Reflecting on 2024: One Step at a Time

As the curtains begin to close on 2024, it's natural to pause, take stock of the year gone by, and look forward to the year ahead. Each year, much like life itself, is a journey—a mix of triumphs, challenges, learning, and growth. And in that journey, one truth remains universal: every single journey begins with a single step.

Looking Back: The Power of Small Steps

When we think about progress, it’s easy to focus on the big milestones: landing a new job, buying a home, or hitting a significant financial target. But if you reflect deeply, you’ll realize that these big moments are just the culmination of countless small steps.

Perhaps this year, you:

• Took the first step toward financial literacy by budgeting your monthly expenses.
• Invested for the first time, even if it was a modest amount.
• Started learning a new skill or committed to improving your health, even if it meant taking small actions daily.

These small steps might have seemed insignificant in the moment. But over time, they add up, shaping your future in ways you might not immediately recognize. The small actions we take every day are the building blocks of our success.

Lessons From 2024: Progress Over Perfection

One of the biggest lessons we can take into the new year is this: progress always matters more than perfection. How often have we delayed starting something new, waiting for the “perfect time” or until we felt “ready”? But here’s the reality—perfection is a myth. The best time to start was always yesterday; the second-best time is today.

Let’s embrace our imperfections. Let’s celebrate every small win, even if it’s as simple as saying no to an unnecessary expense, sticking to a workout routine, or learning something new about managing your finances.

Words of Wisdom for 2025: The Journey Ahead

As we move into 2025, here are a few guiding thoughts to keep in mind:

1. "Every great achievement starts with the decision to try."
   Whether it's improving your health, finances, or relationships, the most significant progress begins with that first small step. You don't need to know every detail of the path ahead—just start.

2. "Failing to plan is planning to fail."
   Take time to set your intentions for the year ahead. This could mean creating a realistic budget, setting clear savings goals, or even outlining a personal growth plan. Remember, goals don’t have to be monumental to matter.

3. "It’s not the speed that matters, but the direction."
   Life is not a race. Focus on consistency rather than speed. Slow, steady progress often leads to more sustainable success.

4. "Gratitude makes sense of our past, brings peace for today, and creates a vision for tomorrow."
   As you reflect on 2024, think about all the things—big or small—you’re grateful for. Gratitude keeps you grounded and positive as you prepare for the challenges and opportunities of a new year.

Actionable Steps for a Fulfilling 2025

Here are some small but meaningful actions you can take to make 2025 your best year yet:

• Start tracking your finances. Even a simple monthly tracker can help you understand where your money goes and how you can save more.
• Set one non-negotiable daily habit. Whether it’s drinking more water, reading for 15 minutes, or setting aside RM5 daily, these habits add up over time.
• Commit to learning. Take a free course, read books, or follow blogs in areas you’re passionate about. Knowledge compounds just like interest.
• Pause and reflect regularly. Make it a habit to check in with yourself. Are you progressing toward your goals? What’s working, and what needs adjustment?

Final Thoughts: The Gift of New Beginnings

Every end is a new beginning. 2024 may not have been a perfect year but it was yours. It was a chapter in your story, filled with lessons, growth, and memories. As you step into 2025, remind yourself that the journey is just as important as the destination.

Remember: one small step can lead to a lifetime of change. Whether your first step is as tiny as saving RM10 or as bold as starting a new business, what matters is that you take it.

So here’s to 2025—a year of small, meaningful steps, progress over perfection, and a journey filled with purpose and joy.

Wishing you and your loved ones a Happy New Year! May this coming year bring health, happiness, and success in all your endeavors. Here's to new beginnings and brighter days ahead.

Cheers to 2025!

Book Review – The Psychology of Money by Morgan Housel

 

Understanding the Power of Financial Behavior

In the world of personal finance, it’s not just about numbers; it’s about behavior. Morgan Housel’s The Psychology of Money is a must-read for anyone who wants to explore the emotional and psychological aspects of wealth. Unlike traditional finance books that delve into charts and investment strategies, Housel takes a refreshing approach by focusing on the human side of money—how we think, act, and sometimes falter.

Key Lessons from the Book

Here are some timeless lessons from the book that resonate with anyone aiming to build lasting wealth:

1. The Role of Luck and Risk

Housel emphasizes that luck and risk are two sides of the same coin. Just as good fortune can catapult someone to financial success, risk can erase years of effort. He highlights Bill Gates’ rise as an example of luck (attending one of the few schools with computer access) and contrasts it with someone equally talented who may not have had such opportunities.

