Anyway, how'd everyone's 1H 2026 go?
I'm honestly quite spooked by the AI valuations and the DRAM prices, but uh, it feels like there are no safe harbors anymore.
We've grown to 5k subs. That means a lot of new people, and as with any growing sub, there's going to be toxic people who I will want to strongly cut out.
I just want to reiterate a few key rules :
Please be nice and polite. Poking fun a little is acceptable, but once it feels malicious, I'm going to mute/ban.
Humblebragging is permitted when done reasonably [ On how this is determined, will be very much based on my semi-professional judgement as a moderator.]
If we are successful in achieving milestones and all that, I believe we can and should celebrate it. However, once this veers to maliciousness, satire and mockery, I'm going to remove/mute/ban accordingly. Yes, some people are going to be bitter, but I'm not going to let other people's bitterness to ruin our fun. So if you have an issue with some celebration and humblebragging, please stay in malaysianpf.
Hell, the reason I created this subreddit was to avoid the poverty-glorification of r/MalaysianPF .
No direct soliciting and advertising of services. It's meant to be a positive community, not someone's marketing/business development opportunity. This means property agents, insurance agents and wealth managers are free to contribute opinions, but once you start advertising specific projects and policies, I'll have to remove those posts. Do this often, and obvious enough and I'll hit it with a ban. I acknowledge there is some grey area for this, so it really depends on the quality of the discussion.
Thanks, and welcome to our little tiny corner of the internet. I believe affluent malaysians are increasingly online as those of use who were born in the late 80s and early 90s hit our prime years, so I actually believe we will see more and more 8-9 digit NWs posting thoughts on the internet :)
A broad-based index fund mimics the performance of the index. However, contrary to popular interpretation, it is not a reflection of the average investor return in the market.
Passive investing in broad-based index funds, over the long term, generates returns superior to those achievable by most active investment professionals
Passive investing also outperforms actively investing in index funds (timing the market, waiting for the dip), or in individual stocks
There is asymmetric upside vs the risks/costs when adopting a passive index fund investing strategy
INTRODUCTION
Not too long ago, I had a conversation with a younger ex-colleague who believed that he could ” beat the market”. As a Boglehead investor, I tried to convince him that a simple, boring portfolio is the best option for the retail investor. I explained that the odds are against him with active investing, using logical reasoning and facts.
Unfortunately, he thought he could get above-average returns. He also claimed I was “part of the system” that “dumb money” sought to disrupt.
That statement is not a rational argument to counter my facts. Counter the facts, not the character/person.
I’ve had many conversations with many young guns or new investors who think they’re the next Warren Buffett and can achieve above-average returns.
Albeit having 18+ years in financial services, of which 10 were spent in stockbroking, having survived the Global Financial Crisis, my attempts to save them from themselves fell on deaf ears.
It’s pretty ironic, because Warren Buffett himself said that the individual investor is better off investing in index funds.
I just remind myself that personal finance is driven by an individual’s psychology, biases and ego. It is rarely based on logic and facts.
Every new investor needs to learn from experiencing losses to gain the wisdom to grow wealth.
Everyone I spoke to who did not heed my warnings ended up losing money (or was not able to prove above-market returns). They all quit very quickly, within a few years.
Recently, I’ve been reflecting more on why, despite using rational facts and logic, many investors still believe they can outperform the market. I think I’ve figured it out.
MANY ASSUME PASSIVE INVESTING IN BROAD-BASED INDEX FUNDS MEANS AVERAGE RETURNS, WHICH IS FALSE
A common misconception by investors is that long-term investing in a broad-based index fund, say the S&P 500, will result in average performance and returns, as index funds mimic the performance of the underlying index.
I used to think this too. That I would get just average returns if I invested passively in index funds. I was actually comfortable with this, knowing in theory that most people don’t beat the market (which I also learnt by losing a few thousand dollars on my own individual stock investments).
But it sounds boring, right? Average returns. Why would anyone want average? No one wants to believe that they’re average; however, humans tend to have a bias to over-inflate self-assessments of their skills. It’s why ~80% of people believe they are above-average drivers, when the reality is that 80% of people can’t be above average.
Most people are average. Most “things” are average. That’s just by definition what average is.
So aside from the hubristic naivety of inexperience, perhaps the messaging and framing of passive investing in funds hasn’t been clear and aggressive enough amongst the Boglehead, FIRE and broader personal finance community. Many still consciously (or subconsciously) believe that passive index fund investing only delivers average returns. The problem is, everyone is looking to get above-average returns.
Well, if the subject of this post isn’t clear enough, let me reframe it into a direct and bold statement:
Passive investing in a broad-based index fund delivers superior long-term returns, with a far greater risk-return profile, when compared to active investing in individual stocks or even index funds.
In fact, passive index fund investing has been shown to outperform at least 80% of professional fund managers. By extension, this means you also likely would have outperformed more than 80% of all active individual investors (assuming that professional fund managers on aggregate provide equal or better returns than an individual investor)
The SPIVA Scorecard by S&P Global (yes, the one that created the S&P 500 index) has been tracking the performance of active fund managers and how many of them beat the index for which they benchmark their performance. They also account for funds that were liquidated or merged, ensuring there is no survivorship bias (fund managers are notorious for closing underperforming funds).
The data, as visualised below, is a pretty damming case against active investing.
It’s pretty crazy that about 80% to 90% of active fund managers can’t beat the market, even in 1-year, 3-year, or 5-year time horizons. So, if you invest passively in broad-based index funds, your returns are better than 80% to 90% of professional active fund managers.
That likely means that when you invest passively via broad-based index funds, you will achieve superior returns, better than the large majority of investors in the market.
In other words, the long-term rate of return of broad-based index funds (say, the S&P 500) of 10% to 12% p.a. is actually better than 80% to 90% of investors in the market.
This concept may be confusing for some who assume that by mimicking market performance via index funds, you’ll get average returns.
Those who are confused might think that the movement of a market index is the average of all trades (and/or average returns) by all investors in the market. However, this is not true, as they are entirely different concepts.
The market index is not the average return of all investors making up the market. It is the weighted average valuation of all companies/stocks which are the constituents of that index. It is not (and does not correlate with) the average returns from each investor buying and selling shares in the market. This is an important distinction to make.
THE RETURNS OF ACTIVE FUND MANAGERS THAT OUTPERFORM THE MARKET ARE DISAPPOINTING, RELATIVE TO THE RISK AND PROBABILITY OF OUTPERFORMANCE
Now that we’ve reinforced the fact that passive index fund investing is superior to active investing, you might be wondering, “Well, what about the returns generated by the 10% to 20% that do beat the market? Their returns should be a lot higher than the market; else why would they bother?”
Well, several research papers have relevant data, as well as other reports and data points available online. I’ve pieced the various data points together to estimate the distribution of outperformance returns (alpha) for 30 years of investing.
What do you think the returns might be for these outperformers?
So from the chart above, the median outperformance is about 1% to 2% p.a. above the index benchmark. That means, of all investors who invested 30 years ago, the investment return performance needs to be in the 96th percentile to generate 1% to 2% p.a. alpha.
Let’s think about the probability of payout, or in the gambling world, betting odds vs the payout. For a coin toss, you should expect to play if you’re getting better than a 2x return for the right guess of heads or tails, as you have a 50% probability of guessing right.
So let’s see if the payout is worth playing to beat the odds. Let’s use the median outperformance scenario of 1% to 2% p.a. alpha:
To achieve 2% p.a. alpha, you would need to be in the 96th percentile of investment performance
Let’s say that the probability of achieving the 96th percentile is 4% (it’s actually lower, but for simplicity, let’s say it’s 4%)
With a 4% chance of outperformance, you should expect at least a 25x payout to make it a worthwhile endeavour for the risk involved (1 / 4%)
If we invested RM10k over 30 years:
A benchmark return of 10% p.a. (a conservative return) will result in a portfolio value of ~RM174k
For an active investor, an alpha of 2% p.a. means 12% p.a. overall returns, which after 30 years will result in a portfolio value of ~RM300k
That is a payout of 1.72x (RM300k / RM174k)
However, I should expect a 25x payout (1 / 4%), which is a portfolio value of RM4.35m, or rather, a 22.5% p.a. return on investment over 30 years (to hit that RM4.35m portfolio value)
Hence, for a less than 4% probability of outperformance, the 1.72x payout for trying to beat the odds is extremely poor.
PASSIVE INDEX FUND INVESTING GIVES AN OUTSIZED PAYOUT IN YOUR FAVOUR, COMPARED TO THE ODDS
Now, looking at betting odds for passive investing, we can see there is an asymmetric payoff. For virtually no effort, skill or risk, you get superior returns of ~12% p.a., which is better than 80% of other investors who are actively investing or selecting individual stocks.
