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TABLE OF CONTENTS
Do you have emergency fund?
Driving on a highway, music loud, windows down – and then, BAM! 😱 A sudden car accident! Now you’re staring at RM 10,000 in bills, wishing you had an emergency fund to get it through 😢.
Why Cash Still Wears the Crown
Emergencies are like uninvited guests – they never RSVP. Whether it’s car breakdowns, health hiccups or unexpected layoffs, these rainy days don’t care if you are ready for it. And your emergency stash? It’s umbrella in a storm ☔– not making you rich, but certainly keeping you dry.
Golden rule: Aim for 3-6 months of living costs.
Quick math: if your monthly costs are RM2,600, you’re looking at keeping RM7,800 to RM15,600 tucked away. Remember, this isn’t a one-size-fits-all! Dealing with some heart condition? You may extend it to a 24-month stash, just to be safe.
Low on cash but you need it NOW? 💵
Some tips if you need the money right now:
- Credit Cards
Yes their interest is sky high, but having instant cash on your hands might be the utmost importance when emergencies happen. Surely not the cheapest thing, but it gets the job done. Pro tip: Check out cash advance features with banks like CIMB or Maybank. - Loans
If you have a good credit score, some banks may say yes as fast as 10 mins, few hours or days. (But brace for those interest rates!) - Medical Cards
A simple stroke treatment? RM35k to RM75k in a private hospital. Your card can be that safety net you need, and it’s affordable (and no, I’m not sponsored by insurance giants, it’s just Ziet speaking 🙋♂️). RM200/month can net you coverage up to a cool million. How’s that for peace of mind?
Got Extra Cash? 💰
If you have some extra cash lying around, here are some options.
- Fixed Deposits
One example Maybank’s eFixed Deposit that can offer you 2.70% interest per annum starting from a 1 month tenure up to 3.10% for a 13-35 months tenure.
Pro-tip: In general, banks give a higher FD rates (visiting their physical branch) compared to the e-FD (have it done online). - Money Market Funds
Platforms like TnG GO+ or Stashaway might lure you with ~4% returns. Money market funds are considered as safe investments, but do take note that the word “investment” means your savings is not insured by PIDM. - US Stock Market
High-risk, high-reward. An initial $1,000 in 2010 in the S&P 500? By 2020, you’re chilling at around $3,620. To counter the volatility in US stock market, you have got to be ready for long time commitment!
So, whether you’re stashing or splurging, remember, emergencies are unpredictable, but your finances don’t have to be.
If you’re interested in the US stock market option, I have an exclusive rewards for you! If you sign up for M+ Global rewards, you will receive x6 units of GRAB shares – yes, it’s the Grab you order for food and rides! If you’re concern about the shariah compliant, or simply not interested in Grab, you can also choose to receive trading vouchers that worth around USD 20!
Word of the Week: Margin
Definition: Margin refers to the difference between the total value of securities in an investor’s account and the loan amount from a broker. Essentially, it’s borrowed money that allows investors to buy more shares than they could with just their own funds.
When an investor buys on margin, they use these borrowed funds to purchase securities, hoping the value of the securities will rise. However, buying on margin comes with significant risks: if the securities decrease in value, the investor still has to repay the loan.
Imagine you want to buy shares in a company called ZietStar, which are priced at $100 each. You believe that the stock price will skyrocket soon, so you decide to purchase 100 shares, costing a total of $10,000. But, you only have $1,000 in your trading account.
Your broker offers to lend you the remaining $9,000 so you can buy all 100 shares immediately. This loan from your broker is called a “margin loan”, and your $1,000 initial investment serves as collateral.
If ZietStar’s share price shoots up to $150, your total investment value becomes $15,000. After repaying the broker’s $9,000 loan, you’re left with a balance of $6,000, which means you’ve gained a $5,000 profit from your initial $1,000 investment!
However, if ZietStar’s price plunges to $50, your total investment drops to $5,000. After repaying the broker’s $9,000 loan, you’d be left with a negative balance of $4,000, meaning not only did you lose your initial $1,000, but you also owe the broker an additional $4,000.
This leveraged buying power that margin offers can massively amplify gains, but it can also lead to devastating losses. So beware of what you’re buying!
Key Economic Dates:
- 15th November: PPI (Oct)
- 16th November: Initial Jobless Claims
What I’ve been reading:
Here are the top stories that caught my eye:
- China $137 bln new funding to boost housing market
- WeWork files for bankruptcy
- Microsoft 365 to launch Copilot AI Tool at $30 Per Month
You’re all caught up!
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Cheers,
Ziet
