Of course no Tax Relief for YA2013 if you did not top-up in Year 2013

duhhh     

i am informing ppl here about one of the highest interest rate available

anyone know anything about this?
Yearly dividend @3.25% at 2010

Saving rate=2.5%

Maybank said can only open sspn once my kid is minimum 6 months old.... true ka?

Cos my baby born in jul so if wait 6 months is jan 2014... so cant put in 6k for 2013... anyone can help?

Today will be the last day if anyone want to get the RM6000 tax relief for this year!!

Can single open an a/c?

Can single open an a/c?

First I use Excel to do the calculation.

I pull it for 17 years.

Under column 1: I put in a figure of RM 4,400.00 i.e., RM 6,000.00 less 26%. This means your actual capital is RM 6000.00 - less 26% =  RM 4,400.00

Under column 2: I put in a figure of RM 6,000.00 because this is the actual amount put into SSPN every year for the next 17 years consistently.

Under column 3: I key in the formula =Column 2 x 1.04 because I assume SSPN will give a dividend of 4% consistently throughout the whole 17 year tenure.

I repeat the process until I get 17 rows i.e., 17 payment periods. 

What I get essentially is:

i) PV = 0 since I start accumulating from zero value

ii) FV = RM 147,872.48 i.e., the total accumulated future value inc dividend reinvested.

iii) N = 17 i.e., 17 years tenure.

iv) PMT = RM 4,440.00 i.e. the actual capital outlay per period of time

v) Mode = End, since the dividend is paid at the end of the period.

From all the 5 parameters above I am able to calculate I, i.e. the Internal Rate of return for this series of investment using a financial calculator.

And from my calculator, the IRR (I) = 7.85% p.a.

Taking into a/c the tax savings, this SSPN saving vehicle is able to give a return of 7.85%p.a.

Can you compare SSPN rtn with an equity unit trust rtn in a direct way? The answer is no.

Because another component we have to take into a/c is Risk adjusted return.

For SSPN, I'll say its volatility or standard deviation from mean (the measurable parameter for riskiness) is very similar to money market fund i.e., around 0.1%

For an efficient unit trust, the usual standard deviation from mean is around 8% and a typical long term rtn is around 10% p.a.

So, let's compare the risk adjusted return of SSPN vs a efficient equity unit trust.

SSPN = (7.85 - risk free rate)/standard deviation = (7.85 - 3.1)/0.1 = 47.5 where the risk free rate I take is the current retail 12Mth FD rate

Unit Trust = (10 - 3.1)/8 = 0.8625

So if that is the case, does that mean we should dump everything into SSPN?

The answer is no, because SSPN tax benefit stops at RM 6,000.00 p.a. So it is not enough to accumulate for a child education.

However, SSPN plays a volatility reducing role in your overall portfolio for your child education.

Xuzen

Hi Xuzen,
While calculating the roi, I came across your formula in this post. Thanks for the tips. 
I have worked out the spreadsheet as attached.
In fact I am able to work out the 7.85% by using the Excel function @RATE.
i.e. RATE(17,-4440,0,147872.48,0) = 7.85%

I normally use this function for Annualized ROI calculation for my investment.
RATE((TODAY-InvestmentDate)/365,0,-OneTimeInvestmentAmount,CurrentBalance,0)
E.g. says I withdraw RM100,000 from EPF for UT investment 10 years ago, and it is double by today.
Hence, Annualized Returns for the past 10 years = RATE(10,0,-100000,200000,0) = 7.18% p.a. (compounded).
Am I correct?  (sorry, I am no financial person)

I am not clever with excel formula.

Sorry.

Xuzen