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Malaysia Today - Your Source of Independent News |
| Posted: 28 Sep 2012 02:48 PM PDT  Dwindling value: With the high cost of living and rising inflation on an annual basis, RM1mil won't be sufficient to retire for long.Eugene Mahalingam, The Star A MILLION ringgit is a lot of money. In the past, it was always considered "the benchmark" in terms of a person's success. After all, having RM1mil officially makes you a millionaire. However, realistically, is RM1mil big enough to survive on today, especially once you retire? According to official statistics, the average Malaysian male has a life expectancy of up to 75 years, while for females its up to 77 years. This means that a retiree aged 55 has to support hinself or herself for another 20 years or more. But let's be a little bit conservative for the purpose of this article, let's put the average life expectancy at 80 years old. With RM1mil at 55 years old, you would need to divide that money to last you another 25 years, which comes to an average of RM3,333 a month. Is that enough to sustain you? "It really depends on your living standards," says Whitman Independent Advisors Sdn Bhd managing director Yap Ming Hui. "With rising inflation on an annual basis, that monthly sum (of RM3,333) will be worth a lot less as the months and years go by, so it's definitely not enough to sustain you for 25 years," he tells StarBizWeek. Yap nevertheless believes that a person is able to "make do" with RM1mil once he or she retires. "You would definitely need to readjust your lifestyle," he says, adding that a person without financial obligations, such as a pending house or car loan can still survive on RM3,333 a month. "Of course, if you have a posh lifestyle, especially when you're living in Kuala Lumpur, then that amount won't be enough. But if you live outside Kuala Lumpur and live within your means, then it's still possible." MyFP Services Sdn Bhd managing director Robert Foo says living for 25 years with RM1mil in today's environment "would be tough." "If you're married and have a few children and ongoing commitments such as a loan, it's tough. If you're not generating any more money after 55, it will definitely run out. "By the time most people are 55, their children are probably working but some of them might still depend on their parents. They could be living under the same roof or might need financial help to buy their first car, for instance." CTLA Financial Planners Sdn Bhd managing director Mike Lee also feels that RM1mil would only sustain a person for a limited period of time. "RM1mil might be enough for the first few years. However, with the high cost of living and rising inflation on an annual basis, that sum won't be sufficient." Foo maintains that it is ultimately up to how the individual manages his or her lifestyle. "It truly depends. For some people, RM1mil might not be enough to even last them 10 years." He says RM1mil might not be sufficient for a bachelor with no commitments to retire on. "As a bachelor, you're probably going to want to go out with your friends and see the world. You're unlikely to be cooking your own food, staying at home everyday and living hand-to-mouth every month. "That's not considered living, that's existing!" How to retire with RM1mil While RM1mil might not be enough to retire with, it's still a lot of money, which can be used for investment purposes and to grow your wealth even further. Foo believes the best thing to do is to continue working well into your retirement years if health permits,. "Don't retire! We advise our clients that if it's possible, they should continue working. At 55, you're still young enough to generate more income for yourself. Even if it's just half of the amount that you used to earn, it's still money coming in," he says. Yap says readjusting your living standards would also help, adding that an individual could further invest his or her money in shares, unit trust or even property. In terms of shares, Lee says a retiree should put some of his money in stocks that provide good dividend returns. "Real estate investment trusts also give good dividends. Have a mixture of investments and don't just leave everything in your fixed deposit account. "Leaving all your money in the bank is not a good idea, as it won't generate good interest rates. With the inflation rate growing at an even faster rate, you'll just end up losing out." Foo says it's also a good idea to start your own business. "By the time you retire, you would have acquired valuable skills that still make you marketable," he says, adding however that starting your own business can be either a rewarding or risky endeavour. "Starting your own business can generate high returns. But you can either make it or lose everything."
