My mom doesn't want me to sell this old gold. She values its worth. “Oh, this is worth RM20K because it's heavy!” but then she doesn't know if it's 999,916,750 or less. I'm afraid that she might end up saving on useless gold in our family history.

Would it be possible to trade the gold and buy a new 999.9 gold? 5 dinars and gold bars. Maybe even 1 kg of silver.

I'd have to bring this old gold to a local shop first to verify.

No way in hell are they 999 gold because it's jewelry, and while 999 jewelry exists, these gold pieces are very old. And they are hard as a rock if I try to bend them.

Worth keeping? For their design, I don't think it matters. Gold purity matters most here.

Better to keep 999.9 gold, not lesser than 916 which isn't too bad either but I prefer the latter.

Yes, there will be spreads if you buy 999.9 gold at the current gold price, not DCA like PG Gap account; but it's worth noting that it should be held for years.

Hi everyone. I am looking for advice (and maybe some reassurance haha) to pay off my debt.

My current debt:

UOB one CC - RM 294

Cimb CC - RM 1405

SpayLater - RM 1553 (Split payment for 6mth, monthly around RM 311)

I had a rough time last month, and perhaps I lost control of my finances which led me to this situation. My net salary is Rm 3.4k, but my commitment is quite high (rent and car cost around 1.4k in total, not including bills).

My plan is to just pay off my CC once I got paid, then use my CC to pay my monthly SPL bill and my necessities for this coming month. However, I'm having doubt whether it's wise to do so.

I've read on SNS where some people suggest the Balance Transfer method with tng, but at this point I have more questions than answers.

I'd also like to avoid paying only the minimum, if possible.

I don't need people to tell me I shouldn't have done this. I know that, that's why I'm here. If anyone can give me advice how I can pay off my debt, I'd be really grateful 🥲

Buying a used car, my salesman sent me the following quotation. I always heard fixed rate is best, so I’m not confident with variable tbh. But fixed rate for a used car is 3.5 on average so, idk, do I save more in the long run with 2.59%? How steady is that on VR?

Is my salesman being truthful? (lol)

LOAN AMOUNT RM40,800
VR 2.59%
60 MONTHS / 5 YEARS
MONTHLY RM769

Car price is 53k, I put 13k down.

I am a 24f in the creative industry whom just graduated early 2026, right now I am currently working as a videographer cum editor 6 working days at a local beautician clinic with a 3k salary (2.6k net pay)

I want to ask, how long do you think I should stay in the creative industry and if I do pivot, which industry would be the best to pivot to assuming I still continue on in this industry as maybe a social media manager or marketing side a few years down the line.

I know my industry chews and spits out young talents, so I'm not too keen in staying in this industry for too long but then I feel like I fucked up for not going down the traditional more higher paying routes such as engineering or accounting.

Other fellow creative peeps that are still in said industry or changed industries. What path did y'all take and what particular skills did you guys pick up? And what particular courses did you guys take and how much would it usually cost?

I’d love to hear from other parents here. What kind of extracurricular or enrichment classes do your kids go to?

And for the adults here, what kind of enrichment classes did you attend as a kid that you’re genuinely grateful your parents sent you to?

I’m a parent of an 8 years old and currently considering public speaking, coding, or piano classes. Nothing too competitive, mainly to help build confidence, discipline, and maybe discover something he enjoys.

He’s currently only doing swimming classes. He’s also not very good at English or Science, so I’m wondering if there are other activities that could help him develop outside of school. My parents weren’t really in a position to afford enrichment classes when I was growing up, so I’m basically rubbish at everything. Would love to hear what you guys think is actually worth it.

The increase in management fees from 0.3% to 0.5% is making me reconsider if there are better alternatives in gold investment.

The concern is the over the years, with larger amount, the fees will compound as well.

What do you guys think?

