I'll make RM2mil from selling my business, how do I achieve financial freedom?

[blessed2day]

@magda0316 I started off in VOO (S&P) but then got hit by the witholding tax and then read this article that was shared on this subreddit and decided it made sense so moved everything to VWRA. I understand that there's some bias towards developed economies because the methodology of stock selection is based on market cap. However, should power shift to China, wouldn't that mean that VWRA would shift its weightage towards China also? What do you think?

 

[zionpeter]

@blessed2day Ireland domiciled etf like VWRA is still subject to 15% dividend withholding tax. Pretty sure there’s a maybank or local etf that tracks S&P index (I am not well tuned to local equities) if you want US exposure.

If there’s no debt or mortgages, looks into cash flow generating business such as landlording. HYSA is only generating sub 5% atm so even if you lump sum 2M into it you won’t cover your monthly.

Regardless of how you cut it, I think it’s very tough to FIRE with your current spent. RETIRE probably but definitely not FIRE.

 

[lynq]

@zionpeter VWRA is the better option for nonUSA ppl like us. Charges are lowet too.

 

[magda0316]

@blessed2day My assumption is that as with most ETFs, the weightage won't change significantly, which is why I would recommend investing in China separately, whether via another ETF or unit trust or individually with individual China-related stocks.

 

[allan252]

@blessed2day For VOO, an alternative is VUSA or VUAA. Ireland domiciled so you pay less tax (15%) on dividends. With your situation I'd just lump sum/DCA into an index fund

 

[racheldiane]

@blessed2day EPF is not an immediate option. You can only contribute max 60k per year or 100k if government approved the increase later. It will take you 20 years or more to deposit 2mil into epf

 

[blessed2day]

@racheldiane Oh. I didn't know that.

 

[savedintx]

@blessed2day Go pay a financial consultant. One that charges a flat fee so not incentivised to push other financial products.

 

[smissy]

@blessed2day 2mil is not enough to retire if you have young kids, more so if you're planning for them to pursue higher education outside of Malaysia.

 

[brendanawitz]

@blessed2day Interesting discussion from the constructive comments here, and also a harsh reminder that 2mil is not enough to completely FIRE for a lot of people. For myself I'm targeting at least 3mil and I don't even have kids (DINK - Dual Income No Kids). For the haters/jealous comments, they need to open their mind to fully understand the total amount required to plan for FIRE.

As for your question, I think there's not much wrong to go VWRA. I subscribe to Boglehead approach which is to keep investing as simple and passive as possible. So I only own EPF, VWRA and very small allocation of crypto (this is my fun investment haha).

Based on the lifestyle you're accustomed to, I'm afraid you might still need to continue working in some form or another. But definitely you have wider options - like taking a sabbatical now before you grind again or taking a lesser pay job with less stress and more passion to supplement your investment drawdown. Maybe can consider taking a part-time consultant role at your company after selling off? Look into CoastFIRE approach and see what possibilities are available to you.

 

[blurredcontours]

@blessed2day

I am seeking this community's advice on how to achieve FIRE (Financial Indepence, Retire Early) with the RM2 million, as well as to pass down more wealth to my children than I will receive from my inheritance. My household spending is RM18,000 per month. I have about RM250,000 in my bank account and RM100,000 in VWRA.

RM2mil at RM18K per month expenses will last you about 9 years. That doesn't take into account general economic inflation and your own lifestyle inflation. Your expenses will increase as your kids get older. Your kids education will blow through that money. It is not enough.

In 20 years time, I should inherit >RM20mil in Malaysian real estate assets and cash.While I am so fortunate to eventually receive this inheritance, I hope that FIRE may be achieved independent of it.

Not guaranteed. Who knows in 20 years Malaysia may have inheritance tax. We had it before in 1991. Dad could choose to disown you, donate his money to a cult, remarry and give his wealth to his new kids, etc.

Option A: Invest everything in VWRA, draw down 3% per year, and reduce spending to live within that amount.

Option B: Invest everything in EPF, draw down 3% per year, and reduce spending to live within that amount.

Let's just say you don't plan to work. You invest your whole RM2mil into this VWRA or EPF. How are you going to fund your RM18K per month lifestyle? You have negative cashflow.

While I plan to FIRE... realistically I am probably still going to continue to work, but just that now it would be for passion and purpose rather than financial.

You better be sure your passion or purpose can make up for a RM13K++ shortfall

One thing to be aware of is that it seems the Anwar government is planning capital gains tax on private sales of unlisted shares. I'm no tax expert but I guess that impacts you. Depending on when you sell and when (or if) this tax comes into effect, you could be looking at a lot less than RM2mil

 

[lisa42]

@blurredcontours All sensible and logical thinking. Which makes me wonder how OP is even asking about this question. Simple maths can tell RM2m, FIRE is not an option even with downscaling lifestyle expenditure from 18K to 5k.

Said earning RM20K per month but spending RM18k per month, net saving only RM2K.

 

[blurredcontours]

@lisa42 If he were paying for a home loan it wouldn't be that bad, but he said he has no liabilities and an expense of RM18K. Insane.

People who have less than him but save more can easily be richer than him over the long term.

 

[blinkshadow182]

@blessed2day TIL Financial Independence, Retire Early.

Well with my measly salary I doubt I can do so but all the best OP, hope u can find professional advice that doesn't try to sell/advertising their products while doing so

 

[impactb13]

@blinkshadow182 It's always possible. Everyone is on a unique journey.

Best to invest in what you can understand, rather than blindly what is recommended. I've been there several times.

Even if your own decision is wrong, do not regret taking it.

Even the BSN premium savings is good if you want to be fuss free. EPF is also good if you want low risk with guarantee that your funds will be there for you when you need it. Diversification is a word often thrown about that it loses its allure.

People over think. Get the basics like shelter and food on the table right first. Others will come in due course.

And oh, insurance and insurance linked investment ain't even close to being an answer to financial independence. It's high income for somebody else playing on your mortality.

PA and medical card should be all you need. (oops that was advice..).

Never underestimate the power of compounding!

 

[blessed2day]

@blinkshadow182 ah yeah. edited to explain what FIRE stands for.

wish you all the best on your financial journey.

 

[polygon]

@blessed2day > down would be about RM5k/mth

that's a big drop in lifestyle

family might revolt

 

[beckylovesyou]

@blessed2day Engaged with a professional financial planner. There is no ways around it. If you want a suggestion you can message me.

 

[markusaurelius131]

@beckylovesyou Yes totally agree. Please engage a trusted financial planner and mostly go for low risk and just a fraction in high risk. If you also need a recommended person let me know.

 

[schalene]

@blessed2day Lets say if you have decided to make a business, do look for offshore company such as Labuan. They offer really low tax