Tag Archives: retirement

Market Bulls

Market Bulls Still Charging

KUALA LUMPUR: Market bulls are expected to continue their charge, with the rising US inflation rate just a “tiny bear” that does not pose a big risk to the global markets as yet. Amidst all these, there are investment opportunities available, said speakers at the inaugural Eastspring Public Symposium 2018 titled “Crouching Bears, Charging Bulls” in Kuala Lumpur last Saturday.

Robert Rountree, global strategist at Eastspring Investment (Singapore) Ltd kicked off the forum with his session “Crouching Bears, Charging Bulls: Market Drivers in 2018”, saying that the rising US inflation rate does not pose a big risk yet because commodity prices remain relatively low and the US job market, while in full employment, might not see a strong rise in consumer spending and inflation moving forward.

“Many of these jobs created are for aged 65-years-old and above. The salary for these jobs are low and the people of this age group do not spend a lot. It’s [inflation risk] just a ‘tiny bear’.”

He said the global economy continues to expand while company earnings are on the rise.

“This is supported by ample market liquidity as central banks globally are still injecting money into the market, even though they are raising rates and tightening monetary policies,” he said.

Rountree pointed out that market mispricing presents investment opportunities for investors to bargain hunt. These opportunities exist within the Asian ex-Japan equity market.

Within the region, he said the infrastructure, healthcare and consumer goods sector are undervalued at the moment.

He also added that the China A-shares and Hong Kong H-shares are relatively cheap while the US and European equities are overpriced.

Ooi Boon Peng, chief investment officer of Eastspring Investments (Singapore) Ltd in charge of fixed income, in his session “Rising yields, rising income: 2018 fixed income outlook” also said that US inflation is expected to remain benign as wage growth is unlikely to see a sharp rise.

He said the majority of jobs created for the older age group is comparable to the situation in Japan, where it has an unemployment rate of below 2.5% and a wage growth of less than 0.5%.

In addition, Ooi said that the more widespread adoption of internet and technology and the emergence of new ones (such as blockchain, artificial intelligence and robotics) are other factors that cause the US inflation rate to remain low.

At the same time, Ooi said capital expenditure and consumer sentiments in many countries are on the rise, which shows that the global economy continues to recover.

He said opportunities for fixed income remain in the emerging markets (EM), where markets are volatile but provide good yields. “We are tactically overweight on Latin America, generally positive on Brazil’s local bonds. In Asia, we have been bullish on Indonesia and India’s fixed income performance. India is our main overweight due to the reforms that the country is currently undertaking.”

He added that India’s government has taken a lot of steps to become a more formal economy. These steps include demonetisation to curb black money, introducing the goods and services tax and financial inclusion programmes.

Chen Fan Fai, Eastspring Investment Bhd chief investment officer for retail and institutional business took the stage for the third session, titled “Diversification benefits of absolute return strategies”. He said investors who want to reduce volatility in their overall investment portfolio could allocate part of their money in absolute return funds.

Chen said these funds utilised different investment strategies and derivative products to reduce volatility in achieving targeted returns. These funds are also less correlated with market indexes as compared to most of the existing unit trust funds in the market.

“More than half of all unit trust funds have a correlation with the market of greater than 75%, whereas half of all absolute return strategies [funds] have a correlation with the market of less than 25%. It provides investors with diversification.”

Chen said while there are not many absolute return funds locally, he expected to see more being offered in the market if there is investor demand.

During the panel discussion where one of the topics was whether local investors have enough choices available in unit trust investments as compared to others in the region, Wong Weiyi, general manager of Fundsupermart Malaysia, said there are over 400 unit trust funds available in Malaysia.

“In comparison, Singapore has about 1,200 products while Hong Kong has about 1,800,” he said.

However, Wong said the local fixed deposit rates ranged from 3% to 4%, which is much higher than those in Singapore of about 1%. The higher rates would make fixed deposits a relatively ideal place for investors to park some of their money, while placing the rest of their money into existing unit trust funds in the market.

He said this is unlike Singapore, where investors would need a wider variety of unit trust funds to structure their investment portfolios to chase for higher returns. “As such, 400 over products should be able to cater to local demand. Nevertheless, there will be more products coming into the market in the future.”

On planning for retirement, Carol Yip, CEO of Aged-Care Group Sdn Bhd, said investors who are planning to stay in an aged care home should be disciplined in taking profits and set aside some cash for the future.

She said the amount of money one needed for an aged care home for five years is about RM250,000 at the current market price. Taking into account the effect of inflation, it could go up to RM500,000. “If you were to stay in a hotel-style aged-care facility, it’s easily a million. Set aside money for that. You need cash,” she said.



Source: The Edge

This article first appeared in The Edge Financial Daily on 12 March 2018.

