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When we are young, saving for retirement might not seem urgent. It feels like something that we can focus on later, especially since there are other more pressing and immediate financial commitments. However, we want to emphasise the hard truth: Retirement Is No Joke! That’s why we have the Private Retirement Scheme to help us all out.

Why Should You Save For Retirement?

We Malaysians are expected to live until we reach 75 years old. However, we retire at 60 years old. That means, we can expect to live at least 15 more years without receiving regular salaries.

Some of us may be fortunate enough to receive monthly pensions or be able to rely on our EPF savings. Nonetheless, research has shown that merely having pensions or EPF savings may not be enough.

Some of us may have children who are working and earning salaries. Although they can provide for us, do we really want to burden them, especially if they have children of their own to care for?

Growing Your Retirement Savings 

We don’t just want to save our money. We want it to grow. The way to do that is by investing our savings. A viable option is to invest in Unit Trust Schemes (UTS) or Private Retirement Schemes (PRS).

Investing in UTS and PRS is one of the simplest forms of investing. It doesn’t require large amounts of money, time, or expertise.

All you need to do is approach a UTS/PRS Consultant or Distributor. They will assist you to invest your savings into a UTS/PRS fund that is suitable for you. That fund’s investment will then be managed by a licensed professional fund manager.

Read: Getting To Know Unit Trust Schemes

Saving For Retirement 

A Long-Term Activity 

Remember that life is a marathon, not a sprint. If your retirement is still some time away, it will give you a lot more time to prepare for it. This means that your retirement fund can grow substantially simply by you putting aside some money consistently and invest them over a long period of time.

To maximise your savings, the key is to start early. Just like in a marathon, every now and then, you should keep track of your progress and ‘refresh’ yourself. As your salary increases, revisit your periodic contributions, and adjust accordingly.

After retirement, most of us will not have a fixed salary anymore. However, expenses remain. As such, your target savings should be one which can sustain your desired future lifestyle.

How much should you save?

You can refer to a retirement calculator. All you have to do is key in the requested details. Then, the retirement calculator will calculate for you the amount of savings you will need as well as the projected savings you will have based on your current savings amount.

From there, you can calculate the shortfall and determine how much you should be saving on a regular basis.

Consistency Is Key

Remember to pay yourself first! Most of the time, once people receive their salary, they will save whatever remains after paying their bills, taxes, loans, groceries, and other expenses. However, this practice can lead to inconsistent savings. It is best that you allocate a fixed amount for your retirement savings first, before spending on your other commitments.

Likewise, do NOT take ‘savings holidays’ or defer your savings contributions. You must be consistent!

It would be ideal if you can consider signing up for a regular savings plan when investing in a UTS/PRS. This plan will, on a regular basis, automatically deduct money from your bank account and channel them towards investing in UTS/PRS. Hence, you can ensure that you will be consistent in your savings.

Name A Nominee For Your Private Retirement Scheme

Essentially, a nominee is the person who will inherit your savings/investments in the event something happens to you. Hence, it is essential that you elect a nominee.

Even if you don’t name a nominee, your next-of-kin can still receive your monies from the Private Retirement Scheme. However, the process is a lot more difficult and expensive because he/she will need to prove his/her entitlement. By naming a nominee, the process is a lot easier and more cost effective.

If you have not yet named a nominee, you can contact your authorised UTS/PRS Consultant and he/she will help you with the process of smoothening out the process of taking out the money from your Private Retirement Scheme.

Read: Who Are Unit Trust Consultants?

The Final Word

Retirement is no joke! We want to enjoy our retirement comfortably and without any financial worries. As such, we must start saving for retirement early and doing so in a safe and disciplined way. Now you know why the Private Retirement Scheme is necessary to supplement your retirement funds.

This article is in collaboration with The Federation of Investment Managers Malaysia (FIMM), a self-regulatory organization (SRO) that regulates the marketing and distribution of Unit Trust Schemes (UTS) and Private Retirement Schemes (PRS).

Visit www.fimm.com.my for more information on PRS, Unit Trusts, and UTS & PRS Consultants.

The following story is based on an actual series of events with some names and circumstances fictionalised and any similarity to the name, character or history of any person is entirely coincidental and unintentional. Hopefully by following this decluttering tips, you will be able to safeguard your wills so much better.

