Planning for the kids education funding

Recently I met a few people who wanted to start their children's education funding program. So I asked them how old their kids were and almost all did not answer "newborn" baby. Why I want to highlight this is because if your kids is already one year old, what did you do for the last one year for him or her.

It's funny to me sometimes to think that we all read and know about the importance of education, we also know that the prices are not coming down, so what more does it take to just get started on the savings. My guess is, it's a long way to go right! 18 to 20 years from now is a long time ... are you sure. Don't get caught.

I got this idea from one of the books I read. The way to plan for the long term, is to not call it long term ... but rather a few short months. For example, for a 5 year plan, call it your 60 short months plan. If you start doing this and implemented it on paper ... i can bet you see results.

When I implemented this idea, I got sick to the stomach to realize how much time I have wasted. More like, how many years that is. You see, once you quantify it into monthly blocks, you can see it very clearly and it stares right back at you, if you don't do anything.

So now for me planning has become easy. Well, at least the planning part ... implementation is another skill to be mastered. So back to the question of wanting to start that education or college fund for the kids. Let's just take my examples this time round.

I've got 3 kids, Amira is 10, Amir is 7 and the last girl, Aldelia is 5. Now lets say we plan for Amira. She's got another 8 to 9 years before she comes to me and ask for that money I promised for her to go to college. I sure am going to feel pressured and I want to be able to tell her .... ok darling.

So say 8 years, still quite a long time. Now you break it to months ... it's only 96 short months. Oh man! Now with that you draw up in an excel spreadsheet and line up the boxed and put it at a visible place. Every month that you put aside the money, you can cross off the box. Now you can not only see it, but feel how you are progressing each month. Believe me it is effective.

Financial planning may seem like a complex subject with the stock market, unpredictable returns, complex products and so on. But the bottom line is this my friends ..... it's not how much you earn, it's how much you put aside for the later use of those money. That's basically the basics. Then we can talk about the complex structures and returns.

I do hope all of you will get started with this simple idea.

Do you see more months or more money at the end of the months.

Humanizing Insurance & Takaful

When eTiQa launched the new branding with it's value proposition to "humanizing insurance", some people may have questioned what it means. It is really about going back to the basics and the core foundation of the insurance business, which is people. It is the reason we exist and it is also the reason why we must progress to strengthen this core value.

Yes, the insurance industry has been under attack for many years and has carried with it a "perceived" bad connotation to both the industry and it's people. Little do we realize that this industry has been around for a very long time. It has survived the test of time because for one, insurance companies are very conservative. But that alone is not enough. Insurance companies must honor the contracts with it's policy holders. If this does not hold true, how long would an entity be able to continue as a going concern. Yes, maybe there is very little publicity when claim are paid out. But there are reasons behind this. As you may imagine, not many families want to announce such a sensitive situation. Imagine the devastation ones family goes through. Even with a claim that comes in to elevate the situation of the family, having it publicized would be the last thing on their mind. Wouldn't it be the same for you?

Making a difference

It's not how much you accomplish in life that really counts,
but how much you give to others.

It's not how high you build your dreams that makes a difference,
but how high your faith can climb.

It's not how many goals you can reach, but how many lives you can touch.

It's not who you know that matters, but who you are inside.

Believe in the impossible, hold tight to the incredible, and live each day to its fullest potential.

You can make a difference to your world.

RM 1,000,000

Why do I need a one million dollars insurance cover? This is often the question posed to me every time they ask me to recommend them with the appropriate amount of protection.

My immediate respond ... why not? Would you be interested in a property worth a million ringgit instead? Of course is usually the answer.

Well, lets do a simple comparison. The scenario is a based on a 40 year old CEO whom I met recently.

Say you bought a property worth RM1.0 million and you got an excellent deal from the bank giving you a 100% loan at 3.5% interest with a tenure of 25 years. (question is can you get these kind of rate?)

The monthly installments would be RM5,006.24. Now the total repayment amount that you would have paid to the bank after 25 years would be RM1,501,872. Take this amount and minus the RM1.0 million that you borrowed, thats the amount of profit you would have passed on to the bank! Of course, one would hope that the property value would have sky rocketed in that time ... but to how much? That would be a different discussion, for now we just do a simple comparison.

Lets just get this out in the open. Insurance or Takaful is just a financial tool with the objective of transferring the risk that we would otherwise have to handle ourself. However, with the right kind of product, you can maximize your dollar value tax efficiently.

For example, a RM1.0 million insurance or takaful policy would be around RM9,000 to RM30,000 per year, depending whether its a pure term, composite term or a term with mudharabah (profit sharing). Here, we're not discussing how much return we get, but consider this for a moment.

1. The contract is under your name. You have FULL ownership of the RM1.0 million, whereas the property is under the banks ownership until the loan is fully settled.

2. What would happen if you were suddenly incapacitated and not able to payoff the loan? Well, someone will have to pay for it or the bank will assume its position. So then he said, I can buy MRTA. Well, isn't that insurance? Of course the calculation above did not take into account MRTA, because then the figures would increase. But why do you want the MRTA? Yes, the policy would payout RM1.0 million to your family, whereas the property will need to go through the process of estate administration, assets realization and distribution. How long will this take?

