https://www.thestar.com.my/news/nation/2019...a-day-for-years

Spent all day building my retirement plan and here is the projection:
1) Both spouse and I work until 45 yo and accumulate RM2.5mil in EPF. EPF dividend rate at inflation + 1%;
2) Expand our property portfolio to RM3 mil in next 3 years. Capital appreciation at inflation +1.5%, net property yield at inflation -1.5% p.a.

We should be able to FIRE at 45 yo with EPF being 35% of retirement portfolio and the rest from property.
Living standard is same as our current level which is rather comfortable, and that should last us until 90 years old.
Medical insurance premium is included, children education and own accommodation is budgeted separately from retirement portfolio.
Additional savings and investment return is a bonus.

Why property to lead to portfolio?
Assuming 10% downpayment and 5% transaction cost, a property that generates 2.5% net rental yield and appreciation by just 4% per annum is equivalent to 9.5% p.a. effective cash return. That's in 15 years and you only need to pray for the capitalism system and world order to be in tact.

This post has been edited by kbandito: Aug 13 2019, 10:14 AM

1st post LY

background: offshore worker, age 40 (married with 1 toddler and another 1 on the way)
FI target 50-55 years old with 4 -5 mil RM (liquid asset), will convert to bond, REIT

current net worth: 1.4 mil including 3 properties (market price modestly ~ 750k RM), remaining were spread in stocks and unit trust, passive income from those properties are reinvested inexpected growth at 8-10% p.a

main reason to get FI is so that I can balance my work-life although with current status i work about 6 month/year, but it's not looking good in oil/gas industry, it looks like they will stretch me to work 9 month/year. after FI, my plan is only work maximum 3 month/year until i'm not fit for offshore, tbh i love this job.

i'm lucky to collect those 3 properties and paid hard cash, so that now our commitment for house mortgage can be kept minimum, although our monthly expenses is around 10-15k (trying to bring this down to below 10k).

wish me luck guys..

*note: spouse is working, and i didn't put her wealth up there

I am finding a data driven article, that counts the short term fd rates and long term is negligible.
And short term is better then long.

kbandito,

This will be a solid plan if you are able to achieve this, but I am curious what type of properties you are targeting to acquire in your RM3 mil portfolio?
Would like to hear your views if you don't mind.

Interesting and solid plan there, but I am curious. I hope to hear your views too if you don't mind sharing.

Why do you need RM4-5 mil worth of assets to FI? Assuming a very modest return of 4%, that equates to a monthly passive income of over RM13k (excluding the potential income from your job after FI). Any particular reasons for coming up with this amount?

Nonetheless, I would like to wish you the best of luck.

This post has been edited by Jordy: Aug 14 2019, 12:03 PM

most of my assets are in MYR. Should I invest in foreign currency / stocks?

but MYR is so weak. How?

My plan for record purposes. I've been on a journey of investing since 2007 when I was 20. I opened my first Super account and I had about 70k then invested in shares and also retirement account.

What I realised is that the longer I do this with increasing net worth, the harder it is to achieve a consistent return of even 8% across my investment due to the various investment products and the need to keep track of them. Not to mention the volatility in the market in the last few years really made me doubt if I can achieve the same consistent return of circa 10% before Trump became president.

At 32yo, my household networth is close to 3M. I have an additional 2 investment properties worth about circa RM900k returning at a consistent rate of 4% (equity of about 150k and the rest loan).

Our current total yearly expenses is about 120k/year and household take home is about 250-300k. Last few years was a lot more but this year I've started to take it easy. I however can reasonably expect this go up to about 500k as the wife is flying high in her career.

I personally do not plan to retire (work until at least 75-80) and at my currently work load, I can easily get 10k/month working 3-4 hours a day.

I have a very conservative expectation on my rate of return at only 5-8%/annum and our household can add an additional savings of at least about 100k a year.

