Everyone talks about retirement planning and how important it is to start early. However, no one ever gives the low-down of when and how to get started.
One of the recommended investment vehicles is the Private Retirement Scheme (PRS). PRS offer funds for individuals to invest in with the objective of saving for retirement. It’s hassle-free as you do not need to actively trade your investment. You can set it up once, and monitor your funds’ performance periodically to see how well you retirement fund is growing.
As with any investment, even a long-term one like PRS, there are many things we can do to ensure our money is working hard to afford us the retirement that we dream of. Here are 3 things a PRS contributor can do to reinforce their retirement fund:
Take advantage of perks & benefits
The government has created a variety of tax incentives, and failing to utilise these incentives to maximum advantage is a huge mistake.
The good thing about reviewing your PRS account and funds every year before the end of the tax year is, you can top up the difference (if any) to enjoy the maximum tax savings.
Under the Youth Incentive, the government will make a one-off contribution of RM1,000 to young PRS members who have accumulated a minimum gross contribution amount of RM1,000 during a period of two years. This incentive will be available between 2017 and 2018.
Monitor fund performance
Investing in PRS is a long-term game, the funds aren’t the type you can time like you would stocks or currency exchanges. However, this doesn’t mean it doesn’t need monitoring. You want to ensure you’re always invested in a fund with the best potential.
By monitoring your fund performance, you will be able to rebalance your portfolio and align it to your financial goals.
CIMB Preferred customers can monitor their PRS funds in the following ways:
- They can seek advice from their CIMB Preferred Relationship Manager on how their funds should be allocated to suit their needs.
- Alternatively, for those who are more financially savvy and want to do it themselves, they can manage their fund allocation via CIMB Clicks.
Rebalance your contribution
It’s common to start saving a small percentage of your salary to your retirement fund early on in your career. We all start off our career with a smaller salary, but as we mature, our salary increases as well. With higher income, we can afford to increase our contributions towards our nest egg. This is something we must pay attention to as our retirement needs are largely calculated based on our last drawn salary. So you want to keep your retirement plans as close to that figure as possible. That means keeping it up to date.
You can set your contribution by percentage, just like how you are contributing towards your EPF savings. If you are contributing 10% of your income instead of a set amount, your contribution amount will automatically increase when your salary increase as well.
Due to compounding interest and the long time frame, increasing your contribution makes a huge impact:
Based on the three scenarios above, the best option would be to go for an auto increase contribution as shown in Scenario C. By setting your contribution by percentage, your contribution will automatically increase when you get a pay hike.
Investing in PRS can be easy and with the right provider, it doesn’t require a lot of maintenance. An important thing to remember when choosing the right PRS provider is to ensure that they are able to help you achieve your retirement goals. This includes providing you with a wide variety of PRS funds with proven performance to choose from, and easing the process of transaction and monitoring of funds.
CIMB Preferred, in partnership with CIMB-Principal Asset Management Berhad, provides you with a PRS plan that gives you comprehensive solution to help you boost your retirement savings with personalised service that best suits you.
To know more about maximising your retirement savings through PRS with CIMB Preferred, call 1 300 885 300 or visit www.cimbpreferred.com.my today.
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