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I heard someone said that Singapore has more millionaires per population than anywhere in the world. Well, according to Forbes, it’s about one every 36. Yes, quite an amazing number because if you are a Singaporean and you are graduating with 36 other students, one is already a millionaire. Note, the term millionaire here refers to net worth. In other words, total wealth (assets and money) minus total liabilities. So, if your home is worth RM1,000,000 but your total debts are RM950,000, it meant that your net worth is only RM50,000. Very low when compared to even those who are debt free and save a lot of their money into Fixed Deposit (FD).
It’s important for us to always think about net worth and not just how much money we have in bank. It gives a more transparent perspective if you can really afford that new Segment D car or NOT. 🙂  Well, if we have a good job paying an above average salary, should that not be more important? Well, that is a pre-requisite because you can only do more when you have more. One of my favourite author, Azizi Ali said that if one is earning just RM2,500 it’s time to work harder, somehow get a much higher pay so that one can then build upon this. Otherwise, it’s an impossible task to retire rich. I assume rich would give us more happiness than poor.
So, how do we increase our net worth? According to a famous author Yap Ming Hui, we can focus on four things. Let me explain briefly below. To read more, do buy his books. I personally have one of his books too.
Increase your savings – Seems simple but it is not. Can you convince yourself to buy needs and not wants? Haha. If this first item is not managed well, then all the rest would not matter much. Without item 1, you cannot build item 2 and so on.
Increase your Return on Investment (ROI)- In this case, a Unit Trust giving a return of about 7% would definitely be preferred to a Fixed Deposit providing just 3.5%. One can even focus on stocks which can give far higher ROI but the trade off is, the higher the ROI the riskier it is. Decide based on your risk appetite.
Decrease your exposure to risk – Briefly, this meant to also protect what you have. A medical card payment of RM2,400 per year is really nothing compared to the coverage it would provide if we suddenly needed to undergo an operation which costs RM36,000!  Try not to engage into any huge return but huge risk “investments” such as pyramid schemes.
Decrease your costs – If your mortgage was based on a higher rate previously, take time to refinance it. That lower rate is likely to save you lots of money.
When it comes to my future and my family’s future, I always take a pro-active approach. No point in recognising this only at a later stage in our life where we needed to either take a higher risk as we wanted a faster return due to time limitation and maybe lose it all. The earlier we take note of this, the more avenues that we have to progress towards it. We can also take a lower risk method too as the timeline is longer. Happy thinking net worth.
written on 28 Sept 2015
next suggested article: Buy property now or buy later, which is riskier?

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Charles Tan The Founder The Writer Kopiandproperty
Charles Tan

Charles is Founder of kopiandproperty.com He writes from his investment experience for the the past 20 years in investments including property, stock, unit trust and more as well as readings and conversations with many property gurus in the industry. kopiandproperty.com is an independent property blog which is not affiliated to any media company, property developer or even real estate agencies.

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