PETALING JAYA: A financial expert is advising those who wish to make further special withdrawals from their Employees Provident Fund (EPF) accounts, especially to invest, to think carefully.
Licensed financial planner and partner at IPP Financial Planning Group Ian Wong said EPF is a very solid fund where your money is safe and the returns have been good so far.
He added the 6.10% dividend announced recently was great.
“Using your EPF savings to invest is just moving money from your left to the right pocket, often deducting some fees in the process. It is better to invest from personal cashflow rather than using EPF unless your account is already in the hundreds of thousands,” he told theSun.
Wong said if unit trusts are a person’s preferred investment style (relying on a professional to manage the money), then a person should start as early as possible in his/her career.
“Fund houses and platforms generally want to encourage more investors onboard, so a reduction in minimum investment helps serve that purpose,” he explained.
Wong also cautioned against choosing a fund just based on the minimum investment amount.
“It’s better to enter a good fund than to invest in something that is lacklustre,” he said.
According to Wong, the most important thing about understanding unit trusts is that they are a relatively passive method of investment.
“You are effectively ‘hiring’ a professional manager to manage your money (in a pool with other mutual investors).
“You would be leaving all the details of the individual securities buying/selling to this manager,” he said.
He said unit trust investment is not meant to be a frequent buy or sell type; instead, investors should buy and hold as long as they maintain confidence in the fund house and management.
“To get started with unit trusts (also known as mutual funds), you should first research and understand the structure.
“Then, have a general strategy of what regions or countries and industries you would like to invest in,” he said.
Wong added those who plan to invest must evaluate the various funds in their chosen area.
“You can do this via the fund fact sheets, prospectus, or other relevant documents of a particular fund (usually easily found on a fund house’s website),” he said.
Wong highly recommends looking at different funds from different fund houses (fund management companies).
“Don’t stick to only one fund house. Every fund house has its good funds and its bad funds; just because a fund house has a really good fund, it doesn’t mean that the same fund house’s other funds will be good,” he said.
When asked what options people have, Wong said Malaysians are spoiled for choice.
“There are hundreds of funds from many different fund management companies. Some of those funds are good, many are average. You have to choose wisely,” he said.
