Retirement Planning

Example of Retirement Goal:
Cash assets that will generate dividends / cash flow monthly for RM10K per month.
To hit this goal at 45 years old.

Yearly requirement:
RM10K x 12 = RM120K.

Assume that dividend comes from ASD with dividend 6%.

Therefore I require at least RM2 million in cash capital.

If currently have RM500K at age 35 years old, then need to accumulate another RM1.5 million in 10 years.

So each year need need to accumulate RM150K in cash.

Meaning each month need to accumulate in saving account (almost no interest):
RM150,000 / 12 months = RM12,500.

But if you put a monthly saving in ASD that will return 6% p.a, you need lesser:
Based from Retirement Planning Calculator, you only need to save RM9220 per month.





Reference:
https://www.calculator.com.my/savings-calculator#.Wt2RjPluYdU 

Risk management and insurance

Need to manage the risk of assets.

Life Insurance
Medical Insurance
House Insurance (MRTA/MLTA)
Car Insurance
Travel Insurance

Need to consider:
Term Insurance
Wholelife Insurance
Investment linked

Reference:
https://www.imoney.my/medical-insurance
https://www.imoney.my/articles/the-essentials-of-life-insurance-in-malaysia
https://ringgitplus.com/en/term-life-insurance/

Investment Planning & Management

Identify Risk Tolerance
- Medium to High Risk.
- 40% Low Risk (ASB)
- 30% Medium Risk (UT/REITS)
- 30% High Risk (US/HK/MY Individual Stock/Property)

Emergency Fund Requirements
- Part of Low Risk Investment.
- 6 months of current salary

Short Term Goals
- Travel with Family
- Prepare for baby expenses
- Mum Medical Expenses

Long Term Goals
- For Retirement Expenses
- For Child Education

Review current investments
- Property
- Unit Trust (ASB/PRS/UT/Gold)
- Share (ESPP)

Money Optimization

In order to optimize the performance of our finance, we need to be balance in all areas of out finance.

Here are the suggested 8 areas that we need to take note.

1. Investment Planning & Management


Identify Risk Tolerance
Emergency fund requirements
Short and long-term goals
Review current investments.

A number of proven scientific investment methodologies can help to optimise returns while minimising risk.

·Asset allocation strategies
·Best of Breed investment selection
·Rebalancing
·Long-term investing
·Dollar cost averaging

2. Risk management and insurance

To start, analyse the risk factors you are exposed to, quantify your possible financial loss and identify the necessary insurance products for your needs. Secondly, review and summarise your current insurance policies and decide whether to maintain, amend or cancel them. 

3. Children’s tertiary education planning
Consider whether you opt for a local or international institution. Will your child aim for a scholarship or would you pay for the tuition?


4. Retirement planning
What is your investment risk tolerance and how much do you plan to live on? Also consider inflation. What’s the nest egg you need to retire?


5. Asset protection
Your assets carry various risks like fire, loan exposure, business, professional or personal liability. Find ways to protect these assets. Perhaps set up a trust.


6. Estate planning
When a person dies, his heirs must obtain either letters of administration (where the testator leaves no will) or a grant of probate (where there is a will). The process can be long and complicated. To smoothen the process, ensure that you have a will in place now. Go that extra mile by creating a trust for your children and nominate your beneficiaries in your insurance policy and EPF. If you need to appoint a trustee to look after the children’s welfare, check that the fee is reasonable. Trustees’ fees can vary by between 50% and 200%.


7. Debt and Loan management
Review all property loans, personal loans and credit card facilities.
Do you need to restructure them for better financing terms and interest rates?


8. Tax planning
Explore various ideas to reduce your tax payment legally.


9. Giving
Man becomes happier when he gives.


Reference:
https://www.thestar.com.my/business/business-news/2013/09/14/money-optimisation-is-beyond-investing/