Dividend Magic

Saving and Investing towards Financial Independence in Malaysia

Other Investments

Maybank 2 Cards Premier – Best Air-miles Card

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Filed Under: Travel, food and the finer things in life, Credit Cards, Other, Other Investments 15

There are two components to Maybank 2 Cards. You get a Visa / Mastercard and an American Express card. 2 cards.

The card we will want to focus on is the Amex card, as it gives 5x Treatspoints per RM1 spent whereas the Visa / Master gives 2x Treatspoints.

To keep it simple – You spend as much as you can with your Amex. The Visa / Master is the fallback card for places that don’t accept Amex.

You can check for the latest promos and register for Maybank cards hERE.

Cashback vs Air-miles

First off, if you’re new to the world of credit cards, allow me to explain. To me, credit cards for the first 10 years of my life were about cashback. I have since yesterday, switched to air-miles mode.

I’ve done the research, I’ve done the numbers. You get a better bang for your buck with the air-miles approach. A caveat: Your spending will need to be in the above the RM36K per annum range.

How to get Maybank 2 Cards Premier

Maybank recently revised the minimum income required for their Maybank 2 Cards Premier to RM100K per annum. Even if you don’t fulfill this requirement, I’ll tell you how you can still get them cards.

I was a little short on the income front. Maybank doesn’t care about your dividend income.

I spoke to my relationship manager in the bank and to my surprise, a simple FD pledge would allow me to get the Premier cards.

So, if you’re short on the income/salary front, talk to someone in the bank. This is not a foolproof method and it goes on a case-by-case basis.

Also to note, if you’re planning on getting the 2 Cards Premier, your existing Treatspoints cannot be carried over. This is because the redemption rate is much more favourable to the premier cards.

Maybank 2 Cards Premier Annual Fees

Now, one last thing before you jump on the premier card bandwagon. Apart from the RM25 mandatory fee from the government, the premier cards have an annual fee of RM800.

The cards are free for the first year. For subsequent years, you’ll need to have an annual spending of RM80,000 to get the fee waived.

You know I’m frugal and there’s no way I have that much of an annual spending every year.

My strategy for this? I am utilizing the 4 free supplementary cards provided by the cards. Combining the spending of all cards should get me to RM80K a year. And yes, Maybank allows you to total up the spending per annum of the principal and supplementary cardholders.

What’s in it for the supplementary cardholders? Well, they get the same 2x or 5x treatspoints as you, the same redemption rate for air miles. Basically, everything is the same for them as supplementary cardholders!

I’ve got the first year to test this out. We’ll see how it goes.
I do solemnly swear that the RM80K target will not cause me to spend more than I usually do.

Meantime, do follow me on Instagram and on Facebook for updates.

End.

As I’m writing this, I feel an unexplainable urge to go on a rampage on the benefits of a credit card. As opposed to cash and debit cards. Instead, I’ll keep myself controlled for now and have a long-ass article on it soon.

I know most of you reading this are masters and sifus at optimising your credit cards. Please do let me know if you have better cards out there to recommend for air-miles and cashback for other readers.

You can check for the latest promos and register for Maybank cards hERE.

Funding Societies – My First Default

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Filed Under: Other Investments, Dividends, Financial Independence, Investment 9

First off, an update on my portfolio’s performance with Funding Societies Malaysia. Annualised returns have gone down from 13% to 9.23%.

A lower figure compared to January but still, a 9.23% return is commendable for an investment.

Mainly due to –
1. A default; and
2. New unutilised capital.

My First Default(s)

It caught me off guard when I first received notice on the default on the issued notes, of which I’ve put in RM300 each into the affected notes.

MBBT-18080032
MBBT-18080033
MBBT-18080034

Being caught off guard like that isn’t always a nice experience but it was mitigated somewhat because I’ve constantly been managing my own expectations and prepping for a few defaults.

Re-adjusting Funding Societies’ Auto-invest Bot

If you’ve noticed, all the notes come from a single issuer or company. So it’s back to the drawing board for me.

I’ve now switched my auto-invest bot settings to have ‘Max Issuer Exposure’ from the previous 25% to a mere 5%. I don’t want to be over-invested in one single issuer.

In the event that a single issuer defaults, my loss exposure will never exceed 5% of my total loan portfolio.

Steps Taken by Funding Societies

It all started on 7 January 2019. The issuer contacted Funding Societies to delay payment. Below will be the notices I received from Funding Societies. In chronological order.

This will be pretty lengthy but it is important you as investors know the step-by-step process taken by Funding Societies.

