EPF Member Investment Schemes 公积金局会员投资计划
Effective
January 2014, the minimum basic savings required in Account 1 was
revised upward. This will affect all of YOU who withdrawn certain amount
from EPF account 1 for eligible investment purpose. Higher limit means
lesser money you can withdraw from EPF in the future.
How much will be increased?
自2014年1月上调最低基本储蓄帐户1。这会影响大家谁撤回一定量从公积金账户1为合资格的投资目的。更高的极限意味着较少的钱，你可以退出EPF在未来。
会增加多少？
根据下面的图表，可以作为增加的百分比高达64％。一般来说，增加至少50％，一旦你27岁开始。
EPF Eligible Withdrawal formula :- 雇员准备基金撤销资格的公式：
E.g:-
EPF Account 1 = $200,000
Min Saving Needed Amount according to age( 48) = $78,000.
Eligible withdrawal amount = ($200,000 -$78,000) x 20% = $24,400.
EPF Investment Schemes Feedback/Forum :-
EPF Withdraw to Buy Shares/Stocks.
1.
Many people know that EPF member can withdraw their money from Account 1
to invest in Unit trust. Not many people we also can invest in
individual stock, which we can choose by ourselves and choose the timing
to enter.
Previously some asset management company have this service but the entry hurdle is very high, each withdrawal must above 30K to 50K. means that your account 1 must have at least 200k and above. Now there is a company that authorised by EPF, which allow you to withdraw your EPF to invest in ANY share listed in Bursa Malaysia. even PN17 and call warrant (but not advisable).
The initial withdrawal is just 10K, you can withdraw every 3 months with any amount, that mean if you are 30 years old, your account 1 only need to have 70k and above you are qualified to invest. hurdle is lower
Previously some asset management company have this service but the entry hurdle is very high, each withdrawal must above 30K to 50K. means that your account 1 must have at least 200k and above. Now there is a company that authorised by EPF, which allow you to withdraw your EPF to invest in ANY share listed in Bursa Malaysia. even PN17 and call warrant (but not advisable).
The initial withdrawal is just 10K, you can withdraw every 3 months with any amount, that mean if you are 30 years old, your account 1 only need to have 70k and above you are qualified to invest. hurdle is lower
EPF vs Stock/Unit Trust
2. Just a cautious note. In Singapore, there allowed contributor of CPF
(like EPF in Malaysia) to invest in selected blue chip stock. Initially,
the CPF publishes the performance of its members who are in the scheme.
However, every year, the performance of the members, despite investing
in blue chips in SGX, is so bad that there can't even make the 2.5%
interest paid under CPF. In the end, they stop publish the statistics
altogether. People speculate that it is because the performance is so
bad that they remove the statistics.
So, unless you are really confident with your stock picking skill i.e. you have consistently make more than 5% every year for the past 10 years i.e. no years with negative returns, better leave your EPF money alone. It is for your retirement. If it pays only 5% per year, let it be. The risk of losing your retirement fund is too great to take the risk, unless, you have really good stock picking skill.
So, unless you are really confident with your stock picking skill i.e. you have consistently make more than 5% every year for the past 10 years i.e. no years with negative returns, better leave your EPF money alone. It is for your retirement. If it pays only 5% per year, let it be. The risk of losing your retirement fund is too great to take the risk, unless, you have really good stock picking skill.
EPF Fund Manager vs Others
3. Also, if one has already over 70k in EPF account and it is earning more
than 5% in dividends already and every year you still have a positive.Return, why WOULD ONE want take it out to do self investment in stocks or invest in UNIT trusts that may or may not even have a
positive return to try to beat the market?
Even with Unit trusts = after you pay them their mgmt fees, unless the returns are great, etc.. you're probably left with LESS than what the yearly EPF dividends are paying out. Even in the worst of the global financial crisis in 2008, EPF managed to pay out 4.5% interest and that's higher than the FD banks. During this time, a lot of investment funds have negative returns. Those who started to invest in 2008 still trying to break even today.
Better leave the money in the account accumulating dividends while you're still working and let the EPF fund managers handle it for you (free of charge).
High Management and Annual Fee By Fund Manager
4. With the charge of 1.5% which means 3% when buy and sell, you need to get 8 percent per annum just to be on par with EPF. Although 8 percent seems low, especially in the current rally, but, the key is consistently 8 percent, which is harder than most people think.
As a comparison, most value based hedge fund have a compounded 6% hurdle rate ( I believe Tan Teng Boo have similar hurdle rate or higher). Which means, hedge fund manager also find that performing above 6% consistently is a tough job. So, I guess this is a bad deal, especially when we are paying the company a unit trust kind of fee for doing nothing.
The only time I see this thing a good investment is during the time when there is a massive sell off in a market, then, you can buy big on selected blue chips. When it rebounds, you can gain back the money. But, the timing of the entry is important too. The rest, I think is too risky to even try using EPF money to buy stock on such a high management fee.
Eligibility
positive return to try to beat the market?
Even with Unit trusts = after you pay them their mgmt fees, unless the returns are great, etc.. you're probably left with LESS than what the yearly EPF dividends are paying out. Even in the worst of the global financial crisis in 2008, EPF managed to pay out 4.5% interest and that's higher than the FD banks. During this time, a lot of investment funds have negative returns. Those who started to invest in 2008 still trying to break even today.
