Do you save enough to retire? Better save enough to invest.

They say a journey of a thousand miles begins with the first step. Very true. However, it’s hard to keep our motivation and attention if we have just walked 1 mile and there’s still 999 miles to go. 1 mile is 1.61km. 999 miles remaining is another 1608km away! How about aiming at 10 mile as our first target? How about aiming at saving enough to buy a donkey which can carry us when we are tired? After a while, saving enough to get a horse and suddenly the journey of a thousand mile does not seem that crazily far anymore. This is true in everything we do. Remember many property experts telling us to buy an affordable unit first. After a few years, sell that unit and upgrade to a bigger one. This is true and doable and I did just that for the place I stay. From renting a room of 150 sq ft, I went on to rent a room of 350 sq ft followed by 700 sq ft, 730 sq ft, 1,258 sq ft before downgrading a bit to 1,053 sq ft and currently 1,743 sq ft. The earlier ones were rented. Of course, during the same period, I went from single to becoming a married man and today with 2 kids.

Oh yeah, a good friend of mine always have this to say, ‘Aiya, I should have bought earlier.’ When I asked if he had saved enough to buy, he replied that he was thinking that it was best to save for retirement. As for property, having just one is enough. Well, these days I no longer hear him complaining because we have not met for years. I am very sure his retirement funds is now huge because he is same age as me, 40.  Speaking of saving for retirement, every now and then we will see an article talking about saving enough so that we can retire. Actually we live in a time when saving for retirement may be a myth in future. Look at the inflation rate and then the Fixed Deposit rate. Look at the interest rates in many advanced nations and understand that the double digit interest rates or even remotely close to 10 percent is really a thing of the past. If we take the current fixed deposit rate minus the inflation rate, our savings should only be increasing by around 1 percent per year. Is 1 percent enough to hedge against everything that people are worried about?

I think a better question to answer for all of us may be, ‘what’s the type of investment that I am comfortable with.’ Most of my friends do not buy stocks. I think they are scared. Fundamentally, they did not read enough about stocks. Oh course, there’s PROPERTY which as long as we did not buy the wrong one, on a longer term basis, everything should be fine. Yes, very true that the property bubble may burst, sometime… Read here on what are the signs we can watch out for by ourselves. Therefore, the question is therefore not whether we have saved enough for retirement but have we saved enough for investments which should help us build that pile of retirement funds faster. Essentially, if we have just bought the latest handphone when our current one is STILL usable meant, we did not. If we spent over RM1,000 per month only for food and refuses to cut it down, we did not. Yes, eating cheaper is possible. My new friend, Suraya who blogs at ringgitohringgit keeps track of her expenses because when we do just that, we can immediately see how much we actually spent the month before which was totally unnecessary in the first place. Be clear of what we REALLY need. Saving for retirement is way too far ahead, I think. Saving enough to start investing? That’s what’s really possible within a shorter time frame. Happy saving for investing.

written on 6 Mar 2017

Next suggested article:  Not young anymore, thus don’t simply buy any property  

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