How to calculate retirement fund

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KCLau

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30 Comments

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  • LC

    Reply Reply July 7, 2011

    straight forward illustration to have understanding of retirement fund calculation. Remind me to recalculate mine which done 10 years ago following Public Mutual Financial Freedom book. .

  • vpsanker

    Reply Reply July 2, 2011

    I like it.

  • Name (required)

    Reply Reply June 27, 2011

    You don’t need to enrol in expensive courses only to end up learning superficial financial planning knowledge. Most of the time, you’ll be getting insurance pushers shoving some so called “financial plans” down your throat.

    Just read the book Rich Dad Poor Dad, Financial Freedom (ironically it was published by Pacific mutual, which I’m dead against investing in mutual funds) for basic exposure and for stock picking, Intelligent investor is a must read.

    I’m a salary man working a 9-5 job and at 30 yo is already a millionaire without attending a single expensive course. In fact, I can retire now if I want to if not for the passion and love for my current job.

    I accumulated my wealth mainly from property investment and stocks (long term investment type typically 5 years and beyond, not contra). I don’t have any mutual funds/insurance/ASB/ASN etc.

    We can easily learn the trick through self-help books. Only problem with Malaysians are we are too lazy to read and hoping such courses will magically transform our lives.

    I’m saying this not to be boastful but I get pissed off seeing so many so called “financial planner” in the disguise of insurance agents trying to swindle money from investors. Save your money to buy books

    • Jenar

      Reply Reply June 29, 2011

      Why are U against mutual funds? It does make money ! But in a long term. I have invested and it got me off during a bad time.

      Please explain why it is bad?? I do not understand?

      • zem

        June 30, 2011

        mutual fund is much better as compared to FD and other lower dividend payout investment vehicles. Understand properties and stocks also do make money but if you only have passion via property and stock it does not mean that others all bullshits..
        Insurance is not for investment but it is compulsory to protect our investment shall unexpected rainy days occurred. i myself read many books also and have 3/4 million myself and i do invest in mutual fund which give very good return in a long run. My agent is good as well as my insurance agent. I believe we shall open to anybody who may claim” financial planner” and if we are to damn good we can make a shrewd judgment by ourselves. What’s the problem.

      • ckk

        July 25, 2011

        Do you know what mutual fund managers do with your money? They invest in shares! Now assuming your mutual fund made money from shares, do you know how much commission your agent get a cut out of the profit they used to invest in shares? Minus off all the administration cost etc, what you get back (which you claimed is very attractive) is actually peanuts. Your could have profited all the amount if you are shrew in investment, NOT by being shrew in picking mutual funds agents.

        My compounded annual return from my investments in stocks and properties are in excess of high 30% yearly for the pass 5 years. Doubt any mutual funds can match.

        As for insurance, you only need medical and critical illnesses coverage and if you are a property investor like me, MRTA is crucial. I’ll explain why. I have 8 properties and should I passed on prematurely, those properties will be fully paid for by my MRTA. They are worth a few million ringgit now and my love ones will get to enjoy the steady monthly rental income for as long as they keep the properties. You can argue that life insurance will do the job but I’ve not seen anyone offspring or parents getting rich and staying rich after getting the little insurance payout.

        Warren Buffett makes his money from SELLING insurance to average Joes and use the proceeds to invest in stocks. He did not get rich BUYING insurance. Period!

        There will be many insurance/mutual funds agents here who will get very mad at me for telling the truth. Be your own judge and think wisely before you buy any insurance or mutual funds in future

      • Michael Tsen

        July 26, 2011

        recently I hear this 8 properties story a lot, not sure if its the same person ๐Ÿ™‚

        ckk, its great you have achieved great success through stocks and property. But the fact and statistic remains true that “most” people did not, have not and will not be like you.

        so its better we keep cool with mutual fund/insurance compare to saving account/FD etc while we learn to be like you.

        comes to speak of it, I am thinking to create an industry wide awareness that we ‘can’ have a reducing term insurance for non-mortgage oriented coverage. Would you be interested to help provide some of your experiences ?

    • Michael Tsen

      Reply Reply July 24, 2011

      wow, 30yo millionaire is really cool ! what is your debt ratio ? how many properties do you have now ?

      not everybody can be like you, most ppl are not actually. thats why mutual fund and insurances are around to help them.

