RM1,000,000 is a necessity not a privilege at retirement.

Good day fellow readers,

Is ONE MILLION ringgit a value that we can be proud of? Maybe today, but in 20 years down, everyone must have that amount or more due to several reasons.

Challenges of Retirement

• Escalating Food Prices @ 3.5%*
• Escalating Healthcare Costs @2.3%*
• Escalating Education Fees @ 2.2%*
• Escalating Property Prices @ 10-15%**

*Department of Statistic Malaysia, May 2013

**The Malaysian Insider, April 2013

Rule of thumb, we should save at least 10% of our monthly income for retirement purposes. Do we really do that? Or are we been living in our debt every month without anything to spare, and hope for a miracle/bonus to pay off some but continue piling up that debt soon after?

Case scenario : You have been living your life in the exact way described above, and now you are 54 years old. Next month you will be retiring, and your only savings are from your EPF. There are around RM350,000 in there, and you smile happily thinking all the things that you could buy and places you could go with that money.

In 6 months you have almost depleted your EPF by settling your credit card, housing, and personal loans. Right now you have around RM15,000 left, with no income, and bills to pay (yes bills does not stop after you retired). You are desperate for income, and took the first opportunity to be a night guard in some shopping complex even though you have severe back pain issue. 

No choice, as your children have their own bills to be paid, and can only give meager amount of money to support their parents. And guess what, you didn't even have the chance to use the EPF money for your leisure, as the bills piled up by the time you retired due to the thinking that everything can be settled after EPF withdrawal.

Above scenario can be avoided with proper financial planning, and there are a lot of ways to do so. My name is Tajul Naim, a financial ADVISOR under CWA, and it is my job to advise people on how to manage their money healthily. If you are keen to know what can be done to make sure you have at least RM1,000,000 in hand by the time you retired, contact me now at 012-9232917.

I won't sugar coat the fact that the longer you wait the more money you need to invest. If you are in your 30's, by right you should have a plan already! If not, help me to help YOU by contacting me now!

Do now or regret later.

THE SECRET TO WEALTH

Whether you want to invest in shares or across a broad range of asset classes, unit trust funds provide you with one benefit that can be very hard for individual investors to achieve - diversification. 

Many people invest but only some become wealthy. 

Why?

The mistake many people make when investing is that they treat their investment as saving. 

Saving Versus Investing

So what is the difference between saving and investing? Saving is what you do to build up funds for something, like a holiday, and when you have the amount saved you withdraw your capital from your investment and spend it on the holiday. After the holiday you have nothing left, and start the process all over again. 

But building wealth is different. People who want to build wealth invest their money for the long term in 'growth assets' such as shares and property. 

Their strategy is to spend the income that the investment produces, but to leave the capital invested. They don't withdraw the capital, so it stays there growing and compounding, and producing more and more income each year. 

If you do this it will take you quite a while longer initially to get to your investment goal , but in the long run you will find that the extra wait has been worth it. As the years go by, you will have an increasing additional income stream from your investments and your standard of living can rise accordingly! 

Should I continue to retain capital in retirement?

Retaining your capital is a good strategy to use for wealth accumulation. Of course when you stop working later in life, your strategy may change. At that point it can often be beneficial to start drawing on some of your capital as well, whilst still ensuring that it will last for as long as you need it.