Simpanan awal jadi kunci masa depan

Oleh MUZIR KASSIM
Ketua Perkhidmatan Kewangan Pengguna, OCBC Al-Amin Bank Berhad

 

 

KES: Saya (Arianna Dya) berusia 24 tahun dan baru bekerja dengan pendapatan bersih sebanyak RM2,500 sebulan tanpa sebarang komitmen hutang. Dengan gaji sebanyak itu, saya membelanjakan sebahagian besar wang gaji untuk membeli pakaian, makan di luar dan berhibur. Bagaimanakah dengan pendapatan sebanyak itu saya masih boleh membuat simpanan untuk masa depan tetapi pada masa sama masih boleh meneruskan gaya hidup semasa?
Jawapan
Saya akui individu yang berusia 20an mempunyai bajet yang cukup ketat dan sukar untuk memiliki lebihan pendapatan. Katakanlah siapa dalam lingkungan usia ini tidak suka membelanjakan wang untuk fesyen, hiburan dan gajet terkini? Kebanyakan tidak mempunyai simpanan atau perancangan kewangan kerana ia dianggap ketinggalan dengan tanggapan amalan itu hanya untuk golongan dewasa. Bagi golongan yang berusia 20an, aset yang paling penting bukan wang sebaliknya adalah masa. Tetapi tahukah anda setiap ringgit yang disimpan dalam usia 20an bernilai 10 kali ganda berbanding jika disimpan pada umur 40 tahun. Lantaran itu, usia 20an dan 30an sebenarnya adalah masa terbaik untuk menyimpan bagi masa depan, sama ada bagi diri sendiri atau pendidikan anak-anak atau ketika persaraan. Hakikatnya, mereka yang mula membuat simpanan untuk persaraan ketika berumur 20an akan mendapat banyak kelebihan meskipun dalam jumlah yang sedikit, selagi mereka membuat pelaburan berkala.
Contohnya: Individu yang menyimpan sebanyak RM4,000 setahun untuk persaraan sejak berumur 22 tahun akan memiliki RM1 juta pada usia 62 tahun, dengan mengambil kira purata pulangan sebanyak lapan peratus setahun. Sekiranya anda tidak pernah membuat simpanan dalam masa 10 tahun, anda perlu menyimpan sekali ganda kira-kira RM8,800 setahun, untuk memastikan mendapat jumlah yang sama semasa bersara nanti.
Malangnya, tidak ramai pekerja muda melepaskan peluang untuk membuat simpanan bagi persediaan persaraan awal dengan harapan faedah mampu memberi magis dan memaksimumkan simpanan. Dalam perkara ini sukar untuk menyalahkan sesiapa. Umpamanya dalam kes Arianna, beliau mempunyai minat untuk mengetahui bagaimana yang perlu dilakukan untuk simpanan jangka panjang. Kebanyakan golongan muda seperti beliau yang mendapati sukar merancang kewangan tanpa panduan mengenai wang dan cara menguruskannya. Kecuali terdapat kelas mandatori di peringkat sekolah menengah dan universiti untuk menyediakan pelajar mengenai kewangan peribadi! Di bawah ini adalah disertakan beberapa panduan bagi Arianna dan golongan yang berusia 20an untuk merancang kewangan.
1. Menyimpan selalu, kerap menyimpan.
Tahukah anda ada satu konsep lama yang perlu diketahui mengenai simpanan iaitu membayar kepada diri sendiri terlebih dahulu. Kerajaan amat memahami mengenai konsep tersebut, sebab itu kerajaan akan memotong pelbagai cukai sebelum pendapatan diserahkan kepada anda. Konsep ini boleh digunakan dalam bentuk simpanan bagi untuk manfaat diri sendiri. Tidak dinafikan kebanyakan orang akan berbelanja dahulu pendapatan, kemudian lebihan digunakan untuk simpanan. Tetapi pada realitinya, selalunya kita akan berbelanja sebanyak mungkin berbanding menyimpannya. Seharusnya kita perlu 'membayar kepada diri sendiri' - menyimpan peratusan tertentu untuk simpanan sebelum menggunakan wang anda untuk tujuan lain. Percayalah sekiranya konsep 'membayar untuk diri sendiri' dijadikan amalan, anda tidak akan terlupa untuk menyimpan.
Selain itu, menyimpan wang dalam akaun berbeza juga merupakan idea yang baik kerana ia mengekang untuk kita berbelanja lebih. Sebenarnya tiada satu masa yang boleh dianggap terbaik untuk membuat simpanan, jadi belajar untuk 'membayar kepada diri sendiri'.
2. Berbelanja mengikut kemampuan.
Adakah anda akan menerima gaji untuk kali pertama? Terasa sudah berkemampuan untuk membeli? Kebanyakan golongan muda berbelanja lebih daripada pendapatan. Mereka mahu menggunakan wang untuk membeli kereta, pakaian, makan di luar dan terperangkap dalam kehendak kehidupan. Memenuhi kehendak dalam perbelanjaan akan memberi tekanan kepada kewangan anda. Anda perlu belajar untuk membezakan keperluan daripada kehendak anda. Contohnya pinjaman rumah, bil elektrik dan makanan. Adakah anda perlu menikmati kopi berharga RM15 secawan, telefon baru serta membuat rawatan kuku? Bukan anda mampu menjalani kehidupan tanpa semua itu? Sebenarnya, Sarah, tidak ada penyelesaian mudah bagi menyeimbangkan jaminan kewangan masa depan dan menikmati gaya hidup semasa.
Beberapa disiplin fiskal mungkin diperlukan dan anda akan mendapati ia berbaloi untuk masa depan. Sekiranya anda menyukai sesuatu, paksa diri anda untuk menangguh memilikinya dalam masa dua minggu sebelum terus membelinya. Ini kerana selepas tempoh itu anda akan mendapati anda sebenarnya tidak memerlukannya. Cara lain ialah membelinya secara tunai supaya dapat merasai berbelanja sebenar.
3. Elak daripada terjerumus dalam hutang.
Anda perlu mengelakkan diri daripada membuat hutang yang tinggi. Ia sama seperti meletakkan perbelanjaan sebagai keutamaan, kuasa berbelanja boleh meningkatkan hutang. Oleh itu, membayar kad kredit perlu diletakkan sebagai keutamaan. Syabas kepada Arianna kerana ia tidak memiliki kad kredit. Sekiranya anda mempunyai hutang kredit kad yang tertangguh, elak membuat bayaran minimum. Ia kerana jika anda terikat dengan amalan itu, anda sebenarnya akan menanggung hutang dalam jangka panjang. Mempunyai hutang yang banyak pada usia muda merupakan satu kesilapan besar bagi golongan berumur 20an. Jangan kerana anda layak untuk mendapat pinjaman yang besar, bermakna anda menggunakan seluruh kapasiti untuk membuat hutang. Perlu diingatkan sekiranya anda tersalah membuat keputusan - anda akan menghabiskan usia muda anda dengan membayar hutang. Dalam usia 20an anda perlu mempunyai sejarah kredit yang baik untuk digunakan pada masa depan.
Selain itu, saya turut menasihatkan golongan muda supaya menghindarkan diri daripada terjebak sebagai penjamin. Anda hanya boleh lakukan sekiranya cukup bersedia untuk menghadapi sebarang kemungkinan buruk akan berlaku. Kalau tidak bersedia, jangan sesekali melakukannya!. Yang penting hindarkan diri daripada menjadi 'perangkap wang' yang kerapkali menjadikan golongan muda sebagai mangsa. Sebaliknya dalam usia 20an, anda memiliki banyak peluang untuk menyimpan kerana belum mempunyai tanggungjawab besar dalam kewangan, berbanding ketika usia 30an dan 40an. Ini kerana, pada usia itu anda perlu membayar rumah dan menyimpan untuk pendidikan anak-anak. Dengan memiliki asas simpanan kukuh yang dibuat pada usia 20an, anda akan melalui kehidupan dengan penuh keyakinan.

