By now, you would probably have heard about wealth management. You could be a newlywed couple who is doing some financial planning. You could be planning for your future or even a single individual setting out to make a living. Regardless of which time of your life you are currently in, wealth management is an essential step you need to take. And this is not just something only the rich need to do!
Part of life and financial sustainability
To understand why you need wealth management, it is essential that you know what it entails. Basically, it is about planning your money and managing your investments. The latter basically covers how you make your money grow. This can be in investing in shares, mutual funds, bonds and such. The former meanwhile is all about planning and managing your cash flow for the short, middle and long term. That said, let’s dive into the crucial areas of wealth management that every Malaysian should know.
Accumulation and preservation
The ultimate aim of wealth management is to be able to save enough funds in order to sustain for the future. This can only be done if you consider all the sources of your income minus all the areas of your expenditure and then place them according to the timeline of your life in the near and far future. You need to have estate planning, financial planning, credit and lending, retirement planning, taxation, insurance and education savings for this, forming the 7 major financial commitment categories.
So, what should you do?
Remember that everyone reaches retirement age and when you do, companies are no longer obligated to give you a full-time job. You could still be working on a contract or part-time basis or even not working at all. So, wealth management covers how you are going to have a plan that can sustain you from the present to the future. Hence, you should:
- Plan for retirement – The EPF is only one source of income after you retire. You should be looking at more ways to accumulate more wealth while you are earning an income. This can be done through insurance or the PRS (Private Retirement Scheme) or others. Think about a passive income and work towards it.
- Education for your kids – There must be some form of savings that can give your children the education they deserve. There is no reason to burden them with a loan which they might have to pay upon graduation. If they are studying in a public university, the cost would be very low but should they be required to go into a private institution, you are looking at somewhere between RM25,000 to RM50,000 per year.
- Financial stability for the family – Think about what would your family need to go through if you are unable to service your home loans or commitments. That is where insurance policies come into play. Make sure that you have enough provisions for such things as accidents and whatever that could happen which could derail your family’s financial sustainability. The last thing you want is to have them carry the burden of your debts.
With all that said, wealth management is about having a financial plan and a goal that is logical and sound. It is all about being able to provide and sustain your lifestyle and what happens after that.