At this rate, at 55yo I can expect a future value networth of about RM15-27M (assuming all invested) but with a present value of only RM7-12M based on inflation rate of 3.5%.

Based on the above at 55yo, my present value monthly active income should be RM10k (day-to-day profession), passive income should be a minimum of RM28k (4% FD rate) + rental income (if any). This excludes any inheritance we may/may not receive, but both our parents are very wealthy with networth more than 10M each.

Based on the above, I can reasonably conclude that we do not have to put any more effort into retirement planning and can pretty much go into cruise control. Of course the above do not take into account the vicissitudes of life. However I've been quite conservative in my income projections so hopefully this sets off any potential unfortunate events. We are also very well protected in terms of insurance coverage (about 2.5M life and TPD coverage each) + medical insurance.

At the current point in time, we are very contented with our modest terrace house and 2 non luxury cars. We only focus on doing my job well, spend moderately and enjoy the company of friends and family.

This post has been edited by kingz113: Aug 14 2019, 03:08 PM

found out most of the examples presented here are from working overseas and coming back to Malaysia to retire. Guess retirement by base in Malaysia seems impossible?

Yup... Most with millions converted from overseas.

Msia ringgit too weak.

Guess FIRE by working and living in Malaysia seems impossible.
Time to move to other country!

Income-Expense Ratio gap seems too narrow to earn and save at the same time in Malaysia.

Possible but harder ... u need to be at top 1% of the population or something like that... and provided u save and invest your earnings ... a tall order

I guess one must first know what is the MINMAL amount he/she needs to retire.
each individual need are not the same, as can be read from some examples posted......some needs to have FEW millions to feel that they will need to have a retirement.

what is your minimal amount need?

Good write-up,...

Do you have any children, and plans for them ??

Problem is things are so unpredictable today,... yo may say you needed only so-much and so-much to retire,.. but when the time comes, and when the environment changes due to,.. say sudden surge of inflation, etc,... your calculations will be thrown out of whack...

Hence,... it is always safer to have more to retire with,...

Then, I guess, it will never be a good time to retire, for the unpredictable will also be there no matter how much one have?
diversified investment may crash, family member got kidnapped, siblings gambled away his savings needed your financial helps, business failed, etc, etc...

personally will put RM10k/month (in today's value) will be sufficient.
If we were to take consider of 4% rule. I guess the suitable amount will be RM3mil as of today. But that is if you have RM3mil immediately now.

Food - Rm1k
Kids - Rm3k
mortgage - Rm2.5k
car loan - rm1.5k
others - rm2k (accumulate few months, once awhile travel)

Possible?

I theorised,... the best way is by controlling our expenses. I heard this many times from the elderly people around me,... even the ones who are well-to-do with more than 15m worth in Ringgit terms,... the unpredictability of the world outside today is too high.

A good eg : 15m used to be able to earn great FD income, and live risk-free with FDs only,... but today, FD rates are too low,... I had relatives peing accounts in Aus and NZ many years ago earning great FDs, then converting the AUD back to MYR, and benefit frm the exchange rte some more. But today, FD rates in those countries are very low,.. and with this, the AUD and NZD have depreciated so badly that they are not getting the same amount they used to after converting over.

But,... their consolation is their amt is high,... hence, if they lower their lifestyles, they can still live reasonably well. Some of these men need to support more than one family/wives,...

Yes eventually. However will adopt the same methods my parents did. government school all the way. Kids education expenses are the only unknown variable in our equation but I have already thought out a strategy for that.

The wife and I were both from government schools and we turned out just fine (we're both very highly educated though), so not going to waste money on overpriced education.

With any luck, the kids will be on scholarship if they're academically brilliant. If they're not will just get them to do a trade or something they like. Interestingly most of my friends who are rich in life are from backgrounds who didn't go to uni, or doing something unrelated to their uni course.

Just how many % of our past n current retired population has more than A million myr in their bank to live for retirement?

One of the reason why I use ‘inflation plus x%’ for my investment calculation.