Brokerage Versus Wealth Management - Review

Posted by Kris | Thursday, November 13, 2014 | | 3 comments »

Fees
Brokerage to a larger extent means fees for financial related services provided by wealth management funds. High brokerage fees does not mean that investment returns by a particular asset management directly correlates to higher returns. Higher fees better asset management is marketing cliche. Remember, whether or not a funds makes money for its investor, the fund manager will still get paid.


Nevertheless, I still prefer to buy stocks instead of investing money into mutual funds or asset management funds out there in the Malaysian market. The brokerage for buying a stock is much much smaller than buying a front-load mutual fund. Some brokerage fees can go as low as 0.1% of total contract/stocks that you buy. In cases, a 2 way buy/sell transaction is equivalent to 2 cups of starbucks!!

Since 2011, I have not touch mutual funds, but for tax purposes, i am now considering to buy in RM3K of funds in the PRS scheme. This can save me a few hundreds in terms of tax deductions. It is almost the end of 2014, so I better be quick right? (Just been too busy in my work).



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3 comments

  1. James // 9:16 AM  

    Hi Kris, I'm in a similar situation like yours whereby I'm considering putting my money into PRS. With the RM3k tax relief for 10 years and RM500 given by government if you're below 30 years old, it sounds brilliant. However, it is not liquid and I might even get less than what I put in after decades of investing if the fund is not performing (assuming no switching/transfer fund) Would be it be better to put money into index stock (which in long term always goes up) plus there's no yearly management fee etc (unlike PRS). You view is highly appreciated

  2. Kris // 12:24 PM  

    Yes, I am aware of the various limitation of PRS (withdrawal penalty, etc).

    But if your tax bracket is high and the fact that you are below 30yrs old, it is a wonderful vehicle to get some tax deduction.

    Like all investment, there is no guaranteed return. This is true with even index stocks (you will need to be very discipline to do investment even if the market tanks like crazy and people shouting end of the world slogans).

    So if you want to be truly safe, just go for the conservative PRS funds. At least if will not so violatile but do not expect spectacular return.

    Remember, for high tax brackets 26% tax relief off Rm3000 is substantial, unless you can easily find a 26% per year investment to match that tax deduction. :D

  3. Kris // 12:27 PM  

    Some correction, with the current tax program (to encounter the unpopular GST next year), the highest tax bracket i believe is 25%.