Comment on /c/café daily chat thread for 27 November 2023
port888@monyet.cc 7 months agowww.ppa.my/prs-funds-information/
There’s no best. The ones with lowest management fees often have a sales charge. So you gotta evaluate whether you want to pay the fees up front, or let them chip away per year.
Take for example AHAM PRS Growth -> No sales charge. 1.8% p.a TER. AMPrs Growth D -> 3% sales charge. 1.5% p.a TER.
The 0.3% TER difference will take 10 years to equalise. At face value, it’s better in the long run to pay the sales charge straightaway. However if one were to consider inflation of 3% per year, that initial 3% sales charge will be equivalent to 5.4% after 20 years (assuming the 3% sales charge you put into a 3% p.a FD, while the rest is invested at 0% growth).
Long story short: tax relief is not free, it’s being paid in the form of the TER and underperformance of the PRS fund you subscribe. Pick one and don’t look back.
imademo@monyet.cc 7 months ago
Admittedly my finance knowledge is not the best. But on your last paragraph, it seems you’re implying that PRS is not really all that great and it almost does not matter what I pick? I’m interested to know if you’ve thrown any funds in one now. But thanks to your comment, maybe I’d just go with the Versa stuff due to convenience.
port888@monyet.cc 7 months ago
Yep, the currently available PRS funds are in general not great investments for the price you pay (in TER), by virtue of them being mostly Malaysia-centric stock pickings. They are basically Malaysia-themed mutual funds. I’ve not studied every PRS fund, but most of them do not beat their declared benchmark (most benchmark to FTSE-Bursa Emas Index), or they put a very low bar for themselves (an index comprising a combination of 12-month FD board rate and KLSE) despite being an equities fund.
I’ve been max-ing out my PRS allocation for the past 3 years. The moment the tax relief for this ends in 2025, I will not be putting a single sen in it anymore.
On Versa PRS, I’m more concerned about the longevity of the platform. At the end of the day Versa is owned by Affin Hwang Asset Management (AHAM), so if Versa does not survive the robo-advisor war and is forced to close down, you most likely only need to relearn where to access it (most likely through AHAM’s present own fund investing portal).
The typical place ppl do their PRS shenanigans is on FundSuperMart (FSM).
You’re chasing for Versa’s 12% p.a. promotion on Versa Save? It’s basically RM100 for your troubles (12% for December on RM10,000). RM100 is 3.33% of the RM3000 PRS allocation, or 2 years’ worth of management fee.
imademo@monyet.cc 7 months ago
Yea the reason I mentioned Versa is because I already treat their Save as a savings/emergency fund so may as well get the bonus plus tax relief there instead of making a new account for whatever other providers.
I did think about the chance that Versa does not survive but my understanding is AHAM seems to be well established might not be as big a deal.
Anyways, I’m glad to know that we also arrived at the same conclusion; I planned to just use PRS for tax relief and when that is done it’ll be ASB/US Index funds all the way.
But I’ll have a look at FSM again. I just found an article of theirs talking about a 7% return on their growth fund (I understand that these funds are usually riskier but I’m also very young so I should be able to just weather the storm when the economy is bearish).