{"id":43952,"date":"2020-07-21T09:33:23","date_gmt":"2020-07-21T01:33:23","guid":{"rendered":"https:\/\/www.imoney.my\/articles\/?p=43952"},"modified":"2020-07-21T09:33:23","modified_gmt":"2020-07-21T01:33:23","slug":"should-you-use-epf-i-invest","status":"publish","type":"post","link":"https:\/\/www.imoney.my\/articles\/should-you-use-epf-i-invest","title":{"rendered":"Is It A Good Time To Use i-Invest, EPF&#8217;s Online Investment Platform?"},"content":{"rendered":"<p>Looking to invest your savings? You\u2019re not alone. Thanks to relatively cheap stocks and low interest rates, Malaysian investors have been <a href=\"https:\/\/www.theedgemarkets.com\/article\/malaysia-doubles-online-trading-limit-small-investors-rush\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">flocking<\/a> to the stock market since the dip in March.<\/p>\n<p>To help investors diversify their portfolio, the Employees Provident Fund (EPF) recently announced a one-year fee reduction for members who want to invest their EPF savings. With the reduction, there are currently no upfront fees for transactions made through i-Invest.<\/p>\n<div class=\"block\"><div><a href=\"https:\/\/www.imoney.my\/articles\/benefits-epf-i-invest\" target=\"_blank\" rel=\"noopener noreferrer\">EPF\u2019s i-Invest<\/a> is an online platform that allows members to invest part of their EPF savings in eligible unit trust funds. Transactions can be made online without going through a Fund Management Institution (FMI) agent.<\/div><\/div>\n<p>Considering the current economic climate and reduction of fees, should you consider investing your EPF savings through i-Invest?<\/p>\n<h2><span class=\"ez-toc-section\" id=\"Reduced-fees-can-mean-higher-returns\"><\/span>Reduced fees can mean higher returns<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The fee reduction takes place from May 1, 2020 to April 31, 2021. It applies to transactions made through both i-Invest and FMI agents:<\/p>\n<ul>\n<li>Investing through i-Invest: maximum of 0.5% to 0%<\/li>\n<li>Investing through an (FMI) agent: maximum of 3% to maximum of 1.5%<\/li>\n<\/ul>\n<p>This makes it much more cost-effective to invest in unit trust funds. By contrast, the upfront fees of unit trust funds transactions (for non-EPF savings) can go up to 5.5%. If you invest RM10,000, a 5% upfront fee means that you\u2019ll pay RM500 in fees \u2013 and you\u2019d only actually be investing RM9,500.<\/p>\n<p>Over many years, the impact of fees is even greater:<\/p>\n<p style=\"text-align: center;\"><strong>Impact of upfront fees on a portfolio<\/strong><\/p>\n<p>\n<table id=\"tablepress-1424\" class=\"tablepress tablepress-id-1424 table-subhead-second\">\n<thead>\n<tr class=\"row-1 odd\">\n\t<th colspan=\"4\" class=\"column-1\">RM10,000 initial investment and RM200 contribution per month*<\/th>\n<\/tr>\n<\/thead>\n<tbody class=\"row-hover\">\n<tr class=\"row-2 even\">\n\t<td class=\"column-1\">Year<\/td><td class=\"column-2\">5% upfront fee<\/td><td class=\"column-3\">0.5% upfront fee<\/td><td class=\"column-4\">Difference<\/td>\n<\/tr>\n<tr class=\"row-3 odd\">\n\t<td class=\"column-1\">1<\/td><td class=\"column-2\">RM12,307<\/td><td class=\"column-3\">RM12,890<\/td><td class=\"column-4\">RM583<\/td>\n<\/tr>\n<tr class=\"row-4 even\">\n\t<td class=\"column-1\">10<\/td><td class=\"column-2\">RM44,803<\/td><td class=\"column-3\">RM46,929<\/td><td class=\"column-4\">RM2,126<\/td>\n<\/tr>\n<tr class=\"row-5 odd\">\n\t<td class=\"column-1\">20<\/td><td class=\"column-2\">RM102,309<\/td><td class=\"column-3\">RM107,155<\/td><td class=\"column-4\">RM4,846<\/td>\n<\/tr>\n<tr class=\"row-6 even\">\n\t<td class=\"column-1\">30<\/td><td class=\"column-2\">RM195,980<\/td><td class=\"column-3\">RM205,263<\/td><td class=\"column-4\">RM9,283<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<!-- #tablepress-1424 from cache --><span style=\"font-size: small;\">*Based on 5% annual return; not inclusive of annual charges<\/span><\/p>\n<p>In the example above, the difference between a 5% and 0.5% upfront fee over decades can mean having a few thousand ringgit more in your portfolio. As an investor, lower fees allow you to maximise your investment returns.<\/p>\n<h2><span class=\"ez-toc-section\" id=\"The-opportunity-to-diversify-your-savings\"><\/span>The opportunity to diversify your savings<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The i-Invest platform allows you to diversify your portfolio with unit trust funds that invest globally. This means being able to spread your investing risk geographically. For instance, if you mostly invest in Malaysian stocks, you\u2019ll lose out if the local stock market doesn\u2019t do well. But if you also invest in other countries that perform better, you may be able to offset these losses.<\/p>\n<p>Diversifying part of your portfolio overseas could potentially offer better returns than mostly investing locally. Over the past decade, many major world markets <a href=\"https:\/\/www.theedgemarkets.com\/article\/6-factors-moved-markets\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">outperformed<\/a> Malaysia \u2013 America\u2019s S&amp;P 500 rose 248%, while Malaysia\u2019s FBM KLCI rose 26.8%. In fact, overseas investments were the <a href=\"https:\/\/www.thestar.com.my\/business\/business-news\/2019\/02\/18\/equity-overseas-investments-main-drivers-for-epf-income\" target=\"_blank\" rel=\"nofollow noopener noreferrer\">main driver of income<\/a> for EPF in 2018, despite only making up around a quarter of its assets.