What are the chances of everyone becoming a millionaire by just working 9-5 everyday for the next 30 years? In one word? Possible. In two words? Yes, possible. Let’s not look at the T20 households in Malaysia. Let’s just look at the M40 households instead. (click here to know what’s a T20 and M40 and also another category known as B40) These households earn a median income of RM6,275 per month.
How about saving just 20% of that salary and we assume we will have no further increments until we retire 30 years later? Simple calculation as follows: We round up the salary to RM6,300 per month.
RM6,300 x 22.5% = RM1,417 x 12 (months) = RM17,000 x 30 years = RM510,300 x 2 (conservative estimate for interest rate returns on savings) = RM1,020,600. We have just become a millionaire just by savings alone. By the way, this does not yet include our EPF savings which would have given us another RM1,000,000 based on 11% savings from us and 12% savings from our employer which is a total of 23% per month. See, life’s not that bad, IF we at least save enough of the sum.
I know, some will say that by the time one’s salary reaches RM6,300 the person may have already worked more than 10 years. Noted but like I say, the above calculation is also very conservative as it assumes that when your salary reaches RM6,300 it will then stop increasing… It also assumes that the returns on your investment is pretty low yeah. In fact lower than the fixed deposit rates too. So, give and take lah, don’t be too calculative.
We could also supplement our savings by spending less on food. Here’s an earlier article:Eating cheaper is still possible, depends on us actually Oh yeah, the above also assumes that we are someone who continue to improve, work hard and well keep climbing up the corporate career ladder. In case you like to use EPF’s calculator to understand what would the savings be like, please do try out their friendly calculator here.
Remember yeah, the above are all about savings alone. If we intend to do much better, then investment must come into play. Here’s an earlier article: Are we earning, saving, investing and preserving? It does not even start with property investment. We must remember to protect what we have through insurance too. That’s an investment too to ensure we do not suddenly lose a lot of our money when we have to be hospitalised.
Happy working and happy understanding that it’s possible to become a millionaire or multi-millionaire (if we include EPF savings too) by working 9-5 for the next 30 years.
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