015. MYR vs SGD vs USD: (2) Inflation Story

015. MYR vs SGD vs USD: (2) Inflation Story

In my last blog, I have calculated SGD is appreciating against MYR in the rate of 1.54%. So, let's say I decided to put some money in SGD. I have to decide where to put it.

Obviously, I must have a investment that can beat inflation rate in Singapore. How much is the inflation rate there?

The chart is taken from Trading Economics. Inflation rate in Singapore, for the past ten years, range from -1% to c.8%. The mean is about 3%.

Clearly 1.54% in currency appreciation in currency cannot beat inflation rate of 3%. So, the money cannot be sitting in savings account.

To make the money work harder, other investments are needed. We need to look at Fixed Deposits, unit trusts, stocks and perhaps alternative investments. Agree?

014. MYR vs SGD vs USD: (1) Currency Story

014. MYR vs SGD vs USD: (1) Currency Story

How much has MYR perform against SGD and/or USD? Local are complaining about falling MYR.

Let's see how much it has depreciated / appreciated against SGD and USD.

Charts are from www.xe.com.

MYR vs SGD

We can see from the chart that it was about MYR2.30 to SGD1.00 ten years ago. Today it is MYR2.68 to SGD1.00. So, MYR is depreciated against SGD. But how much? Let's use a financial calculator to calculated the annual rate.

PV = -2.30

FV = 2.68

n = 10

i = 1.54%

An annual inflated rate of 1.54% only.



MYR vs USD

It was MYR3.80 to an USD ten years ago. Today it is MYR3.63 against an USD. So, MYR is not depreciating against USD? If we consider the rate before the current spike, it was MYR3.16 to USD1.00. Let's use financial calculator to calculate the appreciation again.

PV = -3.80
FV = 3.63
n = 10
i = -0.46

If we take the rate before spike:-
PV = -3.80
FV = 3.16
n = 10
i = -1.83

We can see MYR is appreciating against USD.

Let's try to see SGD vs USD.

So, we can see USD is depreciating against SGD.

SGD is a stronger currency?

The fact is we do not know which currency will perform better in the future. As a responsible parents, you might want to plan your children's education fund not in local currency only. It is wise to put some money in SGD and / or USD. Agree?

013. Qualification for financial planner in Malaysia

013. Qualification for financial planner in Malaysia

In Malaysia, the qualification to become a financial planner was to be a certificant of Certified Financial Planner (CFP) or Registered Financial Planner (RFP). Both has to go through study and exmination.

After passing the exam, then individuals has to be registered with Securities Commission, through a financial planning firm, to become licensed Capital Market Services Representative's Licensee (CMSRL).

Only with the CMSRL license, a person can start to practice financial planning activities.

Qualification wise, to completed CFP and RFP, one has to complete 6 modules and 7 modules respectively. Some can complete them in a short span of 1.5 years, most will complete them after 2~3 years or even longer.

In its effort t promote financial planning industries, Securities Commission has, on Nov 2014, revised its Licensing Handbook. The minimum academic qualification to become apply for CMSRL licensed has been revised to

• The Certified Financial Planner (CFP) / Islamic Financial Planner (IFP) qualification and a member of FPAM; or
• Foundations in Financial Planning (Module 1), Investment Planning (Module 4) & Retirement Planning (Module 5), attend a Familiarization Programme on Financial Planning Construction and Professional Responsibilit ies and become an Associate Member of FPAM, or
• The Registered Financial Planner (RFP) / Shariah Registered Financial Planner (Shariah RFP) qualification and an ordinary member of MFPC; or
• Complete a minimum of 3 modules specifically Fundamentals of Financial Planning (Module 1), Investment Planning (Module 3) & Retirement Planning (Module 6 ) , obtain a Certificate of Proficiency in Financial Planning and bec ome an Affiliate Member of MFPC.

Then, we see Financial Planning Association of Malaysia (FPAM) compressed its CFP course from 6 modules to 4 modules. It is now faster to complete the full course.

On the other hand, Malaysian Financial Planning Council (MFPC) also re-packaged their course to make students easier to identify the modules they need to take.



