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.

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.

The post Invest Early: Make Time Your Best Friend appeared first on Dusun Duit.

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.

The post Managing Income to Build Wealth appeared first on Dusun Duit.

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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