How to accumulate enough money for retirement

Personal Investing - By Ooi Kok Hwa

Wealth for retirement, How to earn 30-year investment returns with different savings amounts and rates

ON Jan 28, we have written an article on We all need to become millionaires. That article explained that we need to have cash reserves of about RM1mil to be able to maintain our current lifestyle 20 years after retirement.
Some readers responded and would like to know more on how to accumulate enough money for their retirement.

In this article, we will look into 30-year investment returns with different savings amounts and rate of returns. Our computation is based on the assumption that we start investing at the age of 25 and intend to retire at 55.

•Based on how much rate of returns you can achieve
The table shows that if we save RM100 per month and invest the money into fixed deposits (FD), assuming the FD can provide about 3% return over the next 30 years, our investment portfolio will reach RM58,274 when we reach 55.However, if we can generate 5%, 7% and 10% returns, our investment portfolio will achieve RM83,226, RM121,997 and RM226,049 respectively.

The EPF may be able to provide us about 5% whereas unit trust investments may be able to give us 7% to 10% returns over a very long-term period.Assuming that we treat the 3% FD return as our risk-free rate, any extra returns above this rate will be the risk premium for the additional risk that we are prepared to face.

Therefore, we need to understand our risk tolerance level before considering any type of risky investment.We should ask ourselves whether we are willing to accept the uncertainty of return that is inherent in those investments.Besides, we need to understand whether we can afford to have our savings tied up for a long period before we can achieve our investment targets.

•Based on how much you save and not how much you earn
We agree that when you earn more money, you should have more money for your investments. Unfortunately, some investors are unable to save even though they earn high salaries.


From the table, we can see that if we are able to save RM500 per month in FD, assuming a 3% return per annum, our investment portfolio will reach RM291,368 when we retire at age 55, five times higher than the savings of RM100 per month.Hence, if we can cut down on our expenses and live below our means, we should have more money to save.

We should always ask ourselves whether we want to spend money on unnecessary luxury items to keep up with the Jones or be more frugal and spend less to achieve financial freedom earlier.

The question on how to generate high returns is frequently asked by readers. Unfortunately, there is no straight-forward answer to this.We can equip ourselves with strong financial and investing knowledge which helps us in making better investment decision that will eventually translate into better returns.

To do so, we need to be interested in the economic and business activities around us.For those who are beginning to learn about investing, you can go to any bookstore to look for investment books that you can comprehend to build up the foundation.

Remember that there is no point in buying books written by top investment gurus in the world if you cannot understand what it is trying to tell.Once you have built up your knowledge, you should be able to digest the financial information and do your own research in investment.

We all need to become millionaires

PERSONAL INVESTING
By OOI KOK HWA

One must have cash reserves of about RM1mil to be able to maintain one’s current lifestyle 20 years after retirement. WE need to become millionaires when we retire! A lot of people have misconceptions about being millionaires. To them, being a millionaire means they should own total assets – by adding up their total cash, house, Employees’ Provident Fund (EPF) contribution and car – that are worth RM1mil and above.

They believe that once they achieve one million cash, they should enjoy themselves by driving big luxury cars and staying in bungalows. In reality, all of us need to become millionaires when we retire at age 55. Based on our computation, we need to own total cash, including all money in savings, fixed deposits and EPF, which have total value of more than RM1mil.

The key principle here is we need to have cash reserves of more than RM1mil to be able to maintain our current lifestyle 20 years after retirement from age 55 to age 75. This is on the assumption that we can live up to 75 (the average lifespan of Malaysians).


Based on our computation (see table), if you are now 35 years old and your current monthly expenses are RM3,000 per month, assuming you are only able to generate a return of 3% (the return from fixed deposits) on all of your savings and the RM3,000 will grow by the average historical inflation rate of 3.5% per annum, you would need RM1.6mil when you retire at age 55.This amount will be enough to maintain your current lifestyle for the next 20 years after your retirement at 55. However, if you need to spend RM5,000, RM7,000 or RM10,000 per month, then you need RM2.6mil, RM3.7mil and RM5.3mil respectively at your retirement age of 55.

In short, you need to become a millionaire when you retire even if you only maintain a simple lifestyle after your retirement. You will not be able to use this money to buy a big luxury car or a bungalow, as you really need the money for the next 20 years.

