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Wednesday, August 3, 2022

Are You Doing the Exact Opposite of What You are Supposed to?

I came across one of the top trending articles from CNBC where it says 65% of Americans are doing the exact opposite of what they’re supposed to. Although I do not have the exact percentage for Malaysians but I supposed it applies to everyone and I thought it is interesting to share with you too.

The author used a good analogy to demonstrate the case, so I will keep it simple for you here as well. Imagine if iPhone 14 Pro Max is having 14% DISCOUNT (the actual release date will be end of this year, most probably Sep 2022!), would you buy it right now? 

Most likely you will. Even if you are not Apple fan and you don't plan to use it yourself, you can easily sell it right? After all, it is the pleasure of getting something cheap. Psychologically, discount creates urgency as well as the fear of missing out (FOMO). This applies to everything else, such as airplane tickets, hotel discount and all sort of promotion that you frequently found on your social media. When there's discount, you are most likely to buy. 

Unfortunately, that is not the case when it comes to stock market. You may not be as enthusiastic about the markdown on stocks. As of 1st Aug 2022, S&P500 year to date is down about 14%. Not just S&P500, NASDAQ -21%, EURO STOXX 50 -15%, HSI -15%, KLCI -5%. But will you be buying (investing) at cheaper price now?? Probably not. 

So according to the article, 65% of the Americans say they are keeping money out of the market due to fear of investment losses. I do not have the figure for Malaysians, but most likely you might be the same too. If I am wrong about you, then let me know in the comment down below! 😏

Isn't it amazing on how our mind works? That when it comes to stock market, most people see it as a drop (hence fear of loss) but not as a discount? You may say that what if market drops further? If is so, shouldn't you be worried that iPhone 14 Pro Max will drop further too? You see all we have to do is just to tweak our mindset! 

Psst! On a side note... do you know Apple stock price down by 11.26% year to date too? You can buy 6 shares ($972) now with the price of 1 iPhone 13 Pro Max ($1099). So why not 6 Apple Shares? Being a shareholder (even just a tiny) of Apple Inc certainly deserves the bragging right more than owning 1 iPhone 13 Pro Max (which soon will be outdated when 14 is out) right? 🤔

It is normal to be fearful when the market is in red, we are human after all. So you may be thinking perhaps to wait for the bottom, which people always try to do - to time the market. But unless you have a crystal ball (yes even Warren Buffett cannot tell you when will bottom), otherwise it is always best to stay invested, not fully and not all in, just stay invested. 

Don't believe me? Look at the study from JP Morgan, if you missed out 10 best days from a 20 year period, your Annualized Return dropped from 9.52% to 5.33%! Most people adopt the "KIV" (Keep In View) approach, but usually they ended up buying at high or selling at low already. Then there's where they got burnt and just make a conclusion to others that stock market cannot earn money!

I remember there is a saying like when you hear the taxi driver or the most unlikely person to be investing, to talk about investing in share market, then maybe it is time for you to sell and run far far away! Trust me, too late to enter by then. No offence to the taxi driver or the 小白 friend, but these people usually ended up BUY HIGH because of GREED and SELL LOW because of FEAR.

So we have to be disciplined, be conscious and stay RATIONAL, which I think it is the utmost important one, not just to stay invested but to invest consistently through down markets. Nobody likes the feeling of seeing big red numbers in their portfolio, but if you are invested in a well diversified portfolio for a mid to long term financial goal, you really do not have to worry at all. 

Treat the investment like your favorite brands, you will want the price to go down so that you can buy at low price. Adopt cost averaging strategy, where you invest in a consistent intervals, buy more shares when they are cheaper and fewer when they’re more expensive. 

If you read until this part and still isn't convince to invest now, then you must be really conservative.

Fret not, if you...
  • Do not know what stocks to invest and do not have the time to research and manage
  • Do not have the discipline to invest by yourself
  • Sick of looking at your big red negative numbers in your portfolio
  • High allocation in MYR and want to diversify some to USD 
  • Participate in S&P500 stock market growth without downside risk (principal protected)
  • 310USD per month (RM1400 per month) is affordable to you

Then I have something for you. Click here! 

