What would be your expected expenses per year? The the targeted asset mix would depend a lot on that.

Frugal is not equal to suffering. Not buying iPhone and resort to economy smart phone will save a lot in long term and easier to achieve Fire, and by doing so, don't think it is considered suffering.

Agreed if you're not suffering then that's the correct balance for you.

Hmm i think i didnt get my point across in the right way, like everyone has different level of expenses and lifestyle choices..


But with RM2m, what do you target to achieve as annual return and how would u do it .. i think this is more accurate of what i want to ask...

As long you have cash cow, just milk them.

If we are suffering while trying to achieve the goal then I think we are doing it wrong.

Most important is live below our mean (many don't do that because the lack of financial knowledge and financial responsibility). If our income can't sustain our lifestyle (including saving target rate) then we need to increase our income or learn/accept the fact that our income is not high enough for us and adjust our lifestyle.

All in all, it's our priority. If we found the job that we liked and prepare to work till the day we die, we can choose to ignore the FI movement. However there's a catch. What job let us work till our last day here on Earth?

On the other hand, if we plan to have more choices in the future on whether to work, change to a new career path or travel around the world then FI movement is actually very helpful.

As long as we don't regret our choices then it's all good.

Good point on living below your means.

In my personal humble opinion a person and as a person who retired early at 42 I could have done it at 39 but didn't have the guts to retire. I had surprisingly never heard about FI/RE movement till I retired. Although after reading about it I do see some similarities between it and my life.

To me retiring early has always about being about two concepts
frugality = delayed gratification
high income = personal sacrifices

Both are equally important living below your means is only the start. For me, I maintained my expenses at the same level for the first 10 years of my life even though my annual income had increased by 5 times.

After 12 years if you didn't take into account inflation my annual investment cashflow was equal to my expenses. (I had already increase my expenses by about 2.5 times my original as relaxed a bit and allowed for a bit of inflation)

High income always involves sacrifices what sacrifices?
1. I didn't have time for friends
2. I didn't have time to exercise
3. I never had time to participate in forums like low yat till today
4. I spent my weekends sleeping catching up on sleep
5. I didn't have time for my family

Frugality has never been an issue with me as when you're so busy you don't really have time to spend money.

My target was retired by 40 well I sort of achieved it but did it a bit late as I didn't have the guts to do it. As
the change from spending your salary as compared to spending your investment income was quite a big change
for me.

I couldn't have done it without suffering a bit (long hours and super stressed). To say that suffering to achieve your goal is wrong then I guess I did it the wrong way . If you asked me to do it again without suffering I would tell you I wouldn't know how to do that. Anyway, I can't turn back the clock, but I can say I was willing to make those sacrifices and today I am enjoying the benefits.

I do believe there are different ways to achieve the same goal and everyone has a different goal too. My way might
not be suitable for others.

All the best to you and everyone in achieving your goals.

Your asset mix would depend on a lot of factors it would be hard to say unless someone actually
had some details.

Making the assumption that you are asking about at asset mix based on the goal of retiring at 50 with no dependents.

You have to first look at
1. Required future cashflow meaning how much you would need till death
2. Risk
-risk profile (how you react emotionally to changes in the value of your portfolio)
-risk capacity (how much you can afford to lose, this will depend on your future cash flow requirements)
3. Assumptions on
-inflation rate
-rate of return of different asset classes
4. Your life expectancy
5. Whether you are looking at capital depreciation on non-capital depreciation model for retirement

The more accurate detailed way is like 1 inch of stuff to read in the CFP textbook.