Takeaway: Never judge success solely based on outcomes. Recognize the invisible role of circumstances and focus on controlling what you can—your effort and decision-making.

2. The Magic of Compounding

One of the most striking stories is about Warren Buffett. While Buffett is often lauded for his stock-picking skills, Housel points out that the true secret to his wealth is time. Buffett started investing at age 10 and compounded returns over decades, turning small sums into billions.

Example: Imagine you invest RM10,000 at an annual return of 8%. Over 30 years, your investment grows to RM100,626. If you started five years later, you’d end up with RM68,485—a difference of over RM30,000 for just a small delay.

Takeaway: Start early. The longer your money works, the harder it works for you.

3. Enough Is a Powerful Concept

In one of the most thought-provoking chapters, Housel discusses the concept of “enough.” He warns against the endless pursuit of more—more money, more status, more possessions. The drive for excess often leads to unnecessary risk-taking and dissatisfaction.

Example: Consider someone who has RM1 million in savings but gambles it all in the stock market to chase an extra RM100,000. The risk of losing stability far outweighs the potential gain.

Takeaway: Define what “enough” means to you and align your financial goals accordingly.

4. Control vs. Freedom

Housel argues that the ultimate goal of money isn’t wealth itself but the freedom it provides. Financial independence allows you to spend time on things that matter—family, hobbies, or pursuing your passion—without the constant worry of meeting basic needs.

Takeaway: Focus on building a financial safety net that offers peace of mind and the freedom to live life on your terms.

Why This Book Stands Out

Housel’s writing is relatable and engaging, blending real-world stories with practical advice. Whether you’re a seasoned investor or just starting, his insights apply universally. The book doesn’t preach; it encourages reflection and better decision-making.

Practical Applications

Here’s how you can implement the lessons from The Psychology of Money in your life:

• Create an Emergency Fund: Start with 3-6 months of living expenses to buffer against financial shocks.

• Invest for the Long Term: Avoid get-rich-quick schemes and focus on sustainable growth.

• Stay Humble: Acknowledge the role of luck in your success and practice gratitude.

• Focus on What You Can Control: Instead of worrying about market volatility, optimize your savings rate and spending habits.

Final Thoughts

The Psychology of Money doesn’t just teach you about money; it teaches you about yourself. The lessons within its pages are timeless, reminding us that financial success isn’t just about intellect but also about temperament and perspective.

Pick up a copy today, and you’ll find yourself not only smarter about money but also more self-aware and confident in your financial journey.

Tax Reliefs for Malaysians in 2024: A Complete Guide

As the year progresses, it’s time to start thinking about ways to optimize your finances and reduce your tax burden. Tax reliefs are a fantastic way to do this, especially in Malaysia, where the government provides various incentives to encourage savings, investment, and responsible spending. Whether you’re new to filing taxes or a seasoned taxpayer, understanding the available reliefs for 2024 can help you maximize your savings.

What Are Tax Reliefs?

Tax reliefs allow individuals to reduce their chargeable income by specific amounts, depending on the qualifying expenses incurred during the year. These deductions directly reduce the taxable income, lowering the total tax payable.

For example:

• Chargeable Income: RM60,000
• Eligible Tax Reliefs: RM15,000
  New Taxable Income: RM60,000 - RM15,000 = RM45,000
  This reduction in taxable income can save you hundreds or even thousands in taxes, depending on your income bracket.

Overview of 2024 Tax Reliefs

Here’s a comprehensive look at the key tax relief categories for the year 2024. Use this list to identify areas where you can save:

1. Lifestyle Relief (Up to RM2,500)

• Qualifying Expenses: Books, magazines, personal electronics (e.g., laptops, smartphones), gym memberships, and sports equipment.
• Tip: Keep receipts and invoices for documentation.

2. Education Fees (Up to RM7,000)

• Covers fees for pursuing tertiary education or professional qualifications, either locally or abroad.

3. EPF Contribution & Life Insurance (Up to RM7,000)

• Breakdown: RM4,000 for EPF contributions + RM3,000 for life insurance.
• Self-employed individuals contributing to EPF or private retirement schemes can also claim this.

4. Medical Expenses (Up to RM8,000)

• Includes expenses for serious illnesses, mental health treatments, or fertility treatments for you, your spouse, or children.

5. Childcare Fees (Up to RM3,000)

• For parents sending children below 6 years old to registered childcare centers or preschools.

6. SSPN Contributions (Up to RM8,000)

• Contributions to the National Education Savings Scheme (SSPN) qualify for a significant deduction.

