Wednesday, 6 July 2022

Would Malaysians Voluntarily Contribute To Their EPF?


I mean their EPF dividends beats our CPF interest rates hands down:

EPF declares higher dividends for 2021

Before we proceed, have you noticed its dividends for EPF but interests for CPF?

It could be just semantics; no big deal. Or is it?

Are there any Malaysians here (former also can!)?

If the EPF dividends are 5%-6%, do you still feel the need to "invest" to Earn More? 

I mean Save More can oredi! No?

How is it in Malaysia?

Would a similar "1M65" movement gain traction over there?

Or would the more financially literate Malaysians prefer to weather the risk of capital loss by investing in Singapore dividends stocks for the same 5%-6% dividend yield?


What do the more financially literate Singaporeans do?



  1. Smol,

    When your currency is like this, you got no choice but to invest & earn more. ;)

    Imagine if they stuck to the original 2.5% of the 1950s. Some minister will come out to say it's "not fit for purpose" lol.

    But I suspect they're more interested in liquidity & optionality than in locking up their money till 55.

    Sinkies are lucky so far with strong SGD management. That's why even with dividend yield of 5%-6%, if the stocks or reits don't have a good chance of capital gains and/or dps growth, the risk adjusted returns of top ups to SA or RA will win out. ;)

    In the old days, whenever there's market upheavals or bear markets, people turn to endowments or insurance savings plans.

    With the suppression of bond yields in the last 10 years, people now turn to CPF!

    1. Spur,

      I couldn't have said it better!

      I'm glad big daddy is doing the responsible thing by raising GST.

      I would be concerned if they followed other banana republics by either printing money or borrowing like there's no tomorrow.

      It makes as much sense as listed companies borrowing money to pay shareholders dividends!?

      This year's inflation offset goodies were paid for by Earn More of last year. Imagine if Singapore can't Earn More....

      Every little hiccups we'll raid our past reserves!?

      It matters less to those of us in our 50s who have access to our CPF soon.

      Sure! Its fun to get freebies! Who doesn't like "free"?

      But for those who still have 20 to 30 years ahead of them... Well, if they are alert, "Wait! Will money still be there when its time for us to collect?"

      Don't worry. Money can be printed or borrowed (pretend the Asian Financial Crisis never happened).

      Its just that when its time for you to collect, the SGD/MYR may revert to parity.

      The paradox of being a Singaporean (sinkie your head!):

      If you want to rely on Save More with big daddy, make sure big daddy is good at Earn More!

      If big daddy sucks at Earn More, you better grow a pair and focus on Earn More yourself!!!

  2. The thing is MYR isn't particularly strong/stable, so for Malaysians I think it would be better for them to place in other currencies and investments?

    Haha eh for most Singaporeans, CPF is a good deal for them la.
    2.5%-5% interest, buay pai what. Considering some aunties are hunting for fixed D moving from one bank FD to another bank FD just to chase a fraction of % more.

    Save more easier than earn more.
    Hey no brains needed.

    Side note:
    It's dividends cos Muslims cannot earn interest.
    Same as in Islamic banking, it's dividends not interest when Muslims place deposits.

    1. ERSG,

      Well, that would mean the same aunties would be moving funds out from CPF OA to SGS bonds now that they are 0.5% more attractive?

      Wait. Cannot... Unless the aunties are above age 55 and only for those CPF funds above the FRS ;)

      CPF is only a good deal when bank interest rates are below 2.5%...

      There were a time when bank interest rates were much higher than CPF - everything is cyclical ;)

      For the advanced ones who count using REAL interest rates rather than NOMINAL interest rates, well, don't look now...

      CPF is negative yielding.

      Of course its "transitory"! LOL!

      You're spot on for dividends rather than interests!

      But its not just a play on semantics...

      Dividends mean there's less certainty - every year have to wait for EPF to announce the dividends for the year. There's an element of surprise! You'll only know how well your EPF have done for that year in hindsight.

      Interest rate is known in advance.

      Its a bit like driving for a living.

      Those who don't mind the volatility in earnings will opt to drive a taxi or operate as private car hire.

      Those who prefer certainty will become a company delivery van driver for a monthly FIXED salary.

      That in a nutshell can also describe those who prefer to Earn More versus those who prefer the Save More route ;)

  3. SMOL,

    Why choose a bad example using MYR?
    This is how we attract labor to SG.

    It is not fun when G7 currency are on long term downtrend - Euro, Pounds, Yen. Yes, major economy also can decline.

    When earns in foreign currency long term, the total returns better exceed the forex decay else cannot repatriate back for retirement spending. Ok can relocate to that country instead. Wait what about inflation? Double *Facepalm*

    1. AT_AT,

      Because my blog post was about Malaysia's EPF?

      "not fun when G7 currency are on long term downtrend"

      Our SGD is on the same path. Beginning of 2022, USD/SGD was 1.35; now its 1.40. Won't be surprised if we hit 1.45 in the coming months...

