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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.


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?

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