A Malaysian Japanese Discoveries

Present & Future Values of Financial Planning PV                - Present Value              FV                - Future Value             i                     - Interest Rate/Inflation Rate/Return         N                   - Number of years     PMT             - Payment          PM1           - First Month PM2             - Second Month Mortgage: Multiple Even Cash Flow Property valued at RM 500,000, 10% downpayment while having 90% of financing which equivalent to RM 450,000 (PV). Interest rate is 3.80% (i) for 30 years (...

Financial Planning Formulas  As I deepen my knowledge in financial planning, I came to realise that there are many formulas that could help me to assist my clients to understand their financial strengths and weaknesses.  Saving Ratio (SAR) = Total surplus / Total Gross Income     This formula helps you to measure how much was being saved monthly. A recommended saving ratio is above 20%. The higher the saving ratio, the better the money management skills is. Sometime, it is also an indication of achieving future goals. Debt Service Ratio (DSR) = Monthly Commitment / Total Gross Income     40% and above are considered a high risk borrower. In other word, the lower the ratio, the better the debt management is. This is just a guideline, however, different banks has different risk appetites; where the acceptable DSR are varies. DSR % helps to understand how much was the gross income being utilised for debt repayment while to understand the remaining % for o...