Today I bought some unit trust by dipping into my EPF. The EPF allows its contributors to use some of their money in Account 1 to invest in approved unit trust funds.

I made this decision mainly is because of two reasons. The first reason is that the stock valuation is cheap due to the global recession and economic slowdown. What goes down must come up again. The economy will stabilize and pickup. New jobs will created. Demand will revive and companies will continue to make more profits.

The second reason is that the returns from the unit trust will be higher than the dividends given by EPF. Of course, the high returns from unit trust can only be obtained if I buy low and sell high. Which is why now is the best time to use my EPF money to buy unit trust. If I had bought my unit trust at high valuation, like two years ago, then I’d be making a loss now instead of profits.

Ideally we should take money from EPF and invest into unit trust funds when valuation is low. And when valuation is high, we sell the unit trusts and put the money back into EPF. Then wait for the next market crash. If this can be repeated over the many economic booms and busts, then we’d be able to enhance the size of our retirement fund substantially.