Expert Series with Australian Property Developer – Ken Dodds about the Melbourne property market

Charles Tan of Kopi and Property speaks with Ken Dodds- Resimax Group partner and director of Resimax Malaysia. Ken Dodds is uniquely qualified to offer insights and guidance to anyone wishing to improve their ability to identify, research and negotiate solid real estate deals. Ken has earned a reputation as a respected international speaker at property investment and development seminars around Australia, New Zealand and Asia.

Why should Malaysians invest into Australia’s Melbourne property market?

KD: There is just one simple, yet all-encompassing reason why you should invest into Melbourne property, and that is to
make money and safeguard your wealth
. By putting your money in a safe investment that guarantees capital growth and an on-going passive income, you look at the prospect of having a worry-free retirement, protect your family’s future and live the life most ideal to you- such as travelling the world or spending quality time with family.

Resimax Group clients Jon and Celeste started investing into property to protect their children’s wealth. Here’s what they had to say:

“Having first come into contact with Resimax Group 19 months ago when we bought into Newbridge Stage 2, we are more than delighted knowing that we have currently made a $150,000 gain on our property! With the unique offering of the 5/10/20 guarantees, i.e. the 5-year price protection, 10 years of rental guarantee and 20 years of structural guarantee; as well as the newly included 1% monthly interest on deposits paid, which is on top of Resimax Group’s professional, honest and open way of doing business. We have now bought into three more properties and I am sure we have not finished yet!”

Why should an investor buy into Melbourne property today?

KD: While there are many reasons why Melbourne property would make for a good investment, here are the
top three:

Fastest growing city in Australia

Melbourne property investors have seen housing prices more than double in value in the recent past with
a surge of 65 per cent in the last five years
. With Melbourne being the fastest growing city in Australia, it is predicted that the housing market will continue to boom fueled by an increase in population and the consequent housing demand.

In fact, recent analysis suggests that Melbourne will become
Australia’s largest city by 2050
. According to data released in April 2018, Melbourne recorded its highest-ever net annual population increase of 125,000, including 87,000 immigrants and 17,000 migrants from interstate. This accounts for
the highest population growth rate
 than any other city in Australia.

While Melbourne and Sydney lead the way in terms of job and business opportunities in the country, Sydney has become the most expensive city in Australia to buy a home and raise a family.

Nevertheless, for now, Melbourne in comparison is still relatively affordable. The median house price in Sydney is over $1 million, whilst in Melbourne it is approximately $670,000.

It is this rapid population growth that is creating massive demand for new housing that makes Melbourne residential property a
solid investment
.

High rental yields

According to Domain Group data, in the year to March 2018,
rents in Melbourne suburbs have increased by up to 18 per cent
, while the number of properties available have decreased- thus proving that demand is much stronger than supply. In fact, over
the past decade rents have increased by 76 per cent
. Demand for rental properties has substantially grown in line with Melbourne’s population increase. However, there isn’t enough property supply yet to cater to the population growth. Devon LaSalle from Tenants Victoria said, “there are more renters in Victoria than ever before – about a third of the population now rent their homes.” Domain says, more properties are needed to keep up with high demand for rentals in Melbourne”. Rents rise as stock levels dwindle. Therefore, it is fundamental that when demand is high, and supply is low that property prices and rental yields will grow.

Moreover, since salaries and wages in Australia haven’t grown in proportion to the housing market, another key factor impacting rental rates is the fact that the younger generation in Australia is not being able to afford the down payment required to secure a property. Consequently, investors in the Melbourne property market are, and will continue to reap the profits from their investment.

Safe Investment

A lot of potential investors ask this very valid question- ‘Will Melbourne’s growth and property prices continue to grow’?

The answer in one word is- ‘
YES’
. Australia currently has an aging population caused by lower fertility rates and higher life-expectancy. This is a significant challenge to economic growth as it reduces the employment rate with the older population mostly living off their savings. To ensure economic development, Australia must continue to encourage immigration.

However, despite its obvious attractions, Sydney is now saturated and witnessing a population decline. Other cities such as Brisbane, Adelaide or Perth simply don’t offer the same job and business opportunities as Melbourne. While these cities are now on the verge of growth
, Melbourne is still leading the way by leaps and bounds
. The biggest driving force for Melbourne is its current
housing affordability
 with property values consistently growing, especially as new developments keep coming up to house the continuing influx of population. With all predictions leaning towards Melbourne becoming Australia’s largest city in the future, it is safe to say that property prices won’t crash any time soon.

Should we focus on buying smaller but nearer or buying further but bigger? (Many agents are selling small units inside the CBD…)

KD: Here’s the brutal truth- agents are selling small units overseas because they aren’t being able to sell them to locals.

The one rule that holds true to successful property investment in Melbourne is,
‘buy where the locals buy’
. In Melbourne, there are still many suburbs where you can afford a house and land package in an up-coming development that is in close proximity to the city. This is where the locals want to establish their roots and live with their families. In Australian culture, people want to raise their families the way they grew up- in spacious houses with a backyard, within a community, next to a play-ground. Apartment buildings simply don’t offer that. Moreover, smaller high-rise units don’t appreciate in value because there is a problem of over-supply and too much competition.
Melbourne CBD is over-saturated with apartments with not enough people wanting to live in them.

On the other hand, Melbourne still has an enormous portion of land available in the north and west for further development. These areas are now being developed to accommodate the growing population.

What price-range should we look at as a foreigner buying into Australia, considering that when we sell it has to be sold to an Australian resident?

KD: The median house price in Australia is $670,000 AUD. However, at Resimax Group we have access to house and land packages in northern and western suburbs starting at $500,000 AUD. Regarding the future resale of the property, as an investor, you need to think in terms of yielding profits, so I’ll repeat what I’ve said above: “BUY WHERE THE LOCALS WANT TO LIVE”. As a foreign investor, you can only sell your property to a local Australian. Therefore, it is important for you to understand the lifestyle and choices of the locals, as it will assist you in making wise business decisions.

Please share with us three important things to note before we decide on the property to buy?   E.g.:   reputation of the developer, population growth in the city, potential returns/guarantees etc.

KD:

Only do business with property developers that keep client satisfaction at the top of their mind:
Starting off as a family business, Resimax Group has grown into one
of Australia’s largest private real-estate development companies
 and an Australian success story. We have been able to do so because serving our clients is priority for us. In the past two years alone, our team has helped investors secure more than 550 residential properties. Many of those investors have already seen growth of 20 to 30% on their properties and a significantly greater return on their money.

Make sure you receive rental guarantees:
A great way to gauge your developer’s commitment is through the guarantees they offer you. For example, at Resimax Group we offer a
5/10/20 guarantee
. This means: 5-year price protection, 10 years of rental guarantee and 20 years of structural guarantee. Plus, we also include a
1% monthly interest on deposits paid.

Work with established and efficient property managers:
After you have purchased and settled your property, the next step is to efficiently manage that property. As an overseas investor, you must work with a team you trust. The right property managers will ensure that your property is well-maintained, tenants are happy and that your on-going expenses are minimal.

To learn more about Property Investment in Melbourne and Australia, attend Property Power- a FREE Australian property education seminar at the Intercontinental Hotel, KL on 24
th
 November, 2018. For more information and registrations visit:
https://propertypowerkl.resimaxgroup.com.au/

At the seminar, these are the TOP 4 things you will learn:

1) How to invest with minimal risk and achieve high rental yields

2) From an Australian tax accountant about the tax laws of Australia for foreign property investors

3) From a finance specialist and guest speaker- what you need to know in order to secure the best financial deals

4) How to avoid the most common errors made by foreign investors

To find out and register for free, click here.
Property-Power by Resimax

Feel free to get in touch with them too:

RESIMAX MALAYSIA SDN BHD

UNIT  29-1, LEVEL 29, TOWER A,

VERTICAL BUSINESS SUITE

AVENUE 3, BANGSAR SOUTH,

No. 8, JALAN KERINCHI,

59200 KUALA LUMPUR.

TEL: 03-27839678 / 017-2233965 (Mobile No.)

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Resorts World Genting reopens! Anyone going up yet?(Not everything is open yet)

Before COVID-19 arrived, every time I am up in Resorts World Genting Highlands, I could see why it is a profitable entertainment resort. There are people everywhere. In September 2020 when we were allowed to travel, I went up to Genting Highands and this time, the number of visitors have gone down tremendously. Of course one major reason would be the lack of foreign visitors. The days when coaches after coaches arriving in Genting Highlands on a daily basis were not happening anymore.

In this September 2020 trip, I had dinner at that famous fish and chips from the UK;
The Laughing Fish by Harry Ramsden.
I think the place could be considered 70 percent full but that’s also because of the need for social distancing, thus the tables were further apart from one another and the number of customers are thus limited. I read a good news today. Resorts World Genting has REOPENED. Today is 17th February 2021.

Article in the rakyatpost.com
  Resorts World Genting has reopened yesterday after temporary suspension of its operations due to the movement control order (MCO).  On its
website
, Resorts World Genting (RWG) issued a notice announcing they are reopening at 6pm, 16th February with adherence to standard operating procedures (SOP).

