Money & You - 24 May 2015

StarSpecialTHE STAR Sunday 24 May 2015

Smart banking, potential higher returns > 3

MONEY & YOU

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Time +money =stability

Save now, indulge later

By RACHEL PUNITHA

LIFE would be far simpler if it consisted of only eating, drinking and sleeping. Alas, this is not the case as developing societal issues continue to be the banes of our existence.

We constantly strive to find solutions to issues such as illnesses, accidents, job loss and family and work politics.

Amid these issues are our own pressing needs, as clearly outlined by Abraham Maslow, an American psychologist best known for creating the hierarchy of need.

Maslow theorised that the human psychological health is attributed to five levels of needs physiological, safety, social, esteem and self-actualisation.

As individuals and the society develop, our needs evolve as well. However, as steadfast as Maslows pyramid stands, we have subconsciously allowed our luxury needs to overlap our basic needs. Sometimes, we even view these luxuries as a conduit for reaching self-actualisation. We unwisely think that our need for a luxurious lifestyle is a basic need that will give us fulfilment.

Largely because of this, our discipline in managing our finances takes a hit. After putting aside money for electricity, water, housing, loans, memberships, groceries and other basic necessities, our immediate focus is to attend to our luxury needs.

There is a superabundance of luxury needs these days gadgets, vacations, relaxing activities, vehicles and other items or services of pleasure. Even when we do save, our money is used for weddings, birthday parties, gifts for loved ones and bigger houses.

Out of procrastination, we find excuses to avoid saving, claiming we do not earn enough money to have some set aside every month. However, if push comes to shove, you can definitely find the will to save. Here are different ways you can save money:

l Save in a bank savings account

You can save by regularly depositing money from your current account into your savings account or even a fixed deposit account.

A fixed deposit account involves locking away a particular amount of money for a certain time

period at a fixed rate of interest. Withdrawing this money before the end of the fixed period will mean being charged a penalty.

The interest rate for a fixed deposit account is normally higher than that of other accounts, so this can be a good way of keeping your savings because you would be reluctant to pay the penalty.

Of course, there are accounts with flexible withdrawal options. One such account is the Maybank Islamics new compliant Mudarabah Investment Account.

l Save with a group of friends

This group should comprise individuals whom you can trust. In this method of saving, each

member of the group contributes a set amount every month.

Once everybodys contribution is collected, the person appointed by the group receives the amount for the month.

For example, if there are 10 of you and every one of you contributes RM200 each month, the first person appointed receives RM2,000 in the first month.

In the following month, the second person gets RM2,000, and so on. This is an effective way of saving as you put aside only RM200 every month as opposed to having to produce a lump sum of RM2,000 every 10 months.

l Save money regularly in a piggy bank

Saving small amounts of money, such as coins, at home and

then banking them in when your piggy bank is full can be a very effective way of saving.

Twenty-seven-year-old Tabitha Surita, for example, confesses that she has a quirky habit of putting aside every RM5 note she comes across.

I like the feel of the green bills and so I put them into a large jar at home.

I stuff as many as I can into it, trying my very best not to transfer the entire amount into my savings account unless it looks like the jar is about to burst, says Tabitha.

This is simply because I know that once the money is in my account it will be very easy for me to swipe my debit card and spend it all.

Youd be amazed how much you can save this way.

I am well aware of what my spending habits are like and this is my way of protecting myself against myself.

l Make use of a standing order

Sometimes you may not be disciplined enough to save regularly.

Putting off transferring the money into your savings account from another account means putting the money at risk of being spent.

To save effectively, set up a standing order to get your bank to do it for you.

A standing order is an instruction to a bank to pay a set amount of money at regular intervals from one account to another. Charges may apply.

l Save through an investment plan or insurance scheme

This is one of the best ways to save as your money will mature over time and give you very good interest rates.

Saving through this method is a good example of letting your money work for you.

With insurance, your basic medical bills, if not more, are taken care of.

Moreover, you can purchase investment plans and insurance schemes at a very affordable rate these days.

Regardless of the methods used, saving money is crucial to securing ones future.

To make it happen, one must learn to forgo some, not necessarily all, forms of luxury and make saving money a priority.

