FinTips - Planning and Managing Your Retirement

  For many, retirement may seem something that is far away, leaving us with the thought of having lots of time to save our nest egg to have a comfy retirement. And NATURALLY, many would leave the saving part for TOMORROW… Sadly, most economist and financial planners would agree that the average person has not saved up enough money to retire comfortably.

  Even though the average person is currently working more hours, most of their income is spent to pay off their debts, leaving very little to put aside to adequately fund their retirement account. Plus, if we throw in factors like inflation and taxes, chances are your golden years might end up less shiny.

  So upon due thinking, I thought it would be interesting to share with you some ideas on planning and managing your retirement account. I mean, what is the worth of ideas if not shared?

1)      Start Early.

a.       The sooner you start the better. Simply because time would make your money grow, that is if  you choose the right investment mechanism.

2)      Identify your risk factor for your savings. There are mainly 2 types of risks related to retirement savings:

a.       Shortfall risk – Shortfall risk can occur either from not saving enough during your working years or from being too conservative with your investments. By investing too safely, you can run the risk of not having enough money when you retire as inflation would eat up your money.

b.      The risk of losing principal - The risk of losing principal is often associated with volatility or the price fluctuations within a specified period of time. Although volatility is inherent in the markets, TIME IS ON YOUR SIDE…

3)      Plan for your long term needs.

a.       We spend half of our health to gain wealth. And later, we realize that we’d be spending half of our wealth to gain back that health. So we need to plan for what is known as “non-market losses”, catastrophic things like health care and long term care. As the average cost of medical expense is increasing at a rate of 10% every year, we have to weigh the cost of long-term care premiums against the cost of paying for care out of our pockets.

4)      Your expense in retirement.

a.       Although some expenses may reduce when we retire, the cost of maintaining our lifestyle might not reduce. When given the option, many would like to maintain the same level of luxury or even take it up a notch (or few) upon retiring. But this is only possible if you have a constant stream of cash inflow. With the active source of income scraped off, the passive income has to be equal or in fact be higher than your pre-retirement earnings. Because let’s face it, just because you take a step back from working, you can’t expect the cost of living to take a step back too.

5)      Loaning Money

a.       KEEP YOUR MONEY FOR YOUR RETIREMENT! Learn to say NO when you have to. Most parents (especially Asian parents) feel that they are obligated (or as they call it their duty) to save up for their children and have a good amount of properties to present to their kids. Honestly, the kid would be able to earn his/her living and parents should (after providing the basic necessities for their kids) live their lives.  What’s the point of slogging when you don’t get the chance to reap what you sow? So parents, spend the money on yourselves and children, start standing on your own feet.

So, your lifestyle after retirement is basically yours to choose. If you’d like suggestions, feel free to contact me and I would be willing to lay out a few options. Remember; don’t leave till tomorrow what you can do today.

Prepared By,

Ashveen Chakravarthy Sekaran

FinTips - Survival of the fittest...

Unpredictable weather patterns, global climate change, stock markets and oceans turning red (yes, they are actually turning “blood like” red due to some sort of algae growth in the oceans) and the increase in seismic activity makes it look like doomsday is just around the corner.

The end of the world (or the new beginning as the doped up optimists would put it) is nonetheless going to cause some ripples in the capital markets around the world. Global indices have been on the battle field since the end of last week, leaving blood stains to taint the markets since early this week. Clearly, panic has started setting in and maneuvering through this turmoil is indeed going to turn out to be a feat. If it’s really coming to an end, there is really nothing we could do besides sitting back and enjoying the fireworks. However, should we survive; here are some pieces of information to make sound investment decisions for the coming year. 

Let us start by looking at the local market. Malaysia, has been identified as one of the best investment portfolios by the international community, especially since it climbed the rungs from being the 12^th largest IPO (initial public offering) producer in 2011 to the 4^th largest IPO producer in 2012 falling below giants such as the USA ($54.6Billion), China ($14.5Billion) and Japan($11.1Billion) and outdoing the Asian financial capital, Hong Kong ($6.6Billion). Malaysia, despite the child-like political scene has been making mature strides in terms of corporate and financial decisions. In 2012, Malaysia has issued $6.8 Billion dollars worth of IPOs with Felda Global issuing $ 3.2 Billion,  Khazanah controlled hospital operator IHH Healthcare Berhad issuing $2 Billion and Astro Malaysia Holdings issuing $1.5 Billion, Malaysia has now been hoisted onto a whole new platform. As speculated and reported by fellow analysts in Bloomberg and CNBC, Malaysia is actually set to be the world’s IPO capital in 2013. 

However, the Malaysian electoral scene might force any investor to have major skepticism, even on minor investments. But this political bickering and pointing of fingers would have to come to an end in 2013. As the parliament will be dissolved by the 28^th of April, there is a 60 day window during which the elections can be called for, leaving June 26^th to be the last day to call for elections. Should that fail, then we will be governed by the military until elections are held. Well, let us not get carried away, shall we. Elections will (hopefully) take place by the 26^th of June 2013. And it is the time leading to the elections that would actually work to benefit the investors in Malaysia. With the release of new IPOs and political support for businesses that are bound to happen in 2013, capital market investments will be very lucrative for all.  