Prefer to invest in MYR? No worry, I've got you covered too! 
As Licensed Financial Advisor, we have solutions for your every needs.
Most importantly, you are making a well informed decision. 

Thursday, July 28, 2022

Li Ka-Shing Teaches You How to Buy Car Buy House in 5 Years

I first saw this article in Mandarin whereby the topic caught my attention. I supposed you are the same too to click into this post, after all, who does not want to learn from the Hong Kong billionaire right? Whether or not this is real from the master himself, we can always get something out of this inspirational five-year plan to improve one's life. 

In the article, the assumption for your monthly income is only $2,000 when you just started out. He splits your money into five portions of funds according to the allocation of 30-25-20-15-10. The first portion $600 (30%), second portion $500 (25%), third portion $400 (20%), fourth portion $300 (15%) and lastly fifth portion $200 (10%). 

Here are the direct translation then follow by my own interpretation, as Malaysian for Malaysian. 

The first portion which is the biggest $600 at 30% - used for living expenses. It’s a simple way of living and you can only be assigned to less than twenty dollars a day. Eat simple. According to the article, when you are young, the body will not have too many problems for a few years with this way of living.  

I supposed the article also assume that you stay with parents and probably use parents car too. But you get the gist of it, live minimally. You can only spend maximum of 30% of whatever you are earning and break it down into daily budget. If that 30% in monetary term is too low then you must get a part time job. Not just any job, but preferably sales job so that you learn the art of selling. 

The second portion of funds - Investment. Save the $500 in your bank and accumulate it as your initial startup capital to do a small business. Go to wholesalers and look for products to sell. Even if you lose money, you will not lose too much money. However, when you start earning money, it will boost your confidence and courage and have a whole new learning experience of running a small business. 

Earn more and you can then begin to buy long-term investment plans and get long-term security on your financial wealth being of yourself and your families. So that no matter what happens, there will be adequate funds and the quality of life will not decline.

I agree that a portion should always be allocated for saving/investment. A quarter of your salary can really help achieving your financial goals faster. As for the small business, I believe it is feasible too such as starting an online store in Shopee/Lazada/TikTok. You can even start with drop-shipping so that you can minimize the risk of stocks piling. In Malaysia, you can also start invest as low as RM100

The third portion of funds - $400: To make friends, expand your interpersonal circle. This will make you well off. Your phone bills can be budgeted at $100. You can buy your friends 2 lunches a month, each at $150. Who should you buy lunch for? Always remember to buy lunch for people who are more knowledgeable than you, richer than you or people who have helped you in your career. 

Make sure you do that every month. After one year, your circle of friends should have generated tremendous value for you. Your reputation, influence, added value will be clearly recognized. You’ll also enhance your image of being good and generous.

This purpose is not common in any standard budgeting methods but I have to agree it is important. It is also aligned with Warren Buffett's advice to "pick your friends wisely" and also Jim Rohn's famous quote - “You’re the average of the five people you spend the most time with.” 

The fourth portion: $300 to learn. Monthly spend about $50 to $100 to buy books. Because you don’t have a lot of money, you should pay attention to learning. When you buy the books, read them carefully and learn the lessons and strategies that is being taught in the book. Each book, after reading them, put them into your own language to tell the stories. Sharing with others can improve your credibility and enhance the affinity. 

Also save up $200 per month to attend a training course. When you have higher income or additional savings, try to participate in more advanced training. When you participate in good training, not only do you learn good knowledge, you also get to meet like-minded friends who are not easy to come by.

Most people rarely set a budget for this purpose but it is crucial regardless if is related to their career or not. I like how the article recommends to learn and share as I am a strong advocate of learning is not complete until you apply!

