You might know that investing is useful to help grow your long term savings for your retirement. But what if you don’t have enough savings to invest?

Well, through the EPF’s Member Investment Scheme (MIS), you can invest some of your EPF savings in unit trusts. So even if you don’t have enough savings, you can still think about investing through EPF’s MIS.

But since using this scheme reduces your EPF savings, you should think carefully before doing it.

So, here are 4 things you need to think about before withdrawing from your EPF to invest in unit trusts through the MIS.

1. Will you get better returns from EPF or unit trusts?

EPF guarantees a minimum dividend of 2.5% a year. From 2011 to 2020, EPF made an annualised return of 6.1%, which is higher than the annualised returns most unit trust funds have made for the past 10 years. An annualised return is the return an investment makes every year over a certain number of years and includes compound interest.

The unit trust funds offered through MIS have had different levels of performance compared to EPF. Some of the funds have made higher returns and others have made lower returns than EPF.

So before deciding whether to withdraw your EPF savings to invest in unit trusts via MIS, you should research the past performance of the unit trust fund. You can check out their past 1-year, 3-year, 5-year and 10-year returns to see if it suits your retirement savings goals. But remember, past performance doesn’t guarantee future returns!

2. Where will your money be invested?

Your EPF savings are invested in financial instruments like Malaysian Government Securities, stocks, loans and bonds, money market instruments, and real estate. EPF decides how they will invest your savings in these different investments, so you won’t get to choose where your money is invested.

If you decide to invest online via EPF’s MIS, you can choose from unit trust funds which have been shortlisted by EPF based on their 3-year performance. You can check their performance here. So, you’ll have slightly more choice on where your money is invested.

3. Is there a chance you’ll lose your money?

Your EPF savings are guaranteed by the federal government. So if you keep your savings in EPF, you’ll never lose the amount you put in.

But if you withdraw your EPF savings to invest in unit trust funds, your money won’t be protected anymore. If the unit trust fund you invested in performs poorly, you could lose the money you’ve taken out from your EPF savings to invest in the unit trust fund. So, withdrawing your EPF savings to invest in unit trusts is slightly more risky than just leaving your money in EPF.

4. What fees do you need to pay?

It’s important to know about fees when you’re investing, because fees will eat into your returns. Because of this, your investment will take a longer time to grow. This could affect how much savings you’ll have for your retirement.

If you invest via EPF’s MIS, your sales fee will cost:

Zero to 0.5% if you invest online via EPF’s i-Akaun portal
Up to 3% via the FMI’s agent/counter.

You may also have to pay other fees like annual management fees, transfer fees and redemption fees.

The fees for investing in unit trusts through EPF’s MIS is lower than investing in unit trusts through a sales agent or bank. But, if you keep your savings in EPF, you don’t have to pay any fees.

So, on top of losing the government’s guarantee when you withdraw your EPF savings to invest in unit trusts (which we talked about in point 3), the fees you have to pay for investing in unit trusts through MIS will also affect your chances of growing your retirement savings.

To find out more about how fees can affect your unit trust returns, check out our unit trust guide.

Should you withdraw your EPF savings to invest through MIS?

If you’re thinking about withdrawing your EPF savings to invest in unit trusts through the MIS, remember these points:

MIS unit trust funds: You could make higher returns than EPF, but your investments are less safe and you’ll have to pay fees. However, you’ll have slightly more choice on where your savings are invested.
Saving in EPF: You can expect stable returns and your money is safer because it’s guaranteed by the government. You won’t have to pay any fees. But, you can’t choose where your money is invested.

Now that you know what to look out for when thinking about withdrawing your EPF savings to invest in unit trusts, you can decide on the best option to grow your money for retirement.

What can you do next?

If you’re interested in investing in unit trusts through the MIS, you can follow these steps:

First, check if you’re eligible.
Choose the unit trust you want to invest in from the unit trust funds available under MIS.
You can invest online via EPF’s i-Akaun here. You can also invest through a sales agent or over the counter with the company your chosen unit trust fund is offered by. For investments through sales agents or over the counter, you’ll have to fill in Form KWSP 9N (AHL).

To find out more about withdrawing your EPF to invest in unit trusts through MIS, you can make an online enquiry or call EPF at 03-8922 6000.

Remember, as with all types of investments, if you invest in unit trusts, there’s always a risk! If you want to know more about investing in unit trusts, read our guide on unit trusts. To understand the benefits of saving in EPF, read our guide on EPF. To learn more about EPF withdrawals, watch our video.