Save regularly and invest wisely so that your returns will help to combat sharp rises
in inflation. In other words, regular savings help us to prepare for higher risks.
Inflation, a driving force behind many economies, reduces ones purchasing power drastically
as shown in Table 1. The purchasing power of RM1000 today will be reduced drastically
in the future.
Most investments in any markets rise and fall in a cyclical nature. Our hard earnest
savings will go through periods of bear and bull markets prior to retirement. Regular
accumulation of wealth is therefore essential, the benefit of dollar cost averaging.
Dollar cost averaging is a safer way of accumulating long-term capital with minimal
Enjoy the benefits of diversification. Depending on your risk tolerance, there are
a variety of investment choices for your selection. In the unit trust industry alone,
there are more than 70 funds with more new funds expected to be launched in the near
As the local market matures, there will be more new investment instruments available.
Spreading out your investments will help you counter market movements as the saying
goes "do not put all your eggs in one basket."
To achieve attractive retums, one has to take on some degree of risk. Risk is inversely
proportional to time in general. Youngsters who are planning for their "golden"
periods, can certainly afford to be more speculative than older investors. This means
you are unlikely to put large portion of your money into bank fixed deposits compared
to a person who is about to retire and cannot afford to risk losing his or her money
in speculative investments.
In most cases, it is hard to get rich without taking any risk. Just imagine a growth
company that has no new product development - it would be eventually left behind
by its competitors. What should you do when your risk goes wrong? To anticipate unpredictable
downturn, you should constantly assess whatever new risk that is associated to your
investments. Do not be afraid to take some level of risk exposure.
You never know what will happen in the future. You should make plans for yourself
and anticipate future uncertainties. You should devise a plan that is well-structured
and that will help improve your eventual lifestyle in your twilight years.