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| Budget 2013 showdown: BN vs Pakatan Posted: 28 Sep 2012 02:17 PM PDT Lee Wei Lian, The Malaysian Insider Now that both Budget 2013 from the ruling coalition and the shadow budget from the opposition have been presented, let's take a look at how the two budgets stack up against one another. This is the last budget before the general election and the stakes are high. Barisan Nasional (BN) has had a lot of experience in crafting budgets and surprised no one when it dished out cash and other goodies, particularly to the younger generation who are a significant chunk of the newly registered electorate and are an unknown quantity in terms of their voting inclinations. It scored some points however for not going overboard with spending as expected by some economists and still managed to pare down its expected budget deficit to four per cent from an estimated 4.5 per cent this year. Pakatan Rakyat (PR) is a relative novice when it comes to federal budgets and presented one that appears to be much more geared toward reforming the economy than the one from the Najib administration which appeared to have more-of-the-same type policy tinkering rather than sweeping fundamental changes.  Najib gives the thumb's up to Budget 2013 which he presented in Parliament on September 28, 2012. — Picture by Choo Choy May But PR's budget, on the other hand, is more exciting as it really shows teeth when it comes to tackling things like monopolies, cartels and downsizing the state's involvement in business. Not everything in the two budgets can be compared directly but one of the things that can be put side by side is the fiscal numbers. So we start off with: The Balanced Budget Category Budget deficit BN: 4 per cent PR: 3.5 per cent Winner: PR BN managed to cut the projected deficit from 4.5 per cent this year to 4 per cent in 2013 but it wasn't enough to beat PR. BN can say of course that PR can promise anything since it is less accountable as it is not in power. PR meanwhile has talked a lot about eliminating corruption, leakages and wastages but all that effort appeared to yield only a slightly better deficit number than BN's. Still, the slight improvement is enough to give it an edge over BN in the eyes of ratings agencies and economists. Economic Development BN's approach appears to be via a sprinkling of incentives based on wish lists from industry groups while PR's approach looks to be tackling things at the fundamental level by boosting the country's intrinsic competitiveness. BN advocates incentives such as tax relief for R&D, a RM1 billion fund to boost domestic investments, incentives to take over foreign firms, incentives for the tech industry such as income tax relief for Angel investors and recognising intellectual property as collateral, and a RM10 billion Working Capital Guarantee Scheme for SMEs. PR has gone for the reform route for development, saying that it will seek first to purify the economy of toxicities and flush out rent seeking, corruption, cronyism by dismantling cartels, abolishing monopolies so that the economy can more easily flourish free from the scourges of distortions and inefficiencies. By aggressively reducing state capitalism by reforming the role of GLCs, it also promised to make entrepreneurship the bedrock of the economy. Winner: Both approaches have their merits. BN's incentive-based approach is safe but boring and PR's reforms are more exciting and have the potential to send the economy to first-world status. A hybrid approach would be best as SMEs shouldn't have to choose between a working capital guarantee scheme and a business environment free from cartels and rent-seeking. But based on the potential value that the approaches will bring over the long term, PR wins this one. Education A country's future is won or lost in its schools. BN recently launched an education blueprint devised with input from experts but surprisingly cut its education budget drastically from RM50 billion in the last budget to RM38.7 billion in 2013. The prime minister did say that they wanted to "look at the outcome of each child per ringgit spent" during the blueprint launch so maybe they found ways to cut out wastage and increase efficiency. PR, on the other hand, had little to say about education in the budget and the most noticeable thing was that it wanted to abolish the National Higher Education Fund (PTPTN). While the intention is good and some restructuring of PTPTN might be in order which includes a certain degree of debt forgiveness, and its proposed fee subsidies for private education is a good idea, wiping out PTPTN debts could backfire as it would give students a sense of entitlement and increase their reliance on the government. Many ex-students who paid back their PTPTN loans are already complaining that they should have