I just opened an investment account with Fundsupermart on last Tuesday. On the next day, I received a phone call from Fundsupermart to verify my information. On Saturday, I received the password slip from courier service. Now, I can get started to invest in unit trust online.

In this post, I will show you how to make use of their Regular Saving Plan.

What is Regular Saving Plan (RSP)?

RSP is not something new. If you have invested with other unit trust companies before such as Public Mutual and CIMB, it is known as the monthly regular purchase of unit trust funds, through bank auto deduction, GIRO or standing instruction.

Why invest using RSP?

There are several benefits to invest using RSP:
1. The Regular Savings Plan (RSP) utilizes the dollar cost averaging (DCA) concept of investing which is the practice of investing a fixed amount of money regularly regardless of market conditions. In the case of RSP, the investments take place monthly. Using a fixed amount of say RM500/month, you will buy fewer units when the market is soaring high. But when the market is down, you will be able to buy more units because the fund price is lower. You will end up with a lower average purchase price overall.
2. When you participate in RSP, you’ve triggered a system to automatically invest your money. As human being, we need an automated system to do something good for us in the long term. In this case, our saving is long term, disciplined and automatic.

What is so special about Fundsupermart RSP?

Since you can practically do standing instruction to invest regularly with any unit trust company, why choose Fundsupermart?

Here are some benefits Fundsupermart provides:
1. The sales charge is much lower, only 2% maximum for loaded funds, vs. 5.5% maximum front load at most fund houses.

2. You don’t need to invest at least RM1000 in a single fund as initial investment. At Fundsupermart, you can start with as low as RM100/month.

3. You can do all this entirely online.

4. Some banks impose a fee (normally RM1-2) for every transaction of direct debit, but Fundsupermart absorb the fees and we as investor don’t need to pay the extra fees for the transaction.

How to apply RSP?

Step 1: Open an account with Fundsupermart.
Obviously, you need to have an investment account with Fundsupermart before you can proceed with RSP. Please refer this page for account opening.

Choose your investment account

Step 2: Apply for RSP

Click “Apply” under “Regular Saving Plan” menu.

Apply for Regular Saving Plan

Step 3: Select the fund
If you don’t know which fund to start with (there are more than 100 funds to choose from), just take a look at the list of recommended funds in your account.

Find the recommended funds

Choose the fund house and the specific fund to invest

Step 4: Read the prospectus
It is a requirement that investor read the prospectus before making any investment decision.

Download and read the prospectus

Step 5: Choose a payment method and set the monthly amount
You can choose to deduct automatically from your bank account (only Maybank or CIMB) or the money you’ve transfer to Fundsupermart that’s parked in Cash Management Fund.

Set the monthly amount

Choose the bank for direct debit

Remarks:

- it is easier to use Maybank direct debit because they accept the printed form. As for CIMB, you will need to get the original form from the banks.

- Maximum DDA Limit – I’ve called Fundsupermart regarding this. It is an amount that determine how much can Fundsupermart debit from your account for investment. For example, if you set the limit to RM100, and now you are investing RM100/month in RSP, when you want to setup another RSP for a second fund, you will have to fill up the DDA form again. If you set a higher limit say RM500/month, when you want to setup another RSP, you will not be required to email them the DDA form again. This is just for your own convenience.

Step 6: Print the Direct Debit Authorisation (DDA) form
You shall print out the form, scan and email to clienthelp.my@fundsupermart.com.

Or you can also mail the hardcopy form to the address shown.

Click "Print" to print the DDA form

That’s all you have to do now. Fundsupermart said that they will take at least 1-2 months to get your RSP application due to the time needed for your signature verification at the banks.

Happy investing!

Disclaimer:
This article is not to be construed as an offer or solicitation for the subscription, purchase or sale of any fund. No investment decision should be taken without first viewing a fund’s prospectus. Any advice herein is made on a general basis and does not take into account the specific investment objectives of the specific person or group of persons. Past performance and any forecast is not necessarily indicative of the future or likely performance of the fund. The value of units and the income from them may fall as well as rise.

This article is posted at: KCLau's Money Tips

Fundsupermart Regular Saving Plan

Whenever the economy takes a nosedive like the recent recession, consumers are forced to change their money habits. In a way, the recession has done a good thing in making consumers face the harsh reality on their bad spending habits. In a study done on American consumers, below are some things that have changed significantly.

• More and more consumers have learned to differentiate on what are the important essentials from the frivolous wants. More and more people prefer to make cash purchases and cut back on loans or credit card debt.