With such changes, I believe, government's effort to push for licensed financial planner will surely bear fruit. More students will get their academic qualification faster, and be in the industry faster.

Government's vision for Malaysia to be a developed nation will create many high net worth individuals (HNWI). HNWI may need professional advice for their financial related planning, and may not mind to pay for advice they received.

I strongly urged my fellow friends and all agents to take up the certification faster. I hope we all can grow together with the nation.

012. Bursa Malaysia Holidays 2015

012. Bursa Malaysia Holidays 2015

Today is replacement holiday for Federal Territory Kuala Lumpur. The actual day fall on Sunday. And then tomorrow will be Thaipusam holiday. With that, today and tomorrow are a non-trading days for Bursa Malaysia.

I believe some traders will feel loss because no "excitement" today and tomorrow. There will be only 3 trading days this week.

Below is the list of holidays.

Bursa Malaysia Holidays 2015

• New Year's Day - 1 January, Thursday
• Birthday of Prophet Muhammad - 3 January, Saturday
• Federal Territory Day - 1 February, Sunday ^(a)
• Thaipusam - 3 February, Tuesday
• Chinese New Year (Half day trading closure) - 19-20 February, Thursday - Friday ^(b)
• Workers' Day - 1 May, Friday
• Wesak Day - 3 May, Sunday ^(a)
• King's Birthday - 6 June, Saturday
• Nuzul Al‐Quran - 4 July, Saturday
• Hari Raya Puasa (Eid-ul-Fitri) (Half day trading closure) - 17-18 July, Friday - Saturday ^(b,c)
• National Day - 31 August, Monday
• Malaysia Day - 16 September, Wednesday
• Hari Raya Haji (Eid-ul-Adha)-24 September, Thursday ^(c)
• Awal Muharram (Maal Hijrah) - 14 October, Wednesday
• Deepavali - 10 November, Tuesday ^(c)
• Birthday of Prophet Muhammad - 24 December, Thursday
• Christmas Day - 25 December, Friday 

Notes:

1. Half day trading closure for the afternoon sessions on the eves of Hari Raya Puasa and Chinese New Year. However, the business hours for Clearing, Settlement & Depository remain the same. For trading hours, please refer to Equities & Derivatives pages.
2. Date subject to change.
3. If a public holiday falls on Sunday, the following day shall be a public holiday, and if this day is already a holiday, then the next day shall be a public holiday.
   [February 3 has been declared a holiday by the Government]

011. Medical Insurance premium is increased!

011. Medical Insurance premium is increased!

Just received an email, last Friday, about the notice of upward revision of medical insurance premium for AXA Affin General Insurance. The last time this happened was in 2013.

When I told another planner about this news, he merely said it is expected more insurance companies will follow. End last year Allianz had just raised the medical insurance premium, by about 30%. Now AXA Affin.

Insurance company cite "medical costs have increased rapidly due to medical inflation".

How much is the rise? It is, mentioned in the memo, about 0% to 38% depending on the age group. However, when I look at the premium table, my jaw nearly fall off. It used to be a flat rate for age band 1-14, but it is now broke down.

The premium for age 1-3 is increased by nearly 100%. This is so shocking to me. The premium is getting closer to that of a life insurance companies. However, if life insurance companies increase their premium later on, the gap might become larger.

And for that premium increased, insurance company has also enhanced some features. As we can see from the premium table, the coverage is now extended to age 100; and AXA Affin also include International Emergency Medical Evacuation and Repatriation benefit for Plan 2, 3, and 4 (RM50,000).

AXA Affin also mentioned "SmartCare Optimum is a product that runs on the platform of pooling of risk. The basic concept of risk pooling is each premium contribution from an insured member is placed in an insurance pool. This pool will ensure that members only pay consistent premiums throughout their medical insurance coverage as the large amount in the pool will protect the insured member from being exposed to high severity claims cost. As medical costs increased due to medical inflation, premiums has to be adjusted to ensure long-term viability of the portfolio."

Undeniably, insurance company must be profitable to be able to provide coverage. Rising of medical inflation is also outside their control. With proper calculation, hopefully the insurance company will continue to remain the product.