Savings account should be free, and I’ll tell you how to get one at the end of this post. We are already getting very low savings interest rates. I feel that it is unfair to impose fees on savings account.

When we save our money with the bank, we are actually lending our money to the bank. The bank takes our money and lends it out as housing loans, overdrafts, etc. and makes alot of money via interest.

Imagine the bank earns 3% in mortgage interest, and then pays the savers 0.2% as savings interest. The bank makes 15 times more than the savers. Yes, the banks need to make more to cover its overheads. However, my point is the bank is using our money as working capital to earn even more money and so it is unfair to impose miscellaneous fees on savings accounts.

Today, I have closed my CIMB savings account. Thereby saving me RM8 ATM card fee a year. I have my Maybank savings account for many years now and I have never had to pay any fees on my savings account.

Can you imagine, if the amount of money in your savings account is small, and the interest you earn is little, then the annual RM8 ATM fee will wipe out all the savings interest you have earned in the whole year. And maybe your savings interest is not even enough to cover the ATM fee.

Many banks, when you ask to apply for a savings account, the customer service will recommend that you open XYZ savings account. However, these savings accounts come with all types of fees such as the popular annual ATM fee, and maybe penalties if your account is lower than the minimum balance. What you need to do is ask for “zero fee savings account”.

Here’s my personal experience. I went to HSBC to open a savings account. The customer service introduced a couple of savings accounts to me. But these come with fees. I told the customer service that I don’t want any fees. The customer service explained that all savings account now comes with at least the RM8 ATM annual fees. I insisted that I’d only open a savings account if there’s no fees. The customer service checked and rechecked her computer and finally showed me a savings account without any fees.

Remember, “the customer is always right” and the banks do have no fees savings accounts. It’s just that they don’t recommend these savings accounts outright because these accounts don’t make money for the banks.

Last month, I achieved my first hundred thousand net worth. I also pledged to accumulate my next hundred thousand by the end of 2010, which is about 16 months from now. I’ve listed out my sources of income as a starting guide to see where and how my next hundred thousand will come in.

For the next 16 months, I estimate my income to be as follow:

1. I’d be able to save about RM3,000 a month from my salary (after deducting normal expenses eg. internet, mobile, petrol). In 16 months, I would be able to save RM48,000.
2. Business is bad this year. I don’t expect my bonus to be as high as last year. I’m estimating about RM6,000 bonus, after EPF, taxes etc.
3. I have some side income. Thank God it has started to pick up again. I earn about RM1,400 a month. In 16 months, I would be able to save RM22,400.
4. The dividends from my investments, is estimated to be about RM6,000.
5. I have some uncollected payments from some jobs, valued at RM2,600.

1 to 5 totals to RM85,000. This means a shortfall of RM15,000. What are the opportunities available that could help me narrow the gap and achieve my target?

1. I’m 100% invested in stocks now. My current portfolio value is about RM100,000. Can my portfolio appreciate 15% in the next 16 months? If yes, then the capital appreciation of 15% or RM15,000 will help me achieve my target. However, given that consensus views are that the stock market is already overvalued, I cannot count on further upside in my investment portfolio to cover my shortfall.
2. I have loaned a friend about RM5,000. I have already written this amount off after many unsuccessful attempts to collect the loan. I think now I have to be more persistent to collect this loan and if I am successful, I will be able to cover 33% of my shortfall.
3. Cutting back on my spending. Hmmm, I don’t think I can cut back anymore. I’m already spending very little.
4. Perhaps it’s time to setup a website to advertise my SEO services. If I can get a job every two months, this would add about RM5,000 in 16 months.
5. Join multiple contests and sell off the prizes? You’d be surprise to know that my brother has a friend who is doing this for a living.

Looking at the list above, accumulating my next hundred thousand in the next 16 months is certainly an achievable target. I’m looking forward to this challenge. It’s a nice feeling to watch my net worth grow month by month.

Today, I have reached my first hundred thousand networth. This is of course excluding my retirement fund EPF which I have no control over.

My stock portfolio grew to RM90,890 and I have another RM10,900 in my futures trading account. I’ve invested a total of RM97,000. I have reinvested all my dividends. My investment portfolio value of RM101,790 represents a gain of 4.9% since November 2008 when I first started investing in stocks.

It took me about 3 years for me to reach where I am today. I can still remember the times when I had to tighten my belt to pay off my credit card debt. Then I had set my goals to achieve a networth of RM100,000 by 2010. I have achieved this goal in August 2009, four months before 2010. I have achieved a significant milestone in my life.

Words cannot describe how I feel. It’s a mix of feelings, happiness, relief, some sadness, and lots of hope. I feel happy because I’m on track towards my goal. I feel relief that some expectations I have put on myself have been lifted. I feel some sadness, when I reminisce about my past 3 years and the sacrifices I had to make. But it’s all worth it.  My hope is overflowing because I have proven to myself that my goals are achievable. And my dreams are one step closer to becoming reality.

People say the first hundred thousand is the hardest. The next hundred thousand is much easier. And so will the many hundreds of thousands to come. And I can feel it in my bones that I can achieve the next hundred thousand before end of 2010, even if my take-home-pay plus bonuses for the next 17 months is only RM90,000. Still, I have no doubt that I can achieve my goal. My burning desire and the conviction to achieve my goal will guide and show me new opportunities to financial freedom.

I look forward to my next one hundred thousand.

In the August issue of Personal Money, there’s a readers poll on EPF. Some of the feedbacks are indeed interesting.

1. Studies by the EPF have shown that 70% of members who withdraw their funds in a lump sum spend all of it in less than 10 years. Yet 53% or more than half of the respondents in the poll plan to make one lump sum withdrawal when they reach the age of 55.

2. 84% replied that they did not expect their EPF funds to be enough for their retirement.

These two points taken together shows that the Government should raise the retirement age. Especially more so now because with better healthcare and nutrition, people are living longer.

3. Of the respondents who withdrew their EPF money to invest, 62% reported that their returns are higher than dividends from EPF while only 15% reported lower returns than dividends from EPF.

Why are EPF’s returns so poor? EPF should start buying land and wait for the land to appreciate. It has enough money to buy lots of land. When development takes place either by private or Government initiatives, then EPF will make alot of profit, and this will benefit the contributors.

Is buying a house still the common way to build wealth? Nearly half of the people surveyed didn’t think so according to this article “Many say homeownership no longer a path to wealth“.

“The results released on Monday found that nearly one-third of those polled don’t think they will ever be able to afford to buy a home. Forty-two percent of people who have purchased a home — but no longer own it — don’t think they’ll ever be able to afford to buy another. And 31% of those who still own a home don’t think they’ll ever be able to buy another — whether it’s to upgrade their existing home or buy a vacation home.”

That’s alot of people saying they can no longer afford a home. What I can gather from the above paragraph is that houses are getting more expensive and that the income of the average working man isn’t catching up with the price of the houses. It’s another one of those “the rich are getting richer, the poor are getting poorer”.

If you can’t bring the prices of the houses down, then we need to improve our income. We need to improve our knowledge, skills, and earning capabilities to move ahead of the pack.

People need to have a roof over their heads, to protect them from rain or shine. If you’re renting your roof, then you need to seriously find ways to buy your own roof. The wealthy became wealthy because they stopped paying others and started paying themselves.