Its funny how life is. My investment knowledge is ZERO. Don’t know much about money except its hard to come by. I am learning though, slowly but surely.
Last year, by chance, my wife and I met a young, quiet, self-employed mutual fund investment guy. He’s very young compared to my wife and I but he’s out there, self employed, working for CIMB Wealth Advisors. Over the years, mainly influenced by my parents, I have developed a keen sense of awareness for scams, especially those that involved my retirement savings. So when the Malaysian government allowed people to withdraw a portion of their retirement savings and invest, at their own risk, into units trusts (or mutual funds), I was the first to say NO – my money stays with the government. Last years dividends or returns was 4.5%.
Then comes this guy who said that whatever money that was taken out of my retirement fund, EPF, would, after the investment, go back into my EPF. So there was no chance for a third party to steal my money. What changed my perception about this young man was his calmness – he wasn’t the type that hypes up everything. He comes from a poor family, so he knows the value of money. So, I decided to invest.
And was I in for a shock.
In total, as of today, my wife and I have made a total of 5 withdrawals from our Account 1 (EPF savings is broken up into 2 accounts, Account I and Account 2. The money in Account 2 can be withdrawn for education and home purchasing. Account I has always been secured until recently when the government allowed 10% of Account I to be withdrawn every 3 months for investment purposes.)
When we first made our withdrawal in mid 2008, the market was going down. At our second withdrawal, the market was still going down. So we did accumulate quite a number of unit trust units while averaging down our purchasing price.
Last week, 1 year since our investment, my wife and I, each, had a 14% return on our investment. Much better than the 4.5% the government handed up this year. My only qualm to our young investment partner was why did he take out our investment from the mutual fund market when the market is going up – I could still make some money.
He reminded me that one year ago, we sat down and laid our goals – we wanted a 10% return on our investment. And this 10% was after deducting CIMB’s management fees of 1.5%. So when the time came, he took out our money. I had reached my goal. My investment garnered a 14% return. The young man gently reminded me not to be greedy as most people would have kept their money in the market and then cry in anguish when the market unexpectedly turns for the worst. I had reached me goal, he reminded me.
I had a choice of putting it back into my EPF, and then withdrawing it later when the market falls – but that would incur a further 1.5% management fees. So the alternative would be to park it into a Money Market fund for now.
Now I sit and wait for the market to drop. Then I move my funds from the Money Market back to some good, old unit trusts.