Annuities Commodity (Malaysia)

Rachel Goh Yik TengMA0N0236

Managerial Finance

Real Cases Presentation

What is Annuities “An annuities is a stream of equal

periodic cash flows, over a specific time period

These cash flow usually annually but can occur at other intervals (monthly)

Inflows – returns earns on investments Outflows – funds invested to earn future

returns

Types of Annuities Ordinary Annuity – the cash flow occurs

at the end of each period Annuity Due – the cash flow occurs at

the beginning of each period

Annuity Commodity in Malaysia

Bank Accounts Insurances Mortgage Hire purchase (Car) Taxes – income tax EPF

Bank Accounts Saving accounts – “maintained by retail

financial institutions that pay interest” (0.25%/annum)

Fixed Deposit account – “provides investors with a higher rate of interest than a regular savings account, until the given maturity date” (3.0% - 3.2%)

Insurances “the equitable transfer of the risk of a loss,

from one entity to another, in exchange for payment”

In Malaysia, Insurance agency provide customized package based on individual needs

Combination: medical, accident, life, saving, investment & etc. into 1 policy

Insurance for cars & houses Payment term: monthly, quarterly, bi-yearly,

or yearly

Mortgage “a loan secured by real property” Based on BLR (Basic Lending Rate) –

6.60% Fix mortgage – the interests rate is fixed

for the whole tenure Flexible mortgage – interest rate is

fluctuated by the BLR, interests rates are varies from different banks

Tenure: up to 40 years

Hire Purchase (Car) “pay for goods in parts or a percentage

at a time”, the rest pay with interests monthly

10% deposit Buyer need to prove income status or

else guarantor needed Tenure: 3, 5, 7, 9 years Interest: varies (depends on the car

company and bank)

Taxes – Income Tax Tax levied on the income of individuals or

businesses Taxable rate (for individual) – up to 26% Minimum taxable income – RM2,500/mth Taxable rate (for businesses) – 25% Filing: yearly (own submission) or monthly

(employer will deduct from the salary) Tax deduction: insurance, books, medical

fee for parents, sport equipment & etc

EPF (Employees Provident Fund) “compulsory savings plan and retirement

planning for legally employed workers” save a fraction of employee’s salary Both employee and employer have to

contribute to this fund monthly Employee – 11%, employer – 12% (min) Dividends – EPF only obliged to provide 2.5%.

As to-date, EPF provides 6% Withdrawal is allowed for certain

circumstances

~~ THANK YOU ~~