How to Build a Simple Malaysian Retirement Portfolio: A Step-by-Step Guide

 

🧭 Introduction: Retirement Isn't the End—It's a New Financial Chapter

Retirement isn't about stopping—it’s about switching gears.

You’ve spent years earning, saving, and preparing. Now it’s time to let your money do the heavy lifting. But with rising healthcare costs, inflation, and longer lifespans, your retirement fund can’t just sit in a savings account anymore. It needs to work smart, just like you did.

The good news? You don’t need a PhD in finance to create a solid retirement portfolio. Even with basic tools like EPF, PRS, REITs, and dividend stocks, Malaysians can create a portfolio that’s simple, diversified, and sustainable.

Here’s your practical, no-jargon guide.

1. 🎯 Know Your Retirement Goal (And Risk Appetite)

Before jumping into products, start with the most important question:

“How much monthly income will I need in retirement?”

Let’s say you aim for RM4,000/month. That’s RM48,000/year. If you plan to retire at 60 and live to 85, you’ll need at least:

RM48,000 × 25 years = RM1.2 million

But this doesn't mean you need RM1.2 million on Day 1. If your portfolio generates income (dividends, rent, growth), your total capital requirement could be lower.

Then assess:

• 🔹 Risk Appetite – Are you conservative (FDs, bonds) or moderate (REITs, PRS) or more adventurous (equities)?

• 🔹 Withdrawal Strategy – Will you draw 4% per year, or plan to sell assets as needed?

• 🔹 Health & Lifespan – Consider healthcare inflation and a longer life expectancy.

2. 🏛️ Use EPF as Your Core Anchor

For most Malaysians, EPF is the foundation of any retirement plan.

Why it's great:

✅ Government-backed
✅ Historically stable returns (average ~5.5–6.0%)
✅ Compound growth is automatic
✅ Dividends are tax-free

In 2024, EPF declared 6.3% for both conventional and shariah accounts—beating most fixed deposits and bonds.

If you’re still working:

• Contribute voluntarily through i-Saraan (for gig/freelancers)

• Top up your spouse or parents’ EPF for tax relief

If you're approaching 55:

• Don't rush to withdraw unless needed

• Consider EPF i-Invest to get higher exposure to equity funds under your Account 1

3. 🧱 Add PRS to Diversify and Get Tax Relief

The Private Retirement Scheme (PRS) is another long-term savings option managed by private fund managers and regulated by the SC.

Pros:

• Tax relief up to RM3,000/year

• Wide range of funds: conservative to aggressive

• Lock-in until age 55 ensures discipline

• Some funds offer shariah-compliant options

Example strategy:

• In your 30s–40s: Go with a growth fund

• In your 50s: Shift to moderate or conservative options

• After 55: Withdraw gradually, or switch to PRS Plus Retirement Income fund

✅ Providers: Affin Hwang, Kenanga, Manulife, Principal, etc.

4. 🏢 Include REITs for Passive Income

REITs (Real Estate Investment Trusts) are listed trusts that own and manage property assets like malls, offices, and industrial spaces. They pay out regular dividends (90% of rental income) and are great for passive income.

Why Malaysians like them:

• ✅ Higher yield than FDs (often 5–6% annually)

• ✅ Liquid (can sell anytime on Bursa)

• ✅ Diversified property exposure

• ✅ No need to manage tenants or repairs

Popular REITs in Malaysia:

REIT	Yield (2024 est.)	Focus
Axis REIT	~5.1%	Industrial
IGB REIT	~4.8%	Retail malls
KLCCP Stapled	~5.0%	Mixed (office + retail)

📌 Disclaimer: This is not a buy call. Do your own research or consult a licensed financial advisor.

5. 💵 Add Dividend Stocks or ETFs for Growth + Income

While REITs are great for yield, stocks give growth potential.

If you’re nearing retirement, consider blue-chip dividend stocks like:

• Public Bank

• Tenaga Nasional

• Nestlé

• Telekom Malaysia

Or explore ETFs.

Benefits:

• Long-term capital appreciation

• Quarterly or semi-annual dividends

• Flexible to switch or rebalance

6. 🧯 Emergency Buffer: Don't Over-Invest Everything

Always keep 6–12 months of expenses in a liquid account:

• Fixed Deposit

• Money Market Fund

• Tabung Haji or ASB (if eligible)

This prevents you from selling investments at a loss during emergencies.

Tip: Use this fund for medical needs or temporary cashflow gaps, not speculation.

7. 📊 Sample Retirement Portfolio Allocation

Here’s a balanced portfolio example for someone aged 50–60 with moderate risk:

Asset Type	Allocation (%)	Example Instruments
EPF	50%	EPF Core, i-Invest
PRS	10%	PRS Growth/Moderate Fund
REITs	15%	Axis, IGB, KLCCP
Dividend Stocks	15%	Public Bank, Nestlé, ETFs
Cash / Emergency Fund	10%	FD, Money Market, TH

This mix provides:

• Steady income (REITs, stocks)

• Long-term growth (EPF, equities)

• Flexibility (cash buffer)

• Tax advantages (EPF, PRS)

8. 👀 Regular Review and Rebalancing

Set a reminder every 6–12 months to:

• Review performance

• Rebalance allocations

• Switch underperforming funds or assets

• Update based on lifestyle, health, or family needs

Don’t just "buy and forget". Portfolios need care to stay relevant.

🧠 Final Thoughts: Your Retirement Plan Should Fit You

There’s no perfect formula. The best retirement portfolio is the one that:
✅ Matches your risk level
✅ Generates consistent income
✅ Grows enough to beat inflation
✅ Lets you sleep at night

It doesn’t matter if you’re starting in your 30s or already in your 50s. What matters is that you start, stay consistent, and adjust as life changes.

With the right tools and a simple strategy, your retirement can be as comfortable and empowering as you dream it to be.