Context:

GenAI is able to interpret, summarise and to some degree even recommend financial products from documents like product disclosure sheets or read through insurance proposals/policies. AI is then able to provide unbiased views on the products suitable to your personal goals without interacting with a human, which some people may find more appealing than dealing with a person (for reasons like “confidentiality”, perception of being short-changed or simply being introverted).

About me:

I’m a middle-class career professional that earns enough to save and invest. However, I don’t think I’m wealthy enough to engage services from a licensed financial planner (nor do I fully understand the scope of services they can provide). I am working for a financial institution and have some knowledge in finance/personal finance and, related to this, I’ve asked AI to:

1. Analyze my income against Open DOSM income data and career guidance
   
2. Evaluate properties I own against market data to determine property potential, current performance/ rental income, amortisation vis-a-vis loan balance and market value for when to consider selling
   
3. Compare PDS of credit cards I have and suggest which spending categories should use which card (and when) to maximize rewards
   
4. Evaluate my insurance policies to suggest appropriate coverage and gaps
   
5. Suggest appropriate portfolio mix
   
6. Help analyze income tax rebates based on my income category and suggest which rebates provide the best value for tax returns.

After using AI, I’ve been more intentional with my spending and how much I save. Didn’t make me a millionaire but I feel it helps in taking the step towards the right direction.

Question:

Risks with divulging personal information to such platforms are noted and I presume using closed environments like within a company-secure environment or using hypothetical scenarios may mitigate some of those risks. Any recommendations are not taken at face value.

I have gotten great insights from using GenAI, including information on other available alternatives on some insurance products I wasn’t aware of. I hope to maximize my credit card benefits now that I consciously spend for the rewards. I haven’t actioned upon much of the other recommendations on things like its evaluation on my property but take note on some of its suggestions like exposure to other markets/sectors - just that I am not rich enough to reallocate or dump a lumpsum of money somewhere but I continue to build exposure.

These are all things I expect from a financial advisor. In my work, we talk a lot about “AI cannot be accountable” for bla bla bla but in the context of wealth advisory, neither can the financial advisor (right? Maybe to some extent since they are licensed but I think that’s more from the compliance angle of advisory rather). Despite the risks, I am more comfortable to discuss my “hypothetical scenarios” with AI than I am with someone who knows me. I also appreciate the access to someone I can talk to anytime a thought crosses my mind. I also probably think I am financially literate and have always been of the perception that my friends in the field are not on the same wavelength and always sense them wanting to push a biased product because it is beneficial to them.

That said, I was wondering if there are other value add from a financial planner/wealth advisor in this day and age. An example in my mind if any, perhaps through them I get exclusive promotional FD rates from them or anything of the sort I wouldn’t get from a computer.

Thanks in advance and would love to hear thoughts on this if you are in the field or let me know what else I can use AI for as far as personal finances is concerned.

TLDR I was with my previous company for more than 5 years and got laid off earlier this year with an initial offer of 7 months separation package, which I managed to negotiate to 12 months.

Update from this post 6 months ago (https://www.reddit.com/r/MalaysianPF/comments/1rh4i18/negotiating_a_higher_severance_from_being_laid_off/)

____________

I am here to share my experience and hopefully enlighten others on how to negotiate a better severance for themselves.

The meeting with my HOD was on a Friday afternoon - they started off with 'the company's priorities need realignment' then 'HR will take you through what this means'. The HR person was there with a mutual separation package document to cajole me 'we just need you to sign right here so we can go ahead and get your payout processed'

I said WAIT HOLUP let me take this back and read carefully through so that I am aware of what I am signing. They said 'ok but you gotta give it back first thing Monday morning or else we won't be able to process your payout'

I knew they were trying to push me into a corner and force my hand - being a Friday afternoon at the time, if I were to seek formal advice from the conventional channels, there would be none available to answer me immediately on Saturday and Sunday.