So based on the assumption
1. Expected returns
- 8% Equity returns
- 4% Bonds/Fixed Income returns
2. Inflation - 3%
3. Life Expectancy - 90

Note: Not taking into account your risk capacity, risk profile and uneven cashflow requirements (e.g. you might need=nursing care when you're old)

at
60/40 expected return (60 Equity/40 Bonds)
= (0.6*0.08)+(0.4*0.04)
= 6.4%
Inflation adjusted
= (6.4% - 3%) / 1.03
= 3.301%

70/30 expected return
= (0.7*0.08)+(0.3*0.04)
= 6.8%
Inflation adjusted
= (6.8% - 3%) / 1.03
= 3.689%

80/20 expected return
= (0.8*0.08)+(0.2*0.04)
= 7.2%
Inflation adjusted
= (7.2% - 3%) / 1.03
= 4.077

So using the non-capital depreciation model (meaning you never touch your capital) for RM 2M you can spend
per year
60/40 = RM 66,020 (can maintain 12.11 years of equity downfall without selling your equity)
70/30 = RM 73,780 (can maintain 8.13 years of equity downfall without selling your equity)
80/20 = RM 81,540 (can maintain 4.9 years of equity downfall without selling your equity)

So depending on the numbers of years of equity downfall without selling you can take you can
choose the asset mix.

If you are using the capital depreciation model (meaning you use up all your money) assuming you
live till 90 (you have to estimate a bit more since you might live longer)
60/40 = RM 90,785
70/30 = RM 96,418
80/20 = RM 102,208
Note: Calculated using a financial calculator and excel.

It gets a bit too complicated to calculate the years of equity downfall as I would need to create a table for this.

So it all depends on whether you are going to continue working after 50 as if you still have a source of income maybe a 70/30 mix or 80/20 mix, if you don't have a source of income, maybe a 60/40. Hard to say without knowing your financial goals.

You can sort of calculate the asset mix you need backwards based on targeted expenses but that would not
take into account of your actual cashflow needs and risk profile.

The numbers still will change if the assumptions change.

Please take note I didn't double-check my calculations on my spreadsheet and a financial calculator so I might have made some mistakes.

Disclaimer: I am not a licensed financial advisor. The above numbers are only for educational purposes and do not constitute professional advice. I have not taken into account your personal financial situation. Please seek professional advice from a licensed financial advisor if you would like a proper analysis.

Mind to share your strategy and finance numbers? is it invested in real estate? funds? mix? what is investment value and return so i can learn? also if no time to go out, friends, family etc did you sacrifice marriage and kids also? because some say those are real money suckers too

In my early years I invested almost completely in shares as Malaysia market was really undervalued in 1998 public bank was rm 1 only.

I made money on my first 2 properties but at that time my first property was giving 11% net yield and the second was 7% net yield. I sold it when net yield was less then 3% about 7 years ago.

I lost money on my 3rd property as originally bought it as a personal residence but changed my mind and lost about 100k in terms of interest and transfer fees.

For the last 7 years besides shares I also invested in US ETFs.

Last year I started in unit trust as I felt that US ETFs and Malaysia individual shares will not give such good returns anymore.

There is no magic bullet in investment. An investment is only good when valuations are low and prospects look good. So can't say unit trust, shares, properties or REITs are better it depends on today's valuation and future growth prospects.

Property was good when rental yield was at 7% to 11%. Today it is something like 1% to 2%.

Local shares was good when Malaysia economy was growing 8% and the unit trust industry was growing as they were injecting funds into our capital markets. Unit trust only started getting popular in the late 90s.

US ETFs were good in the last 10 years as there was a big correction in 2008. Earning yields were high today is super low.

Am restructuring my portfolio based on unit trust as I feel that is the way of the future as they able to make money in a flat or falling market. (As I have no idea how to do that)

At the end of the day the most important investment should be yourself as a direct salary icreases gives the fastest cashflow increase.

I estimate my investment returns was about 6 to 8% over the years hard to say as need to remove my savings to calculate actual return. My net worth increase has been about 14% for about 20 years so you can see half the increase was from salary.

Last year my returns was a out 7.5% but my targeted returns at reitirement is about 6%.

I did marry late because of that I could save more. You're right marriage and kids will suck your capital for investment. I don't have kids but I do have enough cashflow to support two kids till University perhaps going to a twinning program.

If you marry late you have more money the bad thing is you're very old when your children grow up like me when I get kids. There was an article I read on someone's blog on what happens if you marry earlier or later with the actual numbers perhaps you can search the web for it.

Your partner makes a big difference in you life make sure she is frugal too. The other big factor is who you mix with if you have high spending friends it is unlikely you can save much.