• Window shopping used to be popular as a way to relax and get out of the house. However, people are now mindful and aware that this past time tends to make them spend money unnecessarily.

• Consumers are going back to basics. Getting the latest gadget does not seem appealing anymore. For example, a cell phone is just a simple phone for communicating rather than for browsing the web, checking emails, etc. Some people have even stopped their cable TV or paid programs altogether.

• Living together has also become popular. To save on rent, some people willingly sacrificed their privacy and do not mind sharing spaces. Children who have moved out of the house are also moving back in with their parents.

• Daily luxuries have also taken a beating such as foregoing the daily pack of cigarettes. A pack of smokes cost about $5 and besides saving money, it makes sense to kick the bad habit. Some smokers have also resorted to buying their own personal machines for making their own cigarettes which saves cost in the long run.

• For people who love to eat, cutting back on food consumption does save money. From reducing outings to restaurants to reducing the portion of food consume and going for simpler dishes or meals.

• Print media has become less popular as people are cutting back or cancelling their subscriptions to printed materials. They prefer surfing the web to get free news and information.

• Cancelling visits to the doctor, cutting back or discarding medication are also part of reducing cost. This is especially happening for those who are unemployed or those without health insurance coverage.

• Stop dating? Believe it or not, dating has also taken some impact. Expensive dates are a major no, no. Simple outings like going hiking are in instead. The worst case scenario for some people is to stop dating altogether until their financial situation improves significantly. Looking for employment or having a stable income is more urgent compared to enjoying a social life.

What about you? What lifestyle changes have you made?

Read other articles by Jacquelyn at WParent.com on parenting matters and Tips4Everyone.com on solving marriage problems.

This article is posted at: KCLau's Money Tips

Reality Bites

Kamil retired in 2006. He has three children and his wife just passed away.

Listen to his interview on BFM radio where he shared how he overcomes the challenges in retirement.

Interview Part 1

Interview Part 2

(email subscribers, please visit this post on my website to stream or download the mp3)

This article is posted at: KCLau's Money Tips

Challenges in Retirement – Interview

Your child is an adult now. You have supported him until he has graduated from university. How far should you continue to support him? Parents are not doing their adult child a favor by supporting him continuously with no limits in sight. Your adult child may end up being dependent on you and may put off taking full responsibility for his own life or future.

Personally, I think that it is fine to support my adult child and he is welcome to stay at home within certain conditions or parameters. One of the ground rules I would insist upon is that my adult child helps with the household chores and if he is working, he should contribute towards the household expenses as well. One day, I would expect him to move out and build a family of his own. However, I would not kick him out of the house when family support is still needed.

Money concerns

One of the main concerns when an adult child lives with the parents is on money matters. I would not want to jeopardize my own financial future to support my adult child continuously. Your adult child has to understand that you are not going to sponsor his leisure pursuits or other hobbies while staying with you. You are not his banker unless he is committed to repaying the money. I would love to help my adult child once in awhile (if I can afford it) but it will be my decision whether to do so or not.

Educate him quickly!

Your adult child needs to be taught to live within his means, start to build a nest egg as soon as possible and not to fall victim to money traps like credit cards. An important priority is finding a source of income (not the parents) like getting a good paying job or jobs (it does not hurt to work hard especially when you are still young). It is imperative that your child loves his work and finds it fulfilling. Teach him how to budget and to pay his bills on time. If he has trouble paying his bills, do not rush in immediately to bail him out. He has to figure out how to solve his money problems with your advice and guidance.

In short, the goal is getting your adult child to be independent and take control of his own life. You would not want him still dependent on you especially during your retirement period, right?

Read other articles by Jacquelyn at WParent.com on parenting matters and Tips4Everyone.com on solving marriage problems.

This article is posted at: KCLau's Money Tips

Should You Support Your Adult Child?

I’ve been waiting for this for a long time. Unit trust investment is not something fancy.

Before this, investors would have to go through unit trust consultants or the banks to invest in unit trust. Now, you can do it directly in front of your Internet-connected computer.

In this post, I will show you the procedure to open an investment account with Fundsupermart – the first online unit trust investment provider in Malaysia. In fact, it is just as easy as following the steps outlined on their website.

Go to their get-started page by clicking here.

Now you are given the choice to open a

• Personal Account
• Beneficiary Account
• Corporate Account

Since corporate account is for corporate investor, we will skip that.
Just choose between personal or beneficiary account. If you want your family to easily take over the money in your account when you passed away, choose the Beneficiary Account option. For me, I chose the Beneficiary Account too so that my wife can easily access the fund without going through the hassle to unfreeze my account when I pass away.
Because most of us have family, please choose to open the Beneficiary Account.

