With the Malaysian government gradually reducing subsidies for higher-income groups in the 2025 Budget, the term “T15” has gained increasing public attention. According to data from the Department of Statistics Malaysia, a T15 household generally earns an average monthly income of around RM13,000 or more.
However, a paradox remains: does a higher income automatically translate into financial security? The reality suggests otherwise. Many T15 high earners still experience anxiety as they approach retirement, and some even face financial strain despite their substantial income.
The core issue is often not how much they earn, but rather the lack of structured financial planning.
Many people equate financial planning with investing in high-return financial products. In truth, the foundation of sound financial planning is not choosing investments, but first clarifying one’s financial goals and implementing a proper asset allocation strategy.
This article explores six common financial planning pitfalls that high-income earners frequently encounter.
Pitfall 1: Poor Investment Mindset – “All-In” Approach
Many high earners excel professionally but lack sound investment discipline. Common behaviors include relying on friends’ “inside tips,” following trends because others made money, or committing large sums to a single stock without analyzing its financial statements or fundamentals.
Jeff Bezos once asked Warren Buffett why so many people lose money in the stock market despite his seemingly simple investment philosophy. Buffett famously replied: “Because nobody wants to get rich slowly.”
Buffett’s “snowball theory” emphasizes three key elements: sufficient capital, quality investments, and time. Yet in reality, greed, fear, and impatience often prevent investors from sticking to a long-term strategy.
Pitfall 2: Obsession with Beating the Market
Charlie Munger, in Poor Charlie’s Almanack, advocates for a strategy of “sitting on your hands,” warning against excessive trading. Frequent buying and selling increases stress, distracts from one’s career, and undermines the power of compound interest.
Even Warren Buffett has had years in which he underperformed the market. For this reason, he recommends that ordinary investors focus on broad-based market-cap weighted index funds rather than trying to pick individual stocks.
The advantages include risk diversification, reduced exposure to single-company failure, and participation in overall economic growth.
For investors concerned about market volatility, a balanced portfolio of equities and bonds can help reduce fluctuations. When investing in bonds, it is crucial to avoid single-company bonds or high-risk debt instruments and instead consider bond funds to spread risk.
Pitfall 3: Saving Without Investing
Some high earners avoid investing altogether due to fear after witnessing others lose money. They rely solely on fixed deposits or extreme frugality to build retirement savings.
This approach ignores the impact of inflation. RM100,000 ten years ago does not hold the same purchasing power today. Fixed deposit interest rates typically fail to keep pace with rising living costs, meaning that money left idle gradually loses value.
True financial management is not just about saving—it is about making money work for you through disciplined investing.
Pitfall 4: Over-Focusing on Investments, Ignoring Overall Financial Health
The rise of digital media has increased awareness of investing, yet many high earners still fail to consider their overall financial picture.
Without an emergency fund, stable cash flow management, or adequate insurance coverage, unexpected events such as job loss, illness, or business failure may force them to liquidate investments prematurely, disrupting long-term growth.
Even strong investments can fail to deliver returns if investors lack the financial stability to hold them during downturns.
Pitfall 5: Overestimating Emotional Resilience
Many high earners engage in aggressive investing, believing they can withstand market volatility. However, during severe downturns—such as a stock dropping 80%—most investors panic and sell at a loss.
This behavior leads to the classic mistake of buying high and selling low.
The solution is not better stock selection, but understanding one’s risk tolerance, maintaining proper asset allocation, and adopting a disciplined investment approach that reduces emotional decision-making.
Pitfall 6: Spending First, Saving Later
A common pattern among high earners is prioritizing lifestyle spending and saving only what remains. This mentality often results in high income but low savings.
A more effective approach is to reverse the order: save first, then spend what remains. Financial planners generally recommend setting aside at least 20% of monthly income automatically for savings and investments.
This habit helps build long-term wealth without creating a sense of deprivation.
The Importance of Financial Planning
How many of these pitfalls sound familiar?
If none apply to you, you are already ahead of most investors. But if you recognize yourself in several of them, it is a clear signal that structured financial planning is necessary.
Just as regular medical check-ups are essential for physical health, periodic financial assessments are crucial for financial well-being. Engaging an independent financial planner can help analyze cash flow, optimize asset allocation, and design a realistic retirement strategy.
Ultimately, financial planning is not an expense—it is an investment in your future security and peace of mind.
