- Share Investment
- Mutual Fund
- Life policy
- Property (rental income or sell the property)
- Allowance from children
Remember, when you are retired, the two most important thing are
- Safety of principal
- Cash flow
- EPF - Common to all it is NOT enough. Return is average due to huge fund size. Related to many government-linked company like Sime Darby which incurred heavy loss in 2010.
- Share investment - High return, high risk. High liquidity. Should have more high dividend stock during post-retirement for stream of cash flow.
- Mutual fund - mostly linked to share investment or bond. High return, high risk+high expenses. To switch to low risk profile during post-retirement.
- Life policy - Cash value in life insurance policy. Life fund managed by life insurance company according to Insurance Act 1996, therefore the allocation of fund is restricted. Pros - safe and steady return. Cons - Can not give high return. Highly suitable for retirement planning as the outcome is highly certain.
- Property - Low liquidity. Need tenant management if aim for rental income to support retirement.
- Allowance from children. - This is special. Take how much you give your parent now and divide by 2 or 3.... probably that is how much you can expect. So, better don't expect any.
Ideal mixture of asset for retirement
- EPF 20%~35%
- Share Investment 10%-30%
- Mutual Fund 10%-20%
- Life policy 20%~30%
- Property 5% ~20%
- Allowance from children - don't expect any. If you have, take it as bonus.
You will never know which "asset" will depreciate in value (esp. Share and Mutual Fund) in 10 to 30 years later when you need to cash it.
- If EPF, Share Investment and Mutual Fund give you good return, life policy is a bonus.
- If Share investment and mutual fund doesn't perform well, life policy helps to minimize the impact.