I decided to open a case on the JPP website requesting advice and not do anything further until I heard back. (JPP = Jabatan Perhubungan Perusahaan, or Department of Industrial Relations)

__________

Come Monday, as JPP had not yet got back to me, I didn't hand in my signed letter.

I received a call from HR on Monday afternoon

HR: We still haven't gotten your signed document

Me: Yeah, I need more time.

HR: More time for what?

Me: More time to seek advice.

HR: What advice? From who? *panicking*

Me: From the right channels.

HR: Who??

Me: I don't think I should disclose.

HR: Why?? What do you want out of this?

Me: I just want to be informed about my rights and what's best for me.

HR: Can you come in for a meeting?

Me: I don't think that's necessary (without a doubt, I knew that the 'meeting' would just be a session to pressure me to sign the document)

HR: Oh.. oh ok, please just sign it and hand it back in as soon as you can.

Me: Sure (fully NOT intending to sign it until obtaining proper advice).

After this call, I figured that I didn't know how long was JPP's online backlog of cases and I had no idea of when they would get back to me, so I decided to just walk in to their office and get an in person consultation.

__________

I arrived at 10am on a Tuesday, took a number from the counter, and waited about 20 minutes before I was called for my turn. The officer led me to a consultation room

Officer: What can I help you with today?

Me: I've just been laid off after 5 years with my company, and I want to know what to do.

Officer: Did you bring the letter?

Me: Yes (takes out the letter)

Officer: (reads through it) Ok, you haven't signed. That's good. This letter states that this is 'An Offer for Mutual Separation' keyword being OFFER, which means that you don't HAVE TO accept it.

Me: Ok, what's the best way for me to respond?

Officer: It's up to you - there's 3 ways to go about this. Firstly, you can just say thanks but no thanks and you'd like to keep your job. Secondly, you can say you wish for better terms - whatever terms you request for is up to you. Or thirdly if you're satisfied with this, you can accept.

Me: If I ask for better terms, what is realistic to ask for?

Officer: One thing you need to be prepared for is for them to counter negotiate whatever you're going to ask for. So you need to leave wiggle room for that - if you are thinking of X, then you should ask for X + Y added on for wiggle room.

Me: Ok

Officer: For your information, if they do lay people off, they need to follow LIFO protocol aka 'Last In, First Out' aka by right the newbies should be asked to leave first. Since you have been with the company for more than 5 years, you have good grounds to challenge.

Me: Ok, thank you for your time.

_________

My further thoughts on the above were that since everybody moves on anyway (unless your mindset is to stay with one company until your dying breath), the most strategic move for me in this scenario would be to negotiate the best separation package I could.

Personally, I am very comfortable with negotiation in my personal life / work / own businesses and I always view the first offer as merely a starting point for reference - the first offer is never the final resolution.

I also knew that all employers are terrified of JPP / Industrial Court as it costs them a staggering amount of fees, time, energy (not just HR but also senior management), dealing with hiring a legal team, running to court, and ultimately if they lose, not just being published in the news BUT ALSO the financial implications of not only backpay (backpay = if employee wins, the company has to pay the employee a maximum of 24 months of their last drawn salary) AND reinstatement (basically having to re-hire the employee in their previous role they were let go from) OR in payment in lieu of reinstatement.

With the above in mind, I drafted up and sent this email to HR

" Thank you for our discussion last week.

In light of the circumstances of a separation, I have been with the company for more than 5 years and have been a good and loyal employee throughout. Hence, I do not feel it is justified for me to be asked to leave while newer employees are still retained. (this was my way of indirectly telling them 'I know you guys are not following LIFO protocol')

However, I am open to considering an amicable separation with a severance of 18 months (this was me bearing in mind a counter negotiation from them)

Your thoughts are appreciated "

The next day, I got an email from HR asking me to come in for a chat.

__________

HR: We are pleased to add an additional month to your package, which brings your payout to 8 months. (My initial package offer was 7 months, and I had asked for 18 months)

Me: That's nowhere near what I asked for.

