When one starts working, retirement may seem like a distant future, however, it is important to know that it is never too early to begin planning for your retirement.

Time is Key to Investment

Many people mistakenly believe they have plenty of time for retirement planning, therefore they procrastinate on it; when they are 20 years old, they think retirement is about 40 years off, so they wait until they are 30. And the same goes when they reach 30, 40 and so on.

Sadly, instead of beginning savings early, they spend so much paying off mortgages and debts when suddenly, they realise that much time has been lost and their retirement savings is forever scarred.

“Procrastination is the thief of time”, English poet Edward Young once said. The most valuable asset unit holders have when saving for retirement is TIME. The more time they have until retirement, the lesser the burden is to accomplish their retirement goals. The more they delay getting started, the harder it will be and the greater the risk to achieve their intended retirement lifestyle.

Managing and Growing Your Investment Portfolio

Some people however do start investing early, but they then let their portfolio go into “sleep-mode”. Over time, as changes in personal needs, spending or financial goals occur, adjustments in their investment portfolio should be done.

For instance, when you start working, you could begin with roughly knowing the age at which you want to retire and how much money you would need to do that. By looking at your present savings, you can understand how much you would need to save and invest for your retirement.

Subsequently, when in your late 30s, you would most probably have a better idea of where you stand financially. With retirement years creeping closer, it will be a good time to start shifting your investments to more stable and safer areas, where capital preservation precedes growth.

While investing, it is important to utilise Direct Debit Authorisation (DDA) facilities to make regular and disciplined investments. This method will allow you to habitually save and not feel the burden of setting aside sums for your golden years. Also, remember to diversify your investment portfolio – as the saying goes “don’t put all your eggs into one basket”. Spread your investment over selected domestic, regional and global equity funds as well as fixed income funds. This is to ensure that your savings grow while mitigating the risk of market volatility.

The Longer We Live, the More Money We Need

With the life expectancy of Malaysians having risen to 75.6 years on average, Malaysians can look forward to more than a decade of post-retirement life (assuming retirement age of 60). This is not taking into account the many individuals who look forward to retiring early.

To retire is to relief yourself of your ability to bring home salary, which you use to fund your many expenses ranging from property, transport, food, medication and so on. This is also when you expect to use your savings. However, the effects of inflation that will shrink the value of the ringgit over time, will inadvertently also shrink your retirement savings.

This can be countered if you allow your money to grow at a rate higher than inflation.

Retirement Planning with Unit Trust and Private Retirement Scheme (PRS) Investments

Unit trust funds are professionally managed by fund managers who manage the risks and returns of your investments. PRS, which was introduced in 2012, is especially catered to supplement the compulsory Employee Provident Fund (EPF).

As general rule of thumb, you will need 100% of your current annual expenses plus inflation for your Retirement Fund. This is because, although some expenses may decrease when you retire, some will also increase. Therefore, both expenses will offset each other. This expenses approach for planning your retirement savings takes into account the inevitable inflation, which will eventually decrease the value of your savings.

To know how much to save for your retirement, you can use our Retirement Calculator available in Public Mutual website (www.publicmutual.com.my). The analysis will provide you with options of lump sum or monthly investment to kick-start your Retirement Savings.

This article is prepared solely for educational and awareness purposes and should not be construed as an offer or a solicitation of an offer to purchase or subscribe to products offered by Public Mutual. No representation or warranty is made by Public Mutual, nor is there acceptance of any responsibility or liability as to the accuracy, completeness or correctness of the information contained herein.

The post Why it’s Never too Early to Start Preparing for Your Retirement appeared first on Dusun Duit.

• Earn daily returns
• Get higher potential returns than that offered by savings/current accounts
• Have no lock-in period
• Enjoy stability as the funds pose very low risk
• Get free insurance/takaful coverage¹
• Get redemption proceeds the next business day² as the funds are highly liquid
• Earn Mutual Gold Qualifying Points when you designate your PeCDF / PeICDF account as an Emergency Reserve Account (ERA)³
• Choose to switch to other equity/balanced/mixed asset funds when sufficient units are accumulated (the minimum investment amount for other funds is RM100 or RM1,000)

¹ Terms and conditions apply.
² If you execute your redemption request using Public Mutual Online (PMO) and provide us with your bank account details (subject to bank clearance).
³ You can find out more on the ERA here.