7 January 2019

Dear Investor, The Issuer has reached out to us to push back the repayment of January 2019 due amount because pending receivables from their client, this will include late interest charges. Tentatively, repayment of January 2019 due will be on 18 January 2019. Thank you for understanding the situation. Team Funding Societies 7/01/2019, 6.20pm

** And thereafter, lengthy amounts of back and forth discussions with the issuer on the settlement. I’ll spare you the details. With the issuer failing to make repayments in March, Funding Societies finally decided to serve a letter of demand.

10 April 2019

Dear Investor, We wish to update that we have served the Letter of Demand as of 8 April 2019. At this stage we continue to be in contact with Issuer through our lawyers to demand for RM 50,000 which due on 31 March 2019, and upcoming RM 150,000 which is due 15 April 2019. As we wait for Issuer response to the Letter of Demand, kindly allow us to update you by 17 April 2019. Team Funding Societies 10 April 2019, 8.30pm

18 April 2019

Dear Investor, We would like to inform you that Note Issuer has made a partial payment of total RM 10,000 and it has been distributed as principle to investors on 16 April 2019. However, the amount made by Issuer is less than what we have requested from the Issuer. We are still in the midst of negotiating the outstanding repayment term with Issuer. As per our last update, the Letter of Demand has been served to the Note Issuer, and the Note Issuer has only made payment of RM 10,000.00 of the promised RM 200,000.00 upon the expiry of the Letter of Demand on 17 April 2019. At the meantime, we are escalating our recovery efforts through legal avenues and are discussing with the appointed panel lawyer on how to approach this matter effectively. You may refer to your email for full update. Kindly allow us until 3 May 2019 to provide you updates on the progress of recovery. We truly appreciate your kind patience and continued support. Team Funding Societies 18 April 2019, 1.25PM

End.

So there you have it. I’ve said there would be defaults and I’m sharing with everyone the first of mine.

There are inherent risks in investing in P2P financing. To mitigate, I am diversifying as much as I can. Putting in small amounts in every note issued.

And now, as I’ve learnt the hard way, not to overexpose myself to one single issuer.

I hope everyone learns from this.

That being said, I am still getting a 9.23% return. So don’t let yourself be discouraged by my defaults.

😀

Sign Up!

If you have not already, you can sign up with Funding Societies hERE.
Alternatively, you may use the code: j1mwa37p
You’ll receive RM50 upon investing your first RM1,000.

Note:
Funding Societies has reduced their referral bonus from RM50 to RM30 effective 1st March 2019.

Using my code and link, you’ll still receive RM50.

StashAway Malaysia Review and Portfolio’s Performance

By
Filed Under: Investment, Other Investments 38

StashAway’s Latest Promo

StashAway is bringing new & existing investors a special promotion to help you grow your cash.

Earn up to 3.2% p.a. on your cash between 1 Jul and 31 Dec 2022.

New Users

  1. Simply sign up hERE.
  2. Make your first deposit into StashAway Simple between 1 July and 31 August 2022 to enjoy a rate of 3% p.a. on up to RM 20,000 in your StashAway Simple portfolio.
  3. Subsequently, successfully refer two friends to use StashAway Simple before 31 August 2022 to enjoy a rate of 3.2% p.a. on up to RM 20,000 in your StashAway Simple portfolio.
  4. Limited to the first 5,000 new investors only.

Existing Users

  1. Refer your first friend and earn 3% p.a. on your StashAway Simple portfolio when they make their first deposit into StashAway Simple between 1 July and 31 August 2022 on up to RM 20,000.
  2. Subsequently, refer your second friend to StashAway before 31 August 2022 to enjoy a rate of 3.2% p.a. on your StashAway Simple portfolio of up to RM 20,000.

For full terms and conditions visit the campaign landing page here 

Moving on to the Main Article…

Latest portfolio updates can be found hERE at the bottom of the page.

If you’re looking for a referral or promo code, you can register hERE.
You get 50% off your fees for the first RM100,000 invested for 6 months.

Having been watching and hearing a lot about StashAway for the past few months, I finally met up with the StashAway team.

I got to know more about the company itself and the team behind it. I was impressed by both the team and the technology behind StashAway. I’ll, therefore, be guiding you to opening a new account and investing with them in this article.

How Does StashAway Work?

I’ve put off opening an account for a while now as I wasn’t too sure what kind of investment strategies StashAway’s Robo algorithm was going to apply to my hard-earned money.