But what happens after the elections? Well, the market will be sluggish and might actually have a downturn for a while for readjustment to occur. After which, it will be up and running and things would start coming to light. But this might be the point where the prices of properties drop as the scenes leading to the elections would have inflated the prices of things a fair bit. Sadly, many common folk would have been led to buy these properties at such high prices that they would find it hard to service when money tends to lack in the system. Hence, the investor who stored during the hype would now be able to go property shopping as initial investors wouldn’t mind disposing these liabilities off their hands. 

So what am I suggesting? Simple, let doomsday happen… Should we survive, we should then look into the capital markets of Malaysia and see how we can make the best of this market. I mean, the politicians aren’t the only ones who should be surfing this wave. With proper investments, we too could get those diamond rings and penthouses. 

For those who would like to visit the summary of the research that I had published in 2009 on the “end of the world” theory, you may do so by clicking: http://thewisse.blogspot.com/2011/12/2012-practical-joke-or-impending.html

Prepared By,

Ashveen Chakravarthy Sekaran

December 17^th 2012

THE WISSE: Where’s my money?

THE WISSE: Where’s my money?: I don’t know about the cheese but WHO HAS BEEN MOVING MY MONEY? As the global spectacle unveils, entertainment seems to be coming in a...

THE WISSE: Dictatorship, Democracy, Dictocracy

THE WISSE: Dictatorship, Democracy, Dictocracy: While the Greek government faced intense pressures from Germany and some of the other European countries to accept more and more auste...

Where’s my money?

I don’t know about the cheese but WHO HAS BEEN MOVING MY MONEY? As the global spectacle unveils, entertainment seems to be coming in abundance without even the need for the summer movie releases- and let us hope that no other politician’s private video would debut anytime soon. Four words – Seen enough, not impressed!(For those gasping at this… I would like to defend my stand that the videos were viewed purely for research purposes and nothing more…)

As we flip through the newspapers from around the world, we can see common stories taking frontlines -Uprising of citizens against governments, political confusion, fall of governments, CEOs / Presidents resigning or kicked out and economic leaders making mole hills out of mountains. To be honest, news has become entertainment. With the lack of information that is circling the media, it is honestly hard to determine exactly where we are when it comes to the economic scene. Or perhaps no one really knows….

The Malaysian economy is being man-handled. Not just by politicians but also the general public. We can read from various valid and non-valid sources on the political spending but what about the general public of Malaysia? Malaysians are becoming afraid. Everyone is looking at keeping their money as close to them as possible rather than investing it to make better gains. Investment spending is happening…. but not happening… or rather not in the way to drive the economy.

One of Malaysia’s popular choices of investment has been the purchase properties. Although properties have generally been a good form of investment, it may have much of a down side in the current economic platform. Properties, although having a relatively good appreciative value, are very illiquid. Meaning, you may not be able to dispose of them that easily. When the cost of servicing the investment outdoes the income from the investment, caution has to be applied. It is here that people have to realize that keeping their money in something that is illiquid can cause financial constraints. 

Let us say that Mark, had purchased a property worth $1 million 5 years back and is currently worth $2million. Clearly his investment has grown by 100%. However, if he is unable to get a buyer or a person to rent it out to due to the current economic climate as people are unable to afford that price due to the lack of money in the system, stringent rules in the application of loans, etc, although his investment grew, he is unable to reap the benefits. And this may go on for a while.

Generally, when an individual buys a property, it is either for personal use or to generate income. So, for the individual, the question would be, “when is the best time to invest into properties?” My bet is towards the mid of the fourth quarter or if you’d like to wait (which may be a better option) towards the end of the year. Why? Simply because people still have money now and the market is still liquid at this point in time. But due to public fear and banks becoming very stringent in giving out loans, new investors are going to be hard to find. And this would be evident towards the end of the year.

Most properties are going to be owned by people who already have permanent properties. But those who are looking at getting new properties are going to be finding it quite difficult to acquire loans as they would lack the needed credit score. And with the increase in property prices, we might find that the “new working class” would prefer to either stay with their parents or pool together in a residence. Hence, the supply of vacant properties would exceed the demand for them. This is when property owners who are looking at disposing or renting their properties would find it difficult to do so. And when this happens, prices of property in general would drop as bargain shopping on properties would start. This is exactly what has let to most service apartments in China to be empty… although being almost fully sold out.

So, what mechanism of investment should people use at this point in time? I would personally suggest looking into the capital market. Of course people would be worried to go into the capital market due to its volatility at this point in time. However, identifying the region (as I have been mentioning many times) is important. Buying into big caps might be risky as the political scene is rather choppy in Malaysia. With the small and medium industries having a better growth factor, one should look into leveraging on such growth.

