Malaysia’s Employees Provident Fund (EPF), on March 1, announced a 6.3 per cent dividend for its Conventional and Syariah savings for 2024.
While this offers some relief to EPF members, it should serve as a reminder of the need for proactive financial planning, said an academician.
Paul Anthony Maria Das, a senior lecturer at the School of Accounting and Finance at Taylor’s University, in his commentary that was sent to Twentytwo13, added that relying solely on EPF savings is no longer sufficient for long-term financial security.
“Individuals must take a hands-on approach to wealth management to stay resilient against economic fluctuations and inflation,” Maria Das said.
“With rising living costs and economic uncertainties, passive savings is no longer an option.”
He said to build financial resilience, individuals should explore, among others:
• Stocks, bonds, Real Estate Investment Trusts (REITs), and mutual funds for diversification.
• Private Retirement Schemes (PRS) for additional tax benefits and compounding advantages.
• Multiple income streams such as dividends, rental income, or side businesses.
• Blue-chip dividend stocks for steady income and capital growth.
• Exchange-Traded Funds (ETFs) for diversified market exposure.
• Gold and commodities as inflation hedges.
• Insurance-based savings plans for financial security.
“Young professionals should maximise EPF benefits while diversifying investments by allocating 10-20 per cent of their income to voluntary contributions, and 15-30 per cent to other investment vehicles.”
Maria Das highlighted that for an individual with RM200,000 in EPF, a 6.3 per cent dividend yields RM12,600 annually, compared to RM10,000 at a 5 per cent rate.
“While the difference may seem small, it significantly impacts long-term wealth accumulation. Regardless of the rate, maintaining a diversified investment portfolio is essential for financial security.”
“The 6.3 per cent EPF dividend for 2024 is a positive outcome, but it should not lead to complacency. Strategic wealth management – through diversification, informed decision-making, and adaptation to economic shifts – is key to long-term financial stability.”
“A well-rounded financial plan extends beyond EPF, ensuring security in an ever-changing economic landscape,” he added.