They call it the Economic Regime-based Asset Allocation (ERAA). In short:
1. You determine your risk levels
2. StashAway picks the securities to invest in for you
3. ERAA will re-adjust the asset allocation to maintain your previously determined risk level

StashAway essentially invests your money in ETFs for you, covering every major sector depending on your selected risk profile.

I went for a higher risk (higher potential reward) portfolio. In fact, I went for the highest 36% risk index one. I’ll be updating my portfolio’s performance on a monthly basis. You can find it hERE at the bottom of the page.

Another thing to note is that the type of portfolios you have access to on StashAway depends on the risk assessment you did. 36% being the highest risk index. Some of you, depending on your answers in StashAway’s assessment survey, may not have access to the higher risk portfolios.

How Does StashAway Calculate Your Returns

Time-weighted Return

StashAway uses Time-weighted Return (”TWR”) to calculate your returns. And I’ve gotten a lot of questions regarding this metric.

Time Weighted Return measures the compound rate of return over a given period for one unit of money.

From StashAway’s website:

Time-weighted Return (TWR) is the most commonly-used way to calculate returns in the financial industry, and it’s an easy metric to compare returns between different portfolios.

By tracking the portfolio’s performance from your first deposit, a portfolio’s TWR removes the distortions that various cash inflows and outflows create. In essence, TWR measures the portfolio manager’s ability to generate returns, not the effects of an individual’s deposit and withdrawal behaviours.

In essence, TWR measures compound rate of growth. It eliminates the distortion created by your inflows and outflows of money. This is important as many using StashAway use the dollar-cost averaging (”DCA”) method.

Money-weighted Return

A Money Weighted Return measures the compound growth rate in the value of all funds invested in the account over the evaluation period.

This approach helps to gauge the effectiveness of the individual’s timing of deposits and withdrawals. As a result, MWR may also overweight or underweight the returns you see as a result of factors unrelated to the performance of the portfolio manager and their investment strategy. It will potentially inflate your returns when you deposit while markets are going up and understate your performance when you deposit while markets are going down. It will also give your lump sum deposit performance a larger weighting when calculating the money weighted return.

So, unless your portfolio manager determines when to deposit or withdraw funds from your portfolio, MWR doesn’t effectively measure your portfolio manager’s performance. You should only use MWR to compare two different portfolios if you have the exact same deposit and withdrawal behaviors for both portfolios.

MWR’s merit lies in that it clarifies the impact of the individual investor’s investment decisions (e.g., when you deposit and withdraw).

Is StashAway Safe?

StashAway is regulated by our very own Securities Commission (SC) Malaysia. That’s as safe as a Malaysian company can get in the capital market.

So, yes! StashAway is totally safe and they’re regulated.

That being said though, robo-advisors have been known to shut down. Your money however, will be held with trustees. So don’t worry.

StashAway Simple

The people behind StashAway have recently come up with StashAway Simple – a cash management fund in essence. They’re projecting returns of up to 2.4% p.a. Which is absolutely brilliant!

You get great liquidity with cash management funds. You can withdraw your money anytime. Comparing it to FDs, if you uplift your FD prematurely, you lose all interest you were meant to gain. No such thing with a cash management fund.

Also, with a projected return of 2.4%, it’s easily beating most FD rates right now with Malaysia experiencing all-time low rates.

As for its risks, they’re about as safe as FDs as StashAway Simple invests in money market instruments issued by banks themselves.

I personally use StashAway Simple as a place to hold my unutilized cash. I foresee myself eventually moving most of my cash here.

What I Like About StashAway

  1. As a retail investor, you get access to a multitude of investments from around the world including the US, Japan etc.
  2. You also pay lower fees only available to the big boys.
  3. Auto readjustment of your portfolio. You can leave your portfolio as it is for years and let StashAway handle it.
  4. Annual fees start at 0.8% and it goes down as you invest more. (Use my referral code below to get 50% off for the first 6 months)
  5. As foreigners investing in the US and other countries, we are liable to pay withholding tax. StashAway as an institution tries its best to reduce this for its investors.

Dislikes

I found that I was unable to pick and choose personally the assets which I want to invest in. The only choice I had as an investor was to reset my risk profile and look at the breakdown of assets to be invested in.

Why? This is in StashAway’s FAQ –
Based on your risk preferences, selected goal, and current economic regime, our algorithm carefully picks the ETFs most suitable for your goal. This allows us to provide the most optimal diversification personalized to you. As such, it is not possible for a customer to handpick the ETFs or the allocation.

Verdict and Review

StashAway I think is a godsend for people that don’t have the know-how and/or time to do their research and valuation of individual stocks. If it’s a simple buy and wait strategy you’re vying for then this is the platform you should use.

