My 1st step

Yeap!!...It's 2009. What we do today will certainly have some kind of impact for tomorrow. Huhu. What is done is done and people always said that we should forget the past for the past is history and what matters is today (now). We can't change the past yet we have the ability and certainly the capability to change tomorrow. Be it small changes or big massive changes, that's entirely up to ourselves to decide. Hence, for once, I wanna do something different for this year starting now till forever I hope. I've always heard this phrase 'let your money work you instead you work for the money'. This phrase has been used time and time again but I can't seem to get it 'right' into my head. However, a pretty simple conversation towards the end of last year change my perspective of 'making money work for you'. Kudos to my friend, 'ippo' for opening my eyes a bit. From that conversation onwards, I took a step back and think what I really want to do for 2009. Slowly and surely, by reading some books, blogs as well as asking opinions from some friends, I've found what I need to do to achieve my goals for 2009.

Today is Jan 02, Friday. For some of us in Malaysia, today is the day we'll update our ASB book to see how much dividend we will receive for the past year. If I'm not mistaken, the dividend given for 08 was 8.75%. So let's take a pretty simple calculation, If you have RM10,000, you'll get about RM850 without even lifting your eye lid. Imagine if you have RM100,000 in your ASB account, that's like RM8750. Wow. That's a lot of money (to me anyways). In addition, what will be your dividend be if your money in ASB is RM200,000? About RM17k perhaps?. So, what can you do with that RM17k? A lot I pressumed. You can pay your car installment for the next one year with such amount without even 'disturbing' your monthly salary (provided your installment should be less than RM1500 per month). Ok, enough of dreaming. The simple question is, how on earth do I get RM200,000 in my ASB? That's a long shot. For me, it is a long shot but let's put a 5 year plan together. That's like saving RM40,000 per year. Another question is, how do I save RM40,000 per year? In order to save RM40,000, you'll have to put at least RM3,333.33 per month for the next 5 years. Hrrrmmm. Putting RM3.3k a month is a lot for a middle-income earner like me. The most I can will be about RM600 which comes about to RM7200 per year. Hahahaha. RM200,000 in the next 5 years? Dream on boyo!!

But wait, let's us take a step back. Perhaps, there's a way (or maybe a lot of other ways) to grow my money. Hrmmm....What if, I take a portion of my ASB savings now, let's say, RM10,000, 'pledge' it to the bank for RM10k of which I'm entitled to receive 90% of overdraft facilities. So, in other words, I will receive RM9,000 of OD facilities from the bank. Am I writing this right? Well, I'm sure am and so what will I do with this cash of RM9k? Be stupid and buy LCD TVs? Hahahaha, of course not. As that RM9k is 'my' hard earned cash (remember, we have pledged some of our savings at the bank), I'll need to use it as wisely as I can. So what I'm thinking of doing is, I'll take a portion of that money, let's say RM2000 and put in my ASB. Is that a good thing to do? Well, theoratically, it is a wise thing to do as you will increase your ASB to a further RM2000k. Let's say your balance of your savings in your ASB is RM20,000. So you add RM2000 and you'll have RM22,000. Now, let's say your monthly ASB savings that you take from your salary is RM500, that will come up to about RM6000 for the year. Correct? Add that to your current balance of RM22,000 and you will get, RM28,000. Hence, for having RM28000 in your savings, let's kid ourselves and start dreaming that dividend receive is at 10%. That's like RM2,800 of dividend. Not bad for a 1st year eh? So, the total amout I will have at the end of the day is RM30,800. Hrrmm.....What about the OD interest? Well, what's the rate of the OD interest like nowadays? 6.75% perhaps? I'm not that well versed about OD, but I'm pretty sure, if at the end of the day, just put some amount from the dividend received into the OD account to pay less interest. A good friend of mine, told me that for a RM10,000 OD facilities used for 20days, you'll have to fork out about RM38 of interest. I might be wrong and perhaps you would wanna check it yourselves. When the time comes, I will write something about OD interest in my future postings

(Note: I wrote in my earlier blog that I would want to maximise my ASB towards RM100,000 mark. Hence, I will write on how can i achieve it later)

Ok, now we have RM30,800 for the first year. Let's take out RM2000 from the balance and put it in the OD account to lessen our OD interest. I'll still have about RM29k right? Perhaps, I repeat the same cycle for Year 2. For this year, I'm gonna take RM3k from my OD accounts and put in my ASB. So, I'll have RM32000 and add another RM6k, I will have about RM38K by the end of the year. Is my money growing? Technically yes. But wait, with RM38k, you'll get about 10% of dividend, which is RM3.8k. So, at the end of year 2, I'll have about RM42k. Not bad huh? What about year the 3rd year, 4th year, 5th year and so on? Well, the basic calculation is there so perhaps, you could try and calculate it yourselves. Hehehehe

Hrmmm........hang on a minute, what about the balance of the OD for the first year? I took about RM2000 from the example right? So, I'm left with a balance of RM7000 in my OD account. What I can do with RM7000? Can I invest with RM7000? Sure you can. That's my 2nd Step.

Till then...
Have a nice day