<strong>\u00a0<\/strong><\/p>\n<p>i-Invest isn\u2019t just for those looking to diversify overseas. There are 280 different unit trust funds qualified for offering by 20 FMIs on the platform \u2013 you can choose funds that focus on specific sectors (e.g. real estate), commodities (e.g. precious metals), financial securities (e.g. Shariah-compliant bonds) and many more. This makes i-Invest a good platform for those who want more control over their EPF savings and want to invest for potentially better returns.<strong>\u00a0<\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Dont-invest-if-you-are-risk-averse\"><\/span>Don\u2019t invest if you are risk-averse<strong>\u00a0<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>While it can be a good way to diversify your portfolio, you should be more cautious with your investment if you are nearing retirement, or if you don\u2019t feel comfortable taking on more risk. When you invest in unit trust funds, there is no guarantee that your investments will outperform EPF, or even provide positive returns.<\/p>\n<p>As i-Invest gives control back to you, you should also ensure you have done your due diligence before you start investing. If you\u2019re not comfortable making your own investment decisions, it is best to get professional advice, such as engaging with a financial advisor or an FMI agent.<\/p>\n<p>Otherwise, leaving your savings in EPF is a safe option. EPF has an excellent track record of performance, with historical dividend rates of around 6% over the past decade. It also guarantees a minimum 2.5% dividend for Conventional Accounts, while unit trust funds do not guarantee minimum returns.<strong>\u00a0<\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"Consider-the-long-run\"><\/span>Consider the long run<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>\u201cShould I invest during a recession?\u201d is a question that often gets asked during an economic downturn.<\/p>\n<p>Sometimes, it can work to your advantage \u2013 when a recession happens, the stock market may be selling at a discounted price. It could be a good time to buy stocks when they are relatively cheap. This gives you more returns when the economy recovers, and share prices rise again.<\/p>\n<p>But if you are a novice investor, it shouldn\u2019t matter if we\u2019re in a recession or economic boom.<\/p>\n<p>That\u2019s because timing the market \u2013 that is, investing based on whether you think the stock market will go up or down \u2013 is incredibly hard, even for the professionals. If you only invest when the stock market is doing well, you\u2019ll be investing in stocks when they are more expensive. And if you wait until the stock market goes down to invest, you could be missing out on stock market gains in the meantime.<\/p>\n<p>When it comes to your EPF savings, investors are advised to focus on the long run and avoid timing the market. Consider investing a fixed amount of money at a fixed schedule (e.g. monthly or quarterly), regardless of whether the stock market is doing well or not. This allows you to capture both the ups and downs of the stock market. When you do this over many years, you\u2019ll be able to ride out the stock market\u2019s short-term volatilities.<strong>\u00a0<\/strong><\/p>\n<h2><span class=\"ez-toc-section\" id=\"So%E2%80%A6should-you-invest-your-savings-via-i-Invest\"><\/span>So\u2026should you invest your savings via i-Invest?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n<p>The bottom line is that i-Invest is a good platform to diversify your savings. Consider using the platform if you want greater control of how your EPF savings are invested \u2013 and can stomach the higher risk involved. From now until April 2021, you\u2019ll be taking advantage of reduced fees to maximise portfolio returns.<\/p>\n<p>However, you should not invest if you cannot take on more investing risk. And if you are new to investing, consider talking to a financial advisor or an FMI agent to help you make an investment decision.<\/p>\n<p>Finally, while we\u2019re currently in a recession, novice investors should avoid investing (or not investing) based on short term stock market movements. Instead, focus on the long run to ride out these volatilities.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>EPF has reduced its upfront fees for its online investing platform until April 2021 \u2013 should you take advantage of it during this recession?<\/p>\n","protected":false},"author":1,"featured_media":43961,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[1,240],"tags":[340],"class_list":["post-43952","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-investment","category-retirement-planning","tag-epf"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v23.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Should You Invest Your EPF Savings During This Recession?<\/title>\n<meta name=\"description\" content=\"EPF has reduced its upfront fees for its online investing platform until April 2021. 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