Daftar i-Akaun mudahkan semak simpanan KWSP- Utusan

KUALA LUMPUR 5 Dis. - Kumpulan Wang Simpanan Pekerja (KWSP) menggalakkan lebih ramai ahlinya untuk mendaftar dalam i-Akaun bagi memudahkan mereka menyemak jumlah simpanan masing-masing pada bila-bila masa mulai 1 Januari 2012.
Pengurus Besar Perhubungan Awam KWSP, Nik Affendi Jaafar berkata, i-Akaun merupakan akaun peribadi dalam talian untuk ahli dan majikan menjalankan transaksi terpilih melalui laman web myEPF dengan selamat.
"Mendaftar sebagai pengguna i-Akaun melibatkan langkah mudah di mana ahli perlu mendaftar di kios atau cawangan KWSP untuk mendapatkan kod pengaktifan.
"Untuk majikan, mereka perlu mendaftar melalui myEPF sebelum mendapatkan kod pengaktifan di cawangan KWSP pilihan. KWSP menyeru ahli dan majikan yang belum memiliki i-Akaun supaya mendaftar agar dapat melakukan transaksi dengan selesa dari rumah atau pejabat," katanya dalam satu kenyataan di sini hari ini.
Beliau berkata, kemudahan itu diperkenalkan bagi mengurangkan kes ahli yang terlepas pandang untuk mengemas kini penama apabila berlaku perubahan seperti berkahwin, bercerai atau melahirkan anak.
"Kegagalan mengemas kini akan membawa masalah sekiranya ahli meninggal dunia. Ahli juga dinasihatkan supaya menyemak butiran penama seperti ejaan nama, nombor MyKad dan peratusan agihan kepada setiap penama.
"Bagi membolehkan penama dimasukkan dalam penyata 2011, ahli perlu mengisi borang KWSP 4C yang boleh diperolehi Januari depan. Untuk penamaan baru, ahli perlu menyatakan persetujuan mereka dalam borang KWSP 4 yang pelu diserahkan sebelum 30 Januari 2012," katanya.
Selain itu Nik Affendi berkata, ahli juga boleh menyemak dan mencetak penyata KWSP bagi memantau transaksi simpanan serta memastikan caruman yang dibayar tepat pada masanya.
"Kemudahan ini juga disediakan kepada majikan untuk menyemak senarai pekerja yang telah dibayar carumannya selain mendaftarkan pekerja baru.
"Majikan juga boleh menyemak nombor KWSP pekerja, memuat turun borang caruman pra-cetak dan mengira dividen caruman bahagian majikan (untuk majikan kerajaan)," ujarnya

