Welcome 2009 with optimism

I'm back after such a long hiatus. It's almost the end of year 2008 and wow, what a year it has been. In 1998, we were hit with financial tsunami. Some of our corporations and individuals were caught with their pants down or worse lose their pants all together. Ten years later, another tsunami is hitting our shores and this time it's the MOTHER TSUNAMI.

Looking back at the beginning of year 2008, a lot financial pundits were predicting new highs for almost any asset class. As common sense tells us, whatever goes up must come down, and this time really it did crash, and crash hard! Most of us and the rest of the world panicked and try to sell off their financial assets at a huge loss. But of course some of us with barrels of cash in hand are getting elated at the golden opportunity that might come once in a life time.....

So what have I been doing this year? I started building a portfolio of unit trust funds beginning June 2008 and still waiting for further investments. As I mentioned before, whatever that goes down will goes up again and who knows it might shoot through the roof one day? That day might not happen in 2009, but with gradual accumulation of financial assets at beaten prices, surely that day will come and that's the day you will laughing all the way to the bank.

So how do you handle your finances in 2009? Below are some of the pointers that I can foresee some of us doing:

1. Start checking your cash flow status - try to monitor what goes in and out of your bank account and at the end of the month, see whether you are in the black or red. This is a very important step to know your financial health, especially in financial turmoil time. You might be a millionaire with ten bungalows but with negative cash flow, you might end up with nothing if the disaster hits you one day.
2. Reduce unnecessary spending - if you are in the red, you should reduce your spending immediately. It doesn't matter where you want to cut your expenses, but make sure you cut enough until your cash flow is positive. I know this is tough financially and emotionally, but think about this, what is more painful than losing all you have, all that you've paid for because you cant pay off your debt?
3. Start saving - with positive cash flow, you need to start saving the extra money monthly. If you don't have any emergency fund, try to build it with a target size of at least six months of your expenses. Put this money away in time/fixed deposit and never ever touch it until emergency time.
4. Be positive - having some cash buffer around during rainy days can bring positive aura/mood to a person because you know you have done your basic job in protecting yourself financially, emotionally as well as psychologically. After building enough emergency fund, you may use the extra cash to invest.
5. Buy low, sell high - 2009 might be a good time to buy financial assets because prices are coming down hard. You might not be able to buy at the lowest price point, but i guess you are close to that. Who knows ten years later looking back, you are glad that you did buy low and lower.

As people said, Roman is not built in a day. This is the same case here. What is critical is to stop procrastinating and start the steps mentioned above. As for me, I'm looking at step 5 now and looking forward to another exciting 2009....

Watch out 2009, I'll be hunting for more!!!!!!

Where do I save my money?

It is a common believes that most people knows what to do when they don't have enough money at the end of the month, i.e. by tightening their belts to last a few more days. But how many of us really knows what to do with our spare/extra cash that we have?

In Malaysian context, some of the most common financial instruments that we can invest our spare cash in are as follow:

1. Savings/Current/Hybrid accounts - or as i termed it cash management.
2. Fixed deposit - a.k.a time deposit
3. Unit trust
4. Shares - common shares or REITS
   
5. Property

Of course there are many other instruments that are not as common, such as futures, options and commodities trading. For high net worth individuals (i.e. rich people), there are even more choices, such as structured investments that require initial deposits of at least RM250,000.00 or even more.

So, in the next couple articles, i will try to share more information on the common financial instruments that we can park our hard earned money as listed above.

I Want to be a Millionaire!

Who wants to be a millionaire? I guess everyone of us dream of becoming a millionaire someday. All it takes is a small but courageous step - to plan your finance - to make a better life, financially!

This is my personal journey to financial freedom. I will share my personal view on current financial situations, topics, trends and queries that most people have in their mind. I hope some points mentioned here will make some sense to you.


Disclaimer: The content in my blog is based on my personal view/opinion and should not be treated as a qualified financial advice. Read it at your own risks!! :)