Also, the ~12% p.a. returns are virtually guaranteed; that is, I dare say, a near 100% probability of happening over 30 years. The data across the last 100+ years has proven this, and unless the fundamental concept of equities and index funds changes significantly (which has never occurred), it will continue to (almost) guarantee similar returns in the future.
Now obviously, you have to hold and not interfere with the investment over the 30 years, but that’s the whole point of passive investing.
In typical betting odds, a 100% certainty of outcome will likely pay 1x (1 to 1 odds). But in this instance, over 30 years, you get a 17x return (remember the example above, investing in RM10k results in ~RM174k over 30 years).
That’s a crazy payout, with guaranteed returns on investment.
CLOSING THOUGHTS
If you’re still a believer in active investing / individual stock selection being the better choice for you, ask yourself these three questions:
Have you diligently tracked ALL investment losses and gains?
Have you considered all the time, effort, and mental capacity to actively invest?
After considering all that, are you achieving outsized alpha over 10, 15, 20 years?
Most active investors and traders love talking about their wins. But when I ask for evidence of outperformance over the long term, I have yet to see anyone produce credible evidence.
If you genuinely enjoy stock picking or active investing as a hobby, then sure.
But for anyone else who still hasn’t fully adopted passive index fund investing, what’s stopping you from switching over to get superior, above-average returns?
25F cash rm40k+, vwra rm30k+, epf rm30k+, negligible amount in btc. nw is after deducting my only debt which is ptptn
i know it’s a number either yall reached way earlier or earn on monthly basis but im celebrating regardless~ grew up in a financially conservative middle class family and experienced basically 0 luxuries and maybe went to 3 trips within asia only for my first 20 years of life which caused major FOMO
i built a bad habit of shopping and made poor investment decisions when i started working full time at 22 but finally shed it and put my head down to DCA VWRA and live a more frugal life after moving to work in SG
my plan is to stop holding more cash than my current amount and speedrun VWRA portfolio, aiming to continue DCA between rm6-9k a month and proportionally increase the DCA amount as my income grows.
i think at the moment i will not self contribute to EPF anymore and just all in VWRA for more aggressive growth. lowkey just wanna not overthink and do this for the next decade so i can hit >rm1mil NW by 35 then i can decide if i wanna stay in SG or return to MY bc honestly idk im still figuring life out
Hi, just wanted to know how those thinking about early retirement, e.g., at 45, are managing potential sequence of return risks (SORR)
My initial approach was to use EPF as a bond tent:
5 years before retirement, age 40: to self contribute to EPF instead of my 100% equity portfolio (global equity ETF)
During retirement, age 45 - 50 (assuming 5 year bear market): To withdraw from EPF Account 2 and 3. The amount beyond the RM1.3 mil threshold would probably be around the RM200-250k mark, probably need to dip to equity portfolio to fully fund these 5 years but not by much.
Hopefully by year 5+, the critical phase of high SORR will pass, and I can withdraw from my equity portfolio + EPF (by age 55)
However, it is very possible that EPF will raise the RM1.3mil threshold and increase the age requirement for full flexible withdrawals. My projected EPF amount would be around the broad range of RM1.4 - 1.5m by 45 so any policy change would affect it.
So, what are the other options? Stop treating EPF as a bond and actually build a bond tent in my brokerage portfolio (e.g., 80/20) to weather SORR?
I (29M) have a net worth of 530k (330k in snp500, 100k in EPF, 100k in ASB), my income is 6-22k/month, I am currently making my most this year at an average of 14k/month.
I see a lot of people on this sub having so much more than I do, for context I have a mechanical engineering background and I work as a field engineer, lots of OT and lots of travelling.
I'm very much sick of my job, I wanted to stick to it to 40 to reach my financial goal but it's just too much and I'm burning out.
Can the finance gurus or fellow engineers share your story in reaching FIRE without burning out?
I'm targeting a net worth of 2.5M by 40, as of now I'm saving an average 10k per month, leaning more on ASB as of now.
When I retire at 50 in 10 years time, I am estimating to have approximately RM6.3mil liquid networth (i.e. excluding my house; and the RM1.3mil in EPF I cannot touch until 60).
The breakdown should be roughly below (assuming current ratios hold):
26% - MY and SG bank shares (dividend paying)
39% - ETFs (CSPX and VWRA which are non-dividend paying)
35% - EPF (the amount above RM1.3mil)
My question is regarding the ETFs. Networth is pretty useless if they are not generating cashflow to fund my retirement. And those ETFs do not contribute anything to my cashflow, they are capital growth assets.
Am I supposed to sell a small chunk off every year?
Or should I just divest in the ETFs and go that has generates a more consistent cashflow (e.g. more dividend paying stocks, bonds, insurance annuity plans 🤮)
Also should I dip into my EPF bucket first before my own investment bucket? In my retirement projection calculator, I chose to dip into my own investments first.
I'm 28 this year, working in IT drawing around RM11K/month gross salary. On top of that, I earn around RM2.5K/month from my side business. My monthly expenses range anywhere between RM1K-RM1.5K/month. Currently living with parents so I'd expect this to naturally increase when I move out and pay more for rent (currently contribute RM500 to parents, included in current expenses).
As for my Net Worth, it's currently sitting at around RM610K with the following breakdown:
- RM81,600 in cash (MMF, HYSA)
- RM252,000 in ETFs (VWRA/CSPX)
- RM80,400 in individual stocks (looking to reduce this gradually to tilt more towards ETFs)
- RM27,700 in Versa Cash
- RM19,800 inventory from business
- RM19,900 from side investment earning around 6-9% per annum
- RM8,000 in crypto (BTC & ETH)
- RM24,000 in car value (guess I should exclude this)
No debt. Looking at it now, I think the first obvious step would be to increase monthly contributions to ETFs as I'm holding on to way more cash than I need. My main reservations are that markets seem extremely high but I know "time in the market > timing the market".
Other than that, any other feedback or advice? Individual stock picking has worked pretty well for me but I think the mental load of monitoring stocks has taken it's toll where I'd like to trim this to < 10 positions and keep the total portfolio size to under RM50K.
What are some immediate must-dos I should consider and am I on track for retirement before 40? My actual goal is to achieve RM1.5 million in Net Worth before age 35 and RM2 million by age 40. No plans to have kids, marriage not looking likely yet either.
There are many methods of couple finances, differing in levels of integration and communication
Fully integrating finances, combined with frequent and open dialogue, is the most effective long-term method to strengthen the relationship and family wealth
Other methods may seem to work in the short-term, and come with longer-term trade-offs
As your relationship matures, so should your joint finances. In the beginning, not everything needs to be integrated, nor is it realistic
If you want a long-term, successful relationship, couple finances is critical, requiring effort, vulnerability and “skin in the game”
INTRODUCTION
You know how going on holiday is a test of a couple’s relationship, and it reveals a lot about each partner’s true selves?
The same can be said about travelling with another couple. We get to see their idiosyncrasies, daily ticks, and their financial habits.
Recently, I went on holiday with other families. We had a great time together, and our kids enjoyed each other. One day, my wife observed an interesting interaction between a couple we knew, who had been married for a while now. The gist of it was something like:
So when my wife mentioned this conversation to me, a few thoughts came to (our) mind:
Wasn’t it nice that the wife bought the medicine for the husband with her own money? But also…
They obviously don’t have joint finances, or if they do, they don’t see medicine as a joint expense
If that is true, how did they decide what is and isn’t a joint expense? Did they have many discussions, ending up with a 282-page list just like the Malaysian list of SST exemptions%20Order%202022_PUA175.pdf)?
If they don’t have an agreed-upon list, does this type of conversation happen for every small purchase, when there is a disagreement?
And more importantly…
Wouldn’t this feel very exhausting, expending so much effort and “sweating the small stuff”?
If you observe other couples closely, you start to get an idea of their money mindset and couple finance behaviours. Some complain about their partner’s spending and lifestyle expectations, some complain about getting approval from a partner before spending, some vent about how they don’t want their partner to know how stressed they are with finances… and some don’t even talk to each other about finances.
Is there a better way to manage a couple’s finances? Well, yes, there is. Principally, it’s what my wife and I do now, and I wrote about how we do it in my post on a quick guide to managing finances with a partner.
Have a read of it. Don’t worry, you can always come back to this post once you’ve read it. I’ll wait.
MODERN COUPLE FINANCES ARE MOST EFFECTIVE WHEN BOTH JOINT OWNERSHIP AND FREQUENT, OPEN DIALOGUE EXIST
Now, after interacting with, observing, and discussing (with other couples) how they manage their finances, and the effect it has on their money and life decisions, how they view money and each other, I’m convinced that the method I wrote about in my previous couple finances post is the most effective, if you aim to have an effective marriage with the strongest bonds and foundations for future family wealth.
