So you read what we had to say about taking your retirement savings off autopilot and decided to take direct control over your retirement fund. Now what?
If you haven’t, then the summary is that leaving your retirement savings on autopilot with the Employees’ Provident Fund (EPF) may not be enough to boost your retirement savings. You might have some savings and yet still fall short of what is needed to maintain your lifestyle.
How do you make up the difference? Additional savings are one method, but unit trust works better as a long-term strategy. So much so that the EPF itself allows Malaysians to partially withdraw their retirement savings for investment purposes through the Members Investment Scheme (MIS).
EPF members who qualify can invest their savings
EPF MIS was introduced as an option for members to invest up to 30% of their EPF Account 1 (that exceeds the Basic Savings amount) in unit trust funds managed by appointed Fund Management Institutions (FMI). With this scheme you can potentially maximise your gain from retirement funds.
There are two ways you can apply to use EPF MIS. You can apply through an appointed FMI agent who will submit your form to EPF for processing or you can apply directly online using EPF’s i-Akaun.
We will show you a step-by-step guide to do this and get started but first, you should understand why it’s important to start thinking about investing your EPF funds instead of just saving it.
Know your EPF dividends
It’s important to find a fund that suits your risk appetite and can meet your financial goals. If your endgame is retirement, then you also need to know how much time you have to invest. A 20-year-old and a 40-year-old will have different savings, financial commitments and investment requirements.
After all, younger people have more time to prepare; and therefore, can afford to attempt a variety of investment strategies to see which fits them best.That said, it’s always better to start building your portfolio earlier rather than later.
Ultimately, if your goal is retirement, then you should also take the EPF dividends into account. Because if your risk appetite isn’t enough to match the dividend, then you might as well increase your EPF contributions instead. The following table shows EPF performance data from the last six years as a reference:
By investing the approved EPF funds through EPF MIS via EPF i-Invest, you have the opportunity to maximise your average returns. It may not be possible to tell what the EPF dividends will be in the future, but you have the flexibility to potentially boost your EPF savings.
Use a trusted fund manager
Principal Asset Management (formerly known as CIMB-Principal Asset Management Berhad) is an established fund manager with over 25 years’ experience in helping Malaysians to invest.
Principal’s unit trusts are a good benchmark against EPF’s dividends.
The following table is an example of Principal’s unit trust funds which can be used as a reference when comparing dividends.
(31/12/2012 to 31/12/2019) | (31/12/2018 to 31/12/2019) |
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|---|---|---|
Note: Performance of the above funds have been averaged out over a period of seven years. This means that you could possibly see some years that fall short of your dividend goal, while others may far exceed it.
However, it should be noted that past performance is never a guarantee of future returns.
Saving for retirement is a long-term goal, so you should be looking for funds that meet your requirements over time.
FMI Agent or EPF i-Invest?
There is no universal best way to get started with unit trust; what matters is that you choose the option that best suits your situation. In this case, we have listed the differences between investing through an FMI agent and going the DIY route with EPF i-Invest.
FMI Agent
- Face-to-face interaction and advice.
- Helps determine your risk profile and which funds are suitable for you.
- Will submit your documents for you.
EPF i-invest
- Convenience of an online platform.
- Monitor your investment funds performance anytime, anywhere.
- Easy to understand tools for you to decide on which funds are best suited for your financial goals.
- Lower sales charges of 0.5% (0% sales fee for funds purchased through Principal Asset Management).
How to get started with EPF i-Invest
Starting to invest with Principal through EPF i-Invest is very simple; the first step is to get your EPF i-Akaun. If you don’t have one, you’ll have to head to your nearest EPF office to request a temporary User ID and password to open an account.
Once you do, just follow these four easy steps.
Step 1: Login to your EPF i-Akaun
Step 2: Click “Investment” then “Transactions” and “Buy”
Step 3: Select “Principal Asset Management Bhd” as your FMI and choose your preferred fund
Step 4: Checkout with “Principal Asset Management Bhd” and complete your transaction.
Just follow these steps below and you can earn an RM50 Touch ‘n Go eWallet reload pin if you deposit a minimum of RM2,000.
Click here to find out more.
Why choose Principal Asset Management
Principal Asset Management Berhad is a joint venture between Principal Financial Group and CIMB Group Holdings Berhad.
Established on 13 June 1994, Principal Asset Management Berhad is headquartered in Malaysia with a footprint across Indonesia, Thailand and Singapore. The company serves over 1,000,000 investors with nearly RM88 billion in assets under management as of January 2020.
Principal launched a digital portal in August 2019 – Principal EPF i-Invest. This platform supports over 20 quality funds, capable of meeting any risk tolerance. Furthermore, it offers a 0% sales fee for all funds purchased via Principal EPF i-Invest.