Thomas J. Stanley and William D. Danko have conducted research on the reasons why some Americans become wealthy. They discovered that a lot of them live well below their means.Unfortunately, we notice that some Malaysians do not have enough money when they retire. Some of them may not be aware that they really need to accumulate that amount of money when they retire. Some may be aware, but they may have used up all their savings to support their children’s education. As a result, they need to find a job after retirement. Some may have difficulties finding a job. A lot of companies may prefer to employ a young graduate rather than a retiree unless the latter is willing to accept a lower pay.

We also believe that a lot of investors are quite worried about having enough money for retirement. They are also concerned that their money may not be enough to protect them against inflation. Hence, besides controlling our expenses, we also need to know how to grow our money.

Looking at the table, different minimum achievable annual target returns can provide different required amounts for retirement.For the current monthly expenses of RM3,000, if you are only able to generate a 3% return per annum, then you need to have RM1.6mil for retirement whereas you only need about RM900,000 if you are able to generate a return of 10%.

However, higher returns come with higher risks. We need to understand our risk tolerance level. We need to equip ourselves with adequate investing knowledge if we intend to generate higher returns.

6 steps for burning DESIRE to become millionaire

The method by which DESIRE for riches can be transmuted into its financial equivalent, consists of six definite, practical steps,:

 

First. Fix in your mind the exact amount of money you desire. It is not sufficient merely to say "I want plenty of money." Be definite as to the amount.

 

Second. Determine exactly what you intend to give in return for the money you desire. (There is no such reality as "something for nothing.)

 

Third. Establish a definite date when you intend to possess the money you desire.

 

Fourth. Create a definite plan for carrying out your desire, and begin at once, whether you are ready or not, to put this plan into action.

 

Fifth. Write out a clear, concise statement of the amount of money you intend to acquire, name the time limit for its acquisition, state what you intend to give in return for the money, and describe clearly the plan through which you intend to accumulate it.

 

Sixth. Read your written statement aloud, twice daily, once just before retiring at night, and once after arising in the morning. AS YOU READ--SEE AND FEEL AND BELIEVE YOURSELF ALREADY IN POSSESSION OF THE MONEY.

 

It is important that you follow the instructions described in these six steps. It is especially important that you observe, and follow the instructions in the sixth paragraph. You may complain that it is impossible for you to "see yourself in possession of money" before you actually have it. Here is where a BURNING DESIRE will come to your aid. If you truly DESIRE money so keenly that your desire is an obsession, you will have no difficulty in convincing yourself that you will acquire it. The object is to want money, and to become so determined to have it that you CONVINCE yourself you will have it.

 

Only those who become "money conscious" ever accumulate great riches. "Money consciousness" means that the mind has become so thoroughly saturated with the DESIRE for money, that one can see one's self already in possession of it.

 

You may as well know, right here, that you can never have riches in great quantities, UNLESS you can work yourself into a white heat of DESIRE for money, and actually BELIEVE you will possess it.

 

There is a difference between WISHING for a thing and being READY to receive it. No one is ready for a thing, until he believes he can acquire it. The state of mind must be BELIEF, not mere hope or wish. Open mindedness is essential for belief. Closed minds do not inspire faith, courage, and belief.

Boikot dan Terus Boikot

Pastikan anda menjalankan kewajipan anda sebagai Islam dan terus memperjuangkan Islam dan Palestine dengan memboikot barang-banrang Israel dan Amerika. Sedekahkan Al-Fatihah untuk pejuang mati syahid kita di Palestine. Amin.

Dunia oh Dunia - Jahanam Kau Yahudi

Oleh Zaharuddin Abd Rahman
www.zaharuddin.net

Setiap hari membelek berita berkenaan Palestin, setiap hari rasa pedih dan adakalanya terasa seolah tidak mahu mendengar sebentar laporan berita berkenaannya kerana sukar menahan rasa sakitnya.

Sudah hari kesepuluh dan serangan semakin ganas. Sekitar 550 orang Palestin telah diragut nyawanya termasuk kanak-kanak dan wanita serta orang awam, manakala seramai 2500 lagi cedera. Bekalan ubatan, makanan dan perkara asas semakin kurang. Hospital dan doktor amat terhad dan laporan berita menyatakan ada doktor yang tidak sempat tidur sama sekali.