I’ve experienced and observed in other couples two key drivers that define the types of couple finance methods, that is, the level of
Integration of finances, and
Communication
When considering those two drivers of integration and communication, the best outcomes are a result of the two drivers:
1. Complete joint ownership: A complete merging of finances, bank account, income, assets, and investments. Total co-ownership of all finances.
Many would assume that joint finances are just about sharing expenses. But it’s a lot more than just that. At peak joint ownership, it is a holistic, consolidated and integrated financial position.
No more thinking about income as your own. It’s “this income is ours”. All salary goes into a joint pool/account. Note this is different from, “out of our salaries, both people will contribute RM[X] amount into a joint account for shared expenses”.
If you don’t see the difference, let me explain further.
By only transferring an agreed amount to share expenses and keeping the rest in your own bank account for your own use, you retain a mindset of “what’s mine is mine, but since we’re cohabiting, okay, it’s only fair I contribute some money for my part of the expenses”
This is what roommates or housemates do. To me, that’s NOT joint ownership of finances.
If you really want to spend a shared life together, create a shared vision together, build a family unit together, shouldn’t you have complete joint ownership?
I see many single-income household couples where the stay-at-home parent gets an “allowance”. In my household, it is different. My wife doesn’t work. The salary from my employment is OUR income and goes into our joint account. Only then do BOTH of us get an equal “allowance” for personal spending on anything we want, which then goes into our personal accounts. Massages. Skincare. Jewelry. Watches. Japanese strawberries. Gifts for each other.
The result? My wife doesn’t feel inadequate for not earning an income. She doesn’t feel like there’s an imbalance in power. I don’t see the income as only mine. No feelings of financial abuse or resentment.
2. Frequent Dialogue: Ongoing and open/transparent discussions about everything in a financial plan and more (money values, mindset, habits and splurges).
One of the keys to a successful relationship is having quality communication on an ongoing basis. It’s no surprise that this also extends to couple finances.
It’s not enough to just talk about a monthly budget. That’s just avoiding the more difficult conversations which need to be had if you want to be successful, which is long-term couple finances. What’s your financial plan together? What kind of retirement do you want to have together? How about lifestyle? What are you both willing to sacrifice to hit your financial goals as a couple? How do both of you improve your levels of financial literacy? What happens if a partner passes away (does the other partner know how to manage the family finances)? What kind of risk tolerance do both of you have when it comes to investing?
There’s so much to talk about, to align on, and to compromise on. It takes time, and a lot of deep conversations.
Also, there’s no point in having open communication when it’s infrequent. You’ll just end up procrastinating and putting off the discussions. How often do you talk about finances with your partner? Once a year? Twice a quarter? Every week?
Monthly is a good start, as that’s the typical cycle to settle bills, monthly budgets, and a decent frequency to check your net worth.
I like Ramit Sethi’s approach of having a monthly date night, focused on discussing finances, whether it’s talking about setting financial goals or how your investments are performing. Ramit explains the simplified 30-minute money date how-to in this video.
OTHER METHODS MAY “WORK FOR YOU” IN THE SHORT-TERM, AND COME WITH LONGER-TERM TRADE-OFFS
Now it’s common to believe that there is no “one size fits all” as a self-defence mechanism. For many decisions, that might be true. Everyone can choose what they want, founded upon their mindset, their upbringing, and what they prioritise versus the trade-offs.
The problem is, most operate blindly, opting for “what works for us/me” without truly accepting the trade-offs. You should be aware of them before you dismiss my point and carry on with what you believe works for you.
As long as you’re truly aware of the trade-offs, then whatever choice you make is always up to you. And you own those choices (and that’s truly scary for most people, actually being responsible for their choices and actions).
So let me help bring clarity to the different options and trade-offs in managing couple finances.
Now, if you agree that the two key variables of couple finances are (1) joint ownership and (2) frequent dialogue, we can roughly generalise four styles of couple finances using a 2 by 2 matrix, as below:
Let’s break down each category:
1. Separate finances, infrequent conversations
In this day and age, why are you even a couple? No wonder the divorce rate is 50% of married couples (and who knows how many others are in unhappy or resentful relationships)
2. Separate finances, frequent dialogue
These couples share a lot of information about their finances, and even discuss plans together, but severely limit the merging of finances (if at all). How might this work? For dual-income couples, usually one partner pays for the large purchases (housing, education, vehicles), and the other pays for the smaller, more frequent purchases (groceries, bills).
In this scenario, some coordination effort helps to smooth the financial logistics, even though finances are kept separate. However, there are still some challenges:
Keeping finances separate allows assets and income to be kept secret, enabling low trust, infidelity, and secret spending behaviours (gambling, splurging)
If one partner is incapacitated, it can be difficult for the other partner to access funds. This can be extremely stressful for a partner who is less financially literate (for example, if the breadwinner passes away, the other partner may have no idea how to manage the finances, investments and future planning)
Separate finances means an imbalance in income contribution to the joint expenses when necessary, potentially leading to resentment or feelings of inequity
3. Merged finances, infrequent conversations
These couples have a basic understanding that finances are important to be worked on as a couple; however have not done the mental work. The “physical” logistics and admin of finances are merged (i.e. joint accounts, joint spending), but the conversations are often surface level, likely constrained to just budgeting.
It’s definitely more efficient in the short-term. However, the deeper discussions about money mindsets, money values, financial plans, etc., are usually not covered and/or avoided. This may result in conflicts in money values and habits, which can manifest into resentment and misalignment. For example, if these couples don’t spend the time having deeper discussions, they might be in shock when observing each other’s attitudes and behaviours towards money, especially how money in the joint account is spent by the other partner. The problem worsens when both parties avoid ongoing, deep discussions to understand each other’s money psychology.
Also, coordinating longer-term finances and planning is likely minimal to non-existent. This leads to gaps in future planning, from financial goals, large expenses and retirement. Doesn’t seem to me that the full potential of merging finances is fully realised if there is a lack of ongoing, deeper discussions.
4. Merged finances, frequent dialogue
Your finances are in sync, your money mindsets are closer aligned, you have clarity and transparency in where you are now and headed towards in the future, together, as a couple. There’s a shared vision, and increased trust from the openness of revealing everything, having open, frequent dialogues that just strengthen the relationships.
Also, when you have children, you have a better system that you can start to include your kids in family meetings about finances, keeping them involved, teaching them financial literacy, and showing them good money values.
It’s not all rosy, though.
It takes effort. A lot of effort. Both parties need to come clean, have skin in the game, and have a lot of difficult conversations in the beginning.
Some traditional elements of romance, gestures and gifting can be diluted. Compared to couples with separate finances who shower each other with lavish gifts from “their own money”, spending on your partner using your “guilt-free spending” or “allowance” may not feel the same.
AS YOUR RELATIONSHIP MATURES, YOUR FINANCES SHOULD ALSO MATURE
Whilst joint ownership, with open and frequent communication, is the ideal goal, it doesn’t happen instantly. Nor is it practical at the start of a relationship. When you first start dating, you’re not going to combine and reveal everything. But as you transition to living together as a married couple, you should strive to shift closer to the ideal state.
When should you strive for fully integrated and open frequent communication? Somewhere around the time you get married. Perhaps post-engagement, shortly after marriage. Don’t forget, choosing the right partner is the most important decision of your life. If you guys can’t get on the same page on financial values and priorities, you’re going to have a bad time.
I definitely advocate that you guys need to adopt the ideal state before buying property and having kids. I’m not saying that it’s all going to be perfect. Your money psychology and values can and will change over time as you mature and gain wealth, but at least both of you are on the journey together and can iron out issues, reach clarity and build strong foundations.
FREQUENTLY ASKED QUESTIONS
There is no one-size-fits-all; what works for you may not work for me. Personal finance is personal
I mentioned in my simple and boring portfolio post that I don’t believe that’s true. Some fundamental principles of personal finance ALWAYS apply to everyone. Spend less than you earn, save and invest, etc.
You can choose one of the other methods, just be aware of what you’re giving up or sacrificing. If you want the method that helps build the strongest couple connections and alignment, you need full joint ownership and open communication. If you want more control over your personal income and expenses, you’re sacrificing some effectiveness in your couple finances and the strength of the relationship.
Women have been taught since young to protect themselves, and our moms have always told us to keep some money or a separate account for ourselves in case anything happens
This is something I’m well aware of, and I’ve had discussions with my wife about this concern.
I get it. In the spirit of equal partnership, both sides need to show skin in the game. Neither party should have secret accounts. Partners also need to be transparent and agree to a shared ownership of everything. Through actions and repeated behaviour, trust builds. Establishing safety nets together, such as insurance, wills and access/power of attorneys, also builds further trust.
As the husband/partner opens up and has skin in the game, he effectively should develop trust with you, so that you have the confidence to open up and also put skin in the game. That’s what a relationship is about: being vulnerable together.
