WHEN CASH IS NOTKING

MALAYSIA has entered unchartered territory. Here’s how to prosper during the exciting months ahead. This column was started in Japan after a work meeting in Wakayama, during a short holiday in Osaka, a fabulous kobe beef meal in Kobe, and a day trip to picturesque Kyoto. The visit granted me physical distance from Malaysia, which sharpened my perspective of our forever altered political landscape triggered by Tun Dr Mahathir Mohamad’s Pakatan Harapan in GE14.

I’m ecstatic at the promise of better fiscal (budgetary) management of our national economy, a commitment to reduce Malaysia’s systemic corruption and, most importantly, the smooth transition of power, which places Malaysia amongst mature democracies with a two-party system.

Plus, I’ve always held our fourth and seventh prime minister in high regard. I cried (a little) when I watched Mahathir willingly step down in 2003. I cried (more) when it was announced in the wee hours of May 10 that Pakatan Harapan had won GE14 in dramatic fashion.

Way back in 1981 — when all my attention was on my SPM examinations and my father, D.A. Devadason, Malacca’s most senior lawyer at his death in 2008, despaired of my zero interest in politics and current affairs — Mahathir became Malaysia’s fourth prime minister.

Thirty-seven years later (as I turn 54 in a few days) and less than a fortnight after 92-yearold Tun Mahathir ascended to our premiership as the world’s oldest elected leader, I look forward to a New Malaysia with optimism, joy and anticipation at the tiny tweaks and seismic shifts Mahathir will implement. The hard-line he took against money politics in Sabah and the accelerated moves to pardon Datuk Seri Anwar Ibrahim have filled me with palpable hope for tomorrow.

I was riveted by a statement Mahathir made after the tense time from late May 9 to even later on May 10. He acknowledged money is important, but declared money will no longer be king in Malaysia. Remember that phrase as our new government must be watched like a hawk and held accountable to ensure it stays true to its lofty principles.

The eventual emergence of a new, clean opposition is something we should welcome. In the weeks, months and short years ahead, Mahathir will be busy. When, God willing, he turns 93 in July, the world will watch, tongues will wag, heads will shake with incredulity, and he will shrug off the accustomed scrutiny and keep on working for the nation he loves.

From a financial planning perspective, there will be times when cash is king within our savings and investment portfolios. The endless cyclicality of economic conditions and the pendulum swings between fear and greed within the stock market mean that holding cash when fear is in its ascendancy can be profitable (and calming).

However, as we raise our liquidity levels, we should heed this lesson from centuries of investment history: Cash never remains king for long. For us to succeed, the cash in our portfolios should be wisely and courageously deployed into riskier asset classes like equities, investment real estate and commodities when they are cheap.

Such shifts from risk-off to risk-on investing are needed so that oscillations of public emotions may be harvested to keep our purchasing power ahead of the twin vampires of inflation and taxes.

The promised cancellation of Malaysia’s 6 per cent GST was a major (but not only) reason for Pakatan Harapan’s victory. I don’t know how the country’s income gap can be closed with the elimination of this globally-accepted consumption tax. However, Mahathir and his team of heavyweight leaders and genius senior advisors are way smarter than I.

As a curious student, I’ll be watching what the new coalition unveils to ease the hefty cost-of-living burden low and middle class Malaysians have endured in recent times.

Cash in a portfolio is wisely utilised in paying down loans and buying productive assets, if we have the discipline to delay excessive consumption. I believe the new government will implement similar steps nationally.

Right now there is a Great Wall of money standing at the sidelines scrutinising how Mahathir’s new government improves Malaysia’s economic outlook for 2020 and beyond. Once those international institutional investors are convinced that we’re on the right track, cash will surge in.

As this torrent pours into our country, the resultant market surges will be enormous and wholly justified, underpinned by the vigour of our diversified economy. Well before that happens, though, I’m advising my financial planning clients to use a justifiable portion of their excess cash to buy sound Malaysian investments. (I’m doing so myself, too.)

None of us knows how close Malaysia came to the precipice of total economic oblivion through malicious theft and inept management. So as we edge backward from the black abyss of failed statehood, as we regain our footing on firm ground, I suggest we unashamedly and selfishly pray for the continued safety, health and mental clarity of the legend at our helm.

© 2018 Rajen Devadason

Read his free articles at www.FreeCool Articles.com; he may be connected with on LinkedIn at https://www.linkedin.com/in/ rajendevadason, rajen@RajenDevadason. com and Twitter @RajenDevadason