Understanding Islamic Unit Trusts

The rising affluence of investors who are keen to invest in Islamic financial products and the expansion of Islamic Capital Market products will underpin the growth prospects of the Islamic unit trust industry over the longer term. In Malaysia, growing demand for Islamic unit trusts is evident. From a mere two Islamic funds in 1993, the number of Islamic funds in Malaysia’s private unit trust industry has increased to 146 today. As at June 30, 2010, the Islamic fund sector has a net asset value (NAV) of RM26.37 billion, which is about 31 percent of the private unit trust industry in Malaysia1.
Characteristics of Islamic Unit Trusts
The primary characteristic that distinguishes Islamic fund management from conventional investing is its compliance with Shariah law. Islamic funds must adhere to Shariah-compliant economic activities and invest only in companies that fulfill Shariah requirements. In addition, Islamic funds cannot invest in conventional banks that offer products with fixed interest rates but can invest in Islamic securities and Islamic financial institutions. The funds must also avoid making investments in companies that are involved in products restricted by Islamic laws, such as alcohol, tobacco, pork, gambling or pornography.
After eliminating companies with non-Shariah primary business activities, the quantitative filter, in the form of financial ratios, are used to ensure that a Shariah-compliant company makes its income with adequate financial resources and without excessive debt. In addition, an Islamic fund may only engage in leverage through the use of Islamic financing instruments and may not obtain or provide conventional loans nor invest in conventional interest-bearing products, including conventional debt securities. Cash held by a fund may only be invested in Shariah-compliant, short-term investment products, such as Islamic money market instruments.
Resiliency of Islamic Funds
As such, Islamic funds have been known to be more resilient than conventional unit trusts as their returns are generally less volatile. Meanwhile, there are also other advantages to "ethical" investing. For instance, Islamic funds were little affected by scandals afflicting companies such as Enron and WorldCom several years ago, as these companies' highly leveraged balance sheets kept Islamic funds from buying them. Moreover, the quantitative filter adds to the resilient nature of Islamic funds because if interest rates were to increase in a rising inflationary environment, investments in non-leveraged companies are expected to outperform.
1 Lipper, 9 July 2010
Purification of Profits
There will also be times when certain Shariah-compliant securities are reclassified to be Shariah non-compliant. This may be due to a company changing or expanding its operations which can lead to an unacceptable level of activities prohibited by Shariah laws. For instance, a restaurant or hotel may decide to start serving alcohol or pork. In this case, the Shariah Adviser will render the securities to be disposed should their market value exceed the original investment cost on the announcement day.
The fund management company is then supposed to purify or cleanse the profits made by its Islamic funds by identifying the profits generated by non-permissible activities and channel the amount to charitable bodies approved by the Shariah Adviser. Investors can find out how fund managers purify earnings from their Islamic funds in the respective prospectuses.
Shariah Advisory Council
In order to protect the interest of investors, the SC has set up a Shariah Advisory Council (SACSC) to regulate Islamic funds in Malaysia. The SACSC is responsible for attending to inquiries and proposals related to the field as well as making pronouncements to encourage innovation in the industry.
In addition, the SC also allows the registration of both local and foreign advisers for unit trust funds and Islamic securities to ensure that fund managers are able to tap into their own Shariah expertise. Besides ensuring that the operations and investments of the funds are in compliance with Shariah requirements, Shariah advisers also occasionally meet with the fund managers to answer enquires and offer advice.
For more information, please contact Public Mutual’s Hotline at 03-6207 5000 or visit www.publicmutual.com.my.

Market Volatility: Friend or Foe?

