A Personal Finance Blog for Malaysian: Summary of Personal Financial Planning

Thursday, September 16, 2010

Summary of Personal Financial Planning

Do you want to have an overall view on what is included in "Personal Financial Planning" (PFP)?

Some item may be new to you; some item may be irrelevant to you. Anyhow, it is always good to know because Financial Matters.

PFP includes:-
  1. Generate Income
  2. Allocation of Income into Saving and Expenses (aka Budgeting)
  3. Allocation of Saving (into various form of investments)(aka Assets Allocation)
  4. Lastly, distribution of Saving by Will and Trust. (aka Assets Distribution)

There are basically two type of income
  1. Active income generated by rendering services e.g. Salary, Wages, Consultancy Fee, Commission etc.
  2. Passive income generated by Investment (Saving from the income earned in Active Income and also other Passive income)

There are many forms of saving you can use:-
  1. Keep the portion of income not spent in Bank's saving account or fixed deposit account;
  2. Keep some with insurance company under a participating-fund policy;
  3. Keep some with Broker firm to buy shares, warrants, ETF etc.
  4. Keep some with fund manager in Mutual Fund.
  5. Keep some in the Property in the form of equity. (installment - interest charges = equity)
  6. Convert cash to "things" that can be sold later at higher value.


  1. Hi, I am a stay at home mom, I have surrendered part of my insurance policy and switched to another higher sum insure but lower premium policy...and just received an amount of RM15,000 surrender value, how should I invest this sum of money so that I can generate more passive income to cover my new premium?

  2. RM15,000 is not a big sum for certain category of investment but for share, should be good enough.

    If you open a CDS account (with any investment bank), it cost you only RM10 and if you buy only REIT (Real Estate Investment Trust) and get a conservative dividend of 6.5% (after withholding tax of 10%) you are looking at RM1,000

    I assume your low-premium-high-coverage still need RM100 per month, i.e. you may need to top up some.

    If 6.5% not good enough, you may have to learn other way to invest to get higher return but if not careful, or not enough experience/skill... always a chance to lose the principal sum.

    M-REITs are good and steady, so far....