Palestin pula telah terbahagi kepada tiga bahagian, kiri dan kanan telah mula ditembusi oleh Yahudi, hanya bahagian tengah masih belum berjaya ditembusi. Jelas, mereka sedang melakukan penjajahan secara fizikal dan menghilang Palestin dari peta dunia.!

Persoalan utama sekarang, apa lagi yang boleh bantu yang benar-benar dikira membantu?? Satu soalan yang saya sendiri turut kerap menyoal diri ini. Saya tiada jawapan yang melegakan, atau jawapan yang membuatkan anda terperanjat kerana ‘di luar kotak'.

Namun bagi saya, kita semua boleh membantu berdasarkan rasa kemampuan masing-masing. Siapa boleh lebih, buat lebih, siapa hanya mampu yang kurang, buat jugalah.

Keadaan manusia yang berbeza-beza dalam kemampuan ini diiktiraf sendiri oleh Nabi akan kewujudannya. Justeru, jangan harapkan semua orang mampu menjadi terlalu ‘berani seperti anda, terlalu ‘pemurah' seperti anda, terlalu ‘berjasa' seperti anda.

Nabi s.a.w bersabda dalam hadis yang sangat popular :-

Erti : Sesiapa yang melihat kemungkaran, hendaklah ia mencegah dengan tangannya, barangsiapa yang tidakmampu, cegahlah dengan lisannya (perkataan dan tulisan), barangsiapa yang tidak mampu, cegahlah dengan hatinya (iaitu dengan rasa benci)"


USAHA KITA : PILIHLAH

Natijahnya, pilihlah salah satu atau lebih dari satu dari tindakan di bawah untuk membantu saudara kita di Palestin yang dijajah dan Palestin yang sedang cuba dijajah.

1) Bantuan tenaga dan diri ; Pergilah ke medan di Palestin, jika anda ada cara, kemampuan dan keikhlasan. Sama ada untuk membantu menghantar bantuan kemanusian, perubatan, psikologi atau yang lebih dahsyat dari itu dari segi fizikalnya..

2) Bantuan Harta : Bagi yang tidak mampu pergi ; sumbanglah bantaun kewangan atau pakaian dan lainnya kepada badan yang dipercayai lagi berwibawa di tempat anda. Agar bantuan tersebut boleh sampai kepada rakyat Palestin yang sedang menderita. Cuaca sejuk kini tidak menentu, di UK kami ditimpa cuaca sejuk luar biasa sehingga (negatif 10) atau -10 darjah celcius. Palestin juga berada dalam cuaca sejuk, sekitar di bawah 10 celcius di sebelah malam

3) Bantuan Doa ; Bagi yang tidak mampu memberi kedua-dua bantuan di atas, atau termasuk juga merkea yang mampu, teruskan berdoa untuk keselamatan rakyat Palestin, Iraq dan umat Islam, doakan bala bagi Yahudi, pemimpin Amerika dan rakyatnya yang menyokong, pemimpin Mesir dan sekutunya-sekutu mereka yang membuka jalan dan menyokong serangan pengganas Yahudi ini.

Doa anda boleh bacanya sebagai :-

a-Qunut Nazilah dalam setiap solat fardhu anda, anda dibenarkan untuk memegang kertas doa semasa qunut tersebut kerana tentunya sukar untuk menghafalnya. Itu tidak membatalkan solat dalam semua mazhab termasuk mazhab Syafie kerana andatidak bergerak besar berturut-turt sebanyak tiga kali. Hanya angkat sekali kertas doa, berhenti sebenar kerana membaca, kemduain terus turun sujud, tiada berturut-turut.

b-Doa semasa sujud dalam setiap solat. Ia lebih maqbul berdasarkan nas yang sohih.

c-Khatib bacalah doa untuk Palestin di hujung khutbah Jumaat.

d-Dan banyak lagi waktu doa maqbul.

4) Solat Hajat ; Bagi mereka yang berpegang kepada bolehnya dilakukan solat hajat sama ada secara individu atau berjemaah. Anda turut boleh meneruskannya.

5) Menyertai Demonstrasi Aman : Sertailah ia dengan aman dan makmurkannya, namun jangan lupa juga memakmurkan masjid di kala Subuh dan waktu-waktu lain.

