Lowering our footprint: The SAVE programme was expected to benefit 250,000 households on a first-come, first-served basis.
PETALING JAYA: A RM50mil allocation for a government incentive programme to reward Malaysians who opt for energy-saving air conditioners and refrigerators has been fully snapped up, months ahead of its December deadline.
Due to overwhelming response, the SAVE 4.0 incentive programme may be extended, according to a source familiar with the initiative.
The source told The Star that the Sustainable Energy Development Authority Malaysia (Seda) is seeking more allocations from the government.
“It is highly likely that the programme will be continued and extended to SAVE 5.0. The announcement will likely be soon,” said the source.
The source also confirmed that the current RM50mil allocated for SAVE 4.0 has been fully redeemed around the country.
“The response had been overwhelming, so there are plans to extend it to benefit more Malaysians.
“We know that the fridge and air conditioning units are necessities in most Malaysian households, and they make up a big chunk of our electricity usage.
“The SAVE programme is here to increase awareness and promote the use of energy-efficient appliances,” the source added.
SAVE 4.0 incentivises the purchase of energy-efficient appliances, offering rebates of RM200 each for four- or five-star rated refrigerators and air conditioners at more than 1,800 registered stores nationwide or selected ecommerce platforms.
The programme was expected to benefit 250,000 households on a first-come, first-served basis.
On claims that some retailers or consumers can manipulate the SAVE rebate, the source denied this, saying every application must be supported with the applicant’s MyKad and an electricity account under the same name.
“I don’t think retailers can limit people’s purchases and keep the quota for their friends or family.
“There are more than 1,800 retailers registered with Seda and the eligibility criteria and application process are very straightforward.
“One electricity account can only apply for one rebate for a fridge and an air conditioner because the rebate is tagged to that account.
“That is the control mechanism in place,” the source said.
According to Seda, the SAVE programme was first introduced in 2011 to encourage people to buy electrical goods with four- and five-star energy-efficiency ratings which, among others, work to save energy and maintain environmental sustainability in the long term.
SAVE 3.0 received overwhelming support with 186,034 redeemed rebates, amounting to savings of up to RM35.778mil.
On July 1, Seda chief executive officer Datuk Hamzah Husin said SAVE 4.0, which is set to run for a year until this December, saw about 240,000 households enjoying the rebates nationwide.
The amount involved RM48mil out of the total RM50mil, he said.
He also called on Malaysians to play a role in realising the nation’s target of becoming a net-zero carbon emission country by 2050 and to increase the capacity of renewable energy in the electricity supply system from 25% to 70%.
It all seemed legitimate, she said, adding that all she wanted was to have a comfortable life in her twilight years.
But now, she wonders if she would ever see her money again.
“The company I invested in cited the pandemic as the reason for not paying dividends to investors.”
Lee was among 105 victims who lodged police reports against the company at the Sentul district police headquarters here yesterday.
Another victim, Siti, said she had invested RM300,000 in 2019 after she was promised 30% returns in one year.
She said that she felt assured when the agent cited names of VVIPs and prominent politicians.
“I did not know it was a scam because they showed me approval letters from government agencies.”By 2020, Siti still had not received any dividends.
“When I tried to follow up on this, the company did not even respond to my queries,” she added.
In view of the silence, Siti said she approached the Malaysia International Humanitarian Organisation (MHO) where she discovered others in the same situation.
Another victim, a Yemeni national, said he was approached by a “relationship manager” of a supposed bank.
“The relationship manager convinced me that it was a good and safe investment with 10% guaranteed returns,” he said, adding that he invested RM330,000 in the scheme which involved sukuk and seafood.
MHO secretary-general Datuk Hishamuddin Hashim said the victims were involved in five types of investments offered by a marketing management company.
He said they were lured into putting their money into supposed trust funds, shares, and sukuk, among others.
These investors were promised that they would get profits ranging from 15% to 24%, depending on their capital and investment period, he told reporters yesterday.
MHO advisor Tan Sri Musa Hassan suggested the government draft a law to deal with fraud including stock investments to prevent more people from becoming victims.
