Over past few years, at least 10 friends have asked me about withdrawing EPF either for housing or unit trust. For the housing ones, I would normally ask if they are really so burdened they needed it. If the answer is no, then I would suggest not to withdraw. Then, there are those who come and tell me that the unit trust agents showed them charts showing EPF’s dividends are much lower than what the unit trusts are getting. First few times, I told them I would keep my money in EPF instead of the transferring it into the unit trust investment schemes. None agreed as their unit trust agents are definitely more professional than me. Then, why ask me? Recent few times, I told them to go ahead if they believe what the agents are showing.
I have withdrawn EPF for the very first property I bought in Penang, an apartment of RM123,0000. Ever since then, I have left my EPF money remain my EPF money. As for unit trust, I buy 6 funds on a monthly basis, from the safest bond funds to the most aggressive equity based funds. Now, you may ask me why am I buying unit trust when I do not believe in withdrawing EPF for unit trust? Am I not having the mindset that EPF is better than Unit Trust? One word, objectivity. I think unit trust is a great tool to continuously enhancing the value of your money over the long run. However, unit trusts also have it’s rainy days. Oh yeah, please note the following.
Charts presented by the agents showed EPF dividends lagging the unit trust funds. Did they show you the chart when you bought equity funds and the market dived? I know, they would say, on a longer term it will go up. However, imagine you have invested a huge amount in equity just few months back and the market dived and you saw your fund value dropped 20%, how would you feel? Of course, after 1 year, the value goes back up to what you bought and then you are happy. Haha. Charts are made by people to show other people. No one would make the charts look negative.
My friend is the agent. Surely he would not cheat me. Hello, from the first word until now, have I ever said unit trust is bad? I have huge amounts in unit trusts, ok? Your friend is the agent because he needs to make a living. If you think his explanation is good, you have extra cash and you want to buy for a very long term, please use your own money today to invest. Just like property, just like stock market and just like decision of not investing in anything, there are risks. Equity funds are aggressive, thus when markets are good, it is not unreasonable to expect your fund value to go up over 20% within few months. But….. you can guess too.
One day, you will need your EPF money, at that time, enjoy it. For now, just let it earn it’s usual dividends year after year without fail thus far. Low, medium, high? Which investments gives you high all the time? If you know one, don’t tell me. Keep it to yourself. If too many people knows, then it will no longer be giving you high returns every year. Yes, I am serious.
written on 11 Oct 2014
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