Just as middle-income earner Tabitha says, we need proactive measures to protect ourselves from our spendthrift ways.

Using yournest egg wiselyAN obligatory savings fund run by the government, the Employees Provident Fund (EPF), is a sure way of saving your money.

Although used primarily as a retirement fund, the EPF has made allowances for us to withdraw our money for a set list of needs when we crucially need it. This is taken from the second account (Account 2) as the first account (Account 1) is cleared out when we retire.

Over the years, many Malaysians have made wide use of this benefit and choose to withdraw their money to tend to their financial matters. Here is a graph showing the types and number of withdrawals made over the last three years.

Number of withdrawals for EPF Account 2 from the year 2012 to 2014

Withdraw at55 years of age

* Terms and conditions apply.

355,754RM13.23bil

416,667RM14.1bil

6.6%

(notstated)

(notstated)

Withdraw at50 years of age

137,633

141,193RM3.84bil

147,991RM3.94bil

Health care

4,533

4,834RM43.13mil

5,136RM46.06mil

6.8%

Housing

362,002

375,563RM4.96bil

382,214RM5.10bil

2.8%

Education

68,176

71,619RM338.14mil

77,404RM372.94mil

10.3%

Investment

833,513

961,771

439,723

RM7.84bil

(not stated)

2012 2013 2014

308,381

(source: The EPF 2014 annual report)

Your dreams of living the high life will be for nothing if you are not savvy with your finances.

2 MONEY & YOU StarSpecial, Sunday 24 May 2015

StarSpecial, Sunday 24 May 2015 MONEY & YOU 3

MAYBANK Islamics new Syariah-compliant Mudarabah Investment Account (IA) allows customers to potentially earn higher and stable returns.

The investment account products will be launched on June 16.

Mudarabah IA will retain all of the existing banking features and services with the added benefit of greater flexibility on withdrawal for Term Fund-i.

There are two types of IA the Daily Fund-i and the Term Fund-i.

More information on the accounts is shown in the infographic.

Existing Mudarabah customers may reclassify their accounts before May 31 to retain the same account number or debit card number.

Doing this will mean avoiding the hassle of opening a new account after this date.

Response channels are made available for the convenience of customers to reclassify their existing Mudarabah deposits into IA:l M2u: Customers can reply through their Maybank2u account. A link will be made available for them to respond.l Hotline: Customers can call 1800 882 028 and ask to speak to a customer service representative.l Mail via post: Customers can submit the response post with a prepaid envelope. l Branch visit: Customers can visit any Maybank or Maybank Islamic branches to convert their accounts.

n For more information,call 1300 886 688 or visit www.maybank.com.my/islamic

Smart banking, potential higher returns

Current New

(Currently in the form of current account and savings account)

Daily Fund-i Investment Account

* Based on indicative rates

Conservative return between0%2% per annum

Higher return between1%3.5% per annum

Current New

Half-yearly or yearly payment depending on product Profit earned* subject to minimum outstanding balance/withdrawals

Monthly payment Profit earned based on the number of days invested

Current New

Premature upliftment Below three months, no profit paid More than three months, 50% of the total profit paid 100% profit paid upon maturity

Without lock-in period Profit paid monthly regardless of investment tenure Profit earned based on the number of days invested Withdraw anytime, without additional charges

Current New

Maximum 3.8% returnsper annum based on tenure

More than 3.8% returnper annum for all tenure

(Currently in the form of term deposit)

Term Fund-i Investment Account

Payment frequencyand profit earned*

Returns*(indicative profits)

Payment frequencyand profit earned*

Returns*(indicative profits)


Tokio Marine recently launched a new brand identity to reflect its commitment to provide a unified customer experience.

New identity propels trusted brand forwardTOKIO Marine recently unveiled a new identity for its collective corporate brand, Tokio Marine Insurance Group, which consists of its life and non-life insurance companies in Malaysia.

This rebranding reflects a renewed commitment to provide a unified customer experience through a one-stop marketing platform of insurance solutions that meets the various needs of customers.

A new corporate website has been launched, exhibiting the new brand colours and providing customers, business partners and advisers a platform from which they can access information.

