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We could do better than the EPF dividends? Sure, go ahead.

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Someone mentioned that the EPF dividends are not high enough. (did you know that EPF dividends are GUARANTEED? read here) It’s best to withdraw money from EPF using the i-Sinar and then use these withdrawals to invest into some better investments versus the EPF. I have no answer as to how good all these external investments are versus EPF. However, there are a few things which we may just want to be clear about. As long as these are clear to us, of course we could make the best decision for our future. Keyword here is ‘our future.’ (Earlier: There’s also the forecast that EPF may declare a respectable dividend for 2020 despite pandemic. Read here.)

EPF dividends
Photo by Gabby K on Pexels.com

#1 i-Sinar is NOT for investment. It is to sustain living expenses because of COVID-19 effects. This is the purpose. “membantu anda bertahan ketika krisis COVID-19.” Thus any withdrawal is for this purpose and not for other purpose. I know, it’s the depositors money and they have a right on how to use it, even if this is i-Sinar. As long as this is very clear, all the best and I do wish your investment will be able to higher than EPF returns too.

#2 EPF returns are not super-duper high (but… 6% per annum for a period of 12 years is really not bad at all) Take a look at below. Please note that EPF’s investment is not going to be like an Equity based fund yeah. It is likely to be safer investments so that we do not suddenly lose a lot of it away like many equity funds where the returns are huge but if we bought at the wrong time, then we will also be having sleepless nights too.

Image source: https://ringgitplus.com/en/blog/personal-finance-news/historical-epf-dividend-rates.html

#3 If we are very confident with our own investment skills. I have many friends who seem to be able to earn returns which is way higher than what EPF declares as dividend every year. Especially the ones who continue to share their huge returns from the glove counters. If you are also one of them, then go ahead and take the money and invest it to your best ability. Just note that there’s definitely the volatility, so just have to hang on when returns are lower than typical.

#4 This money is for FUTURE yeah. Whatever returns or however high the returns maybe, that is to be kept for future yeah. It is not for us to spend it all because we have withdrawn the money and this would mean that the returns you see above will no longer apply to that portion of savings which you have withdrawn. It is now up to you to ensure that you are ready for the days when you need the savings.

#5 I invest with my other savings instead. If we use the same periods of 2008 – 2019, I do think that my property investments thus far have much higher returns than my EPF savings. However, I could not guarantee that for the next 10 years, it will still be better than the EPF. Meanwhile, my Unit Trust investments (I am a PBB Mutual Goal member) has given me higher and lower returns over the same period, depending on the type of fund.

This is why I will just let EPF continue to invest my money while I take care of the rest. It’s just a personal decision yeah and not because I know the EPF CEO. Perhaps I am just one of those conservative people or perhaps I am just at a different stage in my life that I think it is very important to keep diversifying my investments and to ensure continuous and stable returns versus a one year super-duper return and sleepless weeks next year. Happy understanding.

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