Sunday, October 17, 2010

Your saving in EPF may give better return! Yes, "May".

The Government has proposed under Budget 2011 that the EPF be allowed to raise its overseas investment from the current 7% to up to 20% of the total assets managed.


The main reason the threshold increased to 20%, i believe, is because the fund size has grown too big for Malaysia to absorb. (At the end of June 2010, the EPF has total assets of RM407 billion, that's more than half of the size of the Malaysian economy, forecast to be RM712 billion this year.)


We, the ordinary folks, therefore have to bear a certain level of foreign exchange risk. I am only 34 this year, I really hope by end of 21 years later (when I reach 55 years old), my money in EPF doesn't shrink because of an "uncompetitive-economy-currency". 


Example: 


Singapore became independent in year 1965. That is 45 years ago. That time, exchange rate is RM1.00 to SGD1.00 - thanks but no-thank to BN, after 45 years, Malaysia Ringgit depreciated against Singapore Dollar by a whopping 58.33% (1.4/2.4).


I do hope that history won't repeat, else my money at the end of 21 years will be reduced by 21/45*58.33% (in theory).