SOS Read this before you INVEST in Stocks
SOS Is EPF dividend high?
sosfinance
Publish date: Tue, 28 Apr 2015, 08:15 AM
sosfinance
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VALUATION DOES NOT DETERMINE THE PRICE, IT'S JUST A TOOL TO ESTIMATE A VALUE OF A BIZ
www.sosfinancialplanning.blogspot.my
"How do you save RM50,000? - I shared with a friend on how to do it. I got a term life for RM280 p.a covering RM100k until 70 years old. I cancelled my wholelife insurance of RM2,800 p.a. for the same coverage up to 100 years old. Save RM2500 p.a x 20 years = RM50,000. (PM0122037325)
.....IS THIS ARTICLE FAKE OR FACT?? ANYONE CAN CONFIRM?
www.sosfinancialplanning.blogspot.my
"How do you save RM50,000? - I shared with a friend on how to do it. I got a term life for RM280 p.a covering RM100k until 70 years old. I cancelled my wholelife insurance of RM2,800 p.a. for the same coverage up to 100 years old. Save RM2500 p.a x 20 years = RM50,000. (PM0122037325)
.....IS THIS ARTICLE FAKE OR FACT?? ANYONE CAN CONFIRM?
EPF vs Housing Inflation
Yes, for 2014 at 6.75%
Average past 10 years (average dividend) 5.6%
Average past 20 years (average dividend) 6.0%
Housing past 20 years inflation (CAR) 10%
(Estimates only. Figures just updated)
IS EPF RETURN HIGH?
Long term EPF average return for 20 years is only about 4.53% p.a. as compared with housing inflation of about 10% p.a. (CAR for 20 years).
A lot of investors say they rather keep their money with EPF, which has a high return of 6.75% for 2014, which is true. However, we have to see the BIGGER PICTURE here. If you are investing say for 20 years, if the mutual funds give you a 8% CAR.
If you have RM10,000 in EPF
Mutual Fund after 20 years = RM46,600
EPF after 20 years = RM30,000
Mutual fund gives a 55% higher return vs EPF.
I am not promoting EPF or mutual funds, just giving an example from another angle.
Of course this is not the best comparison as the risk profile of EPF and Mutual Fund is different. This is for references, as an alternative of EPF.
FORCE SAVING PLAN
A lot of people underestimated force saving plan. Like insurance premium (can pay monthly or yearly), if most investors have a force monthly saving plan for INVESTMENT, they will do quite WELL. Even if they only invest in KLSE Index.
RECENT EPF PROPOSAL ON WITHDRAWAL FROM 55 TO 60, REASONABLE?
EPF claimed that many have less than RM200k when they retire at 55, which is not enough.
1. By adding 5 more years, one may add about RM20-30k to its EPF, does it mean that is enough? Would extra RM20k helps? Is it significant enough for EPF to say, oh, now the owners have sufficient with the extra 5 years!
2. EPF claims the owner do not know how to use the money wisely, what make them think by adding 5 more years, the owner will be wiser?
HOW TO RESOLVE BOTH PROBLEMS IN ONE AND TWO
Make it compulsory to have EPF website to have e-education or hard copy, on simple financial planning. Make it compulsory for say age 30, 40 and 50 to do a compulsory e-education of simple financial planning knowledge.
Of course, this is not a perfect system, at least majority are force to do their financial planning early. (like what they do to the employer of the maid, have to to for one day training).
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Discussions
Be the first to like this. Showing 14 of 14 comments
I think the most factor people concern is the depreciation of ringgit . They afraid after keep for another 5 year or more, a half of million is no more much value. Everything is expensive by then. Our country trend now is in reverse gear both political, economy and even education. Any opinion, ks55?
2015-04-28 09:30
Besides mutual funds, there is private manage accounts (for higher employment income). Anyway, EPF's formula only permit very restricted withdrawal for investments. Just an alternative. Some did very well with alternative, turning RM40k into RM220k in 15 years. This may be the exceptions. I also have seen some turn RM300k into RM1 million in about 12 years.