Here’s what’s open at RWG:

Genting Grand Hotel
Genting Casino
Genting Club
Genting Club Private Gaming
Malaysian Food Street (MFS)
Seasons
360 Bar
L’titude

Do note that the gaming and casino areas are open to GRC members only. Additionally, guests can now make reservations for future stays at the resort. Do refer to the full article in
Article in the rakyatpost.com

Anyone making plans to go up yet?

Based on the current situation, I think the number of visitors may be even lower than the time I visited in September 2020. This is temporary yeah. One thing is quite sure. Resorts World Genting is now ready for visitors again. If they did not hire many new people, it also meant that they would have continued to pay the basic salary of their existing employees while waiting for the time to reopen.

It also meant that as soon as Malaysia goes back into CMCO especially Selangor and Kuala Lumpur, the number of visitors would increase again. There are easily 10 million potential visitors just within these few states right next to Resorts World Genting yeah. Another  reason is because too many people has been staying home for far too long and really need a cooling place to just relax and SPEND MONEY.

Happy visiting and feeling positive again. For some of the us who may be inside the casino in the near future, happy feeling lucky again. (Just remember, the ultimate winner is usually the casino…)

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Working is also about responsibility, not just money. (you can leave too, right?)

This morning, I was listening to the radio and this topic came up. “Should we reply our bosses if they were to message us after working hours?” What are your thoughts? As usual, many employees called in to complain about their bosses being very inconsiderate. They said that their bosses expected immediate reply regardless of time, sometimes even in the wee hours of morning. Frankly, I am very sure that there are many bad bosses out there. However, I think it’s not just about after working hours or during office hours. It’s also about RESPONSIBILITY. The world is now a borderless one and that’s the only reason why there are many job opportunities which were not available previously.

A business owner (boss level) listener called in to tell his side of the story. He said that many times it is not just a question of should the employee reply after office hours or not. The question is about the nature of work. Furthermore, if certain issues are critical enough to be answered, the employee should also respond. In fact he said that he does not mind to pay these employees extra commission for example because this is really considered extra work after office hours. The two young DJs then asked whether his staffs complained. They had failed to understand his meaning and kept repeating that the bosses should not expect employees to respond after working hours.

Dear readers, if we are working in a company where the bosses are really inconsiderate, it’s best that we find another job. If we are not able to find another better job, the problem may not be with the boss. In my 20 years of working life, all my bosses were very demanding but they have been very considerate as well. In my first company, I have on a few occasions worked till 3am in the office too but that was because of the work requirement and not because my boss was bad. In fact my boss even told me to come in only after lunch the next day. I think I did a good job because I got so many opportunities even when I was just a fresh graduate then. I got to visit our UK office after joining just a few months and was sent to Tokyo for an important negotiation despite joining less than 2 years. By the way, I love all my bosses for the past 20 years even if some of them were really tough on employees! Haha.

Perhaps the reason all my bosses treat me well is also because I know that a working professional should understand the urgency of issues. Responsibility comes in. It’s not about the working hours, it’s only whether it’s appropriate or not. Remember, the choice is also ours and as soon as we browse JobStreet.com for example, we would note that there are 30,000 jobs posted today. As for the two young DJs, it is really important to have a much better understanding of the complexities of the working world. That issue is definitely not just about ‘respond or not respond to bosses after working hours.’ Happy working!

written on 24 Oct 2018

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Restoran Taman Timur, Ipoh

The stalls for breakfast and lunch are slightly different. You get the famous Hakka Mee in the morning while in the afternoon, I love the Indian Curry Rice and also the roast pork / chicken rice. Lots of other stalls but the dry curry mee is….. ‘don’t try’ standard. There are so many choices here that you may be spoilt for choice. As for what’s good to drink, hey you must try their Fu Chok Yee Mai. As for white coffee, just average but according to one colleague, it’s good. haha. My colleague’s from Penang.

Oh yeah, what should you order for the Indian curry rice? Their ayam kicap, fish curry is very good and the fried ayam rempah is also good. Needless to say, tell the uncle to ‘kuah campur’. My father like the mee rebus but I think it’s just so-so. Parking is easy too due to ample space though you may need to park slightly further away but definitely a parking is available. The shop is also very nearby the toll and easy to find too. In the afternoon, there’s a Laksa stall just 45 degrees opposite this restaurant which I find quite good!

written on 22 dec 2013.

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Restriction of Movement Order. Follow lah… DOs and DON’ts.

I am not sure how to react to the many Malaysians who have NO IDEA that they must follow the Movement Restriction for the benefit and safety of all other Malaysians. Please, follow ok.. Image for reference below.

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Retail numbers and credit card spending down but….

I read something which I fully expected. The retail sales are expected to slow down for 6 months, beginning April. According to Retail Group Malaysia (RGM), which tabulates quarterly retail data, the reason for this slow down is because consumers are more cautious and taking a “wait-and-see” approach due to the implementation of the Goods and Services Tax (GST). Of course, in actual percentage, it expects the second quarter of 2015 to still show a growth of 3.5%. It however expected Malaysian consumers to start buying again in three months time and by the final quarter, Malaysian consumers would already gotten used to the GST. By then retail spending would return to normal. Overall, the industry is expected to recover strongly with a 6.9% growth rate.

I have no such statistics but I can safely tell you that the older models of smartphones that many are using would somehow have to be replaced with the newer models. Besides that, I still see many people in Starbucks even until today despite GST being charged on every cup of coffee there. SOGO which is always packed is still packed and the sales is continuing. I just came back from SOGO today and have bought a new pair of comfortable sandals for my mother. Last week I bought a new handbag for my wife in Setia City Mall after a dinner in a Japanese restaurant. I can safely say that because the employment market remains healthy, any negative sentiment is likely to be short-term. Just look at the developed nations, materialism is the norm and no one is going to stop spending so that they can save money for their retirement. Not many would be worried when they are still below 35…..

One thing I noted though is that everyone would talk about GST every day. The sentiment remains negative. Many kept saying that the prices of goods have gone up but I can safely say that when I paid for my groceries, I have not really felt the effect. Maybe because I also switch some brands as well as buying only when that certain product has special offers. So, I think the worst GST on me remain to be my faithful trip to Starbucks. I hope another huge chain may just open and give more competition. Truth is, their margin is way HIGHER than the GST but there’s no competition, thus the prices would usually inch upwards. Happy buying.

written on 11 May 2015

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Retail sales still growing BUT forecast is lowered, again.

Forecast for retail sales growth rate has been lowered further for the second time. Instead of a predicted 4.9 percent growth earlier, The Malaysia Retailers Association (MRA) has lowered the projected retail sales growth rate in 2015 to 4.0 percent. Major reasons cited include higher costs of living, a weak Ringgit and higher cost of doing business. This has caused the consumers to hold back their spending. The MRA said that Q1 of 2015 was positive as sales grew 4.6 percent but Q2 showed a negative -3 percent. Q3 is expected to be 4.8% followed by 6.9% in the final quarter.

After reading through all these numbers, I seriously hope everyone noted that except for Q2 2015 which was negative because everyone bought everything in the Q1, other quarters are expected to be positive and the full year is also forecasted to be positive, at 4.0 percent growth. What this tells us is a story which has been repeated many times for countries which implemented GST. Read here: jj   Due to uncertainty, the spending would be down and after some getting used to, the spending pattern would return.

Think rationally, what would cause the overall spending to be down, is it really the GST? Or is it the amount of money we have in our pockets? Looking at the Gen-Ys of today, I am not confident at all that the materialism thinking of today would stop simply because of GST. Another Gen-Y friend had just bought an Iphone 6 just last week. This is despite the fact that she kept telling me that her budget was only RM1,500. Thus, she signed up with DIGI which tied her to a contract and she managed to buy the phone below her targeted budget.

As for money we have in our pockets, look at the unemployment rate instead. It will give us a better number. When news of retrenchment starts to increase, this would cause the retail sales to go down. As of now, I do not see such signs yet. Also these days any big company shutting down is immediately reported by both offline and online medias, thus it is quite easy to know when the bad times are coming. My advice is, spend wisely and only on necessity. This should be the case whether or not the economy is good or bad. Every season has its time. Tough times never last forever. Thus, it is important to objectively see the real signs and act accordingly. Thinking of first home? Yes, please proceed because even if you do not buy, you are still paying rental anyway. Happy buying.

written on 3 July 2015

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GST, thus retail sector down? Great Sale Tomorrow.

Every report we read nowadays would tell us that Goods and Services Tax (GST) is going to affect the retail sector. Let’s skip property market for this time. It said the reason for the drop in retail sales is based on the experience of other countries which has implemented GST, the retail would be down as soon as GST starts. Is the real reason due to GST or due to the uncertainty about how the market would be? Would it be because of cautiousness of the consumer? When confidence is down, they stop buying. Retail down, surely to be followed by property down as well?

Looking at this objectively, do we believe that GST would cause retail to be down forever? If yes, then good luck to you because in every country that has implemented GST thus far, no such situations have occurred beyond the usual 6 – 9 months. After that, everything would follow how the economy moves. In fact do we really expect everyone who wants to buy a new smartphone or that new watch to stop buying forever? Looking at just needs and not wants and based on just the current working population in Malaysia, we can see clearly that this sentiment is not going to last. There’s just too much demand because everyone is at the right age and materialism is alive and kicking.

