Mrs Money’s Portfolio, November 2018

Hello fellow Money-Makers!

In the next couple of posts, we will share our current portfolio allocation in different assets, and the vision for our financial future. The aim of these posts is to set the stage for where we are right now, our thinking that led us here, and where we are hoping to be in a few years which is, hopefully, financially independent!

What is financial independence? Generating enough passive income through assets owned, that can at least cover ones expenses.

Mrs Money’s Long-Term Goal: earning a passive income equivalent to RM10,000 ($2,400) monthly in today’s value. Based on my assets today, a simplistic assumption of 5% yield per annum would bring me to ⅓ of my current expenses. So needless to say, I have quite some way to go!

So let’s start!

Part 1: How I got here

I started my financial journey just as I begun working in a law firm in my early twenties. (I will disregard part-time jobs I did as a student. Like most teenagers, any income earned was just as quickly spent. Youth is truly wasted on the young). I earned RM1,800 a month ($425) as a chambering student in 2008, with a starting salary of RM3,000 a month ($715) the following year. At the time, I thought that was a pretty sad salary because I was left with nothing at the end of the month. However, as I explained in my earlier post on How to Save Money When Travelling, I used to spend most of my money travelling, eating out and drinking wine with my colleagues after work, so it was really no surprise I had nothing to show at the end of the month. It puts things in perspective to know that  the median salary for employees in Malaysia in 2017 was RM2,160 a month ($515). However, with bonuses of between 3 – 5 months over a few years, I managed to save a decent amount of money.

However when I quit my job to do a Masters degree in New York, I used all my savings to pay for the ridiculous living expenses. Despite receiving a partial scholarship, and financial support from my folks, 4 years savings was swept away with the cold winds of a New York winter.

Gray's Papaya
Gray’s Papaya, New York. Pizza for $0.99, my kinda meal

When I returned from the US and before I got a job, I had to live off my credit card. I didn’t think much of it and assumed I would easily be able to pay my credit card bills back when I got a job. Man, was I wrong! Paying off my debt after 4 months of unemployment took much longer than I expected, and I vowed then to never, ever go into credit card debt again. Long story short, I started saving in earnest when I returned to Malaysia and after I paid off my credit card bills at the ripe old age of 28.

Although I wasn’t earning that much more, a few skips and hops later into different, better paying jobs, coupled with a strong desire to save and live within my means after that credit card fiasco, allowed me to (i) buy my first car (ii) accumulate some savings and (iii) begin investing – in that order. In retrospect, I would have made a different decision with regards to purchasing Sophie, my car. But that’s a different story for a different day. (Literally. I am considering selling Sophie, and am doing the math and weighing the potential costs, so I will be sharing my research and thoughts in another post on the real cost/benefits of car ownership).

Part 2: Where I am

Ok, let’s open the books!

Below is a pie chart of my asset distributions, with some explanations and analysis on my part:

