What exactly is EPF- Employee Provident Fund- investment scheme? It basically an option for members to invest a percentage of their EPF in an employee provident fund in a unit trust fund which is EPF approved. It works in that; members whose account 1 has sufficient funds can start investing with epf investment and grow their wealth for the purpose of retirement. The minimum amount that is eligible for epf investment is 20% of total savings in EPF account 1. A member should have a minimum of RM 55,000 in the EPF account 1 in order to invest and must be of 54 years of age and below. If you got sufficient funds then investing in one EPF investment is a good option to accumulate the retirement savings. On the other hand, your investment will earn you dividends which are plowed back to your Employee Provident Fund investment. You will only be able to withdraw these dividends after you attain retirement age. Withdrawal can be done completely or partially for a certain period. While it is a perfect idea to invest in the EPF fund, it is also wise to understand our safety net before making a decision to invest in one. This decision is based on the advantages and disadvantages of EPF investment funds.
Advantages of EPF investment fund
- This kind of investment positions you in a better place to control how your finances are invested. This is because you have an opportunity to make a decision on where you want to invest the savings based on the level of risk you can take. Smart investors will specifically benefit from being in a position to choose funds and expand their portfolio.
- Investments in EPF schemes could receive high returns. Savvy investors plow back the profits and re-invest it in a stronger portfolio with high returns.
- With EPF investment, you have no business using the liquid savings for investment. Therefore, the investment you make to grow your money has little impact on the lifestyle you lead in your current life and saving goals. Also, the EPF investment scheme provides investors with low cost of accessing funds where no interest is charged.
All these are quite amazing reasons for you to start investing in epf investment but they come with risks and setbacks. Some of the drawbacks associated with EPF investment include
- It is not guaranteed that your investment will grow. Yes, in as much as these Unit trust funds pose great investment avenues, they don’t guarantee money growth. An honest word is that you could lose the money and thus, decrease your retirement savings. Some of the things that could affect your investment negatively include inflation, poor management of funds and other market fluctuating factors. All these are risks that you should put in mind before investing in an epf.
- The charges subjected to your investment could decrease your profits. These charges include transfer, service, management, and exit charges which vary with the institute managing the funds. Therefore, if you earn little dividends, your profits may not be as big as you would love it.
With all that in mind, you could make a sound decision to start investing with epf investment and row your EPF savings.