The best and most practical investment in Malaysia IS AN INVESTMENT IN YOURSELF. Invest in your EDUCATION! LEARN! BUY BOOKS AND COURSES.
Lol no jk jk I’m not that annoying (usually). I mean, that advice is true. But still annoying.
As of time of writing (October 2020), these are the 3 most practical investments in Malaysia: EPF/KWSP, PRS and SSPN/SSPN-i.
Why these 3? Because you can get income tax relief up to RM15,000 annually, combined. Regardless whether the investment performs well or not – and this is outside your control anyway, depends on the economy and all – you will still ‘gain’ via reduced tax payment and other practical benefits uniquely offered from each of them.
Let’s go into details.
#1 – EPF/KWSP (Employees Provident Fund/ Kumpulan Wang Simpanan Pekerja)
What is it: You know what this is. The de-facto retirement fund for Malaysians
Why it’s practical:
- You can self-contribute and get up to RM4,000 in income tax relief
- It’s for your own retirement. Inability to withdraw is a feature, not a bug. It’s better to have more money than you need after you retire, than not enough
- Aside from retirement, you can make withdrawals for other reasons, including for health and education purposes
- You can also channel a portion of your EPF fund into unit trust. Read: All You Need to Know About Buying Unit Trust Through EPF i-Invest
- You can directly nominate your EPF money to anyone you want. More info here
- You can make use of Retirement Advisory Service, which is free of charge for EPF members!
Official website: https://www.kwsp.gov.my/
What is it: Like EPF, but optional
Why it’s practical:
- You can self-contribute and get up to RM3,000 in income tax relief
- The money is meant for your retirement. Again, more money is better than less
- Look out for attractive promotions and competitions to attract depositors. Sometimes they have freebies, sometimes they have 0% sales charge (usually 3% sales charge; this is different and IN ADDITION to annual management fee ya, usually 1.5-1.8% or so). Circa 2016-18 they used to have PRS Youth promo, where they gave youths RM500/RM1000 for every RM1000 deposit (takde dah). So just look out for them
- (Idk if there are better options, but I got my PRS through
FundSupermartnow FSMOne. 0% sales charge through there)
- If you’re an employer, doing this for your employee(s) can give you tax exemption for contributions for up to 19% of an employee’s base salary
- You can directly nominate your PRS money to anyone you want. More info here
The only downside to PRS that I can think of is analysis paralysis – choosing which unit trust funds to invest in. Even after the process of elimination (I eliminated non-syariah funds and conservative funds), there are still tens of funds to choose from. How did you pick yours?
Official website: https://www.ppa.my/
What is it: A fund to prepare for your children’s education. Note that only parents and legal guardians can open SSPN/SSPN-i accounts
Why it’s practical:
- You can get up to RM8,000 in income tax relief (edit: increased from RM6,000. Thanks ck!)
- For me this is a subtle way for PTPTN to let you know that PTPTN loan may not be as readily available for future generation. Who do we blame? People who don’t pay back their PTPTN loans? Profit-making companies which underpay? Whatever it is, don’t let your children be affected by the consequences
- You can also double it as insurance/takaful for your child. More info here
- They have a lot of attractive promotions and competitions to attract depositors. Last I checked they have a lucky draw offering RM100,000 cash prize
Official website: https://lovesspn.ptptn.gov.my/
Other practical investments
IMO, other practical investments are quite contextual:
- Yes, investing in environmentally-conscious companies are practical for our future (you can do sustainable investing easily via BEST Invest)
- Yes, investing in physical gold allows you to get secured personal financing (as shared by one reader in 4 Things You Can Do If You Need Money URGENTLY in Malaysia)
- Yes, investing in fixed deposits/bonds is safe and therefore practical, especially for those with low-risk appetite
But EPF/KWSP, PRS and SSPN/SSPN-i are probably the most practical of them all, for reasons given above. This is a sample size of one, but I shared this opinion with the CEO of a large fund management company and she agreed with me, so :/
Do you agree or disagree? Feel free to share with me what other investments you think are practical. I’d love to hear what you think – leave a comment below.