7. PRS Contributions (Up to RM3,000)

• The Private Retirement Scheme encourages long-term financial planning for retirement.

8. Disabled Spouse or Self (Up to RM6,000)

• Additional RM3,500 if you have a disabled spouse and an RM6,000 relief for registered disabled individuals.

9. Parental Care Relief (Up to RM3,000)

• If you support parents aged 60 and above, you can claim up to RM1,500 per parent.

Examples of Maximizing Tax Reliefs

Here’s a practical example to see how these reliefs can benefit a middle-income earner:

Details	Amount (RM)
Total Income	80,000
Lifestyle Relief	2,500
EPF + Life Insurance	7,000
Childcare Fees	3,000
SSPN Contribution	5,000
Chargeable Income	62,500

By effectively claiming RM17,500 in tax reliefs, this individual significantly reduces their taxable income, potentially saving thousands in taxes.

Key Tips

1. Plan Ahead: Identify qualifying expenses and keep track of them throughout the year.
2. Organize Documents: Maintain receipts, invoices, and proof of payment for all eligible expenses.
3. Leverage Investment Tools: Consider contributing to SSPN or PRS for additional reliefs while growing your investments.

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Summary Table of 2024 Tax Reliefs

Here’s a quick overview to help you visualize the options:

Category	Maximum Relief (RM)	Eligible Expenses
Lifestyle Relief	2,500	Books, gadgets, sports equipment, gym memberships
Education Fees	7,000	Local and international tertiary education
EPF & Life Insurance	7,000	EPF contributions and life insurance premiums
SSPN Contributions	8,000	Contributions to SSPN account
PRS Contributions	3,000	Private Retirement Scheme investments
Childcare Fees	3,000	Registered daycare or preschool fees
Medical Expenses	8,000	Serious illness, mental health, fertility treatments
Parental Care	3,000	Support for parents above 60

Closing Thoughts

Tax reliefs can make a significant difference in your financial planning if you approach them strategically. Start early, keep records of all eligible expenses, and ensure you understand the terms of each relief. While it’s important to save, do so responsibly and within your means. By maximizing these incentives, you can enjoy better financial health and stability for the future. Stay proactive, and happy tax planning!

Malaysian Tax Calculator

Below is a tax calculator for you to explore and have fun with! Please note that this is a simplified tool designed to give you an estimate of your tax liabilities. For precise calculations and compliance, always refer to the official guidelines from the Malaysian tax authorities or consult a tax professional.

Annual Income (RM):

EPF Contribution (Max RM4,000):

Education Fees (Max RM7,000):

Medical Expenses (Max RM8,000):

Parent Support Relief (Max RM5,000):

Books, Journals, etc. (Max RM2,500):

How Much Do Malaysians Really Need for Retirement?

Planning for retirement is one of the most critical aspects of financial stability. In Malaysia, the rising cost of living and inflation make it essential to set a realistic savings target that ensures you can maintain your desired lifestyle during retirement.

Why Retirement Planning Matters

The Employees Provident Fund (EPF) recommends a minimum savings of RM228,000 by age 55. However, this amount might only cover basic needs, given factors like inflation and increased healthcare costs. Malaysians aiming for a comfortable lifestyle may need significantly more.

Key Steps to Prepare for Retirement

1. Calculate Your Retirement Needs: Estimate monthly expenses based on your current lifestyle and multiply them by the number of retirement years. For example, RM3,000/month for 20 years equals RM720,000.
2. Account for Inflation: Assuming a 3% annual inflation rate, RM3,000 today may cost over RM5,000 in 20 years.
3. Start Early: Compound interest works wonders. Investing RM500/month from age 25 could grow into over RM1 million by 55, assuming a 6% annual return.
4. Diversify Your Investments: Beyond EPF, consider stocks, bonds, ETFs, and other retirement plans for better growth potential.

Real-Life Example

Example: Calculating Retirement Savings With and Without Withdrawals

Assume Ali, aged 30, saves RM500 monthly in a fund earning a 6% annual return. Without withdrawals, by age 55, he would accumulate approximately RM500,000. However, if Ali withdraws RM50,000 at age 40 for a medical emergency, how does this impact his retirement fund?

1. Without Withdrawal:
   RM500/month at 6% for 25 years ≈ RM500,000.

2. With RM50,000 Withdrawal at Year 10:

   • Savings at Year 10: RM83,000 (before withdrawal).
   • Remaining savings after withdrawal: RM33,000.
   • Resumes saving RM500/month at 6% for the next 15 years.
   • Total savings at 55 ≈ RM350,000.

