Financial Freedom

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        Coming to this new year 2014, while it is holiday. I took some of my times to plan for my future as I always had, one of my planning was become financial freedom.


         I wont go as much as detail those consultant might explained the "Financial Freedom" term , for me I just going to describe financial freedom in my own short term. I would called financial freedom is about a person who has already debt free and have enough financial capability to support/sustain his daily financial needs for the rest of his retired life (without worries).  In other word, you can say that you have enough money to support when your retirement. Again financial freedom is not about you have to be become a millionaire, it is about you earn enough money to support your life when you're no longer having active income. It could be you having save Rm 1 million during your working life and save in your account which generate annual interest rate of 3% which make it Rm 30K to support your annual expenses when retired.  The question is ... "Are RM 30K enough for your annual spending when you retired ? "  Divided by 12 months , your monthly spending should not exceed RM 2,500.  Of course, we don't forget about the inflation which will make your money less purchase power.


         Base on my calculation, if a person aged 32 (Table A) able to save RM9,600 per annual (monthly save Rm 800). He/She will have ~Rm 1,657 to spend monthly with interest rate of 5% per annual and with capital of  Rm 398K. Well, image you only have Rm 1,657 to spend in year 2036 is that going to enough? Of course NO.. Inflation will eat your money value slowly by the time you reach your retirement age. For your information, I am compounding the dividend earned. Of course even you have only Rm 1,657 from interest of 5% but you still have capital saving of Rm 398K to spend, just as reminder that you have another 25 years (assume you lives till 80 yrs) to go, if you happen to consume your capital that would mean you will get lesser interest for the coming year.


          Let's say, you start saving at age 24 (Table B) when you start working and save Rm 800 per month with compound interest. When reach age of 55, you will have monthly expenses of Rm 3,000+ for you to support your retirement and capital of Rm 722K.  I know it is difficult because for fresh grad to save monthly Rm 800 which they yet to purchase house, car and not to mention marriage.  My key message today is.. if you start young and realize what you soon will be facing it is more easy for you to handle in future. If you dont, you will face toughness whether you like it or not. You will be there one day....  So be FEARFUL ..be prudent in your spending, start saving for the raining day...




Best Regards,
Tony Quah



Table A: Start Saving at Age 32

Age	Year	Capital	Dividend	Per month	Yearly Contribute
33	2014	9600.00	480.00	40.00	9600
34	2015	19680.00	984.00	82.00	9600
35	2016	30264.00	1513.20	126.10	9600
36	2017	41377.20	2068.86	172.41	9600
37	2018	53046.06	2652.30	221.03	9600
38	2019	65298.36	3264.92	272.08	9600
39	2020	78163.28	3908.16	325.68	9600
40	2021	91671.45	4583.57	381.96	9600
41	2022	105855.02	5292.75	441.06	9600
42	2023	120747.77	6037.39	503.12	9600
43	2024	136385.16	6819.26	568.27	9600
44	2025	152804.41	7640.22	636.69	9600
45	2026	170044.64	8502.23	708.52	9600
46	2027	188146.87	9407.34	783.95	9600
47	2028	207154.21	10357.71	863.14	9600
48	2029	227111.92	11355.60	946.30	9600
49	2030	248067.52	12403.38	1033.61	9600
50	2031	270070.89	13503.54	1125.30	9600
51	2032	293174.44	14658.72	1221.56	9600
52	2033	317433.16	15871.66	1322.64	9600
53	2034	342904.82	17145.24	1428.77	9600
54	2035	369650.06	18482.50	1540.21	9600
55	2036	397732.56	19886.63	1657.22	9600
56	2037	427219.19	21360.96	1780.08	9600
57	2038	458180.15	22909.01	1909.08	9600
58	2039	490689.16	24534.46	2044.54	9600
59	2040	524823.61	26241.18	2186.77	9600
60	2041	560664.79	28033.24	2336.10	9600
61	2042	598298.03	29914.90	2492.91	9600
62	2043	637812.94	31890.65	2657.55	9600
63	2044	679303.58	33965.18	2830.43	9600
64	2045	722868.76	36143.44	3011.95	9600
65	2046	768612.20	38430.61	3202.55	9600

Table B: Start Saving at age 24

Age	Year	Capital	Dividen	Per month	Yearly Contribute
24	2014	9600.00	480.00	40.00	9600
25	2015	19680.00	984.00	82.00	9600
26	2016	30264.00	1513.20	126.10	9600
27	2017	41377.20	2068.86	172.41	9600
28	2018	53046.06	2652.30	221.03	9600
29	2019	65298.36	3264.92	272.08	9600
30	2020	78163.28	3908.16	325.68	9600
31	2021	91671.45	4583.57	381.96	9600
32	2022	105855.02	5292.75	441.06	9600
33	2023	120747.77	6037.39	503.12	9600
34	2024	136385.16	6819.26	568.27	9600
35	2025	152804.41	7640.22	636.69	9600
36	2026	170044.64	8502.23	708.52	9600
37	2027	188146.87	9407.34	783.95	9600
38	2028	207154.21	10357.71	863.14	9600
39	2029	227111.92	11355.60	946.30	9600
40	2030	248067.52	12403.38	1033.61	9600
41	2031	270070.89	13503.54	1125.30	9600
42	2032	293174.44	14658.72	1221.56	9600
43	2033	317433.16	15871.66	1322.64	9600
44	2034	342904.82	17145.24	1428.77	9600
45	2035	369650.06	18482.50	1540.21	9600
46	2036	397732.56	19886.63	1657.22	9600
47	2037	427219.19	21360.96	1780.08	9600
48	2038	458180.15	22909.01	1909.08	9600
49	2039	490689.16	24534.46	2044.54	9600
50	2040	524823.61	26241.18	2186.77	9600
51	2041	560664.79	28033.24	2336.10	9600
52	2042	598298.03	29914.90	2492.91	9600
53	2043	637812.94	31890.65	2657.55	9600
54	2044	679303.58	33965.18	2830.43	9600
55	2045	722868.76	36143.44	3011.95	9600