Why do you need to invest?
1. Your EPF might not be enough for your retirement.
EPF sets a minimum of RM196,800 by the time you arrive at 55 years old. That is equivalent to RM820 per month if you live until 75 years old. Do you think you can survive with RM820 per month? How much do you think you need then?
2. Investments are highly likely giving you better returns than savings in banks.
Do you know how much you earn when you put your money in banks? On average, banks only give you between 1%-3% (annually). If you invest, you can get even more. How much more you can get? It's up to you.
3. Protect the value of your money from inflation.
Inflation Rate in Malaysia averaged 3.72% from 1973 until 2014. If you put your money in banks, you will lose the value of the money over time. Why? Because banks give you average returns that are lower than the average inflation rate.
Let me gives you one example:
Suppose you have RM10 today (2014) and that can buy you 5 cups of coffee or RM2 per cup of coffee. If the inflation rate in 2014 is 3%, the price of a cup of coffee in 2015 will be:
If you put RM10 in your bank account that gives you 2% return, in 2015 you will have:
Let see how much cups of coffee you can buy in 2015:
Let me gives you one example:
Suppose you have RM10 today (2014) and that can buy you 5 cups of coffee or RM2 per cup of coffee. If the inflation rate in 2014 is 3%, the price of a cup of coffee in 2015 will be:
RM2 x (1+0.03) = RM2.06
If you put RM10 in your bank account that gives you 2% return, in 2015 you will have:
RM10 x (1+0.02) = RM10.20
Let see how much cups of coffee you can buy in 2015:
RM10.20 / RM2.06 = 4 cups ONLY, and you need another 10 sen to buy the 5th cup
