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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
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
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
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?
*
Hi ftan,

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

List of PRS Providers
creativ
post Mar 22 2013, 11:50 AM

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QUOTE(guy3288 @ Mar 22 2013, 12:45 AM)
I heard some PRS from Great Eastern Assurance - the Great Retirement Plan - return is like guaranteed.
*
That is not a PRS, it's an Annuity.

Understanding Annuity

This post has been edited by creativ: Mar 22 2013, 11:58 AM
creativ
post Dec 11 2013, 10:33 AM

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QUOTE(kochin @ Dec 4 2013, 08:49 AM)
just got my statement from public prs growth fund.
damn pathetic!
...
shame on you public. you dare to take 1.5% management fee when the fund you manage perform so badly.

just entered hwang about 1 or 2 months.
return already exceeded public full year!
*
Kochin, There is higher risk when chasing after returns. The current top performer might not be so tomorrow.
Investing for long term (i.e. PRS) is not about jumping from one ship into another because of better returns.

This post has been edited by creativ: Dec 11 2013, 10:35 AM
creativ
post Dec 11 2013, 10:46 AM

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Investing in PRS is not about....

(Year 1) +3 % rclxms.gif
(Year 2) +1 % cry.gif
(Year 3) 0% mad.gif
(Year 4) +8 drool.gif
(Year 5) -4% vmad.gif

What matters most is that you control the risk you're willing to take. At the end of the day, at retirement age, that is the amount that matters.

That's the approach I take. PRS should be boring. biggrin.gif

If I want excitement, and something to talk about, I invest direct in equity.

This post has been edited by creativ: Dec 11 2013, 10:59 AM
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