Mama Lucy is so into Marie Kondo to the extent that she has been increasingly NOT sparking joy in her family members.

Her obsession with decluttering tips has been annoying for her family members after she came to know of Marie Kondo who gained world fame for her Japanese art of decluttering and organising.

This was especially so in the run up to her move from the family’s 3-storey house to a two-room condominium unit. A day did not go by before her daughter and son receive calls telling them that she is getting rid of their this and that as they no longer spark joy!

Decluttering Tips: Don’t Overdo It

Daughter Jane and son Jay, who have started families on their own and moved out, will then have to make trips that very day to their family home to take the items that they wanted, otherwise those would end up in the garbage bag.

“Her OCD behaviour is eating me up,” Jay would gripe to Jane, whose tolerance of Mama Lucy’s obsessive-compulsive disorder too had reached her limit. Mama Lucy had even coined her own mantra, Mati Kosong, in an adaptation of the Marie Kondo acronym for her decluttering mission!

The siblings hoped their worries about her Mati Kosong obsession would dissipate after their mum finally moved to her new condo. They were right until a week later after the move…

Decluttering Tips: Safekeeping Of Wills

Jane received a frantic call one evening. Her mum at the other end went like a runaway train… “I can’t find my Will. I took it out from the Will Custody Centre. I wanted to make changes to the Will. I just remembered it and have been looking for it the whole afternoon…

“I have looked into the boxes and everywhere. What should I do…?” her voice trailed off.

It should be worrying. A Will that cannot be located is like not having a Will. Luckily for Mama Lucy the discovery of her loss of the Will was not after her demise which would put her children through a lengthy and arduous process of getting a Letter of Administration before the distribution of her assets could take place.

Mama Lucy had been prudent in keeping her Will in a Will Custody Centre prior to taking it out for review. Now, having lost it, she needed to go through the process of writing a new Will and making sure that it is safely kept and easily retrieved at the crucial time.

Read: Hard Facts About The Executor Of A Will In Malaysia

Decluttering Tips: Let The Professionals Handle It

A professional Will custody company like Rockwills Corporation Sdn Bhd which specialises in providing custody and protection of Wills ensures that Wills are kept confidential, free from any tampering and safe from any accidental or deliberate destruction.

A strong room with fire resistant walls and doors, motion and smoke detectors, non-explosive lightings, and humidity control safeguard such important documents from accidental damage or destruction as in fire or flood.

Biometrics security features allowing access only through card and fingerprint and 24-hour security are part of the secure system that include tight security processes of regular audit to ensure Wills are kept secure at all times.

The additional feature of security stamp embossing in each page of the Will also ensures Will in custody are tamper-proof.

Easy location is another merit of a Custody Centre. Legal representatives of the testator simply needs to provide the custodian with the death certificate and proof of identity, for the Will to be released to execute the process of the distribution of the estate.

Hope you enjoyed the decluttering tips, just make sure that you don’t overdo it.

Read: The Importance Of Estate Planning, Avoid Last Rites Drama

About Rockwills International Group

Rockwills International Group, now in its 27th year, pioneered professional will writing in 1995 and has since evolved into the leading estate planning specialist in the country. It is today the largest provider of solutions and support services in the areas of trusts, succession, management and distribution of wealth. It has shareholders’ funds exceeding RM50 million. It has done over 280,000 wills and 15,000 trusts and hold more than RM25 billion in assets under trust.

Have you ever met people with different money personalities? These can be your spouse, parents, colleagues or friends. Is there a single best money personality that each of us should adopt? During a recent wealth seminar that I attended, I learned about these four main types of money personalities.

Come let’s check out your money personality.

1. The Money Saver

This person always feels insecure and wants to save as much as possible. It may be due to past experiences where these individuals have encountered financial difficulties, therefore they have this belief that it’s hard to earn money. Thus, it’s always good to set money aside for rainy days. I would agree that saving is a good habit to inculcate.

However, if you just save money alone without spending appropriately, then you may miss out on some great experiences in life such as travelling or other fun activities. What’s the purpose of saving then, if we don’t spend it wisely on things that matter to us while still achieving our long-term goals?

Read: Saving vs Investing, Should I Save Or Invest?

