Basic Investment Planning

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Now everyone can enrich their lives’ experience thanks to AirAsia’s low-budget deals. Unlike in the olden days where travelling can only be realised after retirement or by saving enough, it has now become part of a budgeting exercise for many individuals.

Due to the various temptations and the rising cost of expenses, many find it difficult to have surplus funds for investment. One of the successful method we experience is EPF or pension fund contribution. The employee’s contribution of 11% and employer’s 12% or more that we set aside monthly, automatically grows into the nest egg for the individual for retirement. Let’s copy the same method. Put aside as low as a few percent from our monthly income and slowly increase it over time. Then we would be able to see another growing account that fulfills our medium to long-term objectives easily.

The idea is to contribute right after income and the remainder would still be able to make ends meet, which adheres to the old adage of ‘Pay yourself first’ and then only spend the rest. Not only will the auto contribution become effortless investment after we set it up, the development of good habits play the most important role to make this a success. To watch this initial investment is an encouraging and self-fulfilling cycle that will lead many to set aside higher percentage of net earnings on a regular basis.

Let me give you a simple example, by starting with RM200 per month of investment and then increase additional RM100 monthly every year till the 10th year, with the assumption of 8% per annum return of investment, one would have around RM100,000 after 10 years.

Further to this, we can also set different investment accounts to fulfill different objectives. We can divide our funds into THREE main accounts for short, medium and long term objectives. Short-term goals can include emergency funds, buying IT gadgets and holiday funding, etc. Mid-term objectives can be funding your house’s renovation, car deposit or sabbatical funds. Long-term objectives may be retirement income, children education etc. As simple as it is, you may want to talk to your financial planner to identify the amount needed to fund all you life goals and objectives.

The good news is, these days we can start investing from as low as RM100 per month via mutual funds. So now, everyone can invest!

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Blueprint Planning Malaysia

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