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My Financial Thoughts
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My Financial Thoughts Home About Me Contact Me Subscribe via Email 0 Important terms in a medical insurance Posted by Financial Fool at April 9, 2009 If you think that you already have sufficient insurance, check to see if you have gotten yourself a medical insurance. This is one insurance you cannot afford to ignore seeing how the current medical and health costs are skyrocketing these days. This insurance will help us get the necessary treatments without a dent in our wallets, provided we are sufficiently insured of course. Medical insurance here covers both hospitalization insurance and critical illness coverage. Having hospitalization insurance is important as it covers the risk of being hospitalized due to illnesses and accidents. The uncertainty of treatment needed and medical expenses can be a scary situation for many people. An illness or a lengthy hospital stay can actually wipe out one’s savings, and then, what will become of us? When shopping for a medical insurance, it is important to understand what the coverage is like, the amount insured, the premiums needed and also how fast a typical claim will take. Of course, the insurer also needs to be reputable. Below are some terms which are common in medical policies taken from Personal Money, April 2009 edition. These terms are particularly important when making a claim. Co-payment - If you are hospitalised and the board rate is higher than your eligibility, you will bear the difference in the room charges as well as a portion (usually between 10% - 20%) of the other eligible benefits described in the policy. Waiting period - Most medical policies contain a waiting period for illness and disease, which means that eligibility for benefits under the policy will start only 30 days after the effective date of the policy. Free-look period - If you decide not to take up a medical policy, you can return it to the insurance company within 15 days of the date of issue. You will be entitled to a refund of the full premium, after deducting administrative expenses incurred by the insurer. These expenses shall be RM50 or 10% of the gross premium paid, whichever is less. Overseas treatment - You may or may not be covered for treatment obtained overseas, subject to the exclusions, limitations and conditions specified in the policy contract. Misstatement of age - Your age is an important rating factor in your medical policy. If you have misstated your age and the premium paid as a result is not enough, any claim payable under the policy will be pro-rated, based on the ratio of the actual premium paid to the correct premium that should have been charged. Residence overseas - If you were to live or travel out of Malaysia for more than 90 consecutive days, no benefits will be payable for medical treatment outside Malaysia. Phew, isn’t that a loadful? Remember that these terms may be slightly different depending on the insurers. Refer to your policy document for any further descriptions and call your agent when you have a question. Most of all, ensure you are insured for this!! All, Insurance 0 Should we buy or rent the family house? Posted by Financial Fool at April 8, 2009 Yesterday I had an interesting chat with my son’s principal. I was telling her how we had bought our house over the weekend and she told me that she has never bought a house when her kids were small. She simply rented and now, after the kids are all well educated and grown up, she bought her first property. Her remark made me think and ponder about what my views were. I have always believed in owning the family house rather than renting it for a simple reason - I do not want the decision to pack up and move to be the owner’s instead of mine! And with kids, this task can be quite daunting. I also think her remark depends on several things, notably: 1) Your capital outlay. If your capital outlay is small, you are effectively not losing out on the opportunity cost (for education funding for example). Let’s say you are buying a RM500,000 house with 10% downpayment. You are probably looking at a monthly instalment of RM2,500 depending on interest rates. Assuming that house will command a rental of RM2,000. In this case, you are paying RM500 more every month for a house which is effectively yours from day 1, and you are not exposed to the likelihood of being asked to evacuate because the owner decides to sell etc. Of course one could argue that the additional RM500 will be an opportunity cost seeing that you can potentially invest this amount into some sexy investment vehicle and make more money to buy the house cash sometime down the road. But then, this means the risks are high too. So really, I think renting in this respect is not going to help you save much. 2) Your personality. Make no mistake, this is a very important consideration point. Some people are very comfortable with taking loans. I am a good example of this. I do not mind being indebted to the bank because I always go in with a game plan. Noted, this game plan may not be perfect, but I have a plan. And I guess having a plan makes all the difference because when the environment changes, you are reverting back to the original objectives and you can adjust/ ammend easily. My other half, on the other hand, is simply terrified of owing the bank anything and is always trying to pay down as much as possible. His mantra is, if I do not have sufficient money for the downpayment (note, this is the amount he thinks he should put down, not necessarily mean the minimum required), he would prefer to rent. This is not an entirely wrong approach provided you are disciplined enough to save and hold on to the money you planned to put in. If you spend all, then you will not be able to buy anything in the end!! 3) Whether you like to change your views. Some people like to move houses frequently because they want a change of view and feel of places. Then renting is perhaps best as it is cheaper to draw up a rental agreement than a sales and purchase agreement!! Some people also move around a fair bit because they are not sure where they want to settle in, or if they are still single, and do not want to