Manulife Asset Management published a report on Malaysia population “aging” issue.
- In 2010, only 5% of Malaysian population are above 65 years old.
- By 2050, there will be 15% of Malaysian population above age 65.
Malaysia population is getting older. As each year passes us, there will be more elderly seniors compared to the previous years:
- In 2010, every 100 working person are supporting 7 retired elderly seniors.
- By 2050, every 100 working person will be supporting 23 retired elderly seniors.
When comes to retirement age and financial support upon retirement, the 1st thought Malaysians think about is EPF. Taking a deeper look, there are LESS THAN 40% of working age Malaysians have an EPF account.
There are a couple of issue with our EPF:
- It is a one-for-everyone solution in retirement planning. Undeniably, EPF is safe and stable by consistently giving 4.x% to 6.x% dividend (in the past 15 years). Last year (2012), the dividend payout from EPF was 6.15%, which can be considered reasonably. Unfortunately, this return is merely slightly above FD (fixed deposit) rate. This might be an okay plan for someone above age 50 and have a family with wife and kids. He cannot afford to take high risk due to his age and dependencies. However we have other groups of working class such as someone who is below 30 and have no dependencies (no wife, no kids and parents are still healthy). They can take much higher risk in order to make higher return. Their money in EPF earning merely 4.x% to 6.x% dividend is doing a relatively poor job for their money. This group of working class need to consider an alternate option to grow their wealth quickly.
- Most people finished spending their EPF savings within 3-5 years. Firstly, as of end 2011, 86.5% of the active EPF contributors have LESS THAN RM100,000. If an elder spends RM1667/month (for food, medical attentions and other daily necessities), his fund will run out in LESS THAN 5 years. Secondly, most retired folks are not prepared to handle such large amount of money. They have been receiving salary all their life and only managing their salary of few thousands Ringgit (perhaps RM3000, RM5000, RM8000, etc), but they are not prepared to handle RM100,000 or sometimes even more. They are not intellectually prepared due to insufficient financial education and they are not emotionally prepared with that large amount of money. Their financial blueprint will immediately bring them back to the level where they do NOT have so much money. This is the same reason why most lottery winners that became millionaires overnight became broke again (or in worse financial situation) within 3-5 years.
Apart from better money management skill, we should consider taking a little risk and grow our personal retirement fund (not purely relying on EPF). In my opinion, the most potential investment in this decade is silver investment. Silver is known as the largest wealth transfer in human history in this decade. Just like Energy, wealth is never destroyed, it is merely transferred from one pocket to another. The challenge with our modern generation is, the money / wealth have gone invisible. If you are not trained or educated in this subject, you won’t even realize “the transfer” has happened.
Silver investment is really simple. All you need to do is buy low, sell high. Unfortunately, most people are doing the exact opposite. When the price is going higher, they came in and bought during the high price then soon found the price started crashing down. When silver price did come down, that’s the time they should buy but now they are conquered by their fear that silver price might drop further and paralyzed them from taking any action.
Remember this, if you want to sell high, you need to buy low. Price fluctuation (ups and downs) for silver will always be there. Price moving in straight line NEVER exists. At the point of writing this, silver price is $29. I would not call this as the rock bottom price, but this is definitely a good price to buy some cheap silver. It is always better to buy at a good price, than waiting for the best price that might never come.
For more of my work, please take a look at the eBook: Practical Guide For Investing Silver In Malaysia (3rd Edition).