EPF - Keep or Take Out - Who Has The Better Argument ?

People are getting excited when they hear the news that the Employees Provident Fund Malaysia a.k.a. the EPF is announcing their dividend rate for 2014 next week. Will the rate be more than 2013 ? Everyone is keeping their fingers crossed. (Note: On February 8th, EPF announced a 6.75% dividend rate for 2014)

The EPF Track Record For 30 Years

The fund which have an asset size of RM586.7 billion (2013) is a huge success in the stock market as it can pay a much higher return rate than what you could get from a bank savings or fixed deposit account. Over the 30 years, the returns from Employees Provident Fund Malaysia have been as follows -

Year Returns

1983 -1987 ..8.5 %

1988 -1994 ..8

1995 ..7.5

1996 ..7.7

1997 -1998 ..6.7

1999 ..6.84

2000 ..6

2001 ..5

2002 ..4.25

2003 ..4.5

2004 ..4.75

2005 ..5

2006 ..5.15

2007 ..5.8

2008 ..4.5

2009 ..5.65

2010 ..5.8

2011 ..6

2012 ..6.15

2013 ..6.35

30 Year Average Returns = 5.5%

(Source : EPF website)

Keeping In EPF

A little known FACT the Employees Provident Fund Malaysia have unknown to many people is that it has never failed to pay good returns even during the worst stock market crashes : In the 1987 Wall Street stock market crash, 1998 Asian Financial Crisis and the recent 2008 US stock market crash, the fund still managed to pay 8.5%, 6.7% and 4.5% returns to their members.

Another little known SECRET is the EPF is a big player in the stock market, it is able to influence the KLCI Index besides trading shares much like a stock market syndicate. If you're thinking of punting/investing in the market with the EPF money, why not keep in the EPF and let them do the work for you? They are the expert, the proof ... see diagram above!

Take Out EPF

Of course, some people have good reasons to take out the EPF money such as if you need it for medical, paying off the balance of housing loan or other urgent purposes. But if you are thinking of spending it on some lavish lifestyle, it's wiser to be frugal. Or, if you think you can invest in something that pays more than 5.5% p.a. , with no risk like EPF, think hard before doing it.

Conclusion

There are only a few good & safe opportunities found in Malaysia to grow your savings to help you during old age. One of the very best around locally is the EPF. 

Think wisely. So try not to withdraw all the cash with the Employees Provident Fund Malaysia upon reaching the age of 55 but keep in the fund to let them grow the savings for you.