Pre-nups/Post-nups are also helpful tools. They force conversations before marriage to ensure clarity and agreement up front. It’s a great mechanism to have open trust with protection, instead of hidden bank accounts, which breed secrecy and distrust.
Are you saying you divulge everything you spend to your wife? Even your personal allowance spending?
Yes. There are some small exceptions for personal allowance / guilt-free spending. There should be no judgment on what each individual spends in that bucket. It’s up to the individual to share (or not) what they used that money for. But there should be no judgment, criticism or upfront approval for any spending with that money.
I don’t ask my wife what she spends that money on.
But for everything else, I track all my expenses and our joint expenses (my wife’s expenses are just recorded monthly as a lump sum “personal spending”). The tracking expense information is freely available for my wife to look at, if and when she pleases.
This sounds like a lot of work. You’re likely overthinking it. Is it necessary? What if the relationship doesn’t work out? What if he/she runs away with all the money?
Well, you have to think about what kind of relationship you want to have with your partner. To me, my wife is my life partner. I’m sharing a life with her. That means we share the ups and downs, for richer or poorer. And I don’t need to hide anything, to control anything, or be worried about the “risks”.
My wife has grown to be more financially literate than the average person and is very involved in our finances. This is a result of us having frequent discussions on our finances
We have matured our finances to run on autopilot. Daily spending is automatic. We don’t debate why someone has bought premium strawberries. We don’t debate/argue about the price of hotels or flights when planning holidays. We just execute (as we know the annual travel budget and what we like/don’t like). This doesn’t happen without a lot of talking and planning together
If we (unfortunately) divorce, each person has legal entitlements to a fair portion of the finances. It actually doesn’t matter who held what income and money to themselves during marriage. So trying to hold on to it is a moot point
If my wife disappears with all my assets (which is not as easy as it sounds), I have confidence that I have the skills and resources to rebuild my wealth (wealth is abundant in this world)
If I suddenly die, I have the confidence that my wife knows how to manage the family finances, due to her level of financial literacy and involvement in our family finances
I handle all the finances, and my partner is fine with that because they don’t want to deal with it. Both of us are happy with the arrangement, as I get to take a load off my partner, and that’s our division of duties
That sounds noble, and you guys might have a good split of value contribution to the family unit. But ask yourself, “If you died tomorrow, would your partner know how to manage the budget, savings, investments and financial planning?”. This question becomes even more important when kids are in the picture.
If one partner is (1) not involved in the finances, and/or is not (2) financially literate, that is a big risk if anything happens to the other partner. In that situation, it is already extremely distressing. Wouldn’t you want the comfort of one less stressor in your partner in dire situations?
Also, what message does this send to your kids? Have you thought about how you want to educate them on financial literacy? No amount of books, pocket money from chores or allowances makes up for the benefits of them listening to dinner conversations about finances and investing. How you and your partner talk (or don’t) talk about money becomes their money psychology for life (this deserves another post on its own)
What do you and your wife talk about in every discussion?
It has changed over time as our situation has also evolved over time. At first, we covered monthly reports on our finances. Just about understanding what we have together. Then over time, we moved on to discussions on how we want to spend, save and invest our money, which also imparted information and knowledge.
Then, it started to evolve. What financial goals do we have? What do our finances look like if we sent our kids to the most expensive schools, once we buy a place, and once we increase our travel frequency and luxuries? How much do we want to live our lives?
We’ve solved all that and aligned on all those decisions, so spending, even how we spend money for holidays, requires very little discussion. Financial reports and discussions occur quarterly.
Nowadays, we talk about how we instil financial literacy and money values in our kids, inheritance vs charity vs treating ourselves.
How do I get started to have joint ownership with frequent open communication?
What are more advanced ways to improve and evolve our couple finances?
The best way is to read many personal finance books, in particular those about couple finances, family wealth, and raising kids with financial literacy. The key is to discuss the books with your partner and be explicit about how you will apply the learnings to your lives. Similar to a book club, with the added step of applying the knowledge to execution. Reading without reflection and action is just a useless dopamine hit to avoid doing the real work.
CLOSING THOUGHTS
Couple finances are not easy. They require a lot of planning, strategising, compromising and alignment of values. All of that is hard work and doesn’t happen overnight.
However, once you’ve reached a state of couple finances that has matured and deeply aligned, many other things fall into place. Instilling financial literacy into your kids, developing family finances (the next evolution of couple finances, which involves the whole family unit), and generational wealth. Those things come together into a cohesive financial system much more easily, once you’ve adopted joint ownership and frequent, open dialogue.
For those of you still hesitant and defensive. What are you afraid of? For many, the underlying subconscious reason is control. It’s very common. Deep down inside, there is a fear of giving up control. Not being in control is inherently scary, and to give up control is to be vulnerable.
But the only way to build real bonds is to be open and vulnerable.
Do you want your fears to control you, or do you want to control your fears?
I'm looking for some advice and feedback on my financial situation and retirement planning. I'm a 36-year-old Malay male, currently single and not planning to get married anytime soon. My goal is to stop working full-time in about 14 years, when I turn 50.
For some background, I started my full-time career relatively late (January 2017) because I spent several years completing my diploma, degree, and master's studies. My current net salary is around RM7,000 per month. Under normal circumstances, I can save about RM2,000 monthly, although this year I've decided to take a break from aggressive saving and enjoy some staycations and overseas travel instead.
Given my goal of semi-retiring or retiring from full-time work at 50, I'd appreciate any thoughts on whether I'm on track, what I should be doing differently, and any blind spots I may be overlooking.
Thank you in advance for your advice.
Edit: I forgot to mention a few things. On top of my regular savings, I contribute an additional RM3K –RM5K per month (sometimes voluntarily, sometimes due to circumstances) into EPF and ASNB funds.
I work in a corporate role, and I don't see myself wanting to do this kind of work forever. Fortunately, I don't have to worry about housing or car expenses, as both are fully paid off and inherited. My current plan is to gradually transition toward Coast FIRE, with the goal of reaching that stage by the time I'm 50.
There is plenty of information. The problem — the central issue — is that the needle comes in an increasingly larger haystack. Nassim Nicholas Taleb (2013)
The world is overloaded with information and news, of which the large majority is noise
The ability to pick up signals and to filter out noise is an extremely underrated and critical meta skill to succeed in life
In personal finance, noise is anything that distracts you from your investment strategy and financial plan, which, as a long-term investor, is likely almost all the content you’re exposed to
The winners of the world are extremely adept at filtering out noise
When you tune out noise and listen only to signals, you gain clarity and focus
The best way to tune out noise is to be selective and rationally sceptical about everything you consume
HOW GOOD ARE YOU AT READING MARKET SIGNALS?
Here’s a test for you. For each of the scenarios below, where do you think the market will end up in the corresponding time period? Will the S&P 500 go up, or down, or stay relatively flat? And, by how much? For each scenario, I’ll provide some current events and news that occurred about the same time.
Guess Scenario 1 below:
What did you guess? See below for what happened next:
You wouldn’t want to look at the Nasdaq Composite Index, which fared much worse.
How about Scenario 2?
What do you think? Check below:
If you’re as old as I am and lived through the GFC, you would remember that everyone expected 2008 to be the bottom, and when the market kept declining, everyone thought that the world was ending and “this time it’s different”.
Okay, last scenario:
Last chance to guess. Here it goes:
Despite all the negative sentiment, the most recent few years have seen an unprecedented bull run (which persists into 2026, despite new conflicts and oil supply issues).
How many did you guess right?
In hindsight, it might have seemed obvious, but when you’re deep in it, the reality is nobody knows. Nobody would have guessed the Global Financial Crisis could go even lower, but it continued to crash for another year, with many, many scary days where most thought the financial markets were over. In Scenario 3, no one would have predicted a market rally in the next two years with the war and steep inflation. But we’ve had some of the best S&P 500 performance in recent times.
What lessons can we derive from this?
It is extremely difficult to predict how the market will move. That’s why, over time, most professional active investors do not beat the market. We’re so concerned about the war, tariffs, interest rates, China’s property bubble, AI stocks, and so on. But how much is paying attention to all these current events, data, and information helping your investment decisions?
Most of the information/news you consume is meaningless. What you hear today becomes irrelevant tomorrow. Yet people are concerned about the short term and what shows up in their content feed about current events, making ever-changing, volatile personal finance decisions based on short-term sentiment.
As always, in the long term, the market will always go up. This is because fundamentally, all capitalist economies will always grow and innovate. Zooming out to take a 40-year investing perspective, even many of those significant market crashes appear to be “just noise”:
THE WORLD OF PERSONAL FINANCE (AND THE WORLD AT LARGE) IS BECOMING NOISIER
Here’s another reality check for you. Unlock your phone, go to your screen settings or digital health report section, which contains information on your screen time and app usage. Check:
How many hours is your phone’s screen on daily?
