Hornbill Unleashed

May 23, 2016

Save and live within your means

Filed under: Politics — Hornbill Unleashed @ 8:00 AM

The article titled ‘So many of us will be retired and poor’ fails to address the issue in a wise, balanced and mature way.

It is not surprising since The Heat Malaysia seems to like publishing articles and news that often blame the government for everything and this article serves a particular purpose.

The writer uses facts from the EPF and mixes with her own shallow-minded opinion to present a picture of half truths which is very misleading.

1. The writer claims that salaries/wages are not high enough to ensure sufficient savings in the EPF.

(a) The government has now raised the minimum salary/wage to RM1,000 a month. Although the writer says the government has increased the mandatory contributions to the EPF by both the employer and employee, she says it is a little too late. Nothing is too late if you are determined to save.

The trouble is when mandatory contributions have been increased, there are still people especially from the Opposition who will say all sorts of things to tarnish the image of the government.

They will cast doubts over every action by the government and for decades have been spreading lies that the EPF will surely go bankrupt.

This continued spread of fear has caused many people to withdraw all their EPF savings and many ended up losing most if not all their EPF money in failed businesses, earning lower returns of 3% to 4% in bank fixed deposits or splurge on unnecessary and unwise expenses.

For example, people used their EPF money to finance their children’s tertiary education and worse, sending them abroad when they cannot afford to.

(b) When salary/wages are raised, businesses will also raise prices and employers are often the first to protest. So why just blame the government?

2. The writer paints a bleak picture (using EPF’s own statements as well) for retirees and even mentioning that “almost 80% of Malaysians earn less than RM5,000”, which means that their combined employer/employee contribution is still not enough. RM4,000 to RM5,000 still not enough? Bullshit!

For the first 10 years of my working life, my salary was below RM1,000 a month. In fact it hovered around a few hundred ringgit in my early 20s (1970s). My salary at age 33 or so was just below RM1,300 a month. Although for a few years, EPF dividends was around 6% to 8%, how much could I earn in dividends with my then low salary in the 1980s, even when prices of things were lower?

By the time I was retired my salary was still way below RM10,000 a month. Isn’t that a bit late? But no.

I managed my finances wisely. I save most of my bonus money. I withdrew RM20,000 in 1990 to use it with other savings as downpayment to buy my two-storey link house for RM153,888. Later I withdrew nearly RM70,000 to quickly pay off my housing loan for my RM218,888 bungalow. I have been debt free for more than 15 years! I am now 63.

I was able to save because I do not buy brand new cars except one new Proton Iswara. I had three second-hand cars. I live within my means and now I live below my means and still haven’t touched my EPF dividends but let it be accrued with the principal sum each year. My annual EPF dividend has hit six figures and I am still letting it accumulate.

Today, despite never reaching even middle or senior management level, I am able to see my EPF grow more than twice the sum from when I retired because I pumped in RM60,000 a year (from other savings) and the dividends grow with it. I am still using savings from FD, savings account and a bit from share dividends.

To achieve this, you must have two “financial armies”. Army 1 is your usual savings in the banks, shares, Sukuk, etc. When you retire, you can shift RM60,000 a year from Army 1 (until it is almost exhausted) to the EPF. This is the maximum annual amount you can contribute after age 55. It does not matter whether you are working, retired or jobless.

Army 2, is your EPF. You can contribute more than the mandatory employee contribution. Tell your human resources department to deduct more from your salary to contribute to your EPF. Start doing it now.

My advice to people especially this pessimistic writer is to practice deferred gratification. Don’t buy when you can’t afford it.

Many middle to high income people complain of living from hand to mouth because they always want to keep up with others. If there is a new smart phone, they buy. They do not want to live with their parents but want to buy a RM800,000 condo or link house. Despite having a combined (husband and wife income) of RM20,000 a month, they still complain.

Yes, it is true that many retirees do not have enough money in their EPF and increasing salary/wages is not the only solution but it is your own lifestyle, habits and wisdom that make all the difference.

Think of those who never have any EPF savings. These are the self-employed, hawkers, small business people etc. Many will have to slog until they die because these days children seldom support their parents as they also find it hard to support themselves or so they say.

So how is it that with my low income for the better part of my adult life that I can still save? How is it that I can still spend so much with my own money to treat my children for so many overseas holidays? How is it that I can own debt-free properties etc? How is it that I can support my late mom for 36 to 37 years? How is it that a salaried worker, not striking lottery, nor earning side income etc can still save?

The answer is simple: spend wisely, save regularly, live within or below my means, see the magic of compound interest, take less risk, make less financial mistakes and do not simply throw away things which can still serve you.

Cheah Sin Chong


  1. If the overall Malaysians behave like the writer, obsessed with save, save, save…. no body will buy million dollars handbags and million dollars overseas properties. On the local scene, businesses selling contraband boozes and fags will close shops,cina dolls balik Thongsang as the footprints business losing itchy males customers. Proton,Perodua, AP holders can close their car factories and businesses. If only we can instil the rakyats to have similar government along the Scandinavian model, the poor or disadvantaged rakyats will enjoy a decent standard of living as amenities for the citizens well-beings are in placed in event of calamity. Eliminate corruption in the government system is the answer to the current calamity that rakyats are enduring.

    Comment by otakkosong — May 23, 2016 @ 10:59 AM | Reply

  2. BN government set bad example to Rakyat by spending unnecessarily and wasting money.

    Comment by Desmond — May 23, 2016 @ 9:08 AM | Reply

    • this is NOT SPENDING…….it is called CORRUPTION lah…..even Ah Cheat Gor’s aids boleh possesed bent-lay … lol

      Comment by tiuniamah — May 23, 2016 @ 12:52 PM | Reply

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