Employee Provident Fund (EPF) – Part 3

We have discussed about the impact on the profit rate charged by banks is normally lower for higher loan amount and vice versa. Before we further, let us see what are available withdrawal types for housing loan so that nothing is missed out in our discussion here.

•          Withdrawal to reduce or settle outstanding housing loan
•          Withdrawal for buying house
•          Withdrawal for monthly installment on housing loan
•          Withdrawal for flexible housing loan

Again as highlighted earlier, withdrawal to reduce or settle outstanding housing loan will be the best option based on criteria for less hassles and for better profit rate on our financing products. Withdrawal for buying house is very common for the first time purchaser because of the down-payment issue if can get something attractive deal from the developer or owner.

The next one is on monthly installment on housing loan where our monthly installment will be paid via our money from account two (2) in EPF based on total amount available when submitting our application. Let me illustrate from monetary value, say we have RM 12,000 in our account two (2) and our installment is RM 800, then EPF will pay on standing instruction by depositing into our saving/current account so that can be paid to our housing loan account. This is how it takes place on withdrawal for monthly installment.

Last but not least on withdrawal for flexible housing loan where this is almost similar to previous to pay on monthly basis and it has very tedious procedures and not all banks offering through this scheme. Since there is not much benefit from this withdrawal, no further discussion I want to highlight here.

In conclusion, I may say that the best option could be withdrawal to reduce or settle outstanding loan based on all the justifications we have seen earlier. You may judge accordingly and choose whichever the best suit with your need.

Cash-flow

Why we always talk about cash-flow? Why flow? What would be the main criteria for the health specifically on our blood circulation system? How about our plumbing system? How to judge our plumbing system is good enough? How about the traffic? What is the main criteria to claim that our traffic is good? YES!!! The answer is very simple where the FLOW is the main criteria to gauge the healthiness of all the above mentioned. Hence, the main criteria to gauge our health level in our financial report is the cash-flow. Some would say that this cash-flow is only applicable to business and not for individual which salary based source of income. Great! Let us discuss further about the cash-flow that we can apply in our day-life.

I believe most of us have read my previous article on Saving - Part 1 and Saving - Part 2 which is the main criteria to start our investment portfolio. I also have published on our first investment would be our steady savings which can be read here. As highlighted earlier where people may claim that cash-flow is only applicable for business and not much related to person with salary based source of income. This scenario is not really a credible scenario because the first investment portfolio is via our saving, you may read Investment – Savings. Hence, cash-flow for an individual as a start will be the amount allocated for the savings every month. If you noticed that you can’t able to manage your cash-flow at least with certain amount to show the positive cash-flow then you have to develop attitude towards investment mindset, you may read here to have some idea.

When you have developed to have positive cash-flow from your monthly income which is your salary based income source then with some capital you have developed from your saving you may start our investment portfolio. Bear in mind that when we discussing about the investment portfolio, it is not necessarily to be portfolio creating millions of dollar in our cash-flow but at least something positive which could be just RM 1. As we discussed earlier, we’ll find that our portfolio slowly will give more and more cash-flow which ultimately will create our multi-million wealth portfolio. How to reach that? Be patient and passionate with our goal to achieve our financial freedom. Remember the double-P!

Importance of Networking

Why do we need connections for this finance subject matter? How exactly can we benefit by having all this networking or connections? How many connections normally in general we have to have when dealing something related to investment subject matter?

 

First of all we must have our friends or/and relatives which practising very good personal financial planning where we can start developing our network from them. Why is from them? It's simple because they must have somebody more professional dealing with this subject matter. Normally they should have they financial planner where most of their actions are guided by this professionals to minimize the risks based on their personal experiences or lesson learnt from other clients.

As our skills is being developed in this field even we are not the experts but slowly you'll see that more skilled people are surrounding you where can be benefited from them. Start with products from banks, you'll see bankers start becoming your friend or network. My point here is that make friend with them even sometime can be annoying because of the sales skills from them. Hehe! Don't worry because they are professionals and fully aware if you have any specific products that you are looking for. Remember that we want to get rich a bit faster by using all this products offered by the banks.

 

As you go further, you'll find more people will become your contacts and more importantly this professionals will be part of our team in developing our wealth. Who are these professionals? Do you want me to name it here or in future articles? Alright folks, let me list them here but will explain further in upcoming articles so that we can team-up with them in future. Other professionals that we must have connections are lawyers, real estate agents, investors, and valuers (I might be missing some professionals that might crucial in developing our wealth).