DIVERSIFICATION OF INVESTMENT FUND

No one can consistently predict how markets will perform and there have undoubtedly been occasion when the unit trust investment takes an unexpected tumble. But it does not mean that you should not be investing. In reality, regardless of global events, economic conditions and short term setbacks, the unit trust investment has prospered over the past ten years.

To ensure your wealth continues to grow in all market conditions, it is vital that your investment portfolio is well diversified. The objective of diversification is to reduce the risk of your investment portfolio with minimal impact to your expected returns.

In other words, holding the investment portfolio that does not perform in tandem exposes your wealth to less risk although impact to expected returns remains minimal. The lack of diversification causes the investor’s investment portfolio to experience greater volatility. In the long run, this portfolio makes low returns compared to another portfolio of the same initial value but is more diversified and less volatile.

Basically, there are two (2) steps to take when diversifying a portfolio:

1) To develop an asset allocation plan and this involves spreading your investment capital across different fund categories such as equity, balanced, money market and bond.

2) To diversify within a single fund category. For example, in the equity fund of your portfolio. Diversifying across various large and small cap shares.

(Adapted source from Bizweek, The Star)

BASIC SAVINGS OF NEW AMENDMENTS ON EPF MEMBERS FUND INVESTMENT SCHEME

DEFINITION OF BASIC SAVINGS

Basic savings are the amount of savings in Account 1 which have been fixed by age to ensure that EPF members will have a saving of at least RM120,000 at age 55. EPF members can invest maximum of 20 percent of their savings in Account 1
(the excess amount of basic savings) in the financial products via the approved financial institutions by the Minister of Finance.

MINIMUM AMOUNT OF BASIC SAVINGS IN ACCOUNT 1

AGE (YEAR)	BASIC SAVINGS (RM)
18	1,000
19	2,000
20	3,000
21	4,000
22	5,000
23	7,000
24	8,000
25	9,000
26	11,000
27	12,000
28	14,000
29	16,000
30	18,000
31	20,000
32	22,000
33	24,000
34	26,000
35	29,000
36	32,000

AGE (YEAR)	BASIC SAVINGS (RM)
37	34,000
38	37,000
39	41,000
40	44,000
41	48,000
42	51,000
43	55,000
44	59,000
45	64,000
46	68,000
47	73,000
48	78,000
49	84,000
50	90,000
51	96,000
52	102,000
53	109,000
54	116,000
55	120,000

Reference:
Kumpulan Wang Simpanan Pekerja
January 2008
www.kwsp.gov.my

AMENDMENTS ON EPF MEMBERS INVESTMENT SCHEME

Effective from 1st February 2008, EPF has implemented some amendments to the EPF Member's Investment Scheme as follows:

1) Members can invest 20% of the amount in excess of the required Basic Savings in Account 1 subject to a minimum of RM1,000.

2) Members can make a withdrawal for investment once every 3 months.

3) All other terms and conditions under the EPF Members Investment Scheme remain unchanged.

**This amendment will be implemented starting from 29th January 2008 onwards.