If you are working in any corporation in Malaysia, fully utilized the Human Resources Development Fund (HRDF) by attending trainings. After all your company is compulsory to pay 0.5% (5-9 Malaysian Employees) or 1% (10 and Above Malaysian Employees) of the monthly wages of each of their Malaysian employees. Psst! #YourFinanceDoctor provides HRDF Approved training courses too!

The last portion of funds $200: Use it for holidays overseas. Reward yourself by traveling at least once a year. Continue to grow from the experience of life. Stay in youth hostels to save cost. In a few years you would have travelled to many countries and have different experiences. Use that experience to recharge yourself so that you’ll continually have passion in your work.

This is the one expense that financial advisor does not need to ask you to add as you would have already done so! I would say that most people, youngsters in particular, could have overspend on vacation.  So yeah, keep it below 10%! If you are envious of your friends' overseas travel, then learn to increase income first.


The article continue to go on and on which I find it way too long so I will just pick some for you. 

"Well, after struggling for a year and if your second year salary is still $2,000, then that means you have not grown as a person. You should be really ashamed of yourself. Do yourself a favour and go to the supermarket and buy the hardest tofu. Take it and smash it on your head because you deserve that."

🙊 That is a bit dramatic, but you get the point. You should be better than yourself from last year.

Try to buy minimal clothes and shoes. You can buy them all you want when you’re rich. Save your money and buy some gift for your loved ones and tell them your plans and your financial goals. Tell them why you are so thrifty. Tell them your efforts, direction and your dreams.

👍 Yes, people around you may not understand so communication is key! 

Life can be designed. Career can be planned. Happiness can be prepared. You should start planning now. When you are poor, spend less time at home and more time outside. When you are rich, stay at home more and less outside. This is the art of living. When you are poor, spend money on others. When you’re rich, spend money on yourself. Many people are doing the opposite.

👆 Start with planning and get it started.

There is nothing wrong with being young. You do not need to be afraid of being poor. You need to know how to invest in yourself and increase your wisdom and stature. You need to know what is important in life and what is worth investing in. You also need to know what you should avoid and not spend your money on. This is the essence of discipline. Try to avoid spending money on clothing, but buy a selective number of items that have class. Try to eat less outside. 

👌 On point! 

Famous theory from Harvard: The difference of a person’s fate is decided from what a person spends in his free time between 20:00 to 22:00 . Use these two hours to learn, think and participate in meaningful lectures or discussion. If you persist for several years, success will come knocking on your doors.

The article continue endlessly beyond this, which I will stop here as I find it irrelevant to the main topic of budget allocation. It looks like someone just copy all the famous lessons on the internet and just dump it all at the end of the article. 

There are many people who are struggling to make ends meet. It doesn’t matter if you are rich or poor. There are lessons for all to learn from Li Ka-Shing. In case you have not notice, I am also applying the teaching of Li Ka-Shing -- sharing with you all what I learned! 

Wednesday, July 27, 2022

Top 5 Most Common Financial Mistakes To Avoid

Throughout the years in personal finance industry, here are some of the most common financial mistakes that I have seen. This is especially true for those that just started to work and finally get a taste of having money of their own. These financial mistakes often lead them into endless loop of living paycheck to paycheck, and an unforeseen circumstance can easily turn into disaster without any emergency fund. 

1. Overspending on Unnecessary Expenses

Overspending is the most typical scenario that I found when my clients filled in the Income and Expenses tracking sheet. They got to realized that even though it may not seems like a big amount when they order that bubble milk tea, or dinning out, or even those monthly subscription to movie streaming or audio streaming, eventually every little items add up. 

"Sedikit-sedikit lama-lama jadi bukit," this phrase is commonly used to encourage money saving. But like a double-edged sword, it works the same as to expenses too! So if you are living paycheck to paycheck or can barely save up any money, the first thing to do is to look into your expenses! 

Tips: Avoid or using lesser on physical cash. This is the best way to track on expenses. Then take a look at your bank account statement frequently, look at where are all those money go. Cut out those unnecessary expenses, especially those on subscription basis, such as gym membership (that you rarely go anyway), music services or video streaming (just wait for the ads), and some other subscriptions that you forgotten.

