both pure UT and PRS(UT as well) has pros and cons respectively. u need to understand it first. the most important how much risk u willing to take. PRS is not only for tax payers. tax reliaef only for 10 yrs.

and there are many ppls dont hv epf, so, they will may make use this scheme with lower SC.

if the stament is correct...government that put a mandatory....... should thanks for it, becasue, what they done is good job.
1. understand abt saving is important for malaysian.
2. understand tht EPF money is not enuf for retirment,


its not abt the fund size.........., smaller size easy to manage than bigger size. u can ask any FM. sure PRS FM are experience one. do you think, the management will assign fresh FM. even the PRS agent need hv at least 3 yrs experiance as UT agent.

my tought only.

How did you calculate this 26% returns per year via income tax? I really dont understand what ure trying to say here.

This post has been edited by cybermaster98: Dec 7 2012, 04:09 PM

Ans: The following are the schedule of management fee on all 3 core funds - PRS Growth Fund (1.5%pa), PRS Moderate Fund (1.25%pa) and PRS Conservative Fund (1.00%pa). The same schedule of management fee applies to all 3 shariah compliance funds. Do check out Public Mutual Product Highlights Sheet (PHS) at any Public Bank branch nears you.

This post has been edited by felixwang: Dec 7 2012, 04:23 PM

Lets say your total income for 2012 is RM 103,000.00.

The tax you have to pay to our beloved govt is RM 14,315.00 (first RM100K) + RM 780.00 (next RM 3K @ 26%) = RM 15,095.00 accoding to the LHDN schedule.

If you have made a RM 3,000 contribution to PRS, then you need to pay RM 14,315.00 only because the govt allowed you a RM 3,000.00 tax relief from this scheme. In essense you save RM 780.00 in tax.

If that is the case, you are actually contributing only RM 3,000.00 - 780.00 = RM 2,220.00. So in essense, you have already made a 26% gain.

Understand?

Xuzen

Thanks to all sifus for the advice as this is the first time I will invest in ut as I normally invest in equities.
Actually the prs agent is from public mutual.
I dunno how true but agent told me she makes the same commission but she prefers to invest in normal ut than prs due to what I stated earlier.
But when I explain about close to 26% yoy return (10yrs) then only she realize my intention of buy prs.

I am not sure if rm3k /yr is a lot or not when invest in ut but I am quite sure most ppl will not buy more than 3k per yr for prs. And if yr tax bracket not high, he/she may think twice or wait a few yrs first to see performance before buy. The agent says bigger fund offers more flexibility n liquidity n is better.

I read the brochure n the same fund managers manage the three funds(growth, moderate n conservative). They r liew mun hon and zaharudin ghazali. I have no idea who they r or their track record. In hong kong, there is no epf equivalent,, but employees have to contribute a certain amount thru prs n some of the funds is losing money n my counterparts there are cursing. At least here the gov is giving ard 26% "discount" depend on yr tax bracket.

So far I only consult public mutual so if others have consulted other providers do share yr thoughts of which prs to buy. Thank you.

Thats wht i thought as well. But he just mentioned 26% which isnt really correct. He's merely saving on the equivalent of a 26% tax on the taxable amount above 100K which equates to RM780 only for the whole year.

But my question is, to get that RM780 tax relief per year, you have to ensure you invest in a PRS fund that gives you back a better return. I mean it would be pointless to invest in something that 'loses' money rite? So although u may be saving RM780 from taxes, you risk losing much more through the investment itself. Is this a risk or am i being too paranoid?

If you cannot stomach a 70% equity: 30% fixed income exposure, then you can opt for 20% equity: 80%fixed income fund aka conservative.

It all depends on contributor risk profile.

Xuzen

Hi Turbopips,



I would stopped taking advise from your unit trust agent if I were you.

If you want to buy from her, go ahead, she is a sales person after all. The only benefit I see is that she can help you with the administrative work of buying a fund from her company.

But when it comes to investment and financial advice, stop taking it from her.

A person with total annual income RM 103,000.00, may save $780 bcos they are in highest tax bracket 26%

How about those total TAXABLE income RM 53,000.00 contributing the same $3000
save how much? 19%

If i sells PRS i also will use 26% to promote as if all malaysians earns over taxable 100,000 a year

most ppl who consider only thinks about money but never realised who they are, after invested only knows their tax bracket only 3%

---

Added on December 8, 2012, 12:26 pmLet say u contribute 3000 month for 3 years
U would have contribute a total $108,000

Is there any possbilities at end of year 3 your investment is worth = $92,000?
U need to earn back your capital the next few years
How different is PRS compare to regular unit trusts?


Does EFP pays u less after u contribute $108,000?

This post has been edited by Kinitos: Dec 8 2012, 12:26 PM

Funny enough, the people who are very interested in this PRS scheme tend to be people who are at the highest tax bracket.

Those at the say 3% tax bracket tend not to be so interested in this PRS thingy.

I have an epiphany:

Since some PRS provider are giving zero upfront charges and all else being equal, guess my money will go into PRS vis-a-vis traditional cash investment into UT.

Bye bye Pub-Mut; hello HwangDBS.

