,Depending on which items we buy, most of us would have noticed that the price of goods has gone up. In fact, food is listed as one of the highest inflation groups in the consumer price index (CPI).皇冠手机管理端（www.hg9988.vip）是一个开放皇冠手机管理端即时比分、皇冠手机网址代理最新登录线路、皇冠手机网址会员最新登录线路、皇冠网址代理APP下载、皇冠网址会员APP下载、皇冠网址线路APP下载、皇冠网址电脑版下载、皇冠网址手机版下载的皇冠新现金网平台。
WHETHER you have been keeping up to the news or not, chances are you would have noticed that the prices of goods have been on the rise recently.
Depending on which items we buy, most of us would have noticed that the price of goods has gone up. In fact, food is listed as one of the highest inflation groups in the consumer price index (CPI).
According to a newspaper report, the meat subgroup continued to be the main contributor to the food inflation, rising by 7.6% in March. Chicken, considered the biggest component in the meat subgroup, expanded by 10.5%.
Inflation has always been present. But its effects are felt now more than ever.
From my experience in managing wealth, the yearly inflation rate that is experienced by urban Malaysians is somewhere around 6%. In this article, I’ll be talking about how to hedge against it.
One of the biggest mistakes the middle class makes when saving for their retirement is underestimating the rate of inflation.
This leads me to believe that not many people have the awareness to truly grasp how inflation could easily erode the value of their money, especially during their retirement years.
It is, after all, quite challenging for anyone to imagine the reality taking place decades into the future. Nevertheless, if you look back at the cost of living 20 years ago, this will help you understand the concept of inflation and how it affects your wealth.
Let’s take the example of Robert.
Robert is a 50-year-old who has just retired. He has RM3mil in his savings as his retirement capital.
Not a big believer in investing, he plans to put his RM3mil savings in a fixed deposit, and live off the 4% interest, which comes up to RM120,000 per annum (approximately RM 10,000 per month). Upon his death, he hopes to divide the capital among his three children, each getting RM1mil.
While Robert has the right mindset to save, live off his interest, and leave a legacy for his children, there is a big assumption that he is making.
He mistakenly assumes that the value of his money today will be equivalent to the value of his money in 24 years when he is 74.
In reality, this is far from the case. His assumption that the yearly inflation is at 6%, would result in two things happening.
Robert’s budget of spending RM10,000 per month will be valued in today’s terms at RM2,500 after 24 years. If the aforementioned takes place, he would then have to readjust his original standards of living rather drastically to keep within the budget.
In terms of today’s monetary value, the RM1mil that Robert intends to leave for each of his kids will be only worth RM250,000. While this is still a sizeable allocation, it is not the value that Robert thinks he is leaving for his kids.