Are you the type of investor who gets worried or panics whenever the stock market drops by three percent a day? If you are, it is time you stop looking at your investment portfolio on a daily basis. After all, investment fortunes are made over the long run and not overnight.
Wouldn’t investing be so much easier if the stock market moved according to a strict set of agreed rules or guidelines over time? For example, imagine if prices rose in the first week of every month, remained steady for another week, before gradually falling back to the previous levels as shown in the diagram below.
January February March April
With this knowledge in mind, you can probably buy during the period of low prices and sell at higher levels. Repeating this process every month should provide you with ever-increasing wealth as long as your buying and selling does not affect the hypothetical market gyrations.
Unfortunately, markets do not follow these patterns in reality. Attempting to ‘time’ buying and selling decisions in the short-term is risky, and something that very few professional investors manage to do successfully on a regular basis. This is because markets are unpredictable – they can rise gradually over a number of days before suddenly falling and losing the previous gains. Unexpected news, either specific to one company or the economy as a whole, can significantly influence stock prices in the short-term. Psychological factors such as changes in risk appetite due to fear or greed can also affect markets over the short-term. In the chart below, you can see the volatility of the FBM KLCI Index over the past 20 years.
FBM KLCI Index (1 April 1990 - 31 March 2010)2004006008001000120014001600Mar-90Mar-92Mar-94Mar-96Mar-98Mar-00Mar-02Mar-04Mar-06Mar-08Mar-10
Source: Lipper, April 2010.
Looking Past Short-Term Volatility for Long-Term Gains
Over the long-term, equities and real estate have generally outperformed both bonds and money markets. However, unlike real estate, equity prices may experience extreme volatility over the short-term. During these uncertain periods, it is normal for most investors to be anxious and worried about the value of their investments.
Due to the volatility in the markets, many experts advise investors to take a long-term view for their investments. This is because a longer time frame is needed for companies to grow their businesses. In addition, research shows that, historically, the longer you stay invested, the less likely you will lose money and the higher the possibility of making a profit. Profits of well-managed companies will continue to grow with time and be able to withstand short-term periods of cyclical weaknesses.
Market Volatility Presents Investment Opportunities
American billionaire Warren Buffett is commonly referred to as the world’s most successful investor. For over 50 years, Buffett has continued to grow his fortune – not through complex strategies or a magic formula, but by adhering to basic investment principles in a disciplined manner.
When the U.S. stock market fell following the ill-fated technology boom of the 1990s, many investors were selling their holdings in fear or watching nervously from the sidelines. On the other hand, Buffett applied the golden rule of investing – buy when prices are low – and quietly went about accumulating over-sold ‘cheap’ stocks in a number of stable, quality companies such as Gillette and Coca-Cola.
The market soon realised that quality blue-chip firms in bricks-and-mortars businesses were unaffected by the technology crash and were still making sustainable profits. As such, they quickly returned to their previous valuations. After hitting a 5-year low of 7,286 points in October 2002, the U.S. Dow Jones Industrial Average Index rebounded by more than 40 percent by the end of 2003. Buffett, having selected better stocks than the market average, performed even better.
Therefore, in the current market volatility, think rationally and keep your emotions in check. As long as you have a long-term horizon, view the short-term weakness as a potential opportunity for investing at attractive prices.
Adopting Ringgit-Cost Averaging
In volatile market conditions, investors should consider Ringgit-cost averaging (RCA) for their investments. This technique works by investing a fixed amount of money in regular intervals, regardless of how the market is performing. It is a disciplined approach whereby investors invest no matter how the market is doing, thus helping to avoid the poor decisions most people make when trying to time the market
When the markets are down, many people become fearful and reluctant to invest. That may help avoid some losses in the short-term. However, when markets eventually rebound, individuals who have avoided investing because of the earlier volatility will miss out on the gains. Those who invest a fixed amount every month, on the other hand, will be positioned to benefit when the market bounces back as they would have invested at bargain prices.
The Folly of Market Timing
During periods of market volatility, investors might be tempted to delay making investment decisions or sell existing holdings in the hope of buying back in when prices are lower. Ideally, market timing seems to be an attractive method of investing but it seldom works in practice. Just as sharp falls in stock markets tend to occur over short periods of time, the best gains are similarly concentrated. Because these gains often occur just after a market decline, an investor who tries to avoid falls is likely to miss the best gains.