Instead of paying enormous and exorbitant fees for unit trusts and mutual funds here, go with StashAway. You’ll have AI invest for you, which means no emotional and irrational decisions by human fund managers.

Updated Oct’20

With the Covid-19 pandemic, StashAway performed pretty well with my 36% risk portfolio. They managed to reduce losses as the market tanked in March and a few short weeks after, my portfolio was back in the green.

I’m pretty sure not everyone was able to predict such a quick recovery by the equity markets in such a short time which was why we didn’t see huge returns for StashAway’s portfolios.

In short, StashAway managed to weather the storm. The algorithm works and I’ll continue making recurring deposits.

I’ll also be storing a portion of my portfolio into StashAway Simple for that sweet >2% returns.

Have any of you started investing in StashAway? How is your porfolio doing? And for those who are planning to start out, please do share the portfolio mix you’ve decided on and why.

StashAway Referral Code

First things first, sign up at this link hERE.
Dividend Magic has partnered with StashAway to get you 50% off your fees for the first RM100,000 invested for 6 months.

StashAway Step-by-Step Registration Guide

Now, I didn’t have too much trouble with the account sign up. It took me about 5 minutes but I’ll guide you through it as best I can. With pics.

Step 1 – Getting Started
Step 2 – Your Email and Password
Step 3 – Your Goals and Portfolio
My Parameters
Projections for my Portfolio – I wish.
Step 4 – Eligibility
Step 5 – More Assessments
Final Step – Set up your risk profile!

My Stashaway Portfolio Update

I will be updating my StashAway portfolio on a regular basis.

May 2022

Total value: RM62,400.43

Dividend Magic – Risk (36% Risk Index)
Gross Investment – RM50,000.01
Current Value – RM46,814.01
Time-weighted return – 1.86%
Money-weighted return – -12.10%

Dividend Magic US – Risk (30% Risk Index)
Gross Investment – RM10,000.00
Current Value – RM10,767.34
Time-weighted return – 7.67%
Money-weighted return – 7.67%

StashAway Simple
Gross Investment – RM4,500.00
Current Value – RM4,819.08

April 2022

StashAway made a really bad move with China’s side of things and it has caused a huge stir, both in the portfolio and the community. I’m not gonna lie, I’m pissed. I wouldn’t have had a problem if they just continued taking up positions in China or even holding them.

I’m losing money! Guess what? The only portfolio doing well is StashAway Simple.

Total value: RM63,104.55

Dividend Magic – Risk (36% Risk Index)
Gross Investment – RM50,000.01
Current Value – RM47,405.90
Time-weighted return – 3.15%
Money-weighted return – -10.32%

Dividend Magic US – Risk (30% Risk Index)
Gross Investment – RM10,000.00
Current Value – RM10,891.76
Time-weighted return – 8.92%
Money-weighted return – 8.92%

StashAway Simple
Gross Investment – RM4,500.00
Current Value – RM4,806.89

January 2022

Total value: RM67,120.99

Dividend Magic – Risk (36% Risk Index)
Gross Investment – RM50,000.01
Current Value – RM50,867.39
Time-weighted return – 10.68%
Money-weighted return – 3.92%

Dividend Magic US – Risk (30% Risk Index)
Gross Investment – RM10,000.00
Current Value – RM11,463.32
Time-weighted return – 14.63%
Money-weighted return – 14.63%

StashAway Simple
Gross Investment – RM4,500.00
Current Value – RM4,790.28

December 2021

Total value: RM64,777.86

Dividend Magic – Risk (36% Risk Index)
Gross Investment – RM48,000.01
Current Value – RM48,575.135
Time-weighted return – 10.19%
Money-weighted return – 2.79%

Dividend Magic US – Risk (30% Risk Index)
Gross Investment – RM10,000.00
Current Value – RM11,433.23
Time-weighted return – 14.33%
Money-weighted return – 14.33%

StashAway Simple
Gross Investment – RM4,500.00
Current Value – RM4,769.28

October 2021

Right back on track this month! Glad I made the decision to put in a little more last month. Not at July’s returns but we are getting there.

Total value: RM61,904.62

Dividend Magic – Risk (36% Risk Index)
Gross Investment – RM44,000.01
Current Value – RM45,600.19
Time-weighted return – 12.82%
Money-weighted return – 8.92%

Dividend Magic US – Risk (30% Risk Index)
Gross Investment – RM10,000.00
Current Value – RM11,552.14
Time-weighted return – 15.52%
Money-weighted return – 15.52%

StashAway Simple
Gross Investment – RM4,500.00
Current Value – RM4,752.29

September 2021

A bad month for almost all my investments. My StashAway portfolio wasn’t spared as well. Apart from the usual RM2K per month, I moved an additional RM3K from StashAway Simple to the main 36% Risk portfolio. DCA + a little buying the dip.