2. The Money Spender

This person always wants to buy things and must have the latest gadgets in town. They’ll buy whether they need those items or not and find fulfilment in spending their money. They may or may not have the money, but they’ll always have things to buy when they’re out for shopping. Now it’s even more convenient to spend money via various online shopping platforms available on our smart devices.

On the contrary, some may have the “you only live once” (YOLO) mentality. This personality of people rather spend their money now rather than delaying it to their later years. However, spending without proper planning and budgeting will cause you to regret it down the line when you no longer have any in flow of funds, as many people don’t have enough retirement savings for their later stages.

Read: How to Save Money in Malaysia – RM1 Million Goals

3. The Money Avoider

This person is not comfortable talking about money and never pays attention to their own personal finances. By not learning and understanding about personal finance or how to manage their money, these individuals may not be able to secure their financial future.

Not learning about managing money will have serious consequences in life. These personality types often conclude that they’re not good at personal finance. It’s important for this group of individuals to learn about the basics of savings, investing and protection so that they can take more control of their life and be able to reach their own financial security or financial independence.

Read: 6 Ways To Deal With Inflation

4. The Money Monk

Money monks are individuals that believe that money is the root of all evil or have preconceived negative beliefs about being rich. For example, they may have the belief that rich individuals are greedy and evil.

However, these rich individuals can make a bigger impact on society by having businesses to solve problems that we’re facing. Some wealthy individuals also channel part of their wealth into philanthropy or contribute money and time to tackle major problems affecting the world.

Read: Debt-Free vs Retirement Savings: Which to Prioritise?

4 Money Personality, What’s Yours?

Which of the above personalities is closest to your current habit of spending money? Personally, I don’t think that there’s one personality that is better than the rest. For me, it’s all about having that awareness of your current money personality.

What do you need to change about your current money personality? Do you need to read more books about managing money? Or signing up for classes or to seek help from financial professionals to guide you in your money management?

However, I think you should choose the right money personality that suits your current situation as it can change depending on your circumstances in life. It’s more important to have a balanced personality in managing your money so that you’re able to reach your financial goals and live the life that you desire!

About the Author

Goh Chee Yong is a Licensed Financial Planner under Capital Markets Services Representative License (CMSRL) and Bank Negara approved Financial Advisor Representative (FAR). Prior to becoming a financial advisor, he spent eight years working in Big 4 audit firms and multinational corporations. He can be contacted at cygoh@imaxfinancial.com.my

Islamic finance is growing at a remarkable rate. The impressive performance of Islamic finance is due to the vigorous development of infrastructures focusing on financial support in the industry. Malaysia is a hub for Islamic finance with the dominant sectors being Islamic banking, takaful and Islamic capital market, which includes Islamic financial planning solutions.

With the growing demands for modern-day Islamic finance, Islamic financial planning solutions is seen as a service that best caters to these ever increasing needs and covers the wealth cycle to cater to the financial needs of individuals.

Muslims may obtain advice and benefits from Islamic financial planning professionals on a wide range of issues, including cash flow and risk management, investment, self-managed retirement funds, zakat, taxation, takaful and legacy planning. All these tasks require specific knowledge and expertise in legislation, regulations, and market practices.

Unnerving as it may sound, the importance of Islamic financial planning once again received sporadic attention when COVID-19 severely impacted many Malaysians, especially Muslims. The Movement Control Order (MCO) caused many people to contemplate having proper and structured emergency funds – prompting them to undertake financial planning.

Technology – Emergent Requirement

Technology is everywhere and evolving rapidly. Whether we are financial planners or consumers, it will become harder to thrive and survive without technology in constructing holistic financial planning solutions. According to McKinsey Global Survey, consumers have moved dramatically towards technology during the pandemic. The survey results confirm the rapid shift toward interacting with customers through digital channels.

A piece of automated advice on financial planning solutions and applications is no longer (by right) a threat to financial planners, but rather an enabler for the industry to be competitive. The well-informed clients call for a wide selection of economical and practical financial planning solutions, whether online or through a mobile platform. Responding to this type of consumers, it is imperative to adopt financial technology as a channel for distribution.

