This article is updated as of 5 April 2024.

Why is RM100,000 important?

Aside from being a satisfying figure, having RM100,000 by 35 can greatly improve your personal finances and pave the way for a comfortable retirement.

According to the Department of Statistics Malaysia (DOSM), fresh graduates earn an average salary of RM2,400 (or RM28,800 per year).

If you’re just starting your career, reaching RM100,000 may seem daunting, especially if you're starting from scratch.

The fear of not reaching this goal only becomes more pronounced as we grow older, as many believe that it's too late to achieve such a significant amount.

How long does it actually take to achieve RM100,000?

Assuming that you start working at 24 and earn a salary of RM2,400/month, you’ll reach this goal by 35 if you:

• set aside roughly RM588 per month.

• invest the sum into an asset that compounds 5% annually.

Your total capital will be RM77,616, while the remaining RM22,627.09 is interest earned.

The calculations include mandatory EPF contributions.

The best part about achieving RM100,000 is that your employer is already doing the heavy lifting for you.

Your salary of RM2,400 per month is automatically deducted by mandatory EPF contributions.

Here's the math:

So, to reach the goal of RM100,000 by the age of 35, you would only need to save an additional RM12 per month! Now this seems more achievable.

What if I am older?

The monthly contribution required will be significantly higher as you age, because the power of compounding works with time, giving those who start earlier a much greater advantage.

But since the calculations already include EPF contributions, you would only need to top up the difference to achieve RM100,000 by 35.

How can I achieve this goal sooner?

As you progress along your career, your salary will increase and you’ll also receive bonuses. Use this golden opportunity to contribute even more to your investments!

Assuming you start off with RM588 per month for the first year but you increase it by 10% every year.

After 11 years, you’ll have RM165,636.89 – significantly higher than your initial goal!

Where can I earn steady returns of 5% pa?

EPF.

The retirement fund has managed to secure an average dividend of 5.95% over the past decade. During the Covid pandemic in 2020, the fund remarkably maintained its returns above 5%.

But do note that your funds will be locked until you reach 55.

If you’re younger, you should opt for a variety of investment options (such as money-market funds, stocks, etc).

Personally, I just ensure that my monthly contribution hits the minimum requirement to achieve RM100,000 by 35.

How do I Voluntarily Contribute to EPF?

• Download the “i-Akaun” app.

• Login to your KWSP account.

• Select “Increase Your Savings”.

• Enter any amount (min RM10).

• Transfer the funds via FPX.

Make your own calculations and projections by using the Compound Interest Calculator.

Personal finance is a journey, not a destination.

While reaching RM100,000 by 35 may not be feasible for everyone, having some money saved somewhere is better than having none at all, especially when we no longer have the capability to convert time into money.

So start as soon as possible and save whatever you can, no matter the amount.

DISCLAIMER: The information contained in this article is for informational and educational purposes only. Nothing herein shall be construed to be financial, legal, or tax advice.

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