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“The biggest thing for your financial future is in yourself.”              Warren Buffet

“KC, I am 24 years old this year and am not ashamed to tell you that my capital is as low as 2K at the point of time I wrote this; which I saved from my studying years. Thank god that I will start to work this incoming June, and I really need your advice on personal financing so that I can avoid overspending, and save some money to buy stock, emergency fund and etc. How much should I save from my capital to buy stock? I would love to have at least 100K in my portfolio one day.”

My personal experience

First of all I must congratulate you for your awareness of the importance of financial advice. How many youngsters know or care about personal finance and financial planning? I didn’t when I was as young as you. I borrowed as much as possible to buy a flashy car, Alpine Talbot which resulted me spending a lot of money in maintaining the car. I got personal loan, withdraw cash from credit card etc. and spend, without bothering about the high interest I had to pay. I was able to pay all those interest as I was earnings quite a bit as engineer, only left with nothing to save and invest.  I did not start saving until after I got married when we had double incomes. I could have saved substantial amount of money before, I was of a higher income than most people of my age then.

With the double incomes and sharing of household expenses, then only I could save some money and started investing a few years later. However, at that time, nobody taught me how to invest wisely. Instead of spending time to learn about it, I wasted a lot of time playing Mah-jong when I was a bachelor. The outcomes of my investment were obviously bad. That was because I did not have the faintest idea what investing in the stock market was, except for following rumours, hypes, fads and tips, chasing hot stocks when they had gone up, and sold at substantial losses. That was actually speculating and gambling. I can tell you for sure that most of my friends and colleague then experienced the same; losing money in the stock market. Numerous research has shown that 90% of retail investors lost money or under-performed in the stock market, some of them lost heavily, as just like me, they have not the faintest idea what investing is.

Later I read books, a lot of investment books by many super investors in the US, Peter Lynch (One Up Wall Street), Philip Fisher (Common stocks Uncommon Profit), Joe Ponzio, (F Wall Street), Robert Hagstrom (The Warren Buffet Way), Carol Loomis, (Tap Dancing to Work), Benjamin Graham, (Intelligent Investor), Roger Lowenstein, (When genius failed), Pat Dorsey (The 5 Rules), Tweedy Browne (What has worked in investing), Zack-Buckley (The road less travelled), later books by Howard Marks (The Most Impotent Thing illuminated”, Seth Klarman (Margin of safety), Joel Greenblatt (The Magic Formula) and many more. It forced me to think hard. So I embarked on my fundamental value investing journey. It was just about 10-15 years ago and the rest is history.

From the money I have saved from my career, and the good returns from investing, I was able to provide tertiary education for my three children, all full time education overseas. I am not rich, I could have been if I knew about this secret of success in building long-term wealth earlier in my life, but with not many needs and wants, I think I would be able to retire reasonably comfortably. 

Tis goeth down to a fundamental aspect that “An investment in knowledge pays the best interest” Benjamin Franklin

You are luckier now as you realized early the importance and the need of guidance on your personal finance. You have a great future if you follow this proven way of personal finance and fundamental investing.

Spend within your means

Also congratulate you for having a saving of RM2000, all by saving from the meagre amount of money you have when studying. Few as young as you have much saving at all as you haven’t even started working yet. Even those who are working now, many of them, instead of having some savings, could be carrying some debts; credit cards debts, student loans, car loan, personal loans from banks etc., all because of spending money on the unnecessary items, expensive cars, unearned holidays, expensive clothes, frequent eat out in expensive restaurants, pubs and cafes etc.

I personally do not advocate living like a pauper, taking advantage of others when eating out together, not giving a token money to your parents every month, not have a nice meal in a nice restaurant once a while with your girlfriend etc., but live within your means. Spending RM10 for a cup of coffee in Starbuck, instead of a RM2 kopi, every day, would be a waste of money. Spending RM30 for a nasi lemak, mee rebus, chicken rice etc. every day in an expensive restaurant in Bangsar shopping centre will also be a waste of money. You can get better hawker food at many coffee shops at much cheaper price.  Drive a RM30000 second hand and low maintenance car such as Myvi instead of a new high maintenance RM250000 Volkswagen. Don’t buy every newest model of iPhone. Go dating with your girlfriend/boyfriend doing some outdoor activities such as walking in the park, a teh Tarik at mamak shop, instead of frequent wine and dine in expensive restaurants and pubs. Too many people overspend money they earned, or even haven’t earned, to buy things they don’t really need, to impress people that they don’t like.

It’s a good idea to have a personal budget and track your spending for a week or a month to get an idea where your money goes, and cut down the high and unnecessary expenses.  Small but regular changes in expenditure can free up cash that you can use to build financial security.

“The budget is not just a collection of numbers, but an expression of our values and aspirations.” Jacob Lew

Avoid bad debts, use only good debts

A company can take up loans to do business, but not an individual to do things like investing, going for a holiday, spending in night clubs etc. Avoid debts, except for “good” debts like a housing loan, or initial payment for a car you need for work. In fact, as soon as you can afford, put a down payment for a house. It is a form of forced saving too.