Investors are advised to read and understand the contents of the Prospectus of Public e-Cash Deposit Fund and Prospectus of Public e-Islamic Cash Deposit Fund dated 28 August 2023 and the relevant funds’ Product Highlights Sheet (PHS) before investing. Investors should understand, compare and consider the risks, fees, charges and costs involved in investing in the funds. A copy of the Prospectus and PHS can be viewed at our website. Investors should make their own assessment of the merits and the risks of the investment. If in doubt, investors should seek professional advice. Please refer to our investment disclaimer

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Seed Your Success, #RM10je at a Time
Begin investing #RM10je in our Public e-Cash Deposit Fund (PeCDF) / Public e-Islamic Cash Deposit Fund (PeICDF). With PeCDF / PeICDF, you can earn daily accrued returns. And, these returns are potentially higher than that of savings or current accounts.

You should also continue investing regularly by capitalising on Public Mutual’s Direct Debit Authorisation (DDA) facility to experience the power of compounding. Once you have accumulated sufficient units, you can switch to other equity / balanced / mixed asset funds with as low as RM100.

Build Your Emergency Fund
Besides that, you can also earmark your PeCDF/PeICDF account as an Emergency Reserve Account (ERA), where the #RM10je you invested could grow into the lifeline you need tomorrow.

By earmarking your PeCDF / PeICDF account as an ERA, you can also enjoy the following benefits:

• Highly liquid, allowing you to easily redeem your units in PeCDF/PeICDF if the need arises. Redemption proceeds will be credited into your bank account within the next business^{^} day
• You can enjoy greater stability as the funds pose very low risk
• You can get free insurance / takaful coverage^{^^}
• You can also earn Mutual Gold Qualifying Points (MGQPs) when you designate your PeCDF / PeICDF account as your Emergency Reserve Account (ERA)^*

^{^} If you execute your redemption request using Public Mutual Online (PMO) and provide us with your bank account details (subject to bank clearance).
^{^^} Terms and conditions apply.
^* You can find out more on the ERA here.

Investors are advised to read and understand the contents of the Prospectus of Public e-Cash Deposit Fund and Prospectus of Public e-Islamic Cash Deposit Fund dated 28 August 2023 and the relevant funds’ Product Highlights Sheet (PHS) before investing. Investors should understand, compare and consider the risks, fees, charges and costs involved in investing in the funds. A copy of the Prospectus and PHS can be viewed at our website. Investors should make their own assessment of the merits and the risks of the investment. If in doubt, investors should seek professional advice. Please refer to our investment disclaimer

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Investors are encouraged to follow the following investment must-dos to enjoy successful investing.

You don’t need to be a rocket scientist. Investing is not a game where the guy with the 160 IQ beats the guy with 130 IQ. – Warren Buffett

Some say that luck plays a role in investing and several things need to happen for an investor to make money: correct stock pick, market movement and timing.

But is it necessary to be lucky? That depends if you choose to be:

Here are the DO’s and DON’Ts in strategising your unit trust investment:

DO’s

1. Asset allocation
   
   Apportion the investment among various asset classes according to an individual’s goals, risk tolerance and investment horizon.
   
   
   
2. Diversification
   
   Spread the investment into various funds within each asset class to reduce the portfolio’s overall volatility.
   
   
3. Ringgit Cost Averaging (RCA)
   
   RCA is an investment technique in which investors invest a fixed amount of money on a regular basis. RCA brings you these benefits:
   
   
   
   How to apply RCA?
   
   Sign up for Direct Debit Authorisation (DDA) via our online facility, Public Mutual Online (PMO).
   
   
4. Invest for the long term
   

DON’T

1. Don’t put all your eggs in one basket
   
   If an investor invests in only a fund or two, and they are from the same fund category (e.g. domestic equity fund only), a potential decline in the performance of that fund(s) will have a substantial impact on the overall portfolio.
   
   
   
2. Don’t try to time the market
   
   Timing the market is difficult even for investment Gurus. So investors should not attempt to do so through frequent buying and selling of funds.
   
   
   
3. Don’t perform frequent switching
   
   Investors often switch between funds in an attempt to improve their returns. However, frequent and emotional switching may cause negative effects to the portfolio’s returns, not only because there are costs involved, but timing the market is extremely difficult too.
   
   
   
4. Don’t make emotional decisions
   
   Fear and greed are often two major emotional drivers in making irrational decisions, where investors engage in frantic buying and selling during the ups and downs of the market cycle.
   
   

This article is prepared solely for educational and awareness purposes and should not be construed as an offer or a solicitation of an offer to purchase or subscribe to products offered by Public Mutual. No representation or warranty is made by Public Mutual, nor is there acceptance of any responsibility or liability as to the accuracy, completeness or correctness of the information contained herein.