Step 1: Instructions

You will get to choose again which type of account you will like to open. Click the Beneficiary account.

A Beneficiary Account is useful if you are planning separate portfolios for your children, parents, or other loved ones. The laws governing survivorship will apply here. In the event that any one person in the beneficiary account passes on, the assets of the account will belong to the surviving person.

Step 2: Required Documents

You will need to fax, mail or email these documents to Fundsupermart.

1. A signed Account Opening Form (you will be able to print the PDF file at the end of Step 7)
2. A photocopy of your IC (both sides)/passport.
3. A photocopy of the Beneficiary’s IC/passport (birth certificate for Minors below 12 years old)

Click “New”

Step 3: Account Details

Just fill up your information.
Your login ID had to be at least 8 character and must consist of alphabet and numbers.

Step 4: Details of Beneficiary Applicant and Direct Credit Bank Details

Just fill up the information of your beneficiary.

Step 5: Anti-Money Laundering Declarations – Beneficial Owner and Politically Exposed Person

Most people will Click “No”.

Step 6: Confirmation

Please verify that all the information is correct.

Step 7: Print form

You may fax the documents to 03-2148 7718 or email a scanned PDF file to clienthelp.my@fundsupermart.com.

That’s all. You will automatically receive an email with your softcopy PDF form attached. Just sign the form and send to them.

Once your application is processed, your login details and password will be mailed to you by post.

Happy investing!

This article is posted at: KCLau's Money Tips

How to open an online unit trust investment account

This is a guest post by Charles Chua from All About Living with Life.

Getting a loan from a bank or borrowing from your friends means you are in debt. You will end up paying more to make purchases because you have to pay interest for the debt.

How do you distinguish between good debt and bad debt? Here are some examples:

Good debt

Education: You get an educational loan to do advance study. This is an investment in you. With the knowledge you gain you will be more insightful to work effectively and enhance your earnings and pay off your loan.

Housing loan: This is a major purchase and a roof over your head is necessary. This is a good investment as land is limited and your property value will appreciate in due course.

Car loan: This is another necessity in life so that you can move around easily and quickly. A car does not appreciate, but depreciates over time, but you save valuable time moving around to get things done. Get a car loan only when you can factor in the monthly repayments into your budget.

Consolidated loan: It is a good move to consolidate all your credit card balances into a loan with very much lower interest rate. You will pay off the debt in less time with less interest.

Investment: When you know it is a solid investment opportunity and the value of your investment will increase in the long term.

Bad debt

Buy what you want: Buying something for no practical uses and get yourself into debt is a no-no. Don’t get materialistic.

Renovate or beautify your house: Your house is in good condition, so don’t spend unnecessarily to renovate or beautify your house.

Adding accessories to your car: You car is shinning and new; don’t borrow money to add gadgets with no practical uses or improvement in its performance.

Overseas holidays: It is better for you to save up a sum for the dream holiday. It costs less and you are not in debt after an enjoyable holiday.

Borrow only when you can get a better return or to build wealth, otherwise don’t borrow to spend unnecessarily.

This article is posted at: KCLau's Money Tips

Bad Debt and Good Debt

At 18, sitting down with friends at a mamak stall, a sleek looking BMW, dark blue, 5 series, stroll pass us and stop a few meters ahead. A young chap, jumps out of the car and runs across the street into a shop, and few minutes later runs out and drives away. We looked at each other with a smile, was it a hope that one day, we will be driving a car like that or was it that he is at our age already driving a BMW by we are still on bicycles. “Ah, that must be his father’s car, rich man’s kid”, the silence is broke by one of our members in the group. We go back into our routine discussion about other stuff…football….movies……girls….etc….but never on how to make such money and big dreams.

But it was a point to brood over, 20 years later, I am still shy to drive off a BMW 5 series Dark Blue Metallic, but right now I have different reasons. Yes, the mortgage is huge, the maintenance is expensive and I’ll need to leave on a different level of lifestyle – as we normally worry about “what people will think”!!. Of course, we want to drive a luxury car, so that people will think “WOW”. But is it really that what we want? I am thinking to myself.