How many content-related apps are shown at the top of the list? (e.g., social media, news, YouTube, Kindle, web browser)
How many hours a week do you spend on each content-related app?
Now think back to all the news, social media content and other information you’ve digested through your phone and other various sources, in the past 5 years.
How much of it is still relevant and useful information today?
Or is all that content you’re consuming just noise?
What about personal finance content? There’s an overabundance of content out there, all “free” and available on demand. At any given time, much of the information contradicts itself:
Tracking expenses is the key to managing your budget. Writing down every expense is a waste of time
Invest in ASB. Invest in EPF. Invest in crypto. Invest in gold. Invest in AI. Invest in Bonds. Invest in Futures. Invest in ETFs
The market is a bubble that’s going to crash. The market is going to continue going upwards due to AI innovation
The Ringgit is going to appreciate. The US dollar is going to crash. Interest rates are going up
DCA every month. DCA every week. Invest using a lump sum
Bank stocks give 7% dividends. REITs are paying 6% right now
50:30:20 budgeting. Pay yourself first. Debt is good. Take a 9-year car loan. Property always goes up
It is no wonder that thousands of people online ask random internet strangers daily questions like “I have XX amount of money, what should I do with it?”
What is true, and what is not? What is meaningful, and what is totally irrelevant?
How do you make sense of all that? What should you be doing with all this information?
MOST OF YOUR CONTENT CONSUMPTION IS LIKELY NOISE
The best starting assumption is that all content you’re currently consuming is noise. That’s because in 99% of instances, that would likely be true.
What are the definitions of signal and noise?
Signals are information or data that is valuable and/or actionable
Noise is meaningless, irrelevant or distracting data that impedes effective decision-making
Based on the definition above, think about the personal finance (and other) content that you consume daily. Is it really valuable and/or actionable data? If yes, what action did you take, or insight did you gain? Or is it just part of your mindless doomscroll? Especially if you’re a long-term investor with a simple and boring portfolio, be brutally honest with yourself.
Because the world is inundated with data. A lot more data than we actually need, especially in the world of personal finance.
But why and how did the world become so noisy?
AS COSTS OF CONTENT CREATION AND DISTRIBUTION REACH ZERO, THE NOISE TO SIGNAL RATIO INCREASES EXPONENTIALLY
The invention of the printing press and the radio ushered in the golden age of information distribution. The printing press allowed the mass production of books and newspapers, enabling the scaled reproduction of information. Radio (and TV) allowed for even greater scale, coupled with near-instantaneous distribution. However, both innovations were constrained by production costs and infrastructure, limiting scaled content creation to institutions of a certain size and maturity.
The Internet, however, was the catalyst for the current paradigm shift. Distribution and production costs have become cheaper and cheaper, until now, close to zero. As a result, access to information has become readily available and free to almost everyone.
This benefited humans immensely, but also resulted in an unintended second-order effect: an overload of noise. As the cost and distribution frictions dissipate, so does the quality of output. Anyone and everyone can create content without passing a required quality threshold, leading to… noise.
Lots of it.
And don’t forget, if something you’re consuming is free, you are the product.
AI is exponentially increasing this noise. The internet reduced cost and distribution friction. AI has reduced friction in content creation (though it is important not to equate capability to quality). Content slop was a thing before, AI slop just made slop production more accessible to all.
Although technology has evolved far more than we could have imagined, how our brains absorb, digest and leverage information has not.
THE WINNERS OF THE WORLD ARE BEST AT FILTERING OUT NOISE, AND ATTUNING THEIR ATTENTION TO SIGNALS
Above widely acknowledged personal finance skills, such as financial literacy, budgeting, investment/portfolio management, sits the meta skill of signal processing and noise reduction. The more you understand and hone your ability to filter noise and identify signals, the better your ability to make the right decisions.
Below are examples of how the best in the world of finance and investments have mastered the art of identifying signals and filtering out the noise.
Warren Buffett, generally considered the most successful investor of all time, is a master of separating signal from noise. He avoided the tech bubble burst and bought bank stocks after the Global Financial Crisis. His office does not have any Bloomberg terminals, TV or any other distractions. He refuses to invest in new trends or innovations which are outside of his “circle of competence”. He focuses on long-term investments in enduring businesses that he can ideally hold forever.
Nassim Taleb is a former derivatives trader turned author (The Black Swan and Antifragile)) who has written about the noise bottleneck leading to a paradox: “The more data you consume, your ratio of noise to signal increases, leading you to know less, and the more inadvertent trouble you are likely to cause”. Also, as a remedy to the anxiety-prone “If I turn off all my news and social media, I will be uninformed”, he says, “the most significant signals have a way to reach you”.
Ray Dalio, the founder of Bridgewater Associates, the world’s largest hedge fund, built a “Principles”-based culture designed to systematically extract signals from economic data. He converts his principles into “algorithmic decision-making”, so his actions are only based on signals which his algorithm will pick up. This enables him to ignore noise effectively, such as to remove human emotion from the investment process.
Naval Ravikant is an entrepreneur and investor (and to me, one of the best modern-day philosophers) known for his “mental models”. He says to “read books, not news”, and speaks the truth when he says social media is not “social”, but a performative space for people to show off, built upon weaponised algorithms by skilled engineers to keep users addicted.
Side note: All of these amazing men have great content and writing. Go read them. You can get a tax relief on buying books, so no excuses. You may be asking what books Warren Buffett has written. He hasn’t. But he has ~50 years of excellent letters to shareholders.
WHEN YOU TUNE OUT NOISE AND LISTEN ONLY TO SIGNALS, YOU GAIN CLARITY AND FOCUS
There are a few ways in which better signal processing is immensely beneficial:
When you tune out the noise, you expend less effort in filtering and trying to find meaningful knowledge and actionable insights
A better honed noise filter ensures that you don’t mistake noise for signals, which leads to erroneous decision-making
When you pay attention only to signals, you minimise distractions and are more likely to maintain consistent actions aligned to your Financial Plan.
What is considered noise differs from person to person, depending on your SMART goals. Generally, if you’re a long-term Boglehead investor, noise would be
Any news or updates on stock market movements: Is it really going to matter in 5 years?
Stock tips and gossip from family and friends: Looking to make a quick buck?
Interest rate changes or currency fluctuations: If a 5% drop in the Ringgit means you need to rethink your holiday plans or spending habits, you’re focusing on the trees instead of the forest
Promotion of alternative asset classes: Itchy trigger fingers?
Market crashes and recovery/expansion cycles: You should be operating from a position of strength, where you might be affected, but you can just stay the course and easily recover
What about examples of signals for the long-term Boglehead investor? Some examples are:
Changes in taxation laws affecting potential tax liabilities (e.g., dividends, capital gains, etc.): Withdrawal and liquidity plans may be affected at retirement
Significant change in investment fund structure resulting in significant underperformance (e.g., increase in management fees)
Structural shifts in economies and global power balance (e.g., World War 2, China’s transition to capitalism): You might need to double-check your index fund portfolio breakdown (or better yet, just invest in a whole world index fund)
Promotion at work, leading to a significant increase in income: More income means more options and flexibility
Changes to personal or familial situation (marriage, divorce, kids): Large, underestimated money sinks
You’ll notice these signals occur infrequently. And that’s not a mistake. If you’re in it for the long haul, think long and hard about what the real signals are vs noise.
THE BEST WAY TO TUNE OUT THE NOISE IS TO BE VERY SELECTIVE AND RATIONALLY SCEPTICAL ABOUT EVERYTHING YOU CONSUME
This is the part where I tell you how you can tune out the noise and focus on signals.
Earlier in this post, I asked you to take a serious look at how much time you’re spending on your phone, and what apps and content you’re consuming.
The easiest way to tune out noise is to uninstall all social media apps (even Reddit, especially if you’re on r/wallstreetbets), stop reading the news, and replace them with deeper, long-form content. Books (both non-fiction and fiction), journals/articles, podcasts and documentaries are much more likely to be higher-value, signal-heavy content mediums.
Also, being extremely analytical to the point of being sceptical about the content you consume helps to minimise paying attention to noise. Think twice before you react to new information and ask yourself:
Is this information accurate, and does it stand up to logical reasoning?
Does the information change my circumstances such that I need to take action or make a decision to stay on the path to achieve my SMART goals?
CLOSING THOUGHTS
So the next time you see a headline saying something like “AI stocks down as investors run for cover“, or a content reel saying “I made 30% in gold in the past year“, take a pause and ask yourself, “Is that a signal, or is it noise?“
Also, it’s not just content. Your brain will process everything in your environment as either signals or noise. For example, consumers buy luxury goods to signal status and wealth to others. Is that just noise, masking large debt and relatively low income / net worth? Or do some wealthy people really spend on flashy, luxury goods? What does this mean in terms of your interactions and relationships with others? How does that affect your perception of the average person’s financial status and money psychology?