Today, I went to the baby fair in Mid Valley. The situation was chaotic and the crowd was overflowing. Those who buy were buying as if there’s no tomorrow. Now, imagine the same baby fair happening AFTER GST. Tell me the situation would be different and I can safely tell you that you must be joking. Retail consumption can be stimulated IF it is indeed simply due to the cautious sentiment. If the economy itself is going down, then no matter how the shopping centres try, the demand will go down. If you thought only the baby fair garnered the main attention, well, I had to queue up for 15 minutes to pay for a new running shoe in Jusco. Then, when I went past the kids section, the queue was much longer. Again, I smiled and I told my wife, ‘I am not sure what would be the predictions of the awesome analysts but if I am in baby / kids business, GST meant nothing to me at all for many more years to come.’

Oh yeah, rest assured, there would be lots of GST hiccups soon but do not let that cloud whatever judgement you may have on the property or the stock market. For the blue chips, except for another crisis, it will be business as usual BUT because of negative sentiment, some of the counters would now be cheaper to buy. As for the properties, happy buying no matter from developers who would increase price because of GST or absorb the GST. As soon as the whole market quiets down, the retailers would try to stimulate it. They would do lots of stuffs and perhaps by then GST should be known as just ‘GREAT SALE TOMORROW.’  Happy buying.

written on 28 Mar 2015

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Changing trends not necessary bad, we must change with them

I had lunch with a few friends just days before Chinese New Year (CNY). Everyone was saying they had no CNY mood. (I think it’s more of age?) However, they agree about one thing, the malls were now packed with shoppers. I told them that NOT all malls. There are malls which when we visit for the first time these days, we can already nearly conclude that unless something drastic happens, the mall will be shutting down within the next 12 months or lesser, depending on who’s the owner. Some replied that hypermarkets were packed with people. Again, I reminded them, not all hypermarkets. I have been to a few where car parks were still easy to find; in seconds upon arrival.

Let’s look at some industry news then. Reported in the local media, the Malaysian Small and Medium Industries president Michael Kang said nationwide, the retail sector saw an average 20% to 30% drop in sales during Chinese New Year. I personally do not like average numbers. Are the drops because the bigger malls are getting all the businesses while those in the less popular spots are now getting far fewer customers who prefer to shop at one place instead of many different places? It’s okay, we assume this number is talking about the sales in RM. Michael further commented that this drop may repeat itself in Hari Raya Aidilfitri, Deepavali and Christmas too, with prices going up and consumers cutting back on spending.

According to the full article, this trend was for all range of CNY related wares such as such as fruits, clothing and prayer items. For fruits if we are talking about mandarin oranges, let’s do a survey within my family. Many years ago, we used to buy at least two boxes every CNY. These days, we could not even finish one box and I personally have eaten just ONE slice given to me by my brother a few days ago. Is it just me or mandarin oranges are just the most favourite fruit during CNY these days? I prefer to eat canned Lychees or Longans instead. Oh yeah, canned King Lychees were only RM8.88 for THREE cans in Sunshine Square. I thought Ringgit depreciated so much?

I am not sure but I seriously think the trend is really shifting. For clothing, I told my colleagues just days before CNY that this is the year I bought the most number of new clothes because the prices were unbelievable. Two polo shirts for RM59. Two long sleeve shirts (EASY CARE) for RM39. Two collar T-shirts for just RM47. In total, I bought 300% more than last year! Yet, spending almost the same. I think in terms of RM, I am really spending less this year.

I visit the temple on the first day of CNY without fail every year. This year, the cars parked in the temple compound are still full. However, in my visits to many of friends of my age and even the younger ones, many are definitely not buying prayer items for their homes. The trend for high-rise living is rising by leaps and bounds too. I think it’s very clear that even during the perceived good years, some of these items would definitely not be selling as much as previous years.

Before everyone now conclude that 2015 was indeed so bad it extended well into 2016, do take a look at the sale of luxury cars last year. It has increased by leaps and bounds too. The house prices, on average were still increasing in KL. It is expected to increase again in 2016. (I hate all these reports, I still think there are good properties which are undervalued, just have to work harder in identifying them) The retail tenants especially for the very popular malls are definitely renewing their lease even as the smaller and less popular malls struggle to keep their tenants. In fact, even one listed company for clothing, Padini reported solid earnings even though it was facing strong competition from many new foreign entrants. Expansion is still continuing.

The number of people buying ONLINE from their mobile phone or even notebooks are also increasing by leaps and bounds. Yes, this is also the reason why certain companies are still hiring while some companies are firing. The right industry helps tremendously while the wrong ones meant we have to find a new job. The catch? Strive to be valuable enough so that if needed, we can switch industry or role if needed.

My personal advice? Understand why some people are earning so much that they are now driving luxury cars. My personal conclusion? I seriously think I must spend even more time viewing properties. Who knows, the owner may just happen to be a very motivated seller. Luck comes on and off when we are lucky but it comes almost all the time to those who work hard. This was my personal sales mantra to all my top sales people previously and I think still true today. Happy Chinese New Year!

written on 15 Feb 2016

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Retail growing by 5.9% with celebrations

When retail numbers for KL malls are good, KL property sales numbers should drop. Why? Well, if we have spent everything we have on retail therapy, we would have nothing left for property, right? Haha. Please do not take this humour seriously. My personal belief is that sentiment remains key to market recovery, by far more important than the usual political related news. Only when we believe positive things are on the horizon that the buying would normalize. There are still huge number of my colleagues who does not have an own home yet.

I tried to go to MidValley Megamall today. I said, I tried because I failed. The queue into the car park was too long and I decided to drop by The Curve instead. I needed to go and settle some Maxis stuffs anyway. I parked in eCurve as the car park indicator showed zero parkings remaining in The Curve. I do not consider the mall to be full of people but the Maxis store? I had to wait for over 35 minutes! Yes, most of the people were getting new phone packages, together with new phones.

Sometimes, when we step back and think about it, unless our current phone is “dying” or “dead” why do we need a new phone? I have three reasons; extra money (bonus??), personal branding (image) or last would be just for fun (what the…..). All three showed that that new phone is nowhere near a necessity. So, is the retail scene good in Malaysia? Well, not really but if we have more celebrations, it would help. As reported in thestar.com.my, Retail Group Malaysia (RGM) has projected that the retail industry would grow by
5.9% in Q3 2016, due to the Hari Raya holidays. It said that the growth is also supported by the
Minimum Wages Order 2016 that was implemented on July 1. (More money to spend….)

I was at Sunway Pyramid Mall just yesterday, during office hours and the mall was full of people. We wanted to eat at Yoshinoya but the queue was so long that we had McDonald’s in the end. Sigh. Anyway, following happened too. My colleague stood near the entrance for a while because he was trying to catch Pikachu! Haha. Anyway, as per reported in the same article, Mall operator Sunway Malls said that the traffic increase in Sunway Pyramid was 10 percent and one reason was due to Pokemon Go. It was also reported that r
etailers in the pharmacy and personal care sub-sector continue to have double digit rise, at 11.4 percent during Q3 2016. You have to eat what you have to eat when it comes to health…..

RGM also said, “The projected retail sales growth rate of Malaysia’s retail industry in 2016 by RGM stays at 3.5% or RM99.5bil in values.” Actually, I think this is still positive for the industry. At least not all the malls would have to think of shutting down in 2016. As all of us have noted, many malls have started to struggle and many may have to reorganise, cut expenses and try to get more visitors through different kinds of activities. Perhaps what could happen is that Q4 may be supported by the next huge celebrations, Christmas. After all, everyone should get a gift during Christmas and offices may be organising gift exchange parties too. Yes, I would also be buying gifts for my kids and my wife even if we are not Christians. Just wanted to feel joyous. I am happy to shop for gifts and they are happy to receive them from me. Hey, let’s push Q4 2016 retail numbers higher! Happy shopping!

written on 31 Aug 2016

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Retail to improve after GE 14. Means more income or more willingness?

I have bought more new shirts this year than last year but have spent virtually the same. I have bought two new pairs of jeans too. However, the amount I spent per shirt and per jeans is much lower than what I would have spent previously. For example, a new pair of very nice LC Waikiki jeans (1 Utama and IPC Mall) was only RM55 (best buy item). My previous pair of jeans was nearly twice as expensive. Actually, this is not the only thing which is happening. Set lunches which used to be RM19.90 are now coming to the RM15.90 level, even in malls. The quality may have changed slightly but this is the world we currently live in. Businesses say it’s tougher, I do agree. Let me also remind all retailers that it’s best to look at lower margins and serving more customers instead of higher margins and  fewer customers.
The M40 and B20 groups in Malaysia

is super huge by the way. With ever more retail choices (new brands), buyers are spoilt for choice and retailers have to fight ever harder because they are also ‘attacked’ by the online side.

