Should Women Take Control of Their Finances?

By Helwa Sofni and Fateen Rosli

Feeling overwhelmed by your finances and would rather leave it to your spouse? How do you take charge on your own financial needs?

Based on recent survey by UBS in 2019, most women do not plan their own financials. Most married women would instead leave the financial responsibilities to their men. Is it wise to do so? What are the implications in the future? What are the steps that women can take on this matter?

Low Level of Financial Literacy

Do you know that financial literacy rate in Malaysia is among the lowest globally? In 2016, the Organisation for Economic Cooperation and Development (OECD) reported that the level of financial literacy rate in Malaysia was below average and ranked 26th among 30 other participating countries.According to statistics published by FENetwork, about 1 in 3 Malaysians admit to having low confidence when it comes to financial knowledge.

“Many Malaysians struggle to manage their money, making them highly vulnerable to the impact of a financial shock such as redundancy, long-term illness or even just a large unexpected bill.”

Tun Dr. Mahathir Mohamed’s message in the Malaysia National Strategy for Financial Literacy 2019-2023.

Growing sophistication of financial products and services accessed via digital channels have made financial literacy even more pertinent.

Leaving Major Financial Decisions to Spouse

Despite the low level of financial literacy in our country, most women are depending to their spouses to make major financial decisions.According to a survey published in UBS Investor Watch, women decided to let their spouses to lead on major financial decisions because:

Nonetheless, can women afford to take a back seat on this matter?In actual truth, no, women cannot afford to do so. Women have a life expectancy of about 5.1 years more compared to men; up to 77.3 years. In addition, 64% of women believes they will outlive their spouses. If women do outlive their spouses and have always relying to their spouses in making major financial decisions, how will their financial future be?

Leaving It to Circumstances

Men may be taking charge of the household’s finances. However, what if things did not go according to plan e.g. losing your job, premature death of the breadwinner, divorce happened? How can women take charge on the finances when they needed to, when they are not involved in the first place?These are the most common financial consequences due to unfamiliarity of the subject matter:

1. Unaware of Financial Status/ Not knowing own or family financial status

Normally this is due to:

1. No proper tracking of key data such as income, expenses, financial commitments;

2. No proper record of assets owned, loans owed and the updated loans balances.

The truth is, many are unsure of what assets and liabilities are in their personal context. Let alone what are their net worth value.

Not knowing your current financial situation is a big blind spot as this is the first step in managing personal finances. It is very important for women to be aware of all these and the documents whereabouts, not only in their name but if possible, including under the spouse’s name.

We never know when a time may come when we have to handle all financial matters by ourselves. It is about survival, not only to women but those who are depending on them like minor children or aging parents.

It is better to know now rather than have to dig for information and handling coping with loss? It is better to be ready rather than to be sorry.

2. Readiness for unexpected life events

When we are not aware of our current financial situation, it is a sign that we are unaware of our financial exposure. In other words, how ready are we to respond to unexpected major life events such as premature death of the breadwinner. It is common to have financial commitments and debts. Common debts include property mortgage, credit card debt, car loan, personal loan and study loan.

You need to quantify whether your existing assets or existing insurance coverage are enough to cover these commitments when eventualities strike to your family. Do note that non-liquid assets which may takes longer to process as compared to your liquid assets. This is crucial because regardless whatever happened, it is always our wish that disruptions are at minimal level as possible.

To achieve this, you can begin with having a list of summary of your existing policies coverage for respective events such as death, total permanent disability (TPD) or Critical Illnesses (CI). Do include the coverage provided by your company, if there is such. It is also important to take note on the coverage period for each policy.

In the case that you are solely depending on your husband, it is critical to understand this as surviving wife, and assume the role as the backbone of the family.

Being Risk Averse

In general women are normally an averse risk taker. The above statistics show women tend to leave it to their spouse to decide on major financial decisions as women tend to take care more on household chores and work.

In addition, women usually earn lesser and start to invest later than men. As a result, this may lead to potential loss of opportunity to earn better returns and there is a risk of insufficient funding for post-retirement period. This issue is crucial knowing the fact women live longer than man.

Therefore, a basic understanding on your risk tolerance, investment decision, and investment options are essential information that every woman need to have.

1. Splurging Your Income

At early stages of working life, many tend to delay the habit of saving. Most reasons are given such as insufficient salary or that will start saving later when one’s salary is higher. However, in real life many people tend to increase lifestyle spending when they get a salary increment or promotion.

