Inflation - Stranger or Foe?

I suppose many of you are able to define or explain the word "Inflation". If you lookup this word in the internet or books, you will be blown away by the many creative definitions.

In my opinion, the simplest definition of Inflation is "time taken for the value of your money to halve", i.e. time required for your RM10 (example) to halve or the time required for prices to double (example - a bowl of RM5 noodle to double in price)

What is your inflation?

Yeah, I supppose the numbers you plucked from the papers are not exactly incorrect but neither are they correct (depends whether you believe the reports). There are however more than one category of inflation:

1. Country's Inflation
2. Personal/Individual Inflation

One common formula of calculating inflation is Rule of 72. For instance, if we assume the inflation rate to be 4%, then 72/4 is 18 - it will take 18 years for the value of your money to halve or 18 years for price of items to double.

However as wise consumers, we are all aware that this is not true. How much was a bowl of noodles 5 years ago? 3 years ago? 1 year ago? So can our country's inflation possibly be 4% and below?

Personal Inflation

There is another inflation that many of us are not aware of - Personal Inflation.  Do you budget or itemize your expenses? If you do, try analysing it. How much did you spend (in general) in 2008? How much in 2009? From there you will be able to ascertain your inflation rate. Of course, if you wish, you can proceed into details - expenses by categories. You can then have an inflation rate for every category of expense. 

What this means is that your personal inflation rate is as important if not more important than our country's inflation. Thus, it is vital that you need to keep an eye on your expenses and income.

Did you just give me a number? Where did you get the number from? Did you get it from the papers or reports?

Who's More Important - Parents or Children?

Children are a gift from above and there is no value to associate the joy and blessing they bring to a couple.

With the arrival of a child, parents tend to divert all their attention to the little ones.

The question is "Who is more important? Parents or Children?"

Consider this analogy:

1. You make reservations for a Presidential Suite in an exclusive resort. This suite costs a bomb and you really look forward to enjoying it.
2. You then make plans for transportation to the resort.
3. Upon confirming your transportation plans, you begin your journey
4. As you are travelling, you have a puncture or meet an accident. What next?

• Are you prepared for this circumstance?
• Will you ever reach the destination?
• If you do not reach the destination, you would have wasted all the money spent on reservations for the Presidential Suite right?

Is this not the same for planning for parents & children? While it is good that you have created a huge $$$ for your children's education, what about their daily needs from now till their University days? Do they have enough for their daily needs (food, clothing, shelter) - maintaining their lifestyle?

Have you calculated the daily expenses of your children?

No. of children  * daily expenses per child

Total expenses * 365 days * no. of years

(above calculation does not include inflation)

Do you realize that this amount to quite a significant amount? Parents need to first take care of themselves before their children. This will ensure they have enough to complete their journey when they enter University (for instance).

Even the airlines recognise the importance of caring for the parents before children. Shouldn't you?

NickG Financial Designer provides specialized & customized advice/planning for parents
Email: gloriouscash@live.com
Facebook: http://www.facebook.com/nickg.advisory

Financial Planning in a Nutshell

Financial Planning. A name so commonly associated with products in Malaysia.

What is Financial Planning? It is not a product directly or indirectly. It is more than that. It is a process.

Calculating EPF

The Malaysian EPF was founded after the enactment of Employees Provident Fund Act 1991 (Act 452). EPF was created to help employees from both private and non-pensionable public sector save a portion of their salary.

EPF primarily applies to retirement, sickness, disabilities or unemployment. It is unfortunate that EPF is now accessible for many other reasons too. How much do you think one will have @ age 55 if the fund is used all the time?

Do you know how much you will have in your EPF by age 55?

Click on this link to find out --> EPF Calculator

Do you have any Unclaimed Money?

It will be really nice to suddenly find out that you have money to you, won't it? Maybe it belongs to a passed away loved one?

Have you searched the Registrar of Unclaimed Moneys?

Unclaimed money can be in various forms:

1. Life insurance policies
2. Share dividends
3. Dormant bank accounts
4. Unclaimed wages
5. EPF contributions
6. etc.

I believe we share the sentiment that to go to the Registrar to find out can be tedious due to the traffic, time constraint, efficiency of the staff there, etc.

Well, there is a company that offers such services now - UMA Compliance and Administration Sdn Bhd (Umaca).

Of course being a private entity, they may charge you some fee subject to their terms and conditions. 

Check out their website: UMACA 

Limitations of Insurance Nomination

No Substitute Nominees

• You cannot appoint substitute nominee
• Only joint nominees are allowed

Pop Quiz --> If your nominee(s) dies before you, what happens to your nomination?

For clarification/assistance, please contact us via gloriouscash@live.com 

Limitations of Insurance Nomination

Minor Children Nominees

Questions for your consideration :-

1. How to safeguard the proceeds for the minor beneficiary if parent is financially irresponsible?
2. What happens if parent receives the money but later passes away or is declared a bankrupt?
3. Will Amanah Raya Berhad distribute the money for the minor children's maintenance? If yes, how fast?

For further assistance, contact us at gloriouscash@live.com