This is what the Malaysia Retailers Association (MRA) president Tan Sri William Cheng said recently. “The sluggish local retail market is expected to pick up after the nation’s 14th general election which will be held on May 9. At the moment, the upcoming Malaysian general election maybe also one of the main reasons Malaysian consumers have been taking a wait-and-see attitude on their retail spending. Retail sale may rise after the official election campaign starts.”
The full article in edgemarkets.com here.
(I think this is debatable but I do hope he is right because many property industry people are telling me that potential buyers are waiting to pay their downpayment only after GE.
So, they are also saying that property transactions will pick up after the GE
)
Tan Sri William who’s also the The Lion Group chairman also acknowledged the challenge posed by the e-commerce industry. He added, “What retailers need now is improvement in consumer spending. When the economic growth is broad-based, more Malaysians will have higher take-home pay. High income means higher purchasing power.”
The full article in EdgeMarkets here for reference.

I do hope that all these retail numbers would take into account the changing prices in the market today. When GAP left Malaysia and many other countries in this region, it was replaced by Old Navy. No prices for guessing which is the cheaper brand. Padini and Brands Outlet belong to the same owner. Again, no prices for guessing which brand is the more affordable one and are now becoming very popular. When the same piece of clothing is bought today, it meant that the actual spending is lower. If the
retail can still show an increase, it meant that the market is pretty okay and not as bad as it seems
.
 Anyway, I have no access to such numbers. Let’s see if anyone in the Malaysia Retailers Association (MRA) picks this up and does a much more comprehensive study. Yes, I am buying more often from
shopee.com.my
 here in Malaysia. However, I continue to visit malls every week without fail. Happy shopping everyone.

written on 29 April 2018

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Retail Malaysia 2016 – Growing…very slowly…

Did I buy more stuffs in 2016 versus 2015? Let’s look at just two categories which I am a shopaholic for; shoes and clothes. I did not buy any new leather shoe in 2016 but I did buy two new sports shoes and one new hiking shoe (preparation for Mount KK climb in June 2017). I did not buy a single new T-shirt but I bought 5 new long sleeve shirts for work purpose. I think I spent slightly more in 2016 versus 2016 where clothes are concerned. I could however see that most of my colleagues are using newer smartphones. Okay, it includes my wife because her Samsung smartphone ‘died.’ So, my general conclusion is that retail scene in Malaysia should not be too bad, right? Let’s look at what The Retail Group Malaysia (RGM) is saying in their 2016 retail industry report. Brief conclusions below or you can read full article
here
.

Q3 2016 grew only by a pathetic 1.9 percent versus 2015. Main cause was due to department store sub-sector recording disappointing sales. The results were 68 percent lower than their members’ expectations. There was however a period of growth and it was between April and June where it grew 7.5 percent.

RGM then said the Goods and Services Tax (GST) is to be blamed as this came into effect in April 1 2015. It made the consumers become negative. Supermarket and hypermarket was still growing but only at 0.7 percent.
(I personally disagree at such assumption, better look harder for other reasons including online sales as well which is growing by leaps and bounds. Look at departmental stores results in many other countries where online sales is growing and we would get the same idea…)

The fashion and fashion accessories sub-sector grew by 7.6 percent versus a year ago.
(Yes, I contributed here!)

The pharmacy and personal care sub-sector enjoyed a double digit growth of 10.2% in Q3 from a year ago. In fact this was the best performing sector.
(First of all, I am not so sure if I dare to buy medicine, cough syrup or even facial cream online. I am scared that it will destroy my face even make me sick. I think this sector will be safe for a long time more)

Q4 2016 is however expected to be much better. The members of Malaysia Retailers Association (MRA) are positive with their expectations for a recovering quarter. In fact, the department store operators forecast a growth rate of 5.4% in Q4 2016 while the supermarket and hypermarket operators expect a growth of 4.3 percent. For the entire 2016, RGM has forecasted that the Malaysian retail industry’s sales growth rate would be 3% which is down from their earlier estimated 3.5 percent.

This year, I have started to buy more large items from online, either Lazada or 11Street. They include Air-Fryer which was at least RM100 cheaper than the electronics store I went to. I bought a new baby car seat which was RM50 cheaper. More recently, I bought a new baby electronic cradle which was not only RM80 cheaper but they gave an extra slip on fan for free. However, I would not want to buy clothing online as I prefer to wear it to feel and see it first. I think this needs to also be taken into account if not now, beginning next year. Oh yeah, lots of people were still buying stuffs in 1 Utama today when I was there. Perhaps it’s the time to buy gifts have arrived. Cheers.

written on 10 Dec 2016

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Retail Malaysia? Still growing lah, moderately.

I do not believe retail Malaysia is on a downtrend. It’s consolidating. Bigger and better malls are attracting bigger and better crowds. Smaller malls or retail spaces are slowly dying. On an overall basis, the numbers are still growing. Read here:
Higher end retail still okay? Growing 3-4%
 Anyway, many colleagues disagree even though many bought new handbags, smartphones and new clothes occasionally. Many would also share with me that their new clothes are cheap because it comes with 50 percent discount. Honestly, if they wish to save more, it’s best to continue wearing the same clothes they have today. Buying new ones are not necessary, actually.

In an article in The Star, Retail Group Malaysia (RGM) managing director Tan Hai Hsin shares that Q1 2016 versus Q1 2015 is likely to have contracted by 0.4 percent based on their estimation. This was because of a weak February 2016 and a strong Q1 2015 as everyone wanted to
buy before GST started
. Q2 2016 should be better than Q2 2015, growing between 2 – 3 percent. He pointed out that with Ramadan beginning in June, it would stimulate retail sales during the last month of Q2. He then used one word to describe the retail sector. he said it’s RESILIENT.

Then he shared a few
positive signs
. Cinema goers have been more willing to buy tickets, probably due to many big movie releases. Food and beverage (F&B) sector has been doing well and some people are still buying six-figure items. F&B outlets are also growing especially the cafes for ‘expensive’ coffees, bakery cafes, fine-dining restaurants, overseas chain restaurants and even food trucks.This proved that urban Malaysians are still willing to spend.
(Actually, this just proves that people continue to feel confident enough to spend or they just do not know how to save.)
According to the National Property Information Centre’s (Napic) 2015 Property Market Report, the retail sub-sector recorded a slight improvement in occupancy from 81.8% in 2014 to 82.4% in 2015.

Still believe all is okay? Or you would like to believe what some my colleagues say but does not actually preach? Haha. It’s okay. Keep your job by working hard. Save more money by spending less. Invest in more property by finding undervalued ones. Life is how we make of it. A friend’s course mate who managed to enter the
oil & gas industry
 many years ago were driving great car, having great holidays and well lost his job many months back. Suddenly he realised not everything is great anymore. When we have it, do our best with it. Happy believing.

written on 23 May 2016

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Retail Malaysia. Positive growth for 2Q 2021. Do not just read title yeah, read the full article for the numbers and comparison.

March 2020 was a bleak period for retail Malaysia

Hopefully, the periods of March 2020 to September 2021 would not repeat for retail industry in Malaysia. Okay, in between the period, we did have many good months where there were no lockdowns. However, it’s a tough period for many retail store owners including even my own relative who has a place in 1Utama. When the lockdown started in March 2020, everything just plunged. Suddenly no one was allowed to go to the malls.

Retail Malaysia will be boosted by inter-state travel

Now we are in October 2021 and it has just been announced that we are very close to inter-state travel restrictions being lifted.
Read here for more details about what’s really happening and all the numbers related to Covid-19 and of course vaccinations too.
  The good thing is, 2Q 2021 was a positive one for the retail industry. Why was it positive? Well… it was compared to the same quarter last year.

Article in theedgemarkets.com
  The Malaysian retail industry recorded a positive growth rate of 3.4% in retail sales for the second quarter of 2021, from a 30.9% contraction a year earlier.

RGM explained that the positive growth rate during the quarter under review was due solely to the low base effect a year ago.

Moving forward, RGM said that Malaysia Retailers Association (MRA) and Malaysia Retail Chain Association (MRCA) project an average contraction 15.1% during the third quarter of 2021.

After a temporary rebound, the department store operators are expecting their businesses to decline with a negative growth rate of 11.2% for the third 3-month period of this year, it said. Do read the full article here:
Article in theedgemarkets.com

Shops are not going to let go their prized location yeah

Please feel free to go to any POPULAR mall and ask the POPULAR shops if their sales are down versus the time before Covid-19 arrived and their answer is a definite Yes. Then ask them, why they do not just move away and give up the spot and go somewhere else? The answer is also a simple one. If they let it go, they are not going to get it back when times get better.

Not just shops but offices too

We can go ask the multinational companies which are occupying those popular office buildings where half of their people are working from home or even if majority of their people are working from home. Why don’t they just move out and later on move back again or move somewhere else? After all, office space is said to be increasing by most reports. The decision is based on long term yeah, not because staffs are working from home for now.

By the way, many technology companies are asking the staffs to go back to office. Here’s the news.
New norm is working from home?

Do visit the mall to feel what I felt yeah. The crowd is definitely starting to swell again. That’s good vibe. As for 3Q 2021, let’s be realistic too. It was a lockdown period. If it’s a big positive number, something’s wrong with the numbers. Happy shopping, again.

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Retail Penang is facing oversupply, more coming.