This shows that a single withdrawal can reduce retirement funds by RM150,000 due to lost compounding opportunities.

Scenario	Savings at Age 55
Without Withdrawal	RM500,000
With RM50,000 Withdrawal at Year 10	RM350,000

Take Action Now

Planning for retirement isn’t about age but awareness. Take small steps today, such as calculating your needs, creating a budget, and exploring investment options. Feel free to use the retirement savings calculator below and have fun with it.

Retirement Savings Calculator

Current Age:

Retirement Age:

Current Savings (MYR):

Monthly Contribution (MYR):

Expected Annual Return (%):

The Pros and Cons of Refinancing Your Home Loan

Refinancing a home loan can save you thousands of ringgit or provide needed cash flow. However, it’s essential to weigh the benefits and drawbacks before making the decision.

What Is Home Loan Refinancing?

Refinancing involves replacing your existing home loan with a new one, often with better terms like lower interest rates or longer tenure.

Benefits of Refinancing

1. Lower Interest Rates: A reduction from 4.5% to 3.5% on a RM500,000 loan can save over RM90,000 in interest over 20 years.
2. Shorter Loan Tenure: Paying off a 30-year loan in 20 years reduces interest significantly.
3. Improved Cash Flow: Access equity in your property for urgent needs.

Potential Pitfalls

1. Refinancing Costs: Legal fees, valuation fees, and stamp duties can amount to 3-5% of the loan value.
2. Early Settlement Penalty: Check your loan agreement for lock-in periods and penalties.
3. Extended Tenure Risks: While lower monthly payments ease cash flow, longer tenures can lead to higher overall interest.

Example Calculation

Example 1: Beneficial Refinancing

Ali has a RM400,000 home loan at 4.5% with 20 years remaining. He refinances to a 3.5% interest rate, reducing his monthly payment from RM2,533 to RM2,318, saving RM215/month. Over 20 years, this adds up to RM51,600 in interest savings.

Example 2: Costly Refinancing

Sara has the same loan terms but is 18 years into her loan. Refinancing involves upfront costs of RM10,000 (legal and valuation fees). The savings from refinancing over the remaining 2 years total only RM5,000. In this case, refinancing leads to a net loss.

Example 3: Extending Tenure

John refinances his RM300,000 loan at 4% for 20 years to 3.5% for 30 years. His monthly payment drops from RM1,816 to RM1,347, improving cash flow. However, the total interest paid increases from RM137,000 to RM185,000 due to the extended tenure.

Scenario	Monthly Payment	Interest Savings	Conclusion
Lower Rate, Same Tenure	RM215 less	RM51,600 saved	Refinancing worthwhile
Near Loan Completion	Minimal difference	RM5,000 loss	Refinancing not worthwhile
Longer Tenure, Lower Rate	RM469 less	RM48,000 more interest	Better for cash flow only

Key Tips

• Always calculate the break-even point for refinancing costs.
• Refinancing is unsuitable for loans nearing completion unless rates are substantially lower.
• Compare offers across banks to find the most favorable terms.

Refinancing your home loan can be a game-changer for your financial health, but it’s essential to weigh the benefits against the costs carefully. Take the time to evaluate your options and align them with your long-term goals. Remember, a little effort now can lead to significant savings and financial peace of mind in the future!

MRTA vs. MLTA: Which Mortgage Insurance is Right for You?

When buying a home in Malaysia, selecting the right mortgage insurance is crucial. Mortgage Reducing Term Assurance (MRTA) and Mortgage Level Term Assurance (MLTA) serve different purposes and understanding these can save you money while ensuring financial security.

What Is MRTA?

• Purpose: Pays off the remaining home loan balance in case of death or total permanent disability.
• Cost: One-time premium, usually cheaper.
• Cash Value: None; covers only the loan amount.
• Who Should Consider: Individuals without dependents or those seeking a lower-cost option.

What Is MLTA?

• Purpose: Provides coverage and builds cash value, which can be withdrawn or borrowed.
• Cost: Higher premiums paid annually.
• Cash Value: Offers savings and investment elements.
• Who Should Consider: Families or those looking for flexible financial protection.

Comparison Table

Features	MRTA	MLTA
Premium Type	One-time	Annual
Coverage	Loan balance	Full sum insured
Cash Value	None	Savings/investment potential
Flexibility	Low	High

Example Scenario

Example 1: MRTA Costs

Ali buys a RM500,000 house with a 30-year loan. The MRTA premium costs RM8,000 upfront. If Ali passes away at Year 20 with RM200,000 remaining on the loan, MRTA fully covers the outstanding amount. Ali's family receives the property debt-free but no additional funds.

