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1,400
26 years old
1,200
60 years old
35 years to prepare
retirement fund
1,000
75 years old
Retirement period
of 15 years
800
600
400
200
Mdm Ho Starts
investing at age 40
0
1
11
13
15
17
19 21
Name
Start
age
Investment
period
(years)
Compounding
period up to
age 60
(years)
Ms Alia
30
20
30
Mdm Ho
40
20
20
23 25 27 29 31
Yearly
investment
(RM)
Total amount
invested (RM)
Total invesentment
value* at
age 60
(RM)
10,000
200,000
1,320,149
10,000
200,000
557,645
* By starting 10 years earlier, the investment value of Ms Alia could grow 137% more than the investment value of
Mdm Ho when both of them reach the retirement age of 60, assuming unit trust rate of return is constant at 9% per
annum. This is only an illustration and does not indicate the past or future performance of any specific unit trust
fund.
Consider your
investment horizon
If time is on your side, shortterm market fluctuations will
eventually even out over time.
A longer time horizon will allow
you to invest in more volatile
investments while at the same
time take full advantage of the
compounding effect of your
investments.
Likewise, the shorter the
investment horizon, the more
conservative ones investment
strategy should be with more
weightage given to fixed income
funds.
Mitigate risk by
diversifying investments
In view of how business cycles
can adversely affect a particular
sector or economy, it is always
safer not to put all your eggs in
one basket.
While investing in a narrow
range of sectoral theme funds or
single country funds may produce
attractive returns when they
outperform, your returns may be
adversely affected when these
sectors or markets slow down.
Thus, investors should select
funds with different asset classes
that do not move together so that
market swings in one part of their
portfolio are offset by another
part. Failing to diversify may
leave investors vulnerable to
fluctuations in a particular sector
or market.
In addition, investors should be
mindful that owning many funds
that focus their investments in a
particular sector or market does
not necessarily equate to being
invested in a diversified portfolio
of sectors and markets.
Retirement planning
with unit trust and
private retirement
scheme (PRS)
investments
Ask yourself:
l Why are you working now?
l What are you looking forward
to when you retire?
Chances are you are working to
sustain your present life, but also
looking forward to saving a
sizeable sum to enjoy your
retirement life many years down
the road.
Now ask yourself these
questions:
l Do you know what the effects
of inflation can do to your savings?
l Are you saving enough for
your retirement?
A general rule of thumb is that
for your retirement years, you will
need 100% of your current annual
expenses plus inflation. This is
because, although some expenses
may decrease when you retire,
some will also increase. Therefore,
both expenses will offset each
other.
This expenses approach for
planning your retirement savings
takes into account the inevitable
inflation, which will eventually
decrease the value of your savings.
To know how much to save
for your retirement, use the
retirement calculator available on
Public Mutuals website. The
analysis will provide you with
options of lump sum or monthly
investment to kick-start your
retirement savings.
Public Mutual offers more than
120 funds, of which nine are PRS
funds; six core funds and three
non-core funds. PRS, which was
introduced in 2012, is especially
catered to supplement the
compulsory Employees Provident
Fund (EPF).
Speak to Public Mutuals unit
trust consultants or walk into
any Public Mutual branch today to
start saving for a truly golden
retirement life.
Founded by Siew Yin Leng, GreenAcres offers luxurious retirement living that promises comfort, security and care
for its occupants.
It is about self-respect,
independence and finding a
purpose that will keep you fulfilled.
Retiring well is a choice you
make. Although we allocated
13 acres (5.26ha) of land in Meru,
Ipoh, for this purpose 10 years ago,
we realised we needed to engage
Australian consultants, architects
and interior designers to
conceptualise the design and plan
the operations. That was the only
way to get it right, says 72-yearold Siew.
Currently managed and directed
by her son John Chong, GreenAcres
is peninsular Malaysias first
integrated retirement village
located in Meru. It is set in a
beautiful landscaped environment
that offers purpose-built amenities
and facilities, including a
recreational clubhouse, tailored to
the needs of retirees.
The project comprises 105
Australian-inspired
retirement experience
Gated and guarded
community living
Trained and professional
management staff
Senior-specific design
features in homes
Green landscapes at
your doorstep
Fully functional
clubhouse
Social, intellectual and
physical communal
activities
A village shuttle bus to
close public amenities
and areas of interest
Enough talk,
more action
IT is a fact and long-held belief that
if you fail to plan, you plan to fail.
Perhaps this sounds familiar, so
why have you not yet taken action
and left ground zero?
While ground zero does have
some level of comfort, it gives you
a false sense of well-being and
security it is time to take charge
of your personal finances and
retirement fund.
To have a comfortable and
enjoyable retirement, you need to
start planning now. This is because
there are many things in life that
are beyond control and you would
not want to be caught unprepared
when things go wrong.
Perhaps you are not the do-ityourself (DIY) type with limited
knowledge of the stock market,
mutual funds and insurance and
number crunching is not your
thing. Meanwhile, you have
modest savings in deposit and you
are unsure of what you can do
with it to generate a higher return.
Ismitz Matthew
De Alwis.
Seek the help of qualified financial planners to best save, invest and grow your money.
Client-centric service
Financial planners
also help you focus on
financial strategies
and planning. Staying
disciplined is tough
without help and
procrastination is
often the cause
of many financial
problems and loss of
unrealised potential.