Additionally, if you’ve been wanting to invest with a roboadvisor, now could be a good time. Of course, please do your own research and due diligence first.

Total value: RM58,171.19

Dividend Magic – Risk (36% Risk Index)
Gross Investment – RM42,001.00
Current Value – RM42,266.36
Time-weighted return – 9.41%
Money-weighted return – 1.56%

Dividend Magic US – Risk (30% Risk Index)
Gross Investment – RM10,000.00
Current Value – RM11,167.54
Time-weighted return – 11.68%
Money-weighted return – 11.68%

StashAway Simple
Gross Investment – RM4,500.00
Current Value – RM4,737.29

August 2021

A pretty big dip in performance here. I, in fact, had hopes that StashAway would actually be making gains the past month. Will wait a bit to see if performance continues to drop.

Total value: RM55,033.95

Dividend Magic – Risk (36% Risk Index)
Gross Investment – RM35,001.00
Current Value – RM35,973.59
Time-weighted return – 11.03%
Money-weighted return – 6.34%

Dividend Magic US – Risk (30% Risk Index)
Gross Investment – RM10,000.00
Current Value – RM11,350.24
Time-weighted return – 13.50%
Money-weighted return – 13.50%

StashAway Simple
Gross Investment – RM7,500.00
Current Value – RM7,710.12

July 2021

Total value: RM55,444.93

My stashaway portolio has steadily grown in value from a mere RM5K back in March 2020. Started regular monthly injection of RM2K in September as well as some extra money pumped in when the market was bad and now we’re at RM55K in value.

Returns have been pretty good so far and looking forward to the next 10 years. StashAway is the platform I most often urge beginners to start with when they ask me ”how to start investing?”. So if you haven’t already, sign up for Stashaway. And then slowly move to other assets.

Dividend Magic – Risk (36% Risk Index)
Gross Investment – RM33,001.00
Current Value – RM35,895.38
Time-weighted return – 17.96%
Money-weighted return – 21.46%

Dividend Magic US – Risk (30% Risk Index)
Gross Investment – RM10,000.00
Current Value – RM11,857.11
Time-weighted return – 18.57%
Money-weighted return – 18.57%

StashAway Simple
Gross Investment – RM7,500.00
Current Value – RM7,692.44

June 2021

Moved some funds from StashAway Simple to my 36% portfolio to capitalise on the dip in the market last month. Making a little more gains. Just touched about RM50K in total value in StashAway now.

Dividend Magic – Risk (36% Risk Index)
Gross Investment – RM31,001.00
Current Value – RM33,541.37
Time-weighted return – 15.88%
Money-weighted return – 19.94%

Dividend Magic US – Risk (30% Risk Index)
Gross Investment – RM10,000.00
Current Value – RM11,590.84
Time-weighted return – 15.91%
Money-weighted return – 15.91%

StashAway Simple
Gross Investment – RM7,500.00
Current Value – RM7,692.44

May 2021

With the dip in the markets recently, I’ll be moving some money out of SA Simple into my 36% Risk Index Portfolio. We should see it reflected in the next update!

Dividend Magic – Risk (36% Risk Index)
Gross Investment – RM24,001.00
Current Value – RM26,000.47
Time-weighted return – 13.25%
Money-weighted return – 17.45%

Dividend Magic US – Risk (30% Risk Index)
Gross Investment – RM10,000.00
Current Value – RM11,416.45
Time-weighted return – 14.16%
Money-weighted return – 14.16%

StashAway Simple
Gross Investment – RM12,500.00
Current Value – RM12,676.72

April 2021

Dividend Magic – Risk (36% Risk Index)
Gross Investment – RM22,001.00
Current Value – RM24,634.88
Time-weighted return – 15.99%
Money-weighted return – 24.70%

Dividend Magic US – Risk (30% Risk Index)
Gross Investment – RM10,000.00
Current Value – RM11,443.90
Time-weighted return – 14.44%
Money-weighted return – 14.44%

StashAway Simple
Gross Investment – RM12,500.00
Current Value – RM12,642.31

March 2021

Dividend Magic – Risk (36% Risk Index)
Gross Investment – RM20,001.00
Current Value – RM23,047.82
Time-weighted return – 18.20%
Money-weighted return – 30.70%