In addition, the Ready For Whats Next campaign was launched nationwide in April on major media platforms.

The campaign focused on key moments and decisions that people make in their lives and how the insurance solutions offered by Tokio Marine Insurance Group can meet their needs and challenges at different life stages.

Tokio Marine Insurance Group supports customers aspirations with a pragmatic approach and an objective of making progress a personal matter.

Tokio Marines commitment to its customers in their life journey is reflected in the companys Arc of Progress graphic element.

The Arc of Progress also represents Tokio Marines intention to stay true to its heritage while portraying the company as a dynamic and progressive organisation.

The rebranding marks another important milestone in Tokio Marines 65-year history of operating in Malaysia.

ESTABLISHED in 1879 as the first insurance company in Japan, Tokio Marine has grown over the decades and now offers an extensive selection of general and life insurance products and solutions.

With presence in 37 countries and expanding, Tokio Marine ranks as one of the worlds most globally diversified and financially secure insurance groups.

Tokio Marine Life is a member of Tokio Marine Group in Japan and has more than 17,000 employees and 46,000 agents operating in 456 cities across 37 countries.

Both Tokio Marine Life Insurance Malaysia Bhd and Tokio Marine Insurans (Malaysia) Berhad are member companies of Tokio Marine Holdings Inc in Japan.

Tokio Marine Insurans (Malaysia) Berhad or TMIM is a subsidiary of Tokio Marine Asia Pte Ltd Singapore and its ultimate holding company is Tokio Marine Holdings Inc in Japan.

About Tokio Marine

l Risk engineering Catering to the ever-growing demand for manufacturing and construction insurance solutions, Tokio Marine has a risk management support team consisting of highly trained and qualified risk engineers experienced in identifying potential hazards and mitigating risks.l Personal Tokio Marine caters to the rising demand for insurance coverage of personal accidents, health, property and travel as well as other services such as card protection and travel related services.l Life insurance While it may be exciting to think about the future, you may also have concerns about protecting your

It further unites its businesses and gives both its life and general insurance companies wider reach in the local insurance industry.

A unified brand gives customers the confidence that Tokio Marine is a trusted brand that is capable of taking care of all their insurance needs.

Much to offerTokio Marine prioritises its

customers and upholds this principle at the core of all its products and services.

The company has formed robust strategies and infrastructure in the way it operates, establishing a broad distribution network based on multiple partnerships, joint

ventures and collaborations with agency channels, brokers, intermediaries and banks.

It continuously works to ensure that its policies offer full coverage with minimal disparities.

Some of its sought-after insurance products that are based on this winning formulation include:l Marine cargo insurance The technical expertise, state-of-the-art eMarine platform and dedicated global team of claim, recovery and loss control specialists that offer timely policy underwriting, issuance and claims processing. It has earned the company the reputation as a leading global player in marine insurance.

loved ones, paying off a house loan, providing a good education for your children and retiring comfortably. Hence, Tokio Marine offers a comprehensive suite of life insurance and wealth solutions that can help secure you and your familys future.

n For more information,visit www.tokiomarine.com

Professional insight into investmentsTHE type of investment someone chooses depends to a large extent on various factors such as age, sex, background and profession.

This often makes choosing the most suitable product tricky and hence a qualified financial planner may be helpful.

By keeping abreast of the latest financial matters and products, a financial planner can recommend a different combination of elements to suit each clients needs in the best way possible.

Money & You speaks to Jonathan Avinash Victor, an associate financial planner who has been running a business that distributes financial services and products since 2007, about the different demographics of investors in Malaysia and the reasons behind their decisions.

In my line of work, high net-worth investors generally choose to keep their investments and insurance plans separate. Many of them subscribe to the philosophy of buying term insurance policies, which do not have an element of investment, rather than pure investment vehicles such as stocks or unit trusts, he says.

This enables them to buy a large insurance cover for lower premiums compared to investment-linked insurance policies or whole-life plans. At the same time, they have more control over their portfolio by taking part in pure investment vehicles.

This is great as long as one has the discipline and cash flow

effective when started while the child is young. Having a good 15 to 20 years for the schemes to mature and grow exponentially is the best, he says.

