First, allow me to wish you a belated Merry Christmas and a Happy New Year! It is to me, once again, a season of thanksgiving, celebration & … some reflection.
Looking back, I would say that 2023 has been eventful. The theme of the year is on relationships. I began 2023 with a girlfriend and will be ending 2023 with my wife. In between, I had made a handful of key financial decisions and over here, I’ll pen them down not just for my own reflections but also as lessons which are valuable to all who are making shifts and transitions in life. They are as follows:
1. I Bought a Second-Hand Car
Prior to this, I did not own a car and was driving my dad’s 18-year old car. So for my dad and I, our shared concern is on the car’s durability and longevity. In that period, I had received an offer from a close contact for her 9-year old car. I have researched prices of its similar model and found her offer to be “decent”. I then shopped for car financing packages and was offered a loan at 4.05% flat rate for 6 years.
Knowing that flat rate isn’t the same as effective rate. I’ve calculated that a 4+% flat rate is equivalent to 7% in effective interest rate, which is higher than FDs & dividend yields offered by EPF and many fundamentally good stocks. As such, in view of this, I paid for the car with cash in full.
Link:
The Rule of 78 for Flat Rate Loan: Can it Cost You?
How to Finance the Purchase of Your Next Car?
2. Growth Vault
KC Lau and I had launched DividendVault.com in 2020 for dividend investors. As its co-founder, I’m thrilled to know many who had gone through the course and built themselves stock portfolios that keep on paying dividends regardless if the market goes up or down independently. Building portfolios and educating many others on dividend investing in Malaysia and Singapore is a no-brainer.
Link:
How to Build a Stock Portfolio that Pay Increasing Dividends?
The same principles of value investing can be applied in the US. But I learnt that dividends from US stocks are subjected to 30% withholding tax. Hence, many of these fundamentally solid stocks (profitable, cash-rich … etc) had chosen to use their cash flows in CAPEX, R&D, business acquisitions, share buybacks and thus, have lower dividend payout ratio (DPR) or pay no dividends at all. In that sense, dividend investing makes less sense in the US.
Rather, it makes more sense to practice “Growth Investing” in the US. Hence, in 2023, KC Lau and I built and launched Growth Vault for growth investors who’re interested in building a growth-based portfolio in the US to compound wealth.
Link:
Growth Vault
With both Dividend & Growth Vault, our members and I have “data” needed for the building of a “dream-team” portfolio, consisting of the “top 1% companies”, which are listed in Malaysia, Singapore and the US. Such can be adjusted and as well as balance our personal needs for dividend and growth.
3. Wedding Ceremony
I always have a perception that wedding ceremonies are expensive. When I was single, I tended to “save and save” for I don’t know how much a wedding would cost me in the future. Also, I wished that I could fund my own wedding, without financial support from my parents or parents-in-law. Hence for years, I’ve saved and hoped that when it’s my turn to get married, my funds are sufficient.
And so they were.
My wife and I had an awesome wedding and we had funded them by ourselves. I’m superbly proud of our shared achievement. Looking back, the “final cost” of our wedding is RM 27+k. But, we paid RM 55+k in cash upfront for various costs such as wedding venue, rings, attires, dowry, live band & emcee … etc. The cost netted is after the end of our wedding dinner (ang pao collection). So overall, in your case, it’s best to prepare this cost in advance if you wish to get married.
Link:
A Comprehensive Breakdown of 8 Key Expenditures
4. Will Writing
Once I tied the knot at JPN, my previous will document was nullified instantly. It is therefore necessary to rewrite my will document. There were months which I was an “intestate” person. Intestate refers to people who don’t have a valid will and if he or she passes on, the distribution of estate shall be determined by our government in accordance with the Distribution Act 1958, not us. Also, it’s a lot more troublesome to distribute such estates as it involves more paperwork and people because “intestate” people never really state their wishes clearly on the estates and they should be administered in the first place.
After much consideration, I learnt that my circumstances require me to include: a testamentary trust (TT) in my will document. TT is a type of trust which would be effective once the person (settlor) passes on. I choose to have TT because I’d like a portion of my estate to be withheld and distributed to my parents and my wife on an installment basis (monthly). As such, I can avoid losses arising from:
- Uncontrolled impulsive and excessive spending.
- Financial mismanagement from beneficiaries.
- Abuses from swindlers (from people we know and we don’t know of).
- Unforeseen business + market forces (like COVID-19).
Link:
Estate Planning Strategies at Different Stages in Life
5. My Tenant Moves Out.
I have a property which was occupied by a tenant for 3 years. Once the contract expired, he decided to move out as his own house was ready for occupation. As a result, I decided to refurbish my property and make it into a retirement home for my parents. At the writing of this, the refurbishment has just started. Here, I would say that my experience as a landlord is nice as my tenant is quite decent.
I’m thankful to receive rent on-time for 3 years. The total amount earned is one that is substantial as it, in a way, paid for my second-hand car (Point 1). Without the car, this amount has been instrumental to service the interest portion of my mortgage installments for 3 years. But having said that, one thing to factor in as a landlord is – “What is the point of renting a property for 3 years where I’ll take 2 years worth of rental income to pay for its refurbishments?”
To that, I’m still digesting this as I only realize this myself. Ouch!
Link:
Smart Rental Strategies to Consider for Your Investment Property
What’s Ahead in 2024?
Baby? Confinement? Childcare expenses? … Quite possible. This explains why it is key to have savings after spending on a wedding. Weddings are for a moment and there is a marriage to thrive for eternity. I now thank myself for my building of wealth much earlier as it contributed to an easier life in the present. Today, if you wish to get married, it’s best to plan for it financially as early as possible.
But before that, I believe 2024 is a year of replenishing my reserves for I spent a lot more this year than my previous years. Anyhow, if you like to set aside spare cash for possible immediate expenditures like a wedding, you could refer to this article to find out 9 other ways (other than FDs) to manage your spare cash.
