Last Updated on March 3, 2025 by Chin Yi Xuan
“Should I ignore the stock market and just invest in EPF (KWSP)?”
EPF’s latest 6.30% dividend is a nice treat for Malaysians.
From 2000-2024, EPF (conventional) delivered an annualized return of 5.63% compared to 8.32% of the US stock market (S&P500).
With a difference of 2.69% in annualized return, which is a better long-term investment?
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Table of Contents
#1 How a ‘small’ 2.69% annualized return makes a huge impact in the long run
Despite a ‘small’ 2.69% difference in annualized return, the S&P500 delivered significantly better return vs EPF for the past 25 years.
After accounting for forex (USD/MYR) gains/loss, RM100 invested in the S&P500 in 2000 would mean RM737.41 by 2024. For EPF, you’d be looking at RM392.86.
Putting this into table form:
| S&P500 (US stock market) | EPF (Conventional) | |
| Annualized Return (2000 – 2024) | 8.32% | 5.63% |
| Total Return | 637.41% | 292.86% |
| RM100 invested in 2000 would mean… | RM737.41 in 2024 | RM392.86 in 2024 |
#2 “Risk is the price you pay for outsized return.”
The S&P500’s outperformance over the EPF did not come easy.
You’d have to endure multiple bumps along the way, such as:
- The Dot-com Bubble in the early 2000s
- Global Financial Crisis in 2008
- Market crash in 2018
- Bear market in 2022
Just look at 2000-2002.
A 3-year consecutive negative returns would be difficult to swallow for many investors.
So… how? Which option is better then?
#3 My thoughts:
In the long run…
- Both are better than not investing at all.
- It is not one or another. Combining EPF & stocks can give investors a diversified exposure to stable returns & higher growth.
Also important to consider: How many years you have before you need to access your money?
Generally,
- Less time = Seek more stability over growth.
- More time = Choice to seek more growth by giving up some stability.
There are no hard rules, nor right or wrong answers – you do what’s best for your circumstances!
Disclaimers
This article is produced purely for sharing purposes and should not be taken as a buy/sell recommendation. Past return is not indicative of future performance. Please seek advice from a licensed financial planner before making any financial decisions.
Hey as you shared in one of your article, SP500 return will be charged 30% WHT in US and likely to be taxed again in MY for foreign investment income since we dont have tax treaty agreement with US, even with this double tax you still think it’s worth to invest in SP500 or any ETF domicile in US?