An industry study by Sun Life reporting that only 40% of Malaysian millennials have a financial plan beyond one year. This statistic is concerning — your 30s are a crucial decade for laying a solid financial foundation. Without long-term financial planning, it’s easy to lose direction and struggle with money in the years ahead.
So, what can you do about it? Start by focusing on the three key pillars of personal finance: savings, investment, and insurance. These personal finance tips will help you understand the basics, make better financial decisions, and build a more stable future.
Personal Finance Tips for Millennial Malaysians
Whether you’re just turning 30 or already deep into this decade, it’s not too late to take control of your financial life. Let’s break it down into manageable steps.
1. Build a strong financial foundation with savings
Savings are the bedrock of financial stability. Here’s how to build yours the right way:
Emergency fund
An emergency fund is a safety net. Life is unpredictable — accidents, car repairs, job loss, and medical emergencies can happen anytime. Ideally, you should have 3 to 6 months’ living expenses in a separate savings account. This account should be harder to access and strictly for urgent spending.
Debt management
Before you can save effectively, manage your debt. Start tackling high-interest debt like credit cards. Use the avalanche method (paying off the highest interest debt first) or the snowball method (starting with the smallest debt to gain momentum). Always pay at least the minimum payment to avoid penalties.
Short-term savings
Not all savings are meant for the distant future. You should also save for short-term goals like vacations, gadgets, or weddings. Set up separate sub-accounts for each goal and contribute monthly to prevent you from using your emergency fund for non-emergencies.
Automating savings
Set up a standing instruction to transfer a fixed amount from your salary account to your savings account. When savings are automatic, you’re less likely to spend what you intended to save.
2. Grow your wealth with investment
Once your savings are in place, it’s time to make your money work for you by investing. Here are some tips you can use on your investment journey:
Know your risk tolerance and set clear goals
Before investing, understand how comfortable you are with risk. Are you comfortable handling market fluctuations or do you need more stable returns? Your risk tolerance depends on your income stability, financial goals, investment timeline, and personality.
Next, set clear goals based on how long you’ll be investing because each goal will have a different strategy. Here are some examples to help you visualise:
- Short-term (1–3 years): e.g. saving for a house deposit.
- Medium-term (3–7 years): e.g. children’s education fund.
- Long-term (10+ years): e.g. retirement.
Investment options in Malaysia
Malaysia offers a variety of investment products, all of which have different advantages and uses. Let’s find out below:
EPF (Employees Provident Fund)
If you’re employed, EPF is already part of your savings. Your employer contributes a minimum 12–13%, and you contribute 11%. Since it offers a guaranteed dividend, it is a safe long-term option.
Advantages:
- Low risk
- long-term compound growth
- Tax relief
Unit Trust and Mutual Funds
These are collective investment schemes that pool money from multiple investors to create a portfolio of assets managed by professionals. . When you invest in a unit trust or mutual fund, you’re essentially buying a unit of the overall portfolio.
Advantages:
- Diversified as it holds a portfolio of various assets like stocks, bonds, and other securities.
- Suitable for beginners
- Low entry cost
Things to note: Look for funds with low management fees and good historical performance.
Shariah-Compliant Investment
Shariah-compliant investments are a great option to align your finances with Islamic principles. One example is Funding Societies’ Guaranteed Islamic Investment Note (GIIN), where you can invest to grow your wealth from as low as RM100, with guaranteed returns and a flexible investment period of up to 24 months.
Advantages:
- Low entry barrier
- Predictable returns
- Shariah-compliant
Stocks and ETFs
Buying individual stocks or exchange-traded funds (ETFs) allows you to own shares of companies or baskets of assets.
Advantages:
- Higher potential returns
- ETFs offer diversification (for example, by investing in the S&P 500 or FBM KLCI, it gives you exposure to the entire index)
- Greater control compared to collective investment schemes as you can choose exactly which companies to invest in.