Another very popular channel of investment is real estate. Jonathan explains that your first house is where you stay and therefore, does not generate a positive cash flow.

However, by renting out your second property, you can create a positive income stream.

Jonathan advises people to be proactive about incorporating critical illness benefit to their mortgage insurance.

This is important because many people will find it a burden to continue their monthly mortgage payments should they be unable

Jonathan Avinash Victor.

to work and earn due to serious illnesses.

This is a section often overlooked by those purchasing MRTA (mortgage reducing term assurance) and MLTA (mortgage level term assurance) plans, which usually only offer payout in the event of permanent disability or death.

Getting your will done, no matter how young you are, is also part and parcel of being financially savvy. Your finances, investments, property and schemes are not solely your concern. They are the concern of your family as well, he adds.

While buying a property, growing your money and being insured are important, there is a large number of the population who do not have the luxury of owning even one of the above mentioned. When asked about this matter, Jonathan says if you are forced to prioritise, secure a good medical plan.

Jonathan says, Nowadays, insurance is quite affordable. There are even standalone schemes that cost around RM500 a year for a 25-year-old male that take care of the very basic medical needs. The purpose behind investment-linked insurance plans is to allow people to have the best of both worlds even if they have a limited monthly budget.

to stick to a plan that separates investments from insurance.

On the other hand, those who have dependents or not a lot of money to spare prefer to purchase investment-linked insurance plans, according to him.

This is beneficial because it meets two financial goals providing medical coverage or a death/critical illness payout while meeting investment needs.

If youre on a tight budget, one of the first things you should consider getting is a good medical card as hospital bills can put a big dent in your financial plan.

By purchasing a medical card, you can ensure that you need not touch your savings or investments when caught unaware, says Jonathan.

This advice is especially important for bread winners of the family. Without them having access to good health care, the whole family may face dire financial difficulties.

Jonathan also advises those who are thinking about purchasing education schemes for their children to do it while their children are still young.

Education schemes are most

Careful financial planning will help you find the best investments for your lifestyle.

Sunday 24 May 2015 StarSpecial 5


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Total body coverageEVERYONE is encouraged to get covered by insurance; it is one of the best ways to ensure that you will not be caught out financially in the event of an emergency.

Most people get life and medical insurance coverage but some deem it prudent to insure themselves or parts of their body as a means of insuring their source of income.

This certainly makes sense a singers income is dependent upon his or her voice, as is a surgeons career on his or her hands.

In this vein, here are some of the more interesting body parts that people have had insured.

LegsInternationally famous footballers David

Beckham and Christiano Ronaldo both have had their legs insured for hundreds of

millions of pounds, which is justified as their

legs are basically their livelihoods.

Another person who has insured her income in this way is supermodel Heidi Klum, whose famously sexy legs are insured for US$2mil (RM7.2mil). Klum has revealed that her left leg, which sports a small scar, isnt as pricey as her (presumably pristine) right leg.

Actor, singer and dancer Betty Grable, who was the highest-paid Hollywood celebrity between 1943 and 1951, was also a favourite pin-up during World War II and most famous for her legs.

They were reportedly largely responsible for her earning US$300,000

a year, and so at the height of her fame she insured them for US$1mil.

Several other celebrities have also insured their legs for several millions actress Jamie Lee Curtis and singers Taylor

Swift, Rihanna, Mariah Carey and Tina Turner, to name a few.

Turner has said of her long legs, which are reportedly insured for US$3.2mil (RM11.5mil), that when she was young she thought she looked like a pony.

They have since become part of her signature high-energy performances that have entertained fans for decades.

BottomMoving up from legs, being well-

endowed in the behind can also garner a lot of attention and make one famous.

The assets of both Jennifer Lopez and Kylie Minogue, for example, play a major part of their respective brands as singers and entertainers.

Lopezs prized behind is insured for somewhere between US$25mil and US$30mil (RM90mil and RM107.5mil) while Minogues perky booty is insured for about US$5mil (RM18mil).

HandsHands are another commonly insured

body part. Models and surgeons are among the biggest group of people who seek coverage for their hands as part of their insurance for their income.

