Guys,

Some good tips from Azizi Ali, the Malaysian millionaires….

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1. FEATURE ARTICLE: More about the Reserves Fund
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I wrote about the reserves fund in my first book entitled “Millionaires are from a different planet!” Let me now add some additional points about the subject.

Occasionaly, I run into people who think that it is a waste of time, resources and money to have one. And yes, I have read books (all from the west) that discourages having a reserve fund as well.

Their main argument against it is that the money will not be making more money for you. Since the fund is kept in a safe and secure investment vehicle - normally the fixed deposit - it’ll be earning a measly 3-4% return a year. So it is wasted. Why not take this money and invest it in the stock market, properties or someplace else and make the money work for you?

Now, let me first clarify that I have nothing against investing. In fact, I’m a firm advocate of investing your money. However, first things first.

Before you can run, you have to learn how to walk. And before you can walk, you have to learn to crawl first.

And before you invest, you must have a reserves fund worth at least three months of living expenses first. For example, if you require RM5,000 a month to ensure that life goes on as per normal, then have RM15,000 as your reserves fund. Of course, more is better.

This money, as mentioned in my book, should be kept in a safe and secure investment vehicle. And although you may consider the fixed deposit, I’ll give you two better alternatives - the ASB and/or the Tabung Haji. Both give a fair return for your money. ASB used to pay >12%; now it’s about 10%. Tabung Haji used to pay >7%. (Of course,
2001 wasn’t a banner year for Tabung Haji. But they appeared to have sorted out their problems, and have paid decent returns again).

The purpose of the reserves fund is not so much to make more money, but to ensure that life goes on as per normal.
It will ensure that your life will go on with minimal disruptions.

Otherwise, when a situation or an emergency arises (and they certainly will as long as we are living here on Planet Earth), it will compound our problems. We may have to sell our investments at a loss or borrow money (and pay an obscene interest) to address the situation. Both will cause more disruptions, waste more time, effort and money.

In summary, I will say this: if you do not have a reserve fund - forget about making an investment - any investment.
You are not ready.

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2. QUOTE OF THE MONTH
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“Given equally good players and good teamwork, the team
with the strongest will to win will prevail.”

* David Packard *

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3. YOUR QUESTION ANSWERED
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QUE: i would like to have a good investment as in to
purchase a house but just could not afford it…..there are
some apartments that I might afford but the location is too
far or in areas that might not offer any return on the
investment. How could I know which area could offer me a
good ROI? People say it’s good to start earning your own
house as young as possible….but I’m just too afraid that
I might end up loosing or have to pay too much…Most of my
colleagues have bought a house as they need their own house
as for my case, I’m staying a.k.a renting at my mom’s house
(not loosing anything plus it’s in a Prime location). One
more thing, is there any difference in value of purchasing
a freehold and a 99 leasehold house? Also…how to choose
a good housing loan?

I really need a financial planner’s advice….i just don’t
know how to manage my money to make a fortune or at least
retiring rich…..with no more loans to settle….

Hoping to hear from you soon with your wonderful advices.

ANS: Maam, practically ALL the answers that you are
asking are already inside my books, namely Millionaires
are from a different planet and the books on property
investment.

All you need to do is buy them and all your problems will
be solved.

Yes, I make a little bit of money when you buy my books but
considering that the answers will solve much of your
problems (and not just the financial kind), I think it is a
fair exchange. I wish you the best.

* HOT TIP *

Read “The HP Way” by David Packard