There are also women who spends their salary only for their own and the kids, as the spouse will take care of other financial matters. As the purchasing power is more, they tend to overlook on the importance of savings. This has led to a very risky situation whereby you need to adjust your lifestyle if you are unprepared to the unforeseen circumstances which is not easy to deal with. Also as a parent, you are setting a precedent of lifestyle spending for your children.

The right way is to start saving early. No matter how small the amount, it is easier and beneficial to kick-start the saving habit compared to delaying. Consistent small saving can grow to become substantial over a period of time.

2. Unaware of administrative procedures and related cost when death happened

Today’s life arrangements are more complicated than during our parents or grandparents time. For example, it is becoming more common to find both husband and wife taking joint long-term debt commitments together but the asset (i.e. property) is only under one spouse’s name.

Many people do not know how to start estate administration procedure. Where to go, who can advise and what are the associated costs are some of the questions that come up. Inefficiency can be very costly to deal with. Being unprepared, beneficiaries are expected to deal with a lengthy process and in some cases dealing with disputes among beneficiaries.

Proper estate planning while you are alive will enable your beneficiaries to expedite the process and manage associated costs better. Thus, your hard-earned money can reach your beneficiaries as per your intended wishes rather than being frozen. This is of upmost important especially when you have minor children or are depending on a single income earner.

Taking Charge

Women tend to be the most severely affected because of unfamiliarity of their personal finances. It is essential that women take an active interest and more involved in planning their finances.

1. We have various life priorities but very limited financial resources.

It is important to note that cash flows management is the heart of managing your personal finances. Elements of budgeting, keeping track spending and differentiate “needs vs. wants” are among the key essentials. Women may also spend more on luxury products such as handbags, clothes and beauty products.

2. Aligning your needs with resources

Everyone’s financial needs and commitment change at different phases of life. Most people tend to enjoy during earlier phases of working life. However, it is important to realise that there will be peak time throughout that lifeline where one’s expenses are at the max. One’s ability to anticipate and be prepared of this will help not only to manage the situation but reduce stress.

3. Beating inflation

Over the time we notice things just get more expensive. A piece of roti canai today priced more then what it was 5 or 10 years ago. In other word we call this inflation. But the next question is what do we do to ensure our money work harder and can beat inflation? In many cases majority women only look at salary raise or promotion instead of to equip self with relevant investment knowledge.

All women should have this goal regardless of your marital or work status. It would be even better if this goal can be set together with your spouse or family members.

The ultimate key point for women is to improve on financial literacy. This is the best investment for yourself. Know own current financial situation and start to initiate own financial goals are also important. You can read Next 6 Steps for Setting Your Financial Goals in setting up goals.

Additionally, you may seek professional advice for example, a Licensed Financial Planner can help you on this. It is very important to choose a good, qualified licensed planner, who will help you to improve your knowledge and explain the suitable unbiased recommendation to you.

A Value Addition to the Family

Each one of us are responsible to our own financials. You matter, equally as important as your financials. Thus, take heed and act upon your financials now for a better promising future for you and your loved ones. As Arese Ugwu quoted,

“A woman becoming financially independent does not equate to ‘I don’t need a man’. It just means she brings more to the table. Instead of being a financial burden, she becomes a value addition. Her success does not take away from his success. The pie they share just becomes bigger.”

Own your worth. Take control of your financial well-being. Live a peaceful and comfortable life now and for the future.

Sources:

1. UBS Investor Watch, Singapore Insights, 2019 Volume 1

2. Malaysia National Strategy for Financial Literacy, 2019-2023

3. Abridged Life Tables, Malaysia, 2017-2019Smart Money Arese – The Smart Money Woman

Helwa and Fateen both previously working in oil & gas industry before decided to leave the workforce and pursuing a career as Licensed Financial Planner with WVA.

They believe it’s about managing own expectations and emotions. Having the confidence and capability to manage own finances are essential life attributes to attain and sustain a good quality of life for women.

So what do you think about this? Do share with us your comments in section below.

Memperkasa Kewangan Islam Melalui Platform AsSidq.com

Oleh Nurul Khairiah Mohamed Yusof

Sedania As Salam telah melancarkan platform AsSidq.com yang menawarkan sistem perbankan Islam terbaru. Mereka adalah pelopor teknologi kewangan (FinTech) berasaskan hukum Syariah yang disahkan selaras dengan agenda digital Malaysia.