Recently, as our normal window shopping on properties have been my family’s weekend activities, with condition, we strictly “window shop” and upon interest, we would make an absolute “financial decision” to decide if that property is worth investing as an investment with regards of its appreciation value or rental income. We visited a gated community bungalows with club house in Penang, my wife fell in love head over heels on that place and the bungalow unit, exactly the dream home that we have been dreaming about since our college.

Location, build-up, styling with a kitchen in lower ground floor is exactly what we have been looking for and it exactly falls into our attention. Sure more appealing was the club house, the sales person so calm and helpful, only later to find out that his boss is our friend, Juanita Chin [author, real estate investor in Penang]. Everything fall into its place wonderfully. Only setback was that it was a leasehold property – but it’s our dream house replication.

Well as we promised on the “window shopping final decision” will be negotiated base on our financial standings. Well, the property cost $1.6M and there is a maintenance fees; of course we would need to relook at our utility bills etc too. So checking with the bank, it would cost us about 6.8k monthly on mortgage, which means easily with all in (utilities and maintenance), it is $7.5k a month for next 30 years ?!!. Well okay, base on our household income, we are still OK to have $7.5k put aside for the property + put aside for a car reimbursement + other monthly expenses, at the end of the day, we would still have monthly savings going into our accounts provided my wife keeps her business income coming at the minimum range as per what she have been doing for the past one year. So, do we decide to move on with this investment??!!

There are 2 side of the coin here. IF (is a big word) we move to our dream home, we feel good, our dream achieved at 38+. We have settled in our lives, maybe something to be proud off with our family and friends – well many people get more attention when they live in bigger homes and drive bigger cars, surely I don’t know why!!?? But that is the nature of our life, we work hard to get what we want, achieve our dreams. And now when it is knocking at our door, let’s go for it. Emotionally, I would sincerely thank Allah for giving us this as we have always wanted it. Then there is the other side of the coin, financial decision.

If I were to engage such a property, there are decision that have to happen such as; would need to delay my $1Million savings goal – maybe now it may take forever, stop my property investments as banks would stop giving me loans due to my mortgage is in Million only in 1 property, would need to delay all my dream holidays to US, Europe, Australia, Egypt, Turkey etc until I am able to gather back my position in the financial world again maybe in another 10 years or so and will I have the money to spend when my kids go to college in 10-15 years from now?

[Note : (1) Soon we are moving to a landed property – 3 storey town house; not our dream home but what is affordable, (2) It is a family of four, us and 2 kids, (3) If we ought to buy that bungalow, we need to sell this 3 storey town house; we need $$ to replace our savings for the down payment if paid and renovation].

So we have 2 side of the coin here, heads – we are okay in terms of monthly expenses + savings to move to a bungalow unit or tails – we would need to give away or delay our other goals that we planned for. So what would you do if you are in our situation ? Heads or Tail ?!!

Sayeed is a senior manager in a large MNC in Penang. He wrote an earlier blog post titled “From Credit Card Debt to Owning 6 Houses”. His philosophy in life is sharing and learning, “the more you share, the more you learn”. Following his association with the world of investments focused in the past 5 years, both Sayeed and his wife are confidently leading to a financial successful lifestyle, his wife retired as an employee and today runs her own business, blessed with 2 kids, this couple have learnt through tough times about their financial literacy. Sayeed is currently focus in accumulating wealth and dreams of becoming a future speaker, author, trainer and coach to help others achieve financial success.

This article is posted at: KCLau's Money Tips

Head or Tail!! Financials?!

Have you ever wondered how people spend their money or hard-earned income? Do you spend the bulk of your money on food or on rent?

The World Bank organized a worldwide study entitled “Global Purchasing Power Parities and Real Expenditures 2005 International Comparison Program” spanning 2003 – 2008. The results gave an in-depth view or perspective on global consumption patterns in 12 categories or buckets such as education, health and food and nonalcoholic beverages.

Take a look at the data below extracted from the report. The table shows the estimated percentage of income people spend on the various categories. The countries displayed here are chosen randomly for comparison purposes only.

Comparison Table

Country……..Food and……..Clothing and……..Health(%)…..Recreation and……Education(%)
………………Nonalcoholic…..Footwear(%)…………………….Culture (%)
………………Beverages (%)

Ethiopia……….54.5……………….6.1………………2.1………………0.6………………..3.5
Egypt………….42.5……………….7.9…………….. 5.0 ……………..2.6…………………7.7
Malaysia………17.3……………….2.2………………4.9 ……………..4.1…………………9.0
Singapore…….. 8.2……………….3.5………………8.4……………..12.2………………..8.0
United States….6.2……………….4.2……………..18.3………………8.6…………………8.5
United Kingdom..7.0……………….4.6………………9.9 …………….10.7………………..5.9
China…………..24.1………………6.3………………6.2………………4.7…………………9.8
Indonesia………41.6………………3.6…………….. 3.0………………1.7…………………5.6

Under food and nonalcoholic beverages that excludes any purchases made at restaurants, hotels or bars, people in Ethiopia, Egypt and Indonesia spend a sizeable chunk of their income on food and drink.

