by Helmi Hakim | Nov 7, 2011 | Investment
I have some clients, who asked me, “Financial Consultant, Helmi Hakim….I want to buy a car. Should I pay it in full OR take a car loan?”
Well…If you have been reading my blog, for the past few years, you know, that I have been advocating that buying a car, can be both an asset or a liability.It depends on your situation. You can read more here.
But, now, let us focus on the question. The question is, “Should you pay your car in full OR take a car loan?”
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My answer: It depends.
To know, whether you should pay your car in full or take a loan, you will need to calculate the “effective interest rate” of your car loan.
“If you can invest your money, and get higher returns than the effective interest rate of your car loan, you should invest your cash and take a car loan.
If the effective interest rate of your car loan is higher than your investment return, you should use your cash to pay off the car ASAP.”
I will give an example to illustrate my point.
Car HP (Hire Purchase)
Price: $65,000
Less Deposit 15,000
HP Principal 50,000
Example, the car, that you will like to buy costs $65,000. You pay a deposit, of $15,000. So, you will be left with an outstanding hire purchase principal of $50,000.
If your car loan interest is 5% “Flat” for 5 years,
Add Hire Purchase Interest
$50,000 X 5% X 5 = $12,500
Total Amount Payable Including Interest = $62,500
Monthly Instalments= $62,500/ (5 years X 12 months) = $1041.67 per month
You need to pay a monthly instalment of $1041.67 for 5 years.
So, how do we calculate the “effective interest rate” of your car loan from here?
Take Out A Financial Calculator.
Key in this input. Solve for i (interest).
PMT = -1041.67
PV= +50,000
n= 12 X 5
i = ???
Solve for i and you will get 0.762817% interest per month. Multiply it by 12 months, and you will get the effective interest rate of your car loan, which is 9.15% per annum.
It means, if you have $50,000 cash right now, and your investment skills allow you to generate investment returns of more than 9.15% per annum, then you should not pay your car in full.
However, if you cannot get such a spectacular return, it is best, that you pay off your car loan as soon as possible. Hope my sharing helps! Click share if you find it useful! 🙂
by Helmi Hakim | Jan 11, 2011 | Insurance, Investment, Miscellaneous, Motivation
These few days, I have been meeting financial advisors from other tied insurance companies and independent firms….and guess what?
I get to know, all of them through this blog!!! 🙂 🙂 🙂 powerla
You know as I joined Cabaran 101010, where we challenged ourselves to achieve $100,000 in net profit within 10 months, I have made a conscious decision to blog what I have learnt along the way. Maybe, if you are a financial advisor too, reading this blog, you can share your strategies…. We can learn from each other. 🙂
I will blog what I have learnt along the way, from people who surrounds me, or from books that I have read.
I realize that by doing so, it forces me to think and reflect more, on how, I can use what I have learnt, and further apply it to improve my business. I will apply it, contextually in my situation.
Today, I just read 8 Wealth Tactics From T Harv Eker Guerilla Marketing Strategies.
Note: As the strategies will require some bits of explanation, I will blog, 1 strategy each day,and show how I will apply that strategy in my business.
Strategy 1: Business is as simple as KISS
KISS stands for Keep It Short and Simple.
In business, you dissect it into 3.
1) Create
2) Sell
3) Admin
For any business to succeed, you need to focus MORE on selling. If you are not selling, you won’t make money. If this means that you have to reduce your admin, or outsource, then you should because you only get paid when you sell.
The ideal breakdown of your resource and time allocation should be:
1) create – 20%
2) sell – 60%
3) admin – 20%
APPLICATION ON STRATEGY 1
I realise, that at times, I spend more time, on idling. Surfing the net, chatting with friends, facebooking, reading etc2…. and generally all these activities are not money-making for me. THERE ARE 2 THINGS THAT I WILL DO IMMEDIATELY….
Roadshows– There are about 30 days in a month. 2 weeks in a month, I will allocate time for roadshows. From there, I will generate leads, or perhaps generate clients immediately, through special needs, financial planning. Just by that, 50% of my time, is focused on selling.
Telemarketing– Business are always generated through appointments with clients.No appointments = No business
I will make Friday, a telemarketing day for me. Friday will be a day, where I will call all my leads for the following week appointments. I need to have at least 15 appointments, for the following week, before I can go home. No 15 appts = Cannot go home
By having 15 appointments per week, it will also ensures that I dedicate much of my time on selling, in my context, advising my clients how they can grow their money, make their money work harder for them, all in all, to achieve their financial objectives.
Brilliant!!!! Sounds like a game plan to me!!! Stay tune on my blog, to read the other 7 strategies that I will apply…. For now, I will work on this first…Take one step at a time….. I will update you of my progress!!! See ya!!!! 🙂 🙂 🙂
by Helmi Hakim | Jan 9, 2011 | Insurance, Investment, Miscellaneous, Motivation
Its already 3am here, and I’m struggling to sleep. I guess, it is because of the caffeine from the redbull, I drank for my run just now.