For those who would like to test the waters of the capital market without a life jacket, you may do so via buying into the counters yourself. However, if you’d like to test it with a life jacket, I would definitely suggest looking into mutual funds as you’d get the opportunity to venture into various counter without much cost to you. If loses are to be made, they would certainly be in a smaller scale compared to that of going into the capital market head on.

For those who are already in mutual funds, I would suggest to keep your funds in the Islamic bonds for the time being as there seems to be a little bit of false upward pressures on the Malaysian stock market for the past 2 weeks. Not quite sure why… But my theory is leaning towards political spending. Most would have reached market highs at this point and there would not be much losses to incur if switch is to be made soon. If my predictions are correct, there would be a short spiral of the stock market right before it stabilizes and heads back up, at which point, you’d want to get into the capital market. 

Commodities such as precious metals might not be rallying in prices anytime soon as a lot of uncertainties still loom the horizon. So for those who have invested in Gold and Silver, don’t look at liquidating it anytime soon. Keep it for as long as you can.   

By,

Ashveen Chakravarthy Sekaran

July 17, 2012

Dictatorship, Democracy, Dictocracy

While the Greek government faced intense pressures from Germany and some of the other European countries to accept more and more austerity that will clearly be rejected by most Greeks, the Greeks appeared to have come up with an interesting way to deal with it – To not have a government! Is that possible??!! Apparently, it is possible in a democratic nation. 

According to Floyd Norris, the Chief financial correspondent of the New York Times and The International Herald Tribune, the elections in Greece held on May 6^th, 2012 “seemed to draw an impasse over the formation of a government”. The two traditional parties got fewer than a third of the votes between them, which may be fitting considering that they were responsible for Greece’s current predicament. Nearly all the rest went to parties that opposed the austerity deal but also despise each other. 

So what happens if no winner is formed? Well, if no coalition government can be formed, a caretaker administration would be formed – with no mandate to do anything- and new elections called; with no assurance that a second or third election would settle anything. 

As I was flipping through the New Straits Times of the 27^th of May 2012, I came across an article that made me realize something. People are still oblivious towards race and religion and what’s more, they have a preconceived idea that a person who practices a certain religion would have a far superior knowledge on the religion than that of a person who doesn’t. Religion, as many think, can’t be immaculately conceived in one’s mind! 

When the oldest opposition party leader of Malaysia Datuk Nik Abdul Aziz Mat stated that only a Muslim can and should be the prime minister of Malaysia, I honestly felt perplexed by his ignorance. Granted that Islam is a predominant religion in Malaysia as it is practiced by many in Malaysia, it must not be used to determine the political scene of a nation. It somewhat spells out that non-muslims are insensitive towards the Muslim faith.

While I was in college I had the privilege of learning on world religions from the late Dr. Renuka, a born Hindu (Brahmin) who had an endless reservoir of knowledge when it came to any religion. As a matter of fact, she inspired me to learn up more on religions. And during my studies with her, she had made me understand that religion was something that drew a pattern of the rights and wrongs that helped guide people through life. When a person knows, without the need of reference, of the rights and wrongs of life, then he is beyond religion. 

Malaysia is still young in many ways. But that should not be reason for its ignorance. Tun Abdullah Ahmad Badawi was quoted saying “Malaysia has first world infrastructure but third world mentality”. The validity of that statement can be seen to resonate in the actions of the many that seem to be taking the front pages of our Malaysian newspapers. To change such mentality, one must find ways to look beyond religion and race and understand that human beings act the same way, it is only the cultures that make them vary. Religion is just an add-on to a person’s life. It should function as a point of reference and nothing more. When one lets religion dictate one’s life, he becomes a slave to the religion with God as nothing but a tyrant. Heaven is on earth. Not finding it now and hoping to find it after death is what I call PROCRASTINATING. So go find it, if not you, for GOD’s sake! 

Many, at this point, might look at this article as nothing but another petty rant of a youth. The generation that wants to be heard… Also many might be confused as to why there is not link between the ideas in the article. Well, is there a naturally existing order in the universe or is there order because we gave it? The Greek scenario can happen in Malaysia because of the politicians themselves – ruling and non-ruling party alike. 

If religion and race are going to be taking centre stage, Malaysia will soon face social problems caused by political parties, with the possibility of riots happening all over again (and please know the difference between a RIOT, PROTEST and RALLY). As a nation participating in the current global economic scene, we, as Malaysians, can’t afford for such mishaps. Malaysians are becoming aware that we can either vote for, vote against, or just not vote, whichever is the lesser of evils. Talking about religion and race which stirs up mud in the social pool would certainly not be welcomed by the general masses in the near future. So start working on ideas on uplifting the country and work towards common goals that would benefit MALAYSIANS (no matter what their ethnicity may be). Don’t know where to start? Well, get rid of the race and religion columns from official forms…

By,

Ashveen Chakravarthy Sekaran

2^nd June 2012