Slightly over 3 years ago, I was looking for an office space for my previous company within Penang island. There were numerous choices and the more expensive ones were slightly over RM3 per sq ft. Many were below RM2 per sq ft but the environment and the facilities were not that spectacular. One was only RM1.10 per sq ft and negotiable further but there were no car parks within the tower or outside when we went over to view the place. It’s crazy.

Well, the situation then and now seem to be the same, or perhaps worsening? I seriously do not think that RM1.10 per sf place I viewed would be rented by a proper office with say 5-8 staffs. All of them would have to take taxi because there were just no parking spaces inside, outside or even around the office tower. Yes, you can imagine parking space is always an issue in Penang. I pay a higher parking fee for an uncovered parking space in Penang compared to here in KL.

According to a report in StarBiz, within the next 5 years, new malls and complexes would add an additional 7.6 million sq ft into the Penang market. To be exact, eleven new malls are coming. Greater KL was quoted as having 46 new malls but Penang alone would have eleven! Read here for the Greater KL malls:
Tough to do business these days, malls too many
  According to Savills Malaysia managing director Allan Soo, the current retail space per capita is 6.11 sq ft in the state compared with the island’s 9.58 sq ft.  He said, “
Anything above 5 sq ft is oversupply.”
With the upcoming new supply, it would double the total retail space and will worsen the oversupply situation. This meant that by 2016, the rentals in popular malls will increase a lower rate of increase while for the under-performing ones, it will drop.

Please read the previous sentence again. Oversupply situation, more upcoming ones BUT the rentals in popular malls will INCREASE though at a lower rate of increase. Now you understand why I kept saying that we must look at the actual mall and not the average number? As usual, the popular malls will get majority of all the visitors and with most visitors, the business is likely to be better and thus the shops would definitely be willing to pay higher. Soo said that malls must have their own pull factors such as major difference in price, quality, uniqueness of the tenants and merchandise.

The 11 shopping malls are Penang Times Square Phase 3 with a net lettable area (NLA) of 230,000 sq ft, City Mall Bayan City (300,000 sq ft), Southbay Plaza (424,000 sq ft), Penang World City (1 million sq ft), Sunshine Tower (2 million sq ft), The Light Waterfront Mall (1 million sq ft), Mall@Southbay City (750,000 sq ft), The Designer Village (400,000 sq ft), Ikea & Ikano Power Centre (NLA not available), and Mall by Belleview Goup (1.5 million sq ft). From the names above, ask Penangites and they can tell you which of the existing ones  that are doing well and which are not so awesome currently. 🙂   Of course for the new ones, it’s important to see who’s the mall management. It makes a huge difference. Any developer can build a mall but managing it for prosperity is another issue altogether. Read here:
A developer does not equal to a successful mall

According to my good friend, Raine & Horne International senior partner Michael Geh, all these talks about oversupply are clearly unfounded. Since many years ago, there were already similar talks about oversupply of retail space in Kuala Lumpur. Well, until today none of those older malls have closed down simply due to competition. I think he would also agree that depending on the actual mall and actual management, there is a huge difference between oversupply or just another new supply of ‘unneeded or unwanted’ malls. Ask anyone you know for their top three malls whether in Penang or in Kuala Lumpur, most of the time, it overlaps. Happy shopping for the best deals in your favourite malls.

written on 16 Sept 2015

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When we are 60, just have a RM1,000,000 property, possible?

My parents bought a RM85,000 property in Ipoh 30 years ago. It is currently RM540,000. It took 30 years for that home to reach RM540,000. Still worth buying? The answer in short is, YES. Imagine if my parents chose to rent instead of buying that semi-detached property (which was not that common even then) in a popular neighbourhood (which was not that popular then). At the time, there were many cheaper choices of terraced homes too but my parents was adamant that if they have to spend lesser, they would and they did. By the way, Ipoh is still not known for high-rise units even till today except for a few more popular ones like
The Haven
 or even the one managed by my good friend called
The Octagon.
Let’s assume we bought a RM400,000 property today then and that we are just 30 years old. We assume we are fit and could work until 60 before we decided to leave our full-time job.

Average house price increase.
 The house price increase on average is around 6 percent for Malaysia. It’s much higher in some advanced property markets but we assume for the next 30 years, the price would only increase at half the pace which is 3 percent per annum. So, what happens to the price of our RM400,000 property by the time we are ready to retire? It will be very close to RM1,000,000 by the time we say bye-bye to our job. Yes, by then, the value of money would have reduced tremendously due to inflation. Salary would have also increased but for the majority, it’s usually below the pace of the house price increase. Sorry yeah, it’s the same in advanced countries and not just in Malaysia. Look at the

CEO’s salaries in some countries

and stop feeling shocked but this is the world we live in today. If we rely only on salary and we are not investing or in the top 20 percentile of the working population, we will be stuck in the middle; neither here nor there.

Affordability in the market.
 Fortunately perhaps that we have a
lot of these affordable units being released

to the market today by the federal, state and private developers. Usually these units are subsidised and thus, the prices are below RM400,000. However, without any subsidy or assistance, the typical prices for these units should be around RM400,000. (Assuming RM500 per sq ft and a 800 sq ft unit). Based on the many announcements thus far, these units would continue to flood the market for many more years. Developments with direct accessibility to the MRT station will be majority in the near future. MRT Line 2 (SSP) would bring even more potential choices where areas are concerned. Those popular areas will not be getting cheaper in the future, regardless of how many years we want to wait.

RM1,000,000 property is sold off.
 The proceeds are divided by the next 20 years. We assume we can live to 80 years old and are retiring at 60.  That’s around 240 months. It’s thus RM4,200 per month if we put the RM1,000,000 under our pillow / bed / in cupboards etc and slowly take out some amount every month. If we decided NOT to touch the RM1,000,000 and instead put it into a FD which pays us 4 percent interest per annum, then it’s RM3,333 per month. If we save RM500,000 into the FD and another RM500,000 under our pillow, than it’s RM1,666 per month from FD and RM2,083 from the remaining RM500,000 divided by 240 months. That’s RM3,750 per month which is the middle of RM4,200 and RM3,333 per month. No further assumptions but I think it’s quite clear that it’s best to buy at least one RM400,000 property today and start paying for it if we intend to have a couple of options in future.

Yes, I know that if we sold that property off,
we would need a place to stay right?

Actually, there are plenty of options in future because by 2035, Malaysia would become an ageing nation. By 2040 for example, there would already be lots of options for the senior citizens, not just from the private sector but also the government of the day too. By the way, we can even choose to live in
some cheaper countries too.

Please stop thinking that the ringgit is the weakest currency in the world lah. 😛  Let’s not worry too much with this for now. Just concentrate in getting that RM400,000 property first yeah. Or… a few instead of one. Happy thinking.

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written on 29 April 2018

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EPF Malaysia says RM600,000 needed to retire comfortably

How much funds do we need to retire comfortably?

Many years ago, a good friend said that she would need RM2 million to retire not-so-comfortably. Currently she stays in a semi-detached home in a gated and guarded community. Just for perspective, the table which she is using as a desk for working from home costs RM5,000. I am very sure the table is a great asset to have and yes, it tells a lot about her financial status too. I also do not think there are so many Malaysians who would think the same and that RM2 million is needed in order to retire comfortably.

What is EPF’s advice then?

That’s many years ago, probably she would have changed the retirement fund aspiration higher. Well, the Employees Provident Fund (EPF) says that Malaysians should have at least RM600,000 in order to retire comfortably in major cities. I read through their chief strategy officer Nurhisham Hussein’s comments and I believe this amount already includes the amount needed for shelter; a roof over our head even if we do not own a property.

How much is RM600,000 anyway?

Well, if our life expectancy is 80 and we retire at 60, then that’s another 20 years or 240 months. RM600,000 divided by 240 months is RM2,500 per month. If we are paying RM1,000 for rental, then we have RM1,500 per month for food and other stuffs. That’s RM50 per day. Okay, if we cook by ourselves and manage the expenses, RM50 per day is still pretty manageable.

Now, think a little. What if we own a property which we could stay without paying monthly repayments? Perhaps this RM600,000 can be lowered? At the same time, if we spend well above what we have, then perhaps even RM600,000 is not enough yeah. So, how much is enough then?

Here’s that article in thesundaily
(click here to read the full article)

EPF chief strategy officer Nurhisham Hussein said: “Based on our data, an individual retiring in Kuala Lumpur today will need to set aside RM2,450 a month for basic necessities. Based on this and figures from the Statistics Department, which state the lifespan of the average Malaysian is now 80 years, it means a person will need RM600,000 to retire.”

He also gave an example of location versus the funds needed. He said, “For example, if a person were to retire in Alor Star today, he or she will need RM1,980 per month based on purchasing the same basic necessities (as a person retiring in Kuala Lumpur).”

In terms of investment, this is what he said, “Don’t put all your eggs in one basket. There are several options available for Malaysians, such as putting money in verified unit trusts and financial institutions.” He added that Malaysians can start contributing to EPF from as young as 14 years old for their children. This can help parents to kick-start their contributions.” Please do read here:
(click here to read the full article)

If we do not own a property

In many countries, the cost of living is elevated because of property price. Actually, when we look at what we spend every month, we spend a lot on shelter. If it’s a small room, it could be RM700 (without the need to share) or it could be RM2,000 for a typical apartment per month. We may spend RM50 for food per day and this is still lower than the rental we pay for a typical apartment per month. If we do not own a place, we are also at the mercy of homeowners yeah. If they know we do not have much choice, what’s there to stop them from increasing the rental every year?