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As we go through different life stages, our financial needs will evolve. Hence, it goes without saying that planning ahead for each stage, in addition to starting to invest early in life, can help ensure a smooth ride up to our retirement years.

Learning to invest early and following a realistic financial plan are essential for success in investment. Here is a general guide on how we can make time work for us to reach our long-term financial goals.

In the 20s and 30s

For those of us in our 20s, this is the perfect time to start saving and putting our money to work. As there is still a relatively long way to go before retirement, we should develop good saving and spending habits so that we can invest and accumulate wealth.

The good thing about starting to budget and invest early is that we have more time on our side. This is also the best time to take advantage of the power of compounding returns to build a larger retirement nest egg.

First, start by identifying and writing down your medium- to long-term goals. Next, work out a budget which shows how much of your income is taken up by monthly expenditures. It is also important to set aside at least three months’ income for emergencies.

While it is not practical to be debt-free, we should be careful with debts which have high rates of interest such as credit cards. It is advisable to clear these debts as soon as possible so that you can allocate funds for investments and other financial needs.

Meanwhile, those of us in our 30s who still have a reasonable amount of time before retiring can devise an investment plan to maximise the power of compounding. This will help our money grow to fund future retirement needs.

Within each life stage, there are different priorities, financial challenges and goals that we would face. Thus, by effectively planning for the next stage of life, we would be better positioned to achieve our financial goals.

Targeted Sum Needed for Retirement

**The above calculation is based on an average Rate of Return (ROR) of 8% per annum and investments made at the beginning of each month. The calculation is based on financial calculators and is for illustration purposes only.

When we start saving and investing early in our 20s and 30s, we are actually allowing time to be on our side. For example, an individual in his/her 20s who makes regular investments of RM285 per month will be able to accumulate RM1 million by the time he/she is 60 years old. In comparison, individuals who start to invest later in their 40s, will have to invest a larger sum of RM1,687 per month to obtain a nest egg of RM1 million at 60 years old.

Therefore, to have a smoother ride up until retirement, it is important for us to start investing as early as possible because the later we start, the steeper the climb will be.

This article is prepared solely for educational and awareness purposes and should not be construed as an offer or a solicitation of an offer to purchase or subscribe to products offered by Public Mutual. No representation or warranty is made by Public Mutual, nor is there acceptance of any responsibility or liability as to the accuracy, completeness or correctness of the information contained herein.

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Common features of illegal schemes

Stay sceptical when you encounter the following situation. Here are some common features of illegal schemes that everyone should take note of:-

How it works?

At the beginning of such schemes, the operators are able to use money received from subsequent depositors to pay high returns or to repay the principal amount to the earlier depositors.

The operators are however unable to invest the deposits in equally or more lucrative ventures or investments and therefore unable to sustain the high returns or repayment promised to their depositors.

These schemes fail eventually when there are no new deposits being continually received by the operators. At such time, the “get-rich-quick” schemes will collapse and the depositors or investors will lose their investments.

Why do you need to be cautious?

Members of the public found participating in illegal financial activities could be charged under the law as abetting the operators of such illegal activities.

How to Protect Yourself?

Most importantly, keep in mind that there is no short-cut to making money. When investing in licensed financial instruments such as unit trusts, they must be willing to not just invest regularly but to stay invested for the long-term.

This article is prepared solely for educational and awareness purposes and should not be construed as an offer or a solicitation of an offer to purchase or subscribe to products offered by Public Mutual. No representation or warranty is made by Public Mutual, nor is there acceptance of any responsibility or liability as to the accuracy, completeness or correctness of the information contained herein.

The post Don’t Fall Victim to Scams appeared first on Dusun Duit.

1. Build up savings
2. Invest wisely
3. Align your portfolio to your investment profile
   As our personal financial situations may evolve with time (e.g. approaching retirement), giving our investment portfolios an occasional tune-up may help to manage our risks well. In addition, market conditions may also alter the mix of our assets over time. Thus, periodic rebalancing of our portfolios can help to realign our investments in line with our objectives and risk tolerance. 
   

Conclusion
In summary, building wealth entails managing our income well to accumulate savings and investing them in various assets over the long term. As a form of investment, unit trust funds provide a convenient and flexible avenue for investors to build their wealth.

