I just used that number because the chap's starting pay at the turn of the millennium was around that.
To make sure I did not overcount, i allowed only 3% salary increment pa.
Would you think 3% pa increment fair or unfair?

(ps: instead of 3K, say it is 2K and keep all other parameters the same. just adjust the amount linearly. he would still have around 360K rm at end of 2021)

This post has been edited by Wedchar2912: Feb 15 2022, 01:34 PM

yeap, actual person. I also don't have a reason to doubt him, although most starting pay back in 2000s were like 2K rm type.

in fact, my calculation was way too pessimistic. his basic salary now is not 5K rm type... i believe it should be closer to 17.5K rm just based on his senority and jobscope. that is like a 10% pa salary increment.

This post has been edited by Wedchar2912: Feb 15 2022, 03:04 PM

you made a fantastic astute point. Hats off to you for this comment.

agree...
and he is not even a manager in the proper sense, although rank wise is a VP. (banking is kinda weird with grandiose title... especially after 2008 where banks here start following US ranking titles). Pretty much everyone is a VP/D/ED/MD... and no, ED is not that ED. haha.
Joke aside, my firm have VPs that basically just do clerical work. serious here.

But the point to share in this forum (semi-serious topic since not in kopitiam) is that EPF is there to help all of us, and the "forced" savings feature with compound returns helps damn kau a lot; while many makes claims that 5K rm salary at 40 years old are failures. In reality, only a failure if didn't make their financials properly.

actually, my chicken rice example is cos I add char siew.... hahaha...

understand what you are getting at. you are looking at a higher level problems: expected returns vs actual realized return vs risk free vs portfolio management, etc

Unfortunately, we do need to punch in numbers to see the effects: the math is never wrong, just the theory and assumptions that go into it. The UT/insurance people have a different agenda, as we both know well.

vs FD, esp for certain category of people, it will be silly to leave money on the table by not considering EPF.

**light hearted Disclaimer: I am not a sales person for EPF and I do not get any benefit whether anyone here puts more money into EPF or not. The fact that a decent % of my assets are in banking stocks, it is actually in my interest, pun intended, that everyone put more cash in FD/CASA. yum yum...

the government will find it very hard to do the dividend tiering, as to work out the criteria of the tiering is not easy, and will face a lot of resistant.
the 250 odd deca-EPF millionaires are some of the most influential people in Malaysia. Heck, our FM would be one of them also. All the major firm CEOs and then some. These people are not that generous to begin with.

And like you say, by the time it really comes to it, we most probably will just take our funds out.

The 3K monthly salay came from a colleague of mine (I have no reasons to doubt him): started at 3K in 2000 at age 21, and then I assume he got no bonus at all; salary increment 3.0% pa.
He did way better than 3% pa increment, as his pay is way more than 6K rm in 2022.

But the point is even with such conditions, he would still end up with 550K rm in EPF now, and when he retires at 60, he should have 2.3 mio in EPF.

A big notice: if a fresh grad now in 2022 starts with these conditions, by 2044, he will have 550K rm in EPF, give or take.
If he starts with 2K rm instead, 360K rm then.
Hence, EPF is a great savings/pension/retirement scheme.

This post has been edited by Wedchar2912: Feb 16 2022, 04:16 PM

Wah. 1.2K is very good salary in 1983. Chicken rice like 80cent to 1 rm?
imagine using chicken rice as index. 1983 starting pay can eat 1200 plates.
2022 starting pay only 300 plates.

No wonder SG starting pay is min 3K sgd. = 9K rm

I am just saying cos many in my firm also said it is hard to believe. But I didn't care about it cos that was not the point of the discussion that day with him and others...
And then I told them starting pay in America back in 2004 and all my colleagues just called me an outright a liar. haha.

Gig economy workers... EPF should still be of use to them, just that they may lose out in the employer's contribution part.
Most banks, for example, gives 16% or even higher contribution, and that is a very nice juicy monthly savings that we usually dont "notice".
I guess they need to be disciplined enough to do self-contribute, or if not via EPF, some other method and not touch those funds.

oo... nice. and now we get Perodua, not even Proton at RM 33K. ok, my fault... Saga can.

Malaysia got... but you got the decimal place wrong. It is 2.90 rm and the employer will even round down the 3.5 sen.

in a normal functioning market/economy, low rates with high inflation is quite rare. Ie, real rate of return for capital is normally positive.

So for Malaysia's inflation rate vs EPF nominal dividend rate, it really doesn't compute to have inflation running at 10% but dividend rate at 4% consistently for long term. But if in doubt, just to see what kind of purchasing power one can have, just put into your worksheet a dividend rate of 1% with zero rate of salary growth. What you see at end is roughly your spending power at retirement based on today's purchasing power.

Just for fun, i did a simple calculation with these assumptions: starting salary at 1.2K rm at 21 years old; grow the salary till 30K rm at end of 60 y.o. (ie 8.6% pa salary increment); zero bonus ever; 4% dividend rate. Guess what is the EPF balance?
1.9 mio myr about.

If I use historical dividend rate and the person retires in 2021, the number is 2.6 mio myr thereabout in TODAY's MONEY.
even if the person stopped working at 40 years old and retires early, his EPF will end up today at 1 mio ringgit in TODAY's MONEY

sure, a million ringgit is not much.
But it sure is better than having lesser than a million ringgit right?

Obviously if there are better alternatives to accumulation of wealth, go for it. But do you have something else in mind that will do this?

Agree on the points about present value of money/static purchasing power if possible when it comes to financial/retirement planning.

Since nominal 1 mio appears too vague a number at 60 years old (in earlier discussion cases, it is like at around the year 2040), what would be a good recommended number then? I would assume that number would be in today's money worth/purchasing power.

This post has been edited by Wedchar2912: Feb 17 2022, 12:33 PM

sounds like I am not taking this seriously, but I do in some sense... when one is dead, one is dead. Just leave the body in the government hospital morgue and they will take care of it.
that turns out to be the most economical way.

Joke aside, in wealth management planning... if after calculating one's financial plan and one is short of a bit of funds, just change the age of death assumption and wallah.... one can retire already and die tomorrow.

This post has been edited by Wedchar2912: Feb 17 2022, 12:37 PM

There is also a concept called personal inflation, and by right and if possible, this should be used.
(At age 21, I love buffets because I can eat a lot. But now, it is a waste of money and caloric count. Spending pattern changes)

But too much trouble and difficult to calculate this. So, everyone just use whatever inflation index that is freely and easily available for calculation sake. Just be aware of its flaws.

How does low dividend rate going to help since the government is plundering?
How does Low dividend rate but inflation is high help?

Your concerns are valid, but the solutions is not with Epf. In fact, based on your concerns, converting a high % of your assets to foreign currency denominated assets would be a better solutions.

ringgit was never par with the usd. but it was a lot stronger at Rm 2.2x to 1usd back in 1970s/80s.

if memory serves me right, ringgit strengthened to 2.9X level even during that period.

What was interesting was Malaysia economy was "doing well" in the aftermath of subprime (Malaysia didn't really get impacted). Incidentally this was when 1MDBD started issuing its debt.

The system is currently under maintenance

that is what the EPF app is saying as of 6:30pm Friday