Staying the Course in the Long Run

Similar to how the slow and steady tortoise beats the hare in the race, the investor who remains focused on long-term goals is more likely to achieve better risk adjusted returns than the investor who has a short-term horizon.
Short-term market movements are unpredictable and in times of major swings, are often driven by sentiments of excessive pessimism or irrational exuberance. In view of the volatile nature of the stock markets, investors should be focused on riding through market cycles by having a medium- to long-term investment horizon of at least three to five years.
In addition, investors can better withstand the impact of market volatility on their investments by investing a fixed amount of money on a regular basis. This strategy is widely known as Ringgit Cost Averaging (RCA), which ensures that you buy more units of an investment when prices are low and fewer units when prices are high. Ultimately, the investor achieves a lower average cost which translates into a higher return when the market recovers.
Take Advantage of Market Downturns
RCA is, in fact, quite an effective strategy during bear markets or volatile market conditions for long-term investors. A strategy of continuing to invest a fixed amount of money when markets are sold down should enable investors to accumulate undervalued shares. Mark Mobius, emerging markets fund manager of Templeton Asset Management Ltd, once said in a Fortune magazine interview: “Investors should dollar-cost-average by investing a fixed amount on a regular basis, and hang in there. No one knows if the markets are going up, down, or sideways.”
By viewing market declines as great buying opportunities, you can enhance your long-term return potential when the market eventually rebounds. Historically the Malaysian market has trended upward over the long run and investors who bought when prices were relatively low will generally be rewarded when prices rebound (see sidebar). Thus, investors are advised to practice a disciplined investing strategy such as RCA to take advantage of the volatility in the markets.
Staying Invested May Prove Rewarding Over the Long-Term
There has been no proven method of predicting which direction the market will move over the short-term period. Nevertheless, some people still try to time market movements by selling their investments when they think the market is about to decline, and by buying in when they think the market is about to rise. By trying to time the market, you potentially miss out on market rallies that could substantially improve your overall return and long-term wealth. Thus, what is most important is not timing the market, but rather staying invested and focused on the long-term investment objectives.
Conclusion
Over the past few years, investors have seen a number of shocks and disruptions to global financial markets caused by various economic and geopolitical factors. Markets may also react dramatically in response to specific events. Getting – and staying – prepared for difficult times, however, is often a determining factor for long-term success.
Seasoned investors know that in the long run, markets have shown remarkable resilience in times of crisis. For instance, in the recent global financial crisis, stock markets fell sharply in 2008 with the FTSE Bursa Malaysia Kuala Lumpur Composite Index (KLCI) (FBM KLCI) falling by 39.33 percent. However, markets started to rebound strongly from March 2009 onwards with the FBM KLCI registering a one-year return of 51.35 percent as at March 31, 2010. Investors who are disciplined, well-invested, opportunistic and diversified will have a greater degree of confidence that their investment goals will be achieved. In comparison, sentiment-driven investors who have short-term goals may have panicked during the market’s sharp sell-down in late 2008 and redeemed their unit trust investments, turning an unrealised loss into a realised loss. If they held on to their investments and continued to practise RCA, they would be able to minimise their losses and possibly achieve positive returns.
Sidebar
Riding the Bulls and Bears
Over the past 32 years, the local stock market has experienced its fair share of ups and downs. Since 1976, the FBM KLCI, which proxies the local market, has generated positive returns in 21 years. Out of those, the FBM KLCI’s gains exceeded 10 percent in 15 out of the 21 years. In comparison, the FBM KLCI declined in 11 years since its inception, with losses ranging between 0.84 percent (2005) and 51.98 percent (1997). Nevertheless, the KLCI enjoyed annualised returns of 6.81 percent per annum since 1976 despite the major market correction in 2008. Over the period, the market was volatile but generally moved in an upward direction in tandem with Malaysia’s economic growth and increase in market capitalisation of listed companies.

Benefits With Unit Trusts

Professional Investment Management

A unit trust combines the capital of many investors to employ experienced management in purchasing securities of many companies. The management of a unit trust provides diversification of investments and supervision which few investors could individually afford. Investment management is a full time job requiring specialised knowledge and training. It involves the study of a variety of factors.

Some of the factors which have to be examined are:
1. Comparisons of all industries in the economy
2. Relative studies of companies within a promising industry
3. Personal contact with management of promising corporations
4. Evaluating the effect of international events, both monetary and political
5. Determining the results of government policies on each industry

Professional management is also interested in studying less obvious factors such as wage rates, which might affect the economy or the profitability of certain companies or corporations. It requires careful study of individual companies within the industry to determine which of the many companies offer the best prospects for the investors. It requires comparing this company with the best companies in other promising industries. Since all this factors are constantly changing, re-evaluation and study have to be continuous.

Diversification
Diversification means spreading one’s investments among many securities. It is an important method of reducing risk. It decreases the danger of damaging losses, which can occur through having all of one’s eggs in one basket.

Diversification is difficult and expensive for a small investor because the cost of purchasing numbers of shares in many companies at the same time is disproportionately high.

Unit trusts with their resources are able to make widely diversified investments available to even the smallest investor. Diversification involves the ownership of many different securities. All the securities owned by an individual investor or unit trust fund are referred to as an investment portfolio.

Liquidity
An investor can sell his units, wholly or partially, at the following trading day’s unit buying price. Units have a high liquidity, that is, they can be readily converted into cash.

It has to be remembered, however, that unit trust’s units will be redeemed at the prevailing buying price on the following day after receipt of the repurchase form. The unit price may be higher or lower than the price at which the investor started the plan. Unit trusts should be regarded as a long term, rather than short term investment.

Advantages of Compounding
Many unit trust funds provide facilities for investors to reinvest their distributions. For those who opted for distribution reinvestment, the fund will automatically credit the distributions into the account, rather than sending distribution warrants.

This process of reinvesting the income from the original investment and also of reinvesting the return on the total accumulating investments is called compounding.