Dividend a surprise, much more than economists predicted, says ecperts
PETALING JAYA: With the current economic challenges, the 5.35% dividend by the Employees Provident Fund (EPF) for 2022 is considered good for contributors, say economists.
Sunway University Economic Studies Programme director Prof Yeah Kim Leng called it laudable given last year’s challenging local and international financial as well as capital market conditions.
The Russian-Ukraine conflict and spikes in inflation and interest rates weren’t of help either, he said.
“Though lower than last year’s 6.1%, the 5.35% is above earlier expectations that were close to 5%,” said Prof Yeah.
“The performance is also respectable as the fund had to adjust its portfolio to meet the large withdrawals allowed as part of the Covid-19 pandemic support packages,” he said in response to EPF’s announcement yesterday.
The EPF declared a dividend rate of 5.35% for conventional savings, with a total RM45.44bil payout, as well as 4.75% for syariah savings. This amounts to RM5.7bil in payout.
In total, EPF will be paying RM51.14bil to contributors.
As for unhappiness among contributors over the dividend rates, Prof Yeah said it is not surprising for them to compare EPF returns with other pension funds as such funds are typically more conservative and earn lower but have more stable returns.
“By contrast, funds that generate higher returns entail taking higher risks. Therefore, many growth funds are earning much lower returns because of the financial market downturn in 2022 as evident by the nearly 20% decline in the Global MSCI (Morgan Stanley Capital International) benchmark,” he pointed out.
Economist Datuk Jalilah Baba said EPF’s dividend rate still exceeded many pundits’ expectations.
“People will still receive payouts, which is a good sign. Perhaps it may not be what was expected but even I expected it to be around 4.5% to 5%.
“Based on EPF’s calculations, they can still afford to give people money, so it is good news for contributors. On the average, this is considered stable.
“If people were to compare, say with 2017 with its 6.9% dividend rate, you also have to look at the economy at the time because now the situation is totally different and filled with uncertainties.
“As such, the scenario has to adjust to the collection they have,” she said.
Meanwhile, corporate executive P. Suganya, 37, from Subang Jaya, Selangor said if EPF continued to give lower rates than previously, Malaysians might have to set aside their savings for other investment schemes as they might not have enough EPF savings for their retirement due to the volatile market.
However, she said most Malaysians could not afford to set aside part of their income for investments due to the high cost of living as well as the anticipated recession.
“This is worrying and the EPF is a fixed and reliable investment most Malaysians rely on. And the contributions are automatic and accounted for,” she said.
“EPF has to be cautious in its investments in the current volatile market since the fund cited this as a reason for the lower gross investment returns,” she added.
Facebook user T. Gopal Thirumalai commented that even though people were worried about the shrinking size of the funds in EPF, it was important to know that good fund managers would get rid of low-yielding investments, shares and assets that actually give better returns.
“When high returning funds are no longer available and your fund size keeps increasing every month, what would you do with excess funds, month after month?
“On top of that, unlike instruments with fixed dividends, when you invest in shares, you cannot predict future returns.
“A share with historical high returns can become the opposite during uncertain times.
“At that time, you decide on what to do,” he posted on the social media platform.
Many Malaysian are EPF contributors and have FDs as well. "You will never understand how bad the feeling is when you have to break your fixed deposit to cover your living expenses."
ONE of the top financial concerns of retirees is running out of money.
Whether you were an executive earning a reasonable income, or if you are making top dollars as a businessman, the fear is still valid.
For example, Tommy, who left the working world soon after selling his factory to a European multinational corporation. Tommy shared during one of our meetings that he was golfing every week and globe trotting almost every other month.
However, there was a problem that greatly bothered him. He found that he was dipping into his fixed deposit every now and then just to maintain his interesting lifestyle.
“Yap, you will never understand how bad the feeling is when you have to break your fixed deposit to cover your living expenses, ” he said.Combing through all of his finances, we discovered that Tommy’s lackadaisical attitude was to be blamed. He has not been paying enough attention to invest and generate income from the RM12mil nest egg that he had painstakingly accumulated. His investment portfolio was a mess.
Over the years, he invested in a few properties but never really bothered to oversee them. When tenants left, he didn’t make an effort to secure new tenants. In fact, some properties were even sitting vacant and idle. His excuse? He was too busy running the business.