Better leave the money in the account accumulating dividends while you're still working and let the EPF fund managers handle it for you (free of charge).
High Management and Annual Fee By Fund Manager
4. With the charge of 1.5% which means 3% when buy and sell, you need to get 8 percent per annum just to be on par with EPF. Although 8 percent seems low, especially in the current rally, but, the key is consistently 8 percent, which is harder than most people think.
As a comparison, most value based hedge fund have a compounded 6% hurdle rate ( I believe Tan Teng Boo have similar hurdle rate or higher). Which means, hedge fund manager also find that performing above 6% consistently is a tough job. So, I guess this is a bad deal, especially when we are paying the company a unit trust kind of fee for doing nothing.
The only time I see this thing a good investment is during the time when there is a massive sell off in a market, then, you can buy big on selected blue chips. When it rebounds, you can gain back the money. But, the timing of the entry is important too. The rest, I think is too risky to even try using EPF money to buy stock on such a high management fee.
Thursday, 25 July 2013
All About Investing Into Unit Trust via EPF Withdrawal
This is another touchy subject to write about especially when the topic involves Employees Provident Fund (EPF).
To start off, allow me to highlight figures from EPF Year 2012 withdrawals. In a news released by EPF dated 10th of July 2013, the total amount withdrawn from EPF by Malaysians in 2012 was RM32.98 billion, an increase of 10.3% as compared to RM29.90 billion in 2011. And according to an article from MySinChew, out of the RM32.98 billion withdrawn, RM6.64 billion were withdrawn under the category of "Investment Withdrawal".
This proves that the introduction of Investment Withdrawal Schemes by EPF have been well received by Malaysian as proven by the year to year increase in withdrawals. But what exactly is an Investment Withdrawal from EPF?
(i) A Malaysian Citizen; OR
(ii) A Malaysian Citizen who has made Leaving The Country Withdrawal before 1 August 1995 and has opted to re-contribute to the EPF; OR
(iii) A Non-Malaysian Citizen who:
- Has become an EPF member before 1 August 1998; OR
- Has obtained a Permanent Resident status (PR).
You have not reached 55 years of age at the time the EPF receives your application; AND
You have Account 1 savings of at least RM5,000.00 more than the required basic savings amount
Frequency of Withdrawal
- Investment can be made at the intervals of three months from the date of the last transfer, subject to the availability of the required balance in Account 1
- Subsequent investments may be made with the same Fund Management Institutes or other approved Fund Management Institutes. However investment is only allowed with one Fund Management Institutes at any one time.
Investment Top-Up Using Own Funds
You are not allowed to top-up your investment using your own funds.
Investment Risk Liability
You are fully responsible for this investment. EPF will not be responsible for any loss incurred.
Annual EPF Dividend on the Amount Invested
You will not be paid dividend declared by EPF on any amount you have invested as this amount has not been invested by EPF
If An Approved Fund Management Institute Has Been Delisted
Your investment with the Fund Management Institute must be sold and the funds returned to EPF by that Fund Management Institute
Release of Controls on Investments
EPF will release its controls on your investment at the Fund Management Institutes when you reach the age of 55 years old or have withdrawn all of your EPF savings under the Leaving the Country, Incapacitation, Pensionable Employees and Death Withdrawals.
Claims or selling of the invested units will be handled by you/next-of-kin with the Fund Management Institutes.
Withdrawal Amount Eligibility
You can withdraw your savings as follows:
- 20% from your savings in excess of the Basic Savings amount in your Account 1
- The minimum amount for investment withdrawal is RM1,000.00
- The maximum amount cannot exceed 20% of the savings amount in excess of your Basic Savings
- Formula: (Account 1 – Basic Savings) x 20%
Tips on Investing into Unit Trust Via Your EPF
1. Considering that this is a long term investment between 10-30 years, it is highly advisable to invest into funds with proven track record in terms of total returns.
2. The amount for every EPF withdrawal is considerably large in comparison with regular cash investment. Therefore, finding a top performing fund is vital to ensure that the money you are investing in is working doubly hard for you.
3. Ensure that you continue to invest regularly (intervals of three months) to utilize the benefits of Dollar Cost Averaging.
4. If you are unsure/unclear/uncertain about how to start an investment Unit Trust via EPF withdrawal, please seek a professional and experienced consultant to assist you in terms of
- recommending a fund that suits your risk nature
- explaining the risk that comes with unit trust investing
- explaining the entire process of EPF withdrawal for investing
Tip number 4 was clearly highlighted in an article published by EPF dated 18th July 2013;
Summary
As our society become aware of the importance of long term financial planning, passive investment vehicle such as unit trust is being utilized to ensure that the potential annual returns (taking into account the risk involved) are able to beat the inflation rate. I believe most of us would like our retirement savings to passivelywork hard for us while we commit ourselves to important things in our life such as our family and career. Agreed?
Despite the allowance given by EPF for Malaysians to withdraw their retirement fund for investment, we as investors should play a role by putting additional effort especially during the initial stages before investing. Find out what is unit trust investing all about. Understand the risk. Seek answers from your consultant if you find that you're unsure of certain things. Grill them if you must. Search for the top performing funds that have proven track records. Ultimately take that leap of faith by investing long term and let the fund manager prove his or her credibility.
Last but not least, always remember that every effort that you've placed in investing would go a long way towards ensuring your retirement savings work the hardest for you!
Cheers and Happy Investing!
No comments:
Post a Comment