On Sunday (3 Nov), I hosted a session with financial experts Hann Liew and Sani Hamid on EPF, retirement, job hopping, Bitcoin, gold and more.

If you missed the live discussion, listen to it on Spotify or Apple Podcast.

Scroll down for a detailed QnA breakdown of the session.

A 35-year-old woman has close to RM2 million in EPF. How did she do it?

Recently, a 35 y/o woman posted anonymously on Reddit about her close to RM2 million EPF account. She mentioned that she’s working as an engineer and her current salary is RM50k/mo, with bonuses ranging from RM200-300k. 😮

Her starting salary was RM5k but she received huge increments and hit RM20k within the first 5 years. Rather than job hopping, she focused on being extremely good at what she’s doing.

Though the post has since been deleted, it has garnered quite a lot of attention. Many are using this as a source of inspiration, but there are also some that are criticizing her post, saying that she’s trying to flex and that her case is an extremely rare one.

Q1: What is your first impression when you look at cases like this?

Sani: Yes, her case is an extremely rare one. She’s definitely one in a million to be able to earn such a high pay.

You can call up any chart from DOSM and have a look at the median salary of Malaysians. At RM2,745, the majority of Malaysians are extremely far away from her salary range.

So, rather than focusing on her as a source of unrealistic inspiration, you should focus on yourself and your own finances.

Q2: In the same post, she also mentioned that she did not job hop. Do you agree with her approach?

Sani: If you’ve found the “golden goose” company, then consider yourself lucky. But in most cases, it’s entirely normal to look for a higher paying job.

Like what the woman has indicated in her post, the surefire way to increase your retirement savings is to first ensure that you have a decent income. That’s because when you’re paid higher, the monthly EPF contributions by you and your employer increase too.

So, if you’re planning on working in the same company, make sure your employer pays you a healthy increment every year (at least 5-10%). It makes no sense for them to give 2-3% increment because it doesn’t even keep up with inflation!

Working for a different employer, on the other hand, can potentially give you a much higher pay raise, which will boost your retirement savings faster than working with your current employer who barely gives you any raises.

But before jumping to a new job, you have to figure out how much you’re worth (ie. your fair value).

Compare yourself with industry peers. Go online and check how much people like you are currently paid. This way, when your new employer asks “what pay are you expecting?”, you can confidently justify your expectations.

Q3: In 2022, EPF’s chief strategy officer said that Malaysians would require RM900,000-1 million to retire comfortably in 20-30 years. Is this figure accurate?

This figure is somewhat accurate when look at the average annual inflation (2.15%) in the past decade and how much RM1 million will be worth in 2-3 decades:

• 5 years: RM899,100.13 (10% less)

• 10 years: RM808,381.36 (19.1% less)

• 15 years: RM726,815.93 (27.3% less)

• 20 years: RM653,480.42 (34.7% less)

• 25 years: RM587,544.45 (41.2% less)

^ Calculated using the reverse inflation calculator.

With RM1 million in EPF, you’ll receive RM55,000 in dividends every year, or RM4,583 per month (assuming EPF pays 5.50% per year).

But due to inflation, this figure will be worth 41% less, equivalent to RM2,693 today.

RM2,693 is about the benchmark for single people to retire right now, according to the Belanjawanku Study.

Hann: Calculations aside, this figure does not factor in where you live and your spending habits, which will differ from person to person.

DOSM’s new “basic expenditure for decent living (PAKW)” index should give you a better idea on the cost of living based on districts.

You can check it out here: https://mypakw.dosm.gov.my/

Q4: Many are still far away from RM1 million and feel depressed. What is the right approach when planning for retirement?

Hann: Most people don’t achieve RM1 million until the final years of their employment – that’s really when compound interest works the hardest for you.

Let’s say you earn an average salary of RM5,000 throughout your career. During the first 20 years, you’ll have RM524,662 in EPF (which may seem far away from RM1 million).

But within the next 10 years, that RM500k will double into RM1.1 million. In the final 5 years, the annual interest you’ll earn will range between RM60k-RM73k. 😮

Another method to increase your retirement savings is to treat yourself like a bill and pay yourself first.

During the start of the month, allocate 10-20% of your salary for your future. Store it in EPF, cash apps, FDs, stocks, or whatever that can help you generate returns. This way, you can spend the remainder of your money without guilt.

Q5: “Why save so much for the next day? I won’t live that long anyway.”

Sani: There are two types of people in this world: those that favor instant gratification and those that are willing to delay gratification.

If you’re in the “instant gratification” camp, you’ll always be in debt. Without prudent financial management, you’ll find it difficult to deal with emergencies, and the interest in your debts will keep piling up to the point where you’re unable to repay them.

The “solution” to this is even more debt, or worse, using your retirement savings to cover up the hole you’ve dug for yourself.

On the flipside, “delayed gratification” doesn’t mean that you don’t enjoy the current moment at all. Rather, you set aside some money for emergencies and your future, so tomorrow will be more comfortable for you.

It’s the only way to retire with a peace of mind. No one expects to work until they drop dead.

Hann: When you’re young and healthy, you’re able to effectively convert your time into money. But as you age, this efficiency will decrease until you’re physically not capable to generate income.

During this period, your retirement savings play a crucial role to support your daily necessities.

If you’re saying “I won’t live that long,” then you should also consider the opposite side of the coin: “what if I do live that long?”

So spend less than you earn and invest the difference. This is a simple rule, but if you can follow it, you’ll be ahead of 90% of people.

Q7: Gold and Bitcoin’s performance have been stellar this year. How should an investor allocate their portfolio in both of these assets?

Allocating a tiny portion into gold and/or Bitcoin is proven to increase the overall returns of your portfolio. This is because BTC is not really correlated to other markets, and can therefore diversify your investments.

Your allocation in Bitcoin should depend on your risk profile.

• Low risk (1-3%)

• Medium risk (4-8%)

• High risk (9-10%)

So, if you’re a low risk investor and your total investment is RM50,000, you should only allocate up to RM1,500 in Bitcoin.

This summary does not fully encapsulate the thoughts shared by both of the speakers. Listen to the full episode on Spotify to learn more:

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That’s all for this week’s newsletter!

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