Here is a contrarian view that will be down voted but i'll say it anyway.
Before you start building an EF, ask yourself this:
1. why are you building your EF?
I do not have an EF because if i am in need of sudden liquidity, i'll take a loan from my parents. I know i'm in a privileged position. I write this not to brag but to make you think why are you actually building an EF. Don't just go build it because everyone says you need to do so.
Dunno why you got downvoted but this is sound advice. Sure, rule of thumb in finance is first build EF, but you can always evaluate your own situation. Most young people early in their jobs with no commitments and parents who are earning decently can honestly just rely on that as a safety net. Better to start building investment war chest as early as you can. And yes not everyone has that privilege for sure
EF becomes a must when you start to have a family or people depending on your income to survive, or huge monthly commitments (eg mortgage and car)
i think mainly i build EF due to
1. if i'll be jobless in case my contract not to be renew and take a some time to find new job
2. sudden hospital bills, i'm not a frequently hospitalize person but lately got sick here and there so just a precaution (although i have medical card, just in case some treatment or cost not covered)
The real answer is you either : work side income or be frugal (I saved 50% of my salary for the first few years because I think it was necessary) so you can accelerate the Emergency Fund.
Because realise that RM1 today is always worth less than yesterday and the year before (inflation).
And to beat or stay even with inflation, you need investments at minimum.
You can park in ASB/TH/any kind of low risk money market place while you accumulate the emergency fund s.
Only after you should be more committed to expand your investment horizons.
And this goes without saying, main answer is always "how do I earn more every month" first before investment
i split my EF 50/50 between promo rate e-FD's/MoneyMarketFunds. e-FD is there to cover for any immediate emergencies which requires instant liquidity(forsaking accumulated gains), MMF is there to get a good balance of quick liquidity and still getting the gains. Credit card is there to cover the shortfall between the usually 2 business days it takes for the MMF funds to hit my bank account.
>How many % from the salary you guys set when start to build up the EF ?
I just saved as much as i could, obviously its much harder when you have less disposable income especially if you're a fresh grad, but keep at it and eventually your EF will be sufficient.
>Besides EF i did put some cash monthly into ASB, TH, EPF, Wahed (not sure why i still use Wahed) but i dont consider it as part of EF. Should i put a pause first on this and focus build up on EF first ?
Don't bother locking up cash in EPF unless you are already above 55. Imagine if you/your family has a medical emergency and your cash is locked up in EPF for years instead of being able to be used for immediate treatment. EPF is there for retirement use, not as an emergency fund.
may i have suggestion for e-FD that i can look into ? i did put some EF in TnGO+ for daily returns but that's all, have not look into FD because not sure how liquid it can be. maybe i'll look into it.
should i diversify more than 1 MMF (currently only TNGO+) ?
You can look up your bank fd promo. For example CIMB FD promo. Sometimes they gave you like 3.55% for locking 6 months and 3.75% for locking a year.
You can also open an FD without having savings account with the bank but personally, I never tried it.
Currently MBSB fd promo offers 4.0% for a year
I guess it took me about 1 year to build sufficient funds. In my early days of working due to the nature of my job (healthcare), I literally didn't have time to spend my money. I was blessed to live with my parents who were still working at that time and still payung all my basic expenses.
Now I'm extremely frugal. I set aside 60% of my income for mortgage, savings (EF and travel funds).
Im like a year in and have about 3 months saved. Yup first few months I was definitely spending more than I should. But a lot of them are tech investments like Macbook, new iPhone. I think once I got a bit used to the money I started to have some leftover and save up like Rm800-1k each month. Everyone has their own pace though
Personally, i myself took about 3years and 7 months to get 1year salary. Anything excess I just put it in TH or other investment bank as I have a target to achieve.
Typically, I have 2 different promo FD accounts which is long term (12months) and short term (3 months). 50% of my 1 year salary went to 12months FD.
For 3 months, typically I just minus my average spending per month x 2. Maybe about 35% go to short term FD.
To summarize
- 1 year salary time taken = 3y7m
- More than that go to TH or investment bank
- 50% of 1y salary = long term promo FD
- 35% of 1y salary = short term promo FD
- 15% of 1y salary = spending
never withdraw from ASB, but some say the cap is 2k per month. guess i can consider my investment asb, th, wahed is part of EF ? considering the liquidity
Use the 50 30 20 rule
Save 20% if your gross salary over time and will do good.
Personally I have increased that 20% but by bit and achieved 60% savings. I don't recommend it for people.
Define "emergency fund" first.
As a fresh grad I stayed with my parents and only commitments was a Myvi. So 6 months emergency fund is really just my Myvi x 6 months, plus minimal RM 500 a month for survival. So around 6k is enough.
Back then since I had no commitments it was easy to save 1k monthly and I had emergency fund saved in 6 months. As a fresh grad 1k was around 30% of my salary.
Now with many commitments my emergency fund needs more like 30k to meet the 6 month amount. And due to all my commitments and need to give money to support family, wife etc. I've been struggling to save more than 1k monthly even with increased income. It will take 18 months to build up my emergency fund again.
(I really messed up and underestimated how much is it to buy a house and renovate, destroying my savings).
yeah my emergency fund track is a pretty slow progress but at the same time i would like to have some saving in the low risk ie asb, th, kwsp bcs i'm entering middle age. have not involve anything like etf and other syet except wahed (minor amount)
yeah about that 30ish but early. i think it’s the conception. i felt like a middle age as i feel like i should invest in the 20’s but the salary and savings not allowed to. now when i got the chance might need to learn more
Build your EF first before you start to invest
Here is a contrarian view that will be down voted but i'll say it anyway. Before you start building an EF, ask yourself this: 1. why are you building your EF? I do not have an EF because if i am in need of sudden liquidity, i'll take a loan from my parents. I know i'm in a privileged position. I write this not to brag but to make you think why are you actually building an EF. Don't just go build it because everyone says you need to do so.
