4 Pieces of Investment Advice For Retirement Planning

By Saidah Nur Asilah Abdul Shukor

Planning for your retirement can be an overwhelming task. Learn about some useful advice before planning your retirement.

If you want to delve deeper into investing your wealth to secure a financially better retirement, here are 4 pieces of advice to get you on the right track to start investing.

#1. Grasp investing fundamentals

Whether you are a seasoned investor or just someone who is starting to invest, it is always good to have at least a basic foundation of fundamental investment concepts.

While there are working people who invest to supplement their primary source of income, there are also many retired people who continue to invest as they live off their investment income, for example, dividends from shares and rent from property. There are both working and retired persons who invest for capital growth – to build their wealth over time and protect them against inflation. Capital growth occurs when the value of investment increases.

However, there are many people who are unable to see the differences between investing and speculating.

Investing and speculation both put money to use in something that offers the potential for profitable returns. Examples include interest, income, or appreciation in value. However, that is where the similarities end. Speculators buy something expecting a profitable change in price. They will buy if they think something will rise in value and sell if they think it is going to fall.

Investing requires a deeper understanding of how markets work and making informed decisions based on this knowledge. Understanding the relationship between risk and return and how it is affected by time is probably one of the most important aspects of investment. With a good knowledge in certain investments vehicles, markets, and industries, you can understand which ones best suit your needs and goals.

#2. Understand how to accommodate low yield return for investment savings

In the world of investing, two elements that are important are the return and the risk incurred in order to achieve the return. Return is the benefits the investor receives as a result of an investment of some assets and a high return means the investment gains compare to investment cost or other investments.

Risk is the chance that an investment’s return will be different than expected. In practice, risk to many people, is the possibility of losing some or even all of the original investment. One common understanding is that:

• Low risk is associated with low potential returns.

• High risk is associated with high potential returns.

The risk return trade-off is an effort to achieve a balance between the desire for the lowest possible risk and the highest possible return. When you understand the risk-return element, only then you know that there are no guaranteed returns in investment.

Most of the investment objectives, among others, are for safety, stable income, growth, and liquidity.  Investments that offer the least investment risk and more stable income have less potential to carry expected investment return and growth in value.

Therefore, by defining the objectives for each component parts of the portfolio, it is created for the purpose to invest in securities in such a way that the investor maximizes its returns and minimizes risks in order to achieve his investment objective. However, do not assume and think that one portfolio is suitable to all ages and financial situation.

Choosing a single strategic objective and assigning weightings to all other possible objectives is a process that depends on such factors for examples; investors stage of life, marital status, family situation, and many more.

Table below provides an example of asset allocation range for each asset class:

#3. Understand the importance of emergency reserves as part of a financial plan.

For retirement planning, it is very important to re-asses your stress level. One simple measure to do by yourself is to list down all your existing liabilities and expenses.

According to Danny Wong, the CEO of Areca Capital MJ, asset allocation is an investment strategy, besides of security selection and the right market timing strategy.  As such, you should have many portfolios as you have many goals.

Financial planning is very important regardless of your life stages, because everyone wants their needs to be fulfilled. However, the risk-return differs from one to another.  While the return depends on your goals and needs, risk is a match to the tolerance from you which depends, among others, your income and personal situation. For a person nearly to retire, some of the portfolios that different in term of amount to allocate are:

•  Daily expenses or necessities

• Short term cash needs or emergencies

• Long term needs such as retirement

• Extra or luxury wants such as travel and lifestyle

Hence, for retired spenders, the suitable investment portfolio is the one that can offer income and stability. The market speedy recovery is inharmonious with a still-struggling economy due to Covid-19. Global recovery is slow and full of market uncertainties. It is recommended to constantly monitor your portfolio in these times, in order to review and track the progress of your investment portfolio.

In reviewing your portfolio, secure the help of an expert if you need a periodic evaluation provided as a report . The report should address the portfolio performance based on the target allocation as compared to appropriate benchmarks, and the needs, if any, for rebalancing in target allocation, to ensure the objectives being aimed are being met.

Many people believe they are having unlimited resources but the reality is that they are not. Plan ahead and question yourself – how much do you need to sustain you and give you peace of mind for the next X decades?

#4. Revisit of health-saving assets and map-out a plan for sourcing in-retirement cash flow on a year to year basis

The pandemic’s economic side effects also have significant implications for when and how older adults plan their retirements. Not only have older workers experienced some of the highest rates of job loss of any age band, but in previous recessions, it has also taken older unemployed workers a much longer time to become re-employed than younger ones. That, plus the fact most of the companies that are struggling to survive their operating expenses, now are offering Voluntary Separation Scheme (VSS) to their employees, has no doubt prompted some to ponder early retirement.

