If you’re a Malaysian investor with savings in your EPF (Employees Provident Fund), you’ve probably asked yourself this question:

“Should I keep my money in EPF for the steady dividends, or should I withdraw it to invest in property?”

This is a common dilemma, especially for those looking to grow their wealth. Let’s break it down and explore the pros and cons of each option, with a focus on the Malaysian property market.

The Scenario: A Real-Life Example

Imagine this: You’re 56 years old, self-employed, and planning to work for another 5 years. You already own three properties:

1. A landed property for your own stay.
2. An office unit in SS2, Petaling Jaya, generating rental income.
3. A condo in SS2, also rented out, covering its mortgage and maintenance costs.

You have an EPF savings of RM390,000, which you can withdraw anytime. Now, you’re considering whether to:

• Keep the money in EPF and enjoy the annual dividends (around 5% to 5.5%).
• Withdraw RM300,000 to invest in a new property.

What should you do?

Option 1: Keep Your Money in EPF

Pros:

• Steady Returns: EPF offers consistent dividends, historically between 5% to 5.5% annually.
• Low Risk: Your money is safe and guaranteed by the government.
• No Effort Required: You don’t need to manage anything—just let your savings grow.

Cons:

• Limited Growth: While EPF returns are stable, they may not outpace inflation or property appreciation in the long term.
• Missed Opportunities: You could miss out on higher returns from property investment, especially in high-growth areas.

Option 2: Invest in Property

Pros:

• Higher Potential Returns: Properties in strategic locations like KL, Penang, and Johor Bahru have shown consistent capital appreciation over the years.
• Rental Income: A well-chosen property can generate monthly rental income, providing cash flow to cover your mortgage and expenses.
• Leverage: You can use your EPF savings as a down payment and take a loan to finance the rest, maximizing your investment potential.

Cons:

• Market Risks: Property prices can fluctuate, and there’s no guarantee of returns.
• Maintenance Costs: Owning a property comes with additional expenses like maintenance fees, property taxes, and repairs.
• Loan Challenges: At 56, securing a long-term loan may be difficult, as most banks limit loan tenures to age 65 or 70.

The Middle Ground: Refinance Your Existing Properties

Here’s a smart strategy: Instead of withdrawing your EPF savings, consider refinancing your existing properties.

• How It Works: If your rental income covers your current mortgage payments, you can refinance to unlock the equity in your properties. This means taking out a new loan based on the current market value of your property, which is likely higher than when you first bought it.
• Use the Funds: The money you get from refinancing can be used as a down payment for a new property, allowing you to grow your portfolio without touching your EPF savings.

For example:

• Office unit in SS2 is currently valued at RM1.2 million, with an outstanding loan of RM450,000.
• By refinancing, you could potentially unlock RM750,000 in equity (RM1.2 million – RM450,000).
• Use this amount to invest in a new property, while your EPF savings continue to grow.

The Bottom Line: What Should You Do?

1. If You Prefer Stability: Keep your money in EPF. It’s a safe, low-effort option that guarantees steady returns.
2. If You Want Higher Returns: Invest in property, but do your homework. Look for areas with strong growth potential and consider refinancing your existing properties to fund your investment.
3. If You’re Unsure: Start small. Use a portion of your EPF savings to invest in a property while keeping the rest in EPF for security.

ChatPropertyMalaysia’s Take

At ChatPropertyMalaysia, we believe in strategic property investment. Whether you’re 25 or 56, it’s never too late to start building wealth through property.

Here’s our advice:

• Start Early: The earlier you invest, the more time your money has to grow.
• Leverage Wisely: Use tools like refinancing and EPF withdrawals to maximize your investment potential.
• Diversify: Don’t put all your eggs in one basket. Spread your investments across different locations and property types.

Your Next Step

If you’re ready to take the plunge, start by:

1. Researching the Market: Look for areas with strong growth potential.
2. Consulting Experts: Speak to a mortgage banker or property advisor to explore refinancing options.
3. Visiting Show Units: Get a feel for the property and its potential before making a decision.

At ChatPropertyMalaysia, we’re here to guide you every step of the way. Let’s turn your property investment dreams into reality—starting today.