Getting RM 1,000,000 in cash is almost impossible for average working Malaysians. However, it is not entirely impossible considering the possibility of you hitting jackpot by gambling in 4D numbers or lucky enough to win BSN Sijil Simpanan Premium (SSP) or by any other means. Just in-case if this to be you, what you should be planning for the million ringgit you just got?
Don’t get me wrong. Playing the lottery is detrimental to your finance, not worth the gamble, and Islam forbids it.
يَسْأَلُونَكَ عَنِ الْخَمْرِ وَالْمَيْسِرِ ۖ قُلْ فِيهِمَا إِثْمٌ كَبِيرٌ وَمَنَافِعُ لِلنَّاسِ وَإِثْمُهُمَا أَكْبَرُ مِن نَّفْعِهِمَاThey ask you ˹O Prophet˺ about intoxicants and gambling. Say, “There is great evil in both, as well as some benefit for people—but the evil outweighs the benefit.” They ˹also˺ ask you ˹O Prophet˺ what they should donate. Say, “Whatever you can spare.” This is how Allah makes His revelations clear to you ˹believers˺, so perhaps you may reflect. | al-Baqarah (219)
Also, I’m not affiliated with any banks or financial institutions. This is not investment advice too.
Back to the topic.
What things are you dreaming of if getting a million ringgit?
From what I hear, most people will be thinking about traveling around the world, giving back to parents, buying a home and car. All those dreams are good as traveling tends to make us more open-minded from the experiences we have, giving back to parents is a commendable action, buying a home to live in will allow us to ensure live independently, and buying a car provides greater accessibility to more places rather walking by foot or relying solely on public transportation.
All those dreams have one thing in common. It is making the RM 1,000,000 finish, and you are back in the rat-race again. Again, don’t get me wrong. There is nothing wrong with having a career and doing the things you like. However, twisting the way we thought about it can make us achieve independence in at least financial terms.
Instead of fantasizing about how to spend the million Ringgit you received, applying the delayed gratification concept will enable you to be financially free for the rest of your life. By the way, how is that possible?
The fundamental idea of being financially free is every decision you made in life is not constrained or at least motivated by money. Don’t get me wrong. Financial freedom is not about an eat-sleep-play routine (doing nothing). However, being financially free is about doing the things you like or, doing the things that you believe benefit the most or, exploring new things that you are a passion about or, making the world a better place with community work.
Maintaining your RM 1,000,000
Let’s do the math. Take 6% as an annual investment return. You will easily get RM 60,000 per year which equates to RM 5,000 per month. That’s near to the average 2019 Malaysian household income!
Yes. I know, 6% annual investment return is a bit opportunistic (but not impossible either). Then, we may use Amanah Saham Bumiputera (ASB) 2020 income distribution as a worst-case example. Take 4.25% as annual investment return. You will easily get RM 42,500 per year which equates to RM 3541 per month. It is still quite good for doing nothing than most working Malaysians. Remember, this is just an example as ASB and ASB 2 combined only allow deposit up-to RM 400,000. This is simply an oversimplified example.
The idea that I was attempting to sell is to be able to live with the passive income that enough for you not to touch the principle for the rest of your life. Yeah, either RM 5,000 or RM 3541 per month is not enough to live comfortably considering having a wife and child. That number is only ideal if you are plan to be single forever where you don’t have a wife and/or child to feed.
Don’t forget the main idea: Think about how to grow your money first before thinking about where to spend it.
Whatever financial stage you are currently in, doing nothing is not the objective. Having million ringgit invested with steady passive income is just a cushion for uncertain times. We must work, play a role in society and do a good thing for other people.
Having a huge passive income also means, you can stand by your principle. Some people may be tasked with unethical things which against their principle. However, considering we have a child to feed, have a home-rent to pay, due to financial constraints we are forced to do things we do not believe in.
You can stand by your principle is the true meaning of independence.