Yap Ming HuiYap Ming Hui
Tommy has also invested in some shares and unit trusts but he seldom monitors and reviews their performances. Imagine his surprise when he went looking for some extra cash but discovered that most of the investments were not making money. Prior to meeting me, he couldn’t decide whether to sell or to keep those underperforming investments.
Consequently, the bulk of Tommy’s wealth is in fixed deposit. The trouble is the interest income from fixed deposit barely covers the impact of inflation. As such, if Tommy continues to spend on his interest income, he will risk having the principal depleted.
Asset rich, income poor
Tommy’s problem is a typical case of “Asset Rich, Income Poor.” His situation is definitely not unique. In fact, I find most self-made millionaires or business owners, typically strong at creating wealth from their business or professional career, but poor at generating income and gain from the created wealth.
For one, all the time spent ensuring their businesses succeed also takes them away from making sure that the wealth created is optimised.Let’s examine Tommy’s assets and see how it measures up (see chart).
The RM6mil in fixed deposit generate approximately 2% interest income. However, notice that the 2% of interest is not sufficient to offset the 4% inflation provision. As a result, there is negative net income coming from Tommy’s fixed deposit asset.
Tommy’s properties are worth RM3mil and only generates RM50,000 in rental income per annum. Nevertheless, this can be considered a net income because inflation will be hedged by capital appreciation (at least 4% per annum) of the properties.
The RM1mil in shares gives a total return of 5%. Factoring 4% inflation, the actual income received from share investment is RM10,000.
Unfortunately, the RM2mil unit trust investments didn’t offer any returns. After inflation provision, his unit trust investment has a net income of RM80,000.
The reality is if nothing is done now, Tommy’s wealth will continue to shrink by RM140,000 a year once inflation is factored to the equation. How does this play out for Tommy? The fact that he needs RM360,000 a year to maintain his current lifestyle will not augur well for him.
So, how can you prevent from ending up in Tommy’s situation?
The optimisation measures
> Remember to review the performance of each of your investment asset classes. In order to generate more income and gains, be proactive in getting rid of poor quality and poor performing investments. Look at each investment and ask yourself, should you keep it or should you sell?
> Consider moving fixed deposit into higher return investment.
Any gains from your fixed deposit would probably be eroded by inflation, especially given the current low interest, which will probably persist for quite some time. After calculating and providing for your emergency fund cash reserves, the balance of your fixed deposit should be invested into other investments that can generate higher return and income to hedge against inflation.
> Diversify the source of retirement income
Even if one investment asset can give you a good income and hedge against inflation, it does not mean that you must bet all or the majority of your wealth in it. For example, property investing. Some investors have found success in it. They were able to generate good capital appreciation and rental income.
As a result, they put a majority, if not all, of their wealth into properties. It may sound logical at first but rental income is not sustainable in the long run. It is subjected to changes, some of which cannot be controlled. Therefore, the best practice is still to diversify your retirement income across different asset classes, like share dividends and capital gains, unit trust gains, bond investment gains, retirement income products and others, so that it is not badly affected by any one impact.
The ability to grow your wealth during retirement years is important. Just because you have stopped working, it does not mean your money should stop working too. The idea behind wealth optimisation is to ensure that you can upkeep your retirement lifestyle and protect your wealth from inflation.
Ideally, one should get a plan done a few years prior to retirement to see how your retirement income would play out. After all, you wouldn’t want to have any unpleasant surprise, like in Tommy’s case. When you have time on your side, you can improve your investing skills and adjust your retirement plan accordingly while still in your active income earning years.
Yap Ming Hui is a licensed financial planner. The views expressed here are the author’s. Any reliance you place on the information https://www.thestar.com.my/business/business-news/2021/01/09/generating-sustainable-retirement-incomeshared is therefore strictly at your own risk.
We’re almost well into the third quarter of 2020 – have you made headway in any of this year’s financial priorities and goals? Or perhaps you have been thrown off guard by the state of affairs in by the Covid-19? In a challenging environment like now, it is even more crucial to sit down and do a critical review of your latest financial status.
TIME flies by quickly when you’re going about your daily grind. We’re almost well into the third quarter of 2020 – have you made headway in any of this year’s financial priorities and goals?