Famous people to have their hands insured include Rolling Stones lead guitarist Keith Richards, who has insured his for about US$1.6mil (RM5.7mil), and rock guitarist Jeff Beck, who reportedly took out a US$1mil (RM3.6mil) policy on each of his fingers after he accidentally sliced the top off his left index finger while cutting carrots, resulting in a seven-week hiatus from playing music.

Vocal chordsPeople who

make their living as professional singers are often exposed to illness because of their hectic lifestyles travelling on aeroplanes, meeting hundreds of people who are carrying all kinds of germs and physically exerting themselves during their performances.

For this reason, most, if not all, have some form of health insurance to cover any circumstance. On top of that, singers choose to insure their vocal chords the tools of their trade against injury or illness.

Among them are Bruce Springsteen, whose original coverage was for about US$6mil (RM21.5mil) in the 1980s and is now about US$31mil (RM111mil), and Rod Stewart, whose voice reportedly started with US$6mil (RM21.5mil) of coverage in the 1940s and is now worth about US$15mil (RM54mil).

MouthSome people have insured

their tongues or taste buds because that is what they make a living on.

Food critic Egon Ronay, who is credited with raising the quality of British cuisine in the 1950s and 60s and published a series of guides to British eateries,

Madonna.

Betty Grable.

Bruce Springsteen.

insured his taste buds for about 200,000 (RM1.1mil) in the 1960s.

Wine expert and presenter on British television Angela Mount, credited with

making quality wine accessible to the public and catalysing a new British trend of wine drinking, has insured

her taste buds for about 10mil (RM56mil).On the other end of the spectrum, there

are entertainers famous for their tongue antics who have coverage for this twisty appendage.

Gene Simmons, well known for his blood-covered tongue waggling

during live performances with his band KISS, had his insured

for US$1mil (RM3.6mil) at the height of KISS

popularity.Miley Cyrus, more

recently infamous for sticking out her tongue everywhere she goes, has reportedly insured hers for US$1mil

(RM3.6mil).Then there are those

that have insured their famous smiles. Julia Roberts

smile and teeth are insured for US$30mil (RM108mil), making it the most expensive smile in Hollywood.

America Ferrara, who rose to fame playing the metal-mouthed ugly duckling lead character in the television show Ugly Betty, had her teeth and smile insured for US$10mil (RM36mil) by Aquafresh after she signed on as

their spokesmodel.

BreastsLife or medical insurance that

includes coverage for breast cancer is gaining popularity nowadays. Breast cancer is, after all, a major cause of illness and morbidity in the female population.

On a lighter note, there are people who have insured their breasts against injury as their breasts are part of their image or are the main source

of their income. Dolly Partons famously full bosom,

for example, is insured for US$600,000 (RM2.2mil). Former Playboy bunny Holly

Madison, who has said that her breasts are her primary money makers, has insured hers for US$1mil (RM3.6mil).

Madonna has had hers insured for US$2mil (RM7.2mil), and though she has not revealed why, it can be speculated that it was because they played a large part in her rise to pop idol status.

Gene Simmons.

StarSpecial, Sunday 24 May 2015 MONEY & YOU 7

Astute way to save for retirementMORE often than not, what is left of our earnings after paying the bills is used to buy something we want rather than something we need.

Imposed upon by peer pressure, advertisements and promotions of the desire to live a life of luxury, we are inclined to spend more than we can afford.

Setting aside money for savings is often at the bottom of our priority list and we often have to deal with emergencies, which eat away at our savings.

Added to this are the rising costs of living and inflation rates, which mean we may never find the means to save enough for when we retire.

For many who do not have the privilege of having enough investments or insurance to look after their entire family, the Employees Provident Fund (EPF) is the legitimate saving grace for them to be able to retire to a decent lifestyle.

Furthermore, because of the difficulty of preserving our savings, the EPF is the only precious nugget left to sustain many of us upon retirement. Even then, statistics show that this alone is not enough.

According to figures from EPF, approximately 70,000 active 54-year-old contributors had average savings of just under RM167,000 last year.

The recommended minimum savings level is RM196,800.

