Simply spending way too much, dear Malaysians.

Actually, we do not need a research on the topic of whether Malaysians are saving enough. Just look at how they are spending their money would already allow us to predict the outcome. Just a few days ago, a guy called the Melody FM and proudly announced to all listeners that he changes phone every time a new model is launched. Wow.. looks very promising? Today, when I was in Bangsar South and I overheard a guy asking a lady from AMBANK if he could qualify for personal loan. He wanted RM10,000. I do hope he is taking that personal loan to start a business which will provide him sufficient returns to return the money he was borrowing. Else, he is in deep trouble.

The Star had an article quoting the study of Khazanah Research Institute. In brief, the study said that Malaysians are borrowing too much and not saving enough. Full article? Read it here. Short summary? Household debt versus gross domestic product has reached 89.1% in 2015. (Yes, this is really very high). Most debts were to FINANCE house purchases. (Of course, because the amount is by far larger than car or handphone purchase.  Average life expectancy is now at 77.4 years. (YES, if we do retire at 60, we need to ensure our money can last at least 17.4 years!!)

It also shared that only 10.8 percent of Malaysian households can withstand financial shocks such as unemployment, physical impairment, death, divorce and changes in interest rates or financial markets. Meanwhile Bank Negara’s “Financial Inclusion and Capability Study”, found only 6% of Malaysians can survive more than six months, and 18% up to three months, after losing their main source of income. On an overall basis, household balance sheet is still healthy, as some households continue to accumulate more financial assets than debt.

Do not look at other Malaysians, especially those who are not saving enough. Look at Malaysians who are not just saving but also investing. It’s time we rethink our strategy. A very simply start is to jot down all the expenses that we could remember that was UNNECESSARY for the past 30 days. Use that number x 2 (because there are things we forgot we spent on) and then x 12 (one year). We will now get a number which we could have saved and once we have this number imagine what could we have gotten from it if we had invested it instead…. Cheers fellow Malaysians.

written on 9 Sept 2016

Next suggested article:   81% Malaysians are confident with retirement via investment

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