Do you remember this? Check out the coffee price below. I am not that old to experience RM1 for 4 cups of coffee. But i still remember RM1 bought me 2 cups of coffee ;)
By the way, 4 cups, 2 cups 1 cup or 3/4 cup is not the killing part. The Killing part is Starbuck Coffee. RM10++... My favaourite Green Tea Latte RM15++..... Haha.....
Let review some official inflation data from government web. Do you believe in below inflation figure? Do you think 5.4 for year 2008 is low or high? Don't laugh, you got your inofficial answer ;)
What is the implication of inflation rate toward your Fixed Deposit? you are earning a negative income (real rate -1.7%) for FD in year 2008. Sorry for those who has a lot of FD in year 2008.
How about your retirement fund? EPF. ehm... not too bad... slightly better than FD.... but you are earning an -0.9% in year 2008 as well. Will this -0.9% impact your retirement planning? "probably not for year 2008 data. average return still good with 5%" ;)
How about below article? EPF has hard time to maintain ~5% return every year. So, what is your action? Do you still want to wait for government to gurantee your retirement fund? Some said your EPF is not sufficient, you need to die before age 77 (life expectancy in Malaysia) like what my previous instructor said ;) another instructor said, die also expensive.... haha.....
What should i do? Where are the source for your retirement fund? Stock? Property? Bond? FD/Saving? Same type of question i have been thinking...............
Below are some of the instruments that you could use to plan for your retirement. Higher risk give your potential higher return. Find your own sweet spot. Talk to your financial planner or unit trust consultant to plan for your future. Let start together... Happy Retiring and Happy Jobless..... ;)
you asked, Do you believe in below inflation figure?
ReplyDeletewhen my mum is young, fried mee hoon cost RM0.05
now it cost RM1.2
so, the inflation, in percentage is 8.49% annually.
when i was school time, hokkien me is RM0.8
ReplyDeletenow is RM2.5
inflation = 6.5% annually
slightly different from my mum time
The instructor told us during his time, chicken rice only cost around RM0.70 per plate and economy rice cost around RM0.30 per plate.... ;)
ReplyDeleteHokkien me with RM2.5 also hard to get, my friend.... ;)
ReplyDeletepg price > RM3++
Ok, let pick this example instead. When you retire at age of 55 and you need about $4k to survive your retirement. Let's assume you have 4 extra houses/apartments that can help u generate $4k (1k each) of passive income, you would be able to retire easily. The good thing about property is it's inflation protected and so is the rental which will goes up with inflation. Of course owning 4 properties is a big sum of money, but it's achievable if you start early and use the profit from stock/fund investment to put in properties. Buy properties that can yield good rental value and capital appreciation. It's not that hard to find one if you willing to spend time scouting for one. Looking at the chart above, properties investment is lower risk compare to fund & stock. When you retire, you should lower your investment risk exposure to safe guard you from economy crisis. Even during crisis, people still need to rent apartment/house.
ReplyDeleteHC, i understand your point by passive income generated via property ;) but as i told you, you need to know how to judge this biz. For example, you need to know at what price for a property price should be in and how much premium you are willing to pay. The reason i said that is to maximize your return. And property is just an instrument to archieve your passive income. The problem is i find it is hard to judge property price especially at Penang Island. Do you consider a terrace house worth RM700k-900k a good deal? i do not know how to do the calculation. i only know those are the market price and i have no idea whether it is discounted or not. But if i am in construction biz, for sure, i will go in property for more margin.... ha... just some of my thought.....
ReplyDeleteeasiest way to see if your rental is worth the property value is ...rule of thumb rental price has to be at least 3% (more than bank interet) of your property prices. If you buy a RM800k terrace house, but you can only rent it for RM1K....might as well keep in banks :)
ReplyDeleteActually the rule of thumb for rental return is 2x the FD rate. You don't want to go thru all the trouble of renting your property just for the additional 1% or 2% return.
ReplyDeleteBuying a 800k house is for the capital appreciation, not for the passive income.
That's a good tip on the 2x :)
ReplyDeleteThink getting a 800K for capital appreciation is too much of a risk (bank default, interest, stamp duty..etc), the return might not be as much as say...if you go for mid range property..say RM200k - RM300k...higher return. Of coz, need to scout for good locations...etc for the appreciation factors.