KWSP (EPF) has a formula that decides if you can invest and how much you can invest into the Unit Trust of your choice. The main consideration is your age. The older you are, the more funds you are expected to maintain in your KWSP account
When you contribute into KWSP, both your and employer’s contribution is split into Account I & Account II in 70:30 ratio. Account I is what you can withdraw at age 55 only and also invest in Unit Trusts. Account II is for Housing Loan, Education & Medical Treatment. Note that you can apply to move Account II funds into Account I anytime you choose. However, once there, you cannot move back to Account II
The formula used to determine the maximum amount you can invest is as follow:- (Account 1 – Basic Savings) x 20%.
See the table below for Basic Saving requirement as per your age
RM150,000 -RM44,000 = RM106,000 x 20% = RM21,200
He can invest RM21,000/- into unit trust, and the next similar transaction can be done earliest in the next 3 months.
Note that KWSP will not pay any dividends to funds invested in Unit Trusts. Your KWSP nomination will also not apply to this portion of funds
Professional Investment Management
The fund managers who take care of your unit trust funds have access to information and statistics from leading economists and analysts. Consequently, they are in a better position than individual investors to identify opportunities for your investment to grow.
Unit trusts allow you to broaden your portfolio. With your nest-egg spread across a basket of securities, your overall investment risks are reduced.
An investor can sell his units, wholly or partially, at the following trading day’s unit buying price. Units have a high liquidity, that is, they can be readily converted into cash.
Ease of Transactions
Unit trusts provide investors with a simpler, more convenient and less time-consuming method of investing in securities. The paperwork that comes with managing your own portfolio of shares and bonds are handled by the fund manager.
The interests of unitholders are protected by the appointment of an independent trustee to hold the fund’s assets on behalf of the unitholders. The trustee will also ensure that the fund manager will always manage the fund in accordance to the Deed of the fund and the Guidelines issued by the Securities Commission.
Affordable and Flexible
The minimum initial investment amount is low as compared to investment in shares and/ or bonds. Furthermore, additional investment can be made in even smaller amounts than the minimum investment amount.