Pengenalan Sedania As-Salam

Kewangan Islam merujuk kepada satu rangka kerja institusi perbankan dan kewangan yang dijalankan berlandaskan prinsip Syariah untuk merealisasikan keadilan dalam pengagihan kekayaan dan juga pendapatan. Pengurusan perbankan dan kewangan Islam adalah berdasarkan transaksi dalam fiqh al-mu’amalat supaya ia sentiasa mengikuti hukum Syariah.

Sedania As Salam Capital Sdn. Bhd. (SASC) adalah anak syarikat milik penuh Sedania Innovator Bhd.  Ia ditubuhkan pada tahun 2013 dan merupakan syarikat teknologi kewangan (FinTech) Islam dengan produk utamanya iaitu platform AsSidq.com. Ia menawarkan sistem dagangan berdasarkan konsep Tawarruq bagi memudahkan urusan perbankan selain menepati hukum Syariah.

Servis Yang Pantas Antara Keistimewaan AsSidq.com

Menurut Ketua Pegawai Eksekutifnya, Nisa Ismail, keistimewaan platform ini adalah ia telah dipatenkan dan boleh diaudit daripada aspek perbankan dan juga Syariah melalui pengesanan nombor siri pada produk itu. Berkata beliau kepada MyPF dalam temu duga baru-baru ini,

“Sistem ini menggunakan kredit telekomunikasi sebagai dagangan komuniti dan anda tidak boleh mengulang penggunaannya kerana ia tidak mematuhi hukum Syariah. Platform ini juga membantu pihak bank apabila pelanggan memohon pelan kewangan peribadi kerana pembayaran yang pantas, misalnya permohonan dibuat hari ini dan ia akan diproses serta merta, membolehkan pembayaran dibuat paling pantas dalam hari yang sama atau keesokan harinya dan itulah istimewanya dengan AsSidq.com,”

Sebagai pelopor dalam bidang teknologi kewangan Islam, pihaknya mahu memberikan pendedahan yang lebih menyeluruh kepada pengguna dan bank mengenai penggunaan sistem perbankan yang mematuhi Syariah dan juga fintech.

Sehingga kini, lebih daripada 55 institusi kewangan di seluruh negara telah menggunakan platform berkenaan.

Kepentingan literasi kewangan dalam kalangan penduduk Malaysia

Selain menjadi pelopor teknologi kewangan Islam di negara ini, Sedania As Salam turut memberi fokus kepada meningkatkan tahap literasi kewangan terutamanya dalam Bahasa Malaysia.

Nisa berkata, melalui blog AsSidq.com, mereka menyediakan pelbagai maklumat antaranya mengenai gaya hidup kewangan, perbezaan di antara kad kredit kad debit dan juga kepentingan pengurusan kewangan peribadi.

“Penerangan dalam bentuk video oleh penasihat Syariah kami turut dimuat naik yang menerangkan konsep kewangan Islam dan perbezaannya dengan kewangan konvensional. Maklumat ini disampaikan dengan menggunakan terma dan penerangan yang ringkas serta mudah difahami oleh pengguna,”

Pihaknya juga  turut bekerjasama dengan Angkatan Koperasi Kebangsaan Malaysia Berhad (ANGKASA) untuk menyampaikan dan mendidik pelanggannya yang kebanyakannya merupakan kakitangan kerajaan tentang teknologi kewangan, penggunaan e-wallet dan juga mata wang kripto.

Ia menjadi tanggungjawab korporat sosial pihaknya untuk mendidik terutamanya golongan bumiputera tentang pengurusan kewangan yang berkesan.

Nisa turut menyenaraikan dua langkah utama yang boleh diambil supaya tahap kewangan lebih stabil dan tiada istilah tidak mampu untuk menyediakan wang bagi hal-hal kecemasan.

1. Senaraikan perkara yang menjadi keperluan dan kehendak

Lihat semula gaya hidup, adakah ianya suatu keperluan atau hanya sekadar kemahuan? Sentiasa menyimpan sekurang-kurangnya 10% daripada gaji bulanan. Laburkan wang di dalam sistem insurans atau pelaburan yang boleh digunakan untuk masa akan datang.

