Hi all, anyone actually invested into this PRS? I'm aware of some info on this, and agree with others that one of the reasons for going into this is to reduce the taxable income, and save up to rm780 per year.

I'm considering going for the growth or conservative fund, but for eg public mutual, i can't find further details on how they are going to invest except for the percentage in equity. To those who have invested, which one did you go for? Hwang? Pb? Anyone tried investing in this via fundsupermart?

Also, let's say i invest into conservative fund, and let's assume after first 2 yrs it's losing money say 5% pa, can we 'sell' the fund and just leave the proceeds in ppa/epf account getting the standard epf dividen? ii understand there is a 70/30 distribution where we can't touch the 70% until retirement, so let's say out of rm30k invested, rm21k cannot be touched but can we sell or are we locked in forever into this prs?? Any ideas?

This post has been edited by poolcarpet: Dec 11 2012, 05:04 PM

ok just called hwang to check my understanding. here's what i know.

lets say rm3k in per year, for 10 yrs. total is rm30k in. distribution of 70/30 so rm21k can't be touched till retirement withdrawal. the other rm9k can be taken out (either partial or full) but only once a year and subject to 8% tax.

and lets say i want to exit... well, its not possible to exit. can switch to conservative fund and just let it grow till retirement.

so the big con of this is once you put in your money, give it a big hug and say see you in xx years' time

the pro is of course the tax relief / immediate gain. based on hwang prs materials conservative fund is projected around 5% returns i think with growth fund max about 11%. think this is still better than epf returns but obviously there is a risk.

anyone else actually already jumped into this prs?

I'm planning to go for hwangim growth. Any known issues or negative points?

If it's not doing well, can switch to another prs in the fiture just have to pay some $, i think rm25+25+sales charge for the other. 0% sales charge for hwangim too good to say no to

erm... 60 yrs old means post retirement already. why buy this? if want to invest better just stick to ut or shares?

or this 60yr old still earning high and want to take advantage of the tax relief?

5k plus means about 60kpa. take away personal relief plus kwsp already taxable income drop to 45k only. i think budget 13 announced a reduction of 1% for those below 50k taxable.

anything above 35k is taxed at 11% if i'm not wrong. assuming rm3k in this prs means a saving of rm330.

but at 60+ wouldn't the epf account be completely withdrawn already? not sure how it would work since they said this is up till retirement age and we are supposed to withdraw at 55 (or 60 if they amend the laws).

Did a simple and crude calculation for Option A.... assuming entry age of 35:

Option A : Total Premiums paid RM30000, Total Returns = RM65,475 (over 15 years)

Compared with simple FD rate returns of 3.15%, meaning on 1 Jan you put RM3000 into FD, then next year 1 Jan you put in another RM3000 (on top of the RM3000+interest earned for previous year)

Total Amount Invested : RM30000
Total Amount Withdrawed (assuming withdraw RM4375 per year after 55 for 15 years matching Option A) : RM60,959.97

So this plan looks like just a bit better than FD rate of return, but obviously it has the extra benefit of tax relief and protection component.

However, I believe one can easily get more than 3.15% returns on investment using other methods provided one has the discipline to do so (the plan above means you are locked into it, FORCED to save to put it another way).

Is this considered PRS also? Sure it's claimable up to RM3000 per year for 10 years?

Ok thanks - found the info too. Sincethereturns are not that great, isn't better to go for prs fund that can potentially give better than 3.15% and also immediate lmp sum withdrawal at 55? Although prs doesn't have protection component...

mind to share the calculation? i calculated based on 3.15% and was just about 1 year short of matching option a payout. maybe i made a mistake somewhere...

ok that's about right... my calculation shows RM4063 payout per year for 15 years.

so anything above 3.5% or so, better just do own method instead of annuity

Mine shows the same too

great minds think alike?

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Added on December 13, 2012, 12:34 pmSo assuming 4.60%, using own method of 'annuity' investment, deposit RM3k per year for 10 years then let it continue to grow till 55 and then withdraw yearly for 15 years....

Total amount invested: RM30000
'Payout' per month: RM5694.70
Total payout : RM85420.50

Not too bad.

But own method does not have tax relief, no protection component, plus it will take a lot of discipline to save the RM3k (without threat of penalty or policy lapse) and also even more discipline to take out only RM5694.70 at 56 years old when you are staring at RM50k one lump sum

I think PRS is still better than annuity, since potential returns can be higher if it can be around 8-9% it will be fantastic returns for the RM30k invested upon retirement, easily quadruple....



