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 Private Retirement Fund, What the hell is that??

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creativ
post Nov 28 2012, 12:57 AM

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I've prepared an excel spreadsheet to calculate your annualized PRS return rate at the time when you decide to withdraw in-full (usually at the age of 55). I would like to share it with everyone here:

Attached File  PRS_Returns.zip ( 13.83k ) Number of downloads: 331

Note: If the XIRR Excel function is not working, please refer for the fix --> click here

This will help you assess if PRS return is your cup of tea.

Example:
If you are 35 years old in 2012, tax rate is 26%, and would like to contribute RM3000 for 10 years only (take advantage of tax relief), then at the age of 55, assuming PRS return is 0% annualized, your annualized return will be 1.95%
CODE
Age Year   Fund Contribution Fund          Fund Value  Income Tax  Income Tax      Total Return
          Amount            Return        (Year-End)  Rate        Relief Amount   Rate (Ann.)
                            Rate (Ann.)
35  2012   $3,000            0.0%          $3,000.00   26.0%       $780            35.02%
36  2013   $3,000            0.0%          $6,000.00   26.0%       $780            21.81%
37  2014   $3,000            0.0%          $9,000.00   26.0%       $780            15.82%
38  2015   $3,000            0.0%          $12,000.00  26.0%       $780            12.41%
39  2016   $3,000            0.0%          $15,000.00  26.0%       $780            10.20%
40  2017   $3,000            0.0%          $18,000.00  26.0%       $780            8.66%
41  2018   $3,000            0.0%          $21,000.00  26.0%       $780            7.53%
42  2019   $3,000            0.0%          $24,000.00  26.0%       $780            6.66%
43  2020   $3,000            0.0%          $27,000.00  26.0%       $780            5.96%
44  2021   $3,000            0.0%          $30,000.00  26.0%       $780            5.40%
45  2022   $-                0.0%          $30,000.00  0.0%        $-              4.60%
46  2023   $-                0.0%          $30,000.00  0.0%        $-              4.01%
47  2024   $-                0.0%          $30,000.00  0.0%        $-              3.54%
48  2025   $-                0.0%          $30,000.00  0.0%        $-              3.17%
49  2026   $-                0.0%          $30,000.00  0.0%        $-              2.87%
50  2027   $-                0.0%          $30,000.00  0.0%        $-              2.63%
51  2028   $-                0.0%          $30,000.00  0.0%        $-              2.42%
52  2029   $-                0.0%          $30,000.00  0.0%        $-              2.24%
53  2030   $-                0.0%          $30,000.00  0.0%        $-              2.08%
54  2031   $-                0.0%          $30,000.00  0.0%        $-              1.95% <--- Result
55  2032



In my opinion, this personal annualized return of 1.95% is enough to cover the Annual Fund Management Fee and Sales Load. This is good enough for many people.

Conclusion: Buying PRS is like buying Unit Trust with free management fee and sales load. thumbup.gif , except that it is not so liquid as a typical Unit Trust.

Special thanks to wongmunkeong, this PRS spreadsheet is a modified version of his SSPN return spreadsheet he prepared and shared in the SSPN Topic.

This post has been edited by creativ: Nov 29 2012, 11:01 AM
cybermaster98
post Nov 28 2012, 09:00 AM

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But my question is this. Many institutions will be offering various PRS schemes and everything will have 1 thing in common which is not capital and income guaranteed.

So how would a lay person know which PRS investment plan is better? All these institutions will market their products as the best, lowest risk, highest potential returns, etc so how do we make an informed decision?
creativ
post Nov 28 2012, 10:17 AM

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QUOTE(cybermaster98 @ Nov 28 2012, 09:00 AM)
But my question is this. Many institutions will be offering various PRS schemes and everything will have 1 thing in common which is not capital and income guaranteed.
Like you mentioned, "PRS investment plan", investment comes with risk. It won't be called an investment if it has no risks.

The lay person must understand, PRS is Unit Trust. All risks and reward of PRS is similar to a typical Unit Trust.

If the lay person doesn't understand Unit Trust, then PRS is not for him/her

QUOTE(cybermaster98 @ Nov 28 2012, 09:00 AM)
So how would a lay person know which PRS investment plan is better? All these institutions will market their products as the best, lowest risk, highest potential returns, etc so how do we make an informed decision?
*
I beg to differ with you:
There is no institution who will market PRS (or Unit Trust for that matter) as highest potential return, lowest risk.

It is the investors choice of fund that determined the amount of risk he can stomach.

This post has been edited by creativ: Nov 28 2012, 10:23 AM
cowkyle
post Dec 20 2012, 11:13 PM

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Will it be too late to open account tomorrow ?
tansling
post Dec 21 2012, 10:18 PM

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QUOTE(cowkyle @ Dec 20 2012, 11:13 PM)
🎅
Will it be too late to open account tomorrow ?
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It is still not too late to entitle for 2012 RM3K tax relief. Contact me if you are interested.
bkwu
post Dec 22 2012, 12:33 AM

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QUOTE(cowkyle @ Dec 20 2012, 11:13 PM)
🎅
Will it be too late to open account tomorrow ?
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Nope, You are entitled for the tax relief as long as you get it before 31st Dec.
I can provide Hwang, Cimb & Manulife.
Do let me know if you are interested.
MGM
post Dec 22 2012, 06:06 AM

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Was told that at this moment retirement age is still 55 so any funds bought can still be withdrawn after 55yo, correct?

Would like to know the answer esp from PRS agents, bkwu and tansling?
ftan
post Dec 22 2012, 09:07 AM

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Hi,

Been roughly following this thread but I may miss out something. I'm still a noob; so bear with me.