6) Menulis ; Tulislah di blog, web, forum anda, ruangan akhbar, majalah yahoogroup dan lainnya, buatkanlah kajian ringkas dan permudahkan penyampaian info kepada orang ramai berkenaan kezaliman Yahudi terhadap Palestin dan sekutu-sekutu mereka.

7) Ceramah ; anda mampu ceramah? berikanlah ceramah berkaitan isu ini atau hadirkanlah diri ke ceramah berkaitannya di tempat anda.Anda tidak semestinya seorang ustaz/ah untuk ceramah dalam bab ini, wartawan pun boleh.

8) Boikot : perkukuhkan boikot barangan Yahudi dan Amerika di ketika ini. Hantarlah surat dan bantahan, petition, memorandum kepada kedutaan Amerika, Mesir dan sekutu jahat mereka. Pelajar Al-Azhar, kami mendambakan tindakan dan usaha anda terhadap kerajaan Mesir.


TINGKATKAN KEPEDULIAN


Tingkatkan kepedulian kita terhadap nasib saudara kita umat Islam.

Jangan dirasakan usaha kita sangat kerdil, tidak mampu memberi sebarang kesan. Yakinilah bantuan Allah, sangka baiklah dengan Allah, nescaya Allah bersama hambaNya yang bersangka baik dan taatinya.

Sebagai sebuah hadis qudsi ertinya:

Allah menyebut : aku berada di atas sangkaan hamba-hambaKu,


AMERIKA SUDAH SAKIT, BERIKAN HADIAH KEEGOANNYA!

Keegoan dan keangkuhan Amerika dalam bidang ekonomi sedang jatuh merudum, hari ini berita BBC melaporkan Presiden dipilih, Barrack Obama mengatakan ekonomi USA sedang ‘SANGAT SAKIT' dan sangat serius masalahnya.

Rakyat Amerika yang kehilangan kerja semakin ramai. Obama sedang pening kepala masa plannya untuk USA, Bush bukan main seronok dengan Yahudinya.( Sumber di sini http://news.bbc.co.uk/1/hi/business/7811326.stm)

Jualan kereta di US pula kini diratah serangan virus kegawatan ekonomi apabila jualannya jatuh paling teruk sejak 1992. Jualan di pasaran Detroit Three jatuh 50 % buat pertama kalinya. Chrysler pula rugi dengan kejatuhan jualan sebanyak 53 % ,manakala jualan Toyota, Honda, GM dan Ford jatuh 31 ke 37 peratus. (http://uk.biz.yahoo.com/06012009/323/auto-sales-crash-2008-hits-lowest-level-since-1992.html)

Seorang rakan warganegara Amerika di sini memberitahu kami bahawa Bush sedang merancang Amerika menyertai perang, itu adalah salah satu jalan agar perlantikan rasmi Obama sebagai Presiden UA pada 20 Januari 2009 terpaksa ditangguh, kerana demikian menurut undang-undangnya. Iaitu jika US sedang dalam peperangan, Presiden yang sedang menerajui akan kekal. Kami tiadalah mengetahui sejauh mana benarnya ramalan atau analisa ini. Cuma ini mungkin salah satu sebab Obama dan rakannya, senyap sunyi menggelak dari memberi komen dalam isu Palestin.

Namun saya kira, mungkin hasrat Bush sedikit terganggu kerana untuk berperang Amerika perlukan berbillion US, bagaimana ia boleh sedang dalam ekonomi yang sanagt sakit dan teruk.?

MUJUR BRITAIN SEDANG PARAH, TAK LARAT BERSUARA

Kalau sebelum ini yang tidak kurang bengisnya adalah Britain, sebagaimana dalam kes Iraq, namun, kini UK agak senyap sunyi sikit, Alhamdulillah. Mengapa?

Jika Amerika sedang merudum dengan laju teruknya, UK setiap hari berita parahnya semakin menjalar, sehingga nilai Pound Sterling jatuh menjunam hampir sama malah pernah lebih rendah daripada matawang Euro. Kes buang kerja tidak henti-henti, pasaraya dan syarikat besar satu demi satu bungkus seperti Woolworth, MFI dan banyak lagi, menghidangkan kebanjiran pengganggur. Ditambah dengan cuaca sejuk luar biasa, Sehingga kami yang berada di sini turut bimbang.

Oleh itu kita mesti boikot barang-barang sekutu Yahudi terutama AMERIKA LAKNATULLAH