PHOTO by Shahrin Yahya: (From left) BFM business radio station producer and presenter Melisa Idris moderating in the inaugural Eastspring Public Symposium discussion involving Yip, Ooi, Rountree, Wong and Chen in Kuala Lumpur.

8 things you need to think about before you retire… besides money

Ah, retirement. The day we no longer need to wake up to the 9-to-6 routine five days a week; the day we sit back and relax and do the things that we really like to do.

This is a perception that many hold until they reach retirement age, when it slowly dawns that the reality is rather different.

With at least 12 hours of free time a day, many retirees struggle with filling the gap with meaningful activities and relationships they likely missed when they are climbing the corporate ladder or trying to make ends meet.

Most would have accumulated a tidy sum for retirement, but do not know how to draw from it to sustain themselves for an indefinite number of years.

Some eventually realise that they do not look forward to a leisurely life and choose to continue working at a slower pace.

While adequate savings for retirement is the prerequisite for a sustainable retirement, it is often the non-financial aspects of retirement that will determine the quality of life after retirement.

In the late American pastor Harry Emerson Fosdick’s words, “Don’t simply retire from something; have something to retire to”.

So, regardless of the age you wish to retire, it is worth giving the following some thought.

#1: Protection

The presence of adequate savings to draw from after retirement gives us peace of mind, but these savings can be easily depleted due to inflation, longer lifespans, and unexpected events. Therefore it is important to have a backup plan for life’s challenges including death, accidents, illness and medical bills.

One of the most common forms of protection is insurance. According to Allianz Malaysia chief executive officer Jens Reisch, a general rule of thumb is to have life insurance coverage of approximately six to 10 times your annual earnings.

However, protection also comes in the form of your emergency contact list, having trusted friends and family who check in on you regularly, and friendly neighbours you can count on when you need them.

#2: Shelter

Do you want to continue staying in your three-storey bungalow or move to a more manageable apartment unit? Will you be staying alone, with your spouse, or sharing a space with other family members?

These are issues that require mental, emotional and financial adjustments, which could be made with support from peers and communication with the people involved in the transition.

In Malaysia, there will soon be options for those who are interested to live in retirement villages – townships designed to cater for retirees and their needs.

#3: Health

Health Deputy Director-General Datuk Dr Jeyaindran Tan Sri Sinnadurai “People should actually invest in health management,” says Health Deputy Director-General Datuk Dr Jeyaindran Tan Sri Sinnadurai when met at a recent conference launch.

While we are used to putting money aside for material possessions such as houses, cars, and that new curved TV, we should invest time and effort in our health before and after retirement.

This could be done by setting aside time every day to exercise and making effort to control our body weight, says Dr Jeyaindran.

#4: Friends and family

As an ancient Chinese saying goes, a faraway relative could not compare to a nearby neighbour.

This saying reminds us that although it is good to be able to count on family for support, we should also cultivate friendships within our community and maintain good relationships with our contacts before retirement.

While community work is not everyone’s cup of tea, it’s worth thinking about some of the activities you would enjoy and the likely people you could enjoy it with.

#5: Lifestyle

There is a budget for every lifestyle. It is more important to think about the type of lifestyle you want instead of the millions of dollars you were told you need after retirement.

If you have not saved enough, it is time to consider downsizing your life to match the amount that you have saved. If you have saved more than enough, it is also important to ensure that it can last as long as you need it to.

#6 Meaning and Fulfillment

In an article by Australian financial services firm Wealth Leadership Services Pty Limited on TheBull.com.au, retirement coach Peter Black suggests that retirees should consider how they are going to replace the following aspects work provides them: financial rewards, time management, purpose, status, and socialisation.

Without solid replacements, retirees often return to work a few months after retirement due to “boredom” or a loss of identity or purpose.

To transition smoothly, you can consider opting for semi-retirement instead of retiring fully within a short period of time to avoid the sudden lifestyle shock. Those who do not have this option can adjust emotionally by reviewing career expectations and goals.

#7: Stuff, aka belongings

Throughout our working lives, we accumulate documents, books, clothes, accessories and stuff we may not need during our retirement.

Donating or giving away some of these things may be good for your available floor space and your soul too.

#8: Goodbyes

At retirement age, not many are willing to think or talk about the last leg of life. However, death planning is as important as life planning as both are only different sides of the same coin.

Some of the basic preparations for end of life planning include a written will as well as discussions with close ones about personal preferences on end of life care, funeral services and issues like organ donation and the treatment of personal belongings.

This would not only help your loved ones in carrying out your wishes in illness and death; you will also be assured that your final days will be remembered in a meaningful and dignified way. – By WEN LIM

Source: Business Circle

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