The second category shows that we Malaysians can be frugal when it comes to spending on clothing and footwear which amounts to 2.2% only of our income.

The health category shows the Americans or U.S. consumers spending a good chunk of money on health care which is not surprising due to their problematic health care system.

The Singaporeans do not mind allocating a high percentage of their budget on recreational purposes at 12.2% and the U.K. consumers comes second at 10.7% based on the table above.

Education wise, the Malaysians, Singaporeans, Americans and Chinese spend more or less comparatively in this area. It is not surprising to note that impoverished Ethiopia shelling out very little on education and a lot less on health and recreation.

The balance of Malaysian money

Out of curiosity, I also check out where the rest of the Malaysian ringgit is going. We allotted part of our income as follows:

* Alcoholic beverages, tobacco, and narcotics……………………………………………..1.5%
* Housing, water, electricity, gas and other fuels…………………………………………17.5%
* Transport …………………………………………………………………………………….12.7%
* Furnishings, household equipment and maintenance……………………………………4.7%
* Communication………………………………………………………………………………..5.2%
* Restaurants and hotels………………………………………………………………………7.6%
* Miscellaneous goods and services…………………………………………………………13.4%

You can read the rest of the World Bank detailed report by clicking here.

Read other articles by Jacquelyn at WParent.com on parenting matters and Tips4Everyone.com on solving marriage problems.

This article is posted at: KCLau's Money Tips

Global Spending: How People Spend their Money

What is the Latte Factor? This phrase is coined by David Bach, author of various financial books such as The Automatic Millionaire, Smart Women Finish Rich, Start Late, Finish Rich, Fight for Your Money and Smart Couples Finish Rich. Each and every one of us has our own Latte Factor. Each of us throw away or spend our money on “little” daily expenditures. These small daily expenditures will add up and actually have a significant impact on your financial well-being.

For example, forgoing the purchase of a pack of cigarettes (RM6 – RM10 per pack) and a cup of coffee a day can save a person about RM10 per day in Malaysia. In one month, it is a savings of RM300 (RM10 x 30). If that person saves RM300 every month and invest it at 7% annual return, the amount will accumulate as follows:

# Years………………………………………………………………….Money accumulated
1 year………………………………………………………………………….$3,905.5
2 years…………………………………………………………………………$8,084.4
10 years……………………………………………………………………….$53,960.1
20 years……………………………………………………………………….$160,107.9
30 years……………………………………………………………………….$368,916.6
40 years……………………………………………………………………….$779,674.9

Note: The above was calculated using the Latte Factor Calculator found at www.finishrich.com

Finding out what is your Latte Factor will enable you to save that extra amount which may not seem much at the time but will be a substantial amount years later. This is one idea that I will definitely be imparting to my children starting at a young age.

The times have changed now where temptations are all around us. Our children are bombarded with marketing campaigns to purchase items or material things based on the idea that they need it and deserve to own it. Hence, it is not surprising to hear our kids talk about the latest games, gadgets or other must haves.

During my younger days, it was easier to save money without all the temptations and enticements. It has become more urgent that parents educate their children on the pitfalls of the Latte Factor. It may only be a few dollars spent a day now but may accumulate to ten times more if it is not curbed soon enough. A dollar saved a day becomes $30 in a month. Invest the amount continuously compounding at 7% annually and the money will accumulate to $77,967.5 in 40 years. Double the amount to $2 daily and you will get $155,935. This shows that any small amount saved is still money in the bank compared to having nothing at all.

I wished that someone had taught me about this idea when I was still in high school. I would have loved to see the amount of money accumulated after compounding yearly. The money would have been great to have as a retirement fund or even education fund for my own kids. Hence, I would want my kids to have the choice now to decide how they want to spend their money. Time will be on their side to ensure their money will grow slowly but surely.

Do you think it will be beneficial to teach your children especially your teenage children about the Latte Factor?

Read other articles by Jacquelyn at WParent.com on parenting matters and Tips4Everyone.com on solving marriage problems.