settle in a place till they are married. In cases like these, perhaps renting is best. Despite all, I still prefer to own the house I am living in. Besides having to deal with the kids, owning the house gives me better control over where I will be tomorrow, next month, next year etc. Although Robert Kiyosaki did say that the house you stay in is not an asset because it is not generating income for you, to some extent I have to disagree with him because the money you “save” from renting ultimately becomes the “income” to you and helps you in the end to own the house. This does not include the capital appreciation that would take place. What do you think? All, Investment 1 What do we do now? Posted by Financial Fool at March 31, 2009 These days, my financial thoughts seem to have taken a holiday. Really. Everyday I scan the papers and read online news about how the economy is, how the markets are behaving, what the stocks are like and where commodities are going etc. but without much clarity. Everyday, “experts” give a variety of claims - one day it could be the market is heading south, another day, the market could be recovering and then on another day, financial experts are saying that the bottom is near. Which is which? How can we, the man on the street, make any sense of this if the experts are unsure about it all? What do we do in times like these? How much has the global economy crisis hit us? Do we continue investing? Do we stop and see where the market is going? Which asset class should we go into? Maybe fixed deposits are best? But what about the inflation effects on my real returns? I think in times like these, it is important that we remain on course with our original investment objectives and look to the longer term instead of focussing on the short term. It will help us overcome any emotionally driven decisions and make the mistake of buying high and selling low. What do you think? What should we do now?? All, Financial rambles 0 CPI Forecast for February 2009 Posted by Financial Fool at March 20, 2009 Business Times carried an article on the CPI forecast for February 2009. The table above shows the various forecast by main research houses/ banks. While the average shows 3.41%, I am just wondering how people measure inflation when the price of things do not go up significantly but the portion does!! E.g. the hawker used to sell a plate of noodles for RM3, it is now still RM3, but the portion is down by 20% - how then? And the other thing is, with the lower fuel price, prices for food and staples are supposed to follow suit. But then again, if one is willing to pay higher (when fuel prices were higher) for a particular item, what is the motivation for the suppliers to lower their prices, even with the reduced fuel prices? This is particularly true for hawkers, pasar malam sellers etc. And then there was this minister who asked restaurants/ eatery outlets to lower their prices of Milo since Nestle has lowered the price tag …. did you notice the price of a cup of Milo reduced at the local mamak stall?? So, is this 3.41% for real?? All, economy 0 Citigroup May Spend $10 Million for Executive Suite Posted by Financial Fool at March 20, 2009 Bloomberg carried an interesting piece of news on Citigroup today. It is said that Citigroup intends to spend a whooping $10 million on refurbishings for the top man and his band of lieutenants. This is apparently part of an effort to reduce its office space worldwide by more than 10 million square feet to help save $15 billion over the next few years. Here, I am thinking, why is this money not spent on making sure the various business units within the bank function better? While it is argued that this spent will save the company billions in coming years, isn’t it better to focus on the immediate problem and see how this $10 million can help ensure that business continue and people retain their jobs? The article further pointed out that plans and instructions for the bank’s contractors, on file with the city (NY), specify the installation of at least one Sub-Zero Inc. refrigerator and icemaker in the renovated space, along with “premium grade†millwork and Madico Inc. “Safety Shield 800†blast-proof window film. The project encompasses 17 private offices, each with space for administrative assistants, as well as two conference rooms and open areas with “soft seating,†according to the plans. I am not sure what other people will think, but I am certainly annoyed with the idea that Citi is spending the government’s money so lavishly, especially when they came so close to being a penny stock some weeks ago!! Wonder how the stockholders will react to this piece of news? All, Financial rambles 0 What are you worth? Posted by Financial Fool at March 18, 2009 Today, I was watching an episode of Everybody Loves Raymond and there was a debate as to who was worth more - the home maker or the husband who brings home the paycheck? Now, I am sure we have all thought about this before, even if both are working and bringing home the dough. How do we place a value on who is worth more to a household? Is it solely by the number of zeros in the paycheck? What about all the non-tangible stuff like love, care, nurture, effort etc? How do we place a number to that? If all one does is just bring home the money but does not pour sufficient attention and time into the family, is this person worth more than the home maker who does not physically earn any money, but provides all the love and warmth to a household? I guess at the end of the day, all members of a household do carry a value, no matter if they bring home physical money or not. We just have to appreciate each other and be thankful we have another day to count our worth and blessings. Don’t you think so? All, Financial rambles 0 Love and money Posted by Financial Fool at March 14, 2009 Are you one of those couples who NEVER fight about money? If you are, then you are indeed very very lucky. Most couples I know will usually have at least some squabbles about money and how it is spent. I am one of such couple. It is really different when you are single and worry free. All your money earned belongs to you and you alone and you do not really need to account for it. Once you are married, engaged or involved in