  • Name (required)

    Reply Reply June 27, 2011

    What do you have to say?this is something everyone should plan fffor!

  • Andrew Lau

    Reply Reply June 27, 2011

    This video reminds me of my RFP (Retail Financial Planner) class. I also used the same Financial Calculator software for my class.

    i would say the most important thing about wealth accumulation, whether it is for retirement fund or normal savings, 2 things we need to take note are inflation rate and interest rate.

    inflation affects the devaluation (decrease in value) or revaluation (increase of value) of our money. if the inflation rate is positive, that means there will be devaluation going on.

    when devaluation happens, your purchasing power will be lower. or in layman term, things are more expensive. (e.g. 10 years ago, you can purchase a plate of noodle for RM1.50 but today, a plate of noodle costs you RM3.00).

    it is the same RM1.00 but the things you can purchase is lesser.

    Interest rate will be the return rate of your savings or investment. To have a better savings or investment value, interest rate has to be higher than inflation rate.

    if your savings or investment’s return rate is lower than the inflation rate, you will still have more money but the money that you have will not be enough to sustain the expenses in the future because things may cost more.

    another thing to take note is TIME. time is very important when it comes to wealth accumulation. The longer time you have, the more flexibility you have in terms of investment or savings choices.

    also, when you have more time, the amount you save per month or per year becomes lesser. this will allow you to have more cashflow and at the same time have the savings that you want.

    when you put TIME and Interest rate together, you get Compound Interest. It means interest accumulated over a certain time frame. You can ‘google’ about compound interest and you will know that it is a very powerful thing.

    as KC Lau always says, save early. that is exactly his point, the earlier you start saving, the easier to accumulate your wealth. besides, if you have TIME x Interest Rate in the right Investment or Savings Vehicle, then you can optimize your savings and reach the ideal amount that you want in a better way, and most probably shorter time.

    just my 2 cents.

  • George Tan

    Reply Reply June 27, 2011

    Retirement plan should start when a person start entering the work force. Before this of course our education system should enforce that our graduates should be taught on financial planning. I can see a lot of basic concepts can be taught in the secondary school.

  • zarita

    Reply Reply June 27, 2011

    i still in the dark, how much i need when the retirement comes.
    also, not so sure what is the best place to invest the money.

    • Fiza

      Reply Reply June 28, 2011

      Hai zarita, if u dont mind i can explain how n which the best place u can invest..im fiza n this my contact number- 0199565229..u can call me.tq

  • denon

    Reply Reply June 27, 2011

    Do you recommend a fresh graduate starting to calculate or planning for the future retirement plans?

    • KCLau

      Reply Reply June 27, 2011

      Start calculate and accumulate as soon as possible.

    • Ani Munirah

      Reply Reply June 27, 2011

      Hi denon, I recommend fresh graduates read this book ‘Retire Rich’ by Azizi Ali, it gives the idea for when and how to start planning for retirement. The example in the book starts with planning by a fresh graduate assuming at the age 23 as opposed to one who starts planning at the age 35 ๐Ÿ™‚

  • Ani Munirah

    Reply Reply June 27, 2011

    Great content, KC ๐Ÿ™‚ Thanks…

    Many people guess that they don’t have to think about retirement just yet, because the age 55 or 58 is still a long way to go. But early planning and preparation will actually determine if we’re ready for the retirement days.

  • Name (required)

    Reply Reply June 27, 2011

    what is the direction of the Malaysia Ringgit, long term ?
    Retirement funds may go hay wire, if the currency depreciates ?
    How to overcome ? thanks

    • Andrew Lau

      Reply Reply June 27, 2011

      i suppose you mean “devaluation”….

      “depreciation” is a decrease of currency value in exchange system

      “devaluation” is a decrease in value vs goods and this is commonly known as “purchasing power”. something to do with inflation.

      so, what do we need to take note before devaluation happens?

      we need to first identify the value of inflation and the return rate of your investment.

      your investment (be it savings, unit trust or other vehicle that can help ur grow ur money) return need to be higher than inflation rate. then you will be alright.

      for example, if your saving generates 3% a year and the inflation is 4%, you are losing money in terms of value (purchasing power).

      hope this helps.

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