Technology is an agnostic tool that can significantly change the financial planning industry. By using technology, financial management’s efficiency and effectiveness will increase, making it easier for customers to deal with financial institutions through various activities and financial products.

On the other hand, technology in the context of Islamic financial planning must be seen in compliance with Shariah guidelines.

The Role Of Technology In Islamic Financial Planning Solutions

It is essential to understand that financial planning solutions is not simply limited to the distribution of inheritance upon death, buying family takaful or investing in unit trusts. Developing a comprehensive financial plan is a personal journey for a true Muslim, and an excellent Islamic financial planner plays a critical role in this process.

The client needs to have confidence that financial planners are up-to-date on the current financial planning landscape and current Shariah-compliant financial technology (fintech), diversification of halal investment selections via digital platforms, and other latest solutions to be considered.

As technology advances, we have been able to automate parts of financial planning services, with vast improvements in the tracking of documents and records of advice. Access to information and keeping clients well-informed regarding their investments are part and parcel of technology’s role. However, without technology to complement, one might find things a little hard going as we drift deeper into the 4th Industrial Revolution.

To overcome the industry’s technology disruption, financial planners must be nimbler to apprehend new technologies and employ them for innovation on existing solutions that are in great demand.

For example, a few years back, the emergence of robo-advisor was regarded as a threat in the financial services sector. A robo-advisor is an automated platform running with a computer algorithm functioning to manage assets in investment. During that time, people were uncertain about the role future human advisors would fulfil as usage of robo-advisors gained traction.

Threat Or Enabler?

The COVID-19 pandemic is the most significant catalyst for digital transformation, and this change will lead to exciting insights into Islamic financial planning that will reshape its approaches. Technology can never entirely replace a human’s touch and skills.

In years to come, both humans and technology are vital to serve clients better and modernise our financial planning profession. Technology exists to support, simplify, and create efficiency, instead of threatening the industry. Technology allows financial planners and clients to have a more engaging and meaningful advice conversations.

A more robust framework of competency and consistent efforts for Islamic financial planners, including technical knowledge on the latest technology, would develop a more agile professional, who will safeguard the public’s interest, uphold the industry’s professionalism, and ultimately receive the rewards in the Hereafter.

About the Author

Dr Haji Shahizan Haji Md Noh is a licensed Islamic Financial Advisor (IFAR) for ASWA Advisory. He obtained his Doctor of Philosophy in Economics and Muamalat Administration from Universiti Sains Islam Malaysia (USIM). He also holds a Certified Qualification in Islamic Finance (CQIF) from IBFIM and Islamic Financial Planner (IFP) from the Financial Planning Association of Malaysia (FPAM). As an experienced practitioner, he has served numerous institutions in different aspects.

The following story is based on an actual series of events with some names and circumstances fictionalised and any similarity to the name, character or history of any person is entirely coincidental and unintentional. We will be looking at how a family foundation can help when trust crumbles within a family.

Uncle Tan was shaken. It had just been revealed to him that something was not right in the books of the family’s hardware business.

“It can’t be!” Uncle Tan was in denial even though San, the third of five children, showed him the books where the numbers didn’t add up. What was unbelievable to Uncle Tan was not the books but the accusation that Da Ge, his eldest son, has been putting his hand in the till.

Business Runs In The Family

Patriarch Tan has been happy and contented with Da Ge ably stepping into his shoes. As what one steeped in traditions would want, his number one offspring fitted to a ‘T’ the role of running the family business so that the 72-year-old founder could take a back seat and enjoy his golden years.

Seeing how Da Ge has taken the bull by the horns in steering the company through some hiccups in business, Uncle Tan’s confidence in Da Ge grew over time and he showed his pleasure by giving his trusted son a free rein in the operations of the business.

He was also contemplating on rewarding Da Ge with the largest share of the equity of the company and the rest, equally among the other son and three daughters. This, he felt, would sort of make up for the lack of attention for his first-born who grew up with scant fatherly love and attention.

As one not attuned to showing affection, he neglected Da Ge and just focused on building up his business in his younger days. To him, his affection could be shown later by rightfully transferring his significant wealth to the eldest male offspring.

And as Da Ge won his father’s heart with his business acumen, it blindsided Uncle Tan to his wayward ways. Easy success and access to cash from business transactions got to Da Ge and he became a spendthrift, splashing his money on wine, women and song and ego-tripping with his growing popularity and following by his cohorts of fan-friends.

