Start becoming a smart investor today

Without even noticing, when you are working as an employee today, you had automatically become a passive investor, why did I said so, the reason is simple, you had Employees Provident Fund (EPF), and how did EPF give you 5.8% rate of return, it's because it invests, which indirectly makes you an investor.

So the topic that I would like to discuss here is are you a smart investor? As we all had realize, the inflation rate had becoming a troublesome for almost 60% of the people from any country, Malaysia is one of it. Below is the investment that EPF made to project its income:

Types of Investment	RM Billion	Percentage
Malaysian Government Securities	107.3	32.7%
Loans and Bonds	130.4	39.7%
Equities	73.2	22.3%
Money Market Instruments	15.5	4.7%
Properties	1.8	0.6%
Total	328.2	100%

Because EPF is an entity that need to act for overall benefits of its investors and it must make sure of the return is sufficient to cover the promised rate, so its investing its fund in Malaysia Government Securities (MGS) and loans and bonds. Meanwhile we all know that the equities and properties are the types of investment that can really help us project a higher income. If you are in an early of 20 to 30 years old, do you think you are not eligible to take a higher risk? which is why I would said the EPF investment strategies doesn't suit a young employee. Instead they should be searching for a higher return investment tools as they still need to work for another 20 or maybe 30 years.



Today your EPF return is 5.8%, however the government had already release the news for all EPF members to encourage them to look for a better investment tools to accumulate their retirement fund, the reason is simple as in the future they are hardly to maintain a 5.8% return rate. And we can obviously notice this through their action of allowing its members to withdraw a portion of their account 1 saving to switch to mutual fund. My forecast of the EPF rate of return would be around 3-4%, but would never be lower than Fixed Deposit (FD) interest. And since FD rate is also anticipate to decrease in the future, we can expect the EPF return rate is going to decrease as well. Remember, nothing is impossible in this dynamic era, you need to make preparation for every possible circumstances to happen any time.

The phenomena of EPF members to switch their savings to mutual funds had started since year 2002, so why bother to be the last to follow the crowd when you can be the one leading the flow? Hence what is the next move for yourself? Please do not wait until things happen then only tried to fix it, we have to always remember that prevention is always better than cure.

Source of info : www.kwsp.gov.my, KLSE Stock Review