As an illustration, if at 25, you invested RM100 at the beginning of every month at an interest growth of 10% per annum until age 65, your investment would have grown to RM638,000 ! The key element to compounding is time. The longer the period of time, the greater the growth.

Regularity of Investing
Many people do not have substantial sums of cash available to invest, but they can develop an investment account, investing smaller sums regularly in a unit trust.

Most unit trust funds have plans available to make it possible for smaller investors to invest relatively small amounts monthly. It is easy and inexpensive for an individual to acquire units through deposits of RM100 or more a month in a unit trust fund.

Fund Administration – The Convenient Factor
Few people have the experience, time or facility to properly set up an investment programme, much less to supervise it constantly. Unit trust managers have emerged as professional organisation devoted to solving the investment problems of people from all walks of life.

Unit trusts relieve their investors of the need to handle their own securities transactions. Investors in unit trust funds are not obliged to concern themselves with matters such as:
1. Obtaining quotations on securities being bought and sold
2. Delivery and payment for the securities involved in each transaction
3. Safekeeping of cash and securities
4. Accounting and bookkeeping procedures, etc

Investors of unit trust funds will receive semi annual and annual reports which describe:
a. The portfolio of the funds
b. Investment changes made in the period
c. Distributions paid, if any
d. Fund manager’s opinion on the economic and market outlook

How Long It Takes To Switch Mutual Funds?!

Since the market is very volatile and bias to the downside, a lot of people are cashing out from the mutual funds or just do some switching. So the major question is how long does it take or when the switching will take effect once you initiated it . If you do manually through an agent, the answer will be when the receptionist at the Public Mutual starts to key in the request into the database :P

So if you want to be fast and do-it-yourself, just do it online. Here are the Public Mutual rules regarding switching transactions.

•Switching transacted before 4:00 pm on any business day will be processed based on the closing NAV per unit of the same business day whilst switching transacted after 4:00 pm on any business day will be processed based on NAV per unit of the next business day.

•Switching for foreign funds transacted during non-business days of the funds will be processed based on pricing determined at the close of the next business day when both the Switch From and Switch To funds are opened for trading. 

•Public Mutual reserves the right to reject any switching request that it regards as disruptive to efficient portfolio management; or if deemed by Public Mutual to be contrary to the best interest of the fund. Switching requests which are rejected by Public Mutual would be treated as a redemption of units from a fund and a rejection of application to purchase units in the intended fund. As such, unitholders will receive payment of redemption proceeds in the event of a rejection in switching requests. 

•For full switching, please advise the bank to cancel your Direct Debit Authorization immediately. 

•Successful switching transactions will be processed within 2 business days. 

•Please contact our Hotline 03-6207 5000 should you require further information.

3 Reasons I Will Avoid Capital Protected Funds

There no such thing as low risk but high return investments!! Except scams!

I bought this capital protected fund investing in commodities at the height of the 2008 bear market. I bought it because, i expected that the commodities will eventually rise with the recovery and also gold aka precious metal will rise as the dollar loses its value because of the quantitative easing by the FEDs. 

Below is the performance of my fund that I bought. I thought it will at least yield me 5% annualized returns. (Heck even my govt SUKUK yielded me 5% and no service charge!!) Commodities aka precious metals, palm oil were on the rise!! Heck this year alone, gold has risen like 20-30%!! And yet i still get fixed deposit returns.

3 Reasons why I will avoid capital protected fund in the future are:

1. I am bounded to stay vested in the fund for 3 long years!! If i withdraw or sell prematurely, i will get penalized around ~1% if i am not mistaken for the 1st year, and lesser amount as we reach the 3yr maturity. ~1% is alot considering that it only yielded 3% returns per year.

2. When the market recovers, this fund did not managed to capture the rise and hence the dismal performance. The main reason is that to do a capital protected fund, ~90-95% of the fund is invested in zero coupon bonds. (something like very low yielding fixed deposit. This is designed to protect the erosion of the value of money due to inflation. More detail from Wikipedia: A zero-coupon bond (also called a discount bond or deep discount bond) is a bond bought at a price lower than its face value, with the face value repaid at the time of maturity.^[1]). So only the remaining ~5% is used to invest in commodities.  That is why the fund cannot performed good enough compared to equity type funds.

3. There is a 3.5% service fee when i buy into the fund. Ouch..with this low return, it really ate into my returns. I better put my money into fixed deposit or sukuk funds by the government. I expect more sukuk issuance as the economic condition worsens. Remember that government is too dependent on income taxes as a source of income. (around 41%). Lower wages, or higher unemployment will hurt their revenue.

P.S I am recalling the figures above by memory. (This was 3 years ago!!) But I think i am right to a certain extent. 

So my learning for 2011 is to AVOID Capital Protected Fund types NO MATTER what exciting sector it invests in. I will tell you next time what are the types that I like and will buy in the coming future when the market tanks. I was a mistake on my part even ( I think i could not find any pure commodity funds at that time) though I picked the correct sectorial play that is commodities.