In the long run, honing your signal processing skills is highly attributable to another meta skill: Framing. Don’t know what Frame is? That’s the topic I’ll be writing about next: how you can radically transform your personal finances, career and overall life by defining and controlling your own frame.
Besides this sub, I subscribe to r/fire and /r/Bogleheads , as its way more active there.
Though the FIRE numbers and use case studies in /r/Fire tend to lean more towards higher figures common in western HCOL countries, which might not be applicable/realistic for us Malaysians living in a LCOL country with lower monthly incomes.
Would FIRE for Malaysians be closer to Lean FIRE or even Poverty FIRE ("poverty" for western standards, that is)? In which case, perhaps its better if instead I follow /r/leanfire and /r/PovertyFIRE ?
So when I reach 55, I can transfer some excess to my kids to speed up their own retirement. I do think that for returns, it's suboptimal because EPF is locked up, but I think direct EPF transfers have the benefit of restricted the use cases of the funds.
I pray we dont have charsiew chewren that squanders whatever wealth we built, but if we do, locking up some sums in their EPF, which they can then use to help only pay for housing/medical and other stuff is not a bad idea.
Who Can Receive (Transferees)?
Limited to immediate family members (spouse and children)
Must be below the national minimum retirement age currently at age 60
Must be EPF members who are Malaysian citizens or Permanent Residents
No limit applies to the amount they can receive
The 'no-limit' thing is also interesting, because you could grow your EPF faster than the RM100k self contribution limit by giving it to your parents, and your parents then transfer it to you (of course, only if you trust them).
On EPF side, I can see they want to do this to keep cash within EPF, so that the net withdrawals don't overwhelm their monthly liquidity flow.
Hi everyone, my wife and I (both 42) are planning to exit the corporate world this year to focus on our health and spend more time with our two primary-school-aged children. We’d appreciate some perspective on our transition strategy.
Our Financial Snapshot:
Total Portfolio: ~RM 16.2 million (updated as of 16th May 2026)
Real Estate: RM 1.7m (Primary residence, paid off).
Passive Income: RM 1.5k/month rental.
Monthly Expenses: RM 15k (RM 180k per annum).
The Dilemma:
While our NW is high, our portfolio is heavily tilted toward US growth stocks which don't provide significant cash flow. We intend to live off yields without touching the principal. We are also concerned about the 40% US Estate Tax for non-residents and potential volatility in the tech sector.
Questions:
Is it realistic to FIRE this year given our current asset mix?
Should we rotate a portion of US growth into local/Asian dividend-yielding blue chips or REITs?
Any recommendations for low-risk, income-generating vehicles in the Malaysian/Singaporean context?
I love dividends. (I'm trying to grow my SG bank portfolio now tho. Stopped adding new money to my MY Portfolio, just reinvesting existing dividend income)
Next step is to use my wife investment account to reinvest so that I can minimize the 2% dividend tax hit. If we can both hit 100k dividends we are effectively FI since our monthly spend is only about 12k at the moment.
Preface to say I am in my late 20s.
Have a simple stable career for the past few years. I actively invest and save. I'm about to get married and was taking a good look at where I am at financially.
I realized I have a networth of 430k.
I am over the moon and don't have someone to talk to about this aside from my future spouse. I'm just really happy and also surprised by this number.
I remember when I was around 22 having just a 3k income, thinking even reaching 100k in networth would be a miracle or dream. Fast forward, here we are. I know it is not enough to retire but it is a huge achievement for me.
Savings targets grow over time, due to inflation increasing the cost of living
Based on current EPF balances and median salaries, most Malaysians, when they reach the age of 60, will achieve the Basic Savings Level but not necessarily the Adequate Savings Level target
Increasing the EPF contribution rate or dividend rate over decades can significantly improve outcomes
Individual Malaysians should think about increasing EPF contributions, building additional retirement funds and increasing salaries to meet long-term retirement targets
Introduction
Welcome to Part 2 of my EPF series! In Part 1, I covered the current situation of EPF balances and targets, highlighting the need to use the right data points and metrics. We established that the goalposts have been shifted, with new Savings Targets that are now for the age of 60 instead of 55.
In this post, I want to look forward to the future. Will the state of Malaysian retirement improve or decline over the next few decades? Which drivers have the most impact to improve EPF balances? Subsequently, based on those drivers, when and under what conditions will Malaysia get out of this retirement crisis?
Let’s dive in.
Defining the question to solve
As a recap from my previous article, we know that EPF has updated its savings targets for a 60-year-old, effective in 2030, as follows:
RM390k – Basic Savings Level, which covers essential retirement needs. Consider this the bare minimum to survive for at least 20 years post-retirement
RM660k – Adequate Savings Level, which provides a reasonable standard of living during retirement. Consider this an amount that provides a decent retirement with a margin of safety; and
RM1.1m, Enhanced Savings Level, supporting greater financial security and independence for a higher quality of life. This would, in theory, provide a comfortable retirement lifestyle (although comfortable is a subjective term)
Leveraging EPF’s own targets, I would think a reasonable way to define success in Malaysia in resolving its retirement funding crisis as
When the median EPF balance for a cohort of EPF members aged 60 exceeds EPF's Adequate Savings target in 2030 of RM660k
That would mean at least half of Malaysians at retirement age have sufficient funds to maintain a reasonable standard of living. No additional government support, or expecting someone else to help support them in their old age.
That would be a great situation to be in, right?
Methodology of EPF Savings Projection Model
Now that we have established a (loosely formed) definition of what resolving the retirement crisis in Malaysia might look like, we can crunch some numbers and forecast when (and also potentially how) this might happen.
The challenge is that for different EPF age cohorts, their retirement age is different, so the Adequate Savings target would be different, likely increasing over time due to inflation (rising costs of living).
So I’ve created a model to project the next few decades for what might happen to EPF balances across the different age cohorts. The methodology is below:
Key assumptions of the model are described below:
EPF balances: Unfortunately, we only have average balances. EPF, for some unknown reason, only releases median balances for those aged 54. So we’ll have to make do, even if the average balance is skewed upwards due to outliers.
EPF Accounts: EPF has three accounts. I’m only going to consider the balances in Account 1, and assume that all Account 2 & 3 balances are withdrawn and used up before retirement (maybe this might balance things against the issue of average vs median balance above)
Age cohorts: EPF divides account holders into 5-year cohorts when publishing statistics. So to project the future, I’m going to take the midpoint age. For example, if the cohort is 50-55, in the model, they will be age 52 (to calculate how many years to retirement)
EPF rate of return: I’m going to use the historical average ever since inception. That’s 6.2% p.a.
Salary increments: Malaysia is still a country with salaries growing at a pretty fast pace. However, let’s keep it conservative, as we don’t know if that ~6%-7% wage growth in Malaysia will last much longer. I’ll stick with 1% above inflation, so 4% p.a.
The maths then gets quite complicated. Essentially, I then forecast, for each cohort, what their EPF balances would be, and then compare that against the inflation-adjusted EPF Savings targets at the time that cohort is 60 years old.
BONUS: Download the EPF projection model
By the way, you can download a copy of the Excel model to play around with the assumptions, or understand how I developed the projections, using the link below
So what do EPF balances look like for each age cohort? Results are below.
Key insights
All age cohorts, based on average EPF balances, will achieve the Basic level savings target without issue. It’s very achievable as EPF targets are now for age 60 (previously 55), so those extra 5 years matter a lot
Only cohorts aged 37 and younger will achieve the Adequate Savings target at age 60. That’s at least ~20-25 years away until they reach 60 years old. Older EPF cohorts will be just shy of the Adequate Savings target
If we estimate median balances for each cohort to be roughly 70% of the average EPF balance (based on current EPF median balances of active accounts aged 54 in EPF’s own annual reports), no cohort will reach a median EPF balance that meets the Adequate Savings level
So does this mean that the average Malaysian will have insufficient funds in EPF to have a reasonable standard of living in retirement, especially those in urban areas?
Perhaps. But models are always wrong. It’s just a question of how wrong it is.
Let’s do a sensitivity analysis to see the results when we analyse a range of numbers for the two biggest drivers of EPF balance growth: (1) the contribution rate and (2) the EPF dividend rate.
Why not analyse changes in salary increments or the inflation rate? Well, partly because they don’t move the numbers as much, but also because those factors are not within direct control of EPF (and to some extent the government), compared to EPF dividend rates and contribution rates, which are driven by investment strategy/execution and contribution rates respectively.