Dividend Magic US – Risk (30% Risk Index)
Gross Investment – RM10,000.00
Current Value – RM11,374.55
Time-weighted return – 13.75%
Money-weighted return – 13.75%

StashAway Simple
Gross Investment – RM12,500.00
Current Value – RM12,625.37

February 2021


Dividend Magic – Risk (36% Risk Index)
Gross Investment – RM18,001.00
Current Value – RM21,630.61
Time-weighted return – 21.69%

Dividend Magic US – Risk (30% Risk Index)
Gross Investment – RM10,000.00
Current Value – RM11,444.72
Time-weighted return – 14.45%

StashAway Simple
Gross Investment – RM12,500.00
Current Value – RM12,588.00

January 2021

Dividend Magic – Risk (36% Risk Index)
Gross Investment – RM16,001.00
Current Value – RM18,319.50
Time-weighted return – 13.97%

Dividend Magic US – Risk (30% Risk Index)
Gross Investment – RM10,000.00
Current Value – RM11,010.15
Time-weighted return – 10.10%

StashAway Simple
Gross Investment – RM12,500.00
Current Value – RM12,568.69

December 2020

Dividend Magic – Risk (36% Risk Index)
Gross Investment – RM14,001.00
Current Value – RM15,378.03
Time-weighted return – 8.01%

Dividend Magic US – Risk (30% Risk Index)
Gross Investment – RM10,000.00
Current Value – RM10,603.19
Time-weighted return – 6.03%

StashAway Simple
Gross Investment – RM12,500.00
Current Value – RM12,559.17

September 2020 (Started DCA)

Dividend Magic – Risk (36% Risk Index)
Gross Investment – RM10,000.00
Current Value – RM10,753.27
Time-weighted return – 3.25%

StashAway Simple
Gross Investment – RM7,500.00
Current Value – RM7,500.00

March 2020 (In the Beninging)

The Employees’ Provident Fund – EPF in Malaysia

By
Filed Under: Dividends, FI/RE, Financial Independence, Investment, Other Investments 12

The Employees Provident Fund (EPF) or also known as Kumpulan Wang Simpanan Pekerja (KWSP) is one of the most important retirement savings schemes in Malaysia. Whether you’re a salaried employee or self-employed, understanding how the EPF works can help you maximize your savings for a secure financial future and help with your retirement. This article covers everything you need to know about the EPF, including its benefits, contribution rates, withdrawal options, and strategies to grow your retirement fund.

What is EPF / KWSP?

The Employees Provident Fund (EPF) or also known as Kumpulan Wang Simpanan Pekerja (KWSP) is a mandatory savings scheme established by the Malaysian government since 1951 to help private-sector employees and non-pensionable public-sector workers save for retirement. It is managed by the Employees Provident Fund Board and ensures that Malaysians have sufficient savings to support themselves after retirement.

EPF Dividend Rates and Historical Returns

2024 – 6.30%
REJOICE!

EPF KWSP Malaysia Historical Dividends Full Dividend Magic

One of the key advantages of the EPF is its annual dividend payout, which has historically ranged between 5% to 7%. The fund invests in various asset classes, including equities, bonds, and real estate, to generate stable returns for members. EPF dividends are compounded annually, making it a powerful tool for long-term wealth accumulation.

The 6.30% declared for 2024 is one of the highest in history. Anything above 6% is really good for Malaysians. Rejoice!

EPF / KWSP Contribution Rates

Both employees and employers contribute to the EPF based on a percentage of the employee’s monthly salary:

  • Employees contribute 9% of their monthly salary.
  • Employers contribute 12% for salaries RM5,000 and below and 11% for salaries above RM5,000.

EPF Account Structure

EPF KWSP Malaysia Account 1 2 and 3 Akaun Persaraan Akaun Sejahtera Akaun Fleksibel How many %

The EPF divides contributions into three accounts:

  1. Retirement Account (Akaun Persaraan) 75%
    Originally Account 1, Akaun Persaraan aims to accumulate and increase the members’ saving level for the long term to achieve a comfortable life after retirement. Savings in Akaun Persaraan cannot be withdrawn before 55 years old.