2.  Tabiat menabung dengan tabung peribadi

Ia boleh diletakkan di mana-mana sahaja. Bagi Nisa, tabung peribadinya berada di dalam bilik dan di dalam kereta. Jumlah yang diletakkan juga tidak tentu, adakalanya hanya RM5 dan mungkin boleh mencecah sehingga RM10. Ia menjadi tabung tabung kecemasan terutamanya apabila menjelang hujung bulan apabila gaji semakin berkurangan. Ia boleh digunakan untuk mengisi minyak kenderaan dan sebagainya sementara menunggu pembayaran gaji seterusnya.

Perancangan masa akan datang untuk Sedania As Salam

Sedania juga bakal melancarkan As-Sidq Althiqa yang juga produk pertama seumpamanya dihasilkan bagi membantu meningkatkan kadar kelulusan permohonan pembiayaan peribadi pelanggan.

Menerusi Althiqa, bank boleh memastikan potongan bayaran ansuran terhadap akaun bank gaji pemohon dibuat sebaik bayaran gaji mereka dimasukkan ke dalam akaun tersebut. Ia memastikan bayaran ansuran pembiayaan peribadi bulanan mereka terjamin.

Pelanggan boleh memohon Althiqa melalui laman web AsSidq.com dan pihaknya akan menyediakan maklumat produk tersebut kepada pihak bank bagi membolehkan mereka meneliti sejarah skor kredit pelanggan.

Sedania juga akan mengembangkan teknologi tersebut selain di Malaysia dan sasaran mereka kini adalah Indonesia yang mempunyai jumlah penduduk beragama Islam yang tinggi. Pihaknya percaya bahawa negara tersebut semakin memberikan perhatian terhadap kewangan Islam dan produk kewangan berdasarkan konsep Islam.

Adakah akan memilih AsSidq.com sebagai platform kewangan anda? Jika ya, kongsi dengan kami dalam ruangan komen di bawah.

The Impact of Major Events on Financial Markets

Events in Malaysia, Asia and globally continue to affect financial markets. What is the visible impact seen? What should investors do?

Financial markets refer to any marketplace where trading occurs, including the forex market, bond market as well as the derivatives market. It is vital for the prolonged operation of capitalist economies.

The markets make it easy to trade financial holdings while creating securities products that provide a return for those who have excess funds (investors/lenders) and make these funds available to those who need additional money (borrowers).

The markets can be affected by certain factors such as political landscape, disaster and the outbreak of fatal infection.

Malaysia Political Landscape

The political uncertainty that has clouded Malaysia for some time is mainly fuelled by the reluctance by Prime Minister Tun Dr Mahathir Mohamad to step down in favour of Datuk Seri Anwar Ibrahim, as agreed to by all parties in the ruling Pakatan coalition before they won the general election in May 2018.

Starting last Friday night, several important meetings held by top leaders of Pakatan headed by Tun Dr. Mahathir Mohamad and on Monday, he officially resigned as the Prime Minister.

This turn of events affecting the financial markets in Malaysia in terms of:

Foreign investors might avoid investing in Malaysia Ringgit based assets.

The executive director of the Socio-economic Research Centre, Lee Heng Guie, told The Star, the last thing investors want to see is political turbulence when the government’s ability to deal with economic disruptions and uncertainty associated with China’s Covid-19 outbreak amid a slowing economic situation is being tested.

“The persistent uncertainty associated with an unstable political environment has undermined investor confidence, weakened consumer sentiment and reduced pace of economic development.

2. Panic selling on Bursa Malaysia

According to The Edge, the selling wiped out RM43.4 billion in market capitalization from Bursa in one day. There were 1,015 losers and 138 gainers, while 222 counters traded unchanged.

All indices on Bursa were also in negative territory; the worst hit was Bursa Malaysia

Construction Index, down 6.07% or 12.6 points to 194.81. Bursa Malaysia saw 4.03 billion shares, worth RM3.91 billion.

The ringgit also ended sharply lower against the US dollar in tandem with the local equity market, amid a domestic political realignment and the ongoing Covid-19 outbreak.

Covid-19 Global Outbreak

With the current Covid-19 outbreak, analysts generally believe that its impact on Malaysia’s economy as well as on tourism and production would likely lead to moderate growth in the near term.