This article is prepared solely for educational and awareness purposes and should not be construed as an offer or a solicitation of an offer to purchase or subscribe to products offered by Public Mutual. No representation or warranty is made by Public Mutual, nor is there acceptance of any responsibility or liability as to the accuracy, completeness or correctness of the information contained herein.

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Pointer 1: Have a clear investment objective

It is essential to have a clearly defined investment objective when investing in unit trusts. In the absence of a clear objective, investors may make impulsive decisions during periods of market volatility.

Hence, prior to making any investments, investors need to consider the following:

Pointer 2: Understand your investments

Prior to investing in any fund, investors need to take some time to understand the fund’s objective and key features, such as its distribution policy, asset allocation and risk exposure to ensure that these are in line with their investment needs and risk profiles. Investors should also take note of the fees and charges incurred when investing in unit trust funds.

Pointer 3: Avoid market timing

Unit trust investors should avoid timing their entries and exits from the market to achieve their long-term financial goals. Instead, they should stay invested for the long term and allow professional fund managers to navigate through different market cycles.

Not only are market timing decisions difficult, but frequent switching of funds will also incur additional transaction costs which could reduce the overall net return for the investor. Rather than attempting to time the market, it is time in the market that is the key to long-term investment success.

Pointer 4: Do not allow emotions to affect investment decisions

Successful investors are invariably highly disciplined in keeping their emotions in check. Investing under the influence of emotions often leads to poor investment decisions as investors who are overwhelmed by feelings, such as fear or exuberance, are prone to making rash decisions based on short-term market fluctuations.

Investors are advised to adopt the Ringgit Cost Averaging (RCA) approach to ride out market fluctuations. The RCA strategy involves buying a fixed Ringgit amount of unit trust investments on a regular basis, such as on a monthly or quarterly basis. This will help investors average out the cost of their investments as they will buy more units when the market declines and fewer units when the market rises.

Pointer 5: Diversify your portfolio

To diversify one’s investment is to spread the portfolio of funds across a range of markets (e.g. domestic, regional and global markets) as well as asset classes (e.g. equity, bond and money market funds). Typically, different markets or asset classes may perform differently at various stages of a market cycle. A decline in the performance of one or two funds can be partially mitigated by the steadier performance of other funds in the portfolio.

In addition, investors are advised to review their portfolios and rebalance their asset allocation on an annual or semi-annual basis as their investment objectives and risk profiles may change over time.

Conclusion

Unit trusts are convenient and effective channels for long-term investors seeking wealth creation and preservation. However, the value of unit trust investments may fluctuate depending on the financial markets in which the funds are invested. Thus, investors will do well to keep in mind these pointers that help them to be focused, calm and disciplined in their investing approach.

This article is prepared solely for educational and awareness purposes and should not be construed as an offer or a solicitation of an offer to purchase or subscribe to products offered by Public Mutual. No representation or warranty is made by Public Mutual, nor is there acceptance of any responsibility or liability as to the accuracy, completeness or correctness of the information contained herein.

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Hence, investors are advised to rebalance your portfolio from time to time to ensure their investment portfolios do not deviate from its original intended asset allocation.

Asset allocation refers to allocating an investor’s investments across different asset classes, which is determined according to his or her investment goals, time horizon and risk profiles. Changes in the trend of equity and bond markets will cause the asset allocation of an investment portfolio comprising stocks and bonds to change over time. As a result, the portfolio may deviate from its original intended asset allocation.

Portfolio rebalancing ensures that investments in a portfolio stay in line with the investor’s intended asset allocation. This rebalancing exercise entails adjusting the mix between equity, bond and money market funds within a portfolio according to the intended asset allocation.

The benefits of periodic portfolio rebalancing include helping investors to: (1) maintain their desired asset allocation, (2) lock in gains during market uptrends, and (3) remain focused on their long-term investment objectives during periods of elevated market volatility.


1. Maintaining the desired asset allocation
A well-balanced portfolio, determined according to your investment goals, time horizon and risk profile, is one where the fund’s portfolio is invested across different asset classes. However, due to market movements, asset classes that have performed well in the past may now account for a larger share of your portfolio while slower-performing asset classes become proportionately smaller. When the asset allocation of your portfolio has shifted significantly from its original allotment, the risk profile of your portfolio will no longer be in line with its original intended risk profile.

Rebalancing to maintain your portfolio’s intended asset allocation will ensure that risks are not overly concentrated on a particular fund or asset classes. Furthermore, this safeguards the risk profile of your portfolio by moving it back in line with your own risk appetite.


