Employee Provident Fund (EPF) – Part 1

Everybody knows that EPF is a way savings during retirement by forcing us to park our contribution and employer’s contribution there and prohibited from withdrawing it until meet certain requirements. So what exactly to be discussed here? Typical question isn’t it? Give an applause to yourselves buddy! Why? Because you want to know more about this article.

I’m sure that most of us know about types of withdrawal from EPF account one (1) and account two (2). However, type of withdrawal is not same and it is based on purpose of withdrawal. Basically withdrawal of account one (1) is something reversible whereby withdrawal account two (2) is something irreversible. So? More exciting? Great!

Generally there are approximately eleven (11) types of withdrawal where we are entitled to withdraw and each type has its unique criteria. Out of 11 types, I’ll discuss mainly on five (5) only. If you are interested on all 11 types, kindly leave comments and I’ll email you separately for the types available. Here is more on our strategy to optimize for our financial goal. The withdrawals we’re going to discuss is mainly cover on housing loan and education loan. Withdrawal for housing loan itself has four (4) types can be elaborated further. So, how to prioritize between housing loan and education loan? Which one to be chosen first? My personal suggestion is that it would differ case by case. I would explain in detail for both scenarios for our benefits.

Why did I say it’s subjective for prioritizing between housing loan and education loan? As we all aware there’ll be some discount given for education loan (PTPTN) during some dedicated time and we must be aware about the promotion period. From my personal experience, there was promotion period with 20% discount if able to settle the whole amount of loan and it is very limited time only. Hence, it’s for recommended for me to settle it earlier because it is huge discount compared to any ROI of any investment portfolio can give us back the return.

Similarly, there are some strategies on housing loan as well which I will cover in upcoming article so that you’ll have some idea to digest first prior reading article on EPF – Part 2.