The Employees Provident Fund, better known as EPF, is a body that manages the retirement funds of most of the Malaysian workforce. For most people, it is a mandatory contribution to ensure that there is sufficient income after retirement.
Sadly, the unfavorable economy has seen the interest rate of the EPF falling year after year. As such, many people are starting to seek for other means of investments which can provide better returns. Before you take all your retirement money out of the fund, hear us out on another alternative.
EPF i-Invest
Early in 2019, EPF have introduced i-Invest, an online investment platform that allows its members to diversify their retirement funds into approved and relatively safe mutual funds. EPF members can select funds with various goals and risks that are in line with their own retirement plans and invest a certain percentage of their EPF savings.
What Are the Criteria?
If you wish to utilize EPF's i-Invest opportunity, you have to be:
1. Malaysians / Permanent Residents / Non-Malaysians (registered before 1/8/1998)
2. Below 55 years of age
3. Have sufficient savings with the EPF
Do I Have Sufficient Savings?
The EPF has determined a minimum savings amount for members of every age. This is to ensure that the retirement funds are able to sustain a roughly RM1000/month withdrawal during retirement. You are only allowed to invest 30% of any excess savings in your Account 1. To find out how much you can invest, use the calculator provided by the EPF or check the list here.
Some T&Cs to Take Note Of
1. Once the application is approved, there is no cancellation.
2. The type and amount of funds you can invest in is not limited. The minimum initial investment is RM1000, and minimum subsequent investment is RM100.
3. You can only invest using additional money in Account 1.
4. Funds invested through i-Invest will not be eligible for dividends in the coming years.
5. Under the age of 55, investments withdrawn will be added to Account 1. At over 55 years old, investments will be withdrawn to your personal bank accounts.
6. If the mutual fund you have invested in is removed from the list of approved funds, your investments will be instantly withdrawn and transferred to Account 1.
7. Funds invested will not be under the EPF's nomination program. Upon the passing of the investor, the funds will be handled by the mutual fund, not the EPF.
How to Apply for i-Invest
Based on your own preferences and needs, you can apply for i-Invest via:
1. Counter / FMI agent.
2. i-Akaun online platform.
Benefits of i-Invest
Mutual funds as investment vehicles are relatively safe as they are usually well diversified and managed by experienced professionals. Add on to the fact that the funds you invest in have been screened and approved by the Ministry of Finance, you'll be able to sleep better at night.
The fees are also lowered when investing through i-Invest when compared to purchasing into the mutual fund on your own. Lastly, i-Invest provides you with many analytical tools to check and compare the performance of funds and also any fund prospectus that you might need to make a decision.
Conclusion
Mutual funds are NOT risk-free, there is still a chance that your investments might lose you part of your retirement funds. Besides, you have to consider the opportunity costs as your investments will no longer receive the 5+% dividends from the EPF. Therefore, any mutual funds that provide less than 6% returns might be deemed "not worth it".
At the end of the day, it is still up to you to do your due diligence and make a decision based on your own retirement goals and risk appetite. Everyone wants to have a good retirement life, but the way you get there might be different!
*This is not financial advice. Invest at your own risk.