waited. Winner: BN admitted Malaysia's poor showing in international testing and vowed to improve it via the new blueprint. The apparent cut in education spending is puzzling but PR's move to wipe out PTPTN debt smacks of populism and vote-buying. What kind of message does that send to students? That they don't have to pay back debts? Based on this and its recent blueprint which drew mixed reviews but was nevertheless a step in the right direction, BN wins education. Personal Income BN has once again committed to direct cash transfers to the low income to help with the rising cost of living. PR, on the other hand, says that it will increase money in the pocket indirectly by making cars cheaper via excise duty reductions, toll abolishment, waiver of PTPTN and savings from lower fuel and transportation charges. BN also cut income tax rates for taxable income up to RM50,000 but tax experts expect that this is just in preparation for the introduction of GST. Winner: Both have their pros and cons. Direct cash transfers can help in times of economic slowdown as it boost domestic consumption. It however can also be perceived as a vote-buying tactic and is one-off so it is not sustainable. A one-percentage point cut in income tax is not much when you consider that other countries have income tax as low as 11 per cent for RM300,000 in taxable income or have higher income tax than Malaysia but offer better public services in exchange. PR's approach by increasing income by removing economic distortions is more sustainable so it wins this one although it's a hold-your-nose winner as it includes PTPTN waivers as part of its income boost.
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| Posted: 28 Sep 2012 01:53 PM PDT Many Malaysian voters are still gullible and can be easily swayed, many of them are lazy to get informed in regards to the current issues. Selena Tay, FMT It is now five months since the Bersih 3.0 event on April 28. Lest we forget, of the Bersih's eight demands, only the use of indelible ink has been agreed upon by the Election Commission (EC). But still we cannot be too sure of it as in the previous general election the use of indelible ink was withdrawn at the 11th hour. There is still no news in regards to the cleaning of the electoral roll. This is very irresponsible and unbecoming of a federal government who is always harping on 'transformation', whatever that means. BN leaders have mocked Pakatan Rakyat's tagline of 'Change' by saying that by choosing Pakatan, the rakyat would have chosen change for the worse. Certainly transparency, accountability and responsibility do not rank highly in the current government's code of governance. Otherwise, how else can you explain the EC's reluctance to clean up the electoral roll? They should remember the Spiderman movie tagline 'With great power comes great responsibility'. There are too many discrepancies in the electoral roll. PAS Pokok Sena MP, Mahfuz Omar has compiled a few thick files on irregularities in the electoral roll but the relevant authorities have not shown any interest at all in the matter despite his efforts in highlighting the same. Instead the BN leaders are more interested in showing numerical superiority. Two examples highlighted involve a Hari Raya Aidil Fitri Open House function in Putrajaya and an event in Pekan, Pahang. There are allegations that the crowd pictures have been manipulated to make the crowds seem larger. Does this reveal a very desperate move to project a false image of popularity? Hopefully, someone can come forward with solid evidence to prove that the allegations are false. Simple mere denials do not count. This is very important as our image in the world arena is at stake! However, it must be noted that ever since Bersih 3.0, Prime Minister Najib Tun Razak has constantly sought to portray that BN's events are more popular than 'Duduk Bantah' on April 28. One thing for sure, BN can never beat Bersih 3.0! The 'Himpunan Jutaan Belia' gathering in Putrajaya organised by BN in May this year seems to have drawn in millions in numbers. But it was an event spread over a few days unlike 'Duduk Bantah' wherein a concentration and mass convergence of people was required in just two hours from 2 pm to 4 pm. "The constant obsession to display numerical superiority shows that BN leaders are envious of a people's movement. They are incensed that a people's movement can prove to be so very popular. This shows that these leaders are insecure, immatured and petty-minded," commented PAS Kuala Selangor MP, Dzulkefly Ahmad. This brings to mind the prime minister's statement that he intends to defend Putrajaya at all cost and his reluctance to answer the question of whether there will be a smooth transition of power in the event Pakatan wins the 13th general election.
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