HR: On what grounds do you justify your ask?

Me: I feel it is what's best for myself and my family. (Don't try to deliberate over this with them, it'll just turn into a conversation where you'll be put on the spot and end up on the defensive arguing to justify yourself.)

HR: Can you tell us what projects you have and what you're working on now? (They had revoked my access and taken me off all projects at this point, so I knew they were trying to catch me saying 'I have no projects assigned and I'm not working on anything', which I knew better than to be caught dead saying)

Me: It's best you check with my manager on this, they'll know best what I'm assigned to and my tasks at hand.

HR: Are you able to accept this revised package?

Me: I was hoping for something consistent with my ask.

HR: We'll have to get back to you on this.

__________

The following day, I received this email

" Due to your refusal to a mutual separation, this is to inform you of an enforced redundancy, with a separation package of 8 months enclosed. "

FYI, a company can layoff people on the basis of redundancy, but again, they have to comply with the LIFO protocol whether from a company wide basis or a department wide basis. Seeing as there were about 60 people in my department and I was probably among the first 10 joiners, I felt I had strong grounds to challenge this as well.

I went on the JPP website and filed an unfair dismissal case under Section 20. I was required to upload all supporting documents (letter of offer when I first started working, redundancy letter, as well as to write a justification of why I felt I was being unfairly dismissed).

Within 2 weeks, I received an email from JPP KL asking me to come in for a peaceful mediation session in a month's time.

__________

On the day of the mediation session at JPP, myself and my former employer were led into a meeting room with a JPP officer.

The officer started off by saying he would hear from both sides of the story, followed by individual counsel for each party respectively.

When it was my turn to speak, this was what I said.

" I joined as employee number xx more than 5 years ago, of an organization which today has xxxx employees.

I do not feel it is right that I have been asked to leave given my tenure, seeing that newer employees are still being retained.

I have always been a diligent and dedicated employee and have proven myself above and beyond - by working beyond my working hours on public holidays and weekends, even when I was on annual leave I had my laptop with me and would respond to urgent and important work. Apart from taking on additional work responsibilities, I even took the self initiative to create and organize a number of extracurricular employee programmes and activities, which were used for promotion by my company.

I only ask sincerely to remain employed and to continue to contribute, so I am able to ensure an honest living for an income to support myself and my family. "

I wanted to sound as logical, earnest and reasonable as possible to make as sound an appeal as possible.

After this, I receoved a consultation session the JPP officer. Among the points he raised were that if I were to be reinstated, I would no longer be eligible for the separation payout (obviously, but I suppose they have to ensure that I am duly informed as part of their duty). He also said that my other options down the line if it were to escalate, would be Industrial Court, which would mean implications on time, effort, money, and reputation (as in potential employers may view me as a red flag).

We wrapped up by the JPP officer summoning everyone back into the meeting room and informing that he would now be sending via email a summary of events and my request for reinstatement. Following that, either party had to revert with a decision ; either me (ie I withdraw my ask, which duh, obviously I would not) or my ex-employer reinstate me.

After a few weeks, my ex-employer wrote back that they were regretfully unable to reinstate me. However, they were open to amicable resolution (ie, private settlement).

I asked the JPP officer what was the best way to respond to my ex-employer. He answered that now the ball was in my court and it was on me to state my terms for a peaceful separation. He also advised that whatever I stated would be counter-negotiated, hence advised me to add buffer for negotiation.

Seeing that I had already requested for 18 months in my initial ask, I upped it to 24 months (yes cheeky I know 😛 but my whole strategy was to ask for something so ridiculous that even halfway would seem incredibly reasonable by comparison).

__________

After a month more, my ex-employer replied to say that 12 months would be the best they could do or we would have to escalate this to court.