In reality, even the minimum amount is insufficient. As the average life expectancy rises to the 70s, to retire at 60 with that amount would mean surviving on just RM800 a month for the rest of your days.

This amount is far below the minimum wage requirement,

which will be increased as time goes by. The thought of thriving on such a measly amount is inconceivable, especially when we are already struggling to survive on more while still earning a salary.

According to EPF deputy chief executive officer (strategy

division) Tunku Alizakri Raja Muhammad Alias, EPF members need to empower themselves in terms of financial literacy so that they can live a sustainable life during their retirement.

The core purpose of EPF is for retirement and retirement only. It is meant to be used when we retire and not any time before.

If we withdraw the fund even before we retire and then expect it to sustain us till we are in our 70s, we will soon be forced to either work to earn a living or completely depend on our children to pay for expenditures.

This scenario is already happening as worrying reports of the ageing population being homeless and crowding charity homes across the country are appearing in the media.

There are various other channels through which we can grow our money. However, EPF statistics again show that we are not very dependable when it comes to managing our finances.

According to a report from Bernama, from January to June last year, 2,491 individuals aged 25 to 34 and another 4,121 individuals aged 35 to 44 were declared bankrupt. These two age groups recorded the highest number of bankruptcies out of all other age groups.

Looking collectively at the number of cases, in 2011, the number of registered bankruptcy cases was 19,167 while the

number recorded in 2012 was 19,575. In 2013, the number was 21,987 while last year, a total of 22,351 cases were filed, the same report adds.

One simple but crucial solution to effective saving would be to scrutinise our financial habits now rather than pine for the money accumulated in our EPF.

Frugality and extreme care need to be practised when spending.

Dont look at EPF as a single source of financial help. Start looking at other forms of investments as well and be very clear on what sort of lifestyle you want to have, says Tunku Alizakri.

The power of compounding your savings can only be unleashed if you start early.

If we were to use our EPF money to settle our debts or get us out of bankruptcy, what else will be left for us to use for our general well-being and health care during retirement?

Admittedly, we are dealing with rising household expenditures and ballooning housing, education and medical fees.

However, a preferred scenario would be to brave these woes now and still have our EPF money to fall back on when we retire rather than deplete all our savings and retire penniless.

n For more information, visit www.kwsp.gov.my

EPF deputy chief executive officer

(strategy division) Tunku Alizakri Raja Muhammad Alias.


Global diversification for added valueINVESTMENTS tend to drop in value due to inflation, meaning that your current investments may not necessarily leave you better off in the future.

The key to a successful investment is not to focus on the money earned but on its purchasing power.

Nowadays, investors are increasingly confronted with rising inflation rates and currency depreciation, both of which can significantly erode their moneys purchasing power.

In addition, a major part of our daily consumption is imported, meaning that currency depreciation will also lower purchasing power.

To overcome these issues, a financial strategy should be applied to build your assets to outpace inflationary and currency depreciation rates.

More and more investors are also turning to global investments in search of protection and higher returns to add to their mix of portfolios.

Typically, the investments now sought after are those with returns that not only counter inflation but are also capable of hedging currency depreciation risk.

Investments with global diversification can mitigate risk and exposure to inflation and currency depreciation.

Global diversification is the key to a good investment. Unfortunately, inflation and currency depreciation are silent thieves that are often ignored by investors in building their wealth, says William Ng (pic), chief executive officer of TFDC Asiacorp Berhad, who is also a member of the Certified Financial Planner and Islamic Financial Planner.

Todays investors are seeking options to diversify globally.

This usually leverages a portion of their portfolio on global investments that provide high-performing returns and the ability to hedge on a stable currency.

Purposeful global diversification

provides a balance of optimal returns against

currency depreciation risk exposure. It is a useful tool to balance poorly performing

investment options, says Ng.

We coach investors to be wary of

believing that investing solely in the local market is good enough. There is value in investing in global markets to accelerate returns that can outpace inflationary rates and depreciation risk.

TFDC Asiacorp is a subsidiary of a Canada-based development company, Terra Firma Development Corporation (TFDC), which is the master developer of Forest Lakes Country Club, a premier four-season mixed-use luxury community development in Nova Scotia, Canada.