This article is posted at: KCLau's Money Tips

The Latte Factor

Below is another case study I’ve done for a reader. This is the email I received from him.

Dear KC,
I will be 40 years old soon. I am married with a 10 years old daughter. My wife is same age as me, she is a housewife. I have very little knowledge about the profession of financial advisory as retirement always seem far and away. Reading your book awakes me to the importance of financial planning and the quality of life.
My asset as bellow:
1) House (own stay) – Market value of RM800K with RM470K loan outstanding.
2) Second house tenanted at RM850/month. The market value is RM300K with no loan.
3) Share holding of RM840K, all invested in KLSE.
4) EPF RM460K.

Could you please advise if I have saved enough to meet the following requirements?
1) Do I have enough for retirement with monthly income of RM6500? I plan to retire as soon as possible. I will still continue to work after retirement but it would be nice not have to work for money.

2) Education fund for my daughter at about RM300K current value. The education fund is my second goal. It is up to my daughter where she chose to study. I hope to have the resources available if needed.

3) I do not have any insurance except those provided by the employer. Please recommend basis insurance requirement after retirement. Currently the employer provides PA & medical for family. No coverage upon cessation of employment. Should I take up medical insurance upon retirement? How much is sufficient for the family?
I plan to sell the second house and invest the proceeds in equity for higher return.
Thank you.
Ron

Retire with monthly income of RM6500

To retire now with passive income of RM6500/month (78,000 per annum), assuming that the average annual return of 8%, Ron would need to have an investment portfolio of RM975,000.

Looking at Ron’s current asset:
- Share holding of RM840k in Bursa Malaysia
- Second house of RM300k
- EPF RM460k

His total assets are RM1.6million. Let’s exclude EPF from the portfolio, he still have RM1.14 million. To get RM78k return per annum from RM1.14 million worth of investment assets, he just needs to generate 7% return.
His retirement need is met in this case. To generate a 7% return per annum, it is pretty much achievable with the right mix of asset allocation.

Ron mentioned that he plan to sell the house to be invested in equity. But I wouldn’st suggest that because of several reasons:

1. If all his money is invested in equity, it is like putting all your egg in the same basket. Unless he is very good in stock picking and knows what he is doing. Warren Buffett invests almost all his money in stocks and he takes care of his portfolio really well.

2. His second house is giving a return of 3% per annum [RM850 x 12)/300k], which is much lower than the required return of 7% per annum. But properties appreciate over time. Another option is to refinance the house in order to withdraw more capital to be invested in the stock market. Doing this, he can still grab the full return when the house appreciates, while he is making money in the stock market and only paying low interest charges to the bank.

Anyway, there is no absolutely right answer for this. If Ron knows stocks very well compared to real estate, he can definitely sell the house and make more money from stock using the same amount of capital.

As a conclusion, Ron can retire already!

Education fund of RM300k

Since Ron’s daughter is only 10 years old, she will only need the large amount of education fund maybe 8-10 years later. At that time, Ron can withdraw his EPF account 2 for his daughter’s education fees.

Insurance Planning for retirement

Basically, Ron would need to get his family well-covered with insurance protection to prevent any unforeseen illness. Since Ron can afford to retire now, if he chose to stop his employment, it is advisable to get his personal insurance coverage effective.

There are 5 categories of life insurance coverage:

1. Personal Accident plan – this can be purchased from general insurance companies and also online at Tunemoney.

2. Hospitalization and surgical benefit – this is the medical card we often talk about. Most medical card cover until age 80 with adequate lifetime limit. It depends on the hospitalization package you prefer. I would suggest to get a lifetime limit coverage of not less than RM300,000 per person.

3. 36 critical illnesses – For a person who is actively earning money now, I suggest to be covered at least 3 times of your annual income. But for a retiree, probably RM100,000 would be enough just to fund the nursing care and some outpatient medication. Most of the major medical fees are covered if you have a medical card.

4. Total Permanent Disablement – This benefit is included when you are covered for 36 critical illnesses.

5. Death benefit – This benefit is also included when you are covered for 36 critical illnesses. For a retiree, death benefit is not so important compared to those actively working adults who are the breadwinners in their families.

You can allocate 5-10% of your income for insurance planning. Normally it is adequate to get your family well covered. In Ron’s situation, he can allocate about RM400-600/month for insurance planning.

Ron, well done!

You are doing a lot better than majority of the population at you age.

This article is posted at: KCLau's Money Tips

He can retire now & afford his daughter’s RM300k education fund[Case Study]