Not worrying about investing for your children or retirement from the beginning is a mistake.

Time and compounding are amazing. A person who just graduates and puts aside 2000 a year for the first 4 years (total investment of 8000 RM) can stop putting money aside and in 30 years will find their 8000 investment to have turned into over RM 113,0000 ringgit if they managed 10% each year.

If however, another person decides to put money aside for their kids/retirement 20 years after they start working, and even if they put 5000 a year away for 10 years (total investment of 50,000) they will still have around only 92,000 RM. Less than the guy who put away his money early.

This post has been edited by jsm: Feb 6 2006, 05:41 PM

Simple
- find a mutual fund that has good 5, 10 year returns (e.g. >5%) and start putting money away immediatley each month for a few years.
- use the rule of 72 to see how long it takes for your money to double (e.g. if investing at 5% a year, divide 72 by 5 and you find your money doubles in 14 years, if investing at 10% a years, 72/10 = 7.2 years to double your money)
- wait and invest further if possible

Most mutual funds (overseas at least) report their returns after considering management fees. If the management of one fund is very cheap (e.g. 0.5%) but they manage to make a return of only 5% on the fund, I will rather buy the fund that has management fee of 3% but manages to return 10%.

I personally never look at the management fees but only look at the return on my money.

Probably just the usual situation where financial planners are often little more than commission sales people for various financial products. If you want good advice, go to a financial planner that is truly independent, which also means that you will have to pay for their advice.

Few banks are likely give you a loan in excess of the appraised value of a property.

Dreamer101, are you also suggesting that car loans are not based on the concept of compounded interest charges? If that is the case that is most unusual. Over here in Canada, the interest charges for loans are legally mandated to acrue semi-annually and a 5% loan for a car or 5% loan for a mortgage will end up costing the same in interest charges over the same period of time.

Can you explain the "tax deductability" aspect further?

I am not familiar with Malaysian tax issues pertaining to insurance. I know that over here in Canada, insurance premiums are not tax deductable but one of the benefits is that when you die and the life insurance is paid out to the beneficiaries that unlike almost all other financial instruments it will not be considered taxable income to your estate or to those it was paid to. How about Malaysia?

Over here in Canada a 750,000 RM term life insurance policy (20 year validity) costs a 25 year old (non-smoker) less than 100 RM/month. The cost of a life insurance policy in malaysia should be even lower. It is certainly nice that in malaysia the premiums can be deducted from your income for tax purposes but the tax deductability would hardly seem to be a strong reason to actually buy the insurance. In fact, I wouldn't even suggest a young unmarried person even worry about life insurance since upon their death they would not have any dependents who need income. If your parents are too poor to afford a funeral for you, a small life insurance policy that is enough to cover funeral expenses would be appropriate.

200,000 RM life insurance in Malaysia is probably about the same equivalent to a RM750,000 life insurance policy in Canada. It could pay off the outstanding portion on a house mortgage in the event a sole-wage earner has an early death.

My point is that buying life insurance is not an investment or something that is done to reduce your taxable income, it is something you buy only to cover the costs your dependents may have in the event of an early death for a wage earner.

The KLSE is not a place for "stable" investments. KLSE is highly speculative. Even blue-chips stocks like Telekom have been lousy investments over the last 5 year period.