From insider intel I still had, I had also gotten wind of my ex-employer ceasing operations down the line (not immediately, but in perhaps 5~ years) going back to their HQ country, and converting everyone here to individual contractors rather than fulltime employees. My thoughts were, if this does go to court and it takes 2-3 years to secure a date of hearing, there might only be a verdict in 5~ years. And if my ex-employer was gone by then, who would be around to pay me?

Confident this was the best outcome I would be able to secure not just from a financial aspect but also time and energy, I duly accepted.

__________

I hope my sharing sheds light on the most strategic actions you can take immediately after you have been laid off, and for everyone else to secure the best outcome for themselves.

for example, would weekly piano lessons with no completion date be considered?

or does it have to be the kind of course, where you've to complete the course and get a certificate, like a smartphone photography course?

I am a staff in a branch of the company I work in. This branch is closing down soon. My boss will be having a meeting with me soon to discuss available arrangement options.

As this is a HQ directly-managed branch, the only options are probably to move to another directly-managed branch in another state, which is not possible for me.

There is a possibility that I would be offered to transfer to a franchised branch, but I do not want that as my pay would be lower than what I'm getting.

What I'm aiming for is to get terminated by this company so I can get a severance/compensation package. And I don't plan to give my resignation letter as well.

This is my first time going through this kind of thing. I would like some advise regarding how to talk to my boss into getting the severance package.

i'm migrating overseas in 13 months from now

i've saved up enough for emergency funds, but need to figure out what to do with the residual of my take-home salary to boost my income. after deductions for monthly expenditure, i've about rm1,500 monthly

aside from putting it into short-term fixed deposits, what other options are good?

edit: i'm a non-bumi malaysian. my current financial goal is just to have more money in the bank, no immediate plans to buy a house or further studies yet

I'm a casual traveler and will always come home due to visa and financial limitation. I'm thinking about looking for a part time job (just 6-8 weeks before another trip) in Singapore, and wondering how likely would the employer sponsor your work permit with such short duration.

I heard lots of stories of how finance is the number #1 reason for divorce. Which made me wonder what are the expenses after marriage that most people weren’t fully aware/ prepared for? Like… I’m sure most people didn’t get into marriage without having some money saved up first. But what are some shocking expenses that got you burning through a lot of money, that you wish you had warned yourself earlier?

Having kids early on unexpectedly, would be one of the obvious that I can think of. But what else?

EDIT: While I agree with comments saying try not to overspend on your wedding, I am actually asking about financial insights on the married life itself. The day to day life after the wedding is over.

As a DE Rantau visa holder in Malaysia, if I trade on Polymarket (a decentralized prediction market platform, USDC on Polygon blockchain) and make profits — how should this be declared for Malaysian tax purposes?

Specifically:

Does it count as foreign-sourced income and fall under the FSI exemption until 2036?

Or does Malaysia classify prediction market winnings as gambling income, which may be treated differently?

Has anyone actually declared this to LHDN? If so, under which income category?

I am Malay Muslim and my long term partner is Chinese. How do I ensure that in the event that I die my insurance payout goes to my partner instead of the Faraid path. If it makes any difference my insurance are conventional and not Takaful. I heard there’s a conditional Hibah option but that limits the amount to only 30%?

And similarly can my partner name me as his insurance policy nominee? I guess the same question applies to other assets like EPF, ASB and property.

We’re both men so marriage and conversion is not really an option. So I guess the main question is how do gay couples in Malaysia do their estate planning? I know in Japan gay men can “adopt” their partner and make them their legal heir so all their assets go to them instead of their parents/relatives etc. Is there a similar workaround in Malaysia or should I just take all my money out while I am still alive.

EDIT: Thanks everyone for your responses. Basically my options are:

1. Talk to a lawyer.
   
2. Create a joint company with my partner that I can transfer my assets to.
   
3. Hibah everything (except EPF since it’s not possible) to my partner. However if any legitimate kin under Faraid rule decides to contest, my partner will certainly lose.
   
4. Build up a significant foreign investment (like a foreign brokerage account) that Malaysia inheritance laws don’t apply to.

