QUESTION
Please make comparison if i put money rm269,339 in EPF and invest with consistent return income of 6.3 % per year or i have RM269,339 and put money in unit trust return income of average per year is 10% with service charges of 3% In 7 years which is more profitable?
ANSWER
ANALYZE BY DEEPSEEK
To determine which investment option is more profitable over 7 years, we need to calculate the future value of both the EPF investment and the unit trust investment, taking into account the respective returns and fees.
---
### **Option 1: EPF with 6.3% Annual Return**
- **Initial Investment**: RM 269,339
- **Annual Return**: 6.3%
- **Time Period**: 7 years
- **No additional fees or charges**
The formula for the future value of a lump sum investment is:
\[
FV = PV \times (1 + r)^n
\]
Where:
- \(FV\) = Future Value
- \(PV\) = Present Value (RM 269,339)
- \(r\) = Annual Return (6.3% or 0.063)
- \(n\) = Number of Years (7)
\[
FV = 269,339 \times (1 + 0.063)^7
\]
\[
FV = 269,339 \times (1.063)^7
\]
\[
FV = 269,339 \times 1.530
\]
\[
FV \approx RM 411,900
\]
---
### **Option 2: Unit Trust with 10% Annual Return and 3% Service Charges**
- **Initial Investment**: RM 269,339
- **Annual Return**: 10%
- **Service Charges**: 3% (deducted upfront from the initial investment)
- **Time Period**: 7 years
#### Step 1: Deduct the 3% service charge
\[
\text{Net Investment} = 269,339 \times (1 - 0.03) = 269,339 \times 0.97 = RM 261,259.83
\]
#### Step 2: Calculate the future value with 10% annual return
\[
FV = 261,259.83 \times (1 + 0.10)^7
\]
\[
FV = 261,259.83 \times (1.10)^7
\]
\[
FV = 261,259.83 \times 1.9487
\]
\[
FV \approx RM 509,100
\]
---
### **Comparison of Future Values**
- **EPF**: RM 411,900
- **Unit Trust**: RM 509,100
---
### **Conclusion**
The **unit trust investment** is more profitable, yielding approximately **RM 509,100** after 7 years, compared to the EPF's **RM 411,900**. However, keep in mind that unit trusts carry higher risk compared to EPF, which is a low-risk investment. The decision should also consider your risk tolerance and investment goals.
ANALYZE BY CHAT GPT
Let's compare the final amount for both options over 7 years:
-
EPF Investment
- Initial amount: RM269,339
- Annual return: 6.3%
- Duration: 7 years
- Formula: FV = P (1 + r)ⁿ
- FV = 269,339 × (1.063)⁷
- FV = RM415,608.85
-
Unit Trust Investment
- Initial amount: RM269,339
- Service charge: 3% (one-time fee), so the net investment = 269,339 × (1 - 0.03) = RM261,258.83
- Annual return: 10%
- Duration: 7 years
- Formula: FV = P (1 + r)ⁿ
- FV = 261,258.83 × (1.10)⁷
- FV = RM509,806.62
Conclusion:
- EPF final amount: RM415,608.85
- Unit Trust final amount: RM509,806.62
The unit trust option is more profitable by RM94,197.77 over 7 years, despite the service charge. However, unit trusts come with higher risks, whereas EPF is more stable and secured.
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