Tips:
- Start with blue-chip stocks
- Use a regulated and licensed stock trading platform such as Rakuten Trade and Bursa Anywhere
- Always research thoroughly before investing
Diversify and review regularly
Diversification spreads your risk. In other words, avoid putting all your money into one type of investment. What you can do instead is to mix things up according to your portfolio performance, life goals, or economic changes once every 6-12 months. Here’s a sample allocation strategy:
- 30% in unit trusts
- 30% in EPF or PRS
- 20% in Shariah-compliant notes
- 20% in stocks or ETFs
3. Protect your financial future with insurance
Why insurance is a must
Savings and investment help you grow wealth, but insurance is your financial shield. It prevents life’s unexpected events from wiping out your hard-earned money. For example, a hospitalisation could cost thousands. Without insurance, it could drain your savings.
The most essential insurance for millennial Malaysians
There are many types of insurance available in Malaysia, but here are some of the most vital ones for people in their 30s:
- Medical/Health Insurance: Covers hospitalisation, surgery, and treatment. Choose a policy with cashless admission and high annual limits.
- Life Insurance: Provides financial support to your family if you pass away unexpectedly. Essential if you have dependents.
- Critical Illness Insurance: Pays a lump sum if you’re diagnosed with critical illness like cancer, stroke, or heart disease. It helps cover living costs while you’re unable to work.
- Personal Accident Insurance: Highly beneficial if you have an active lifestyle or travel often.
Personal finance tips: how to balance your insurance premium with your investment
A good rule of thumb is to keep your insurance premiums below 10–15% of your monthly income. Prioritise medical and life insurance first. Then, allocate the rest to investments. Avoid mixing insurance with savings products unless you fully understand how they work.
How to Calculate Your Retirement Needs
Retirement might seem far away, but your 30s are the perfect time to plan. You can make it easier by following these steps:
- Decide Retirement Age: The most common choices are 60 or 65.
- Estimate Monthly Living Expenses: Adjust for inflation at 3% annually.
- Determine Retirement Duration: If you live until 85 and retire at 60, that’s 25 years of expenses.
- Use a retirement calculator or apply this formula to estimate your future monthly expenses:
FV=PV×(1+r)n
Where:
- FV = Future Value (your estimated monthly expenses in the future)
- PV = Present Value (your current monthly expenses)
- r = Annual inflation rate
- n = Number of years until retirement
Example Calculation:
If your current monthly expenses are RM3,000, and you plan to retire in 25 years with an estimated annual inflation rate of 3%:
FV = 3000 × (1 + 0.03)²⁵ = 3000 × (1.03)²⁵ ≈ RM6,281.33
So, to maintain the same lifestyle, your estimated monthly expenses in 25 years would be around RM6,281.33.
- Bridge your retirement expenses gap by factoring in your EPF savings, investments, and other income. If there’s a shortfall, increase your monthly savings or invest in higher-return assets while you are still young.
Your 30s are a golden decade for financial planning because you have time, energy, and the opportunity to shape your future. While only 40% of Malaysian millennials have plans beyond a year, you can beat the odds. Start with the above checklist to build your financial future. Taking a small step today will make a huge difference tomorrow.
Remember, personal finance isn’t about being rich; it’s about being prepared. So, let’s start planning today for a financially free tomorrow! For a more accessible investment option, you can consider Funding Societies’ Guaranteed Islamic Investment Note, which offers a low entry barrier with starting funds of RM100. Click here to learn more, and seize the moment!
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Please consult a licensed financial planner for personalised recommendations.
References:
https://ijafb.com/PDF/IJAFB-2024-55-06-44.pdf
https://www.kwsp.gov.my/en/w/article/achieve-money-goal
https://www.stashaway.my/r/best-safe-low-risk-investments-malaysia
https://malaysia.gov.my/portal/content/30992
https://fi.life/learn/the-5-most-essential-insurance-for-you
https://fundingsocieties.com.my/guaranteed-islamic-investment-notes?tab=signup
