As usual, newspaper interviewed readers of their opinions of the recent EPF dividend announcement. Many will welcome the higher dividend rate, some will want EPF to give even higher return.
It is commendable EPF gives higher dividend this year. Like I said in previous post, EPF has done their best to gain extra returns for all members. Let's read paragraph 5 of news below: "the EPF aims to provide at least a return of 2% above inflation rate over a three-year rolling period".
Now, check back ourselves. How many of us has too much money sitting in FD because we do not dare to take extra risk? We complain of prices going up but we do not make our money harder. Not even to beat inflation.
Whether we like it or not, whether we are prepared or not, time to retire is time to retire. Time waits for nobody. Human nature likes to blame others for his own failure. Let's not do that. Let's not blame others for our ill-preparedness for our retirement. God gives us the ability to work, to save and to invest, please ask for wisdom to better prepare for our future.
As a responsible man to ourselves and our family, let's plan properly.
1.) Decide your lifestyle. Reflect how we spend our money. Are we spending too much on lavish items, or wasting too much on unnecessary items? Can we cut down? Do we need to dine in fine cafe or restaurants? Lifestyle is a monster. Once it gets hold of you, you cannot let go. We feel shy if we change to a lower spending lifestyle. The society is talking about instant gratification - enjoy when you earn. Fine cafe and restaurant is not a definite no-no, just calculate how often can you go.
2) Save first. Many of us has EPF because the law make it compulsory to contribute first before paying salary. If the law says we can contribute after we spend first, I think most of us will have money inside. Same here, allocation 20%~30% of your salary into saving and investment scheme once salary is paid out. A dollar save is a dollar earned. Live our life wisely on the balance of our salary.
3) Reduce debt. Many of us are tied down by car loan and housing loan. This loan should not make up more than 60% of total household income. Do not take up unnecessary new loan. Must we change a new car every few years? Review your housing loan package and look for a lower interest rate. Personal loan is a definite no-no.
4) Increase income stream. Some family member can work as part-timer in restaurant or fast food outlet to make extra income. Use the income to save or invest for future. Besides income, the job is like training to especially younger generation where they do not know the toughness to be employed.
5) Learn new investment skills. Do not reject an investment based on hear-say. If an investment is supposed to be a safe investment tool but why some hates it? Know their reason. It may be because the agent over-promised, or investors wants fast returns etc. Learn unit trust investment, shares investment, gold investment etc. Any investment as long as it is approved by government (Securites Commission or Bank Negara Malaysia). When in doubt, check at the responsible government agency.
6) Plan for passive income. We can only retire if we can have passive income coming in during retirement years. Dividends from shares and trust scheme, rentals, annuities are some examples.
7) Stay away from get-rich-scheme. When an investment sounds too good to be true, it is. If an investment is promised to be sure-win (all upside, no downside), RUNNNNNNN! Stay away from them. The greed will make us lose everything. The recent busted scam of SureWin2u, World Richest Man, Bitcoin investment in Hong Kong, should be alarm bell for us. Victims were promised of sweet returns but now many lose everything.
Let's make EPF one part, not all, of our retirement funds. If you need proper guidance, talk to a wealth planner.
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