2. Paying the Minimum Amount for Credit Card

Should you use credit card or not is a highly debated topic. But let's face it honestly, the only reason for one to be paying the minimum amount every month is simply because he/she cannot afford to pay back in full and is living on borrowed money. 

"Bank lend you money" with 15% to 18% annual interest rate (some banks offer 8.88%) on your credit card bill. But when it is on the opposite side, where "you lend your money to bank", you are only getting less than 1% annual interest on saving account and 2-3% on fixed deposit. Isn't that crazy?

This is why banks always entice you with all the sign up offers and some even guarantee RM600 into your e-wallet or shopping vouchers. This could be also why you always hear bank staffs getting 6 months bonus! 🙊

So yes, if only you can afford and discipline to PAY IN FULL every month, use by all means to help track expenses and to earn all the cashbacks and points. Otherwise, stay away, no point using credit card as you ended up spending a lot more. Having said that, it doesn't mean you should not own a credit card as it can still be helpful for emergency use. 

3. Buying a New (Expensive) Car

This is especially true by borrowing money to buy a car and pay interest on a depreciating asset. Do you know, according to Malaysian Automotive Association (MAA), total passenger vehicles sold in 2020 was 480,971 and in 2021 was 452,663. For the first half of the year, total passenger vehicles sold up to June 2022 was 293,540, compared to first half of 2021 was 223,805. Despite MCO and all the complaints on increasing in prices, people are still buying new cars! 

Generally as a rule of thumb to gauge, if one unable to pay cash for a new car then it could also mean he/she cannot afford the car. After all, being able to get a car loan is not the same as being able to afford the car as there are other expenses incurred such as maintenance, petrol, toll, car insurance and road tax.

Regardless if you are buying a new car or used car, be sure to do all your homework. Cars are expensive and depreciating, so if you are buying more of a car than you need, the opportunity cost is missing out on saving or investing for other financial goals or even simply just paying off other debts.

4. Buying Too Expensive House  

Similarly to car, just because you can afford to get a house loan does not mean that you are able to afford with all the hidden costs! So when it comes to buying a house, bigger is not necessarily better. Unless you have a large family, buying a 4,000 sqft house will only mean more expensive maintenance and utilities. Oh, and also gotta clean a lot more spaces that you probably rarely use. 

Buying a house is like buying an appreciating asset. But unlike a car loan with tenure up to 9 years, housing loan can be a very very long commitment. Do you really want to commit to such a big and long dent in your monthly budget? 

5. Not Having a Financial Plan

All the 4 common financial mistake above are a result of not having a financial plan. When my client engaged me for comprehensive financial plan, the first step is always to gather all their information which include income, expenses, assets, liabilities and most importantly, their financial goals. 

Guess what? The most frequent scenario that I came across is that most people do not know their financial goals and they do not track their income and expenses (they do not know their current financial situation!). Surely you know how important it is to do goal setting and follow it thru!

Your financial future pretty much depends on what you do right now. Most people spend countless hours on binge-watching or scrolling through their social media feeds, but rarely anyone would spend a bit of time going through their personal finances. The reason behind that is that you do not know you need to do so or probably you know but you do not know where and how to start right? 

Start your comprehensive financial planning NOW!

The Bottom Line...

To avoid all these financial mistakes, start by monitoring all the little expenses that can add up rapidly and quietly, then move on to the big expenses. Having a budget would be the best solution so that it helps you to decide better before adding new debts to your long list of payments. 

One key takeaway from this article is to keep in mind that being able to make a payment isn't the same as being able to afford the purchase. Finally, developing a sound financial plan can better determine the success of your financial future! 

Any other financial mistake that you find it common but crucial to avoid? Let me know down below!

Thursday, July 14, 2022

What is FIRE? Financial Independence, Retire Early!