Hence, it is advisable
to have a financial
planner who can help
you on your journey
and stay on track.
When planning
your retirement:
l Account for large
purchases you are looking
forward to such as a holiday,
and everyday living expenses
l Aim for a larger sum
for your egg rather than
underestimating what you
will require
l Consider creating three
different budgets for each
phase of retirement to
account for the variations in
spending
l For healthcare expenses,
use your own health and
family history as a guide
l Keep an emergency fund
in retirement in case of
unpredictable health
problems
Building a
comfortable retirement
retirement, divided by his or her
gross income before retirement.
It serves as a measure of
retirement income adequacy.
In Organisation of Economic
Corporation and Development
(OECD) countries, the income
replacement ratio is 57%.
Private
Retirement Scheme
Do-It-For-Me
CIMB-Principal
PRS Plus
CIMB Islamic
PRS Plus
> 50 years
CIMB-Principal
PRS Plus
Conservative
CIMB Islamic
PRS Plus
Conservative
> 40 years
<50*
CIMB-Principal
PRS Plus
Moderate
CIMB Islamic
PRS Plus
Moderate
> 40 years*
CIMB-Principal
PRS Plus
Growth
CIMB Islamic
PRS Plus
Growth
CIMB-Principal
PRS Plus
Equity
CIMB Islamic
PRS Plus
Equity
CIMB-Principal
PRS Plus Asia
Pacific Ex Japan
Equity
CIMB Islamic
PRS Plus Asia
Pacific Ex Japan
Equity
Do-It-Myself
By RACHEL PUNITHA
LIVING off your savings without an
income can be a very frightening
notion, spurring some to work
even harder to earn money.
The reality does not get any
better when you are finally retired
and your ability to earn a living
has decreased significantly.
Life expectancy in Malaysia now
stands at 74.75 a good 15 years
post-retirement, which is pinned at
60.
It is hard from this side of the
equation to fully grasp how long
the retirement years will actually
be, more so in this day and age
where we are living significantly
longer. In the 1950s, life
expectancy stood at 54.8 for
Malaysians and a mere 38.3 for
neighbouring Indonesia.
Needless to say, retirement years
were not very long then and the
concept of retirement as it stands
has crept up on us. In fact, life
expectancy in many parts of the
world stands in the 80s.
As much as a longer lifespan is
something to be thankful for, are
we preparing wisely for reduced or
no income, whether it is by living
off our savings, cashing in on
bonds or redirecting our
investments? Whatever the
scenario, decisions pertaining to
them need to be made today.
Depending on your age,
retirement could be within your
immediate or near future. Here we
look at some of the areas that you
need to address in preparation for
your retirement.
Less than 15 years away
(45 years old and above)
Family support
Family is an invaluable asset that
can be tapped into. If you have a
spouse, look at how you can
stagger your retirements so that
your family will not suffer the loss
of a double income within a short
period of time.
Moreover, you can supplement
your income with part-time and
casual work. The trick at this stage
would be to create as much cash
flow as possible that can be saved
or reinvested.
It would also be a good idea at
this point to enlist your childrens
help. Would they be able to commit
to a monthly contribution or be
open to caring for you under the
same roof when you retire?
Retirement is a family matter and
should be addressed together.
Employees should
discuss with
their employer
the possibility
of increasing
the employers
contribution rate
in place of a salary
increment.
This way, you will be
saving more towards
your retirement
without incurring
higher taxes.
Bryan Zeng
designed environment.
Redefining retirement
As a progressive result of longer
lifespans, more people are able to
actively contribute financially after
the official retirement age of 60.
This inadvertently increases
your ability to save more, allowing
more time for your funds to
generate returns and delaying the
Ready,
set,
grow
Capitalising
on youth
Become debt-free
Reduce your debt as much as
possible and as quickly as possible,
starting with debts that have
higher interest rates.
Ideally you should retire debtfree, but in the current low-interest
rate environment, you can plan to
have some low-interest debts in the
early years of your retirement
provided you have post-retirement
income to pay off the monthly debt
repayment, says Zeng.
However you go about it, it
should be about minimising risks
and maximising returns.
Make it a family
thing
Try to coordinate your childrens
tertiary study years and their
income-contributing years to tie
in with your retirement plan.
If non-ideal circumstances are
inevitable (meaning, you still need
to provide education for your
children even at retirement age),
delay your retirement to give time
for your children to become
established in their careers.
It is best to lay the groundwork
now by talking to your children
about your expectations Do you
Regardless of your age, now is always the best time to start planning for
your retirement.
Property as an
investment
A smart way to put your money
to work is to buy a second
property. An option is to invest in
low-cost units where rental rates
are high.
Urbanites used to fancy living
may avoid them, but they can
prove to be an effective cashgenerating tool.
Moreover, it can typically be
sold off at a much higher price if
market conditions are favourable,
providing you with a large sum to
invest elsewhere.
And at the end of the day, it can
be your backup home once you
retire and want to live elsewhere.
$
5
our
Saveonyey!
M
FOR some, retirement is a time to kick back and relax from building a career while for others, it is a time to
reconnect with themselves and spend quality time with loved ones.
The real retirement challenge begins long before your golden years. Here are some myths about retirement
planning and a few tips on how you can enhance your retirement saving efforts.
Retirement planning
1 can
wait