2. Locking in gains in market uptrends
Rebalancing also gives you the opportunity to lock in the unrealised gains in your portfolio of funds. During periods of market uptrends, you may find that certain asset classes such as equity funds which have outperformed are now above the original intended allocation. Thus, rebalancing the portfolio by trimming the asset class that has outperformed will help you to safely secure unrealised investment gains, with the proceeds subsequently re-invested in other asset classes. 

3. Remaining focused on long-term investment objectives
When it comes to making financial decisions during periods of elevated market volatility, our emotions can often overwhelm rational thinking. During such times, we often find it difficult to stick to our investment goals and strategies as the markets may not move in tandem with our expectations. This can eventually lead to panic selling as a result of losing focus on our long-term goals.

Thus, employing a strategy of periodic rebalancing can reduce the stress associated with making investment decisions during periods of elevated market volatility. By periodically assessing and rebalancing your portfolio, you can maintain self-discipline and remain focused on your long-term goals, regardless of market conditions.


Portfolio Rebalancing
The following illustration demonstrates how a portfolio can change over time and explains how you can rebalance it. The pie chart comparisons show the asset allocation of the same portfolio as at August 2016 and a year later.

	Chart 1 assumes the recommended asset allocation of a moderate risk investor, as at August 2016, who aims to achieve long-term capital growth by choosing an asset allocation which comprises 65% in equity funds, 25% in bond funds and 10% in money market funds.
Assuming the stock market performs well within a one-year period, the equity portion of the fund portfolio will have increased to 80%. This will result in the exposure to bond investments declining to 14% as shown in chart 2. As the equity exposure of 80% is above the original allocation, the investor can reduce the equity portion back to 65% and use the proceeds to increase the bond funds’ exposure back to its original allocation of 25%.
	However, if the stock market has trended lower over the same period, the equity portion of the fund will have fallen to 40%. This will result in the exposure to bond and money market investments increasing to 43% and 17% respectively as shown in chart 3.

As the fund portfolio’s current equity exposure of 40% has moved below the original allocation, the investor can reduce the bond and money market portions back to 25% and 10% respectively and use the proceeds to increase the equity funds’ exposure back to its original allocation of 65%.

A word of caution to investors would be that excessive rebalancing will incur higher transaction costs which would adversely impact overall investment returns. Therefore, investors are advised to practise portfolio rebalancing on a scheduled basis such as half-yearly or annually.

Rebalancing your investment portfolio plays an important role in achieving your investment objectives over the long-term. It restores your investment portfolio to the targeted asset allocation that is consistent with your specific risk profile. Thus, periodic portfolio rebalancing helps you to stay on track with your financial goals.

This article is prepared solely for educational and awareness purposes and should not be construed as an offer or a solicitation of an offer to purchase or subscribe to products offered by Public Mutual. No representation or warranty is made by Public Mutual, nor is there acceptance of any responsibility or liability as to the accuracy, completeness or correctness of the information contained herein.

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1. Long-term Investing
Having the right perspective is crucial for investors to capitalise on the long-term growth potential of their investments. By keeping a long-term horizon, investors allow their investments time to generate compounded returns and amortise the initial cost of investing. Hence, instead of attempting to time the market, it is time in the market that enables one to accumulate returns over the long term.

2. Harnessing Volatility
Markets can be volatile in the short term, but these fluctuations can sometimes present opportunities. When the market sentiment turns negative, companies with strong fundamentals can be mispriced. The volatility provides the investor the opportunity to acquire valuable companies at lower prices.

3. Regular Contributions
To be a successful investor, one requires aptitude as well as a disciplined attitude. This means sticking to your investment plan through regular contributions (which averages out unit costs over time as opposed to a lump sum approach). Public Mutual’s Direct Debit Authorisation (DDA) feature was designed with this in mind: enabling investors to practice Ringgit Cost Averaging through automated contributions with a worry-free approach.

4. Build a Portfolio
An ideal portfolio involves investing in funds of various asset classes and geographical exposure, industries, themes in alignment with risk tolerance. Building a portfolio of funds helps investors move beyond individual fund performance and achieve greater diversification. Consult your unit trust consultant to build a well-diversified portfolio and to rebalance it to maximise performance.

Public Mutual’s Investment Philosophy
Our funds’ investments will continue to focus on companies which are backed by fundamentals, with their portfolios rebalanced accordingly and positioned for the long term. Hence, we encourage our investors to be continually guided by these four principles of investing so that they can reach the full potential of their investments with Public Mutual.

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