Through out my financial planning career, I came across many clients where more than half of them do not have a specific financial goals. Mind blowing? Perhaps not. It is more common than you could ever imagine. All they ever wanted is just to earn more money. Sounds familiar? You might be one of them too. Well, no worry, in this post I will share with you the most common financial goal that you can set for yourself too:

Financial Independence Retire Early (FIRE)

Financial Independence Retire Early

What is FIRE? 

FIRE is the short form taken from Financial Independence Retire Early. 

As per the wordings, literally, it is a movement where people have the goal of gaining financial independence and retiring early. The basic idea was to having enough saved or enough passive income to cover the expenses, in order to retire early. 

What does Financial Independence means?

Different people might have different interpretation. But personally, having enough without a day job.

At this point, you might think "Yeah, I want this too." I believe everyone would want this too, otherwise what is the point of working right? But a financial goal has to be measurable or quantifiable. So this is the part where my clients hire me to do all the calculations. 

Yes, you need to know your number. It could be the retirement number to cover the expenses for the rest of your life post-retirement. It could also be the passive income required to cover the monthly expenses. The passive income could be coming from investment's dividend, rental income, business income and so on. 

Hire me to calculate for yours too. 😉

What does Retire Early means?

Retire early could mean differently depending on the person. 

Some people it could mean never having to work anymore. After working non stop for 30-40 years, 9 to 5 every weekdays, which sums up to 56,789 hours, of course it is time to enjoy retirement right! Okay I just made up the hours number, but you get what I mean.

Then of course towards some people, early retirement simply means having enough money to retire, but they continue to do so because they are passionate in their line of work. Imagine having the power to choose not having to work anymore, like you can actually fire your boss anytime if you want! 

Similar to FI, you need to know your numbers. In this case, you need to know both your retirement number and retirement age. So yes, if you ask me, in a way, Retire Early is the same as Financial Independence. 

Is it easy to achieve FIRE?

Achieving FIRE is not easy at all, especially on the "Early" part. 

As I mentioned before, everything should be measurable. A SMART financial goal has to be time bound too. So if FIRE is one of your financial goal, then one of the question would be BY WHEN? Retire Early means before the standard retirement age of 55 or 60. So depending on your age now and also your money, I supposed you can roughly tell how easy or how difficult it would be.

Which is why you would not surprised to see some chose to work 100+ hours a week inclusive of the side jobs that they have. While some people have to do all the extreme things to save money in order to retire early. This reminds me of those TV Show like Extreme Cheapskates or Extreme Couponing. I know it could be fake but it also reminds us that not taking saving money too far.

Should You still do FIRE movement? 

Whether or not it is right for you depends on what you really want and to what lengths you are willing to go to. It is NOT impossible to achieve FIRE, but you will really have to plan it out and work it out. Like the saying goes, "WHY is more important than HOW". Hence, it is utterly important to know WHY you want to do it, which can be helpful to keep you going when you feel like giving up.

Here are some of the reasons to retire early: 

You want to pursue a passion that you can’t do while having a full-time job

You want to spend more time with family and friends

You want to have more time to exercise and be healthy

You want to have the freedom to choose what you want to do

You want to travel around the world

And many more, and perhaps some more common for Asian parents such as:

You need to help take care of your grandchildren 😅

Do you really know what you are going to do after retiring early? 

There are a lot of disadvantages too if you are retiring early, especially without planning. Early retirement does not mean sitting around doing nothing all day. It is certainly not dozing off on a cozy sofa while the TV is watching you. 

The number one con of early retirement is the declines in mental health and mobility, hence, increases in poor health outcomes, such as heart disease and stroke. Many retirees have a tough time making the transition from the daily routines of a full-time job to the unstructured life of retirement. They may find it boring and miss working, but it may not be easy to get back into the workforce once you've left it, voluntarily or otherwise.

So it is vital to decide ahead of time on what FIRE looks like for you—and how much it will cost.

Okay I know what I want, what's next? FIRE Number!

Calculations! Many FIRE movement uses simple calculation to calculate their FIRE number. Fire number can be calculated quickly but roughly. First and foremost, how much is your monthly expenses? 