If we own a property, a small one maybe?

If we retire at 60 and we continue our life journey until 80, that’s 20 years. If we own a property which is fully paid for when we retire, even if it’s a small one, we could probably save RM2,000 per month. That’s RM2,000 per month for 20 years. In calculation it is as follows:

RM2,000 x 12 x 20 years = RM480,000.

I am not sure about you but I do think it’s best to buy a small place and just do best to keep paying for them so that by the time we retire, the home is fully paid for.

Happy owning at the very least one small property.

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7 things to do to retire earlier than most people

Some say it’s financial independence. Well, it’s just retire earlier. Are we on the right track?

Financial independence is not a common thing

When I graduated in 1998, my idea of a good life is to keep getting promotions until I get very high salary every month. I have no idea how high is high though. I just know that every month I did not have much savings left so I needed to get higher salary.  I think I was paid quite well because I was able to get a credit card almost immediately after I have 3 months pay slip. My first credit card was from Citibank and second one was from Maybank. I do not hold both these cards nowadays. Long story but briefly, their benefits for credit card holders did not appeal to me.

Photo by Andrea Piacquadio on
Pexels.com

What could we do to retire earlier than most people?

#1 – Deciding WHEN?

Have we decided on the age which we want to retire a.k.a no need for full time salary? When we hit our 35th birthday? (wah, very early) When we reach 40 years old? (i have passed this) How about 45 then? (I am 44 in 2021) By the way, even 50 years old is fine because the life expectancy for Malaysians is no longer 65 like long time ago but it’s towards 80 these days. The expectation is that this will continue to increase in future. Thus, retiring at 50 still meant another 30 years more to enjoy the new lifestyle.

#2 – What’s your current earning power like?
(Briefly, active income must be higher than expenses.

Are we working towards earning more than what people typically earns every month? Let’s take RM11,000 salary per month for calculation. I think this is the low side of T20 household in Malaysia.
This is the minimum household income for a T20 household in Malaysia.
If these T20 households need to work 40 years in order to retire by 60, then if we wanted to retire earlier than them, then perhaps we stay focused on just working for 20 years and aiming at RM22,000 per month instead?

#3 – What’s the passive income AFTER active income?
(Yes, passive income will now have to be higher than your expenses too)

When we actively get a fixed income every month, everything seems fine. As soon as we stop working and we do not have a fixed income every month, then we better ensure we have a recurring income every month. Preferably this recurring should be almost the same as fixed income if not more. Just now we used RM22,000 per month as a benchmark. Well, if we want to save enough money into Fixed Deposit to earn RM22,000 interest per month, then we need to have RM13.2 million saved into FD in the bank. Erm… how?

Do note that property investments are illiquid even if we get a positive rental return every month. Meanwhile stock market, even if we were to buy the bluechip counter would still have unforeseen circumstances. Many of these companies which were deemed to be as strong as the oak tree has fallen. Just remember to start thinking about passive income if indeed we want to retire earlier than most peers.

#4 – Are we protected against unforeseen circumstances?

I was hospitalised in Singapore during a business trip and was admitted in ICU too. That bill was enormous. Please get ready for unforeseen circumstances. Please do call up your insurance broker friends to understand more about medical cards, about other necessary protections based on our age and lifestyle. Please do not be penny wise and pound foolish because any sudden trips to the hospital for a week will likely to cause a huge dent in the expenses for many months. We may suddenly be in a huge debt after a trip to the hospital.

#5 – How low could our expenses be?

Beyond just the passive income focus, we also needed to know how low could our expenses go. If we are STILL paying rental, then do remember this amount goes up every year. My advice is to own a property which is fully paid on the day you decided you like to stop full time employment. Please do finish paying for the car too and continue to drive the same car. If we intend to travel a lot, have we factored in this into the financial calculation?

If we are used to spending RM100 for food every day, are we ready to spend lesser? All these are to anticipate a sudden drop in passive income as well. No one knows when the future pandemic may strike.

#6 – Do we really want to stop working full-time anyway?

Truth is, the lifestyle life we wanted need not be the life we need to have everyday. I love to have coffee with friends and just talk about everything under the sun. I do not need to do this daily. I love to jump into the sea and build some bad looking sand castles but I do not need to do this weekly. I have visited probably around 20 countries thus far and I would love to do this more often than every other month but I still love my hometown and all my family members too.

By the way, what if I love my what I do? Haha. I love interacting with people. I love to continue to be a Toastmaster member. I love to share what I know. I love to write. These are what I am already doing today. As they say, if you love what you do, a job becomes an interest. When it’s an interest, you will be good in what you do and somehow all the rest could just fall in place. In fact if we could just work 4 days per week and spend the other 3 days as our own, that’s already fantastic. It does not need to be all 7 days.

Conclusion

I do believe that I am not going to stop full time employment before 55. In other words, at least another 11 more years to go. I also do not believe that working to 60 is considered a sad thing too. I already enjoy what I do today and I do not have the feeling of refusing to jump out of bed every morning. Perhaps I would wait to have both my children in university first. Then, I would want them to be independent and I could then spend more time to do other things too.

At 60, if I live to 80, I have 20 years to continue visiting more countries. If I could visit a country every 6 months, I could still visit easily another 40 countries before I bid goodbye to this world. Happy thinking about it and making plans to achieve it too. I am very sure you could come up with a good plan too.

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Congrats! If you are within this 12% Malaysians who could retire early

It was just a week ago when this topic of retirement came up in a conversation and I told my good friend that I still needed to work. Perhaps until my son enters university? Retirement is really not on my mind currently. As for when would my son be entering university, that’s probably 12 years away. So, I should be able to stop working a.k.a retire early by 57. Before 60 years old is considered retire early, right? 🙂

There’s a report which says that only 12 percent of Malaysians are on track to retire early. Oh dear, what will happen to the remaining 88 percent then? Hey, maybe some have retired? 🙂  Maybe some is on track to retire on time yeah. So, 12 percent is definitely not the only group who would stop working. Here’s that article for more information.

Article in themalaysianreserve.com
  According to a survey by Milieu Insight, employed respondents aged 18 to 49 years old from Thailand, Singapore, Malaysia, Indonesia and the Philippines reveal that many aspire to retire early but only a small percentage of those are on track for early retirement. This is 12 percent of Malaysians while another 55 percent of other Malaysians are unsure of how they could achieve financial independence to retire.

The survey utilised FIRE (Financial Independence, Retire Early), which is essentially about aggressively tightening belts and finding multiple sources of income in order to achieve early financial freedom. The common strategy towards early retirement among Malaysians is regular savings, followed by ‘doing financial planning’ and “investing.”  Meanwhile 72 percent invests into investment funds, 66 percent into stocks and 65 percent into real estate.
Here is the full article in themalaysianreserve.com

What’s your plan then? Since you may also be a Malaysian?

Do not wait too long yeah. The only thing that’s not coming back is time lost. Savings while it remains a virtue but savings should be for investing and not just saving for saving alone. Investing meanwhile is up to you yeah. Some may say stock market too volatile and FD is too slow while property is just too expensive but remember, all these would continue to be true yeah. Plus the fact that inflation will always be around and after a few years of inflation, only the property price will be enough to hedge against it. The rest would depend on your returns.

By the way, saving money can also be through these few ways too

Not buying expensive smartphone and getting a cheaper one every few years means that we could have saved over RM10,000 every 10 years. Not buying some overpriced property and instead choosing to buy slightly further away could save the buyer RM100,000. I know some will now point out that staying further means more money for petrol. Okay… please do the calculation on the extra in petrol spending and how many years before one could spend RM50,000 on the petrol price difference yeah.

Another one is try driving a Proton Persona for 12 years versus buying a new Japanese branded car every 7 years would save the person easily RM100,000 too. Suddenly you may now realise why this Proton Persona owner could buy 4 properties during the MCO period… There are more but I think these three are great examples why some times we just spend too much money.

Happy investing.

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Retire without worry? Ready? Enough? Prepared?

Do we wish to retire without worry?

Many years ago, I read Mr. Yap Ming Hui’s book ‘Maximise What You’ve Got… No matter how much you have now.’ Powerful title and something extremely important because it’s quite usual to hear people complaining how little they have. Yet, not many bothered to use whatever little they have to create more wealth. Frankly, not many in a million that
would win a lottery no matter how long we keep buying…

A few days ago, I read an article by him in
TheStar ‘Making a smooth transition into your retirement years’

He shared many good points and I would encourage everyone to buy and read some of his books too. Here are some of his points in brief with additional resources that I have added for everyone.

A holistic financial plan is needed and everyone should have one. It will help to check our financial readiness for retirement. In fact, if we google for some financial planning resources, there are quite a number even within the Malaysian context. One example would be a
Personal Finance checklist by Entreprenuer Insight.
 It tells us that it’s important to manage our finances right before we attempt to start any business.