For older employees that are having health issues, revisit a health-saving assets are important to re-organise existing resources. Most common mistakes are for this group of early retirees, they thought they have unlimited resources that they even do not mindful to spend the money to whatever cost they want. More alarmingly, based on Employees Provident Fund (EPF)’s annual report, majority of the Malaysians have not saved enough to last them more than five years post retirement. As such, it would be a good idea to maintain a well-stocked health saving accounts to be used in the emergency funds context to pay for healthcare expenses.

On the other hand, given that Covid-19 is the first and foremost a health crisis, spending on healthcare actually declined substantially in the first quarter 2020. That is because both patients and hospitals deferred in-person nonemergency medical visits and elective procedures, as patients were fearful of the spread of virus and hospitals needed to focus on their Standard Operating Procedures to limit the visits and to refocus their resources.

This situation, either from a business owner’s or individual’s perspective, certainly is cause for concern among many of them who are already paying high premiums on existing insurance. With the help of a licensed financial planner, after reviewing the current cashflow, advisors can help to select the best coverage, that includes premiums, healthcare usage and preferences, out of pocket expenditures like co-payments, and the client’s financial situations to cover unexpected healthcare expenses. Certainly, for many that are greatly affected by Covid-19, a room for surplus to save money is a great relief.

Conclusion

Retirement planning is not something to procrastinate over anymore. There are impacts and consequences of not doing proper planning. With adequate data and identified goals, the types of retirements that you would want can be worked on.

While the world we are living in is full of uncertainties, our best hope is to work with unbiased yet knowledgeable experts to plan for and execute our retirement plans while avoiding the financial mistakes.

How do you ensure a smooth retirement?

5 Tip Kewangan Peribadi Untuk Pemilik Perniagaan

Di dalam tahun-tahun pertama memulakan perniagaan, pemilik perniagaan terdorong untuk mengabaikan pengurusan kewangan peribadi mereka. Ketahui langkah-langkah yang boleh diambil untuk menguruskan kewangan kepada landasan yang lebih baik

Bukan mudah untuk menjadi pemilik perniagaan, terutama yang baru sahaja memulakan perniagaan dalam situasi pandemik seperti sekarang. Pemilik perniagaan perlu menghadapi risiko kekurangan permintaan, kesukaran untuk membayar gaji pekerja dan jumlah keuntungan yang kurang berbanding sebelum pandemik. Kesemua risiko ini ternyata menjadi cabaran untuk mereka bagi memastikan perniagaan terus kukuh dan mampu menghadapi segala cabaran yang dibawa ketika krisis pandemik sekarang ini.

Namun, sejak bermulanya sesebuah perniagaan, pemiliknya cenderung untuk mengabaikan kewangan peribadinya sendiri. Mereka akan menumpukan perhatian terhadap perniagaan sehingga mengabaikan tahap kewangan peribadi dengan melaburkan modal yang terlalu banyak dalam perniagaannya.

Tidak dinafikan, ada ahli perniagaan yang bijak mengatur haluan perniagaanya tetapi tidak sempat untuk menguruskan kewangan peribadi kerana kekurangan masa dan kekangan dari sudut pengetahuan dan kepakaran pengurusan kewangan peribadi.

Antara kesalahan yang sendiri dilakukan oleh ahli perniagaan kecil adalah :

1. Berbelanja terlalu banyak

2. Tidak menyimpan untuk persaraan

3. Membuat pelaburan yang berisiko tinggi

Jika anda adalah individu yang melakukan perkara di atas, sudah sampai masanya untuk menjadi lebih bijak dalam menguruskan kewangan peribadi anda, lebih-lebih lagi di dalam situasi pandemik kini apabila banyak perniagaan yang mengalami kerugian yang tinggi disebabkan kekurangan aktiviti ekonomi.

Berikut merupakan 5 tip untuk menguruskan kewangan peribadi anda dengan lebih bijak. Anda akan mendapati bahawa jika anda mampu menguruskan kewangan anda dengan baik, anda mampu berjaya dalam perniagaan anda.

#1. Mempunyai simpanan kecemasan

Strategi yang sering dicanangkan oleh penasihat kewangan adalah mempunyai tiga hingga enam bulan simpanan kecemasan (setelah ditolak cukai). Ia amat penting kerana jika berlaku perkara yang tidak diduga terhadap perniagaan ataupun diri anda sendiri, simpanan tersebut boleh menjadi penyelamat sementara anda membina semula aliran kewangan anda.

Simpanan ini sebaik-baiknya disimpan di dalam akaun bank berlainan dan bukan dalam bentuk pelaburan kerana anda memerlukannya dengan segera dalam bentuk wang tunai. Ia juga akan memberikan kelapangan minda dan anda lebih berani untuk membuat sesuatu keputusan bagi perniagaan.