Seriously…I can’t sleep, so I feel, it is best, that I update my blog on my developments for year 2011. itistheraphyforme andlotsofpeoplewanttoknow
1) My book, “You Can Be Your Own Financial Consultant In Singapore”
Some of you, might be asking. What happened to the book, which I have written and intend to publish?
My Answer: I have completed it.
Yet it is a business decision for me, not to publish it right now. To publish it, and get it circulated all over the local bookstores in Singapore is EASY. Just pay $4000, and everything settled. I choose to garner more credibility,and exposure first, and then proceed with my game plan.
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2) Bachelor of Science (Hons) in Banking and Wealth Management
In another 2 weeks time, I will be starting my part time studies. I will go straight to second year, because, I have a finance diploma. I have Diploma In Accountancy from Ngee Ann Polytechnic and have 3 years working experience as a financial consultant.
The reason, why I choose this degree program, as opposed to others, is because I LOVE the modules, available for me. The modules are practical, and things that I can apply immediately. One of it, is Islamic Banking and Finance….
80% of my clients are Muslims, and having the expertise, will thus help me, better assist my clients in the financial planning process, in accordance to Shariah ruling.
That is all for today….My body is aching…..Need to rest well…See ya!!! 🙂 🙂 🙂
by Helmi Hakim | Sep 28, 2009 | Investment
There are certain calculation techniques that we, financial consultants used to make us looks cool, sharp and FAST. 🙂
One of the well known, unguarded secrets is the usage of Rule of 72.
The ‘Rule of 72’ is a simplified way to determine how long your investment will take to DOUBLE, given a fixed annual rate of interest.
Example if you have $10,000 now, given an investment return of 10%/year, how long will it takes your money to turn $20,000?
@20%/year, how long will it takes your money to to turn $20,000?
The formula is simple. Divide 72 by the annual rate of return (example 10 or 20), you can get an estimate of how many years it will take for your initial investment to DOUBLE.
So…..Investment annual return of 10%, it will take about 7.2 years for your money to DOUBLE….
Investment annual return of 20%, it will take about 3.6 years for your money to DOUBLE….
| Rate of Return |
Rule of 72 |
Actual # of Years |
Difference (#) of Years |
| 2% |
36.0 |
35 |
1.0 |
| 3% |
24.0 |
23.45 |
0.6 |
| 5% |
14.4 |
14.21 |
0.2 |
| 7% |
10.3 |
10.24 |
0.0 |
| 9% |
8.0 |
8.04 |
0.0 |
| 12% |
6.0 |
6.12 |
0.1 |
| 25% |
2.9 |
3.11 |
0.2 |
| 50% |
1.4 |
1.71 |
0.3 |
| 72% |
1.0 |
1.28 |
0.3 |
| 100% |
0.7 |
1 |
0.3 |
From the table, you can see, the higher your rate of return, the faster, your money will DOUBLE!
If you will like to know of instruments that can help your money to double, do not hesitate to call me. Thanks! 🙂
by Helmi Hakim | Aug 17, 2009 | Insurance, Investment, Miscellaneous
I am sure, all of you, reading my blog, have a portfolio of insurance, savings and investment policies.
Some of you, may have a manageable 3 or 4 policies. While some, have more than 10. My question to you right now is,”Do you know EXACTLY what you are having?”
Do you know, when you can claim and when you cant from your insurance policies?
Do you know, whether if your critical illness coverage is enough and what is the shortfall?
Do you know, how much you need for your retirement, child’s education and the shortfall/excess that you have?
…or simply put across, do you know, what is the PURPOSE of you getting the policies that you currently have???
The only solution to these, is having YEARLY FINANCIAL REVIEWS.
In a span of 2 weeks, I met 2 clients with tragic stories…
1) Father In Law Cannot Claim Hospitalisation Insurance plan
I did a financial review for my client just now. She also brought her father’s in law policy from a different company, for my interpretation.
She asked me, “My father in law going for heart by pass surgery next week. I check with the claim’s department of X company…They say cannot claim…Can you interpret the policy document for me?”
I interpret for her, realising while the policy owner of the hospitalisation plan is her father in law, the insured is her MOTHER IN LAW… Her father in law does not have any hospitalisation coverage.
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2) Client and his family think he got a death coverage of $300,000
Last week, I met my prospect at his home and he get hospitalisation plans for himself and his family.
I enquired him on his coverage, in case, death, total and permanent disability or critical illness were to strike. How much will his wife, 2 sons and 1 daughter get?
He looked at me confidently and said, “No worries. Anything happen to me, my family will get $300,000…”
I felt relieved, because, as he is earning a takehome pay of $2,500/mth, $300,000 will be adequate. Nevertheless, I asked for all his policy documents for me to help him “refresh” on the existing plans he has.
To my surprise, I realised he only have $30,000 of coverage in case of death. His family will only get $300,000 if he DIED DUE TO ACCIDENT…
You can imagine, the look at his face…For many years, he has been telling his wife, in case of death, “you will get $300,000″….
Call me up at 96520134. Let me help you…Insya’allah… 🙂 🙂 🙂
