As my previous article mentioned, 26% of the total fund (Reported amount RM370 Bil, suspect over RM400 Billions as of this writing) is invested in stock market within Malaysia and some oversea. The recent trend obviously indicates that EPF has been very active in the business arena and stock market, such as recently they extend general offer to buy out MRCB and increasing oversea equity allocation. There are also rumors that the potentially bought out company will be the beneficiary of the mega project EPF join venture with the government in Sungai Buloh that has estimated development value of RM5 Billlions. Though later, EPF cooled down on MRCB deal after many criticism appeared.

With all this moves by EPF, it’s hard not to think that EPF has getting more risk appetite as days go by. Though largely I’m stock investor myself, I’m very much aware of the risk I’m exposed to the market every single day I’m invested. On every investment i make in stock market i will evaluate for several days of weeks plus some observation on the company and movements. How much thought do these fund managers give when investing the EPF money in any assets, especially when the gigantic sum of money is not belong to them, much like any private fund manager such as Public Mutual, they are only investing largely peoples money. How much care they have over peoples money, that is the answer we need to know. Do any of them take accountability and responsibility in person or corporate integrity on the investment decision they make and back it up? If the answer is either vague or unclear, more likely you have no place to cry at when the EPF investment comes back with huge losses, while the so called responsible firm will start to point finger. There are simply no transparency, you might say “Yeah, That’s call Malaysia”. True, but let me put thing into perspective, if you invest in any stock, you as shareholder has voting right in the company’s strategic decisions like appointing new directors. EPF on the other hand, contributors own almost 100% of the fund don’t even get a peek at the company’s balance sheet, and income statement. So, what the hell? In a developing country, this kind of thing which usually deem as outrageous in developed countries is still a norm.

Even EPF loses money in stock market, that’s still not a very serious problem in short term, after all 26% out of 370 Billions is only RM96.2 Billions, besides, EPF has waves of recurring income in hundreds of millions ringgit every month. In the event of EPF making losses, the likely potential problem for EPF to tackle is paying out to the retirees who demands for withdrawal. They can easily solve this by paying these retirees with the recurring incomes, given the total amount of withdrawal does not exceed the total contribution overall for a period of time. For a country with more young working generation this might not be a problem because there are always enough people in the work force contributing to the retirement of some one else. However as the age of the country is catching up, it’s very likely we will see number of retirees increases in ratio to contributors. This has already happen in an ultra modern country like Japan where the age is catching up because many working class chose to be single thus the birth rate is low and the population of young generation simply can’t catch up to the aging old generation. If that’s the case, EPF will have a very hard time catching up to the fund accumulation for any investment returns, the losses in present, even in small percentage will have large crippling effect to future generation in term of ability for EPF to pay back. If that happens, i doubt they will be able to pay even 1 percents of dividend given the money comes in from east and out to west. This is the classic scenario of credit user – use the money now and pay (or suffer) later.

Having said all this, I’m not opposing to any investment moves EPF has done. So far they have done an amazing job (at least it appears to be, in general reporting) with return of 5.65% in dividend for such a clumsy fund size. However, given the non transparent nature of the investment strategy, EPF should always be reminded that the fund need to be taken care of with extreme due diligent – Do not forget that the money is peoples’ hard earned money of their entire life and some people will die losing it. Of course it will be better if the EPF can provide some form of reporting resembling listed corporate annual report including the essential financial statements so contributors can have some understanding of EPF fund’s health as a whole instead of remain ignorant.

 In the same year i got to know a friend from a team building programme and he invited me to a seminar, talk or something like that. The talk was about financial freedom and the content of Robert Kiyosaki’s book had been promoted during the seminar, and my friend even briefed about an interesting game they will be playing, it’s a board game called Cash Flow 101. A brief about Robert Kiyosaki; he is a highly motivated self-made multi-millionaire in a career of building many successful businesses, real estate investment, provide motivational seminars and financial coaching. Several of his famous books such as Rich Dad Poor Dad, Cash Flow Quadrants and Rich Dad’s guide to investing. Cash Flow 101 is a game invented by him aiming to simulate the real life financial experience, objective of players are to generate enough passive income to jump out from the rat race.

 I turned my friend’s invitation down, then went on with my life.

 Nearly four years after this encounter, along the way i have flash back of my friend, and his enthusiastic invitation, being sincerely just for the best of myself and i turned him down. The loser is me.

 This four year i can’t say i’m poor but i’m not rich either, i manage to save some money from my job but it hardly making any impact. Being the average income earner, it will just put me into the main population, the majority population, where we call the middle class.

 Only until recently, in a hot afternoon when i was surfing the book store, browsing books about investing topics, i read a few books about Warren Buffet on stock market and also from some other author. So then i saw his book, Robert Kiyosaki’s Rich Dad’s Guide to Investing, so i read a few chapters.

 The first few words that caught my attention was when he said a person’s internal reality determines a person’s external reality. For example if we used to say; I can’t afford it, or i can’t be rich. He said these words are from a poor man’s reality because he saw a world where money is scarce resource. Instead, people with a rich internal reality will usually say; how can i afford it? or how can i be rich? – with question mark and these will keep them thinking and find their way. Saying words like I can’t afford or i can’t be rich will only stop them from doing anything or think and hence they will remain poor.

 Another word of Robert Kiyosaki attracted me, it sounds like this; I always find people telling me; i would rather be happy than rich. I find it’s strange to compare rich and happiness. Since i have been both poor and rich i have been happy or unhappy. But i find that i was always more unhappy when i’m poor and unhappy than when i’m rich and unhappy.

 The other words sounds like this; I always find it’s foolish for people to pretend money is not important, and money is evil when they spent their whole life working for money. To me, life is the most important, but money is important in supporting life. I don’t want to spend my entire life working for money, instead i want money to work for me, so i can enjoy my life.

There goes the preface of future money. In this blog where i will be drawing my path to financial freedom. This blog will serve as my or maybe your guideline, and as reminder, whenever i lose motivation. It is a reminder to myself of my objectives and ultimate goal –  to achieve financial freedom.