Tackling The Root Cause

San got wind of the missing cash from his former classmate, who was keeping books for the company. After trying to talk to his brother but to no avail, he decided to bring the matter to his father.

Knowing that his father would be in disbelief that his trustworthy son would be capable of endangering the financial health of the business, San thought it was best to go to his father with a solution rather than just the problem.

He knew his father would be more receptive to a proposition for the betterment of the business rather than be presented with the problem that stemmed from his ‘trustworthy’ son.

He could see that his father, when troubled that the foundation of trust had crumbled, welcomed his proposition that offered a solution. The older Tan was eager to meet San’s estate-planner friend to find out more about Family Foundation which would better resolve matters with Da Ge. He finally agreed to establish his own Family Foundation with a set of values and rules that ensured continuity and protection of capital.

A Family Foundation can be established to hold and manage assets for the benefit of your family. It offers the benefits of a Trust and the structure of an independent company with protection of assets not available in others.

The Importance Of Family Foundation

For the Tan family, the Family Foundation offered an immediate resolution of the delicate situation rather than leaving the decision making on family business matters solely in the hands of Da Ker.

The Founder of the family business, in this case Uncle Tan, can assume the role of Chairman of a Council to be set up under the Family Foundation. His five children can be appointed as members of the Council, who will be charged with managing the Family Foundation.

Decision Making

The Council assumes the task of decision making for the family business through the Council members’ vote of resolutions tabled for their consideration. This effectively makes it a collective decision-making involving relevant members of the family including the Founder instead of resting it in the hands of a sole family member.

Family Governance

Family governance is possible with the crafting of a Family Charter and the formation of a Family Council as it effectively becomes a platform or a forum for Family Council Members to voice their views, thus avoiding miscommunication or misunderstanding pertaining to the family business. It also facilitates the establishment of common rules and procedures to follow to minimise any possible disputes.

Ring Fencing Family Wealth

The Family Foundation serves as an essential instrument to safeguard business succession only among family members. This is achieved through ring fencing that keeps out outsiders and unwelcomed parties. This preserves the family business for the multi-generation of family members.

Wealth Distribution

Through deliberation and consultation, the Council can agree to a mutually beneficial wealth distribution formula. This pre-determined formula of shareholding in the family business based on identified scenarios will avert any possible future family squabbles that can break up the family.

With Uncle Tan having his say and expressing his wish on succession and wealth distribution, his children being part of the decision-making process will see the distribution as fair.

Comprehensive estate planning solutions such as the above can be achieved by consulting an experienced estate planner working with an established company such as Rockwills.

About Rockwills International Group

Rockwills International Group, now in its 27th year, pioneered professional will writing in 1995 and has since evolved into the leading estate planning specialist in the country. It is today the largest provider of solutions and support services in the areas of trusts, succession, management and distribution of wealth. It has shareholders’ funds exceeding RM50 million. It has done over 280,000 wills and 15,000 trusts and hold more than RM25 billion in assets under trust.

Inflation literally makes us all poorer by eroding the value of our money. The problems we have been facing in the two-and-a-half years due to the pandemic has made matters worse, as we have find ways to deal with inflation.

As the cost of living continue to rise, what should we prioritize when it comes to our monetary budget? Will we have to retire later? Do we have to change our children’s tertiary education plans?

In a Facebook livestream on 7 September 2022, conducted in conjunction with World Financial Planning Day 2022 (WFPD2022) by SmartFinance (SmartFinance.my) with the support of the Financial Planning Association of Malaysia (FPAM), Rajen Devadason, a licensed financial planner, offers some strategies we can use to deal with inflation.

Here is his tips on how to deal with inflation:

1. If You Don’t Have A Budget, Please Create One

If a budget only exists in your head, you are strongly urged to have it written down, whether on paper or as lined items on a spreadsheet. Getting the tactile sensation of writing things down will get you more invested in the numbers and provide you with a road map of your finances.

2. Prioritize Nourishment

When it comes to budgeting for yourself and your family, do not compromise on nutrition. Make sure nutritious food that meets caloric content is taken care of and no one goes hungry. Everything else can be set aside.

