Question: 

Hi, I’m Uncle Lim, a 60-year old retiree. As I write, I have RM 500,000 in EPF and RM 500,000 in fixed deposit (FD). My question is, ‘What should I invest into that is low-risk and pays higher interest than FD rates presently?’


Answer: 

Conventionally, the EPF and FD are two popular vehicles for many local retirees to park their life savings as they are ‘capital-guaranteed’ and they pay dividends and interests, which are passive income that are crucial to support their current lifestyles after retirement. 

But, in 2020, FD rates were slashed. The common rates are now at around 1.8% – 2.0% a year. This means, depositors, like retirees, are now getting less for their money. Needless to say, it is disappointing and this has spurred greater demand for investments that are ‘low-risk’ in nature and can yield better returns. 


The True Reason for ‘Low-Risk’

Take Uncle Lim as an example. He has RM 500,000 in FD and it is likely that if he is a common salaried man, the money is a representation of many years of hard work and diligent savings. If he loses it, his loss is more likely to be ‘permanent’ for he may not have the strength or income-generating ability required to make or recover back his losses. Thus, it explains why retirees are inclined to be more averse to taking ‘risk’ when investing.  


Having Money Doesn’t Make You an Investor

Many believe that the first ingredient to becoming an investor is to have money or capital. To me, that is not true. This is because it takes more than just money itself to build wealth in investing. In fact, it is the investor himself, his mentality, strategies, knowledge, experiences … etc that makes his investments work. 

This means, the investor is more important than the investments. 

For instance, if you ask, ‘What stocks should I invest into?’, my answer to you is, ‘Are you a good stock investor?’ or ‘What do you think stock investing really is?’ or ‘What do you intend to achieve from stock investing?’ If you do not have any ideas on how to answer the above questions, it shows that you are not ready to invest in stocks as you have no idea what you are getting yourself into or worse, making decisions which are blinded by greed itself. 

The same applies to any other investments such as real estate, unit trusts, gold, silver, cryptocurrencies, debt or equity crowdfunding platforms, or maybe, your next bubble tea franchise. 

So, what am I suggesting? 

For me, it is simple. Instead of chasing investments, focus instead on education. Gain knowledge and experiences. Once you have both, you’ll be able to hunt or shop for investments that offer better returns at lower risk with relative ease. 


But, I Don’t Want to Study. 

All I want is to invest in something to get higher returns for my money, you may think. And, if that is you, I totally get it. Basically, you want your money to work, not you studying to invest, so that you can enjoy a nice retirement lifestyle. 

Imagine this. 


You have RM 500,000 in FD. 

You have a desire to get better returns for your money via investing. 

And, you have no clue about what you should be investing your money into. 


Can you see that you are a person whom many people would love to share with when it comes to what you should be investing into? Here, ‘many people’ could refer to financial salespeople, online and offline media, your family and friends. I’m not against any of them. But, the questions that I would like to ask you are: 


a. Do you trust them? 

b. Can they be trusted with your money? 

c. Are you okay with basing your investment decisions from their ‘suggestions’? 

d. Can you live with its consequences, good or bad? 

e. Or, do you prefer to make your own investment decisions? 


If I’m Uncle Lim Today … 

I believe a wise thing to do is to admit that I don’t know how to invest, if I really don’t. Of all the investments that I could invest, let’s just say, I pick stocks. Here, what I’ll do next is this: 


1. Keep all RM 500,000 in FD. Don’t touch it. 

2. Spend some time learning about investing in stocks from credible teachers.  

3. Practise by building a mini-stock portfolio with my FD interest. 

4. Do a post-mortem on what works and what does not. Learn from them. 

5. I may scale up once I gained more investment knowledge and experiences. 


By doing so, I won’t risk my principal as I’m investing its interests for knowledge and experiences. 

Final question, ‘Who are the ‘credible teachers’?’ 

For me, I would regard Warren Buffett, the Chairman of Berkshire Hathaway Inc as a credible teacher when it comes to stock investing. You can start by reading, learning, and taking notes from his letters to his shareholders for they contain a rich archive of practical stock investment wisdom. Link: Buffett’s Letters

Have Fun Learning! 


Ian Tai
Ian Tai

Financial Content Machine. Dividend Investor. Produced 450+ Financial Articles featured in KCLau.com in Malaysia and the Fifth Person, Value Invest Asia, and Small Cap Asia in Singapore. Regular Host and Presenter of a Weekly Financial Webinar with KCLau.com. Co-Founded DividendVault.com, an online membership site that empowers retail investors to build a stock portfolio that pays rising dividends year after year in Malaysia and Singapore.

    2 replies to "Investing for Retirees"

    • Ting

      Hi, i just started to invest in stock market. Could you show some examples how you record each of the transactions, dividend and calculate the return? Thank you.

      • Ian Tai

        Hi Ting, good question. I’ll come out with another article to explain this. 🙂 Ian.

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