My Longkang

How Much Do You Need For Retirement?

A lot of us never bother too much about how much we need for retirement. Maybe because we are too busy living our lives at present that we don�t have time to think about the future. It was the same with me until I read the above post

When that time comes, do we have enough money to live comfortably for our twilight years? I was at the bank this morning and I momentarily panicked. I have been irresponsible all these years. Basically I set aside some money aside every month for investments and take few risks.

The fixed deposit interest rates are ridiculously low. The value of money has dropped more than the interest rate due to inflation. My investments on the KLSE are all going down south and needless to say my mutual funds are not much better.

It used to be money is king. It no longer is. But what are the avenues for investments in this present day and age when everything is fraught with uncertainty. On the plus side, my investments in property are not going down south and relatively easy to convert into hard cash upon retirement.

Thus faced with this dilemma, I think like me, many Malaysians are hard pressed to preserve the value of their savings and investments.

I write this post as a forum for readers to give their views.

Based on Foongpc’s theory I used my current monthly expenses as a basis. If I spend RM3,000 every month at present, I probably need about RM2,000 per month after I retire. The amount is less because I would have already paid off my house loans and life insurance. I would expect to slow down anyway in my social life.

RM4,000 x 12 months x 20 years = RM960,000

What is your take on this?

I received the following through e-mail. Interesting food for thought. I have taken the liberty to edit it a little before publishing so as not to ruffle any feathers.
(more…)

YEOW POOI LING made the following analysis of the impact of higher fuel cost

The hike in petrol and electricity tariffs that will send prices skyrocketing. There will be increases in food prices and prices of goods. Inflation might rise to 4% to 5% this year. But the real inflation effect could be considerably larger.

Malaysia’s petrol prices were deemed among the lowest in the region, average salaries are not among the highest.

“These are drastic moves, which would lead to erosion in consumers’ disposal incomes and sentiment turning cautious,” said Bank Islam Malaysia Bhd senior economist Azrul Azwar.

He said consumers were likely to cut back on travel and vacation, and eating out in restaurants and hold back spending on “big ticket items” like property and cars. This cut in consumer spending would hit the economy. Sectors like retail, consumer, property and automotive would also be negatively impacted.

As inflation was driven by rising cost and not demand, it would be a tough call for Bank Negara to curb the pressures, he said.

“I hope the central bank would not increase interest rates as it would affect the economy and consumer spending further,” Azrul added.

Global stock markets are expected to be in a state of uncertainty today as global markets reacted to the sharp losses in China. The US Dow Jones index slumped by 416.02 or 3.29%. At one point it was more than 500 points and London’s FTSE 100 index also posted losses of 2.3%. The Nasdaq index closed down 3.86% at 2,407.87, while the S&P 500 index closed down 3.47% at 1,399.04.

The sell-off in Shanghai was due to fears the government may impose new rules to limit demand for stocks. Foreign companies which are particularly exposed to China have been badly affected

European markets suffered as well as Asian markets including Hong Kong and Japan.

“The sell-off in China continues to have a profound effect on stocks across the board, since the largest unwinding in the Shanghai Composite Index since 1997 leaves investors questioning the sustainability of stock gains everywhere,” said analysts at Briefing.com.

It remains to be seen if this panic selling will spread and continue today or be stemmed by more positive developments especially in Asian markets.

To read more, BBC here

Thestar.com/marketwatch
KL Mart eases on selling pressure
China shares fall nearly 9% and effects may ripple through Asia
Regional sell off
Asian markets tumble
The Edge
Asia round up
SGX Sharp correction hits prices
Heavy losses in volatile trade- HK
Europe round up- stocks slide
Slump hits second day

A lot of my friends have been very excited lately with the current developments in the local KLSE. The KLSE is enjoying an unprecedented bull run with volumes above RM3 000 000 000 repeatedly. The composite index has also stayed above 1200 level comfortably and some quarters I wouldn’t expect to invest are rushing to open investment accounts and CDS accounts.

My fundamental principle in investment is to buy when every one is moaning and sell when everyone is clapping. It is impossible to reach the highest level to sell because the market is a volatile place. Sell when you earn and don’t look back. Statistically the build-up began in June 2006 and investors should see an average return of 25% of their investments since then. It closed at 1283.47 on February 23. (more…)

Regional market in jitters

The Thai central bank may have to rethink its next course of action. Yesterday the central bank imposed capital controls in a bid to curb speculation on the Thai currency, the Baht. Subsequent to that, its stock market suffered its biggest one day fall since 1990. (more…)