Investing in EPF, Amanah Saham won't give you chest pain

"IF you invest in the fund today, you are very likely to make a tidy sum in a few years."

That pitch did not come from a snake oil salesman but from a comely man, who represented a respected financial institution.

Perhaps you have been told the same story as the writer?

He had received at least 10 phone calls from a bank peddling this dream of riches. Really, you ask. Yes, it is true. But certainly not thrilling.

He thought he could put an end to these partly amusing, partly annoying calls once and for all by meeting one of the bank's eager beavers, Steve (not his real name), at a coffee house.

To cut a long story short, Steve extolled the virtues of the institution's fund management, produced graphics of past performance and told a good story on why the good times would probably continue. No jargon. No drivel. Just plain speaking.

The incessant phone calls were a bother, though. Steve was told as much. But he, and the callers, were just doing their job. Just as the writer's friend was when he convinced him to put some money in a "retirement" fund years ago. A decade later, that piddling investment has grown by 1.35 per cent. Wow!

If the writer reaches Methuselah's age when that biblical character finally passed on — 969 — he would a rich man make.

In case you are wondering, there's a dose of sarcasm and surliness there.

To be fair, though, the financial institutions don't make promises to deliver such-and-such a return. They can't. But they will certainly tell a more than optimistic story to the prospective buyer.

The potential of these funds to provide hefty returns is not doubted. The writer knows people who have made enough to build a veritable palace or two and always travel first class.

But how many have lost money, or just made a little profit after years of waiting? Only anecdotal evidence may allow us a glimpse of the numbers.

A friend says a good track record is a fairly good indicator of what a fund can deliver in the future.

But predictions produce elusive creatures. Experts worldwide had expected a recession last year. They were proven wrong and must now swap figgy pudding for humble pie, The Economist says.

The writer, who tends to view projections and predictions with loads of scepticism and amusement, has come to a conclusion. The Employees Provident Fund and Amanah Saham funds have been consistently delivering good results. Not superlative returns (heh heh, 20 per cent or more), but solid gains.

He thinks they are great choices for those who are averse to risk, and who view global developments with a great deal of concern and churning. And those who don't fancy watching their nest egg expand and shrink like a heart beating out of control.

No, he's assuredly not paid or asked to say this. In any event, The Economist also says the "golden age" of high returns (which Steve is enthusiastic about) "is now almost certainly over". That's another prediction. Maybe it will not come to pass.

Whatever happens, the writer will stick to EPF: years of steady returns from the fund is better. It does not smell of greed and grubbiness. Ouch!

But Steve was not a pain. He didn't smell of anything but tidiness and honesty. He was a nice guy trying to explain the nice opportunities in America, China, etc.

The writer is content to leave Steve's "tidy sum" conversation in the past, though. He's not dreaming of building or buying palaces. A bird in the hand is worth two in the bush.

The "retirement" fund's piddling 1.35 per cent return teaches him that lesson. The callers from the bank seemed to sense that after a while.

The writer is NST production editor

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