My updated view on Skim Simpanan Pendidikan Nasional (SSPN)

I previously wrote about the Skim Simpanan Pendidikan Nasional (SSPN) offered by the Perbadanan Tabung Pendidikan Tinggi Nasional (PTPTN) here and here.

I used to think that the SSPN is not worth my time. This was mainly because of the low rate of return it provides. However, I have to say, my view has changed. I’ve overlooked the fact that there’s actually tax relief provided to those who saves money in SSPN for their kids. The tax relief given is up to RM3,000 per year. That’s pretty substantial in my opinion.

On top of that, assuming my tax rate is 12%, I have technically given myself an instant return of 12% (i.e instead of giving the money to the tax office, I’m sacrificing it into the SSPN account and therefore keeping the money to myself).

In summary, I’ll definitely look into using this vehicle in the future.

What is the reason behind downsizing?

A lot of personal finance books and financial commentators have talked about downsizing after retirement. Downsizing as in move in to a smaller house, cutting down your expenditure, and etc.

I really can’t understand the logic behind that.

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What would you do if you receive $1 million dollar tomorrow?

I read an article about what you should do when you win the lottery. It was written by a well-known financial planner based here in Brisbane.

Now, setting aside the lottery part, just imagine ourselves in that position. What would you do if you were to receive $1 million dollar tomorrow?

If it was me, perhaps I would:

– Leave the money in FD-like accounts until I graduate.
– After graduation, I’d take out some to pay for my CPL/IR and Flight Instructor Rating Course.
– At the same time, acquire some investment properties and also set up a share portfolio.

It sure is nice to daydream huh? 😀

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Retirement: Nadlique’s Point of View

You see, the main aim of this blog is to document my journey towards financial freedom.

The thing is, what is financial freedom to me? Does it mean that once I’m financially free, I can retire, quit my job, and spend my days relaxing on the beach? Well, no.

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Nadlique’s problems with having cash on hand

I actually have a big problem with leaving too much resources in the form of cash in my bank account. The problem is, I tend to overspend. Also, I’m not really good at sticking to a budget. I often use budgets to project my spending but when it comes to actually adhering to it, I’m hopeless.

I have been thinking to myself, how do I deal with this problem?

Well, perhaps the notion of “Asset Rich and Cash Poor” is not so bad at all.

One way that I have thought about is freezing my money. What I mean by that is probably by way of converting cash into something else. Converting the cash into cold hard assets.

First thing that I need to consider is by having enough money in my emergency account and enough money to cover my monthly expenses. Then all my other/extra savings need to be converted into assets quickly. Some options are:

1. ASB or Tabung Haji or Fixed Deposit Accounts (i.e. hard to reach places)
2. Buy mutual funds/unit trust
3. Buy stocks
4. Buy investment properties (mortgage on my property = forced saving)

In other words, I want to try to have as little “liquid cash” as possible. I’m just too afraid of spending it all if I have access to it 24/7.

Personally, I think that being “Asset Rich and Cash Poor” is better than having too much cash on hand and end up with spending it all. But really, I think this applies to the early stages of my financial freedom journey. Perhaps, when I am indeed financially free in the future, I can be a tad more extravagant in my spending.

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Islamic Financial Planning

I’m interested to learn more about Syariah Finance and Islamic Financial Planning. Not so much of making a career out of it or even issuing fatwa or anything but rather for the sake of knowing as well as maybe doing it on a part-time basis.

Do you guys know where to start? Perhaps good books to read, courses to do, people to speak to, and etc.

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Credit Cards: Where shall I begin? (A rough guide to credit cards from a non-expert)

Sometimes, it’s hard to understand what’s going on with credit cards. A single bank can come up with many different types of credit cards. All with individual features and benefits (and pitfalls as well!).

Let’s have a brief look at some of the different features of credit cards. Please take note that I’m writing based on my experience and past readings. So, if you notice any inaccuracies or you’d like to add some points, do share your thoughts as well.

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The dangers of a credit card (A look into the disadvantages/downsides)

Like I said in a previous post , it comes with great responsibility to have a credit card.

There are a number of dangers with owning credit cards. Some of them are:

1. You might get yourself in a mountain of debt. If you keep on spending and only pay the minimum amount every month, it’s as if your debt becomes indefinite. Default the payments and you might go bankrupt.

3. Credit card interest rates are the highest. It’s not a cheap debt.

4. Sometimes, it’s hard to stop when you gain momentum in spending, thus leading you to spend up till a point of not being unable to pay.

5. Fraud. Somebody could steal your credit card details and you won’t even know until it’s too late.

6. The perks and rewards that come with the credit card can tempt you to spend more. Often, credit cards reward you by spending more (accumulate points, gifts, and etc.) and this might lead you to do the wrong thing, i.e. spend more.

7. As mentioned again and again, credit card = BAD DEBT.

8. You run the risk of not being able to track your spending. The next thing you know, you are served with a statement to pay by the end of the month, and you realised “Shit, I can’t afford this!”.

As usual, share your thoughts below.

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I’ll be getting my first ever credit card from Public Bank

Due to my being an investor with Public Mutual, I was offered by Public Bank to apply for a credit card. I see some good in owning a credit, so I decided to do so. Read here.

My application has been approved and as of now, I’m waiting for it to arrive.

This will be the first time ever for me to be a Principal Credit Card holder.

[Read more…]

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