Or perhaps you have been thrown off guard by the state of affairs in by the Covid-19? In a challenging environment like now, it is even more crucial to sit down and do a critical review of your latest financial status.
Loss of livelihood, pay cuts, unemployment, business closures, and a looming global recession – this is the trail of devastation left by a virus which has played havoc around the globe.
Interesting enough, if this health crisis is not enough to shake you into action to take charge of your finances, then what will?
According to the Oxford English dictionary, procrastination is defined as a postponement, “often with the sense of deferring though indecision, when early action would have been preferable, ” or as “defer[ing] action, especially without good reason.”
Throughout my experience as a licensed financial advisor, I have met many people who procrastinated over reviewing their financial status, let alone in growing their wealth. There are many reasons for this. Some lack the knowledge on where to begin, while others may cite the poor state of economy or our poor tax regime. However, the bigger reason usually lies in our tendency to procrastinate.
Procrastination is one of mankind’s biggest weaknesses – we have all procrastinated doing something important at some point. But in the world of finance, procrastination can result in an opportunity loss to mitigate risk and in growing wealth – sometimes an opportunity which can never be recovered. After all, it takes time for any investment to compound into a significant figure.
Yap ming HuiYap ming Hui
In this article, I’m going to highlight some of the common reasons people use to put off taking actions on their financial matters.
> “I don’t have enough time to plan and invest”
This is a common reason people often say, when putting off investing. In today’s economy, most households require both spouses to work full-time jobs in order to afford the lifestyle that they desire. In the office, you’re stressing about deadlines, projects to complete, and deadlines to meet.
At home you’re likely seeing to your family, social life, and chores, and any leftover time is probably spent away vacationing to rejuvenate so you can rinse and repeat. Add kids to the equation, and you’ll barely have any time left to breathe.
Who really has the time to spend to research, plan and invest? After all, you still have 20 years headstart till your retirement, you should be able to put it off for later, right?
Wrong. Pushing things for later is comfortable, as you convince yourself that it will get done eventually. However, as most of us know by now, later is a concept that is never ending. There is always a “later” to convince yourself about. Before you know it, too much time would have passed and you’ll have too little time to play catch up to achieve the financial goals you could have well achieved if you started earlier.
What you need to do: Set a date and time and clear your schedule. If being at home is too much of a distraction with the family present, then find a place where you can be isolated to focus on your financial planning. Alternatively, outsource these efforts to an independent financial advisor who can review your financial status and manage the wealth for you.
> “I don’t have enough money to plan and invest”
Most people don’t realise it, but having enough money is a matter of perspective. If you don’t have enough money to invest when you’re earning RM5,000 a month, do you think you will have enough to invest when you’re earning RM50,000 a month? Believe it or not, I have met several people earning around RM50,000 or more per month and still lament about not having enough to save and invest.
We always think along the lines of “if only we make more money”, but once we actually start making more money, our expenses and lifestyle will also go up a notch.
The famous Parkinson’s Law coined by C. Northcote Parkinson in his book The Law and The Profits illustrates this concept best. The law says that work expands to fill the time that is allocated to complete it. In other words, if given a 24-hour deadline, a 20-minute job will take a day to complete.
He goes on to say that individual expenditure does not only rise to meet income but it tends to surpass it, and probably always will. So, if you’re waiting for a time when you feel you have enough money to save and invest, that time will never come.
What you need to do: Take a long hard look at your expenses. This is critical since we are now in challenging economic times. Mindfully track your spending habits for a month and cut back on luxuries that you can live without. If it helps, set up a standing instruction with your bank to automatically transfer a portion of your salary into another bank account. Use that to start investing. Every small portion helps, so don’t think that cutting back on a small luxury is insignificant.
> “I don’t really need to invest”
People won’t admit to thinking this, but they do. This fallacy of not needing to invest stems from the fact that when they retire someday, they will have their EPF savings to rely on. Technically, if you are earning a comfortable amount and do not make any EPF withdrawals before you retire, you may be right in thinking this.