The moral is, there are alternatives. But, some are stopped by EPF wef 1 May 2015. EPF always act on the prudent side, because majority did not do well under non-discretionary, and punished those who do well. So, welcome to the Bolehland
2015-04-28 09:57
If you are good at investment, you should have invested using your excess saving other than EPF.
EPF is the minimum safety net for individual. Not really enough for you to be 100% rely upon, but it will never make you feel helpless in your golden years.
In the case if hyper inflation do occur in countries like Vietnam, Venezuela or Russia, of course safest is to park your ringgit in USD. Again you must have the knowledge or means to do so. I, myself allocated very big proportion to RMB dominated collectibles.
2015-04-28 10:01
Similarly with EPF proposed to increase withdrawal age from 55 to 60, if majority do not know how to spend their money, lets restrict everyone. Although this was cancelled, you never know, next round, some illogical proposal will come up again.
Why would the good investors who are doing very well with non-discretionary account being punished by below average return by majority of poor investors? After all, it is their money. Can you stop these people from going to the casinos? Closed down all casinos, and banned all with Malaysian passport to gamble, even outside Malaysia.
2015-04-28 10:04
Good investors are 100% shielded from market risk?
If you were about to retire in 1997/98, do you think you will survive till today?
I strongly recommend if you plan to work util 60, don't take out all your money at 55.
You still can make investment using excess saving other than EPF. EPF is your last line of defense. EPF is to keep you surviving if anything adverse happened to your investment. EPF does not make you a millionaire but to make you feel safe to live on with meaningful and dignity life after retirement.
2015-04-28 10:15
Actually instead of increasing the withdrawal age from 55 to 60, EPF should customize the risk profile for all its investors and allocate its capital depending on the risk tolerance of its members. It doesnt make sense to put 80% of your capital to fix income if >50% of your members are in their 20s right ? Its an inefficient allocation of capital.
2015-04-28 10:40
The average EPF return over the last 20years is wrongly stated here It is not 4.53% rather it is 6.01%. Thus many of the statements are not valid.
2015-04-28 10:45
Safety is the utmost consideration. Do you want EPF fall to the same category as the one in Taiwan where it cannot pay those who retired?
天啊！你知道每個月繳的勞保年金，將來可能面臨勞保破產，一毛錢都領不到嗎？
https://www.youtube.com/watch?v=LpTWwo0WfwM
2015-04-28 10:57
Dear madviruz - i have updated the figures. I got it from www.advisertool.com and it is not verified. I personally calculated for 10 years is about 5.6%. Please double check.
The issue discussed in this article to share the ALTERNATIVES available from using the EPF money, not about whether to keep it there until 60 or not as advised by ks55.
2015-04-28 11:10
hi, what do you mean by "RMB dominated collectibles" ? how do u invest in it
2015-04-28 14:11
Mr. ks55,I'm also curious and interested to know what are RMB collectibles....but sorry I am banana,so pls can you do me a favour?Thank you.
2015-04-28 15:22
hi sosfinance, The site calculation of data is wrong for the 3 averages. The average 4.13% over the last 10years cannot be less than the lowest in that period of 4.5% in 2008. Doesn't seem logical.
2015-04-28 15:41
madviruz, you are right. Let me update the article to 10 yr (5.6%) and 20 yr (6.01%).
2015-04-28 15:58
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This book is the result of the author's many years of experience and observation throughout his 26 years in the stockbroking industry. It was written for general public to learn to invest based on facts and not on fantasies or hearsay....
ks55
EPF made a commendable returns for the workers. Just compare with CPF Singapore, what is the retuen?? 2%!
EPF makes your nest eggs safe. Unit Trusts? Do you feel safe?? What happen if you bought into BHL or Southern Bank UT?? All Public Mutual Funds give you the same returns? You are equally good compare with PB China Funds if you buy into China market seeing your investment goes down by 50% then come up 50%, and only to go down again another 50%.
Play safe. If you are not good in stock market, please keep your money with EPF.
For those who plan to work until 60, don't take out all your money at 55. Try to make good your expenses within your means while still enjoying full employment. Just leave EPF money for your golden years.......No worry...... Don't think of rely on your children....They are having commitment more than what you may think.......
2015-04-28 09:25