a relationship, all this will change. For one, you need to account for the money you spend. This is so that there are no accusations of who spends more on what. Pooling the money together also helps to put into perspective what the current household expenses are and how much is set aside for emergency funds and savings or investments. However, before putting all that together, a good honest talk is needed. This is so that we are able to understand each other better in terms of what is expected. Me, for example, is someone who likes to plan ahead and therefore all my expenses and savings are done with an objective in mind. My other half, however, thinks that so long as the sun rises tomorrow, all is well and life (and money) will roll by. Needless to say, his thinking makes me extremely nervous and in the beginning, we had endless squabbles and arguments over it. However, after understanding a little bit more about his upbringing and values, it helps me to respect his views and now, I decide to work with it rather than to argue and fight over it. After understanding what is expected, then putting together a little budget on paper will help manage the household money much better. It also helps with being transparent about all the money that is circulating. But, as usual, good things are more difficult to do. I have been procrastinating this for the longest time although I have the objectives in mind, I have never gotten around to doing it up on a paper, mostly it is done on the back of an envelope. Hmm … got to start this soon. I guess after all said and done, we have to know what our objectives and priorities are and what is our timeline to achieve them. Sometimes, we ourselves are not clear and may even underestimate it. This is where engaging help from financial planners would be good. I believe for the sake of the relationship and the family, we need all the help we can get. May we all find love and happiness … and a little more money sure won’t hurt!!! All, Personal finance management 3 My blunder … Posted by Financial Fool at March 11, 2009 I accidently deleted all my comments from all my posts while I was moderating some comments. I feel very bad for making this silly mistake - anyone out there who can help? All, Uncategorized 0 Citi and foreclosures Posted by Financial Fool at March 5, 2009 I am sitting here in a rare moment (after the arrival of our daughter) listening to CNBC. 2 things that caught my attention were Citi’s stocks dipped below USD1 and that a record one in eight households ended 2008 behind on their mortgage payments or are in the foreclosure process. Wow, can you imagine those investors who have bought Citi’s stocks in the end of December 2006 and are still holding it now? Make me think about the overly used phrase “Buy and hold long term”. If a blue chip and Dow component share can fall so drastically from high USD50s to below a dollar, imagine what this can do to your long term portfolio? I think the current phrase should be “Don’t buy and hold cash”. Things are too scary at the moment. The other piece of news is equally troubling. 1 in 8 households being behind in their payments affects the economy as a whole and it goes in circles. Unemployment which is at 16 1/2years high is contributing to the foreclosures and the foreclosures contribute to lower tax revenues and this will also contribute to less consumer spending. All this will go in cirlces and further contribute to the downward economy situation. I am thinking that all these things are not seeing the bottom yet. And tiny investors like me are feeling nervous and jittery about what tomorrow will do to my portfolio. What are your thoughts on these 2 pieces of news? Scary isn’t it? All, Financial rambles 1 Forget about insurance Posted by Financial Fool at February 17, 2009 The other day I was having a conversation with my insurance agent and she told me that her sales has been decreasing. This not only apply to new customers but also her existing ones. New customers are saying that insurance is not a priority right now in the wake of the economy crisis we are facing and so, buying an insurance plan is pushed to a later date. Meanwhile, her existing customers are either behind in their premiums or they are lowering their premiums, hence lowering their sum assured too. Not only that, lowering premiums will also impact on the value of the insurance policy when it matures. This is actually a worrying subject. Insurance is definitely something that everyone needs as it will provide us with protection in the event something unfortunate happens - not only to ourselves but also to our loved ones. Besides this, it also helps in diversifying our asset portfolio. Depending on the type of insurance purchased, it will also help us in growing our wealth. This is especially true for investment-linked policies. It not only helps in the protection bit, it also has the investment portion which has the potential to increase your wealth. The investment portion is invested in different types of equities, money market instruments or bonds. This is good for those of us who lack the investment knowledge or the time to monitor markets and take an active role in investing ourselves. Seeing the advantages of an insurance policy, I personally do not think that postponing nor lowering our premiums should be done. We need every means to protect our wealth and ourselves from any economy situation, especially one that spells inflation in the future. What do you think? Is postponing insurance plan a wise decision? Should we lower our premiums to ease our financial commitments? All, Insurance, Investment Next Page Search Custom Search Archives April 2009 March 2009 February 2009 January 2009 December 2008 November 2008 Categories All economy Financial rambles Insurance Investment Personal finance management Uncategorized Recent Posts Important terms in a medical insurance Should we buy or rent the family house? What do we do now? CPI Forecast for February 2009 Citigroup May Spend $10 Million for Executive Suite Click here for more What else is interesting out there CNBC Penny Sense The Motley Fool Live Traffic Map Feedjit Live Blog Stats Feedjit Live Blog Stats And counting ... 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