This video reinforces the fact that it’s not how much you have, but it’s more of how you reinvest your funds post retirement. You don’t even need RM 1 million after understanding the concept of Real Return Rate. Sounds too good to be true? It is. Watch the video below.
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Quoting a scenario from Yap Ming Hui’s book – Set Yourself Free, we want to understand why even putting RM 3 million now in Fixed Deposit for 30 years will not achieve your life goal of leaving a desired lump sum for your children.
Also, we will draw out the Retirement Timeline for better understanding. My apologies half way through the video. You’ll see why.
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…is always on the move. It is silent. It is never static. And by the time you are aware of it, sorry, you are already too late.
And yes, I am talking about inflation. It is an incredibly dangerous three-headed monster. Why?
First, it can’t be predicted accurately.
Secondly, it multiplies your spending to retain your lifestyle.
Thirdly, it reduces your investment returns.
This destructive combination is a figure you cannot just assume one time in your planning then forget about it. Although we have seen relatively stable inflation environment for the past few years, given the unprecedented government debt levels, you should carefully manage your post retirement withdrawals instead of blindly increasing it in tandem with your lifestyle every year.
In short, you need to adjust this inflation figure accordingly every year.
I will show you how.
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p/s- we will cover post retirement withdrawal management in Week 4