Investing in PRS for RM500 and diversification
I really dislike unit trust - but in finance it is all about the numbers. So I am overcoming my rational cum emotions and investing minimally in PRS for the sake of incentive and income tax relief.
Am not going to invest up to RM3,000 - but the only income that is 16-19% taxable - if I hit the bracket that year. (Actually, for 2016 I'll likely not hit that tax bracket). But for 2016 - the luring factor is the RM500 incentive upon RM1,000 investment. So I make the initial RM1,000 investment without reoccurring investment. Update: Now RM1000 incentive.
Initially, I wanted to buy thru fundsupermarket because of their low fees - but I found the units is held under their name WHY!!?? - just being super cautious - I want to be registered as real holder instead. [ But if you buy with EPF funds, it's under your name]
Nearly all PRS provider gives the option of conservative, moderate or growth fund. Basically, the difference lies in their asset allocation - the proportion of fixed incomes, term deposit, and equity or even derivatives and index funds. I think everyone is capable of saving in FDs without paying the management fees so it's better to buy a fund with investment options out of your reach.
Finally, I choose a foreign fund. This fund may invest up to 98% in foreign equity. I consider this as my portfolio diversification. The volatility will be very high and if the fund has too much exposure in the west it might just crash this two years. But it is a good hedge against the fallen ringgit. And I can slowly top up as new market reform comes. As foreign equity investment is expensive in Malaysia - both in terms of monetary, effort and time - I don't mind the 0.2% higher management + trustee fee.
I have a trustable person handling this account for me and what I like most is he did not push me into commit to a monthly contribution. If you want to find him you could email me at lynnringgit [at] gmail.com Update: I could help you apply too when I get my license.