Good thing is that the fund has matured, and I will withdraw my money from this under-performing fund (at least to my expectation) soon this month :)

Gold Scam : The Golden Goose

I read this from MoneyMagnet . I cannot help it but to write a post on this to warn readers on this POTENTIAL high risk Get Rich Scheme. Below is the posting from MoneyMagnet2 that I would like to share. Since, if it were true, i don't want to stop people from making alot of money. I will personally shun this type of "investment"

Will You Take Part In Gold Investment Which Promise High Return Within Short Period Of Time?

Recently, a friend introduced me to a gold investment scheme where I can purchased the gold coin @ gold bar and I will get a certificate and at the same time, monthly interest will be deposited to my saving account (as long as I still keep the gold). Yes, on monthly basis. And the interest rate is much much higher if compare to the current bank interest rates.

She had been approaching me a few times. Everytime, she will bring along her gold investment certificates and also those of her clients to show me how much she is earning by just taking part in the gold investment scheme. The deal sounds to be too good. So, I do not take part in this gold investment scheme. More, the minimum purchase is 50g. If the gold price is RM130/g, so 50g will cost me RM6500. May be to some of us, RM6500 is a small amount. But for me, at this moment, RM6500 is still a huge amount.

I just had some feeling not to trust this quick money scheme. Do you invest in such scheme? You are free to share your opinions.

Highlighted bold what i am interested at.

Most goodies impact the civil servant which actually make up a huge percentage of the Malaysian populace. (With 1.3 million civil servants to a population of 26 million, Malaysia has one of the highest civil servants-to-population ratio in the world) I wonder why is there no tax relief targeted for the middle income people like me and also perhaps a Buffet tax on the rich.

Highlighted bold what i am interested at.

Private schools registered with the Ministry of Education will be given incentives including an Investment Tax Allowance.

We will abolish payments for primary and secondary education, making these free for the first time in our history

RM1bn will be provided through a special fund for the construction, improvement and maintenance of schools.

RM50.2bn will be allocated to the education sector so that it can continue to develop talented, creative and innovative people.

To enable SMEs to commercialise research products a Commercialisation Innovation Fund totalling RM500mln will be established.

The Govt has allocated RM100mln promote innovation including the 1Malaysia Award (C1PTA) for innovative student inventions.

Budget focuses on developing human capital, creativity and innovation and 2012 will be the National Innovation Movement year.

The real property gains tax will be reviewed so it doesn’t jeopardise the ability of low- and middle-income groups to buy homes. (Kris: Another attempt to boost the sagging property bubble in Malaysia?)

The Malaysia Healthcare Travel Council will be privatised to promote and develop Malaysia as a healthcare destination.

To promote tourism the Langkawi Five Year Tourism Development Master Plan will be launched with an allocation of RM420mln.

Full exemption of import duty and excise duty on hybrid cars and electric cars will continue to be given until 2013.

A RM2bn shariah-compliant SME Financing Fund managed by selected Islamic banks will be established in 2012.

FELDA settlers are expected to receive a windfall, and the amount will be announced before listing.

FELDA GVH will be listed on Bursa Malaysia by mid-2012 to raise funds for the company to become a global conglomerate.

To promote the development of Exchange Traded Funds products I-VCAP will provide RM200mln for Shariah-compliant ETFs.

Income tax exemptions for non-ringgit sukuk issuance and transactions will be extended for another 3 years. (As the economy weakens, expect more sukuk issuance from the government to solicit more money)

RM3,000 will be given to ex-members of the special constable and auxiliary police as well as widows and widowers.

A special programme will be introduced for 175,000 army personnel who are not eligible for pensions.

Civil servants will be offered tuition fee assistance for part-time studies, including 5,000 masters & 500 doctoral scholarships.

The Government will extend the compulsory retirement age from 58 to 60 years old to optimise civil servants’ contribution.

600,000 Government pensioners will benefit from an additional annual pension increment of 2%.

For the Orang Asli affected by the landslides at Sungai Ruil, RM20 mln is provided for their relocation to new homes.

RM90mln will be provided to the Orang Asli for basic necessities, including the expansion of the clean water supply project.

To provide greater access to bank services for the rural population, Bank Simpanan Nasional will appoint agents in rural areas.

The Government will provide RM400mln to upgrade the water supply infrastructure in selected FELDA areas.

The Government will expand the programme to supply clean water to the rural community in Sabah by RM50mln.

RM5bn will be given to develop rural infrastructure, including RM1.8bn to the Rural Road Programme & Village-Link Road Project.

Budget introduces a Rural Transformation Programme, so that rural areas can attract private investment and create employment.

To encourage private sector human capital development incentives including a double deduction on scholarships will be offered.

The Government will expedite tax exemption approvals for educational institutions and all places of worship.

SARA 1Malaysia will benefit 100,000 households with income below RM3,000 per month.

