Since Bank Negara Malaysia (BNM) unprecedently cut rates four times within 2020, reducing the Overnight Policy Rate (OPR) from 3.0% to 1.75%, many who were not interested in investment have begun to learn to invest because the reduction in OPR means reduction in fixed deposit interest rates. The risk-free 3.0% FD return suddenly reduced to 1.75%, which led to more people began to realize the importance of investing due to the effect of inflation.
For those who look to avoid risk and feel that bank is the safest place to put their money, they need to seriously think about their point of view right now. Due to the unprecedented negative impact of COVID-19 on the world’s economy, many economists predicted that this low interest rate environment will persist for several years, and the U.S. Federal Reserve has recently announced that there will be no rates hike before 2024 (https://www.ft.com/content/3d7704d3-a312-4294-95bc-90233f469ccd), I believe our BNM will also handle the interest issue prudently, so as not to affect the country's economic recovery after the pandemic.
If the low interest rate situation continues for the next several years, then fixed deposits will lose its most attractive capital preservation effect. Based on the past 10-year average inflation rate of 2.0% in Malaysia, your money will depreciate by 0.25% if you keep them in fixed deposits for one year. Do you still think it's safe? In my opinion, the most terrible thing about putting monies into fixed deposits is that your hard-earned savings will slowly depreciate with time. If you don't want your savings to be eaten up by inflation, you must learn to invest by investing your money in assets, such as real estate, stocks, funds, gold, etc.
Many hard-working employees work hard to save for their future retirement life, but do you know that when you have too much cash in hand, the extra cash depreciates every second. If you don't invest the money that you won't use in near future, you will not only bear the loss caused by inflation, but also the opportunity cost of you not investing.
For example: A professional engineer of the age 25 years old this year, suppose he saves RM 500.00 every month for the first 5 years, then saves RM 1,000.00 monthly from the 6th to the 10th year. From year 11th to 20th , he saves RM 1,500.00 monthly, and save RM 2,000.00 every month for the last 10 years. With FD rate of 4.0%, this engineer will have a savings of RM 870,573.80 when he retires at the age of 55 after 30 years. Assuming he will live till 75 years old, then this savings can only provide him with a monthly living expenses of RM 3,627.39 for the next 20 years after his retirement, and as time goes by, this savings will become lesser and lesser. The above scenario can only be achieved by extreme self-discipline for over 30 years. Is it worthwhile to go through 30 years of careful spending to achieve this? Is RM 3,650.00 per month able to sustain his lifestyle after 30 years? Youngsters nowadays may have a monthly budget that exceeded this figure already!
If we used the same example, this engineer now invests his monthly savings into a unit trust fund with an average annual return of 8.0%. 30 years later, he will have an asset worth of RM 1,598,212.15. If the average pay-out rate of this fund is 4.0%, then he will have an annual dividend income of RM 63,928.48 after 30 years, averaging RM 5,327.37 per month. Furthermore, his assets will not decrease gradually, but will grow with the fund instead. Although the fund may go down, but there is also a possibility of going up!
The two examples above are to show the power of compounding interest. Although the unit trust fund's return is only two-fold of the 4.0% from FD, its total return is 213.37% in 30 years, which is three times higher than the 70.70% return in 30 years from fixed deposit! Moreover, investing in assets such as funds or stocks can also obtain passive income such as interest or dividends, which mean that you can get cash pay-out every year to sustain your lifestyle, meanwhile your asset are not depreciating in value.
To have a better retirement life, we should start investing as early as possible. From the above examples, we can see the power of long-term investment, which means that the longer you invest, the greater the effect of compound interest. Therefore, the earlier you invest, the greater your potential rate of return will be. However, any form investment has its own risk, which is why many people dare not take the risk to invest, fearing that they will lose all their hard-earned money. However, considering the potential returns from investing, I think we should learn to embrace investment risk, rather than avoiding it by not to invest because even if you don’t invest, you are unlikely to achieve the results you want by relying on savings, fixed deposits or other low-risk investment.
So, when should you start investing? The norm is that when you have saved up your emergency fund (equivalent to 3-6 months of your salary), the extra money should be invested. Simply put, you should invest the money that you’re not going to use in near future. One of the reasons why people "burn their hands" is because they do not have adequate emergency fund, so they are forced to cash out their investments even at a loss when they are in urgent need of money. This is commonly referred to as risk management, because when you have adequate emergency fund, you will not be in a ‘forced to cash out’ situation, and therefore your investment risk will be relatively lower, and vice versa.
Lastly, all form of investments starts with savings. If you do not have the initial capital, then how are you going to start investing? Therefore, start saving your investment capital today, learn how to invest, and work towards your dreamed retirement life!
Disclaimer: This is a personal opinion recorded for my personal record. Nothing on this Blog constitutes investment advice, performance data or any recommendation that any security, portfolio of securities, investment product, transaction or investment strategy is suitable for any specific person. The author shall not be held accountable for any investment decision made by the reader. Invest at your own risk.