Avoid taking loans or using margin for investments as I have been deliberating often such as the link below. Only invest the money you can keep there for years.


You may have heard too often that others have made millions of dollars using margin in the stock market, by just following a simplistic “Golden Rule”. Believe me, that is a myth, just a sales pitch. It could be from the investment banks, or individuals with their self-interest in mind, not yours. When you think of getting rich fast and try to use other people’s money to do it, you will subject to a lot of unnecessary risk which can destroy you. Leverage in investing cuts both way. It is very painful when it cuts and hurt you. Besides it is a very stressful endeavour.

I have heard of some remisiers still working at the age of 70+ just to slowly pay off their debts 20 years ago to the investment banks they are working all these years because of the loss in using margin in stock speculating.

If it sounds too good to be true, it is

Remember this, if something sounds too good to be true, it is.

Do not be tempted by the allure of making quick buck and high return in this world of a jungle out there. Nothing comes free. This seemingly easy path to riches normally ends up with very severe burn.

There are many scams and Ponzi schemes promoted all the time with guaranteed high return in a short time; Swiss Cash, Genneva Gold, JJPTR, Sunshine Empire in Singapore, sure-win stock tips etc. We know how these eventually ended up with “investors” losing their pants and underwear.

Also remember this maxim, “In real life, there ain’t no tooth fairy”. Nobody is so noble to give you tips and help you to make money trading and speculating in the stock market, as speculating in the stock market is a zero sum game, your gain is his loss and vice versa. Whose interest comes first?

The Magic of Compound Interest

“Start saving now”. Those are the three most powerful words in personal finance. Learn to pay yourself first by socking some saving each month before expenses, not save what is left after all expenses. If you start saving $5000 a year starting at age 24 now, or less than 20% of the salary of a young graduate, and increase your saving every year by 4% when your salary increases, and earning 10% compound annual returns, you would have saved your $100k intended in just slightly over 10 years. If you continue to do that, by the time you retire at 60, you would have saved $2.2 million. Figure 1 below shows how your saving grows from year to year in an exponential way.

But wait until age 45 to start saving for that $2.2m and you'd need to sock away $60,000 a year. This is what Albert Einstein said:

“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”

With the growing Employee Provident Fund, plus your saving and investment in a safe manner, your total retirement sum can to a handsome $4-5 million when you retire.

See, one really needs not have to use margin finance, which is more likely to derail his financial plan, to become rich, but by just using the time arbitrage.

How to compound your saving at 10% a year? It is definitely not from putting you money in the bank.

“How many millionaires do you know who have become wealthy by investing in savings accounts? I rest my case.”      - Robert G. Allen

Invest in business, good business

Use whatever small saving you have and invest wisely and give the time for compounding to work. You may have a better chance investing in part of a good business, in the shares of a public listed company only when they are selling at reasonable price, to earn a return of 10% a year. In investing, the only reliable way to earn that kind of return consistently is through a proper and proven process in fundamental value investing.

I know of no other investing strategies which can provide that kind of good and consistent return. But first, you must avoid big losses in investing.

You must avoid big losses in investing by “Never buy any stock touted by anybody” in the link here,


You must also avoid big losses in investing by “Never be overconfident in investing” in the link here’


“Goodness (plus cheapness) is the only investment that never fails.” (Henry David Thoreau)

Human Capital in You

 It is great that you will start to work next month. This is the most important thing for you at this stage, and not buying what stocks now. Utilize the human capital in you, focus on your career, do the best you can in your job, advance your career. Investing is just a side show at your age.

 We usually think that wealth is built through money management, but just as important is the management of another sort of capital—namely, the education, training, skills and experience that an individual brings to the workplace. These resources require investment, monitoring, rebalancing and diversification throughout one's life to produce the highest possible risk-adjusted returns.

Their ability to trade your human capital for goods and increase your earnings over the lifetimes will be critical to your financial survival, if not your success. Without the human capital and the rewards from it, one simply doesn’t have the financial capital to invest and grow his investment over time. None other return is more predictable as from the human capital, and from there you get the financial capital to advance in other returns.

“Some people today are wandering generalities instead of meaningful specifics because they have failed to discover and mine the wealth of potentials in them.”           ― Ifeanyi Enoch Onuoha

Notice I mentioned about human capital in you? That also includes other skills you acquire, such as this investment knowledge.


In summary, as a young person, focus on the human capital in you and concentrate in your career is the most important consideration now. Do the best in your job and advance your career. Have a plan, financial and non-financial. Spend within your means and save and invest wisely towards your goals. Avoid the financial pitfalls as there are plenty out there which can destroy whatever you have saved. The only way you can invest wisely and safely to build long-term wealth is to acquire some well tested investment strategies. It is a jungle out there. Believe that nobody can help you that, except yourself.

If you wish to have further knowledge about personal finance and investing, you may contact me at


Remember, you and you are the one who will determine the success (or failure) of your financial future.

Wish you good luck.

K C Chong

Certified financial planner
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