However, this is hardly the case. EPF has reported that more than two-thirds (68%) of EPF members aged 54 had less than RM50,000 in EPF savings, while only 18% of its members had the minimum savings target of RM240,000 in their account by 55. This amounts to a monthly withdrawal of RM1,000 to cover basic needs for 20 years – sufficient if you want to live a basic retirement lifestyle, but nowhere near what is needed for a comfortable retirement in a middle-class lifestyle.
So if you’re thinking of relying mainly on your EPF savings, think again. Your EPF should act as an additional retirement fund on top of your other retirement savings, instead of being the only pillar in your retirement plan.
What you need to do: Start planning now for additional retirement savings. Before you invest, determine the lifestyle that you want to live when you’re retired and calculate how much you’d roughly need over the span of your retirement. Don’t know where to start?
Use a holistic financial planning app, like iWealth, to do a comprehensive calculation on your retirement and other major financial goals. Remember to factor in inflation.
While half of the year has flown by just like that, it’s never too late to examine your financial health and take the necessary steps to protect and grow your wealth.
Over the years I’ve shared many articles to inspire middle class folk like yourselves to take control of your financial destiny.
I certainly hope this knowledge has proven useful and relevant to your personal circumstances.
However, I also hope that you have begun putting into place some of these practices. Today, you may have gotten a better idea of what has been stopping you from investing properly.
Procrastination is a very human trait – but if you’re able to identify what’s been holding you back and take the necessary measures to monitor yourself and counter this, you’ll already have the upper hand on your future.
Remember, true power comes from knowledge. But knowledge without action, is useless.
During good times, there may not be an urgency to act. But we have now arrived at an unprecedented juncture where there will be a cost or consequence to our inaction. If this is not the time to take the bull by the horns, then when?
Many procrastinate on starting a retirement fund thinking there is still a long way to go to retirement age. However, they fail to realise the effects of inflation on their retirement funds. To ensure you have enough time to build a stress-free retirement, here are some reasons you should start saving while you are young.
• Financial independence – As the saying goes, “Sikit-sikit lama-lama jadi bukit.” When it comes to investing your savings, the earlier you start, the greater the accumulated returns on your original investment thanks to compound yield. By investing consistently and regularly, you will be able to secure yourself a comfortable retirement without having to depend on others. Work towards accumulating enough to cover the cost of your basic necessities, lifestyle expenses and occasional splurge on luxuries.
• Saving is a good habit to develop – If you start saving for your future from a younger age, you will find that it becomes second nature. It will be easier to put aside some money for retirement. It helps to start with small amounts, especially for young adults who are just entering the workforce, so it is not as overwhelming. How you manage your paycheck will determine how you save for the rest of your earning years. A person who is used to saving on a monthly basis will find it easier to set aside 10% of her salary for retirement as opposed to an individual who is not used to spending her money prudently.
• Gain control over your future – When you set aside money for your retirement, remember that you are shaping your future.
This is a task no one else will perform for you or push you to do. By saving consistently, you are ensuring that you are well prepared for any outcome when you leave the workforce. With sufficient savings, you will most likely be able to live your dream lifestyle even during your retirement years – promising you the peace of mind of a secure financial future. Steps to successful retirement planning
Building a substantial sum for your retirement nest egg can be easy and painless if you start investing early and regularly. Public Mutual’s Direct Debit Authorisation facility allows you to invest regularly while employing the Ringgit Cost Averaging strategy.
Not only that, you can enjoy tax relief of up to RM3,000 per annum if you contribute to the Private Retirement Scheme (PRS) fund. PRS contributions are creditor-protected. Public Mutual’s PRS contributors can also enjoy a free insurance or Takaful coverage of up to RM100,000, subject to terms and conditions.
To cater to diversified investors’ needs and investment objectives, Public Mutual offers six PRS core funds and three non-core funds, which make a great pool of funds for investors to choose from. Young investors who have long-term investment horizons can consider investing in PRS non-core funds, which can yield better potential returns in the long term.
These articles are prepared solely for educational and awareness purposes and should not be construed as an offer or a solicitation of an offer to purchase or subscribe to products offered by Public Mutual. No representation or warranty is made by Public Mutual, nor is there acceptance of any responsibility or liability as to the accuracy, completeness or correctness of the information contained herein.
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