I think it’s even more important for working professionals to have
financial awareness because else, peril awaits!

Another one by Great Eastern allows one to actually do some calculations on how much one would need in order to retire. Quite an easy one to really make us understand that we
may not have enough to actually retire! Here’s the page.

He says,
“You need not be 100% debt free in order to retire.”
 Haha. While I agree with his statement but I think there are many who disagrees because when one retires, one may no longer have income, then if one has debts what will happen? He says one should not have massive debts; less than 30 percent of debt vs asset level should be ideal. He also shared that if we have settled all our loans, it may be difficult to apply for new lines of credit because once we retire, we have no documented source of income.

He also shared this about credit cards. Many retirees streamline their credit cards and believe they could apply for it again in future. This may not be the case because financial institutions prioritise income levels when it comes to evaluating one’s ability to service the loan.
Here’s an earlier article about retirees and property investment

His next point. It’s important to have
CASH RESERVES.
 The recommended level? 6 months of active income. The higher the better. One should increase the cash reserves to three years when one is just three years away from retirement age. Reason is because even if one could cut down on monthly expenses such as petrol, parking costs and eating out but this may be be replaced or even exceeded by medical or health products and supplements.
Here’s an earlier article about having strong savings

Next point is very important.
Retire from work but NOT from investing!
 He says that the worst investment risk is to liquidate all the investments into cash because we could not run away from the risk of inflation. He advised that at this stage, high-risk/high-return options may no longer be advisable. In fact the prime objective now is to earn between 6% and 9% p.a. returns in order to stay ahead of inflation.
Here’s an earlier article about retiring with just a property, possible?

He then shared about
insurance coverage.
He said that when we retire, we may lose the all medical benefits and insurance  that we used to enjoy in our employment. Thus, one may not have any idea how much one has been paying until one has to pay for it themselves! It’s a must to get some health plans on our own because the longer one delays, the more expensive it will become. Remember, due to our health condition, the insurance company may exclude certain coverages, impose a loading or even reject your application.
Here’s an earlier article in kopiandproperty.com

Last but not least he shared that about 85% of retirees in Malaysia feel a sense of regret at not having prepared adequately for retirement.
Here’s that full article in TheStar for reference.
 So, are we ready for retirement? The secret to retiring is actually to prepare ourselves enough so that we can choose when to retire instead of being retired due to age. Oh yeah, working above 65 is actually something that will become common in the future. We either get ready to face it or face it without being ready. No other choices yeah. Cheers.

Retire without worry is not something we worry later on. It’s something we needed to start today, regardless of how far away to the actual retirement day. Happy moving purposefully towards it.

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written on 6 May 2018

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Retire in hometowns and working in KL today

I have been working in KL for nearly 4 years, after working in Penang for 14 years after my graduation. I think if I were to ask 10 different friends where would they prefer to retire, most would answer their hometowns. I used to also think the same, that Ipoh would be my most preferred city of retirement. These days, I would like to place Ipoh as one of those cities where I would spend at least 30 percent of my time after I retire. The remaining 60 – 70 percent? Well, at this particular moment I am thinking of these few places. Sandakan, Penang, Kota Kinabalu, Kuching, Langkawi and even ISKANDAR. Percentage wise, Sandakan has to be the number 2 place lah since it’s my wife’s hometown. It’s still a long way till my retirement. I believe I still have time to slowly get a small high-rise in these places that I would love to frequent and just relax and do nothing. Not now lah, I need to work hard from now till the day I retire. I still love my current role and all my awesome colleagues. 🙂

This brings me to a question an attendee asked me after my session during the recent
‘Property Outlook Forum 2017 by BLT’

He asked if he should buy in his hometown, Perlis first before buying in KL where he was working. I asked him for his main reason to buy in Perlis. He said he was worried that the prices would become way too high for him to buy in future when he goes back to retire there. I told him that I do not know anything about Perlis property market BUT I would
personally retire in Ipoh
 and yet I have no plans to buy any property in Ipoh yet. My retirement is at least 18 years away. I would however buy in KL because it is growing very fast, in fact fastest in Malaysia as the capital city. My personal belief is that the property price will rise faster in KL compared to other smaller cities or towns. So, when we really do need to go back to our hometown, selling our KL property should enable  us to still buy a property back in our hometown in future.

In essence, I did not answer his question. I merely shared with him what I am currently doing. By the way, he was still renting a place in KL because he did not know how long he would stay in KL. I encouraged him to get his
own place and if needed,just rent out one or two of the rooms
 in the property that he would be buying. Let others help us to own our home. It’s more beneficial than helping the owner own his property from our rental payments. The question we should be more interested to ask ourselves is this. Are we ready to rent out the rooms. If the answer is not, then perhaps renting can still be a good option until you have really saved enough for a home you like instead of just any home. Happy buying for your retirement, wherever it may be.

written on 1 Jan 2017

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Time to retire just like Jack Ma? Wait a minute… not yet.

When I posted an article about Jack Ma’s retirement in my
Facebook page yesterday
, the number of reach was super-high. There were also comments and well, many did not believe that Jack Ma was about to retire. I too have my doubts but then again if one of the richest man in the world says he is retiring, I think he is more than capable to do that. Jack Ma’s net worth in 2018 as per Forbes.com is US$36.6 billion. (This number is bigger than the GDP of many small countries.). Yesterday, there were many reports about him retiring on Monday (that’s 10th September 2018).
Here’s one of that news in BBC.com.
 Today however there are now new reports that says that Jack Ma’s impending retirement is just an exaggeration. Jack Ma is not about to leave the U$420 billion Chinese e-commerce firm. In an interview Ma gave to the
South China Morning Post (SCMP)
, he said that he will instead be phasing himself out of the company through a succession plan.

Alibaba confirmed that Ma will remain a part of the company while the succession plan is carried out. As for more details, it will be announced on Ma’s birthday, September 10. Ma’s daily role stopped when he moved from CEO to chairman in 2013. 13-year Alibaba veteran Jonathan Lu stepped into Ma’s shoes as CEO. Today, former COO Zhang leads the company. This was what Ma said in the interview with SCMP, “I sat down with our senior executives 10 years ago, and asked what Alibaba would do without me.” He added, “I’m very proud that Alibaba now has the structure, corporate culture, governance and system for grooming talent that allows me to step away without causing disruption.” So, the question of whether Ma is retiring totally from Alibaba? Not yet says Jack Ma.
Here’s the latest news in techcrunch.com

Question. When should one retire? Well, personally I will retire when my kids no longer require that much money from me. Hopefully that’s when they start working and somehow they perform well in their jobs and become a high-flyer in their companies. Too bad for me. They will only start working when I am 60 years old… That’s still a very long time to go. I also hope to stop having a full time 9am – 6pm job so that I can fetch my kids occasionally after school and basically spend more time with them because one day in the future, they may NOT prefer to have me in their lives. 🙂  I hope retirement is a CHOICE and not a REQUIREMENT. What about you my dear readers? How many have retired and how many are thinking of retiring or at least working part-time within the next few years? Happy deciding and please remember that Jack Ma is NOT retiring yet. Our PM is 93 and he is still working on something he loves. 🙂

written on 9 Sept 2018

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Possible to retire with RM1 million or US$1 million?

Many years ago, someone told me that RM1 million is not going to be enough to retire because that’s too little. Actually I think it’s enough because if one lives for another 20 years after retirement, then, RM1 million is around RM50,000 per year or RM4,166 per month. We assume everything stays unchanged in terms of rental.  RM1,500 would get us a typical apartment / condo depending on the area. In smaller cities / towns, one could rent a landed home for around the same. Usually the rental is likely to be lower.

This brings us to the remaining amount. RM4,166 minus RM1,500 = RM2,600. Assuming 50% of it will be spent on food. That’s RM1,333 or RM44 per day for breakfast, lunch and dinner. Can lah… Even if RM8 per bowl of noodle plus a cup of kopi-O kaw kaw. Occasionally, roti telur and teh tarik. Beyond food, we still have RM1,333 for all other things. I do not imagine us still paying for a brand new car instalment after retirement or we still have to support the children after retirement.  So, perhaps pushing for that RM1 million savings is still okay, at least for now.

Can someone retire with US$1 million then?

Someone also told me that RM1 million is not the same as US$1 million. Well, first of all, it is definitely not the same because we do not live in the US. We live here. As for the Americans, they also live in the US and they do not live here. After retirement, I am very sure most of them would move to cheaper cities too. This will stretch their retirement dollars way further than if they were to continue staying in New York city for example.
As per information from renthop.com (click here),
the below is an image showing the median price for a Studio apartment or a 1 bed room apartment. it ranges from US$2,595 all the way to US$3,150. (Median price).

We assume it’s okay to stay in a studio versus 1 bedroom apartment. So, it’s US$2,595 x 12 months x 20 years = US$622,800. This meant that out of the US$1 million we spoke about, if we assume the person does not want to move to a cheaper city or town, then he / she would only have US$1 million minus US$623k = US$377,000.

