If you have just started working, earning enough money to cover your monthly expenses will be the first thing on your mind.
According to the Department of Statistics Malaysia (DOSM), fresh graduates earned an average monthly salary of RM2,378, or RM28,536 a year.
If you are making less than RM30,000 a year now, is it possible to get to RM1 million in your lifetime? The answer is yes, if you start saving as soon as possible.
Why starting early helps
For those who have just started working, the many decades ahead of you will work to your advantage, as you can start investing with a smaller amount of money and still stand a chance to reach the goal of putting RM1 million in your pocket.
For example, how much do you need to save and invest each month if you have 40 years to reach RM1 million compared to 10 years?
Assuming a 6% rate of annual return on your investment, here is the minimum amount you have to set aside each month:
|
Number of years to save and invest to RM 1 million |
Amount you need to put aside each month |
|---|---|
|
If you have 40 years |
RM538 |
|
If you have 30 years |
RM1,054 |
|
If you have 20 years |
RM2,265 |
|
If you have 10 years |
RM6,322 |
The sooner you start, the amount you need to set aside each month will be smaller which makes it easier to manage if your income is at the lower end of the scale.
So, when you get your next paycheck and think of spending it on the latest gaming device or phone, you should consider if that money can be put to better use through investing. You will be surprised what saving and investing a few hundred ringgit a month can do to your finances in the future.
Increase the amount you invest
At the same time, do not forget that as you progress in your career in the coming years, you will also likely earn more. You can also increase your income further by taking on freelance jobs or starting a side business.
Any additional funds you can put into your investments can go a long way, especially with the magic of compounding interest over a period of time.
This is what happens if you put aside a higher amount to invest once your income is higher.
For example, say you have forty years to invest. You start off with RM538 a month, but you double that amount at the end of every decade and maintain it for the remaining 20 years. Here’s how those funds can potentially grow.
|
Number of years |
Amount you save and invest each month |
Total savings and investment fund (at 6% returns p.a.) |
|---|---|---|
|
First 10 years |
RM538 |
RM85,095.21 |
|
Next 10 years |
RM1,077 |
RM322,741.16 |
|
The next 20 years |
RM2,154 |
RM1,985908.58 |
When you invest more each month, you can reach your goal of RM1 million faster, or even exceed that target!
Consider higher-return investments
While the number of years can work to your advantage, there is only so much time you have to save and invest.
The official retirement age in Malaysia is 60 years old. While some may choose to work beyond that age, it may not always be possible to continue working, as older workers may find it harder to get a job. Thus, one has to make the extra effort to get to that RM1 million.
An option is to invest your savings wisely and make the money you have saved work harder by choosing investments with higher returns. While you are young, you can consider moderate- to high-risk investments as you may have more time to wait for your investments to recover if they experience dips in performance.
If you are a beginner who is not yet comfortable investing in individual stocks, you could take a more passive approach by investing in unit trust funds and exchange traded funds (ETFs). These funds invest in many different assets at once and are managed by professional fund managers.
Some examples of investments available in the market today include:
- Cash
Examples: money in savings and current account, fixed deposits and money market holdings in your unit trust funds - Fixed income
Examples: unit trust funds or ETFs that invest in bonds - Equities
Examples: stocks, unit trust funds, or ETFs that invest in stocks - Alternatives
Examples: real estate investment trust (REITs) and unit trust funds that invest in precious metals (like gold and silver) or commodities.
You can even invest into unit trust funds through Private Retirement Schemes (PRS) to increase your retirement savings – this allows you to claim a tax relief of up to RM3,000 until the year of assessment 2025. If you have enough savings in your Employment Provident Fund (EPF), you can also choose to invest through Maybank or through EPF’s own i-Invest platform.
Take the first step to commit to your goal
|
If you have just started working, you may not be familiar with HOW to start investing. Don’t worry, the Maybank Financial Goal Simulator can help you get started. If you already have the target amount of RM1 million in mind, all you need to do is figure out how much you can afford to start investing and the number of years you have to reach that target. |
Whether it is RM10,000, RM100,000 or RM1 million that you set your sights on, it all starts with taking the first step to reach that number. Even if you don’t reach a million ringgit, having RM100,000 is still way better than not having any money invested at all.
So just start investing and you will be better off financially in your future years.