Personal Finance 101: Financial Independence, Retire Early, a realistic goal or just a dream?
A number of close friends have retired or says they will stop working soon
I am 47 this year, in September lah. So, if a few close friends have retired since a few years ago, it meant that they have done so earlier than 46. :) Another just left the working world and posted this in his Facebook. “No more chasing targets, No more appraisals, No more budget approvals.” Actually I know he could have retired many years back but I guess his passion was still in building new ventures. So, he has finally stopped working and started travelling.
Today, we talk about Financial Independence Retire Early (FIRE) which is a popular concept for many young professionals. Somehow, some of them managed to earn a lot, saved a lot, invested smartly plus they have very little expenses, so in just 10-15 years maybe from the day they started working, they say they have enough to retire. Of course plus the fact that they probably do not have children like me.
In 2022, there’s a report which says that only 12 percent of Malaysians are on track to retire early. Want to know more details on who are these 12 percent and how they attempted to do it? Here’s that article for more information.
Article in themalaysianreserve.com According to a survey by Milieu Insight, employed respondents aged 18 to 49 years old from Thailand, Singapore, Malaysia, Indonesia and the Philippines reveal that many aspire to retire early but only a small percentage of those are on track for early retirement. This is 12 percent of Malaysians while another 55 percent of other Malaysians are unsure of how they could achieve financial independence to retire.
The survey utilised FIRE (Financial Independence, Retire Early), which is essentially about aggressively tightening belts and finding multiple sources of income in order to achieve early financial freedom. The common strategy towards early retirement among Malaysians is regular savings, followed by ‘doing financial planning’ and “investing.” Meanwhile 72 percent invests into investment funds, 66 percent into stocks and 65 percent into real estate. Here is the full article in themalaysianreserve.com
What’s your plan then? Are you also on F.I.R.E track?
When I was younger, the only thought is to work, earn, work, earn and then retire when I am 60. Well, with my 9 and 11 year olds, I think the earliest I can contemplate leaving my full-time employment is 60. Haha. Okay, probably a few years earlier than 60. These days, my focus is still the same. Earn, Save, Invest and Protect what I have. As they say, better later than never. Not late, later since I am already 47. F.I.R.E is a dream to retire before 40.
Do not wait too long to start this path towards having enough to stop working. Savings should be for investing and not just saving for saving alone. Investing meanwhile is up to you yeah. Some may say stock market too volatile and FD is too slow while property is just too expensive but remember, all these would continue to be true yeah. Plus the fact that inflation will always be around and after a few years of inflation, only the property price will be enough to hedge against it. The rest would depend on your returns.
Saving can be accelerated too.
Not buying expensive smartphone and getting a cheaper one every few years means that we could have saved over RM10,000 every 10 years, or more. Not buying some overpriced property and instead choosing to buy slightly further away could save the buyer RM100,000 or more. Not buying a new car unless the current car gives problems would easily save us RM60,000 in 7 years. I know because I have not paid car repayment 7 years ago for my Proton Persona. All these, when you add up together is really a lot of money.
Happy thinking or accelrating.
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