4 Ringgit Myths You Need To Know

Myth 1 - You have to be rich to start investing

In the mind of many, one has to be rich to start investing. Many thought that to start investing, one would need to have a sizable amount of Ringgit. But the fact that with new technology, investing has become easier and the minimum amount is lower. Robo-Advisors such as MyTheo, Stashaway, and Wahed Invest make it very easy to start investing with just RM100.

*Bonus: If you invest RM100 in Wahed Invest using my referral code (limwei1), both you and I will get RM40 bonus each after maintaining the RM100 for 1 month. 

Myth 2 - I don't earn enough to save

It is possible for everyone to save no matter how much is the income. The real question is are you willing to save? The easiest way to save is to allocate a small amount for saving when you received your salary and make do with the balance for the rest of the month.

Expenses = Income - Saving

You can start by saving as little as RM50 and slowly increasing the amount as time goes by.

Myth 3 - The safest way to keeping my money in a savings account 

While it may be good to have some money in a savings account, to keep all that you have there is not recommended. Many people do not realize that the bank is paying you interest at an average rate of 1% per annum for the money that you keep it the savings accounts. Also, the average inflation is about 3% per year. So, every year, your purchasing power is actually reducing by 2%. So, unless you need your money in the coming 3 years, do not keep it in your savings account. 

Myth 4 - Credit card is evil

The truth is, a credit card is just a tool, not being good or evil. It is how we use a credit card will determine if the credit card is a friend of a foe. Credit card it good when we need to purchase something of high value but you must be able to pay off the amount at the end of the month. Otherwise, the interest that you need to pay for the outstanding amount will totally kill you.

This article is first published in Radical Ringgit.

Buying a car without a loan

Everyone believes that it is impossible to buy a new car without a loan but that does not mean that it is really impossible. What actually requires is patience, hard works, and the right method.

Why should we buy a car without a loan is because the interest that we have paid by the end of the loan period will actually amount to almost a second car by itself? Also, a car is the type of assets that would depreciate in value over time. So, why pay even more for something that is depreciating in value. 

Firstly, we must work on how much can we afford to pay for the monthly installment. Can you pay RM 500 per month or RM 1000? If you can afford to pay this amount for a monthly installment, you should pay it to yourself first before buying that car.

Instead of buying that dream car of yours straight away, look for a decent second-hand car (as a temporary car) with an affordable value. A second hand Perodua Kancil will cost about RM 4000 (at the time of writing) and the good thing about the car is how fuel-efficient it is. So, if you can pay yourself RM 500 per month first, you can buy it on cash after 8 months of paying yourself.

After purchasing this temporary car, continue to pay yourself the same amount every month. By doing this, you are accumulating your fund to upgrade your car to a better one.

Repeat as needed until you are able to buy your dream car. While it may take many years before you get your dream car, at least you would not need to pay for the interests.

This article was first published in Radical Ringgit.