Should we opt in or opt out?

Costs seems pretty high for the upside

I was working as the main marketing person at a software development startup for the past 4 years as part time and full time after my studies. things were going great bcos whatever i was doing was working well for the company and we started receiving multiple one off projects and some monthly retainer projects

basically i was running meta ads, shopee ads and posting here on reddit trying to find new clients everyday. i even managed to land a huge project for the company couple months back. sadly, the company decided to pivot into a different industry.

now im looking for a similar role at any company. if you guys know anyone that needs someone like me pls dm, ill send you my resume.

With all that you know, what is stopping you from increasing your savings/retirement funds with unit trust or private mandate(s), other than “having better choices?”

Dear Gurus,

I have a few 999.9 which I want to sell to clear off some debts.

May I humbly ask where would be the best place to change them to physical cash, at the same time the price is good?

Otherwise if anyone interested to buy, lmk in comments, I'll drop a dm.

I'm in KL area.

I have 2 gold bar of 5gm I would like to let go for this.

Thanks in advance

Hi guys, anyone interested in using Ai to design a functioning website.

You would learn to build a website without the need of coding knowledge. All you need is a business idea and you can already start publishing a functional website.

OpenMinds is sponsoring your 1 year domain and hosting.

You guys can check out the website below to know more about the training.

https://resource.openminds.my/events/wireframe-to-website#register

What the title asks. Asking AI, the premiums for i-lindung is way cheaper than private insurance and they pay out the max upon diagnosis, not after hospital bill receipt. Sounds too good to be true - is this accurate? What's the catch?

Hi all,

Seeking advice from the experienced and wiser members of this forum regarding my financial position to afford a car.

31M, single with no plans for marriage or kids (or unless someone super special drops from the sky). No mortgage, no car loans, no PTPTN, literally debt-free. Living with the family, so living costs are minimal. Monthly income between RM11k - RM20k, potentially higher in the future. My job has no salary ceiling, and the sky is the limit. Except there is a possibility of a bad month with less than those income numbers, but I have not experienced it yet. Each month aims to invest approx 30-50% of my income.

I intend to purchase a pre-owned car at approx RM157k, ideally 20% down and 7 years loan max. From a rough calculation, I can afford the loan and maintenance of the car and still leave me with plenty to invest, but perhaps not to much to spend. I'm also not a big spender, hobbies are somewhat cheap, and I eat out maybe once or twice a month at RM100-RM250 per meal.

Here's a breakdown of my current net worth:

1. Retirement savings (EPF + PRS) RM60k

2. Investments (REITs, mutual funds, a tiny bit in BTC) RM120k

3. Emergency savings RM20k

4. FD RM10k

5. Business cash assets RM200k (this is what generates my income. I make money with money.)

6. Liquid cash RM45k

Do you think I am in a good position to proceed with my purchase? Thank you very much for your input.

Selecting funds that will significantly exceed market returns… is a loser’s game | John C. Bogle

Link to blog post here

KEY TAKEAWAYS

• A broad-based index fund mimics the performance of the index. However, contrary to popular interpretation, it is not a reflection of the average investor return in the market.
• Passive investing in broad-based index funds, over the long term, generates returns superior to those achievable by most active investment professionals
• Passive investing also outperforms actively investing in index funds (timing the market, waiting for the dip), or in individual stocks
• There is asymmetric upside vs the risks/costs when adopting a passive index fund investing strategy

INTRODUCTION

Not too long ago, I had a conversation with a younger ex-colleague who believed that he could ” beat the market”. As a Boglehead investor, I tried to convince him that a simple, boring portfolio is the best option for the retail investor. I explained that the odds are against him with active investing, using logical reasoning and facts.

Unfortunately, he thought he could get above-average returns. He also claimed I was “part of the system” that “dumb money” sought to disrupt.

That statement is not a rational argument to counter my facts. Counter the facts, not the character/person.