自从国家银行去年史无前例地在一年内降息四次，把隔夜利率(Overnight Policy Rate, 简称OPR)从原本的3.0%降至1.75%，许多原本对投资没有太大兴趣的朋友都开始纷纷开始想学习投资，因为隔夜利率的降低就等于定期存款利率降低。本来毫无风险稳赚3.0%突然变成了1.75%，开始让许多人更确切地感受到通货膨胀的压力，从而开始明白投资的重要性。
对于一向不喜欢风险，觉得把钱存在银行或定期是最安全的朋友们可真的要重新思考这个问题。由于COVID-19让全世界的经济受到了前所未有的负面影响，许多经济学家都预测这个低利率的情况将会持续好几年，而美联储也在最近对外宣布了不会在2024年之前升息的立场(https://www.ft.com/content/3d7704d3-a312-4294-95bc-90233f469ccd),相信国行应该也会谨慎地处理利息这个问题，以免影响到国家在疫情之后的经济复苏。
如果低利率的情况持续几年，那么定期存款就达不到它那最吸引人的保本效用了。以马来西亚过去十年的平均通货膨胀率2.0%来计算，若把钱放在定期存款一年就会贬值0.25%。所以您还会觉得放定存是安全的吗？在我看来，放定存最可怕的就是在您不经意的情况下让您辛辛苦苦存下来的储蓄慢慢贬值。如果不希望自己的储蓄被通货膨胀吞噬，就必须学习投资，把钱投资在可以保值甚至升值的资产如房地产，股票，基金，黄金等等。
许多辛勤工作的打工仔努力储蓄的目的就是为了往后的退休生活，可是大家又知不知道其实当您拥有过多的现金，那些多出来的现金每一秒都在贬值。如果不把那些您短时期内都不会用到的钱拿去投资，您所承受的不只是通货膨胀带给您的损失，还有因为您没有投资而损失的机会成本。
举个简单的例子：一位专业的工程师，今年25岁，假设他在工作的头5年每个月储蓄RM 500.00，然后在第6年到第10年每个月储蓄RM 1,000.00，接着在第11年到第20年每个月储蓄RM 1,500.00，最后10年每个月储蓄RM 2,000.00。以4.0%的定存利息，这位工程师在30年后55岁退休的时候就会有一笔大约RM 870,573.80的储蓄。假设他会活到75岁，那么在他退休后的20年里这笔储蓄只足够提供他每个月RM 3,627.39的生活费，而且随着时间流逝，这笔储蓄会越来越少。这笔钱是需要他30年内不间断而且超级自律才有可能达成。试问省吃俭用了30年而得到这样的生活值得吗？30年后每个月RM 3,650.00到底够用吗？很多年轻人现在的每月开支可能都已经超过这个数字了，更不要说是经历了那么长时间通货膨胀的30年后。
如果用同样的例子，那位工程师把每个月的储蓄拿去投资在一个平均年回酬有8.0%的信托基金，那么30年后他就会有一笔RM 1,598,212.15的资产。如果这个基金的平均派息率为4.0%，那么他在30年后每年就会有一笔RM 63,928.48的利息，平均每个月RM 5,327.37，而且他的资产并不会逐渐减少，而是随着基金的表现起伏，有可能会下跌，但是也有继续上升的可能性！
以上两个例子就是要让大家知道复利的威力。虽然投资的利率只比定存的4.0%高了一倍，可是30年后它的总回酬确实213.37%，相比定存的70.70%高出3倍！而且，投资在生产性资产如基金或股票还可以获得基金派出的利息或股息这种被动性收入，也就是说您可以每年获得现金来维持生活，但您的资产并没有因此而减少。
为了可以拥有更好的退休生活，我们应该尽早开始投资。从上述例子我们可以看到长期投资的威力，也就是说您投资的时间越长，复利的效果就越大。所以越早投资，您的潜在回报率就会越大。当然，任何的投资都是有风险的，这也就是为什么许多人都不敢冒险投资，深怕会把辛辛苦苦赚来的血汗钱都亏掉。但是，考虑到投资潜在的回酬，我觉得投资是我们应该要学会去冒的险，而不是为了安稳而选择不投资，因为就算您不投资您也不太可能靠储蓄，定存或是其他低风险相对安稳的投资来达到您想要的结果。
那么到底什么时候开始投资呢？一般的建议是当您储蓄到了您的紧急储备金(相等于您3-6个月的薪水)，其余多出来的钱都应该拿来投资。简单来说就是用您短时期内不会用到的钱来投资。很多人“烧到手”的原因其实是因为他们没有足够的紧急储备金，所以在面对紧急状况急需要用钱的时候，被逼在亏损的情况下把投资套现。这个也是人们常说的风险管理，因为如果您拥有足够的紧急储备金，您就不会面临逼着套现的窘境，所以您的投资风险也会相对的低，反之亦然。
最后想说的是，投资是必须先从储蓄做起，如果没有本金，那么如何开始投资呢？所以今天开始就努力储蓄您的投资本金，然后开始学习投资，为您美好的退休生活加油吧！
免责声明：这只是个人意见，记录下来供我个人使用。此博客上的任何内容均不构成投资建议，绩效数据或任何建议，任何证券，证券组合，投资产品，交易或投资策略均适合任何特定人士的建议。作者对读者做出的任何投资决定概不负责。投资风险自负。