Posted by: fathersez | January 28, 2008

The costly PF mistakes and blunders I have made, and why you should not repeat my mistakes – Part 4

The five mistakes we have talked about so far are:- 

         Not paying myself first  

         Not forming or joining a correct peer group

         Not having a written budget  

         Not managing my career properly and

         Not getting the best deals on my mortgages 

There is more.

The next one is “foolishly selling my long term investments without proper evaluation and soul searching”. 

Ever since I realized that I should start savings for retirement and for our children’s education, I have made monthly contributions to a unit trust or mutual fund as some people call them. My wife and I chose the UT reasonably carefully. We did not delve into diversification and asset allocations and such. 

In Malaysia, we have something called the Employee Provident Fund, where all employees and employers are required by law to contribute 11% and 12% respectively of gross salaries. This EPF is administered by a body set up under the Ministry of Finance and the Fund pays yearly dividends. 

You are allowed to withdraw a part of your EPF savings and invest them in approved UT’s. I also withdrew from my EPF account and invested in UT’s. (When we sell these UT’s then the money has to be reinvested back with the EPF). 

So over the years we had built up a reasonable nest egg.  

The mistake I made 

We had what can only be called a mind blowing bull-run in equities in 1992/1993 which as per text book rules ended in a spectacular collapse. The market then drifted slowly upwards and downwards.  

In 1997/1998 there was another equally mind blowing collapse due to internal political uncertainties followed by the famous Asian currency crisis. 

Against this backdrop, you may have guessed that my UT did not perform particularly well. There were years when no returns were paid and there were also years of losses. 

In 2003, I did something that I still regret. I sold off the bulk of the UT’s. 

The balance UT’s that I still held have performed as follows:-

As at:-

31 December 04        Taken as base 

31 December 05         Increased by 21%

31 December 06         Increased by 40%

31 December 07        Increased by 54%

The above returns include my monthly contributions (which I continued, thankfully). I am still astonished at the returns after even accounting for my contributions. Even though the last few years have been spectacularly good years for equities, the returns are nothing to be ashamed of.

What I should have done

Equities have their cycles of ups and downs. I was well aware of this, having been through a number of them. I also knew that these cycles could take years but just like clockwork, sooner or later the markets would move up again. And the time to turn around was not too far off.

UT’s offered a great way to diversify amongst a number of stocks.

In addition the UT company managing the fund we had selected was one of the better operated ones.

Since we were using the “dollar averaging method”, we had been bulking up on cheaper units as the markets languished.

I should have weighed all these factors and made an unemotional decision on whether to stay invested or to sell out.

Instead, I got influenced by the fact that there were no returns, without objectively analyzing the reasons why. I also never revisited the reasons why I had invested in UT’s in the first place.

Don’t repeat my mistake, please

Long term investments are just that….long term. They should not be influenced by the market fluctuations that happen daily, monthly or even the bigger swings (like what we are going through now) every once in a while. 

Investments in UT’s have the advantage of professional management and diversification amongst a wide array of stocks. Dollar cost averaging does give us an advantage in down markets, as we end up buying more units.  

Had we maintained our investments, my wife and I would be very, very much further ahead in our quest for retirement savings.  

Though I am not losing any sleep over it now, this selling off decision is something that I have regretted and will regret for a long time.  

And it is something I’ll keep repeating to my children never to make! 



  1. I’m seriously considering investing in UT too. Though at the moment I have very little knowledge in this area. I’ve asked around and am trying to decide between two banks. Or should I go ahead and invest in both? I’m only going to put in the minimum amount. What do u think?

  2. Hi, Rina.

    UT’s are a great way to invest, as we can do it in small sums and also get diversification and prof managment at the same time.

    We have to choose the fund carefully, as some of the funds have performed really badly.

    I think the EDGE has a listing of funds by returns, fees etc.

    You can also list your questions on He is a financial planner and may be able to advise you better.

  3. Ok, will do! Thanks:)

  4. Hi Fathersez,
    With the new EPF withdrawal scheme, I can finally take some of them out and put them somewhere like a Unit Trust fund. I can never get a straight answer from anyone about this, but what do you think of putting this money into an equity unit trust with aggressive portfolio? The investment horizon is about 20 years or so, so i suppose the risk would be lower compared to the returns. What do you think? Since this is a retirement fund, is it wise to put it in an equity portfolio? or something more conservative? Am I answering my own question? 🙂

  5. Hi, Fara,

    I am no CFA. My wife and I chose UT’s because of what I read about the divesification and dollar cost averaging. We have accounts under all the children’s names with my wife or me as principal account holder.

    If you have a 20 year time frame, you should be on a great ticket. The problem will be investing in funds like ASJ etc., where the investors got a very bad deal.

    If you like, you can check up with, who is a CFA.

    You should also try registering with the forum on I think you can meet some great people and get some very good ideas there.

    I have just signed up and am not active yet.

  6. Thanks Fathersez for speaking highly of me and my blog. I am just a normal guy who also cares a lot about my money as well as my clients’.

    UT investment is one of the best tool for passive investors.

  7. You are welcome, KC.

    “No strings attached advice” is not easy to come by. You have helped me and I hope Rina and Fara also gain from this.


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