Long term investment - REITS

Lets say now you are at 30 years old and need a monthly expenses of RM 2000. Taking into consideration of 3% inflation yearly, when your are at 55 years old, you will need RM4000 to sustain your life style (this is so call future value that can only purchase the same amount of items  a RM2k can do now)  This means you need RM48k annually till you leave this world.

Hopefully by you retired you have RM500,000 savings (include EPF?) when you retired at 55 years old .  So, how long do you think your life time savings will last you ?  See the table below , you have nothing left when you are only at 67 years old, just 12 years after retired !!! That is when I consider you have to struggle to maintain your expenses at 48k annually eventhough inflation is still progressing every year.

So, in order to hedge against inflation, one of the best investment choice is properties, but there is another options besides buying physical properties, which would be more liquid. We can invest in REITS , owning REITS stocks indirectly means we own a portion of those large & expensive properties managed by the REITS fund. Normally, REITS will have an average distributed dividend around 6~8% annually which much more that FD.

REITS stands for “A real estate investment trust" and is a listed stocks.

REITS is a listed vehicle that invests in a portfolio of income generating from properties.