Using the same rationale, we use half of the amount for food. That’s US$189,000 or US$US$9,450 per year or US$788 per month. It’s US$26 per day. One Big Mac Meal is roughly like a bowl of noodle here in Malaysia in terms of number.
It’s US$7.60. (Info here)
 If I assume this is the typical price for one course, then US$26 is enough for three meals too.  Just need to note that the flexibility would be lower versus the same person in Malaysia simply because of the cost of accommodation.

The above comes with assumptions yeah

We assume food price stays almost the same. We assume rental does not change much. We assume we do not get any returns from our investments. We also assume we only have the occasional fever and headaches and have no major medical related complications. Hopefully we are already protected with medical insurance. One plus point is that treatment at General Hospital remains accessible to any Malaysian. We also assume the person continues to stay in the city versus moving to a smaller city and town. If we moved to a cheaper place, of course our money could be stretched even longer.

Conclusion is simple. RM1 million or US$1 million is enough to retire on

As long as we do not overspend, I think it will be just fine. Remember yeah, if the home we are staying is already ours, then take out all the rental in the calculations above and we realise that we suddenly do have the flexibility to also travel more whether within the country or occasionally outside the country. This is why when people say it’s best to rent and not buy, remind them that renting is forever. One does not stop paying rental just because one has retired… As an owner, I would also not be telling my tenant to stop paying me just because he has paid me rental for the last 30 years. Happy understanding.

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EPF? Withdraw RM10,000 today is equal to RM100,000 or more when we retire

Will not say too much. Let’s see numbers instead. Just look at what happens below where if we have RM10,000 today and the EPF contribution is just an extra RM150 per month. What will happen to the amount of money we have at the end of 30 years? With just a typical return of 3% per year? By the way in 2021,
our returns were… 6.1% (Read here for full article)

Source:
https://www.calculator.com.my/savings-calculator#.YjGBZ3pBw2w

Article in nst.com.my
   PM announces special RM10,000 EPF withdrawal for Keluarga Malaysia.  Prime Minister Datuk Seri Ismail Sabri Yaakob in a special press conference today said the amount is set at RM10,000. He also said that the details on the withdrawal will be announced by the Finance Ministry and EPF.
Article in nst.com.my

EPF is really for retirement a.k.a last resort

Withdrawing RM10,000 is easy. It’s even officially allowed already as announced. Saving back the withdrawn amount of RM10,000? Now, that’s a long road home. It will take a very long time. What if we could save RM200 per month? It will take more than 4 years just to have back this RM10,000. What if we could save RM100 per month? It will take over 8 years!  We have not yet calculated the amount of dividends which we have lost.

Please think very carefully and not withdraw the money because it’s allowed now and you like to use the money to buy the latest smartphone yeah. There is a huge difference between Need versus Want. Thank you.

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Retired and turbulence in the market arrives…?

If I follow the convention, I need to work another 15 years before retiring. 56 years old. Hopefully, I can keep working in something I like for far longer than 15 years though after retiring, I hope to be doing more travelling instead. Should we worry about retirement when we retire or now? Answer is very clear but let’s look at the retirees in advanced nations first. Learning from them so that we can be like them or to avoid from becoming like them is extremely important.

For some retirees in the U.S, it’s not an easy time. The stock market has been volatile and in the last turbulence (Mortgage Crisis of 2008), this happened:
“By the time the market bottomed out during the financial crisis in 2009, an estimated $2.7 trillion had been wiped out of Americans’ retirement accounts, according to the Urban Institute. Older Americans, in particular, have had a tough time recovering their losses. The Pew Research Center estimates the net worth of the median Baby Boomer household in 2016 was still nearly 18 percent shy of where it sat in 2007.”
Full article in gloucestertimes.com (click here)

Many are super worried, especially those who’s about to retire. One retired parent attorney (lawyer) said, “There’s a lot of fear that if you have another event like 2008 and you retire the year before or the year after, you’re screwed. I’m not taking that risk. There’s a huge fear of folks my age that they’re going to run out of money and they’re going to need to rely on the government for help.” The reason why a sudden loss is huge is because many of these older folks may not be able to work for many more years and for many it’s going to be tough to replenish their depleted retirement and savings accounts. Mark Hamrick, the Washington bureau chief and senior economic analyst at Bankrate, notes that the Federal Reserve’s ongoing efforts to boost interest rates benefit savers with money in the bank but also make it more difficult for those with debt to pay back what they owe.
Full article in gloucestertimes.com (click here)

The situation depicted above is NOT happening only in the U.S. Our Bursa has been volatile as well and the ringgit’s performance has been choppy. Earlier article here:
Weaker Ringgit due to stronger greenback
. For many retirees, it’s so important that when they retire, they actually have enough in their EPF savings for emergencies while their savings and assets could be relied upon for daily expenses. The life expectancy for Singapore is already over 80 and Malaysia is actually not that far behind. It meant that whatever money one has when he retires must last 25-30 years. That’s a total of up to 360 months. Imagine paying just rental of RM1,000 per month, that’s RM360,000 until the day we say bye-bye to the world.
Start our savings earlier. Use it for investments.

Happy preparing.

written on 24 Nov 2018

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Retirement fund. Retiring without much funds in EPF. Big worry for many.

Retirement fund. Retiring without much funds. Big worry for many.

When I started working in 1998 after my graduation, retirement funds was never in my mind. I believe that if I continue to work until 56 and I continue to have savings in the EPF, I should be just fine. Fortunately, I realised that property was a necessity. Bought my first one and the rest was history. Gratefully, I realized protection is compulsory. Happily, I learnt more about other investment opportunities too. Thus, I think I have been able to slowly build up my retirement funds versus only realizing it much later. Starting earlier has helped me I believe.

Article in themalaysianreserve.com
.  Economist Dr Nungsari Ahmad Radhi says that there needs to be a policy to repair the safety net for employees which has been made worse due to the pandemic. He disagreed with the government’s decision to allow EPF members to withdraw savings, even for economic relief during the pandemic.

He said, “It was a very bad and irresponsible decision. Obviously, it will be the low-income employees, who have low savings at the EPF, who will withdraw and be affected the most in the future.”

Dr Muhammed Khalid said, “It is not shocking that EPF said nearly half of the members below the age of 55 have less than RM10,000 in their account.

“Data showed that due to the post-Covid-19 related withdrawals, median savings of the B40 (bottom 40% group) in EPF is just slightly RM1,000 and median savings of the M40 (middle 40% group) is about RM25,000. Majority of Malaysian workers will retire super poor.”  Please do read for more details here:
Article in themalaysianreserve.com
.

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Retirement thoughts? Getting ready is the key

We often do not think about retirement until the time when we need to retire, whether or not we are ready. Some may even think that the employers would take care of us until we retire. Well, here’s an actual fact. We retire at 56 perhaps but Malaysians are set to live till 76 or older. In other words, there would be easily 20 years which we have to take care of ourselves. Our Employee Provident Fund (EPF) comes in handy at that time but by then, it’s either we have enough or we do not have enough. There’s no further contributions. How about some thoughts and actions that we could start doing today? When we are still needed by the employers, wanted by other companies and capable of climbing the corporate ladder further?

Start with INVESTMENT. Starting is quite easy. Choose a forced savings type and buy a wealth protection plan; insurance. These two would be sufficient for a while until you have saved enough for a bigger investment such as a property, a second property and so on. Without sufficient knowledge, unit trust is better than stocks directly.
Fixed Deposit
 is good and should have enough to last you 6 months should you be out of job. Once we have started, our investment journey usually grows to include property, stocks and even some alternative type of investments. Starting is usually the hardest…

Supporting ourselves, not rely on anyone else.

When we retire, it’s best to have enough to support our lifestyle. Sometimes, we may fall sick and sometimes we may want to travel a bit. If we have children, they may love us a lot but do remember that they too must work hard to sustain their lives and some may also be struggling. We do not need to look very far, just look at what’s happening to some of the older folks in some advanced countries. In Hong Kong, the older folks have the highest suicide rates in the world. Thus, if we intend to help them (our children) and help ourselves, it’s best that we have enough to at least last us until the day we bid goodbye. If we have extra, then that’s best!

Lessen our monetary burden
. Try to structure our debts in such a way that by the time we retire, we would have nothing to pay for monthly except for our insurance, perhaps. Mortgage payments are normally a huge one on a monthly basis, especially when we are no longer working. If this is not planned, it would mean an additional unnecessary pressure when we retire.

It’s best to buy properties as early as possible.

In fact we could even RENT when we retire. Selling that property or properties that we have and use the money for things we love plus rent a place or even stay with our children?

If we have been taking actions for our retirement, chances are there would be enough in our EPF to supplement what we already have. However, do note that for the majority in Malaysia, relying on just
EPF is a mistake.
 There’s just not enough to last more than just a few years. Thus, EPF is last resort and not be treated as main source. Oh yeah, when retirement comes and we do not have enough money, we can blame the world but the one who has to live on is ourselves. Think and act, ok? Retirement should be a time when we could finally enjoy and do what we love to do, even the small things in life. Assuming we started working when we were 25 and retired at 56, we have worked over 30 years. Frankly, that’s more than enough. Some would say I want to do what I love to do. That’s great! Making sure we do not need to worry about the money part is the critical part. I am MANY more years away from retirement.

written on 26 April 2018

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