The luxury community development project is located in Halifax, the capital of Nova Scotia. The development was spurred by the need for further high-profile

residential areas outside the capital city.

Demand for this type of residential luxury community has grown with the increase in population and the many multinational companies are now choosing Halifax as their base of operations.

In anticipation of the housing boom expected as a result of the citys rapidly growing shipbuilding industry, the resort has already attracted buyers from more than 40 countries.

Ng adds that TFDC Asia Corp is introducing limited units of housing plots with a guaranteed resale and capital appreciation returns of 48% within three years.

Purchasers can, at the end of the three years, choose to keep the plot and build on it for personal use, resell it later for further gains or choose to make a resale back to the master developer for cash at a 48% gain.

The unique features of this investment give investors flexible options to diversify their portfolios internationally and hedge with the stable Canadian dollar.

TFDC Asiacorp Berhad will be holding half-day coaching seminars on the topic of how global diversification can double your capital net every five years.

n For more information,call 011-122 21 998.

The Forest Lakes Country Club developed by TFDC is a premier four-season mixed-use luxury community development in Canada. It has attracted buyers from more than 40 countries to date.

Investing in start-upsPAUL GRAHAM, American author and co-owner of start-up incubator Y Combinator, likens venture funding to the shifting of gears.

In his words, a typical start-up goes through several rounds of funding and at each round, you want to take just enough money to reach the speed where you can shift into the next gear.

Grahams gear analogy effectively captures the complexity of funding, which is an essential aspect of building a business.

In the journey from start-up to public-listed company, businesses typically seek funds from more than one party at different points in time, and so provide opportunities for investment.

Seed funding at the initial stages may include financial contributions from family, friends or angel investors that support the development of a new business idea.

Finding your fit The Governments effort

to assist Malaysian start-ups financially has largely been carried out through Cradle Fund, an agency under the Finance Ministry that manages the RM100mil Cradle Investment Program (which recently received a RM175mil addition).

The agency hopes to enhance private investment capacity through its venture capital arm, Cradle Seed Ventures, a RM60mil fund that will further boost the

countrys start-up ecosystem.Entrepreneurs looking for

comprehensive coverage can also turn to start-up incubators or accelerator programmes.

Most of these programmes offer seminars, mentorship, support and opportunities for networking and development on top of grants or loans.

The Multimedia Development Corporation (MDeC) recently launched the MSC Malaysia for Startups programme in collaboration with several other major names in the start-up scene, aiming to assist local tech start-ups in achieving MSC Malaysia status.

This status grants access to a host of privileges for qualified businesses.

SME Corp Malaysia and the Malaysian Global Innovation and Creativity Centre (MaGIC) both have their own accelerator programmes.

MaGIC is currently running one in partnership with major industry players such as Microsoft, Amazon and KickStart.

MDeC and StartupMalaysia.org are not left out, having previously worked together on the Digital Malaysia Corporate Accelerator Program.

Getting the crowd Today, another form of seed

funding has taken the start-up scene by storm crowdfunding.

Typically, only public-listed companies can receive investment in exchange for shares. This

can be difficult for start-ups as many largely depend on external funding to build their business from scratch.

Through crowdfunding, members of the public can invest in a start-up on the basis of equity offering.

This means that each investing member holds a small piece of the business, which will change in value depending on the success of the company.

Throughout April and the first half of this month, the Malaysian Securities Commission accepted applications for prospective investment crowdfunding platforms for the first time.

This was done after a crowdfunding conference last August opened up discussions on the topic, leading to the release of a regulation guideline in February.

While this method of funding may already be losing its novelty

in Silicon Valley, it is only beginning to make an impactful presence in this side of the world.

Singapore-based Crowdonomic is currently the largest crowdfunding platform in South-East Asia and has contributed to the development of several start-ups in its homeland.

If done right, crowdfunding has the potential to accelerate the growth of the local start-up ecosystem as well.

Investing in a start-up is a novel way to diversify your financial portfolio.

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Money & You - 24 May 2015

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Transcript of Money & You - 24 May 2015