Malaysia Financial Blogger | Financial Freedom Ideas | imDavidLee.Com

Sensible Ways to Use Your Year End Bonus

Most of my friends plan to invest in property when received their year-end bonus. It would be great to go for property as its potential for capital appreciation and a healthy rental yield. I have been influenced by them and planned to use my future bonuses to invest in a residential property soon.

Besides that, I also plan to set aside about 30% of my monthly income to go towards stocks and unit trusts investment. According to Malaysian Employers Federation in its year 2011 MEF Salary Survey, it was reported that the year-end bonuses are reducing at the average 2.13 months forecast for executives in year 2012. Therefore, it’s time for us to spend it wisely during this recession period.

You would need to have a financial plan if you have a great pool of money coming your way and you are not sure how to put it to good use. You can do this on your own or consult financial advisor for assistance.

Tips on Using Your Spare Cash

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KLSE Market PE

As at 6th Jan 2012, our local market is valued at a P/E (Price per earning) of about 14.8x on 2012 earnings. In the other words, it is currently lower than the 10-year average P/E ratio of 16.7x. So, it would be good opportunity for investor to make own assessment and decision in the present market condition.

P/E ratio is commonly used by stock traders to value a company. It reflects whether a company’s share price is overvalued or undervalued.

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Managing Rising Cost of Living

The concern on the rising of living cost is a global one. The living cost essentially will involve food supply, housing and transportation cost. In fact, there’re various factors that contribute to the rise in the price of goods. It is worrisome as it hurts the people, especially the poor. Besides that, increasing the fuel price is another concern as when fuel costs higher, the transportation cost will also be increased and then lead to higher price of goods and services.

Thus, a reduction in the personal tax rates will appeal to high income earners working in Malaysia and it could attract more foreign talents to work as it will allow them to retain higher level of disposable income.

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Performance Based Bonus

Just like last year, it’s no difference for the bonus payout time again. Staff performance appraisal and review once again will determine the level of bonus you will get. Besides that, the bonus payouts also depend on how well the firm performs. In the other words, it’s not guaranteed paid for employees.

However, giving out a bonus is very subjective. Therefore, it would be inevitable that employees are given a standard bonus. This is because each individual has different perceptive; your manager may rate their employees from their own sets of capabilities instead of their subordinates.

From management perspective, if the company made a profit in the last year and they’d like to recognize their potential employees by rewarding them with a bonus. However, we also know that not every employer will give 100% and sometimes it might cause employees dissatisfaction.

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Should Employee Retiree Later? Why?

In my opinion, retirement should be optional for employees. After 55, many employees’ especially top contributors are still able to offer leadership and management skills, technical expertise and guidance. These are invaluable assets that can be used to groom future leaders and successors. Keeping them employed avoid more loss of talent in our country. Still, those who prefer to retire should be allowed to do so.

Our lifespan is now longer than 75 years. This means that a retiree aged 55 has to support himself for another 20 years or more without an income. The average Malaysian is expected to have RM120,000 in his EPF. That will give him RM500 per month or RM16.67 per day, during his retirement.

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Retirement in Malaysia

There are 3 basic groups of retirees and they have different ways of managing their finances during retirement. The 1st group comprises those who have little savings and have difficulties making ends meet, especially with the rising cost of basic goods services. I am glad that Budget 2012 has taken their needs into consideration.

The 2nd group comprises middle class retirees who have some savings, investments or pensions to rely on. However, they have to be mindful of high inflation. The 3rd group of retirees is the super rich who do not have financial worries.

I feel blessed to be in the 2nd group. We cannot look into the future, so we are unable to see when our life on this beautiful earth will end and how much money we will need in the meantime to meet out daily expenses. All we can do is have a best estimate, based on our current needs.

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