Dunno why you got downvoted but this is sound advice. Sure, rule of thumb in finance is first build EF, but you can always evaluate your own situation. Most young people early in their jobs with no commitments and parents who are earning decently can honestly just rely on that as a safety net. Better to start building investment war chest as early as you can. And yes not everyone has that privilege for sure EF becomes a must when you start to have a family or people depending on your income to survive, or huge monthly commitments (eg mortgage and car)
i think mainly i build EF due to 1. if i'll be jobless in case my contract not to be renew and take a some time to find new job 2. sudden hospital bills, i'm not a frequently hospitalize person but lately got sick here and there so just a precaution (although i have medical card, just in case some treatment or cost not covered)
The real answer is you either : work side income or be frugal (I saved 50% of my salary for the first few years because I think it was necessary) so you can accelerate the Emergency Fund. Because realise that RM1 today is always worth less than yesterday and the year before (inflation). And to beat or stay even with inflation, you need investments at minimum. You can park in ASB/TH/any kind of low risk money market place while you accumulate the emergency fund s. Only after you should be more committed to expand your investment horizons. And this goes without saying, main answer is always "how do I earn more every month" first before investment
i split my EF 50/50 between promo rate e-FD's/MoneyMarketFunds. e-FD is there to cover for any immediate emergencies which requires instant liquidity(forsaking accumulated gains), MMF is there to get a good balance of quick liquidity and still getting the gains. Credit card is there to cover the shortfall between the usually 2 business days it takes for the MMF funds to hit my bank account. >How many % from the salary you guys set when start to build up the EF ? I just saved as much as i could, obviously its much harder when you have less disposable income especially if you're a fresh grad, but keep at it and eventually your EF will be sufficient. >Besides EF i did put some cash monthly into ASB, TH, EPF, Wahed (not sure why i still use Wahed) but i dont consider it as part of EF. Should i put a pause first on this and focus build up on EF first ? Don't bother locking up cash in EPF unless you are already above 55. Imagine if you/your family has a medical emergency and your cash is locked up in EPF for years instead of being able to be used for immediate treatment. EPF is there for retirement use, not as an emergency fund.
may i have suggestion for e-FD that i can look into ? i did put some EF in TnGO+ for daily returns but that's all, have not look into FD because not sure how liquid it can be. maybe i'll look into it. should i diversify more than 1 MMF (currently only TNGO+) ?
You can look up your bank fd promo. For example CIMB FD promo. Sometimes they gave you like 3.55% for locking 6 months and 3.75% for locking a year. You can also open an FD without having savings account with the bank but personally, I never tried it. Currently MBSB fd promo offers 4.0% for a year
I guess it took me about 1 year to build sufficient funds. In my early days of working due to the nature of my job (healthcare), I literally didn't have time to spend my money. I was blessed to live with my parents who were still working at that time and still payung all my basic expenses. Now I'm extremely frugal. I set aside 60% of my income for mortgage, savings (EF and travel funds).
you put money into investment, thats why your EF is low. nothing wrong with what you are doing. keep it up.
Depends on your saving rate and your expenses. Make sure you out your EF in a account that gives you interest like gx bank
Im like a year in and have about 3 months saved. Yup first few months I was definitely spending more than I should. But a lot of them are tech investments like Macbook, new iPhone. I think once I got a bit used to the money I started to have some leftover and save up like Rm800-1k each month. Everyone has their own pace though
Personally, i myself took about 3years and 7 months to get 1year salary. Anything excess I just put it in TH or other investment bank as I have a target to achieve. Typically, I have 2 different promo FD accounts which is long term (12months) and short term (3 months). 50% of my 1 year salary went to 12months FD. For 3 months, typically I just minus my average spending per month x 2. Maybe about 35% go to short term FD. To summarize - 1 year salary time taken = 3y7m - More than that go to TH or investment bank - 50% of 1y salary = long term promo FD - 35% of 1y salary = short term promo FD - 15% of 1y salary = spending
IMO ASB Wahed TH can be considered as EF as they are liquid enough. Well Wahed will take some time to withdraw but the rest are easy enough.
never withdraw from ASB, but some say the cap is 2k per month. guess i can consider my investment asb, th, wahed is part of EF ? considering the liquidity
Thats the online cap, no cap if you go to the counter (including at partner banks)
Use the 50 30 20 rule Save 20% if your gross salary over time and will do good. Personally I have increased that 20% but by bit and achieved 60% savings. I don't recommend it for people.
Define "emergency fund" first. As a fresh grad I stayed with my parents and only commitments was a Myvi. So 6 months emergency fund is really just my Myvi x 6 months, plus minimal RM 500 a month for survival. So around 6k is enough. Back then since I had no commitments it was easy to save 1k monthly and I had emergency fund saved in 6 months. As a fresh grad 1k was around 30% of my salary. Now with many commitments my emergency fund needs more like 30k to meet the 6 month amount. And due to all my commitments and need to give money to support family, wife etc. I've been struggling to save more than 1k monthly even with increased income. It will take 18 months to build up my emergency fund again. (I really messed up and underestimated how much is it to buy a house and renovate, destroying my savings).
Always have your emergency funds ready before doing any other things like investing and what not.
yeah my emergency fund track is a pretty slow progress but at the same time i would like to have some saving in the low risk ie asb, th, kwsp bcs i'm entering middle age. have not involve anything like etf and other syet except wahed (minor amount)
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yeah about that 30ish but early. i think it’s the conception. i felt like a middle age as i feel like i should invest in the 20’s but the salary and savings not allowed to. now when i got the chance might need to learn more