As promised previously in the article describing various functions of your EPF sub-accounts, in this post, I shall give a brief overview on how you can actually transfer your savings in your EPF account to a privately-managed mutual fund account of your choice.
Why EPF Investment?
Not surprisingly, since everyone who’s in the payroll contributes to it, the Employees Provident Fund is considered one of the nation’s biggest pool of fund. Since it would be seem to be a waste of resources not to make use of the experience private fund management companies, EPF has since listed about 40 Fund Management Companies to help manage the huge amount of fund.
What are the Pre-requisites?
Here are 3 main criterias to be eligible to invest your EPF savings in a privately-managed mutual fund.
1) Account 1 from your EPF must be more than RM50,000.
2) Only 20% of the excess from your RM50,000 is eligible for investment.
3) Minimum investment is RM 1,000
How Do You Apply?
The procedue is simple
1) photocopy of your NRIC (both side since your thumb print is needed for verification)
2) KWSP investment form with thumb print and some personal details
3) Fill up invesment forms from respective mutual fund companies.
Why The Hassle? Why not just keep everything in the EPF savings account?
Private mutual fund companies are doing only investment-related business. Their core competency are their investing experiences through professional fund managers and maintaining a very transparent relationship with the investors. Track records from various top performing mutual fund companies have shown that returns are usually very much higher than EPF.
Why Are Most People Still Not Doing It?
Most people, especially the retail investors who have experienced the ’97 crisis can tell you that the stock market is like a casino. There’s no way you can make money out of it. There’s no way you can outsmart them. And so grows the list of negative sentiments regarding “investments”.
Hence, regardless of how much facts and figures on how mutual funds can outperform the stock market, these people remain skeptical. Once bitten twice shy.
Some just can’t be bothered to go through the hassle of paperworks or seek advice from a skilled mutual fund consultant.
There are ways to protect your mutual fund investments from unwanted losses and several reasons why it’s the preferred vehicle to accumulate wealth. I shall go into that in the upcoming posts.