#2. Pengurusan skor kredit yang baik

Skor kredit adalah petanda perniagaan anda mampu bertahan dengan baik, dan untuk ini, skor kredit peribadi anda juga perlu stabil. Bagaimana?  Antaranya adalah membayar bil utiliti pada masanya dan jika wang anda agak kurang pada bulan tersebut, buat pembayaran minimun untuk hutang kad kredit. Ia lebih baik dari lewat bayar hutang.

Anda juga perlu mengambil kira credit utilization ratio – peratusan had kredit anda yang berbaki setiap bulan yang anda pinjam secara bulanan. Jika anda mampu mengekalkan nisbah kurang dari 30%, ia mampu membantu anda untuk mempunyai skor kredit yang lebih baik dan permohonan pinjaman peribadi yang lebih mudah untuk diluluskan.

Apabila anda mempunyai skor kredit peribadi yang baik, ia akan membantu perniagaan anda untuk berkembang terutamanya jika ia masih berada dalam peringkat untuk berkembang dengan lebih meluas. Disiplin dalam membayar hutang pada masanya mampu membantu anda untuk membina asas yang lebih baik untuk kewangan peribadi. Anda juga akan mempunyai kesedaran untuk melangsaikan segala komitmen tepat pada masanya.

#3. Menyimpan untuk hari tua

Pemilik perniagaan kecil-kecilan terdorong untuk melaburkan sebahagian daripada keuntungan yang diperoleh kepada perniagaan, tetapi terdapat pelbagai kaedah atau pilihan yang boleh dilakukan oleh pemilik perniagaan bagi memastikan mereka mempunyai simpanan untuk hari persaraan.  Jika bekerja sendiri, anda boleh mencarum dengan menggunakan Skim Caruman Pilihan Sendiri oleh Kumpulan Wang Simpanan Pekerja (KWSP).

Anda hanya perlu mengisi borang Bayaran Caruman Pilihan Sendiri – KWSP 6A(1) . Setelah diluluskan, pembayaran boleh dibuat melalui perbankan internet, tunai, draf bank atau cek. Maksimun untuk jumlah caruman adalah sebanyak RM60,000 setahun.

Selain melaburkan semula keuntungan yang diperoleh kepada perniagaan anda, anda boleh mempelbagaikan simpanan dengan pelaburan dalam bentuk bursa saham, bon, Dana Dagangan Saham atau Exchange Traded-Fund (ETF) dan pasaran wang dana bersama (money market mutual funds)

#4. Membuat pelaburan berdasarkan toleransi risiko anda

Apabila anda menyimpan untuk persaraan, pastikan anda melabur dalam portfolio aset yang pelbagai, bersesuaian dengan tempoh masa dan juga toleransi risiko. Jika anda masih muda dan mempunyai masa yang panjang sebelum mencecah persaraan, anda boleh mula melabur di dalam pasaran saham.

Misalnya, bagi tujuan peruntukan aset (asset allocation), anda boleh menggunakan peraturan menolak umur anda daripada 100 untuk mencari peruntukan saham anggaran anda.  Jadi jika anda berusia 40 tahun, peraturan ini menunjukkan bahawa anda harus menyimpan kira-kira 60% daripada aset persaraan anda dalam saham dan selebihnya dalam bentuk bon atau tunai.

Namun, ia juga bergantung kepada matlamat pelaburan anda. Anda mungkin mahu melabur dalam  peratusan yang besar untuk portolio di dalam saham bagi memperoleh pulangan jangka panjang yang lebih baik semasa bersara. Pelaburan mungkin akan lebih berisiko tetapi ia mampu memberikan pulangan pelaburan yang tinggi.

5. Dapatkan nasihat pakar

Rujuk penasihat kewangan berlesen untuk mendapatkan panduan dan pandangan yang lebih khusus berdasarkan situasi semasa anda. Mereka yang mempunyai kelayakan dan lesen penasihat kewangan mampu membantu anda untuk merangka pelan persaraan yang lebih tepat berdasarkan matlamat dan juga keadaan kewangan diri.

Kesimpulan

Anda mampu mengubah keadaan kewangan peribadi kepada yang lebih baik, dengan mempunyai simpanan kecemasan yang kukuh, skor kredit yang sempurna dan kepelbagaian portfolio untuk simpanan persaraan. Apabila kedudukan kewangan peribadi anda lebih baik, ia akan memberikan kelapangan dada untuk menguruskan perniagaan tanpa perlu memikirkan masalah kewangan peribadi. Bagi pemilik perniagaan, mempunyai perancangan yang baik untuk pengurusan kewangan adalah sangat berharga.

Apakah lagi antara tip pengurusan kewangan yang berkesan untuk pemilik perniagaan kecil-kecilan?

6 Ways to a Budget-Friendly Wedding

Getting married soon? Learn some of the ways couples can save money on their wedding.