The monthly expenses should include utilities expenses, rental or mortgage expenses, groceries and dining out expenses, transportation expenses, household expenses, clothing expenses, healthcare expenses, entertainment expenses and whatever you see fit.

Then multiply by 12 to get your Annual Expenses which will be frequently used to calculate FIRE number regardless which rule you wanted to follow.

What is 4% Rule (FIRE Number Rule of Thumb)?

The most common FIRE number calculation where annual expenses divided by 4%.

Fire Number = Annual Expenses / 0.04

Example: RM60,000 / 0.04 = RM1,500,000

You may ask why 4%? Where do they get the magic number of 4%? This is according to Trinity Study where 3 professors of the Trinity University wrote “Retirement Savings: Choosing a Withdrawal Rate That Is Sustainable.” So the 4% rule comes from the fact that even after 30 years of withdrawing 4% of your initial portfolio, the success rate is still 95%. So with that, the 4% rule was born!

For easier calculation, 4% Rule also known as the 25x Rule. Once your net worth exceeds 25 times of your annual expenses, (25 x RM60k = RM1.5mil) in this case RM1.5mil, then congratulations you have hit FIRE! 

The 4% Rule

RM1.5mil that's it, then I do not have to work anymore?

Roughly, yes. But not everyone follows this 4% Rule though. Some people go for 3% Rule or even less to be safe. 

A more recent study using historical market data up to 2021 to study sustainable withdrawal rates, a 100% success rate that someone with a portfolio with at least 50% in stocks could safely withdraw 3% of their investments for 40 years without depleting their investments

Another thing to keep in mind is that the research were done using S&P 500 Index and also US inflation data. So unless you are staying in US and investing in S&P 500 Index, otherwise it is always better to consult a licensed financial advisor to calculate. Bottom line, you can be more conservative by using lower withdrawal rate - 3% Rule, bigger FIRE Number will be needed.

What is Fat FIRE? What is Lean FIRE? What is Barista FIRE?

Trust me, there are many different types of FIRE out there. You can make one too, and if you succeed then it would become popular. But generally here are the differences:

Fat FIRE: hit FIRE with a higher annual expenses budget, spending over 100,000 annually

Lean FIRE: hit FIRE with a lower annual expenses budget, spending around 20,000 annually

Barista FIRE: hit FIRE but still with a part time job to cover long term benefits such as health insurance

Regardless which one you follow, always make sure you pick the one you are most comfortable with.

Okay, Any other rules that I should know?

Not rules but here are some methods the FIRE movement community follow to help them hit FIRE as soon as possible, such as:

Live minimally, live below your means

Save and invest first before you spend

Spend less than you make

Buy used cars only

Fully utilize credit card rewards 

Focus on adding multiple streams of income

Lower your tax liability by investing in tax-deferred accounts like Private Retirement Scheme

The Bottom Line...

FIRE movement can be a great financial goal, especially if you do not have any specific financial goals yet. Having a goal like that can makes you work harder and live life to the fullest instead of just running in a endless rat race. 

Start calculating your FIRE Number now! If the figure is too overwhelming, then you might look at ways to increase income or otherwise, reduce your expectation on retirement expenses. You can also talk to me by dropping a comment below or private message me in social media if you are too shy! 

Tuesday, June 30, 2020

Do You Have Unclaimed Money? Find Your Windfall Here!

Do you know if you have any unclaimed money from the government? Do you know as of the end of 2019, there are a total of RM8.75 billion remained unclaimed, higher than the almost RM7 billion recorded at the end of October 2019 despite efforts by the authorities to return the money to their owners. Fret not, you can now check online for FREE!

Here are more information in details regarding Unclaimed Money extracted from Accountant General's Department of Malaysia. 

