Be aware of the Economy Reality by Improving Personal Financial Management

Bank Negara already increased the Overnight Policy Rate or OPR twice since the end of the MCO (Malaysian movement control order). 

"At the height of the Covid-19 pandemic in July 2020, BNM reduced the OPR to 1.75% – Malaysia's lowest level ever. It maintained this level until May 11 this year, when it raised the OPR by 25 basis points or 0.25% to 2.00%."

"On July 6, the central bank raised the OPR again by another 25 basis points to 2.25%."

https://www.malaysianow.com/news/2022/07/15/economists-tell-who-will-feel-the-pinch-if-opr-is-raised-again

During the first OPR increment, my property investment required me to pay additional RM310.30. I have many loans in a total more than RM one million. Today, after the second OPR increment, the banks finally increase again the monthly loan payment. I have to add another RM161.00 to the existing loans. In total, I have to pay additional RM471.30 to service my existing loans. The total increment is almost 7.6% of my total loan monthly payment. 

This also means, many Malaysian have to pay additional 7.6% to their loan or monthly expenses. In other words, many Malaysians have less 7.6% ability to spend. Combining the high inflation and 7.6% less ability to spend, Malaysia economy growth will stay slow until next year. This also means I don't agree with the Malaysia GDP expansion as calculated by the ministry of finance or Bank Negara. If you look carefully, the growth during Q1 (3.8%) and Q2 (8.9%) are based on comparison with 2021. 

 

Read more at: https://www.nst.com.my/business/2022/08/821605/malaysias-economy-grows-faster-89pct-q2-first-half-growth-69pct

The actual comparison should be the comparison with 2019 when the MCO have not occurred! Measuring the economy performance when the economy at bottom low is not only inaccuracy, it is misleading as if our economy is a Trust Fund performance! So many people are being fooled by a Trust Fund performance using this technique. If the performance is really high, why the dividend return is low? If Malaysia economy is so good, look at the reality of today economy performance which is your pocket. It has minimum effect to those who work in government. But it is hard for those who work in private sector especially when prices of daily consumption has increased a lot.

Another clear indicator that the economy has not been back to the original level as before MCO, look for the retail shops around you. There are still many empty shop lots with banners "For Rent" or "For Sale". How bad is the area being hit is depending on how many shops are still vacant. Some of the retailers cannot survive when they cannot operate the business and have to close the shop forever. Some of them try to relocate to a cheaper or affordable location. If we are observant, we can see some new retailers have moved into the vacant shops. While some of the shops are still vacant.

All I can advise is spent your money wisely and carefully. We should work harder and look for opportunities for more income streams. But, my wife just bought a new CRV TCP1.5 AWD car!! It is time for us to use some of our success in property investment. But, you should beware for another OPR increment in the near future. It is closer than you think.

Happy investing!