Getting married, especially in Malaysia is not cheap. According to The ASEAN Post article of Rising Wedding Costs in Southeast Asia, the average cost for a wedding in Malaysia last year is between RM50,000 to RM200,000 without including the honeymoon expenses and starting new-life-together expenses.

But, along with the pandemic comes a major shift in event management, including weddings.

For couples who are about to get married, take this situation as an opportunity to organize a simpler and more budget-friendly wedding that won’t quite burn a hole in your pocket so that at the end of the day you might have enough surplus to carry forward into married life.

Here are 6 ways you can have a budget-friendly wedding.

#1. Reduce your in-person guest list

If you want to tone down most of your wedding expenses, start looking at your guest list.

The size of your guest list does significantly influence how much you spend. For every 10 guests, you will have another table and other decorations and more invitations cards to be given.

With the Government demanding events including weddings to be scaled down in view of the on-going pandemic, take this in stride while obeying the law. Trim down your guest list. Afraid you will hurt people’s feelings by not inviting them? No worries, as people tend to be more understanding given the circumstances.

You could also consider hosting a virtual wedding where you can host your event online and your guests can participate through a livestream on video conferencing apps or social media. This would be a money-saving option for both you and your guests, especially those from outstation and overseas. In this way, you can cut down your in-person guest list and have your wedding on a much smaller scale while still having many dear friends and relatives witnessing your special moment.

#2. Opt for less expensive food and beverage options

If you are familiar with weddings in Malaysia, usually it involves food. Whether a traditional sit-down meal or buffet-style meal, both options can be quite expensive and lead to food wastage if they are not handled properly. You can compromise to try something like a high-tea or breakfast reception that requires less time and less formality compared to a lunch or dinner meal.

Another option you can choose is to prepare prepacked the meals for guests to bring home. It might not be a popular choice as it is a break from tradition, but with the on-going pandemic your guests might even thank you for doing it this way. By having prepacked meals, you can certainly trim down your budget as you won’t need tables and chairs for guests, or many wait staff on hand. As a bonus, prepacking meals can also reduce the chance of food wastage too while helping to break the spread of the dreaded virus.

#3. Use virtual invitations

With the on-going pandemic, we would want to cut down on meeting up with people. As such, instead of handing out physical wedding invitations, consider using virtual invitations instead.

E-card invites save you a tidy sum of money compared to traditional physical cards. You save on printing costs and also travel costs if you had intended to personally hand out invitations. You can still add the personal touch by sending out the virtual invitations personally to each guest.

Not only are virtual invitations good for a budget-friendly wedding, they are also a green option for those who are concerned with sustainability since there is no physical waste created at the end of the day.

By using e-cards and virtual RSVP, couples can better track guests’ expected attendance using a wedding website and more effectively budget for the venue and catering.

#4. Choose a smaller venue

With fewer people invited to your wedding, you can use a smaller and possibly cheaper venue and save on a big expense for the wedding. Do look for one that is inclusive and provides enough seating, lighting, and space. Consider where is the best location to set up camera if hosting a wedding livestream.

You could even choose to do it in your own home if you have enough space, thus reducing more on wedding expenses.

#5. Consider cheaper options for wedding dress or suit

Buying a wedding dress can be expensive, especially if you are using a big-name designer for your dress. But, instead of splurging your money on that, why not consider some other options?

• Rent your wedding outfit. You could still get designer dresses and it would be a lot cheaper. You also won’t have a problem of not knowing what to do with your outfits after the wedding is done.

• Buy a less expensive outfit ahead of time and get it altered tastefully. Make your purchase 6 to 12 months earlier and consult an affordable tailor for cheap materials that can still give a classy finishing touch.

• Buy your outfit second-hand. With the many platforms out there such as Carousell and Mudah, there are plenty of options to consider.

How many outfits do you need for your wedding? Consider having just one set of outfits for your wedding. If you really must have a different look, consider making partial changes instead, for example a tie to a bow tie for him, switching accessories from one color scheme to another for her. This can help you to save money.

#6. Simpler wedding favors

In Malaysia, especially for Malay people, wedding guests never leave empty handed as they will be given favors (little gifts) as a token appreciation from the bride and groom or their family.

These small gifts can add up to inflate your wedding budget.

Consider choosing non-expensive items to give to your guests. For example, a small wooden spoon that only cost RM2 to RM3 per piece or a small cup with nice engraving that you can source from souvenir shops. Anything that can reduce cost and yet bring benefit to your guests.

Another idea that could help avoid food wastage in your ceremony is to pack your guests’ food from the event into a pretty container before they leave. Doesn’t that sound practical and tasty?

Conclusion

Planning and budgeting for a wedding can be a stressful task especially when you want to save money and shrink your wedding budget. But, if you know the right way to adjust your budget and make the most out of this pandemic period, you can save more for the next step, your married life.

What preparation do you take before getting married?