Say, we are currently 45 years old and we might live for another 40 years. How much money must we have to maintain our status quo for the next 40 years.
On overage, we will need at least 2k per month to survive in malaysia and we put in mind that inflation will double every 10 years.
Our needs for the first 10 years will be
Rm 2000 x 12m x 10y = 240k
In the 2nd 10 years will be
Rm 2000 x 12m x 10y x 2 = 480k
In the 3rd 10 years will be
Rm 2000 x 12m x 10y x 4 = 960k
In the 4th 10 years will be
Rm 2000 x 12m x 10y x 8 = 1920k
In short over the 40 years, we will need
Rm 2000 x 12m x 10y x (1+2+4+8) = 3600k to maintain our status quo in 40 years time.
However, Thank God inflation does not increase in linear fashion as water, electricity, phone bills and insurance is not subjected to inflation rate as much as food and medicine.
Therefore, we need to itemised inflation rate for each individual item and we will need a much lower amount of money than 3.6 million to maintain our status quo in the next 40 years.
We can roughly divide our source of income for the following 4 decade:
1.First decade from our daily job.
2.Second decade from our pension or EPF.
3.Third decade from our investment and insurance.
4.Fourth decade from our property.
The biggest misery in human nature is fear of the unknown.
Hence, we can creat a plan to overcome inflation and live a bless life. If we fail to plan, we plan to fail.
May God's blessings be with you always.
Everything is possible through God who loves us,
Dr. Lion.
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