Credit Card Fraud

 

bill itunes

Yesterday a friend shared a story with me how her credit card was fraudulently used for online purchases. She always tracks her credit card transactions, so when some unknown charges came up, she could act fast and block the card before further damages were done.

When she called the bank to ask about the charges, she was told that they were apps purchases at iTunes store. She started to get suspicious because the only time she used it was buying an app for her niece a few months ago. Her niece might have purchased apps without knowing that these purchases would be charged to her aunt’s credit card account. 

After checking with her niece, her suspicion was confirmed. She had bought some apps from iTunes store thinking that they were free because they were featured in Apps Gone Free. Well, they were only free for a day, not forever!

Since the amount of credit card charges were not too big, my friend paid the credit card charges in full and asked the bank to replace her card, instead of disputing the charge. Sometimes disputing the charge can cost more than simply paying the balance. (You can read my story here)   

What can we learn from this incident?

  • Track your credit card expenses 
  • Get your bank to notify you for any credit card expenses above a certain amount (you can set the amount yourself). The notification is usually sent by SMS just a few seconds after the transaction occurs.
  • Do not leave your credit card detail saved on website or online store. It may be inconvenient to enter your credit card detail for every transaction, but it is definitely safer, especially if you have youngsters using your gadgets. 

Do you have any similar experience or want to give more tips? Please share in the comments.

Learn and Grow!

Inge Santoso, B Com, CFP®

What Can An Old Childhood Toy Teach Us?

2

Yesterday while shifting stuff at family storage, I found this driving simulation toy from my childhood. I did not quite remember whether I got this for my 11th or 12th birthday, but I remembered the process before getting this toy.

The toy was displayed in a toy store just opposite our old house. I regularly came to the toy store just to see what was new and interesting. When I saw it, I really wanted to have it. In the 80s, something like this was already a very technologically advance toy. The screen on the right displayed the road and when you turned the steering wheel, the car moved from left to right. I could not remember whether the speed changed by shifting the gear. Anyway I was quite obsessed in getting this particular toy.

I told my parents that I wanted this toy for my birthday. They tried to persuade me not to buy it because it was quite expensive. I said I wanted it and I gave them several reasons why I wanted to get it. One of the reasons that I told them was that I could use it to practice my driving skill so I would be ready to drive by the time I reached the age of 17. When I think about it now, I realize how ridiculous the reasons and excuses that I gave to my parents. Yet they still bought me the toy.

I played with it for about a week or so, and I just got bored with it. I did not think that I would lose interest that fast, but it happened. It went to the storage and I just found it again after more than 20 years. I showed it to my 3 year old nephew and he was not even interested in it, the iPad certainly had more appeal to him than something like this.

What can we learn from this?

Sometimes we are still like little kids. We want something so bad and we start making up reasons why we need it. We build a strong case about why we need and have to buy it now. Even the most ridiculous reason seems reasonable and acceptable.

We can be so stubborn and do not want to hear other people’s advice or recommendation although they can see it more clearly than us. Sometimes they just keep quiet after a while because they can’t be bothered speaking to closed ears and mind. So if you still have friends who are honest with you about your silly purchases, be glad you have them around.

Remember that the excitement often occurs during the wait, and we simply lose interest after we have it. Why not just keep waiting to keep the excitement going on and on? Hahahaha In a few months, we will be enchanted by different or newer toys anyway. At the moment, I am excited thinking about getting a MacBook Pro in December…I’ve been waiting for more than two years…perhaps I will buy, perhaps I will wait for the next and more advanced MacBook Pro.

Learn and Grow

Inge Santoso, B Com, CFP®

Kredit Kendaraan Bermotor – Bunga Flat dan Bunga Efektif

scoopy 1

Kita sering melihat iklan penjualan sepeda motor yang menggunakan bunga flat.

Kredit motor 2 tahun hanya dengan bunga 2% per bulan.

Jika kendaraan bermotor yang dibeli seharga Rp 15,000,000 dengan DP Rp 5,000,000. Berapakah angsuran per bulan? Berapa bunga efektifnya?

Pinjaman               Rp 10,000,000

Bunga 24 bln          Rp  4,800,000 (Rp 10,000,000 x 2% x 24 bln)

Total + Bunga        Rp 14,800,000

Angsuran per bln  Rp   616,667 (Rp 14,800,000/24 bln)

 

Bunga Efektif       

Periode (n)            = 24

Pinjaman (PV)       = 10,000,000

Angsuran (PMT)     = –616,667

Future Value (FV)  = 0

Due                        = 1

Bunga periode       = 3.76%

Bunga efektif       = 12 x 3.76% = 45.12% p.a

 

Seringkali kita berpikir bahwa dengan bunga 2% per bulan, bunga setahun hanya 12%. Dengan contoh di atas, kita bisa lihat bahwa sebenarnya bunga efektif adalah 45.12% p.a.

