Every Thursday in the office, I and a group of friends would gather during lunch hour to discuss a random topic. On one occasion, we were discussing life plan and I shared that I wanted to plan for my retirement because I read Tony Robbins’ investment book.
“Clara, why do you have to plan for your retirement? You can just get married to someone who can help you. Look at our friend, she’s getting married and will be moving overseas!” said one of my friends.
The thing is, everyone has a different fate. Therefore, whether you’re a man or a woman, NEVER hope that one day someone will come to save you.
The truth is, only you can save yourself, especially if you don’t have a safety net (aka wealthy parents). And one of the ways to your financial independence is by investing your money.
The truth is, only you can save yourself, especially if you don’t have a safety net (aka wealthy parents).
I didn’t share this with my friends, perhaps I feel more comfortable putting my thoughts into words, like a blog post… Or maybe I just didn’t want to sound self-pity. Like, how can I not concern about retirement when my family is still renting the condo that we’re staying at?
4 Top Investment Tips from Tony Robbins
In case you haven’t heard about Tony Robbins, he’s a best-selling author, entrepreneur, philanthropist and #1 Life and Business Strategist.
I heard about him a lot but only recently I started to read his book, “Money: Master the Game”. It’s a very interesting book that will open your eyes and mind about investment. It’s that interesting thus I’m happy to share with all of you!
1. Set a percentage of your income for your Freedom Fund, then invest it monthly via auto-deduction
What’s the amount of your income that you feel comfortable to invest monthly? 10%, 20%, 30%? Once you’ve made a decision, remember to set an auto-deduction from your bank account to your Freedom Fund. With this, you will never forget or find excuses to skip investing your money when the payday comes. Remember, pay yourself first.
Remember, pay yourself first.
2. Avoid Wall Street’s 9 biggest marketing/investment myths
If there’s one myth that I want to stress out, it’s… mutual funds. When I started investing in mutual funds, I thought I was smart. Then Tony Robbins makes me realise that I can speed up my retirement by skipping mutual funds because of their outrageous fees.
Imagine paying 5% annual management fee + top-up fee + switching fee (if you decide to switch your portfolio)! On top of that, you’ll bear the consequence when the market goes down, because well, you can’t predict the market.
Tony stresses that while 1%, 2% or 3% difference in annual fee doesn’t seem big, but in the long haul, it creates a big impact on your investment. Besides the significant difference in the amount you’ll accumulate, a portfolio with a 1% annual fee could help you retire much early compared to the 3%!
For example, three friends are investing in different mutual funds at the same time. Those mutual funds give a 7% annual return with 1%, 2% and 3% annual fee. Let’s see what happens 30 years later:
A: RM100,000 with 7% return (minus 3% annual fee) –> RM324,340
B: RM100,000 with 7% return (minus 2% annual fee) –> RM432,194
C: RM100,000 with 7% return (minus 1% annual fee) –> RM574,349
3. Calculate how much you’ll need for your retirement
The purpose of investing your money faithfully every month is so you can retire comfortably. Write down how much you spend annually + the things that you want to have (a car, a beach bungalow, traveling twice a year, etc), then add 2%-3% of that amount (as inflation).
The total number will be your motivation to find ways to speed up your financial/retirement goal. Don’t worry to dream big, you can always alter your wants and needs to make the number achievable.
Let’s say you wish to own a private jet in the future thus your ideal retirement goal is RM20 million. Why not rent the jet instead of owning one? In that way, you’ll also skip the maintenance fees, paying your pilot’s salary, etc…
As a result, your ideal retirement goal is actually much lower and achievable –> it motivates you to keep investing!
4. Allocate and diversify your portfolio with a specific percentage into different categories (Security, Risk/Growth, Dream)
To me, I feel that 8-10% return falls into Security. A portfolio with 11-17% return falls into Risk/Growth category while 18% and beyond is considered Very High Risk.
Besides deciding the risk that you’re comfortable with, you need to allocate and diversify your portfolio.
Based on Tony Robbins interview with Ray Dalio, the founder of investment firm Bridgewater Associates and 58th wealthiest person (according to Bloomberg, as in June 2019), here’s a sample of portfolio allocation that guarantees you to never lose money in investing:
With this asset allocation, no matter what the market condition is, you will still gain because:
– when the market grows: the prices of Stocks, Corporate Bonds, Commodities/Gold are rising while the prices of Treasury Bonds and Inflation Linked Bonds are falling
– when there’s inflation: the prices of Commodities/Gold & Inflation Lined Bonds are rising while the prices of Treasury Bonds and Stocks are falling
But Clara, I don’t feel like reading charts and monitoring the market every minute. I don’t even have enough money to buy stock or index fund! Maybe I should just stay with mutual funds?
I’m too poor to buy a stock or index fund as well!! Like women in general, I too, prefer to read Cosmopolitan and go to the gym instead of monitoring stocks all the time. I have an interest in finance but it’s not my core passion.
That’s why I start investing with a robo-advisor so I can have “All Season” portfolio.
StashAway: the Rise of Robo-advisor in Malaysia
The #1 reason why robo-advisors are very popular overseas is that they charge a very low annual fee: less than 1%!!
Robo-advisors such as Betterment and Robinhood provide financial advice or investment management online based on algorithms. Robo-advisors will automatically create a portfolio based on your risk tolerance, finances and goals – it saves you from headache!
Living in Malaysia? Don’t worry, you can start investing with StashAway and have your portfolio created within minutes without having to be a US citizen (a requirement for Betterment and Robinhood)!
Here’s a summary of what you need to know about StashAway:
– no minimum investment and top up
– all investment will be in USD, with a 1% currency exchange fee
– StashAway obtains a Capital Market Services (CMS) license from Securities Commission Malaysia –> regulated strictly
– your money is held by its trustee and remains untouched in a Citibank Trust Account and a custodian account via Saxo Capital Markets –> if StashAway closed down, your money won’t go missing and you’re still the owner of your portfolio
– StashAway uses ERAA™ technology to maximise your returns and diversify your portfolio (global stocks, bonds, gold, cash, etc)
– 0.2-0.8% annual fee (no top-up fee, withdrawal fee, switching fee)
– you’re able to withdraw, top up and adjust your portfolio risk anytime
Can’t wait to build your Freedom Fund? Find out more info about StashAway here and use my promo code to get a 6-month fee waiver when you invest up to RM30,000!
Use my StashAway Promo Code for a 6-month fee waiver: www.stashaway.my/referrals/clarat573
I’m not a financial or investment expert, I just love to share what excites me, such as Tony Robbins’ investing rules of thumbs.
If there’s any correction, comment or opinion, just type what’s on your mind in the comment box below. Gracias 🙂