Example 2: MLTA Costs

John buys a RM500,000 house with the same loan tenure. He opts for an MLTA costing RM2,500/year. By Year 20, John’s MLTA accumulates a cash value of RM100,000. If John passes away, his family gets RM200,000 (outstanding loan balance) and an additional RM100,000 in cash.

Features	MRTA	MLTA
Cost (30 Years)	RM8,000 (One-time)	RM75,000 (RM2,500/year)
Coverage	Loan Balance	Loan + Cash Value

Disclaimer

These calculations are illustrative. Actual premiums and cash values depend on your age, health, and chosen policy terms.

Key Takeaways

• MRTA suits borrowers seeking low-cost coverage.
• MLTA provides flexibility and additional financial benefits, but at a higher cost.

Choosing between MRTA and MLTA ultimately depends on your unique financial situation and long-term goals. While MRTA offers simplicity and affordability, MLTA could provide added peace of mind with its broader coverage and potential investment benefits. It’s important to research and compare different policies, talk to insurance advisors, and consider factors such as your loan amount, term, and personal needs before making a decision. Take your time to make an informed choice that aligns with your financial future!

Paying Off Your Housing Loan Faster: Tips and Insights

 In Malaysia, the flexible housing loan, which adjusts with the Overnight Policy Rate (OPR), is a popular choice among homebuyers. While this type of loan offers the benefit of lower interest during favorable market conditions, paying off your housing loan faster can significantly reduce your financial burden. Here are some common strategies to help you achieve that, complete with examples to make things clearer.

1. Make Extra Lump-Sum Payments

When you receive a bonus or windfall, consider putting part of it toward your housing loan. For instance, if you have a loan of RM500,000 with an interest rate of 4% over 30 years, paying an extra RM10,000 upfront could reduce your loan tenure by nearly a year and save tens of thousands in interest!

2. Pay Extra Monthly

Increasing your monthly repayment amount by even a small amount can lead to significant savings. For example:

• Original Loan Terms: RM500,000 at 4% interest over 30 years
• Monthly Installment: RM2,387
• Additional Payment: RM300/month
• Outcome: You could shorten your loan by almost 5 years and save over RM60,000 in interest.

3. Increase Payments With Salary Hikes

As your income grows, commit a portion of your salary increase to your housing loan repayments.

Example:

• Starting Salary: RM5,000/month
• Loan Repayment: RM2,387/month
• Annual Salary Hike: 5%

After your first salary increment, consider increasing your repayment by RM250/month. Over time, this cumulative increase can cut your loan term by several years and save significant interest.

4. Shorten Your Loan Tenure

When refinancing, opt for a shorter loan tenure.

Example:
Suppose your current loan is RM400,000 over 30 years at 4%. If you refinance for 20 years at the same rate:

• 30-Year Loan Monthly Repayment: RM1,910
• 20-Year Loan Monthly Repayment: RM2,420
  While you pay an extra RM510 per month, you save over RM90,000 in interest and finish your loan 10 years earlier.

5. Utilize EPF Account 2 (Cautiously)

In Malaysia, you can withdraw from your EPF Account 2 to reduce your housing loan principal.

Example:
If you withdraw RM30,000 to offset your loan:

• Before Withdrawal: Loan Balance = RM300,000
• After Withdrawal: Loan Balance = RM270,000

This reduces interest over time. However, be cautious—using retirement funds for this purpose could impact your long-term financial security. Consider this option only if you have a strong retirement plan in place.

Housing Loan Calculator

Try the interactive calculator below to see how additional payments or increased repayments can save you time and money. Have fun exploring scenarios to create the best repayment strategy for your needs!

Housing Loan Calculator

Use this calculator to estimate your savings and loan tenure when making additional payments. Leave "Extra Payment" blank or enter 0 if not applicable.

Loan Amount (RM):

Annual Interest Rate (%):

Loan Tenure (Years):

Extra Monthly Payment (RM):

Results

Details	Without Extra Payment	With Extra Payment
Total Loan Payment (RM)	-	-
Total Interest Paid (RM)	-	-
Total Savings (RM)	-
Loan Term (Months)	-	-

Conclusion

Paying off your housing loan early doesn’t just save money—it provides peace of mind and financial freedom. Use the calculator above to visualize your potential savings and experiment with different strategies.