Only worth it if you get the 1k incentive .
Private Retirement Fund, What the hell is that??
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 Nov 29 2017, 11:20 AM
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#1
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Senior Member
2,289 posts Joined: Jan 2003 From: Stairway to Heaven 
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Nov 29 2017, 01:09 PM
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#2
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Senior Member
2,289 posts Joined: Jan 2003 From: Stairway to Heaven
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Not worth it.. it lock your money until your retirement
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Nov 29 2017, 02:04 PM
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#3
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Senior Member
2,289 posts Joined: Jan 2003 From: Stairway to Heaven
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QUOTE(Ramjade @ Nov 29 2017, 01:21 PM) Which one sound nicer? Wth are you talking about?? You do not buy PRS, you pay your tax, you see your 3k immediately in front of you. What do you mean "never see your money again at 55 years old"??????Put it in, reduce amount of tax, withdraw in full at 55 years old or pay tax and never see your money again at 55 years old? Your call.  Specifically to TS case, he gets a paltry 5% rebate. Amortized over a period of 30 years (estimate), that is only 0.16% p.a. With the money locked for 30 years and with limited funds to choose from, 0.16% is not worth the effort. IMO, PRS tax relief is only worth it if your tax bracket is >20% and you are near to retirement age |
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Nov 29 2017, 03:49 PM
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#4
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Senior Member
2,289 posts Joined: Jan 2003 From: Stairway to Heaven
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QUOTE(rapple @ Nov 29 2017, 02:27 PM) It's actually an instant return of 5% for that year and the fund will grow right? How can you amortized the return over 30 years when you gain the return immediately by paying less tax? I know it's an instant 5% rebate. The reason I amortized it over a 30 years period is to illustrate the "supposedly If TS, it's still age 30 and below just put in RM1k to get the youth incentive. The tax you saved for the full RM3k it's not much given your tax rate it's still low. benefit" of PRS tax relief which actually does not make sense in the long run. So I did a quick check of average return (3 years annualised since PRS is still quite new) between PRS and publicly available funds. PRS you get 5.37% and public funds you get 6.79%. So there's a difference of 1.3%. So over a long period of time, the general funds will net you more returns over the "PRS + tax rebate" And you have the flexibility of switching your fund, cashing out b4 a crash, emergency fund, etc.... QUOTE(Ramjade @ Nov 29 2017, 03:01 PM) Who said you do not buy? You can call it buy/parking but you need to fork out money for it first and you will be given units hence it's still buying. It looks like you are comparing someone who put PRS every year vs someone who spend the 3k every year??You pay income tax, what do you get back after 30 years? Zip, nil nothing aka your money is gone for good. Now, considering if you were continue putting in money into PRS Rm3k/year into PRS. After 30 years, you should get back RM90k + whatever extra the fund makes. That's why you must choose a good fund. Even a lousy fund which give you FD rates will return you > RM90k after 30 years. Sorry if i did not make things clear, I am comparing someone who buy PRS vs outside funds |
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