This post has been edited by poolcarpet: Dec 13 2012, 12:34 PM

yeah small minor details there, not really important in my opinion if DIY, i honestly don't think anyone will be disciplined enough to do yearly cash out, it will be lump sum withdrawal!

This post has been edited by poolcarpet: Dec 13 2012, 04:07 PM

Based on my understanding, PRS does NOT offer guaranteed capital preservation.... the risk is no different from unit trusts...

EPF is paying out about 5% dividend, don't think that's too fantastic actually...

PRS is one way of locking down your money until retirement haha, but honestly, I think if not for the tax relief, there is no point going for this PRS either

This post has been edited by poolcarpet: Dec 13 2012, 04:35 PM

If you are going for Hwang IM, just call them 1-800-222-777 and they can actually arrange for agent to meet up with you to fill in the form.

Payment is via cheque to "Hwang Investment Management Berhad" need to include RM10 for account opening fee, e.g. if investing RM3000 cheque should be for RM3010.

Just need photocopy of IC front and back on single page, and fill up 2 forms when you meet the agent.

Not sure about the rest but think some people mention they walk in and can open on the spot also for other PRS providers.

HwangIM : 0% sales charge, 1.8% annual management fee, 0.04% annual trustee fee, 0.04% PPA fee = total 1.88% pa
PM: 3% sales charge, 1.5% annual management fee, 0.06% annual trustee fee, 0.04% PPA fee = total 1.6% pa

Difference pa is 0.28%, but with PM you have a disadvantage of -3% at the beginning. My reasoning:

1. If I think PM will give me better returns than HwangIM over 10 years, then I'll go for PM cause after about 11 years, PM's extra sales charge would be equalized by HwangIM's higher annual fees.
2. If you have a long way to go to retirement, e.g. >15 years, maybe can consider PM cause in the long run it is cheaper than HwangIM. Remember whatever $ you put in cannot be touched till 55 so the lower the fee the better - this is assuming the sales charge/annual management fee remains the same for the next >15 years.
3. Having said the above, you can also switch anytime to different providers subject to RM25 (HwangIM/PM) +RM25 (PPA).

Personally I'll go for HwangIM for now - hopefully this can pressure PM and other providers to lower their sales charge and also hopefully HwangIM will lower their management fee in future

Disclaimer: I am NOT a financial expert or consultant. These are just based on my layman understanding.

this is exactly what i thought as well... if you transfer to PM, you have to pay RM25 to Hwang AND also RM25 to PPA. That makes it RM50. Plus the 3% by PM as new funds to them.

think if getting this just because of the income tax relief, it's not much invested max is RM30k only over 10 years (and take away your tax portion, it's probably effectively lesser than RM30k).

i was thinking of hwang initially but thought a bit more, and thinking in decades time frame, i'll probably go for PM now since they have a good track record with other funds.

Yup, so for simplicity sake let's assume we only put in rm3k one time.

Up front charge is rm90 for pm, rm0 for hwang.

Let's say both appreciate in same manner and assume after 10 yrs, the value is now rm6k.

Total annual fee for pm is 1.6% or rm96 while for hwang it will be 1.88% or rm112.80 - difference of rm16.80.

Factor in year 2-9, assuming very conservative returns of about 7% pa and i think we'll see pm's lower management fee being an advantage over hwang's zero sales charge up front.

Of course all these will mean nothing if hwang can somehow return high than pm, then the zero sales and higher management fee will be a good thing.

Now time to polish my crystal ball.....

smoking hot female agent will when you tell her you want to invest only RM3000...

So we still need to monitor the investments in PRS, right? When we think it's heading down south, then we should switch it to conservative funds to preserve the earnings instead of letting it go down.

I also read in the PM disclosure doc, if the fund type is default - then the funds will be switched when entering the next age group, e.g.

http://www.publicmutual.com.my/LinkClick.a...QU%3d&tabid=496

(a) Default option:
Your contribution under the default option will be automatically allocated
to the core fund that corresponds to the age group as specified below:

Core Fund Age Group*
Public Mutual PRS Growth Fund Age below 40
Public Mutual PRS Moderate Fund Age 40 to below 50
Public Mutual PRS Conservative Fund Age 50 and above

* This age group may be subject to changes as determined by the relevant
authorities from time to time.
Unless otherwise instructed, your contribution will be automatically
switched (without charge) into the relevant core fund, before the end of
the next calendar month from the day you attain the age as specified in
the table above.

