This blog follows up on my previous blog.
When I plan ahead, I would always attempt to do three things at the same time: the Short Term Plan, the Medium Term Plan and the Long Term Plan. Some things like growing a durian tree takes about 6 years, so growing a durian orchard can only be a Medium Term Plan. By having three plans going concurrently, I would always be able to reap different kind of rewards at different stages of time.
Usually anything that takes times to bear fruit are very tasty.
Short Term Plan Example - Marriage Ceremony
| Description | RM |
|---|---|
| Target Amount | 100,000 |
| Years before Redeem | 5 |
| Investment Return per Year | 6% |
| Capital to Start | 75,000 |
For something 5 years from now, the options we have ranges from Fixed Deposits(~4%) to Fixed Income Bonds(~7%). At this rate, we still need quite a lot at RM75,000 to start. Not impressive compared to what we can do below, but maybe this can help us shave off 1 year.
Garden weddings should be cheaper I guess.
Medium Term Plan Example - Child's Australian University Education
| Description | RM |
|---|---|
| Target Amount | 500,000 |
| Years before Redeem | 15 |
| Investment Return per Year | 8% |
| Capital to Start | 158,000 |
I looked up my university's fees as well as the private accommodation Unilodge there, and for a 3 year course, the total expenses is about RM500k! I was actually expecting RM300k.
In this case since we have 15 years, we have enough time for Equity investments. Did you know Warren Buffett won a bet that he will beat all active fund managers in the world by doing nothing other than leaving the money alone in the stock market? In that bet's 10 years, he got 7.1% per year while the challenger only got 2.2%. That is very close to the historical average of around 8% per year, even in Malaysia.
So after working out the calculations, we only need RM158k set aside, and we can "earn" RM342k by just doing nothing! Talking about how to rich get richer here.
Nothing to do here except to study and research nuclear.
Long Term Plan Example - Retirement
| Description | RM |
|---|---|
| Target Amount | 1,000,000 |
| Years before Redeem | 40 |
| Investment Return per Year | 8% |
| Capital to Start | 46,000 |
If you want more millions, just multiply accordingly.
But Look At Just How Little We Need to Start With!
Only RM46,000. Just a mere 5% of the target amount, less than GST's 6% ( hahaha!). I think this is a very good opportunity to not miss up.
On a side note, If you are below 30 years old, this is the last year the Malaysian Government is giving you RM1k if you register this kind of plan with any registered providers. (Hint Hint Me Here!)
I have more than 5 years of experience in Audit, Corporate Finance as well as Tax. I had IBM, Unilever, Sime Darby Property, Li & Fung and others as my clients during my tenure in PricewaterhouseCoopers.
I write to share the insights and foresights I had gathered throughout my exposure within the leading corporates, as a personal mission to help us manage the oncoming Age of Robots and A.I.
In my opinion, the best form of empowerment is the ability to earn our own money. Hence, I organize Entrepreneur Peer Groups (combined revenue of RM3 mil) as well as assist people to invest in Unit Trusts.