Today’s challenging economic setup means that you have to find ingenious ways to generate extra income in order to keep up with daily living expenses. It’s always wise to explore what options you have at generating a passive income. Passive income generation has many benefits including not requiring you to spend much time and money.
One option you have of generating a passive income is investing your money. It’s a way to make your money work for you and not stay stagnant. You can invest in various things including bonds, mutual funds, stocks, property, Real Estate Investment Trusts (REITs) and many more. If you’re still not convinced, consider the 5 reasons below:
You have to plan for old age
The average middle class Malaysian requires at least half a million to one and a half million Ringgit in order to retire peacefully. This staggering amount is completely impossible to amass through savings alone.
Recently, the EPF has announced that more than 80% of all EPF account holders have inadequate savings for their retirement.
Although the EPF is a mandatory investment scheme imposed by the government, it doesn’t offer enough security as its dividends hover between 5-8% annually.
If you invest in stocks or other modes, you stand a chance of reaping an annual return of more than 10% and even up to 40% per year. In simple calculations, even if you save only RM2000 a year, at a return rate of 10%, you’ll be able to have RM 1 million at the end of 40 years.
The recent tumble in the worth of the Malaysian Ringgit has inevitably driven up the prices of goods and services across the board, and the implementation of the GST has helped this process along. Whether we like it or not, the value of our currency is undergoing serious inflation, and will be worth even less in the future. Investing and growing your money is a way to combat that effect and ensure you have enough for everyday life in the future.
Providing For Your Children
Education doesn’t come cheap nowadays and you’ll find it difficult to fork out the large sums of money needed to pay off semester fees and living expenses if you don’t plan ahead. Investing a small amount of cash lets you grow the modest sum until it covers your child’s entire education expenditure. Similarly, you’ll be able to provide other things for your family, like cars and houses if you use the same strategy.
Get Higher Returns
Letting your money sit in a fixed deposit or savings accounts will not generate much returns at all. However, letting it generate dividends in the market will earn you at least three to five times more. Therefore if you want higher returns, take you money out of the savings account and invest it as soon as possible.
More Purchasing Power
Reach financial goals easier and faster when you invest, rather than focusing on just your savings to pay a down payment on the house, buying a car or starting your own business, use the returns from your investment instead and you’ll find you can have these things sooner than expected.