Semoga contoh ini bisa memberikan gambaran kepada Anda tentang angsuran dan bunga efektif ketika Anda berencana membeli kendaraan bermotor.

Things You Need to Know When Going to Investment Seminars

investment seminar

Have you ever been to an investment seminar?

I like going to those free investment seminars and gatherings because I get to know many different products offered by various banks and financial institutions. If you are interested in learning more about financial products, you can come to these events with some cautions.

Although it is often called a seminar, more often it is more about selling investment products. Even if it is a financial institution’s consumer gathering about economic outlook, at the end, we are often told about some new product offerings.

Sometimes we get emotional when hearing the special offer available that day.

For example, for the first 7 people who open an investment account with a minimum balance of Rp 100,000,000 will get a cashback of Rp 300,000. You can use the money to trade, but you are not allowed to withdraw for the first three months. We feel like we are getting some free easy money, but when you really calculate it, it is not really worth it.

If you are loaded with lots of money, that amount may be a spare change for you and it does not matter where you put it. However if you are not, you need to think about the opportunity cost of putting that money there. You need to think whether there are better alternatives for you. 

What do you need to do if you come to these seminars?

  1. Come with a clear goal in mind – is it just to learn about an investment product? Then come to learn and do not buy anything.
  2. Ask a lot of questions. If you do not understand the product, do not invest in it.
  3. Get a second opinion from someone outside the seminar, preferably those with financial knowledge and unrelated to the financial institutions that are offering the products. If you have a trusted certified financial planner, you can ask him or her.ziggy second opinion
  4. Be skeptical, especially if they are offering something that is too good to be true because it often is. If they are saying that it is a no-risk, high return investment, then run away as fast as possible because nothing is without risk. The higher the return, the higher the risk.
  5. Do not get pressured by the account officers or sales people, especially if they say that if you do not take action now, you will miss out on the profit. Let it go! There will be other opportunities to make profit!

Just like reading books, financial blogs, going to investment seminars can help you to be more knowledgeable about financial products. Use the opportunity to learn and may what you learn take you closer to your financial goals.

Learn and Grow

Inge Santoso, B Com, CFP®

How Much Interest Are You Getting from Your Bank? 0%?

fe zero percent saving

Do you know how much interest you are getting from your bank?

In Indonesia, for most of the banks (BCA, Mandiri, and BNI) that I know of, if your balance in the saving account is less than Rp 1,000,000, you will earn 0% interest.

If you have money less than Rp 1,000,000 sitting in the bank at the moment, you’d be better off by having the same amount under your bed. Why? Because not only you are not getting anything, but you are losing money through bank charges ranging from Rp 10,000 to Rp 12,000 per month.

What should you do if your saving account’s balance is often under Rp 1,000,000?

Get a saving account with no administration fee!

There are several banks that offer free admin saving account – for example TabunganKu that has limited features such as a maximum of one or two withdrawals per month. Each bank has different terms and conditions for TabunganKu, so please go to the bank official site to get more information.

Personally, I prefer Danamon Lebih when it comes to free admin bank account because not only there is no admin fee, but I can get cash back (max Rp 50,000 per month) from using the debit card when shopping. I also get an ATM card and internet banking facility.

We need to be smart when it comes to our money. Try to get the best deal that suits our needs!

Learn and Grow

Inge Santoso, B Com, CFP®

Note: This is NOT a sponsored post

Interest–Part 3 Rule of 72

A quick and easy way to calculate compound interest is using the rule of 72.

In finance, the rule of 72 is used to estimate how many periods the investment will be doubled, given the interest percentage per period.

The formula is very simple

1

If you can get a 12% interest or return on your investment per year, how many years will you double your money? If you invest Rp 10,000,000, when will it be Rp 20,000,000?

n = 72 / 12

n = 6

So it will take approximately 6 years to double your money or make your investment become Rp 20,000,000.

 

Let’s take another example. If you want to double your money in 3 years, what is the rate of return that you need?

3 = 72 / r

r = 24

So you will need an interest of 24%

 

What is the number if you want to know when your money is tripled? Use Rule of 114

What is the number if you want to know when your money is quadrupled? Use Rule of 144

Remember to use this rule as an ESTIMATE because it is not meant to be exact. It is good for rough calculation that you can use without a financial calculator or spreadsheet.

Learn and Grow!

Inge Santoso, B Com, CFP®

Interest – Part 2 Compound Interest

salt compound

Compound interest is interest upon interest. That is, when an interest payment is added to the principal and then the whole thing (principal + interest) earns interest.

How does it work?