Definition of Unclaimed Moneys
1. Moneys which are legally payable to the owner but have remained unpaid for a period of not less than one year. Examples under this category are:
  • Salaries, wages, bonuses, commissions and other payments due to employees;
  • Dividend;
  • Profits declared for distributions;
  • Insurance claims which have been approved for payment;
  • Bank draft, cashier's order and other documents of similar nature which validity period have lapsed;
  • Fixed deposits (without automatic renewal instructions ) which have matured;
  • Tender deposits for which the intended purpose has been fulfilled;
  • Sundry creditors or sundry debtors with credit balance.
2. Moneys standing to the credit of an account that has not been operated in whatever manner by the owner for a period of not less than seven years. Examples under this category are:
  • Saving account;
  • Current account;
  • Fixed deposit (with automatic renewal instructions).
3. Moneys to the credit of a trade account that has remained dormant for a period of not less than two years. Examples under this category are:
  • Trade creditors account
  • Trade debtors account with credit balance.

If you found yourself having unclaimed money, then proceed to claim it back right away since there will be no interest earned in there. You can find everything you need to know from the government official website (Click this Link) or call 03-20568000 to find out more!

Thursday, May 28, 2020

#1 Hindsight Bias | Behavioral Finance 101

What is Hindsight Bias?

Hindsight bias is the tendency of investors to falsely believe that they predicted the outcome since the beginning, only after learning the outcome. The most common phrases would be "I knew it all along" and all the "should have" and "could have". 

Hindsight Bias
Hindsight Bias

Implication of Hindsight Bias?

In Behavioral Finance, this is one of the most common financial biases every investors would make unknowingly, which may leads to overconfident. This in turn causes them to take more unnecessary risks and trade more than they otherwise would. 

Hindsight Bias

How to Avoid Hindsight Bias?

To avoid Hindsight Bias, just follow the 4 simple steps! 
  1. Acknowledge and be conscious that everyone is vulnerable to the bias 
  2. Keep an Investment Diary
  3. Record the reasoning behind all the financial decisions in the diary
  4. Map the outcomes to the reasons and learn from both the wins and losses
It is utterly important to know, not just what happens, but why it happens regardless if is a win or a lose. With a record of all the reasoning, win can be repeated and loss can be avoided in the future. That is the best way to learn from the past, instead of relying on our biased mind. Which is why Warren Buffet always warned about investors not learning from the past in one of his favorite quote.

Stay tuned for other financial biases that we commonly made in the upcoming posts! Remember to Like, Comment and Share @YourFinanceDoctor.Henry if you find it useful!

Tuesday, November 13, 2018

EPF Increases Minimum Basic Savings to RM240,000 At Age 55 Effectively Starting 2019

The Employees Provident Fund (EPF) has announced that the basic savings at age 55 will be increased from RM228,000 to RM240,000 effective Jan 1, 2019. The increment will also be made across all ages accordingly, refer to the table below. 

EPF last revised the amount back in Jan 1, 2017 from RM196,800 to RM228,000 (read here). Given that Malaysian has not saved enough for retirement, EPF further increases the basic savings. 

What is Basic Savings?
The basic savings is a pre-determined amount set according to age in Account 1 to enable members achieve a minimum savings at different age, for example, when they reach age-55, they should have at least RM240,000 to retire. The amount in excess of the Basic Savings can also be invested in products offered by appointed Fund Management Institutions approved by the Ministry of Finance.

Why Do I Need That?
The rationale for the implementation of this basic savings is to ensure that members have sufficient savings when they retire in order to support their basic retirement needs for 20 years from age 55 to 75, in line with Malaysians' life expectancy. The new quantum is bench-marked against the minimum pension for public sector employees, which has been raised from RM950 to RM1000 per month from age 55 to 75. (I don't think RM1000 per month is enough either!)

How Does It Affects Me?
Well, it doesn't if you did not opt to withdraw for the Members Investment Scheme (MIS). But if you do, then the withdrawal amount for MIS will be reduced

With the increment in Minimum Basic Saving, members can now withdraw lesser money, so that you have more money at retirement!

To find out more about it, feel free to contact #YourFinanceDoctor at
Don't forget to follow us on our Facebook Page too!

Earn, Save, Invest, Repeat!
Till then. Happy Investing! ;)
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