By: Rosli Mansor Ahmad Razali
The Employees Provident Fund (EPF) recently announced a 6.3% dividend for 2024 on both Conventional and Shariah savings.
While this announcement brings relief to contributors, it also serves as a reminder of the importance of proactive financial planning.
Relying solely on EPF is not enough for long-term financial security.
According to Dr Paul Anthony Maria Das, Senior Lecturer at the School of Accounting and Finance, Taylor’s Business School, Taylor’s University, contributors should diversify their investments through stocks, bonds, real estate investment trusts (REITs), and unit trust funds.
Additionally, they are encouraged to explore alternative income sources such as rental properties or side businesses.
Structured financial options like the Private Retirement Scheme (PRS) for tax benefits, insurance-based savings plans, and emergency funds can also help navigate economic uncertainties.
Although the 6.3% dividend is encouraging, complacency can be costly.
Contributors should take advantage of high dividend rates by increasing voluntary EPF contributions and investing in high-yield assets such as REITs and unit trust funds.
At the same time, prudent spending and maintaining an emergency fund are crucial for long-term financial stability.
For retirees, asset allocation plays a vital role. Ideally, 50-60% of investments should be in low-risk assets such as fixed deposits, bonds, and cash savings.
Meanwhile, 20-30% can be allocated to moderate-risk assets like REITs and dividend stocks, while the remaining 10-20% should be held in cash for liquidity.
Young professionals, on the other hand, should maximise their EPF contributions while allocating a portion of their income to other investments.
For example, RM200,000 in EPF with a 6.3% dividend generates RM12,600 annually, compared to RM10,000 at a 5% rate. While the difference may seem small, it significantly impacts long-term wealth accumulation.
The 6.3% EPF dividend for 2024 is a positive development, but it should not lead to complacency.
Strategic financial management—through diversified investments, informed decision-making, and adapting to economic changes—is essential for long-term stability.
Relying solely on EPF is insufficient. Comprehensive financial planning is key to navigating an ever-evolving economic landscape with confidence.
