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 Private Retirement Scheme Started?

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echoesian
post Nov 30 2012, 12:50 AM

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QUOTE(creativ @ Nov 29 2012, 10:47 AM)
I Agree.
I don't agree.

There is actually something new. Tax relief for 10 years, and if compounded annually until you're 55, the annualized return rate will cover the Management Expense Ratio (1.5%) and Sales Load (3%).

In other words, PRS is Unit Trust without fees  thumbup.gif ! (and without liquidity  sad.gif  )

A smart investor will know that fund fees is the number 1 drag to your long term fund return relative to the market returns.

I have done the calculations. You can download the excel spreadheet --> Download Excel Spreadsheet from this Post

Example scenario:

If I'm 35 years old, and my tax rate is 26%. I contribute RM 3000 for 10 years (only) to take advantage of the tax relief.

Assuming the PRS fund has 0% returns (that means no profit, no loss), then my Annual Compounded Interest is 1.95% until 55 years old. This is enough to cover for the "Yearly" Management Expense Ratio (1.5% of your total fund value) and Sales "Front" Load (3%).

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

*
You won't be getting tax relief if bringing the previous balance forward.
echoesian
post Nov 30 2012, 08:48 PM

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QUOTE(mars1069 @ Nov 30 2012, 04:11 PM)
Hi, are the insurance's Annuity plan & PRS different products that entitle tax relief RM3K each (RM6K if got both) or just one of them is entitled for 3K tax relief? Confuse la...Thanks.
*
Both annuity and PRS share the same 3k tax relief
echoesian
post Dec 4 2012, 04:30 PM

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HwangIM is cheapest among the three at the moment.
echoesian
post Dec 6 2012, 08:40 PM

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I just opened a PRS account with Hwang yesterday with a pretty nice young lady CRM. For HwangIM, there is no sales charge, trustee fee is 0.04%, management fee is up to 1.8%, switching is 0%. Those charges by PPA is same for all the providers.
echoesian
post Dec 6 2012, 09:58 PM

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QUOTE(kochin @ Dec 6 2012, 08:47 PM)
Pretty nice young lady crm???
Trustee fee for public is the same at 0.04%.
Is hwang's 1.8% for the growth fund or moderate or conservative. Public have different rates for different fund. Their most expensive is growth at 1.5%.
Are you sure hwang does not have exit fees?
*
Not sure about exit fees, what is that actually?

Growth - up to 1.8%
Moderate - up to 1.5%
Conservative - up to 1.3%
echoesian
post Dec 9 2012, 11:35 AM

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QUOTE(Limster88 @ Dec 6 2012, 08:46 PM)
If not mistaken, HwangIM has the highest management fee among the PRS providers, which is up to 1.8%. Other providers only charge 1.5%....
*
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...
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