    However, eligible members can invest a portion of their Akaun Persaraan savings in investments managed by the approved Fund Management Institutions (FMIs), subject to the terms and conditions. This is not recommended by Dividend Magic, keep your EPF money in EPF, no unit trusts please.
  2. Wellbeing Account (Akaun Sejahtera) 15%
    Originally Account 2, Akaun Sejahtera aims to meet the pre-retirement life cycle needs for the medium term. Savings in Akaun Sejahtera can be withdrawn for pre-retirement purposes (subject to EPF terms and conditions) such as:
    • Housing
    • Education
    • Health
    • Insurance/Takaful protection
    • Hajj
    • Age 50 Years Old
  3. Flexible Account (Akaun Flexible) 10%
    The aptly named Akaun Flexible is designed to meet members’ short-term financial needs. Savings in Akaun Fleksibel can be withdrawn by members any time, subject to terms and conditions. However, members are encouraged to withdraw only for emergency purposes and immediate needs only.

EPF Withdrawals

Age-Based Withdrawals

  • Age 50 Withdrawal – Members can withdraw from Account 2 as a partial retirement fund.
  • Age 55 Withdrawal – Members can withdraw the full amount in both Account 1 and Account 2.
  • Age 60 Withdrawal – For members who continue contributing after 55, they can withdraw their accumulated savings at 60.

Other Withdrawal Options

  • Full withdrawal for permanent disability
  • Full withdrawal for leaving Malaysia permanently
  • Nomination benefits – To ensure savings go to the rightful beneficiary in case of death
  • For the Flexible Account (Account 3) – You can withdraw from Akaun Fleksibel any time through the KWSP i-Akaun app. Once processed, the funds will be disbursed directly into your bank account. It’s important to note that there is a minimum withdrawal amount of RM50.

EPF Withdrawal – More than RM1 million savings

EPF KWSP more than RM1 million withdrawal

This here is the best form of withdrawal. If you happen to be a high income earner or you have voluntarily contributed extra amounts every year, you’ll find yourself with more than RM1 million in EPF savings. This is when you get the flexibility to withdraw any savings in excess of RM1 million.

An important note – you have to withdraw a minimum of RM50,000 at any one time.

Strategies to Maximize Your EPF Savings

  1. Voluntary Contributions – You can contribute beyond the mandatory rate to boost your retirement fund.
  2. i-Invest – Invest a portion of your EPF savings in approved unit trusts to potentially earn higher returns.
  3. Delay Withdrawals – Keeping your funds in the EPF beyond 55 years old allows your savings to continue compounding.
  4. Diversify with Private Retirement Schemes (PRS) – Supplement your EPF with PRS to enhance your retirement income.

EPF Voluntary Contribution – RM100K a year

You can choose to increase your EPF savings voluntarily on top of your existing mandatory monthly deductions, with as little as RM10, up to a maximum of RM100,000 per year. 

By starting your savings journey as early as possible, you can take advantage of the power of compounding, giving your savings more time to grow. So, that’s why you should start saving now to ensure comfort and financial stability during retirement.

More info on Voluntary Contribution to your EPF here.

EPF i-Saraan – Self contribution and RM500 per year

EPF KWSP Malaysia i-saraan self contribution RM500 and RM5000

Self-employed individuals can also voluntarily contribute to the EPF under the i-Saraan scheme, which allows them to enjoy government incentives while saving for retirement. More on EPF’s i-Saraan scheme here.

Please do self-contribute here and earn that RM500 per year if eligible for i-saraan. Do take note that there is a lifetime incentive limit of RM5,000.

Who is eligible to apply for EPF’s self contribution scheme – i-Saraan?

  • Malaysian
  • EPF Member
  • Self-employed individuals (not an employee)
  • Below 60 years of age.

KWSP i-Sayang – Contribute To Your Wife’s Retirement Savings​

i-Sayang is an initiative introduced by the government that allows the husband (contributor) to transfer the 2% employee share contribution received from the employer to the wife’s (recipient) EPF account.

EPF KWSP i-Sayang - Contribute To Your Wife's Retirement Savings​ i-Suri

Features of EPF’s i-Sayang

  • Transfer of 2% employee share contribution received from the employer to the wife’s EPF account.​
  • The application is made voluntarily by the husband, and the transfer occurs automatically each month when an employer contribution is credited to the husband’s EPF account.​
  • The transfer of this contribution cannot be cancelled unless the wife divorces or dies.​
  • More information here.

We’re all familiar with EPF as our retirement fund. But what does EPF actually invest in?

dividend magic - retirement
‘How late do you expect to be working?’

Main Assets of EPF

As of 2018, equities made up about 41% of EPF’s total assets.

A further 50% is invested in fixed income instruments.

Let’s have a look at some of EPF’s largest equity holdings.