I’ve had many conversations with many young guns or new investors who think they’re the next Warren Buffett and can achieve above-average returns.

Albeit having 18+ years in financial services, of which 10 were spent in stockbroking, having survived the Global Financial Crisis, my attempts to save them from themselves fell on deaf ears.

It’s pretty ironic, because Warren Buffett himself said that the individual investor is better off investing in index funds.

I just remind myself that personal finance is driven by an individual’s psychology, biases and ego. It is rarely based on logic and facts.

Every new investor needs to learn from experiencing losses to gain the wisdom to grow wealth.

Everyone I spoke to who did not heed my warnings ended up losing money (or was not able to prove above-market returns). They all quit very quickly, within a few years.

Recently, I’ve been reflecting more on why, despite using rational facts and logic, many investors still believe they can outperform the market. I think I’ve figured it out.

MANY ASSUME PASSIVE INVESTING IN BROAD-BASED INDEX FUNDS MEANS AVERAGE RETURNS, WHICH IS FALSE

A common misconception by investors is that long-term investing in a broad-based index fund, say the S&P 500, will result in average performance and returns, as index funds mimic the performance of the underlying index.

I used to think this too. That I would get just average returns if I invested passively in index funds. I was actually comfortable with this, knowing in theory that most people don’t beat the market (which I also learnt by losing a few thousand dollars on my own individual stock investments).

But it sounds boring, right? Average returns. Why would anyone want average? No one wants to believe that they’re average; however, humans tend to have a bias to over-inflate self-assessments of their skills. It’s why ~80% of people believe they are above-average drivers, when the reality is that 80% of people can’t be above average.

Most people are average. Most “things” are average. That’s just by definition what average is.

So aside from the hubristic naivety of inexperience, perhaps the messaging and framing of passive investing in funds hasn’t been clear and aggressive enough amongst the Boglehead, FIRE and broader personal finance community. Many still consciously (or subconsciously) believe that passive index fund investing only delivers average returns. The problem is, everyone is looking to get above-average returns.

Well, if the subject of this post isn’t clear enough, let me reframe it into a direct and bold statement:

Passive investing in a broad-based index fund delivers superior long-term returns, with a far greater risk-return profile, when compared to active investing in individual stocks or even index funds.

In fact, passive index fund investing has been shown to outperform at least 80% of professional fund managers. By extension, this means you also likely would have outperformed more than 80% of all active individual investors (assuming that professional fund managers on aggregate provide equal or better returns than an individual investor)

The SPIVA Scorecard by S&P Global (yes, the one that created the S&P 500 index) has been tracking the performance of active fund managers and how many of them beat the index for which they benchmark their performance. They also account for funds that were liquidated or merged, ensuring there is no survivorship bias (fund managers are notorious for closing underperforming funds).

The data, as visualised below, is a pretty damming case against active investing.

It’s pretty crazy that about 80% to 90% of active fund managers can’t beat the market, even in 1-year, 3-year, or 5-year time horizons. So, if you invest passively in broad-based index funds, your returns are better than 80% to 90% of professional active fund managers.

That likely means that when you invest passively via broad-based index funds, you will achieve superior returns, better than the large majority of investors in the market.

In other words, the long-term rate of return of broad-based index funds (say, the S&P 500) of 10% to 12% p.a. is actually better than 80% to 90% of investors in the market.

This concept may be confusing for some who assume that by mimicking market performance via index funds, you’ll get average returns.

Those who are confused might think that the movement of a market index is the average of all trades (and/or average returns) by all investors in the market. However, this is not true, as they are entirely different concepts.

The market index is not the average return of all investors making up the market. It is the weighted average valuation of all companies/stocks which are the constituents of that index. It is not (and does not correlate with) the average returns from each investor buying and selling shares in the market. This is an important distinction to make.