3. Lets compare the expected profit you can make at the end of it.

The Takaful program.
Annual premium RM32,000
Total amount deposited RM800,000
Immediate cover RM1.0 million
Maturity value RM1.2 million
Expected profit RM400,000

The Home loan program
Annual repayment RM60,000
Total amount paid RM1.5 million
Contingency cover RM1.0 million (value of the property)
Expected value RM2.0 million
Expected profit RM500,000

Now, having done all this comparison, we can still argue. So I say, it not about one side having to win and the other lose, its not about who's right and who's wrong. At the end of the day, all this need to tie back to your objectives and your opportunities.

As a conclusion, we need time to build wealth, we need time to build the business, we need time time to sort out all the things we handle, but if an unexpected event take a turn in, our family will not have the time. So do take action on what you can ... now!

Market is falling, now what?

In this wake of the political drama after the rise of oil prices and now the turbulence of the stock markets. The world markets are crazy, the outlook is dicey, but there are also plenty of ways to profit, if you keep your cool.

So what can I do? Do I sell my funds? Do I buy? I have butterflies in my stomach….

Here's some quick tips:

1. Focus on you're a long term goals and practice dollar cost averaging.

2. Use the buy-and-hold principle, the funds will generate reasonably good returns over the medium to long term.

3. Don't time the market, as we will be exposed to much higher risk.

4. Practice of portfolio allocation or asset allocation will give us potentially higher returns whilst reducing our risk.

For further information, do read this excellent article on how you can keep your cool in a volatile market situation.

http://www.publicmutual.com.my/page.aspx?name=art_remaincalm_pg01

The meaning of what we do

Tonight I went to visit a friend who was recently involved in a car accident. He was hospitalized and had gone through quite a major surgery on his back and now he's got two metal piece and eight titanium screws on his spine. Alhamdulillah and thankfully he's now alright and he's even able to move about only after a week, albeit with the assistance of a back support. The doctor says that he will recover pretty soon. Rest well and bounce back my friend.

However, it is incidents like this that makes me look back and remind myself the meaning of what I do. It is difficult in our business to see the value of what we do. It's not like physical things or products that you can see. How do you prove things like faith, how do you prove you're good? How do you prove the miracle of your product and the quality of the company you represent?

If you try to do it with proof, you lose! But when it's in your heart, when you believe in yourself, believe in this business and believe in the miracle of your products and the company you represent. Then you can look at people in the eye and believe me, a lot of people have told me that I can do better somewheres else, and I can look them right in the eye and say you're wrong.

But it's not easy is it! How do you feel, when people say ... you're an insurance agent !! puuiii ... they spit at you!!

Do we realize, that it is us that creates the vacuum, that gets people to act. It's not the knowledge! There are plenty of books and references that provides us all the materials. What do you want, financial planning, education, retirement. The theory is all there. It's not about the knowledge, but it's what you do!

Do we realized that if people don't DO something that they can't retire with dignity when they're 65. If they don't DO something, their family will be exposed to a high degree of risk. If they don't DO something, they may have to re-finance their home for the children's further education.

What a gift, when we have the chance to do more for the average person compared to anyone one else! We are in a position to help create and secure that DO! When I deliver a death claim, the lawyers are there charging a fee, the accountants are there charging a fee. And I give them a cheque for a million ringgit, and I'm on defense? I got to apologize coz I'm an insurance person!

If you don't believe that, you lose!

MDRT Day 2008

2nd August 2008. I had the opportunity to take a snapshot with Mr. Walton W. Rogers, The Current President of MDRT. During his session on the MDRT Day 2008, he address the audience and shared valuable information.

One area that I like was the "Whole Person Concept", which I feel is the fundamental areas if we want to find the balance and also significance if we are a practitioner in the financial services industry.

The "Whole Person Concept" outlines the following seven areas of importance for us to find the right mix and balance.

1. Career
2. Education
3. Family
4. Finances
5. Health
6. Service
7. Spirituality

Hopefully as we go through our daily work and personal life, we do take some time to think about what is really important to us and find that balance in life.

If you want the materials from the MDRT Day 2008, leave a comment on the blog and type "request materials". Be sure to leave your full name and a valid email address for me to send it to you.

Have an awesome week ahead.

Seeds of Greatness from Dennis Waithley

I had the opportunity to meet this extraordinary person on 29th March 2008 at the KL Convention Centre.

This paragraph is taken from his book that I read called the seeds of Greatness.

Living is Giving

Living is giving your best self away
Living is helping someone every day
Living is giving more than you get
It's treating an animal like a person, instead of a pet

It's helping the handicapped across the street
It's smiling at the new person at work that you meet
It's the respect for all notions, color and creeds,
It's sharing and caring for your neighbor's needs

Losers keep betting that living is "getting"
But there's one of God's laws that they keep on forgetting
And this is the one you can live and believe
The more that you give, the more you'll receive!