Agree in principle.
However, if the same $1.2M was asset allocated to equities & fixed income, say 50% 50%,
and a long term CAGR of say 7%pa (prudent enough?)
with the same spending pattern,
your bro would be able to reinvest even more, thus grow even more (long term lar - dont say crash next year )

Personally - for my retirement, i'm aiming to spend 50% of my investment & trading generated income, reinvest the other 50%.
Technically, i should be able to spend 3%pa to 4%pa of my total assets in investments & trading, reinvesting 3%pa to 4%pa - leaving something behind for future generations + rebuilding/healing of our planet

Just a thought 

Works fine in other countries... malaysia true inflation is more than 3.5% so effectively as long as his real return is -% he still rugi.

Yes truly get what you mean if the capital is big... even 0.5% of real return on RM 2 mil = RM10k

Well it is sufficient to support his life style but that doesn't mean he is beating the inflation. best china-man style is to see how much your average wan tan mee price has gone up.

Don't get me wrong, I am conservative as well when it comes to $.

Didn't know he is in that retirement stage, he should be able to use more then considering that the monthly usage is based on retaining the principal money. With a certain reduction of that principal amount (assuming he is not gonna leave any to his children) he can live a comfortable life.

I dont think you get me.

Lets go again... FD for him can nego good rate say 3.5%.

What do you think the Msian inflation rate is?

sample for you- http://invest-made-easy.blogspot.com/2013/...-inflation.html

I'll respond to you once you get the true inflation rate right.

Thanks. That said, I'll wait for others to come explain to you about inflation...

in any case negative real value will erode savings.

Hi guys..newbie here..
im just a fresh graduate (age 23) with great concern about my financial future..
my current work after epf can get roughly rm2250 per month..therefore..

im planning to save at least rm1000 per month..
for my education loan, rm250,
parents rm300,
motorcycle oil and lunch rm200(work expense).not planning to buy car at the moment. can use family car.
so that gives me a balance of rm500 to spend for shopping and entertainment.

i currently have rm5k in my asb account.
so the saving of 1k per month will be deposit into this account.
do u guys think that asb provides a good financial security?
or do u guys have any other suggestion for any investment?as money always depreciates in value..(gold maybe?)

Actually, it's not. It's the most precise comparison that they (financial planners) or anyone else can come up with that is not a trick.

Because it's pure and simple comparison between incoming (FD) and outgoing (inflation) differences. If outgoing > incoming, that's negative. Both in terms of arithmetic and accounting.

Whereas you brought up numerous other side issues like risk-appetite, accumulated wealth, required/essential expenses and personal circumstances to cloud the matter further.

For example, if you spend zero, the impact of inflation on you is zero.

It doesn't mean the impact of inflation is zero, if you get the drift?

Essentially the buying power of your money is ever decreasing if you can't beat the inflation regardlessly you spend it or not.

You can live until your last breath with 10 millions today in FD @ 3.5%; but by that time the same 10 millions probably can't buy you the equal value of items. Make sense?

No idea. But we can always used what is published by the authority as a guiding principle.

We should make our investment decision based on return vs risk. One should not forced "Beat the inflation" to be in their investment objectives if they certainly can't take that corresponding level of risk. Inflation is completely out of consideration when I am making a decision to invest into something.

each vehicle has its own usage, there is to outright BAD investment or holding vehicle.
any "financial planners" that uses ABSOLUTES give themselves away as ConSultans 

They may be correct in the sense that, FD is going to be outcast by Inflation, but, that should not be the sole reason for you not to put money in FD. Yeah their product give you 20% return but so what if the risk is equally high and you can't afford to lose this amount of money (maybe saving for retirement/children education)?

Again I would like to reiterate my point that one should choose the investment vehicle based on their objective (% of return) and risk profile. If one day inflation also outcast their whatever product, then wouldn't it be equally stupid to invest in their product?

Remember, these whatever financial planner could knows nothing about financial planning. They are just some salesman who tends to over promise. When they say their product going to give you certain % of return, it is appropriate to ask what is the basis and is this written black & white or is only their thought/assumption based on past performance of the product.

Past performance can be used as a benchmark but is never to promise the equal amount of return in the future.

Showtime747... you got your answer de
The last line about authority... works pretty well in well developed countries. Thats why I never questioned your brother's risk appetite, or his financial success in accumulating assets etc... His risk adverse strat works perfectly when the real return is positive (even though its small in percentage- his high networth offsets it).

In Msia... I think we should be smarter than just accepting the govt's facts on inflation.

(and pretty much everything else)... saving since young to buy diamond rings? Saving RM3k EACH DAY since birth?

Inflation is easily high possibility more than 3.5%. Wongmunkeong help me out if showtime still blur k?

Msia inflation is currently more than Malaysian FD. Thats all.

Contrary to what the govt tells you.

That is the answer to the question of "Can FD beats the inflation?"

If your question is about "Should I still put money in FD? Do I look stupid if I do that?", then it has to be answered differently.

There is no straightforward answer my friend, but let me try to make it simple for you.

Say if you have RM 200,000.

You probably want to keep 25% in blue-chips such as major O&G firm, local banks, nestle and etc. Then you probably want to rip some money from the REIT market, say another 25%. Then you say to yourself, "I think I am comfortable to expose half of my money to risk, where should I put the remaining 50% then?". Options for you could be insurance, FD, bond funds or just continue to let them rot in your saving account.

And all these are influenced by factors such as what is your current age, your next-5-year plan and etc. There isn't a single answer that is suitable for everybody and yet those salesman are selling the same product pitching in the same tone to everyone. Screw them.

Oh ya, if you are a Malay, try ASB and ASB2. To me those are no brainers unless you think Msia government is going bankrupt soon.

If you start off investing thinking that investment can makes you a millionaire in 1 year, then my advice is you better put your money in FD. Always start small cause we all learn from mistakes. It is very dangerous if you don't know much and yet you are greedy.

Read more investment related materials, build your guiding principles and investment style and follow it through and adjust as you go along.

Oh ya, while you are learning, it is not a bad option to put your money in FD first. No matter how, it is better than our ordinary saving account.

personal inflation:
one's total spending increase yoy (personal interpretation for focused effectiveness)
VS
one's spending increase on same items yoy (technically correct)

similar to the "argument" on net worth:
total assets minus total liabilities (technically correct)
Vs
total REAL assets (ignoring doodads that dont make $ AND depreciates AND cost $ to keep like personal cars, bikes, etc.) minus total liabilities (personal interpretation for focused effectiveness)

Those that uses personal interpretations (like me ) should lar acknowledge the "technically correct" versions as well lor since that is "universal" gua.

ah.. so he's also a "special needs" baka.. oops.. sorry bakas, insulted bakas.
ok - it's on my ignore list, same with the other twit on retirement.

Thanks for the heads-up Showtime 

i've better things to do with my time - for my kids, family, friends and fellow forumers asking about Excel and stuff, of which i still owe a few here heheh .

heck, even cleaning drain scum with my bare hands is preferable than letting garbage writing that it wrote into my brain, searing my eyeballs and dislocating logic.