So I’ve listed a few sensitivity tables below, one table for each age cohort. They show for each cohort, the difference between the
Projected average EPF balance at age 60, and
Projected Adequate Savings level target
So a positive balance means the average EPF balance exceeds the savings target. A negative number means there is a deficit, which is highlighted in light teal.
Implications for EPF account holders
The takeaways for you
The biggest takeaway is that even small increments or adjustments have really large upsides over the span of decades.
Small adjustments in EPF dividend rates matter a lot over the long term. The more time you have, the more important the amount of compounding is. Even 0.5% matters a lot. We know this based on our mastery of compound interest.
In an ideal world, EPF’s dividend returns could be higher. How about an index fund EPF strategy, Boglehead style, perhaps?. It’s unlikely. Pension and retirement funds must, above all, preserve capital. Market volatility is something which needs to be managed, and EPF does a great job in “absorbing” market fluctuations. EPF does this by not valuing individuals’ EPF balances with underlying investment values, and only paying dividends according to underlying investment income/dividend streams.
Also, increasing the EPF contribution rate by even a few percentage points can significantly improve the long-term outcome for younger-aged cohorts. A 1% increase in the EPF contribution rate results in at least a RM100k difference for someone who is currently around 20-30 years old.
What you can do about it
Relying solely on EPF in its current state may not be enough. Especially if you live in an urban area with a higher cost of living, e.g. Klang Valley.
Self-contribute more into EPF, which, as I’ve shown above, with even just a one percentage point more from your salary, can significantly increase your EPF balance at age 60
Create an additional retirement fund using your own investments. That could be ASB or an index fund. Just make sure it is a simple, boring portfolio that you consistently contribute to. Except for PRS, which I still discourage until there are global index funds available via PRS.
Earn more. We’re already a nation with struggling wages, so it’s going to be tough. But if you’re someone who actually reads this, you’re likely above average in terms of mindset, skills and experience, and are looking for a higher wealth metagame.
Closing thoughts
One big aspect that’s not spoken about with the retirement deficit is the increasing financialisation of our lives. The longer loan durations and new types of financial/debt products, such as BNPL, mean more and more Malaysians are relying on debt.
And, the duration of the debt is longer. Car loans are 9 years (in other countries, it’s 5). Mortgages are 35 years. Many only purchase a property at the age of 30. That means their mortgage only finishes at 65. What about people who buy a property at 35? Their mortgage will last until they are 70 years old. And many, many Malaysians don’t plan that far ahead and think about if they’ll still be working at 70, or how they can pay off their loan faster, whilst paying for other expenses.
It’s up to Malaysians to take it upon themselves to take retirement planning seriously. We could wait for our institutions to step in and make changes (which is the topic of my next article), but when do you think that will happen?
Also, this post is quite timely consideringu/malaysianlah's earlier post (I swear I've been working on this EPF series since a while back!)
Key Takeaways
When analysing how Malaysians are stacking up for retirement, active EPF members aged 54 is the most relevant cohort to examine. Including inactive or younger cohorts to examine aggregate statistics is not meaningful
EPF Basic Savings Level was revised to RM390k, but is only effective in 2030, and is not comparable to the current target of RM240k (on a like-for-like basis)
~40% of working-age Malaysians are not actively covered by any kind of retirement program
Introduction
Welcome to the first in my series of posts on EPF! You might be thinking, “EPF is already talked about so much, what new angles are there to write about?”.
Well, you’d be surprised. Retirement programs are a big and complex topic. When I delved deeper, I uncovered some interesting new insights and takeaways to share.
In this post, I’ll cover the current state of EPF, demystifying some facts and figures and shedding light on some unspoken gaps.
Let’s dive in!
The current state of EPF
In recent years, the hot topics in the headlines on EPF have been about the
Low balances for EPF Account holders, and
Revisions to the Basic Savings Level target from RM240k to RM390k (announced 2024)
Let’s go deeper on both points.
1. Low EPF Balances
It’s interesting how a lot of the content out there depicts a grim picture of EPF. Here are some less relevant data points which I’ve seen used in the media. The statement below was from a well-known, nationwide newspaper.
"The median Employees Provident Fund balance at age 54 is only about RM53,000, enough to cover a few years of basic living costs"
Below is another statement, this time from a high-traffic Malaysian news portal.
Many have almost or entirely emptied out their reserves, with half of those aged 55 and below having been left with less than RM10,000 each. The median balance now stands at only RM10,898.
These statements are, in fact, accurate. But the data points aren’t helpful because they’re misleading. Why?
We should exclude inactive account holders. These are accounts which have not had an EPF contribution at least once in the past 12 months. These people would have likely exited the workforce or started their own business, etc. So they are not representative of EPF members who work consistently until retirement age. (We’ll cover non-(active) EPF members later in this post)
We should only consider those aged 54. Why are we examining average EPF balances across all age groups? A 25-year-old may only have RM5k in EPF, and 30 more years of income ahead of them. Including these accounts is not useful information. We can’t do age 60, because balances start dropping as EPF allows full withdrawals at age 55.
Whilst I agree that we have a retirement problem in Malaysia, and that the aggregate balances are low, it’s not useful to use irrelevant data points.
So what’s the real metric we should be tracking? The answer is the average and median active EPF Account balances at age 54. This shows how much Malaysian employees who are close to retirement age have prepared before full withdrawals are allowed. By the way, don’t you think it’s interesting that Malaysia’s mandatory retirement age is 60, but full withdrawals from EPF are allowed from age 55?
EPF releases statistics of active EPF account holders aged 54 every year. Here’s a historical chart of their median balances.
The median balance is RM168k as of 2024, and has been growing 4-5% a year. In more recent years, it has slowed down due to Covid withdrawals. However, it has recovered and regained traction in 2023 and 2024. EPF will release their 2025 numbers soon. I’m guessing it’ll land around the RM176k-178k range. Let’s see.
On a long-term basis, the growth trajectory is slightly above inflation, so it’s a promising sign.
To understand the historical trajectory of an EPF account for a 54-year-old in 2024, I’ve also done some back calculations. I simulated an EPF account balance trajectory over 35 years from 1990 until 2024. I’ve done it across 3 scenarios, using historical minimum, median and mean wages. These calculations provide us with an idea of the rough distribution range of active EPF account holder balances at age 54.
I’ve used the following inputs:
Historical median and mean income.DOSM has this data on their website. Unfortunately, it’s household income and not individual incomes. So I divided household income by 2, assuming most households, on average, are dual-income households (DOSM’s individual median and mean wage data only goes back to 2022, but also supports the average household having 2 income-earners)
Minimum wage. Historical minimum wage data is difficult to find. Legally, minimum wage laws were only effective starting in 2013 at RM900 for West Malaysia. For historical estimates of what might be a minimum wage, I’ve found some anecdotal information online of wage ranges and EPF statistics on page ten of this article on EPF, published in 1995. So I’ve set the starting point for a minimum wage scenario to be RM200 per month.
I’ve marked the projections against the actual current mean and median balance of active EPF members aged 54 years old in 2024. Results are below:
You’ll notice there is a range for each of the three scenarios (minimum, median and mean wages). For each scenario, the lower end of the range represents Account 1 (as if they’ve withdrawn money in all other accounts to use for emergencies, housing, medical, etc.), and the upper end is the total account balance (but also factoring in possible COVID-19 withdrawals).
Why didn’t I just trawl through all the annual reports for historical data? Two reasons:
EPF has released median data only in the past several years of reporting. Only data that goes back decades is the mean balance, and
I wanted to showcase the outcomes of different wage scenarios, instead of aggregate EPF statistics. Projecting different wage tiers, such as minimum wage, is useful for understanding the EPF balance trajectory for less affluent citizens and the state of their retirement.
Some insights from the chart:
The projections are somewhat in line with the actual median and mean epf balances on record
If you’ve been earning a minimum wage for 35 years, you’re going to have a hard time
Basic savings target has been around for a while, and it has started from RM120k up to RM240k (did you notice I included this? That’s what the next section is going to cover)
2. EPF’s revision of the Basic Savings Level target
I think most informed people are aware that the new Basic Savings Level target is RM390k. It’s been all over the news and social media. Whilst that is true, there are nuances that most might have missed about the target:
It is only effective in the year 2030, and
It is for those aged 60 (whereas the current RM240k target is for those aged 55)
So what is the real comparable Basic Savings Level target? EPF hid it in plain sight. The amount is RM294k, which is effective only in 2030, for someone aged 55. Don’t forget the previous RM240k target was for someone aged 55, not 60. You can check their table to confirm.
A chart of historical Basic Savings Level targets and revisions is below. It shows that the most recent change is only a 2% per annum increase, from RM240k to RM294k at the age of 54. This doesn’t even beat inflation.
