EPF or CPF Millionaire, can you do it?

“Invest for the long haul. Don’t get too greedy and don’t get too scared.”

If you are a Malaysian and had at least MYR 1 million in your EPF account in 2020, you are among the only 67919 or the top 0.64% of 14.89 million members. On average each EPF millionaire had MYR 1.65 million saving. And if you had MYR10 million in your EPF account, congratulations to you, you are the top 0.002% or 248 members who managed to gather the fortune of this magnitude.

There is even one EPF member who is at the age range of 20-24 who had a saving of MYR 2.01 million! And for those who had a saving of more than MYR10 million in their accounts, the average saving was MYR 17.5 million!

For those who contribute to CPF in Singapore, according to the Central Provident Fund (CPF) Board’s Annual Report, nearly 400,000 CPF members have at least S$500,000 in their CPF account as of December 31, 2020. I couldn’t find further information about the age profile of CPF millionaire.

EPF Millionaire for Malaysians

I am a strong believer of EPF contribution, I explained to you the strategy of building up two major portfolios for retirement fund- EPF/CPF and ETFs HERE. Although Malaysians generally do not have much trust in the government, in my opinion, money invested in EPF is still the safest among all investments in Malaysia.

A lot of Malaysians do not know that we can open an EPF account at the age of 16 years old for our children. If you contribute just MYR30K to kickstart the first year ( at 16 years old) in your child’s EPF account and you/the child keep on contributing RM2k per month after that ( MYR24,000 per year), he/she will be a millionaire by 36 ( based on 6% compounding interest per year). Look at the chart below.

Another easy investment way will be to put in MYR100k when your child is 16 years old and keep the money for 40 years, the amount will grow to be more than MYR 1 million.

Therefore, I do not believe in investment products being sold by insurance companies. Never buy from them, the returns suck and at the end of the day, the company, your insurance agents and their children achieve financial freedom and NOT YOU!!

Open an EPF account for your kids if they are 16 years old and start contributing monthly to their accounts. Becoming a millionaire is not a herculean job if times are on your side.

CPF Millionaire for Singaporeans

Many Singaporean parents do not know that every Singaporean baby has a CPF account created for them at birth. If you want your baby to be a millionaire by 65, all you need to do is to invest SGD64350 to your baby’s CPF special account (SA) at birth.

If you find coughing out SGD64k is too much ( you know, nowaday everything is expensive especially pampers, more so if your baby takes milk powders) you can choose yearly top-ups as shown below.

Lesson to be learnt here, the earlier you top up the child’s SA and the larger the quantum, the fewer the years required to make them millionaires upon retirement at 65 years old.

There is even a 1M65 movement in Singapore- the movement to encourage Singaporeans to hit 1 million in their CPF accounts by 65.

Everyone can be a millionaire

Yes, basically, almost every working adult in Malaysia and Singapore should become a millionaire if you start your saving journey as soon as possible. For me, all Malaysians and Singaporeans should aim for 1M50, meaning you should try to hit 1 million in your EPF/CPF account by 50. It is a feasible job if you contribute at least 2000 to your account every month and wait for 23 years with a compound interest of at least 5%. If the starting working age is 23-24, all working adults in Malaysia and Singapore should be millionaires by 50.

If you want your children to be millionaire, don’t waste your money buying investment-linked insurance products, they will suck dry your money. Your safest bet will be putting the money in CPF or EPF and wait for the money to grow.

Conclusion

For your money to grow big slowly, all you need to do is being patient and persistent. Time is the best vehicle to bring you to achieve your financial goal.

Compounding interest will create enormous wealth for anyone who is willing to wait! Therefore, don’t act smart and try to withdraw your money from EPF to buy other investment products. Keep your money in CPF/EPF if possible unless a dire emergency!

And remember, don’t waste your money buying unit trusts and investment-linked insurance products, they will get you no where!