So, is this PRS need to pay till retirement age once you sign up for it? Ex: Auto-deduct 3k every year.

Or I just go and buy any amount I want at anytime every year.

Appreciate the feedback. Thank you.

ftan
Kaka23
post Dec 22 2012, 11:33 AM

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QUOTE(ftan @ Dec 22 2012, 10:07 AM)
Hi,

Been roughly following this thread but I may miss out something. I'm still a noob; so bear with me.

So, is this PRS need to pay till retirement age once you sign up for it? Ex: Auto-deduct 3k every year.

Or I just go and buy any amount I want at anytime every year.

Appreciate the feedback. Thank you.

ftan
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Just buy anytime any amount you want bro..
pisces88
post Dec 22 2012, 05:18 PM

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if my tax bracket 12%/19%, and im only 24, advisable to take up PRS for tax relief? i do have a unit trust account, if i convert everything in the unit trust to a PRS, will it be more advantage?

This post has been edited by pisces88: Dec 22 2012, 05:43 PM
magika
post Dec 22 2012, 10:17 PM

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QUOTE(ftan @ Dec 22 2012, 09:07 AM)
Hi,

Been roughly following this thread but I may miss out something. I'm still a noob; so bear with me.

So, is this PRS need to pay till retirement age once you sign up for it? Ex: Auto-deduct 3k every year.

Or I just go and buy any amount I want at anytime every year.

Appreciate the feedback. Thank you.

ftan
*
I think maximum according to KWSP is RM60k per year.
ftan
post Dec 23 2012, 05:34 AM

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QUOTE(magika @ Dec 22 2012, 10:17 PM)
I think maximum according to KWSP is RM60k per year.
*
Thanks.
creativ
post Dec 23 2012, 06:36 PM

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QUOTE(pisces88 @ Dec 22 2012, 05:18 PM)
if my tax bracket 12%/19%, and im only 24, advisable to take up PRS for tax relief? i do have a unit trust account, if i convert everything in the unit trust to a PRS, will it be more advantage?
*
I would advise you to stick to unit trust. It's just not worth it to have your money stuck in PRS for 31 years (i.e. until you're 55 yrs old) for a mere 12%/19% tax relief (mind you, this tax relief is only until 2021, after that no more relief!)

Added on December 23, 2012, 6:40 pm
QUOTE(ftan @ Dec 22 2012, 09:07 AM)
So, is this PRS need to pay till retirement age once you sign up for it? Ex: Auto-deduct 3k every year.
Or I just go and buy any amount I want at anytime every year.
*
Hi ftan,
You can buy any amount you want, but most people will put max 3000 year to take advantage of the tax relief.
If you have more than 3000 to invest, don't put the remaining in PRS. Put it somewhere else.

This post has been edited by creativ: Dec 23 2012, 06:40 PM
pisces88
post Dec 24 2012, 12:26 AM

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QUOTE(creativ @ Dec 23 2012, 06:36 PM)
I would advise you to stick to unit trust. It's just not worth it to have your money stuck in PRS for 31 years (i.e. until you're 55 yrs old) for a mere 12%/19% tax relief (mind you, this tax relief is only until 2021, after that  no more relief!)

Added on December 23, 2012, 6:40 pm

Hi ftan,
You can buy any amount you want, but most people will put max 3000 year to take advantage of the tax relief.
If you have more than 3000 to invest, don't put the remaining in PRS. Put it somewhere else.
*
thanks for the advice smile.gif

okay la, then no choice.. need pay the tax sweat.gif
weichieh007
post Dec 26 2012, 07:47 PM

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Sifus, my tax bracket is at 19% and I'm 31 years old.
Is PRS good for me? Or I'm better off with other unit trust investments?

Tq
turbopips
post Dec 27 2012, 06:45 AM

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QUOTE(weichieh007 @ Dec 26 2012, 07:47 PM)
Sifus, my tax bracket is at 19% and I'm 31 years old.
Is PRS good for me? Or I'm better off with other unit trust investments?

Tq
*

i will buy prs if income hit 19% with consistent stable income.
JamesPond
post Dec 27 2012, 03:53 PM

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any prs seller here?
pls pm me. tq
ftan
post Dec 27 2012, 06:07 PM

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QUOTE(creativ @ Dec 23 2012, 06:36 PM)
I would advise you to stick to unit trust. It's just not worth it to have your money stuck in PRS for 31 years (i.e. until you're 55 yrs old) for a mere 12%/19% tax relief (mind you, this tax relief is only until 2021, after that  no more relief!)

Added on December 23, 2012, 6:40 pm

Hi ftan,
You can buy any amount you want, but most people will put max 3000 year to take advantage of the tax relief.
If you have more than 3000 to invest, don't put the remaining in PRS. Put it somewhere else.
*
Thank you. I was thinking of that purely for the tax relief.
I got an SMS from great eastern about prs. Does anyone know about it? Is it more conservative compared to what the banks are offering?
creativ
post Dec 27 2012, 11:40 PM

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QUOTE(ftan @ Dec 27 2012, 06:07 PM)
I got an SMS from great eastern about prs. Does anyone know about it?
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Hi ftan,

Great Eastern is not a PRS Provider (as of today)

List of PRS Providers
Prophunter
post Dec 28 2012, 01:17 AM

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QUOTE(weichieh007 @ Dec 26 2012, 07:47 PM)
Sifus, my tax bracket is at 19% and I'm 31 years old.
Is PRS good for me? Or I'm better off with other unit trust investments?

Tq
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Instant (almost lah) RM600 rebate. Why not?
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