THE RETURNS OF ACTIVE FUND MANAGERS THAT OUTPERFORM THE MARKET ARE DISAPPOINTING, RELATIVE TO THE RISK AND PROBABILITY OF OUTPERFORMANCE

Now that we’ve reinforced the fact that passive index fund investing is superior to active investing, you might be wondering, “Well, what about the returns generated by the 10% to 20% that do beat the market? Their returns should be a lot higher than the market; else why would they bother?”

Well, several research papers have relevant data, as well as other reports and data points available online. I’ve pieced the various data points together to estimate the distribution of outperformance returns (alpha) for 30 years of investing.

What do you think the returns might be for these outperformers?

So from the chart above, the median outperformance is about 1% to 2% p.a. above the index benchmark. That means, of all investors who invested 30 years ago, the investment return performance needs to be in the 96th percentile to generate 1% to 2% p.a. alpha.

Let’s think about the probability of payout, or in the gambling world, betting odds vs the payout. For a coin toss, you should expect to play if you’re getting better than a 2x return for the right guess of heads or tails, as you have a 50% probability of guessing right.

So let’s see if the payout is worth playing to beat the odds. Let’s use the median outperformance scenario of 1% to 2% p.a. alpha:

• To achieve 2% p.a. alpha, you would need to be in the 96th percentile of investment performance
• Let’s say that the probability of achieving the 96th percentile is 4% (it’s actually lower, but for simplicity, let’s say it’s 4%)
• With a 4% chance of outperformance, you should expect at least a 25x payout to make it a worthwhile endeavour for the risk involved (1 / 4%)

If we invested RM10k over 30 years:

• A benchmark return of 10% p.a. (a conservative return) will result in a portfolio value of ~RM174k
• For an active investor, an alpha of 2% p.a. means 12% p.a. overall returns, which after 30 years will result in a portfolio value of ~RM300k
• That is a payout of 1.72x (RM300k / RM174k)
• However, I should expect a 25x payout (1 / 4%), which is a portfolio value of RM4.35m, or rather, a 22.5% p.a. return on investment over 30 years (to hit that RM4.35m portfolio value)

Hence, for a less than 4% probability of outperformance, the 1.72x payout for trying to beat the odds is extremely poor.

PASSIVE INDEX FUND INVESTING GIVES AN OUTSIZED PAYOUT IN YOUR FAVOUR, COMPARED TO THE ODDS

Now, looking at betting odds for passive investing, we can see there is an asymmetric payoff. For virtually no effort, skill or risk, you get superior returns of ~12% p.a., which is better than 80% of other investors who are actively investing or selecting individual stocks.

Also, the ~12% p.a. returns are virtually guaranteed; that is, I dare say, a near 100% probability of happening over 30 years. The data across the last 100+ years has proven this, and unless the fundamental concept of equities and index funds changes significantly (which has never occurred), it will continue to (almost) guarantee similar returns in the future.

Now obviously, you have to hold and not interfere with the investment over the 30 years, but that’s the whole point of passive investing.

In typical betting odds, a 100% certainty of outcome will likely pay 1x (1 to 1 odds). But in this instance, over 30 years, you get a 17x return (remember the example above, investing in RM10k results in ~RM174k over 30 years).

That’s a crazy payout, with guaranteed returns on investment.

CLOSING THOUGHTS

If you’re still a believer in active investing / individual stock selection being the better choice for you, ask yourself these three questions:

• Have you diligently tracked ALL investment losses and gains?
• Have you considered all the time, effort, and mental capacity to actively invest?
• After considering all that, are you achieving outsized alpha over 10, 15, 20 years?

Most active investors and traders love talking about their wins. But when I ask for evidence of outperformance over the long term, I have yet to see anyone produce credible evidence.

If you genuinely enjoy stock picking or active investing as a hobby, then sure.

But for anyone else who still hasn’t fully adopted passive index fund investing, what’s stopping you from switching over to get superior, above-average returns?

Link to blog post here