I am happy this PRS happened, maybe it will kick-start the beginning of zero upfront era for the industry.

Yeah, Pub-Mut the lumbering and slumbering giant will probably awaken by this and start to give better return to its investors. Zero upfront fee would be a good start.

Xuzen

Maybe I have confused u. Rm780/3000=26%. if the fund mgr didn't make any money, u get 26%return from the3k u invested. The question is whether the fund mgr is capable to grow or lose yr capital?

U mentioned above "to get that rm780 tax relief per year, u have to ensure you invest in a prs fund that gives you back better return" -- this is not true. Whether or not the fund perform, if u invested rm3k per year n yr tax bracket is 26%, u will get yr rm780 tax relief. Hope this explains.

---

Added on December 8, 2012, 1:55 pmI call public bank but the salesperson I talked to only sell ut,not prs. And she does not want to recommend me any agent, citing she don't know. Last week I saw a public mutual roadshow, n finally I met someone who can sell prs.

In short, she is the only agent I know who sell prs. Any recommendation of good prs agent contacts for me?

This post has been edited by turbopips: Dec 8 2012, 01:55 PM

U didnt get what i was trying to say. Of course i know ull get RM780 when u invest min 3K in PRS. Thats confirmed. But what i meant was, you may get Rm780 from the Gov in the form of a tax relief, but if your fund loses money then whatever small amount of tax relief you get will be easily obscured by the loss of your capital investment.

Yes u r rite. If my tax bracket is not more than 15%, I will think twice to invest in prs.
Malaysia income tax is too high n u easily hit the high bracket. Nowadays a person cannot say he is rich if he/she earn rm 120k per year. our salary increase , inflation increase even more, but the income tied to tax bracket remains.

Btw, do share with us the hwang dbs contacts if u think it's better. Thanks

boss, even though i agree hwang in all essence is the cheaper entry and seems to be the best among all prs fund currently in terms of entry cost, i think i would still go for pb.
reasons:
1. performance of the fund is more important. the differences is very minimal. although i hate that pb charges 3% entry cost. just hope that pb is gonna recoup this charges over the years. let's not forget their yearly maintenance fees is lower than hwangs. and hwangs have a huge disclaimer that they reserve right to change their fees structure. imagine they impose exit cost later, you would be paying exit fees and future values. and those who invest in prs is definitely going for long term.
2. there's cumulative benefits with pb. hopefully this constitute as part of their calculation towards qualifying for gold status. free insurances, free will writing, lower cost for fund management/switching

and btw yes, this prs biggest attraction is for the tax relief. 26% for the highest income bracket. even if the fund does not give positive return, we would have gotten the gain upfront equivalent to our tax relief lor.

so any syt agent wanna service me? kekeke.

Don't forget most of the other providers do charge sales charge, even the annual mgmt fee is higher if you calculate in a longer term, it will be still cheaper...

The income tax relief for PRS start from this year or next year? I ask my unit trust agents and all of them haven't got a license to sell PRS. It's difficult to find one as at now.

just call them and i'm sure they will send someone to service you lor.

but can we request for specific requirements of the agents? kekeke.

If the fund doesnt give you a positive return, you will be facing big losses overall la. That income tax relief is only worth max RM780 per year for the highest tax bracket. Whats so great about RM780 per year? Thats equivalent to a tax saving of RM 65 per month. How many ppl are in that tax bracket anyway? U gotta be earning more than RM8,300 per month to 'qualify'.

So in short, if your fund loses money then dont dream about having that small tax relief cover your losses. Dont forget that the main purpose of the PRS scheme is for ppl to pump money into our country's financial system. Thats the only way to stay afloat in times of crisis. So basically, the rakyat is helping with a bailout of our financial system. Although not at critical level yet but if both Europe and US remain in recession for 2013, then the domino effect will hit Malaysia.

So dont just blindly invest in any PRS fund. Learn about the fund and its potential before committing. And dont ever be satisfied with a RM65 monthly savings.

boss, a bit far fetch, no?

let's break it down to simple layman approach, shall we?
The myth
1. IF the fund breaks even or increase, then no problem
2. IF the fund losses overall, what are the chances of it loses more than 20+% every freaking year?

although i know where you are coming from but for me personally, my views are:
The fact
1. IF we don't invest in this scheme, the gomen CONFIRM taxing me at the scheduled %
2. IF i invest in this scheme, i would have CONFIRM save my scheduled % tax rates

so in total:
1. i have a fact that i would 'safe' certain percentage;
2. a possible scenario of gaining further or losing more than my investment.

we are talking the best use of my rm3k to make my $$ work harder for me mah. i do agree i might have better use for my money overall but specifically for 3k, i am 'hoping' i might gain from this lor. no right or wrong, it is a matter of choice nia.

btw, if i assume a salaried worker at RM7150 per month + 2 months bonus, he/she would be in the 26% tax bracket too (without tax relief).
another scenario; the person earns rm6300 per month + 2 months bonus + he is getting rm1k per month from his rental of property (or other side income equivalent), also hit RM100k per annum.
let's not forget;
for taxable income >50k, already 19%
>70k, already 24%

that seems like an awful lot to me leh even at 19%.