Recently I wrote an article for a women's magazine - Citta Bella. Perhaps some of the questions addressed here are your concerns as well. Here's the article:

Q & A For Citta Bella

Case: 30-year old Single Office Lady

1. I have 20K, how do I invest my money?

According to your risk preference, you may invest in fixed deposit, shares or unit trust. Fixed deposit is the safest investment however it generates only 2-3% per year return. As for shares and unit trusts there is certain investment risk involved but the potential returns are much higher than the fixed deposit, in general the gains are usually around 7-12% per year.

For a 30 year old single office lady, you can tolerate much higher risk than those who are married with children and those who are nearing retirement age, hence I would advice a 25:75 asset allocation for you, which means you may put aside RM5000 (25%) in the fixed deposit and invest RM15,000 (75%)in blue chip stocks.

Asset allocation is how much money you put into different asset classes'the percentage of your assets that are in stocks, bonds, cash, real estate, and commodities. Believe it or not, the choices you make in this regard are the most important part of your investing. A good mix of asset allocation will enable you to achieve sustainable profits from the stock market over the long run.

I usually recommend people to invest in blue chip stocks as blue chip stocks are good investment, not only you can gain capital appreciation, every year you'll receive attractive dividends from these companies. Some examples of the blue chip stocks are: Maybank, CIMB, Genting, and Public Bank. However, if you are not comfortable investing directly in the share market, you may choose to invest in unit trust from a reputable fund management company.


2. How much savings do I need? I'm a 30 yr old single OL (office lady).

Assuming your retirement age is 55 and you live until 75 years old, you should set aside minimum RM500 every month into your retirement fund preferably in stocks or unit trust which will give you RM1,500 every month during your 25 year retirement period.
After deciding how much we need in the future, now, let's see how we can achieve our retirement goal. Many people have the wrong attitude towards savings, they will choose to pay their monthly expenses first, whatever the balance (if any) will then turn into their savings. Sometimes, they may have impulse buying on branded handbags or hand phones, and they will not hesitate to withdraw from their savings to purchase them.

The right attitude should be to pay into the retirement fund before any monthly expenses. In addition, you should try not to withdraw from the fund for any impulse buying. A good way to help you to achieve your retirement goal is to set up a unit trust regular saving plan with a reputable unit trust company with initial RM1000 investment, followed by auto-debit instruction from your bank account to invest RM300 monthly into an equity fund.

However, if you notice, I did not include the EPF into this retirement fund. The reason why I didn't include is because most of us, before the retirement age, we have already used up at least one third for purchasing property, and the remaining upon retirement the money is usually used for children's university expenses, hence, the remaining may not be significant. However, if you do have money left from the EPF that will be a bonus for you.


3. I love traveling to different parts of the world, but I'm afraid I might spend too much on trips and not saving enough for my retirement, what should I do?

As Malaysia is moving towards becoming a developed nation and our society is becoming more affluent, overseas trips has become part of our lifestyle. However, these trips are not cheap, they may cost up to about RM2000 to RM6000 per person. If we lose focus we may ended up spending too much and not saving enough for our retirement fund. My advice is that you need to be disciplined enough to set aside the required amount, say RM500 monthly for your retirement fund first, the remaining you may allocate according to your other needs such as your overseas trip. Hence, it is very important that we must have proper financial planning to safeguard our hard earn money so that our retirement goal can be achieved.


4. Medical cost is getting too expensive, is it advisable to get myself covered with insurance? What is the right amount for my insurance coverage?

Medical expenses are rising faster than the costs of any other service. They are climbing at rates that very much exceeding the inflation rate. On top of that, with the hectic lifestyle and bad eating habits, the chances of contracting terminal illness have increased tremendously in the recent years. Hence it is very important that everyone should buy a medical insurance for protection.

How much medical coverage is enough depends on the following factors: your ability to pay the premiums, your health condition, your family history of terminal illness, your debt obligations and your family commitments and other personal objectives such as whether you need some investment component in it.

In general, for a 30 year old woman with good health condition would need minimum RM200,000 for a lifetime medical coverage. However, if budget allows, you may consider increase your coverage through other add-on benefits such as hospitalization, disability benefits, income benefits, and regular saving feature in it.


5. I am still young, do I need to write a Will?

It's never too young to write your Will. As soon as you have turned 18 years old, you may start to write your Will. What is a Will? A Will is an important legal document that contains your instructions and wishes for distributing your property and assets after you die. This document contains the names of the people you want to benefit, your beneficiaries, as well as details about your home, land, vehicles, bank accounts, investments, jewelry, artwork, and other possessions. Your Will also allows you to choose a personal guardian to care for your children if you should die when they are still minors. Your Will should be written carefully, correctly and in compliance with the laws of your state to be sure your beneficiaries will be taken care of when you are gone.

In order for your Will to be valid, and accepted by the court, it must be in writing, signed with your signature, and witnessed by at least two witnesses who are neither relatives nor beneficiaries. Otherwise, the court may not accept your Will, and it may be unenforceable. If your Will is found invalid, the court may distribute your assets as if there were no Will (or intestate), and the court will distribute your asset according to the Distribution Act 1958 (amended 1997) and it may take up to seven years for the whole process.