3. If It Possible To Accelerate The Repayment Of Debt, You Are Advised To Do So

Many of us have debt that flow. So, when interest rates rise, the cost of our borrowings will go up. One way to deal with inflation is to pay down debt you can, as fast as you possibly can.

Each time you get rid of a liability to your name, the monthly repayment disappears for life (unless you take on an equivalent loan). This will clear up additional cash flow, give you a breathing room and let you do more with your money in an inflationary environment.

4. Exercise Delayed Gratification

Used to changing cars every 5 years or going on two overseas vacation a year? Don’t be too quick to spend your earning on the things you want.

You are likely to have surplus money to save up if you can cut back on some luxuries, until your financial goals are met. Delayed gratification is another way to deal with inflation.

5. Work Harder, Work Longer, Bring In More Money, And Tighten Your Belt Like You Have Never Done Before

Unless you wish to stay poor, you cannot stay static. Most of us can only improve on our situation by working harder, and then by working smarter. If you are not earning enough, get a second or third stream of income. One of the saving graces is internet connection is now better than 5 years ago, which enables anyone with online access to participate in the gig economy and earn a side income.

For those who are under the age of 35 and in good health, you’ve got more energy; your youth, stamina and vigor will give you the ability to work beyond your normal 40-hour work week, if you are willing to pay the price.  

6. Save And Invest More

Saving and investing are two different things. We save for peace of mind, knowing we will be able to deal with emergencies. Meanwhile, we choose to invest to try – though without guarantees – to beat taxes and inflation. If you have been successful, you have grown your money faster than taxes eats into it and faster also than inflation. 

With so much going on in the world; the pandemic, geopolitical conflict, economic crisis etc, there is tremendous volatility, especially for the riskier investment spaces. Nevertheless, volatility is the friend of the long-term, life-long, consistent investor and saver.   

As such, those who are wise enough to work harder, rework their budget, build up their surpluses, pay down debt, exercise delayed gratification, and try to save even though it’s very tough. Rajen’s advice is to take advantage of dollar cost averaging.

To stand to benefit in the long-term, invest in a manner that meets five specific criteria:

1. Invest in an asset of high quality (that are good hedges against inflation)
2. That asset should fluctuate in price
3. Invest in equal amounts
4. Invest at regular intervals
5. Invest regardless of market conditions

Finally, never put all your eggs in one basket. Diversify your investment across three distinct dimensions: diversify across different asset classes, different geographic regions, and over a very long timeline.

6 Ways To Deal With Inflation

There you go with 6 ways to deal with inflation that you can start implementing in your daily life. It might not be easy, but it will be worth it in the end.

59.7 million results when I searched on Google on ‘multiple streams of income’ on the day this article in written. This is a massive result. With the recent pandemic, many sectors are impacted, and many individuals suffered as a result from loss of their major of source income.

In this article, I am going to share with you some general big ideas on how to increase your source of income.

1. Investment Portfolio

Investment provides you with capital growth or income. Capital growth means the appreciation asset value or difference between the realization value and cost of investment. Income refers to the dividend, rental income or other incomes received by investing in the investment assets.  

There are many investment options to increase your source of income these days. We have Exchange Traded Fund (ETF), Equity Crowdfunding (ECF) and Peer-to-Peer Lending (P2P) apart from traditional investment classes like property or stocks.

With new innovative products, you don’t need huge investment to kickstart your investment journey. Some can start from as low as RM100 or you can have a diversify investment portfolio with traditional assets and new investment asset classes.

Below are some of questions that you can use as guide to ask yourself as follows:

• What are your financial goals?
• What is your investment horizon? Is it for Income or Capital Growth?
• Does the asset class suit my investment profile?
• What is the amount that I can allocate to start with? Lumpsum or Regular Savings Plan?
• Can I do it myself or do I need assistance from Licensed Financial Planner or other professionals?

What is the purpose of building an investment portfolio? Different portfolios are to cater for different needs, for example cash/money market is to cater for emergency and or short-term needs.

Whereas for medium-term goals could be for holiday, buying house, for marriage and or starting a new family. For the longer-term goals, it is for replacement of active income and or for retirement. That’s how you build up an investment portfolio as a way to increase your source of income.

