HOW TO STRETCH YOUR RINGGIT

Civil servants here made headline news recently when it was reported that as many as 80 per cent of personal loans from NBFIs, goes to government employees with household incomes of less than RM3,000 a month. NBFIs, or non-bank financial institutions, include among others, Bank Rakyat Sdn Bhd, Malaysia Building Society Bhd (MBSB), and development financial institutions (DFIs) such as Agrobank, SME Bank and Lembaga Tabung Haji.

These NBFIs are not supervised by the central bank. Easy loans plus job security lures many government employees into taking huge loans to pay for lavish weddings, imported cars, up scale housing, overseas vacations, and expensive gadgets like high end smart phones and audio-visual equipment, all of which they can ill afford.

Weddings as lavish as this can set one back hundreds of thousands of ringgit

Says one civil servant: “I have a pension and insurance. If you work in the government, it’s easy to get a loan. Just make sure that the loan does not exceed 60 per cent of your salary every month."

For civil servants, their jobs and pensions are guaranteed, even during a recession. This explains why NBFIs are ready to offer them easy access to personal loans. Those working in the private sector would never be able to secure hefty personal loans of RM100K to RM200K if their monthly take home pay is below M3000.

Whether we are working in the public or private sector, we don't want to be buried in debt, to see almost our entire monthly salary going towards servicing our loans or credit card debts. It's crazy to take out a RM120,000 personal loan from a bank to renovate and furnish your house when your salary is RM2,500 a month.

Source: The Star 10 July

Fortunately for us older folks, by virtue of our age and the experience gained from having lived through lean times, we are frugal in our spending habits and adverse to taking financial risks. We don't hanker for the latest products or the best service that often comes at high price. For many of us, a cup of coffee at the local kopitiam is value for money at RM1.80 compared to a RM10.50 cup of caffe latte at Starbucks. And tastes better too! We can get a MyVi for less than RM45K, and it will take us from A to B or C. So will a Toyota Vios but at more than double the price tag!

It is a good thing that as we age, we care less about appearance, and more about substance. Of course, if we can afford it and money is not a concern, we have the luxury to spend as we like, and enjoy the fruits of our hard labour.

With Hari Raya coming up, food is one of the biggest items of expenditure. Here are some useful tips on how to stretch the ringgit, courtesy of FOMCA (Federation of Malaysian Consumers Association).

Source: New Sunday Times 14 July

If you have a problem curbing your spending urges, it is best to opt for a debit card than a credit card. I used to gripe about banks discriminating against retirees who apply for credit cards. On reflecting, perhaps it's for their own good that retirees stick to one credit card and forget about applying for more.



PLANNING FOR RETIREMENT (Part 2)

Retirement planning encompasses much more than just ensuring we have enough set aside to sustain our retirement. But for retirees and soon-to-be retirees, it is the bread-and-butter issues that concern us most. Given the longer life span of 75 and early retirement age of 55 (private sector) and 58 (public sector), will our retirement savings run out before we do?

At the recently concluded "Everyone Can Retire Well" conference organized by FPAM, industry experts were on hand to share their views and offer suggestions to conference delegates comprising financial planning practitioners, policy-makers, financial services and product providers, academics and NGOs.

Below are screen shots taken from the speakers' presentations. These are solely for educational purposes and to raise awareness of retirement issues that affect all of us. (Click on image to enlarge.)

Above: Questions we should all ask ourselves when planning our retirement. An excellent guide to help us through the process, presented by ReMark's Senior Client Director K. Sasitharan.

Above: An in-depth presentation from Syed Hamadah Othman, senior consultant with Mercer Zainal Consulting. Very well researched, with plenty of food for thought. Nothing like a wake-up call to set our retirement planning wheel in motion. To find out more about the multi-pillar pension scheme, click here. Highly recommended viewing.

Above: Pricewaterhouse Coopers Senior Executive Director Khoo Chuan Keat shared his wealth of knowledge on Malaysia's tax system, and updated participants on current exemptions and reliefs. Check out his proposals on how the government can create a more conducive tax environment for sustainable retirement. Definitely the way forward. Let's hope policy-makers take note.

Above: Anthony Boon of IPP Financial Advisers, Singapore, spoke on how to manage the retirement planning market. Semi-retired at 42 after making his fortune in the industry, his words certainly carried credibility with many of the participants.

After the first panel discussion. From left: MP Tony Pua, Tan Kim Book, K. Sasitharan, co-organising chairman Tan Beng Wah, and Teh Loo Hai, consultant with LIAM.

There were two panel discussions. The first one "Is there a need for national health insurance for retirees?" was lively with participants giving the panelists a tough time with their questions on implementation and transparency issues.

If the second panel discussion was meant to be a summing up of the conference, it did not quite succeed. As stated in the panel notes, there are at least six dimensions to retiring well. The panelists - UM Prof of Psychology Dr Low Wah Yun, UPM Institute of Gerontology Asso Prof Dr Tengku Aizan, author and CEO of RD Wealth Creation Rajen Devadason and CEO of CIMB Islamic Bank Badlisyah Abdul Ghani spoke on their respective areas of expertise. Missing were experts on the dimensions of spiritual, social, occupational and intellectual well-being. Coming at the end of the final day of the conference, it was not surprising that the second panel discussion attracted only about 150 partcipants.

Briefing media representatives at the press conference. From left: FPAM past president Steve Teoh, Deputy President Tan Beng Wah, President Wong Boon Choy and CEO Chan Chow Hun. (Click on image to enlarge.)

Did the 2-day conference meet the following objectives?

• raising public awareness of the need for retirement planning
• addressing the challenges faced by an ageing community
• providing an avenue for the various stakeholders and industry players to work together
• exploring best practices for a better retirement environment

The answer is Yes to all the above. However, there is always room for improvement should the organizers decide to make the conference an annual event. For a start, images used for the conference and for marketing purposes should be multi-generational. This would effectively send home the message that retirement conferences are meant for all age groups, not only retirees and pensioners. After all, the point to be made is that everyone CAN retire well provided they start planning early.

A free public talk on "Why Everyone Needs a Will" by Azhar Iskandar Hew, GM of Rockwills Trustee Bhd.

Having free public talks to run concurrently with paid-for talks may give the wrong impression that the former are conducted by industry juniors and may not be worth attending. Which is most unfortunate as it is not the case at all. In fact the feedback I got from those who attended the talks was positive, with many saying they had learned a lot from the talks on will-writing, credit card management, real estate and investing.

The organizers might also want to consider offering special rates for senior citizens and full-time students from institutes of higher education. If the primary aim is to educate, then it makes sense to reach out to as many demographic groups as possible.

Changing mindset is the biggest challenge for any organizers of events aimed at raising awareness. It remains to be seen whether FPAM has succeeded on this score.