Certified financial planner S. Thechinamoorthy, of Monetmatters Corp Sdn Bhd, suggests RM1.4 million as the minimum sum a 35-year-old today should have accumulated at 55.
Am I reading it correctly:-
if you are 35yo today, you need to have 1.4m NOW as net worth if you would like to retire comfortably at 55.
No, he is suggesting that a 35 yr old needs a total net saving of 1.4mil by the time he is 55. He went on to say that amount of future money is equivalent to 639K of today's money - he assumed you earn 4% p.a. on that money for next 20 years.
A simple way to check: 639/15 years=42.6=3.55K per month
Assuming inflation simply cancels out the nominal earning power of your 639K today, you will have 3.55K real money per month to spend between age 55 and 70. Hmm... is that enough? What if you live till 80?
Illness, children's education... wife nagging...
If 3.55Kx2=7K+, good enough for most. That would imply savings of 2.8mil by 55 years old. Not so easy...
Perhaps that's why most people either keep working after 55 or make whatever money you now have to work harder than a mere 4%!
But seriously, in this country, how can you invest to earn say 8% p.a. consistently with reasonably low risk? Properties? Stocks? Unit trust?
There we go again - back to the age old subject - how to make money with money...