Maintaining the YOLO lifestyle while saving in PRS

With the aim to learn about money management techniques, a financial education webinar titled “I, Save in PRS: The #YOLO Style” was co-organised by UTAR Faculty of Accountancy and Management (FAM), Centre for Entrepreneurial Sustainability (CENTS) and Private Pension Administrator Malaysia (PPA) via Zoom on 2 September 2021.

Invited to be the speaker was PPA Learning and Engagement Manager Mohamed Farith Mohamed Jamal.  He is a Shariah registered financial planner (Shariah RFP) and certified training professional (CTP) holder with years of experience in financial services and the capital market industry.  In addition, he is a former member of the Malaysia Shariah Financial Planning Development Committee.

Mohamed Farith

“PPA is the central administrator for the PRS industry. It acts as a one-stop centre for retirement learning and PRS and provides services with any of the eight PRS Providers. The initiative that PPA do to grow the industry includes marketing campaigns, digitalisation via PRS online service, continuous retirement education and financial literacy initiative and collaboration with stakeholders, for example with the universities,” said Mohamed Farith.

Defining YOLO (You Only Live Once), he said, “Some people would define YOLO as ‘living life to the fullest’. Some might say YOLO is ‘living in the moment’ and also ‘doing the things they love the most’. Because no one knows what is going to happen tomorrow. Living in the moment brings more joy into our lives. In short, YOLO is all about now and nothing else matters.”

Sharing about financial literacy among youths (age below 35), he said, “Thirty per cent of youths use three or more e-wallets, while 93 per cent own at least one e-wallet. Twenty-nine per cent only realised the importance of emergency funds since the MCO started and sixty per cent cannot survive only on savings beyond three months. Forty-seven per cent spend exactly or more than what they earn and last but not least, the most worrying part— fifty per cent have not started retirement planning.” He advised the participants to pay attention to their money, make sure they have enough money when the time comes.

LWYM

As he spoke about financial management for young graduates, he explained how one can save for the future and still live the YOLO life with LWYM (Live + Within Your Means). He also emphasised the three key areas from short-term to long-term financial planning that one should take note of, namely Money Management, Debt Management and Retirement Planning. He said, “Financial management refers to the efficient and effective usage of money which can be done by understanding the difference between your needs and wants. Needs are goods and services that you require to survive; while wants are goods and services that are not necessary but you desire for.” He then shared the YOLO smart spending concepts, namely Be Smart, Prioritise, Don’t Compare and Live within Your means.

YOLO smart spending concepts

Managing money by budgeting

As he explained the short term financial plan— money management, he advised, “Try to minimise inflating spending after you begin to work.” He then proceeded with the medium-term financial planning which is debt management. A short video on good debt vs bad debt was played to understand its differences and to have a better understanding of debt management. He then continued, “So after money management and debt management, now it’s time to talk about the retirement planning for young adults. Most importantly when you start working you need to ask yourself, how much do you actually need to sustain your YOLO lifestyle and retirement?” A short video on “Retirement Planning & Savings with PRS—Episode 1: The Additional 10% with PRS” was played to understand the three key factors, namely adequacy, sufficiency and sustainability.

Understanding the three key factors

Moving on to the smart investment concept “I, Save in PRS”, he explained the three smart investment tips that one can consider when it comes to retirement planning which was Pay your ‘Future’ first, Power your savings and Contribute regularly on monthly basis. He then explained how PRS can help to close the retirement savings gap and advised the participants to “start small and start now”.

The three smart investment tips

How PRS can help to close the retirement savings gap

A short video on “Retirement Planning & Savings with PRS—Episode 2: The Introduction of PRS Industry” was played to provide a further understanding on the features of PRS, its benefits and the flexibility it offers to the public. He said, “PRS is a voluntary long-term saving and investment scheme designed to help individuals save more for their retirement. PRS also intends to enhance long-term returns for members within a well-structured and regulated framework. The PRS regulatory framework is comprised of five key parties, namely Securities Commission Malaysia, PRS Distributors & Consultants, PPA, PRS Providers and Scheme Trustees.” 

PRS Account Structure

The Eight PRS Providers in Malaysia

“These eight PRS Providers provide a total choice of 58 PRS Funds, available both in Shari’ah and Conventional schemes. The selection depends on whether you have specified or preferred PRS funds. If you are familiar with any of the specific funds, you can opt for self-selected funds. If a potential member is unsure, they may choose the default option funds where savings will be allocated based on the member’s age group,” said Mohamed Farith.

Default Option Funds

He said, “PRS members can switch or transfer their funds. The difference between switching and transferring is ‘Switching’ occurs when a member shifts their PRS savings to another PRS fund of the same PRS Provider while ‘Transfer’ occurs when a PRS member shifts their PRS savings to another PRS fund of another PRS Provider. However, you need to know that transfers can only be instructed between Providers after the first year of subscription to the PRS from the date of the first contribution.” He then shared the top PRS fund performance according to each fund category from its inception until 30 July 2021.

PRS Fund Performance

The value propositions of I, save in PRS

“To open a PRS account, you can either directly go to the Providers; contact a PRS Consultant or Distributor or deal via PRS Online Service. Most people would think that they need a large amount of money to start saving. On the contrary, savings for your future in PRS does not require a large amount of money, you can start building your retirement savings now via PRS Online from as small as RM100,” said Mohamed Farith”

How to save in PRS

#ISaveinPRS Treats Contest run by PPA

He concluded his webinar by listing the benefits of PRS. He said, “I, Save in PRS now so I can LWYM, to save for the future lifestyle that I want, and at the same time spend my money today because of YOLO; to have sustainable living for at least 15 to 20 years after I stop working because I know I need to have 2/3 of my last drawn salary to maintain my standard of living when I retire; and to have choices of eight PRS Providers and various funds to match my unique investment profile and risk appetites. I, Save in PRS now because I can start as low as RM100 to enrol and top up my PRS savings via PRS Online Service. I, Save in PRS now because PPA will provide lifetime account management and reporting, plus online access to my PRS accounts and treat myself with monthly and grand PRS treats in #ISaveinPRS Treats Contest. In a nutshell, I save in PRS now to live the life that I want to live with.”

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