Actually I am going to start a blog to share my experiences as a pet project am targeting September for it to be out. Hopefully you will check it out when it's out.

By the way all the above are just my personal opinions for education only please consult a licensee financial planner if you want advice based on your personal situation.

Just try to earn as much return as you can from the 2M
You decide how much return you want and select:

FD 4-4.85%
Amanah Saham Fixed Price 5-6%
KWSP 5-6%
Unit Trusts 6-9% but warning can negative!
Bonds 6-7%, warning can default
Properties 6-12% on rentals(low end props), with capital appreciation even more, safe wont die
FOREX 30% can lose all dont cry
Ah Long /Gambling 100-300% be prepared to run if pass 1-2 cycles, going on longer sure to die

wah very helpful and insightful, thanks for that! If I wanted to follow in your footsteps and get into unit trusts whats the best way?

Some pointers would be

1. Buy some books on it as I couldn't find any free impartial advice on the web. The books authors make money from the book so they can be impartial in their advice
2. You don't have to buy everything from one asset management company you can mix and match
3. Don't just buy one fund at a time buy a portfolio of funds from different asset classes to diversify

Will put more info on my blog will I have time to put together my thoughts

Also be very careful about opening a business I invested in 3 lost my money in all 3 as basically as a silent investor either the business will flop or the working partner would most probably cheat you as he is doing all the work. You also have to work out the figure properly.

is sgx-rw0u Mapletree North Asia Commercial Trust worth to invest it now? https://theasiareport.com/sgx-rw0u i'm deep diving into this particular stock

thanks! I currently have an account in the UK for access to index funds and I just invets in the s and p 500 in US and in the global index fund from HSBC (very low cost index fund for global market), is this good enough for safe, slow growth?

Don't really know your actual situation but some things to consider would be that in all investments you have to know what is the key driver of growth(no growth means the investment won't go up) And what are the risk

1. An S&P 500 ETF is betting on the US economy

https://www.morningstar.com/articles/962169...ns-2020-edition

10 year nominal returns forecast by vanguard for the us economy is I thinK 3.5 to 5.5. You have to make your own decision in what you believe the growth would be as different companies forecast different amount I use Vanguard as I own vanguard ETFs.

2. A global index fund is betting on the global economy

I think the above article might have some forecast on global returns also but I think it's better then the US.

For me I am reducing my exposure to the US but not completely moving out as I also need to think of currency risk. What happens if the ringgit appreciates against USD in the next ten years. A 5.5% upside for me is not enough for me to top up my investment in the US as for me I would want at least another 2% more premium for currency risk. This year for my US portfolio I will most probably reduce my US exposure and put my money in other regions which have lower valuations.

A lot of people are of the opinion that the US market is overvalued

Besides currency risk as more people index something might happen no one knows as there has never been so much money in index funds before. Will there be am indexing bubble?

So end of the day you have to evaluate for yourself
1. Do you think the global economy and the us economy is overvalued or undervalued
2. Do you think there will be earnings growth
3. What are the risk involved and are you getting a premium in return for the risk you're taking
4. Do take into account what we call black swan events, like perhaps an indexing bubble meaning you should have some stuff in non equity markets for cashfow. It might take 15 years to recover from a major crash.

Also another thing is if you have dependents it might not be such a good idea to have an overseas account. If something happens to you, your dependents would have to fly over to UK and appoint a UK lawyer to get a probate. The lawyer might cost more then your investments. If you have a large amount there you might have to be estate duty too.

I hope I haven't confused you didn’t really answer your question but would like to give you some info instead.

yes very helpful indeed, especially on over exposure to US funds thanks for that!

Sifus, tq for all the information. Currently my assets are divided into below :

Unit Trust
FD

Im looking at mitigating risk with additional income by investing out of the country. Im not looking for high risk and high return but same passive rather safe investment.

But lookin at FD rates in the UK, i find that ours is higher. Any recommended place to do some digging.

After the crisis is over, could consider certain REIT in sg, u.s. and London.

This post has been edited by icemanfx: Apr 20 2020, 03:54 PM