Read: 5 Investment Tips For Beginners That You Should Know

2. Business Income

There are several types of business income for you to consider like online food business, selling things at online platforms that can earn you additional income. Yes, many businesses are affected due to the pandemic, but you can still increase your source of income via a business income.

There was 7.5% increase in new businesses being registered in Malaysia year 2020 as compared to prior year based on the information available from Company Commission of Malaysia. Due to many who had lost their jobs or income; therefore, many self-employed or small entrepreneurs have either started their own freelancing or contract services and some had started selling at online social media platforms like Facebook, Instagram and or TikTok.

Gig economy which meaning temporary and flexible jobs have been on the rise and there are close to 4 million freelance workers in Malaysia.

Read: Fall of Family Business Empire, Why Family Business Fail?

3. Leverage On Your Existing Skills To Teach Or Share With Others

If you have certain skills or experience that you are good at which you can use it, teach or share with other individuals, that will allow you to earn additional income. For example, if you good in singing or master certain language, therefore you can create a course to teach others how to sing virtually either in a group setting or individually, as a way to increase your source of income.

It may include creating videos or posting photos with are beneficial to certain market segments may land you opportunity either to be involved as key opinion leaders or in the affiliate marketing. It may be teaching others how to cook food or bake a cake or maybe just a hobby of how to grow certain plants via the online platform.

Read: 5 Different Types of Income

3 Ways To Increase Your Source Of Income

What if these additional sources of income allow you to provide yourself and family with better lifestyle and provide you security in the event of uncertainty, would you think that sacrifices that you make now by building your new sources income worth your effort?

You are the only person is responsible to for your own future rather that relying on others. I would like to end it with a quote from Jeff Bezos, “I knew that if I failed, I wouldn’t regret that, but I knew the one thing I might regret.” Now that you know some of the ways to increase your source of income, which one do you prefer?

About the Author

Goh Chee Yong is a Licensed Financial Planner under Capital Markets Services Representative License (CMSRL) and Bank Negara approved Financial Advisor Representative (FAR). Prior to becoming a financial advisor, he spent eight years working in Big 4 audit firms and multinational corporations. He can be contacted at cygoh@imaxfinancial.com.my

On a Facebook livestream held on 31 August 2022 by SmartFinance (SmartFinance.my) in an effort to promote financial literacy on World Financial Planning Day 2022 (WFPD2022), Linnet Lee, the CEO of the Financial Planning Association of Malaysia (FPAM) shares the five steps anyone can take to achieve financial freedom or financial merdeka.

Here are the five steps in a nutshell:

Step 1 – 2:30

For the first two years you start working, set aside 20-30% of your income to invest in yourself (to buy clothes, gadgets, things you need for work etc.) From the third year onwards, start saving 30% of your gross income for retirement. EPF contributions (employer 12% and employee 11%) already make up 23%, leaving 7% left for you to start investing into retirement in other avenues (stocks, private retirement schemes etc).

Now let’s move on to the second step to achieving financial merdeka.

Step 2 – Rule of 72

Dividing 72 by the interest or dividend will give you a rather accurate estimation of how many years your money will either double up or shrink by half. Use the rule to help when managing your finances and keep an eye on inflation rate as well.

For example:

72/6% (interest/dividend) = 12 years (duration for your money to double up)

72/5% (inflation)=14 years (duration for your money to shrink by half)

Step 3 – Rule of 78

Not all loans are created equal, and this rule is a tip to keep in mind when handling your debts. Financing methods that allocate pre-calculated interest charges are meant to favor the lender over the borrower on short-term loans. The borrower would pay a greater portion of the interest rate in earlier part of the loan cycle than regular loans.

A car loan, for instance, is calculated using the Rule of 78 (the number comes from the sum of monthly term on a one-year loan, by adding the numbers 1 to 12). What that means is the lender has calculated the interest and put most of interest in first and second year of your loan. Hence, there’s no benefit to paying the loan off early because the interest has already been calculated and you have paid most of it already.

So, if you have a car loan, don’t be in a hurry to pay it off. It is better to pay on time to avoid the penalty.

This is different with a housing loan. As you pay off your housing loan, the interest will be calculated based on the outstanding amount for the beginning of that year. It therefore makes sense pay it off quickly because you will be paying less interest.

