Making it for Financial Freedom In Malaysia

I don't think the money system is always fair, especially where the hard working, oppressed people stress their heart, mind and soul out to made it possible for the people at the top to live like king/queens everyday. But this system is how 99% of us have to play to win. 

How do you create the machine of wealth:

1. Spend less than you earn and invest the difference.

The one reason we invest is to have income for living without working. 

If you save but not investing it, there is a big change you'll be working longer than you can enjoy life. 

2. Reinvest your returns for compound growth.

Take out the minimum % of your monthly pay to invest every month. Do no use the dividend but reinvest (can be in different asset depending on the asset allocation).

Think about asset allocation as you invest:

Every trader will lose money at one point of their life.  Building wealth is about psychology. If the equity you buy drops by 50% or even 75%, would you still continue your monthly investment?

Allocate for security
Saving of  6 months to 3 years of living expenses in fixed deposit.
You could also allocate a 5-10% for precious metals as hedge against hyperinflation.

Allocate for growth
High growth company with possible down turn. A good example would be KAREX. The company was growing and most people thinks it's the next Public Bank. Just buy 1000 share and if you make a mistake, you only lose RM1000. 

Start early, repeat step 1 & 2 for 10 years, and you'll be pretty comfortable. Repeat this for 30 years and you'll be financially free when you're near 60. 

On Real Estate

Unfortunately the house you stay, is not an asset, but it'll serve well as a legacy for your kids generation. Which I think, is the main reason why we think of it as an asset. It's after you die that your kids/relative cash out and think, wow, such a good deal. They don't know the burden you took for 30 years loan payment and maintenance.