Recently, a Malaysian man shared anonymously how he has been “shaking leg” at home since retiring in 2021 at the relatively young age of 45.
The man revealed he owns 15 rental properties, supported by income from his oil palm plantation business. “I have 15 rental properties, 9 paid off, and 6 still on loan. My net rental income is around RM10,000,” he shared anonymously.
In addition, he has RM20,000 in his Amanah Saham Bhd account, RM5,000 in his Tabung Haji account, and RM320,000 in his EPF. Despite this substantial financial portfolio, he stated, “My savings aren’t much,” possibly referring to his liquid savings.
At 48, this man exemplifies the principles of the FIRE (Financial Independence, Retire Early) movement, which advocates for frugal living and aggressive savings to achieve early retirement. FIRE enthusiasts typically aim to save 25 times their annual expenses.
Netizens reacted to his confession with mixed emotions, ranging from admiration and awe, to jealousy and skepticism. Many speculated he inherited some of his wealth, noting, “It’s not like you can get an 18-acre oil palm plantation falling from the sky.”
Others estimated he would need to save RM7,000 to RM8,000 per month from an early age to achieve his landlord status.
“I make RM12,000 from my palm oil plantation business.”
The man owns an 18-acre oil palm plantation, generating an income of RM12,000 per month. He explained that the plantation produces 12 to 15 tons of palm oil per harvest, with each ton selling for RM830, resulting in RM10,000 to RM12,500 per harvest.
Malaysia is the second leading producer of palm oil worldwide, supplying around a third of the world’s palm oil. In 2022, the gross domestic product (GDP) contribution from palm oil in Malaysia was estimated to be at 2.4 percent of its GDP.
While his position is enviable, some noted his financial vulnerability to rising interest rates, which could impact the six properties still under loan.
“He’s in a good place right now, but the moment the Overnight Policy Rate goes up by 1% though, he’ll suddenly get a huge hike in interest rates on the bank loans for the 6 remaining properties that he’s still paying off,” shared a financial adviser.
Financial Lessons from This Story
This story offers valuable financial lessons, particularly on leveraging assets, compound interest, and strategic investment.
The Power of Compound Interest
Compound interest is the principle of earning returns on both the original investment and the accumulated interest. Let’s consider if someone started from zero at age 18 with an acre of oil palm plantation producing RM2,000 per month (a modest income compared to the man’s 18 acres).
If the individual saved RM1,000 monthly and invested it at a 6% annual return, compounded monthly, their savings would grow significantly:
Using this formula, they would have approximately RM972,000 by age 45. This demonstrates how consistent saving and investing, even with modest amounts, can create significant wealth over time.
Leveraging Assets
The man’s decision to invest his oil palm income into rental properties reflects a strategy of asset diversification. By turning his plantation income into property investments, he created multiple income streams.
This reduces dependency on a single source of revenue, safeguarding against market volatility.
Starting with Inherited Land
Inheriting an acre of oil palm plantation offers a powerful starting point. If a person reinvests their profits strategically, they could expand their holdings or invest in other assets.
Over time, the compounding effect of reinvested income could transform a single acre into a robust financial portfolio.
This story underscores the importance of disciplined savings, investment, and diversification, proving that even modest beginnings can lead to financial independence with the right strategy.
Is it really possible to get to this level by age 45?
Let us know your thoughts at hello@inreallife.my and you may be featured on In Real Life Malaysia.
Also read: I Earn RM15,000 Monthly as a Designer After Teachers Said I’d Have No Future
I Earn RM15,000 Monthly as a Designer After Teachers Said I’d Have No Future
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