It’s a good idea to have EPF’s investments as a reference, apart from my Freedom Fund of course. ; )

What I Do With My EPF

I personally am leaving my EPF untouched till I reach 55. And then I’ll withdraw a monthly amount to keep me alive, slowly drawing down on the capital. And if I do happen to have extra funds, I will be self contributing to EPF, up to RM100K a year.

Your EPF is essentially forcing you to save a portion of your income every month. And it helps you reinvest those 6% and above dividends every single year.

Even though I’ve mentioned there being no wrong answers to the poll above, I do believe Option 2 and 3 – where you’re essentially drawing down on your funds from your EPF savings is the least financially sound decision.

I see no reason for one to forego that 6% return in lieu of mutual funds or property. If you’ve got to take money from your retirement savings to purchase something, you definitely can’t afford it. In my opinion, of course.

Has anyone done this long term and made good money from Options 2 and 3?

End.

The EPF is a crucial pillar of retirement planning for Malaysians. Understanding its features, making informed contributions, and leveraging available investment options can help you build a robust financial future. Whether you’re just starting your career or nearing retirement, proactive planning with the EPF can ensure you enjoy financial security in your golden years.

You may have heard from uncles and aunties telling you to withdraw as much as you can during times of uncertainty. Mutual fund agents may have enticed you to believe their RM100 million funds are superior to our national fund – worth over RM800 fucking billion dollars.

Property agents may have hinted that your purchase of that 3BR apartment is a better decision than leaving your money in the hands of a professional investing team.

I think all are a load of hokum and I’ll stick with EPF for the foreseeable future.

I think you should too. 
And this is a plea to all Malaysians, don’t squander away your retirement savings.

TL;DR – Withdrawal from EPF? Bad idea.

Funding Societies – Risks, Defaults and Diversification

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Filed Under: Portfolio - Freedom Fund, Financial Independence, Investment, Other Investments 8

Funding Societies Malaysia

This will be an update to my earlier post on Funding Societies, Malaysia’s (largest?) P2P platform.

As I have posted and shown earlier, my investments in Funding Societies has netted me an annualised return of 13.12%. As of today, it has increased slightly to 13.15%.

The referral bonus from you guys does not affect that 13.15% return. 

To put the returns into perspective, my IRR and average return for the Freedom Fund is at the 12% mark for the past few years.

 

Calculating Simple and Effective Interest Rate

Funding Societies Effective Interest Rate
Simple vs Effective Interest Rate

 

From the example, interest returns of RM10,000 for an RM100,000 investment opportunity (effective investment exposure of RM55,000) gives you an effective return as high as 18% (RM10,000 / RM55000).

The monthly repayments help reduce your risk exposure every month while increasing your investment returns. Best of all, if you choose to reinvest the monthly repayments you receive, you’ll compound and achieve even higher returns.

The folks at Funding Societies have a handy explanation for simple vs effective interest rates. The effective interest rate comes in handy when you want to compare your investments vs other choices in the market.

Default and Diversification

Most of you are worried about the risk involved when lending your hard-earned money to businesses you know almost nothing about. And you should be.

However, you’d be happy to know that the regional default rate as of November 2018 is at 1.02%.  Regional meaning Malaysia, Indonesia and Singapore.

Even more good news, the default rate in Malaysia is 3 out of 300 loans. That is 1.0%. With that kind of risk and return rates, I hope you’ll be able to make a more informed decision.

I do expect the default rate to increase in the near future as more businesses seek funding through the P2P network. As for me personally, I’ve yet to have a loan default in my portfolio.

Defaults are normal in the P2P lending industry so the key to success for us as investors is to DIVERSIFY.  The loans from Funding Societies give your returns anywhere from 10% to 16%.

I personally use the Auto Investment Bot provided by Funding Societies Malaysia.

I set my parameters as follows:

  • RM300;
  • A minimum investment period of 1 month;
  • A maximum investment period of 24 months;
  • At least 12% simple interest rate; and
  • At most 18% simple interest rate.

Signing Up – RM50 BONUS

Signing up to be invest is a breeze. Just head over to Funding Societies, and all you need is your IC / passport number, an email, and your mobile number.

Additionally, you’ll receive a bonus RM50 when you sign up with my code j1mwa37p

The terms? You’ll just have to invest a collective amount of RM1,000.

End.

I’ve been using Funding Societies for close to a year now and that 13.15% return is real. If you’re able to stomach that minuscule default rate they have right now, I think this would make a good investment alternative.

Again, thank you, everyone, for using my code upon registration.

I’ve gotten messages of concern from many of you advising against posting my referral bonus. But my aim is to always be as transparent as I can. I’m not recommending P2P for the referral fees.