Congratulations everyone, it is bonus time! The recent quarterly result season, corporate earnings have rebounded. This led KLCI to be in buoyant mood (aside from Trump effect, rebounding oil price, election etc). Many companies seem to have done better or at least shown improvement compared to the past two results season. Many friends and acquaintances have shared with me that this year, some of them finally got their bonus compared to 2015, where there minimal or none.
So with much excitement, many of them started planning how to use their bonus. I would like to say it is subjective. Not many intend to use it for the same reason. Majority of them have already been counting down to end of March and waited impatiently to use the bonus to set their plans in motion. Of course, there were some of my friends / acquaintances who knew about Tradeview and approached me for advice. As I thought this was an interesting topic, I would like to share with everyone some of my ideas.
Do note, one size does not fit all. Everyone is unique. My sharing is merely a simple exchange of insight. Of course, it all comes down a few basic notions such as prudent money management, desire, obligations / responsibilities, needs amongst others. Let me share with all through some simple illustration of how one can use their bonus :
1. Debt Repayment
Surely, using your bonus for this purpose is the least sexy thing to do. Even the title looks boring. However, do not underestimate the importance. Today's society is largely debt fueled due to cheap credit and easy monetary policy across the world. Government relies on debt to grow the economy, building infrastructures, social programmes etc. Ordinary household incur debt through housing / property loan, students through student loan, individuals credit card debt and others. Having extra income from bonus is great, in fact it would be a good avenue to pare down debts as it is never easy to serve the monthly interest outstanding. Should the bonus be used for other purposes, the debt position will never be reduced and forever, one will be financially burden regardless how much they earn.
2. Savings
Saving for rainy days. This is an age old adage that rings true throughout the course of history. There can never be too much savings. Malaysia is one of the few countries that enjoy relatively high fixed deposit savings rate at around 4%++. Looking across the causeway, Singapore's savings rate is around1%++ and further on to developed countries like US / UK which also only provides 1%++. The beauty of saving and setting aside extra money is the compound interest that one gets to enjoy every year. There is saying "Compound interest is the 8th Wonder of the World". Example : assuming one saves RM 1000 every year at 4% interest per annum. After 20 years, the savings would amount to a staggering RM 33,160.62.
3. Investment
There is a saying that salaryman will never make it rich in life. Of course this is not entirely true. Indeed, Malaysia's cost of living has increased significantly, but as we all know, salary growth has been stagnant / incremental. The limited increased despite the high inflation rate is a sign of our economy not growing fast enough. Of course, depreciation in MYR also affects the purchasing power / value of our money. Therefore, a good way to mitigate is to make investment apart from earning the monthly salary. There are many forms of investment one can consider such as equities market, FOREX, property, unit trust, ETFs, PRS and others. Making the right investment can help overcome the annual inflation rate and eroding MYR value through the positive returns. Of course, investments are risky. Hence, investment should only be done with spare cash / funds. Putting a portion of bonus to investment is wise provided one has the necessary knowledge or property financial adviser to guide.
4. Education
There is no end to learning. Everyday I am learning something new from different individuals and life experiences. The day one should stop learning is the day our utility runs out. Using bonus / extra income to take up a course to better oneself is the best. They always say, the best investment is education. As long as it is proper education, and you learn something good, then it is a worthwhile investment. Some use their bonus for financial courses, MBA, soft skills training and others. Personal development is very important. So long as you keep improving yourself, you will never be irrelevant. Think of it as a software update like your Iphone / Android.
5. Necessities of Life
Many people in today's society work to make ends meet. Although B40 category has continued to shrink as the society progress, there are still people out there who live day by day. Many shoulder responsibilities as the sole breadwinner of the family, as a father, mother, son, daughter and so on. Bonus would come in handy in easing the burden of life be it through the mean of buying diapers for a new born baby, medical bills for the elderly, school fees for the children and so forth. Taking into account of all walks of life, it is important to use these funds to sustain the family well being.
Risk Rider
Tradeview also started to write articles to teach people
2017-04-08 14:18