Saving for retirement

Yesterday, I attended a briefing on PRS (Private Retirement Scheme). Basically, it is unit trust investment for your retirement to supplement your EPF savings. It is new in Malaysia as it was just launched very recently and CIMB Principal is one of the eight providers available. In terms of risk return reward, it behaves more like a trust fund where your principal is not protected. But it is quite like EPF, where you can't withdraw from your account 1 (70% of your invesment) before retirement. You can withdraw from your account 2 but you will have to pay 8% tax penalty since you get RM3K tax relief from your annual contribution. That was not what I wanted to write about though so for more info, feel free to visit their website yourself http://www.cimb-principal.com.my/prs/

What I wanted to write actually was about saving for retirement in general. During the briefing introduction yesterday, the lady made a simple calculation of savings you need before you retire. Say you need RM3K per month after retirement for 25 years, assuming you live 25 years after retiring, you will need RM3K x 12 months x 25 years = RM 900K. Let's round it up to RM 1 mio. Sounds quite a lot. It sounds impossible to achieve but actually you can do that using ASB loan alone. Assuming you take a 200K loan, pay it consistently on a monthly basis, WITHOUT taking out the dividend and principal, receive on average of 8% annual return, you will get around 1.4mio after 25 years.

I am not working in PNB, I don't have a KPI to sell ASB loan or get commission from posting this. This is purely for sharing. So for bumiputera out there who hasn't taken advantage of this privilege, you better do so. The sooner the better. Money is never enough but having more money is always better, right. Whether I would invest in PRS? Maybe I will. I think it's time for me to start diversifying my savings.