pie chart Mrs Money

    1. Employer’s Provident Fund (EPF): My biggest “investment”. As I had Malaysian employers for most of my career, I accumulated a decent amount of money in my EPF, which as you can see above, is the largest class of assets I own.
      • My analysis:: EPF is really one of the most stable investments Malaysians, especially at a young age, can have. Although I initially felt a pinch seeing 11% of my income monthly get taken out and put directly into a fund I can never touch till I am 55, it also is incredible in that your employer is statutorily obligated to contribute at least 12-13% of your salary in addition to your contribution! It’s free money! On top of that, EPF has been giving historically high returns, with 6.9% returns in 2017. Definitely a keeper. As I have moved into doing consultancies this year away from a fixed job, employer EPF contributions is the one thing I really miss.
    2. Private Retirement Scheme (PRS): Around 4 years ago, I started investing a small amount in CIMB Islamic PRS Plus Growth. That investment is just under 10% of my total retirement savings. It has pretty choppy returns – at 3.27% in 2016 and 11.45% in 2017 and 2.39% this year. Management fees are at 1.4%, although they were waived for  2018. Sales charges are at roughly 3%.
      • My analysis: Since I’m doing a financial “cleanse” over the next few months, I need to do more research on whether it makes sense to continue with this investment. Anyone investing in PRS too? Thoughts?
    3. Unit trust: At the same time, I started investing in unit trust through CIMB, specifically in the Asia Dynamic Income Fund. This is a fairly high risk and volatile fund, with a 3 year annualized return of 5.67% (2018: -8.86%). Additionally, there is a really high sales charge for this fund at 6.5%, and management fee of 1.8%.
      • My analysis: In short, I’m losing money on this one, AND paying ridiculous fees on top of it. However, given that the market is so weak, maybe I should just continue purchasing them in the hope that it averages out in the long-term? Mr. Money says “don’t catch a falling knife”, which Google tells me is a popular phrase in the trading world. I’ve also heard that these funds can be purchased on Fundsupermart for a fraction of the fees, but haven’t really looked into it. If anyone has, please let me know! All part of my homework.
    4. Fixed deposits (FD): I started putting some money in fixed deposits this year. You can get somewhere between 3 – 4% fairly easily but I would suggest that you shop around as banks always have different promotions, especially for fresh funds. Anything above 4% is pretty good, but you would usually have to commit the money for quite a few months.
      • My analysis: This is really something temporary for me. I managed to accumulated quite a bit of savings this year due to a consultancy I got on the side. Since I am now able to have enough cash for the downpayment, I am looking into purchasing my first landed property within Klang Valley (hoorah!).  With liquidity being a priority in this instance, I decided to place the money in several FDs of different durations so I can easily withdraw them when needed. The other option would be to let the money sit in my savings account and collect dust, while the bank earns money on my money. No, thank you.
    5. Most recently, I invested in Amanah Saham Nasional. See the drama that went with investing in our post on the Trust Deficit in the Financial Sector. But I’m excited about this one! The returns have been consistently high (6 – 7% per annum). I’m looking at this as fairly long-term savings, and plan to put in additional savings after I purchase my property.
    6. Car. Depreciating asset. Enough said.

     

 

  1. Here are some further details of returns risk and liquidity for all my investments:

 

Returns Risk Liquidity
EPF Medium – Low Low Low (only Account 2, under limited circumstances)
Fixed Deposit Low Low High
Amanah Saham (fixed account) Medium -Low? Low High (1-3 days)
Unit Trust Low Medium High (1-3 days)

In short, as you can see from above, I have a risk appetite of a grandma – afraid that my world will come crashing down at any moment and I would need to be able to access tons of emergency cash to pay for my dentures. 

Part 3: Where I aim to go – An overview of “The FI Plan”

My short-term (1-2 years) plan to achieve my long-term goal is rooted in the 3 pillars of financial independence. Each pillar will be fleshed out in greater detail in later posts:

  1. Earn: Since I’ve recently moved into the “gig-economy” like all good millennials, I am looking to build on my skill sets, network and experience and secure more projects and consultancies. In theory, this is less predictable, but potentially will earn me a higher income and greater flexibility in the long run. I am also blessed to have a fixed part-time job that I love that also pays well, so now its all about the hustle to get in more!
  2. Save: Although Mr. Money earns more than I do, I have higher expenses that he does – which really annoys me! My plan is to review all my recurring expenses (I’m looking at you, Sophie) and see where I can cut them down.
  3. Invest: Apart from reviewing my existing investments to make sure I’m not bleeding money, I’m looking forward to purchasing my first property. I have conducted extensive research into the latter, which will be the subject of a future posts. I just hope to avoid analysis paralysis, but I think Mr. Money will be good at making sure I get moving!

More to come as I aim to diversify the asset classes of my portfolio. This is very much a learning process for me, so any tips, advice or thoughts on my portfolio, or how you have distributed yours, would be very welcome!

2 thoughts on “Mrs Money’s Portfolio, November 2018

  1. Hey! Love the blog and welcome to the FI community!

    Saw your portfolio with some unit trusts in it and I felt I had to weigh in. You’re right in that you’re paying hefty hefty fees investing through CIMB (don’t even get me started with Public Mutual’s fees). If you really have to invest in UTs, go with fundsupermart. But I’d suggest following in mr Money’s footsteps and invest in stocks?

    Like

    1. Hey, thanks for your feedback and thank you for the welcome! Mr Money and I really enjoy your blog too.

      Urgh, UT fees make me so mad. I’ll definitely be checking out fundsupermart. It seemed legit but I didn’t know anyone else using it, so good to have your input. As for stocks… urmmm it just seems like a very daunting process and I’m REALLY low-risk kinda person. But Mr. Money is trying to convince me 🙂 Roboadvisors also seem intriguing since I am a little more autopilot on my investments.

      Thanks again and keep up the great work!

      Like

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