Although retirement may not be on the cards yet, it never hurts to look ahead.
The topic of retirement is one that either brings excitement or worry, depending on which side of the fence you are on. For those that have built up a nest egg for comfortable living, it can be a tantalising prospect, but those that struggle to save may find this worrisome.
Last year, the Employers Provident Fund (EPF) said that only 3% of contributors can afford retirement, and it is not the first time that it has raised concerns about this. In 2017, the EPF increased its minimum savings target by the age of 55 from RM197,000 to RM228,000. This figure was bumped up once more in 2019 to RM240,000.
For millions of Malaysians, the worryingly stark numbers do not make for great reading. Reportedly, there are around 3.6 million EPF members with less than RM1,000 in their accounts, while a further 6.1 million members have less than RM10,000.
Such figures highlight the importance of investing, and even more so at an early age. But when is the right time to invest?
Investing For Freedom
The pandemic prompted many millennials to learn more about investing, with many intrigued about the concept and feasibility of financial freedom. This is evidenced by the massive growth of Malaysian financial content creators over the past two years, with well-established creators building up loyal audiences while several new blogs and YouTube channels coming to life as well.
Armed with this newfound financial knowledge, some first-timers may choose to dabble in the stock market; others may yet opt for safer routes like exchange-traded funds (ETFs) and real estate investment trusts (REITs). The go-getters might decide to invest in a friend’s or relative’s business while the daredevils traverse the murky waters of cryptocurrency trading.
But no matter how big the risk appetite, it is always important to maintain a diverse portfolio. While many investors have dreams of making it big, the majority of active traders often lose money. This can be attributed to many factors such as a lack of knowledge, impulsive decision-making and greed.
The old adage “Don’t put all your eggs in one basket” has always rung true, and even more so in the world of investing. For those with no time to actively monitor markets or study the various investing instruments available, it may be wise to leave the investing to professionals. And thankfully, there are a wide array of options available in this space, with Maybank Asset Management introducing two new funds to the market.
Maybank Flexible Retirement Solution
The Maybank Global Wealth Moderate-I Fund and Maybank Global Wealth Growth-I Fund are mixed asset funds that are Shariah compliant, both of which work to hit the retirement goal of investors. With the moderate fund targeting a 6% return per annum, and the growth fund pushing for 8%, this gives investors the choice of which to opt for depending on their age, life stages, time horizons and risk appetite.
For example, younger investors may be able to take additional risk through the Maybank Global Wealth Growth-I Fund to grow their capital given their age and more years to regroup in the event of losses. The fund invests between 40% – 90% of its net asset value (NAV) in Shariah compliant securities and equities.
However, those with a lower risk appetite or who simply aim to beat inflation may choose the Maybank Global Wealth Moderate-I Fund which also invests in Shariah compliant securities and equities, but allocates a lesser portion of its NAV (20% – 70%).
There are also capital preservation strategies put in place to protect against downside risks. While this does not mean that funds will automatically grow, it does ensure mitigation against black swan events and minimises fluctuations caused by market turbulence.
Perhaps the key feature of this retirement solution is the fact that investors may withdraw funds at any time for emergencies, without incurring a penalty or redemption charges. While other retirement funds can only be accessed after a certain age or investment threshold, this offers flexibility for members no matter what stage of life they are in.
In addition, investors can also switch between funds at will at no cost or penalty. For example, if first-time investors choose the moderate fund as a way to dip their toes in the water, they can then switch their allocation to the growth fund once they become more comfortable with the idea of added risk.
Similarly, if growth fund investors are now satisfied with the growth of their investment and want to secure it, they can switch to the moderate fund to lower the amount of market risk they are exposed to. However, such flexibility is rare and should provide investors with additional leeway to invest in a manner they are comfortable with, especially for first-timers. Furthermore, the experts at Maybank Asset Management do all the research and heavy lifting – investors only have to put their money in the funds!
All in all, one should always be mindful of their financial situation as there is no way to tell what tomorrow brings. As for those who have not begun their journey towards financial freedom, keep in mind that it is never too late to start.
To subscribe, please contact your Maybank Relationship Manager or Personal Financial Adviser; or for more information, visit www.maybank-am.com.my