Retirement planning looms large for many, particularly those in their 40s who are juggling mortgages, bills, and possibly college funds for their children. The pressing question remains: are we sufficiently prepared for our retirement?
Joseph Cherian, known as Joe, brings substantial expertise to this issue. As Deputy CEO and Practice Professor of Finance at the Asia School of Business (ASB), Joe has dedicated years to not only guiding individuals through the intricacies of retirement planning, but also managing vast pools of pension assets while in the asset management industry in New York.
Joe, like many other professionals, academics and the government, is worried about a troubling trend: a significant portion of Malaysians are approaching retirement with less than RM10,000 in savings. This isn’t just a concern—it’s an impending financial crisis of national proportions.
Joe offers a simple proposition: a needs-based pension scheme to complement the existing Employees Provident Fund (EPF), targeting assistance towards lower-income individuals and those with sporadic employment patterns. “While the EPF has served as a cornerstone social security savings system for many Malaysians, it may not sufficiently meet everyone’s financial needs,” Joe emphasizes. “We require sustainable solutions that cater comprehensively to all societal segments.”
In the current volatile economic climate, Joe underscores the significance of adaptability and resilience, without sacrificing sustainability. He advocates for innovative, sustainable financing mechanisms and strategic collaborations to fortify financial stability. “Flexibility and cooperation are indispensable during periods of economic turbulence,” Joe advises. “By embracing change and consolidating resources, we can adeptly navigate financial upheavals.”
Joe’s financial doctrine is both lucid and profound. He underscores the importance of commencing savings early, socking away as much as you can afford into EPF retirement savings, constructing a diversified investment portfolio, and evading the pitfalls of credit card debt. “Initiating savings early is paramount. Consistency is key,” Joe emphasizes. “Regular contributions to your retirement fund, and increasing it progressively with the passage of time, earnings and bonuses, can amass a meaningful nest egg at the point of retirement.”
For those apprehensive about currency fluctuations, Joe prescribes a balanced investment strategy. Diversifying investments across various asset classes across the globe can mitigate risks and optimize returns. “Diversification serves as our foremost defense mechanism against market volatility,” Joe elucidates. “Strategically spreading investments helps curtail risk exposure while maximizing potential returns.” For those who need help, it is best to consult a trusted financial advisor who takes his or her fiduciary responsibility to clients seriously.
Joe also advises exploring beyond conventional investment avenues. Delving into real estate and education planning can provide supplementary avenues for wealth accumulation and long-term financial security. “Real estate and education represent pivotal components of a robust investment strategy,” Joe suggests. “Broadening our investment scope fortifies our financial footing.” However, don’t overinvest in real estate! Example, if you already own a home, buying REITs would only increase your exposure to that asset class and increase your “correlation risk”. That could hurt your portfolio, especially when the real estate market corrects.
Ultimately, Joe’s message revolves around empowerment and self-sufficiency. By embracing sound financial practices and remaining abreast of investment opportunities, individuals can assert control over their financial destinies and secure a prosperous retirement.
Joe Cherian’s credentials are exemplary. He serves as a Visiting Professor at Cornell University’s Samuel Curtis Johnson Graduate School of Management in New York and has held esteemed roles such as Managing Director, Global Head, and CIO at Credit Suisse. With academic accolades from MIT and Cornell, Joe actively contributes to organizations such as Asia Asset Management and the Mercer CFA Institute Global Pension Index, while also serving on the Board of the Institute for Capital Market Research Malaysia (ICMR), an initiative by the Securities Commission Malaysia.
For those seeking further guidance, Joe’s book “Track to the Future: Investment, Finance, and Lessons for the New Economy” provides valuable insights for navigating the financial investments landscape. With Joe’s expertise and advice, individuals can embark on their financial journey with confidence, ensuring a brighter and more secure future.