KWSP 2009 Statistic & Annual Report

The EPF's Annual Report 2009 was tabled in Parliament on 13.7.2010 and it is good to know that the information is available for public to access.

• The statistic 2009 (12 pages) is available here.
• The full financial statement (72 pages) is available here.
• The Nanyang newspaper cutting is available here.

I did some analysis myself, interesting facts:

1. Only 1% (of total member of 5.7 million) has saving above RM400,000
2. Of this 1% (56,085 members) , 77.7% was Male.
3. 88.3% (5,111,772) members have RM100,000 and lesser in their saving.
4. Withdrawal application increased by 237% since year 2005. A lots more people drawing money. (1.95 million in Year 2009 vs. 0.58 million in Year 2005)
5. Withdrawal for housing related increased by 1,576% since Year 2005. Wow!!! Mainly from the Housing Loan Monthly Installment Scheme.

Why?? The following may be part of the answer, if not all:

1. Saving (or rather earnings) is not enough, if salary only RM2,000 per month, one needs almost 15 years plus to achieve RM100,000 saving, assuming he/she didn't apply for any withdrawal - That is why we need to aim for high income nation with high standard of living.

2. Too many withdrawal schemes. Over 1.9 million applications received for various withdrawal scheme during year 2009, 73.1% is housing related and 16.8% is age-related.

3. People don't trust EPF investment and its return, so they are not willing to keep their saving with the EPF for golden year, and try to withdraw any much as possible for whatsoever reason and manage by themselves.

It may not really that people don't know how to manage finance and thus having low deposit with EPF, right? Anyhow, I tend to believe most people have not save enough for their golden years (at least the those born in the '70 and '80).

If YOU can and able to save more for golden years, why not doing it now, why wait?

Women And Retirement

Extract from the website, The Women Summit 2009, some salient points:-

• In 2006, Malaysian women accounted for 49.1% (13.08 million) of the total population, of this
• 63.3% (8.28 million) were between 15 to 64 year age group .Female labour force makes up 45.8% with 3.8 million in the labour market, which is 36% of the total labour force.
• A recent survey (not sure how recent lah...) by the EPF revealed that 72% of EPF Contributors spend their entire EPF saving within THREE (3) years of retirement.
• The year 2007 data from EPF on the saving capacity of women age 54 (just before retirement, leaving the workforce at age 55) showed there were 15,944 women registered with the EPF with a total saving of RM1,354,532,480. That is.... an average of RM84,955.62 per person. Enough for retirement? (Average also implies that most of the 15,944 women have much less than RM84,955)

Some inportant steps for women to take control of their finances:

• Take stock of your financial health today. Review your financial strengths and weaknesses. Understand your challenges and obstacles - is it last minute shopping or lack of discipline in sticking to your savings plan?
• Set clear goals. Think how you can make your money work for you. Make 2008 the year when you will succeed in achieving your financial goals!
• Prepare for emergencies. Build a large enough nest egg to deal with emergencies. No matter how much you earn, you must put some aside for savings.
• Develop a budget and stick to it. Identify how you spend your cash. This is the best way to minimise expenditure on items you don’t need. Use any extra funds to pay off debts or save it.
• Try to improve your Fin-Q. Equip yourself with the necessary information - read books, attend investment seminars, visit websites etc. Be proactive, take control and learn more about options to improve your financial health. By doing so, you will be in a better position to choose the right plan for yourself. Armed with information and confidence, you will have a better understanding of the equity markets, investments, property investments and other avenues.
• Understand the fundamentals of developing a proper investment portfolio. Do not be afraid of technical information and jargon. When in doubt, engage a professional financial advisor to provide advice and assistance.
• Start your retirement planning today. Younger women should start by learning as much as they can to ensure they have enough savings to sustain themselves during retirement.

It is never too late to start!

Seeing a financial advisor is also critical. Starting early, developing effective habits, then taking ongoing steps for retirement is the best way to have a smooth transition from working life to retirement and ensuring you can maintain your current lifestyle.

Source: www.thewomenssummit.org

Financial Products And You

We work hard to generate income.

We keep as much income as possible to become our asset.

We grow our asset to become our wealth.

We preserve our wealth for a comfortable post-retirement life.

There are many vehicles out there, to help us along the way to meet needs at different stage of life.

Click here for some products offer by HLA, feel free to add comments for sharing.

Key reasons for using financial product

1. To protect what we already have.
2. To protect what we going to have.
3. To preserve what we have.
4. To accumulate our income.
5. To grow our wealth.

Many people try to grow the wealth the "fast way" by investing somewhere.... the golden rule is

Rule No 1: Don't ever make losses, If you have, Cut losses.

Rule No 2: Don't forget Rule No 1.

Remember the old adage,

No one fail to plan, they just plan to fail.

"Secure Your Future" by proper planning.

Interest Rate And You

Found this website, interesting to know major central banks' next meeting and their interest rate ..... http://www.fxstreet.com/fundamental/interest-rates-table/

Today's paper (7th July 2010), finance specialists predict BNM will up OPR to another 0.25% by tomorrow's meeting and will keep it for the rest of the year due to uncertainty of the economy.

If it happened, OPR will be 2.75% by 8th July 2010, 3rd increase during last 4 months. What will happen thereafter?

1. BLR will up by same quantum of 0.25% to 6.30%
- most Malaysian whom has a house loan will be paying more interest than principal (assuming bank keep the installment amount)

2. Fixed deposit rate will be up but likely to be less than 0.25%, say 0.15% to 3.00%.
- small percentage of Malaysian population will be very happy as they depends on fixed income like FD to sustain their life-style (especially retiree)

So what? How to link "interest rate" to you?

Are you a lender or a borrower?

Lets learn a bit about interest rate from economic point of view.

• Interest rates control the flow of money in the economy.
• High interest rates curb inflation, but also slow down the economy.
• Low interest rates encourage spending and make it easier for business to borrow to invest.
• Interest rates also affect the value of Ringgit versus that of other country.
• All other things held constant, when real interest rate (inflation-adjusted) are higher (e.g. Malaysia's interest rate is higher than Singapore, Thailand, Taiwan, Japan, Hong Kong, USA, UK, Canada, European), then foreigners want to invest their fund here in Malaysia in order to earn a higher return. Therefore, demand for Ringgit will push up the value of the Ringgit.
• When Ringgit become more expensive, good for imported good (cheaper now) but bad for exporting business because our goods are more expensive. (Malaysia's economy is heavy on export).
• So, when interest rates are too high, Malaysia economy will slow down from two sides, internally domestic spending and external demand for our goods.
• So, as a conclusion, Malaysia's OPR or FD Rate are highly likely capped for the time being until..... who knows, can be a decade or more.

Glossary:
BNM = Bank Negara Malaysia
OPR = Overnight Policy Rate
BLR = Based Lending Rate
FD = Fixed Deposit

Lower return from EPF for 2010??

News on 21 June 2010:
EPF Posts RM5.55 Billion Investment Income In Q1 2010
More than 70% Increase Compared to Same Quarter Last Year

As at 31 March 2010, the EPF’s total accumulated fund stood at RM402.22 billion.

Simple math:
RM5.55 b x 4 quarters = RM22.2b / year

RM22.2b / year divided by fund size RM402.22 b = 5.5% p.a only (don't forget that the main contributor to 2010Q1 RM5.55 b income is from equity market (RM2.79b out of RM5.55b) where Q1 is a bull market).

So, do we expect a lower return from EPF for year 2010?

Read more here from KWSP official website.