A simple strategy for Malaysians/ Singaporeans to retire

If you can’t summarize your investing plan in 30 seconds, you literally do not have a plan.

My friend tells me there are only 3 types of people who manage to retire comfortably in Malaysia- businessmen, politicians, and conmen. Retirement for most of us is a herculean and impossible task. You know, there are too many strategies out there, and as Malaysians and Singaporeans, we are pampered with too many options that might work or might not work. What I am going to tell you is a simple strategy for you to retire in Malaysia or Singapore.

1) Have a plan and have an emergency fund

You must have a written plan. I would rather say a simple plan and make a vow that you want to retire in the future. Promise yourself you will stick to this plan no matter what happens. There is no other easier way than investing in this world that helps millions of people to achieve financial freedom. Remember, the goal of investing is NOT about collecting tangible assets such as stocks, bonds, real estate, cash, and other stuff. Instead, investing is about getting the intangible assets- peace of mind, freedom of time, financial independence, and other ‘things’ like smiles, playing with kids, laughter, playing, love and purpose.

Before starting your financial freedom journey, at least save up to 6-12 of your monthly expenses. You can put that money in a fixed deposit or money market but remember, it is only for emergencies. It is not to be used for your Chinese New Year overseas holiday trip, buying a Rolex watch, and certainly not for your home deposits.

2) Settle your credit card debt

Yes, credit card debt is your number one enemy. It carries one of the highest interests in the world after ‘Ah-Long’ ( loan shark). If you pay a minimum payment every month and roll over your payment to next month, congratulations to you! You are a revolver, the best customer of the bank because you contribute billions of dollars credit card companies/ banks make every year.

People use a credit card to buy stuff they can’t afford, to impress people they don’t like, and to show off to people they don’t know. Credit card deludes you that you can live in high life by spending future money. Trust me, you are better off by settling your credit card balance monthly. Negotiate with your bank for lower interest and threaten them you would transfer the balance to another bank if they refuse to give you a better deal!

If you are darn serious about building your wealth, please pay off your credit card debt as soon as possible or you would work your buff off to settle it years later.

3) Settle your car loan

Did I not ask you to buy your car in cash? The second biggest burden that can slow you down in your financial freedom journey is the purchase of a car! Hold on, car is important for Malaysians but remember, buying a second-hand car is an option. Acting rich is never an option if you want to retire fast, buy a car you could afford in cash and not a car you could pay in installments.

If you are a Singaporean, take public transport. Don’t waste your money buying a car that you only spend less than one hour using daily. There is no way you can get the thrill of speeding your car in Singapore because you do not have long highways like Malaysian. So my advice to you, keep that money as your emergency fund.

4) Pay off your housing loan

I hate housing loans, it is like a leech that sucks your blood continuously every second. You become the slave to the banking institution. There are only two ways to settle your housing loan quickly- Get a lower interest rate and make extra payments.

Trust me, a housing loan is termed as a mortgage in the western world- which means ” an agreement till death!” You are right, the bank hopes that you would be a faithful customer to pay your installment until your death, or at least until you are 70-80 years old.

I know, I know, we parents hope to buy a bigger house for our children, hoping they would be more comfortable living inside there. But the problem is, you would be paying up to your nose thousands of interest every month to the bank. You could instead spend that money on an unforgettable overseas family holiday each year: hire a campervan, see Northern lights in Iceland and drive across New Zealand for six weeks.

Settle your housing loan as soon as possible, make extra payments monthly and best still don’t buy a house you can ill afford!

Your kids don’t give a damn about the grandiose and big fat home you bought. All they want is to spend time with their parents. All they want is their parents to stop fighting about money all the time.

5) Maximize your EPF/CPF contribution

Yes maximize your EPF or CPF contribution. They are one of the best investments you can make for yourself. Unfortunately, you can’t decide how these money are being invested, but historically the returns for both of the provident funds are good.

Never use your money in your account unless you plan to use it to purchase a house. Maximize your monthly contribution if you can. Wait until your retirement before you withdraw your money. For Malaysians, never take out your whole lump sum even you are 50 because EPF promises to give your yearly dividend up to age 100. Trust me, you would spend the money fast once you have them in your hands. EPF is required by law to pay you at least 2.5% per year. For the last 45 years, its lowest dividend was 4.25% in 2002.

6) Start indexing

When it comes to investing, discipline is everything. I understand the excitement of investing in technology stocks and cryptocurrency, but boring is the best policy if you want to win big in the stock market. As a Malaysian or Singaporean, you can’t invest in index funds like the American, but the good news is you can invest in the alternatives. Learn how to invest in ETFs which track S&P500 and All-World index.

Think about rich people you know of. They all share one thing in common: they own a business. That’s the commonest way people get rich.

But don’t get me wrong, your friends might be asking you to join them in Amway, Nu Skin, or Insurance to become your own boss, it is certainly much easier to become a part-owner in a big international business by buying the shares on the stock market.

I am a proud owner of the 3600 biggest companies in the world by owning VWRD ETFs with just a few computer clicks. Don’t bother about buying unit trusts in Malaysia or Singapore, the exorbitant fees would only enrich the agents, the fund managers, and the company but NOT you!

Buy and sit on your portfolio as long as you can. Never get a panic attack and sell during market corrections, in fact, you should be buying more during sales, right? Remember Shoppe or Lazada 10-10 sale day? You should be happy to buy your ETFs more during a bear market.

7) Wait patiently

The last step is the most difficult and torturing part. You have to be patient. With enough time, you can’t help but build enormous wealth thanks to compound interest.

Put your emotion away from your investment. Switch off your TV and throw away your newspaper and don’t bother about news that the market is going to crash next month or next year.

All you need to do is investing consistently and wait patiently. One day when you wake up after investing for 10 years, you will be surprised how much money you have in your account!

Conclusion

“The decision to go into debt alters the course and condition of your life. You no longer own it. You are owned” 

Dave Ramsey

For you to accelerate in your financial freedom journey, you have to get rid of the bankers first! The proudest day of my financial life will be kicking out the banker from my wealth equation. Everyone can retire a millionaire in Malaysia and Singapore if you have a plan, know the ways and have the patience.