(b) Non-default option:
Under the non-default option, you can actively select one or more core
funds regardless of your age.

So I think we as investors need to constantly monitor the fund performance as well, not just leave it there and expect a lump sum upon retirement.

Yes, it's charged everytime you invest. The assumption below is correct, but not complete picture. You forgot about annual management/trustee fees, and calculation below is just for yr 10. What about for Yr 2-9? Every year, HwangIM will charge you 0.28% higher than PM and it's cumulative, not just one time.

Example, if you look at 15 yrs, the zero sales charge is wiped out by the management fee over same duration. Simple scenario:

RM3000 contributed today, for 15 yrs (assume age 40 now).

PM:
Yr 1 sales charge - RM90
Annual management/trustee/ppa fee (1.60% of RM2910 cause RM90 reduced under sales charge) - RM46.56
Total management/trustee/ppa fee over 15 yrs - RM698.40

Hwang:
Yr 1 sales charge - RM0
Annual management/trustee/ppa fee (1.88%) - RM56.40
Total management/trustee/ppa fee over 15 yrs - RM846

You can see that assuming the investments never increase much, for HwangIM we are already paying RM147.60 MORE than PM, which is more than the initial RM90 sales charge.

Throw in increasing value, and let's say even longer timeframe to retirement e.g. 30 yrs old now, then the difference is even more. Of course here we are not talking about switching, but if you switch across providers you need to pay some more RM50 each time.

But honestly, I think it really doesn't matter much. Choose the provider you feel most comfortable with, no one can predict the future and we won't know whether PM will outperform Hwang or the other way round. All these are just too detailed and complicated, making the choice so difficult.

Whatever it is, if you take this because of the tax relief, your gains are already realized the day you submit income tax return next Mar/April

I know about the sales charge. You can't calculate this way, because we are looking at this year by year. If you calculate this way, then similarly your total management fee goes up tremendously i.e. the total management fee for 3k x 10 is NOT only RM698.40 - you can't just take RM46.56 x 15 because in yr 2 you now have RM6k worth.. and yr 3 you have RM9k worth and so on. At the 10th year, with RM30k your management fee under Hwang would be RM564 PER YEAR, while under PM it's RM468 PER YEAR. Difference of RM96 PER YEAR. Assuming you have another 25 yrs to go to retirement, we are talking about RM1440 EXTRA for Hwang compared to PM, even after including the sales charge.

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Added on December 20, 2012, 3:19 pmvery nice spreadsheet, this is my understanding as well. up front higher sales charge is a disadvantage over lower management fee IN THE LONG RUN, meaning talking about >20 yrs, because sales charge is based on the initial fund which is RM3k up to RM30k in total, but management fee is based on the value of the fund year after year.

Extreme example, let's say the fund returns 9.6% pa and after 15 yrs it's quadrupled, meaning now it's worth RM120k.

We still have paid a total of RM900 for PM sales charge and RM0 for Hwang.

but calculate the management fee for PM and Hwang on year 15 alone....

PM : RM120k x 1.6% = RM1920
Hwang : RM120k x 1.88% = RM2256

difference of RM336 there... just for ONE year. Assume another 10 yrs to go and it remains at 120k, that would mean extra RM3360 just on management fees alone for Hwang for year 16 to 25...

now go a little more crazy and assume fund is now 10x the initial RM30k upon retirement, so now the annual charges just for the final year...

PM : RM300k x 1.6% = RM4800
Hwang: RM300k x 1.88% = RM5640

difference of RM840.... your FINAL YEAR management fee almost wiped out the RM900 initial sales charge....

hope my understanding is correct, please feel free to correct if wrong.

and still i think we've had fantastic discussion on this, honestly think it really doesn't matter which provider we go for, because we won't know who can perform better. All these discussions are based on the unrealistic fact that both will give you same returns, which i think is not possible

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Added on December 20, 2012, 3:22 pmi think if we are talking about just 10 yrs, then yes it is very possible zero upfront will beat upfront fee. however, i believe most of us discussing this is more than 10 yrs away from retirement, possibly 20 or 25 or even more for some of us. so if you do this little magic below with n=20, what would the results be?

This post has been edited by poolcarpet: Dec 20 2012, 03:22 PM