If you invest Rp 1,000,000 and the compound interest is 10% a year, then

Year 1 : Rp 1,000,000 + (Rp 1,000,000 x 10%) = Rp 1,100,000

Year 2 : Rp 1,100,000 + (Rp 1,100,000 x 10%) = Rp 1,210,000

Year 3 : Rp 1,210,000 + (Rp 1,210,000 x 10%) = Rp 1,331,000 and so on

 

Compound interest is what can make you rich when you invest. One of the most important elements in compound interest is time. The longer the time, the greater the impact.

That’s why the best time to invest is yesterday! Smile  Since you cannot go back to yesterday, then the next best time is NOW!

 

Perhaps you have heard this story…

One day a father and his son went to play golf. Before they started the game, the father asked his son.

“Son, would you prefer getting a lump sum Rp 50,000,000 or getting Rp 1,000 on the first hole and doubling it for next hole until you reach the 18th hole?”

After thinking for a few seconds, his son said, “Rp 50,000,000, Dad.”

“That’s why you still need to learn, Son. I’ll show you why.”

golf course 

“If you choose doubling that Rp 1,000, at the 18th hole, you will have Rp 131,072,000 and if you total all the money from hole 1 to 18, you will get a sum of Rp 262,143,000. You will get about 5 times more.”

 

What can we learn from this story?

1. It’s OK to start small. The most important thing is to start NOW.

2. When you have more money, save and invest more!

3. You may not be able to get an interest of 100% like in the story, but there are financial instruments that can get you better return than bank saving rate.

 

Learn and Grow!

Inge Santoso, B Com, CFP®

Interest – Part 1 Simple Interest

1

When we talk about investment or borrowing money, we need to understand interest.

For most of us, we had learned how to calculate interest when we were at school, but we might not put much attention to it because we were too young to understand its implication. We only learn the mathematical aspect of it without understanding how important it will be when we grow up and start saving, investing or borrowing. 

Today we will learn about SIMPLE INTEREST. Interest is how much you pay for the use of money. If you borrow money, then you pay interest. If you lend or invest money, then you earn interest.

Example 1: If you invest Rp 1,000,000 and the interest rate is 12% a year. How much interest will you get in 3 year?

You will get an interest of = Rp 1,000,000 x 12% x 3 = Rp 360,000                            

The amount of money you will have after three years is

Rp 1,000,000+ Rp 360,000 = Rp 1,360,000.

 

Example 2: If you borrow Rp 5,000,000 and the interest rate is 10% a year. How much you will have to pay if you borrow for 3 years?

You will have to pay back  = Rp 5,000,000 + ( Rp 5,000,000 x 10% x 3)

                                         = Rp 5,000,000 + Rp 1,500,000

                                         = Rp 6,500,000

 

Tomorrow, we will learn about COMPOUND INTEREST.

Learn and Grow

Inge Santoso, B Com, CFP®

Wishing Wishy-Washy Wishes

ziggy wishy washy

I wish…

  • I have more money,
  • I have a new car,
  • I have a bigger house,
  • I have the best smartphone,
  • I win a lottery,
  • I get a windfall from distance relatives,
  • I get a pay raise at work,
  • I can travel more,
  • etc.

I wish…I wish…I wish…so many wishes, but unfortunately they will remain just wishes.

If you want to your wishes to come true, one of the first things you need to do is to change your wishes to goals. Some of you may have heard SMART goal setting that goals need to be Specific, Measurable, Attainable, Relevant and Timely.

Specific – What do you want? Why do you want it? How are you going to do it? You need to be very clear about what you really want. For example, instead of wishing you have more money, you can set a specific goal of saving 10% of your income or Rp 1M a month.

Measurable – You can quantify your goal and measure your progress. For example, if you want to have a saving of Rp 6,000,000 in a year, then you can measure your progress when you save Rp 500,000 a month.

Attainable – You need to believe that you can achieve this goal. You need to set a goal that is big but not impossible to achieve. For example, if your income is Rp 10M a month, saving Rp 1.5M a month or 15% of your income is attainable. If you say that you will save Rp 5M or half of your income, it will be very hard, especially if you have a family to support. If it is too difficult you are not going to do it, so set a goal that will excite and motivate you to achieve it.

Relevant – How is the goal relevant to your life or purpose? For example, if you say that you want to save Rp 1M a month for a child’s education fund for 10 years, but you do not have a child…then it’s irrelevant. The goal must be meaningful and rewarding for you.

Timely – You set a timeframe for the goal. For example I have Rp 20M of emergency fund by 31st December 2013.

Transform your wishes into goals and start taking action today! 

If you do not mind sharing your goals with us, please share them in the comments! You will be more motivated when you make a public commitment!

Learn and Grow!

Inge Santoso, B Com, CFP®