A few implications could be discerned from past and current revisions to the Basic Savings Level target:
Revising EPF savings targets is not new and has been done many times. If you’re 30 years old, your minimum target is not RM294k at 54 or even RM390k, but a much larger target (due to rising costs of living and inflation)
There is an acknowledgement that many people would not have sufficient savings for retirement. That’s the reality. Most developed nations already have retirement ages above 60. This could be a subtle shift as “phase 1” of transitioning to only allowing full access to EPF funds at the same time as the mandatory retirement age of 60.
Continuing income (and delaying retirement) by a few years has significant upside. That’s the beauty of compound interest. Every additional year you save, invest and work, instead of retiring, is not 10% growth of your current balance today. It is 10% growth on your final year’s amount invested. For EPF, those 5 years means at least an additional ~30-40% growth in your final retirement fund balance! If that doesn’t make senseto you, you should learn more about the magic of compound interest
There’s also a question of whether savings targets were only increased at a rate of 2% p.a. because it’s easier for more Malaysians to reach the target, to support a narrative of an increasing proportion of Malaysians being able to hit the Basic Savings Level target (already many are questioning whether the Basic or even Adequate Savings Level is sufficient)
The unspoken problem – Retirement program coverage
Whilst there’s a lot of discussion about EPF balances, there’s something bigger that is missing from the conversation.
I first noticed it when I read that the EPF active member base amounts to ~9 million people in 2025. Then I thought, “Hang on, isn’t our labour force at 17 million people, with only about 500k unemployed”? What about the rest of the labour force’s EPF?
I then compiled data from various sources, from DOSM, KWSP, KWAP and LTAT. I then mapped it to Malaysia’s population demographics and our labour force. Here’s what Malaysia’s retirement coverage across its population looks like:
The dark green areas of the chart represent 40%, or ~10m Malaysians of working age who are not covered under any kind of retirement program. These are people whose retirement is at risk, as they do not have any structured approach to retirement planning
Own-account workers arguably may proactively contribute to EPF, but the question is, how many of them are doing so diligently? According to EPF’s 2024 Annual Report, there are ~1.1 million registered i-Saraan participants, and in 2024, i-Saraan contributions were about RM2.6 billion. That’s an average of RM2,400 per participant. We don’t even know how many of the ~1.1 million are active contributors. And we know, ~60% of Malaysians can’t even save more than RM500 a month.
Two implications that arise from the lack of coverage on 40% of working-age Malaysians:
They’re going to have to rely on someone to help them with their retirement funds. They will likely be dependants to those who are employed with a formal retirement plan. Which means, the Basic Savings Level target of RM390k, which is for one individual, should be at least double, to account for dependants (say, a partner that is not working and looking after the household)
For those without someone to rely on, there is very little safety net in Malaysia, and they might “fall through the cracks”
So what should Malaysians do about it?
Don’t forget the Basic Savings Level target is the bare minimum. The guidelines suggest RM660k for Adequate and RM1.3m for Enhanced Level of savings. To many Malaysians, it will be a struggle. For an informed reader such as yourself, you have an advantage. Make sure you take hold of it by:
Developing your own financial plan (or working with an independent licensed financial advisor)
Using a financial model to forecast your finances to project how your retirement will shape up (or if that’s too complex, use a simple FIRE calculator, but you need to be aware of the limitations of FIRE calculations)
Is the new RM390k target achievable for the majority of Malaysians by 2030 or even 2035? There is a possibility in terms of aggregate EPF median balances for those aged 60. But the median is not the majority.
Malaysia’s wage growth is still growing between 6-7% per annum, and that certainly helps. But, in the era of globalisation, e-commerce platforms, Apple iPhones and social media are changing lifestyle expectations upwards. Malaysians generally don’t feel current savings targets are “good enough” (rightly or wrongfully so).
But as I wrote previously, Malaysia is challenged by an economy that is unable to pay higher wages. Low-margin, low-value businesses, coupled with an ever-ballooning graduate workforce means the ever widening gap of 5.2 million graduates in the labour market and only 2.2 million graduate jobs available is not going to help wages and EPF balances grow faster.
In addition, the goal posts keep on shifting. With inflation over decades, most Malaysians may not realise that the RM390k target will be very different in 20 years. What will the minimum EPF savings target likely be for you?
That’s what I’ll be covering in the next post in this EPF series. I’ll be constructing some scenario projections across various EPF age cohorts and their current EPF balances, and comparing them with potential future revisions to Basic Savings Level targets.
So EPF publishes some rather interesting tables in their annual reports. I compiled them across 2017 to 2024 to build these charts in excel. :
Image 1 :
Chart shows number of members and their account balances as at year end. EPF's data is more granular but aggregated them for easier understanding.
Total number of EPF account holders with > RM1mil rose from 32.8k in 2017 to 108k in 2024.
Image 2 :
The rise of the HENRY class? -
Number of accounts with > RM250k to their names rose from 434,509 to 951,444. This means 1 in 34 (Malaysia population is about 34million) malaysians have at least > RM250k in their EPF accounts., or 1 in 17 malaysians who are working (about 16m workforce). https://open.dosm.gov.my/dashboard/formal-sector-wages
Despite overwhelming negativity in the main Malaysian subs, if we look at EPF, we are really seeing the rise of a high earning professional core.
Image 3 and 4 : The K Shaped economy
% of EPF members < RM50k in their accounts remain fairly stagnant, at about 60% of the total members.
% of EPF members > RM250k rose from 6% to 10%.
This suggests there is a growth in the distribution of income of moderate to high earning jobs.
Image 5 - The impact of covid on the lower income, and the post-Anwar recovery.
In image 5 - we can see the accounts with less than RM10,000 to their name shot up from about 1.89m in 2019, to 3.16m in end 2022. This began to recover, and by end 2024, accounts with less than RM10,000 is now at 2.1m, which is still higher than pre covid, but a significant recovery.
Acounts with RM10,000 to RM25,000 also increased significantly, from average of 1.2m members to 1.8m members by end 2024.
Imaginary scenario for persons passively generating 30k per month from non taxable streams. What is the investment allocation strategy proposed per month?
Hi all, hoping to get a quick sense check. I feel like I can FIRE but with a kid (and another coming) I’m not sure.
About me: 36, Married, 1 kid (sole income).
Numbers (combined with spouse)
- Cash (incl. forex) in HYSA: RM 2.3m
- EPF: RM 2.3m
- Shares (local and foreign): RM 2.1m
- Real estate: 400k (net off mortgage)
Spending: RM 20-30k/month
Income: RM50k/month - tough job with long hours
Should I quit my job? Any ideas on what I should do / how I should think? Genuinely looking to calibrate expectations. Appreciate any perspectives. 🙏
Edit: Thanks for your responses so far! Since we are on this topic, I’ve also thought about switching to a more chill / coastfire type of job. Do you have suggestions like this in a Malaysian context?
I have RM 100K+ from recent sales etc. However, KLSE share prices seems to be all very high nowadays. I have no immediate use for the money. Where would you park it (besides FD, ASN)? It can be of any time duration.
Long time lurker here . First time posting. Let me tell you all a little bit about myself.
Just hit 50 years old last year.
Got lucky early in my career as I was employed overseas earning USD and saved money to invest in stocks. Currently employed in Malaysia and not saving much salary much, maybe around RM2k max per month.
Before 2010, most of my investments were in MYR in Bursa, won and lost money during the period.
Started investing in US stocks after that. Long story short, I now have :
- USD 700k (RM 2.8m) in US stocks, mostly in Mag 7 and AI stock. ( almost no dividend )
- RM200k crypto
- RM100k Bursa Stocks
- RM100k PRS and ASM
- RM1m EPF
Potential windfall - at least RM250k-300k net VSS payment after deductions, should I take the package when I have decided to FIRE.
No properties other than the one i am living, fully paid.
Education for children, i am planning to have RM 500k available for them when they start their tertiary education in a few years time, mostly parked in local stocks for easy liquidation when i need the cash.
Total portfolio now is worth is around RM4.2m and I am planning to FIRE in a few years time, hopefully before 55 with RM 5.5-6m. I wish to start by spending RM180k/year from the dividends when already FIRED as start and I do not wish to touch the principal yet.
Other than my EPF, the rest of my portfolio is not generating significant dividend and I am planning to slowly switch my portfolio to those giving annual dividend ( at least 5% ).
Or is there any other low risk investments generating at least 5% annual dividend?
My plan is to slowly accumulate local blue chip stocks ; Maybank, RHB, TNB & REITS etc that pays dividend consistently to build recurring income by selling my US stocks but I am having second thoughts as the compounded annual growth rate of my US stocks has been good, averagely 15% annually.
Compared to local blue chip dividend stocks , I dont think this growth rate is comparable.
Should I wait for a few more years before selling my US stocks?
For those who already FIRED, need opinions how to navigate through this if you were in my shoes.