According to Kenanga Investment Bank Berhad research house, the impact of the outbreak is seeping into the manufacturing sector and disrupting the global supply chain seen by factory shutdowns in China.

According to iFAST, the initial reaction of markets when the news broke out was negative, as the surge in numbers shook investors’ confidence in China’s ability to contain the virus and its impact on its domestic-reliant economy. Thankfully, the sharp surge in daily growth rate didn’t last. The latest daily growth rate is now at 2.6%.

There remains continued risks to markets as an increasing number of countries are affected by the outbreak. And in some countries the spread has been growing at an alarmingly fast rate.

Tourism Industry Hit

Chinese tourists make up a huge fraction of the global tourism market and in Malaysia,  China’s tourist remains one of its top 10 tourists.

Due to the temporary suspension of immigration facilities including China, the tourism industry is expected to be affected.

Based on past experience with the SARS outbreak, tourist arrivals in Malaysia from China fell by 37 percent while tourist arrivals generally fell 21 percent, leading to a decline of 39 percent and 17 percent in tourist spending.

Given that the Covid-19 outbreak is decidedly larger in scale, it is not unreasonable to suggest that it will be more than nine months before monthly international passenger traffic returns to the pre- Covid-2019 outbreak level.

US Presidential Elections

According to Chief Investment Strategist for BlackRock Canada, Kurt Reiman, rising uncertainty and a wide range of potential policy outcomes that weigh on sentiment and prevent a repeat of outperformance.

Investors may face the risk of more disruptions to the global system if trump is re-elected at the prospect of a Democratic administration raising corporate taxes and tightening regulations.

Fiscal stimulus, whether in green infrastructure or tax cuts, is possible if either party gains control of both the executive and legislative branches.

A big tech companies may face a regulatory backlash, whatever the election outcome- market dominance, data privacy, election meddling and cybersecurity rise to the fore.

Chief Investment Strategist of Manulife Investment, Philip Petursson added there are some factors to consider including which party achieves power in part of the government.

Gridlock tends to be good for markets, as it maintains the status quo and if Democrats take full control, the likely outcome would be a repeal of Trump’s tax cuts and potential weakness in the U.S economy from both business and the consumer side.

The ideological differences between a Democratic candidate and current US President, Donald Trump are making financial markets positioning and making bets. If Trump wins, stock selection will be in usual terms considering he is pro American dan pro-energy.

When you look back at the history of presidential election returns and inaugural year returns, at the year the US elects a Republican, the election year returns are above average and inaugural year returns are below average, but when the US elects a Democrat, the election year returns are below average and inaugural year returns are above average.

Founder and Chairman of Fisher Investments, Ken Fisher explained this probably because markets tend to think Republicans are pro-market and pro-growth when they are just politicians.

“But when a Democrat is elected, the market is scared, and then find out that market isn’t so bad because presidents don’t really have as much power as people think they do. However, we have a strong long-term conviction on where the best opportunities are in Asia.”

For him, these include stocks in sectors such as Chinese consumption, insurance, technology, real estate in Singapore and Indian private sector banks.

What Can Investors Do?

Keep calm and follow your plan.

In the short term, there’s often a knee jerk reaction in investors and markets reacting to news. It matters significantly if you’re investing short term but less so if you’re investing long term where corrections will in the larger context of things appear as a mere blip.

Investors should have and follow your own personal investment plan which should clearly spell out when to exit. In fact, your personal investment plan may be telling you that it’s a possibly time for entry with a buying opportunity as the company’s fundamentals have not changed while valuations are cheap.

For long term investing, one can opt to continue to hold, dollar cost average in, and pickup defensive/undervalued investments. For some investors fearful of a drop, they may opt to sell off hoping to reenter again but this hinges on one believing that one can time the market. Or another option would be to hedge some of your current positions.

Ideally and more importantly, as an investor should have your asset allocation in place. Having a good mix of asset allocation in different asset classes will help reduce the overall volatility and losses. For example, while equities prices in Malaysia/globally dipped, gold as a commodity has risen in prices. An ideal asset allocation across different types of investment assets, geographies and sectors would help your investment portfolio to deliver above average returns even during times of market turbulence.

Rafiq Hidayat, Wealth Vantage Advisory Managing Director shares on the impact of both the coronavirus epidemic and the current political situation on the financial market.

Share and discuss with us on the financial impact and investors response in troubling times.