Before you do though, check with your bank if there is any penalty rate for paying off earlier.

Step 4 – Six Months Emergency Money

Have up to 6 months’ worth of monthly expenses saved up. This will buy you time you need to get back on your feet. When you tap into your emergency fund, be sure to top it up again as soon as you can.

That said, a credit card should not be treated as emergency money.

Are you ready for the final step to achieving financial merdeka?

Step 5 – RM1 Million In Retirement Fund

If you add RM500 per month to an initial sum of RM1,000, starting from the age of 25 to 61, with an interest or dividend of 7% and an inflation of 3%, you will have RM1 million in 36 years. Assuming you stay in good health, you will be able to fund 20 years in retirement. Of course, this is just a simple calculation. Over the years, you can always add to your retirement fund as you earn more.

And now we are at the end of the 5 easy steps to achieving financial merdeka.

Congrats, You Are On The Road To Financial Merdeka

If you need help working through the numbers, do not wait too long to seek the help of a licensed financial planner. To brush up on your financial literacy and connect with a financial planner, go to SmartFinance.my. Wish you all the best in your pursuit for financial merdeka. 

As Malaysians recover from the COVID-19 pandemic, the topic of money is on everyone’s minds for various reasons. These range from rising inflation, which is quickly eroding our purchasing power, to concerns about retirement security as a result of a significant reduction in our savings after two years of the pandemic.

Many in our community are still struggling to replenish their savings. Those whose savings are at a critical level, have expressed concern about how they will survive when they retire, stating that they need to continue working or start small businesses in order to make ends meet in the years to come. To make matters worse, these vulnerable people are often preyed upon by unscrupulous scammers.

According to the Royal Malaysian Police (PDRM), a total of 71,833 scams were recorded between 2020 and May 2022, with losses amounting to RM5.2 billion. These include bank scams, loan scams, as well as investment scams which fall under the purview of the Securities Commission Malaysia (SC). The SC received 1,800 complaints and enquiries related to investment scams and unlicensed activities in the first nine months of this year.

The SC’s work extends well beyond regulating and developing the Malaysian capital market. They are also responsible for safeguarding the interests of investors, by among others, educating investors on how to make better investment decisions by providing them with key financial knowledge and tools, so they can make informed investment decisions.

They also teach the public how to identify red flags of investment scams and illegal activities in the market. Being more financial literate means that investors can take better control of their own finances and stop them from falling victim to the sweet promises of scammers.

With these considerations in mind, the SC will be hosting the InvestSmart Fest at the Kuala Lumpur Convention Centre (KLCC) from 14 to 16 October 2022. Themed ‘Silap Labur Duit Lebur’, InvestSmart® Fest is a one-stop event for all your investment needs, showcasing not only a wide array of investment opportunities, but also valuable lessons on financial planning for individuals who would like to improve their financial wellbeing.

Visitors to InvestSmart Fest can take advantage of InvestSmart®’s #Finplan4u initiative, where they gain free consultations by licensed financial planners on how to better plan their investment and retirement.

InvestSmart Fest will also be investing in the youth segment, who are regarded as key stakeholders for the long-term sustainability and success of the capital market. According to the findings of the SC’s survey titled “Youth Capital Market Survey: A Malaysian Perspective 2022”, Malaysian youth tend to prioritise emergency funds and savings to support their families and pay off debts above building wealth and investment. Therefore, it is important for younger generations to have a head start in investing and saving so they can enjoy greater financial stability in their later years.

This year, InvestSmart Fest brings together more than 40 exhibitors, showcasing some of the most cutting-edge technologies, products, services and solutions available in Malaysia’s capital market today. The 3-day event will also feature expert speakers and key opinion leaders, who will share their perspectives on various aspects of Malaysia’s capital market and how investors can stay ahead of the game and plan for the future.

For more information about the InvestSmart® Fest event, please visit www.investsmartsc.my. Additionally, if you would like to get the latest updates, you may follow their various social media channels at:

FB: https://www.facebook.com/InvestSmartSC/

Twitter: https://twitter.com/InvestSmart_SC?s=20&t=QqkJ8M5M1gcp_ANbcJ1Phw

Instagram: https://www.instagram.com/investsmartsc/?hl=en