      Its just compared to other regional currencies, we are weakening less than them...

      Hence the "illusion" we think our SGD very strong!

      Sure, but importing stuffs in USD is costing us more and more each passing month.

      Same for youths who like to trade US stocks or options. Your broker may be "free" or low cost, but in SGD, its costing you more from this year onwards ;)

      Talking about "facepalm", you should ask what were those Singaporeans thinking when they invested in Malaysian properties!?

      They were making the bet that in 30 years' time, the MYR/SGD will revert back to parity?

      Or is that a hedge against Singaporeans electing "clowns" and "charlatans" into parliament?

  4. Market timing. Fortunate to work in japan earning exchange rate of 140yen to SGD Now 103yen, time to buy yen for holidays instead!

    1. AT_AT,

      Any Singaporean investors want to invest in Japanese equities or properties now that the exchange rate is in our favour?

      If our Singapore equities and/or properties are in the doldrums, would big daddy support those of us on the Earn More path by weakening our SGD to attract foreign investors?

      Just like what the Japan central bank, ECB, and US Fed have done with their interest rate repressions?

      Bailout the speculators and screw the savers?

    2. SMOL,

      If SG equities in doldrums, I believe SG govt will not do anything. STI is entrenched in old economy business. To help, refers to below.

      If properties in doldrums, it is a different story, we will make adjustments to ABSD to improve demand and support price. This will indirectly helps the local banks and the STI index 😆 SG currency dun play a big part here. SGD stability and slow appreciation is still preferred.

      Savers will subsidize the earners and speculators.

  5. AT_AT,

    We are pretty much on the same page ;)

    It will be 2005 all over again:

    Big Daddy's (Not Invisible) Hand Over Properties Versus Stocks

    Its not that big daddy favours property investors over equities investors. Its just that big daddy don't want the moral hazard of bailing out our 3 banks...

    Some retail "investors like to exclaim with full confidence, "If one of our 3 banks fail, Singapore will also!"

    As if its a given!

    Its paid for by multiple cooling measures to ensure our banks and property speculators don't get too ahead of themselves...

    I mean we can't always screw the savers right!?

    Once in a blue moon, maybe...

  6. Smol,

    Think it was mentioned in passing last year, but Mercer did a study of 44 countries' pension schemes, and SG was #10 overall and #1 in Asia. The closest Asian competitor was HK at #18.

    Our CPF also beat Swiss (11), Canada (12), Germany (14), NZ (15), and US (19).

    UK was just above us at #9, but they're currently undergoing pension age payout reform from 65 to 67. In 2020, 100,000 UK 65-er's were pushed into poverty because for their cohort, they had to wait till 66 to collect their pensions.

    #1 was Iceland for its combination of high payouts & financial sustainability.

    But lost in the details is the fact that Iceland is very pro-work. The average Icelander retires at 68/69 and there're big penalties to collecting pension earlier.

    FIRE to Reykjavik is like "lying flat" to Beijing lol.

    If S'pore raises retirement age to 90 & mandates payouts only from that age, we can afford to pay $10K a month pension no problem LOL.

    Ok, a confession...

    After all the snark comments about CPF etc, I'm planning to dump cash into RA to hit ERS, probably in my late-50s. So much for building more run-roadable assets by selling away my rental condo LOL!

    Why late-50s and not now? Flippant answer is coz SSB > CPF. More accurate answer is that my SA is maxed out & I can only contribute to OA with the miserable 2.5% (no RA yet).

    More nuanced answer is that I prefer to maintain 100% optionality with cash & I'm feeling pretty good about the correction & upheaval in stocks and bonds now. ;)

    With luck & patience, I'm still optimistic that my liquid networth will still be many multiples of my HDB flat + CPF hoho.

    1. Spur,

      Singapore is using the "carrot" approach - 54% of CPF members have delayed their CPF Life payouts to age 70 in 2021.

      I wonder will there be future incentives to delay our CPF Life payouts to age 75?

      When more Singaporeans will be working till their late 60s - like in Iceland ;)

      Especially when more retirees crash got sound realise 1M65 TODAY is OKish, but in 30 years time its not really enough...

      I'll be getting all my CPF above BRS out end of this year. This is so I can qualify for the $30K grant when I tap the Lease-Buyback-Scheme and top up my CPF back to FRS (condition for the grant) at age 65.

      Big daddy's subsidy is the highest for BRS, followed by FRS, and ERS. Its a bit like the service and conservancy rebates - 2 room get the most, 5 room get the least ;)

      Market conditions being what it is, I don't mind having the extra "opportunity" funds end of this year! Quietly confident I can do better than CPF.

      Yup, if our CPF is a minority portion of our net worth, life has been kind to us ;)

      Can CPF qualify as "liquid" net worth?

      Not liquid like cash, not solid like properties. Its jello!?



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