It was announced in today’s papers that the EPF now allows familiy members (spouse and children) to contribute to one’s EPF Account 1, in addition to the account member’s own additional contibution if he or she chooses so. Whilst the EPF views this as a move to boost savings for old age, I’m not too sure if they launched this at the right time.

With the recent price hike in petrol, standard of living is bound to go up with prices of other things following suit. Unfortunately, I don’t think many of us are lucky enough to get an equivalent pay rise to match, so it means we’re already tying our belts tighter.

Do we still want to put in the additional money for the future when we’re going to find it difficult to cope with higher prices of things now? Food for thought…

Anyway, here’s the article reproduced from The Star.

EPF moves to boost members’ savings

KUCHING: Beginning July 1, Employee Provident Fund (EPF) contributors can get their spouses or children to contribute additional savings into their accounts.

EPF chairman Tan Sri Samsudin Osman said this was a new initiative under its “Beyond Savings” scheme aimed at increasing the retirement savings of contributors.

Under this initiative, husbands, wives or children of contributors can top up the Account One savings of their spouse or parents at any time in cash or by cheque.

“Our main concern is for contributors to have enough savings when they retire. EPF members have already been allowed to top up their own accounts, but now we are allowing their spouses and children to do so as well,” he told reporters after attending the opening ceremony of the newly-renovated EPF Sarawak Building at Jalan Uplands here.

The 10-storey building, renovated at a cost of RM15mil, was declared open by Chief Minister Tan Sri Abdul Taib Mahmud.

Samsudin added that so far this year, the fund’s investments were showing good results with RM4.1bil earned in the first quarter of the year. This was 7.7% higher than the RM3.8bil earned in the last quarter of 2007, he said.

At this juncture, cash is really king. Investments should be as liquid as possible. What would it be? I don’t know it myself. Time deposits? Yes you don’t make much from it at all but I suppose it’s one place for you to earn some small returns while you wait and see what goes on in the market and what would be a potentially good investment.

A lof of banks are doing promotions for short term cash placements, offering up to 3.8% interest for 3 months. Seeing that inflation rate is between 4% to 5%, we aren’t exactly making enough. But it’s better than money sitting in the current or savings account earning next to nothing.

If you are a brave soul, then you may be viewing this period in time as an opportunity as many stocks are bound to go “on sale”. In fact, some of them already are. How about commodities? I like this asset class but I have no idea how to get into it without it costing me too much. I’m not a sophisticated investor, so I need easy access at affordable rates. Any plans, anyone?

I just heard of a new plan from AIA, the AIA Australian Dollar Savings Policy. The plan matures in 3 years and you are to receive 100% of the premium paid plus some returns.

Each year, you are guaranteed of a cash payout at 7.5% in Year 1, 5.75% in Year 2 and 5.75% in Year 3. However, if you intend to stay put in this plan for the entire 3 years, you might as well opt for the cash accummulattion option where you don’t receive the payouts every year, but only once when the plan matures. The benefit of doing so is that you will still earn the said returns annually, and they will be ploughed into your plan and you earn compounded interest on those returns too. This way, instead of earning the total of 19% when you add up the yearly payouts, you will earn slightly more at 20.22%.

You have the option to surrender the plan midway if you choose to do so. However, you will incur some fees and this will dilute your earnings somewhat. Ideally, you should keep this policy untouched for the entire tenure since it is a short-term plan.

To start, you need a minimum of A$8,000. This plan is ideal for parents who have already stashed away some money for their children to study abroad. It makes sense to put that money in this guaranteed vehicle and earn higher returns than any fixed deposits in the country. Having said that, I also have to caution you on the negative side of this plan – the foreign exchange risk. It will be perfect though if you are intending to send your children to Australia, and therefore not having to exchange the money back into Ringgit and risk losing out on worse-off rates.

If you are interested to know more, contact your AIA agent and ask for more details. I did just that and am now still thinking about whether I should buy the plan. What do you reckon?