Cornerstone to a financially secure future

According to Nomura Asset Management Malaysia Sdn Bhd managing director and chief executive officer Nor Rejina Abdul Rahim, diversification is one of the ways to be financially secure upon retirement.

“Malaysians need to plan properly for retirement, ” says Nor Rejina Abdul Rahim, managing director and chief executive officer at Nomura Asset Management Malaysia Sdn Bhd.

“I think relying on the Employee Provident Fund (EPF) alone as a source of savings is risky.”

Adding increasing life expectancy and your desired quality of life into the equation, it becomes clear that the amount you need to save for retirement would increase. Rejina adds that many retirees nowadays cannot live as comfortably as previous generations, and there are signs that these pressures will only become more pronounced.

In the wake of the Covid-19 pandemic, EPF announced a reduction in the statutory contribution rate for employee contributions from 11% to 7%. “What is concerning is that out of the 7.5 million active members, 75% opted to reduce their contribution rate, ” expresses Rejina. If people choose to spend the additional disposable income instead of saving, they will likely struggle to meet the recommended minimum savings upon retirement, as advised in ‘EPF Sets RM228,000 As Minimum Target Savings At Age 55, ’ published on its website in March last year.

Diversifying your investments

One of the ways to be financially secure upon retirement is to have multiple sources of passive income. Diversification is the golden rule. Rejina elaborates, “The most valuable assets of a well-diversified financial portfolio have minimal correlation with one another – if you have exposure into Malaysian equities, you should also diversify your allocations outside of Malaysia.”

Most Malaysians tend to invest within the country owing to a bias toward home markets. However, Rejina elaborates, “If you invested in a fund that hugs the FBMKLCI benchmark over the last three years, you would likely have had negative returns – and that is only accounting for gross returns without fees and charges”. Most people only look at what they are paying for the investment but tend to ignore the various fees attached with the funds.

Below, Rejina provides some of her thoughts about how people in various age categories can better prepare for retirement:

  • New income earners:

    Do not live beyond your means using credit

    Save 10% or more before you start paying for other discretionary expenses

    Only spend disposable income after deducting for savings and investments

    Be cautious about taking personal loans early on in your career

  • Middle-aged adults (15-20 years before retiring)

    Save at least six months’ worth of expenses in an emergency fund

    Take a thorough look at your expenses. Forego costly desires such as the daily dose of coffee from international chains or luxurious holidays if you cannot afford it

    Have multiple retirement savings

  • Adults about to retire

    Consider your post-retirement expenses and expected lifestyle needs – ensure you have enough savings at least for the next 30 years without any income

    Have at least one health insurance plan and do not splurge all of your EPF savings too quickly

    If your mortgage is unpaid for, consider the option of moving into a less expensive house to lessen your monthly expenses, especially if you or your spouse have health concerns

    Factor in the cost of appointing an estate administrator, admitting oneself into a retirement or nursing home as these expenses could mount up to a sizeable amount of money

Rejina suggests that with any investment, time plays an important role. “The commonality between the three age categories is that the investment time horizon is key. The longer you have, the better, so start early to be able to learn to manage more market risks to reap higher returns for your retirement savings, ” says Rejina.

For more information, call 03-2027 6688 or visit

Disclaimer: The author is the managing director of Nomura Asset Management Malaysia Sdn Bhd. Nothing in this article should be construed as an offer or solicitation to sell or purchase any security nor is it an investment advice. Opinions, analysis, projections and other information contained herein are merely expressions of belief. No representation or warranties are made on the accuracy or completeness of such information.

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