Hospital Kuala Lumpur – the oldest in Malaysia – will be upgraded to be the country’s premier hospital.

Hospitals will be upgraded and constructed as well 81 rural health clinics upgraded and 50 new 1Malaysia clinics launched.

Healthcare will be allocated RM15bn operating expenditure and RM1.8bn development expenditure.

The Government will establish the Special Housing Fund for Fishermen to build and refurbish houses.

The Government will continue to implement the Program Perumahan Rakyat by building 75,000 units of affordable houses.

The Government will identify areas in the vicinity of MRT, LRT and other public transport to be developed by PR1MA.

The My First Home Scheme will be expanded to increase the limit of house prices from a maximum of RM220,000 to RM400,000. (This will solely depend on the banks discretion although there is a direction from the government. Not sure what is the maximum income allowed for a person to apply this loan. If the ceiling is not raised, I don't think the banks will want to loan out RM400K for a person that only has a gross income of RM3,000. (The person still need to eat after all)

500,000 will benefit from KAR1SMA, which provides assistance to poor senior citizens and children and disabled people.

In the spirit of “People First,” all subsidies, incentives and assistance totalling RM33.2bn will be continued.”

The National Agro-Food Policy 2011-2020 will be launched and RM1.1bn allocated for the development of the agriculture sector. ( I think this is the correct move, we need to go back to agriculture to reduce imports and control the food prices)

The Government is mindful of the plight of the rakyat due to rising food prices and will take measures to address this.

Civil servants will be given an additional bonus of half-month salary and pensioners RM500.

Book voucher worth RM200 will be given to Malaysian students in all private and public institutions of higher learning.

One-off assistance of RM500 to households with a monthly income of RM3,000 and below will be provided. (Free money!! Not sure how is this going to be implemented!?. I think a tax rebate will be easier :P)

A Flood Mitigation Plan will be implemented in Perlis, Perak and Johor to help 4 million rakyat residing in flood-prone areas.

To ensure the welfare of retirees measures including a tax relief on Private Retirement Schemes contributions are introduced.

Senior citizens aged 60 years & above will be exempted from outpatient registration fees in Govt hospitals & health clinics.

RM15mln will be allocated to build 150 futsal courts to achieve the “One Court for One Mukim” target.

The Government will establish MyCreative Venture Capital with an initial fund of RM200mln.

To prevent cervical cancer, the Government will provide free Human Papilloma Virus immunisation nationwide. (Good!)

A training allocation of RM10mln will be provided for women to develop leadership and managerial skills.

To assist the homeless the Government established a social assistance centre known as Anjung Singgah.

The National Legal Aid Foundation will ensure that every individual who is charged in court will be given free legal aid.

To assist taxi owners facing increased operating costs, measures will be introduced including tax exemptions on taxi purchases.

TERAJU will coordinate and drive the transformation and strengthen Bumiputera’s participation in business.

Public Mutual Funds Approved By EPF 2011 List

List of Public Mutual Funds approved by EPF under the EPF investment scheme to encourage the rakyat to invest their extra money in the Account 2 (typo correction account 1) to gain more return than EPF's average 5-6% return. :P


 PUBLIC AGGRESSIVE GROWTH FUND 
 PUBLIC BALANCED FUND 
 PUBLIC DIVIDEND SELECT FUND 
 PUBLIC EQUITY FUND 
 PUBLIC FOCUS SELECT FUND 
 PUBLIC GROWTH FUND 
 PUBLIC INDEX FUND 
 PUBLIC INDUSTRY FUND 
 PUBLIC ISLAMIC BALANCED FUND 
 PUBLIC ISLAMIC DIVIDEND FUND 
 PUBLIC ISLAMIC EQUITY FUND 
 PUBLIC ISLAMIC INCOME FUND 
 PUBLIC ISLAMIC MONEY MARKET FUND 
 PUBLIC ISLAMIC OPTIMAL GROWTH FUND 
 PUBLIC ISLAMIC SECTOR SELECT FUND 
 PUBLIC ISLAMIC SELECT ENTERPRISES FUND 
 PUBLIC ISLAMIC SELECT TREASURES FUND 
 PUBLIC ITTIKAL FUND 
 PUBLIC REGULAR SAVINGS FUND 
 PUBLIC SAVINGS FUND 
 PUBLIC SECTOR SELECT FUND 
 PUBLIC SELECT BOND FUND 



 PB BALANCED FUND 
 PB CASH MANAGEMENT FUND 
 PB GROWTH FUND 
 PB ISLAMIC BOND FUND 
 PB ISLAMIC EQUITY FUND 

This will definately make your eyes open…

EPF allows us to withdraw a portion of Account 1 every 3 months for investment.We should utilize this opportunity to invest in approved unit trust funds to maximize our hard earned income in EPF. The reason why we should do that is explained in the scenario given below.

Let say, what happens if you invested 10 years ago. Below are based on actual rates and considering the service charge.

This will definately make your eyes open…