ASB Investment as an Economy Indicator

     ASB dividend and bonus for 2015 were announced as 7.25% and 0.5% respectively. This is the worst dividend from ASB investment since 2002. However, the low dividend was compensated by the higher bonus at 2%. Therefore, the combination of dividend and bonus in 2015 is the worst...so far. We can expect the worst in 2016. If we calculate carefully, 2015 return of investment is really bad because the bonus is an average of investment for the past ten years! This historical ROI of ASB investment is shown in the table below (updated from my previous article in Simplest Way to Start in Investment while Accumulating Capital):

Year	Dividend (sen)	Bonus (sen)	Total (sen)
1990	8.00	6.00	14.00
1991	8.50	4.00	12.50
1992	7.50	5.00	12.50
1993	9.00	4.50	13.50
1994	9.50	4.50	14.00
1995	10.00	3.00	13.00
1996	10.25	3.00	13.25
1997	10.25	1.25	11.50
1998	8.00	2.50	10.50
1999	8.50	1.50	10.00
2000	9.75	2.00	11.75
2001	7.00	3.00	10.00
2002	7.00	2.00	9.00
2003	7.25	2.00	9.25
2004	7.25	2.00	9.25
2005	7.25	1.75	9.00
2006	7.30	1.25	8.55
2007	8.00	1.00	9.00
2008	7.00	1.75	8.75
2009	7.30	1.25	8.55
2010	7.50	1.25	8.75
2011	7.65	1.15	8.80
2012	7.75	1.15	8.90
2013	7.70	1.00	8.70
2014	7.50	1.00	8.50
2015	7.25	0.50	7.75

     But does this mean ASB investment is no longer a good investment? If you invest using cash money, you should continue to do so. The ROI is still a lot better than a fixed deposit in any bank (unless you can find a Quick Rich Scheme Bank).

     If you invest using ASB loan, does the calculation in my old article is still profitable? For a RM50,000 investment using an ASB loan, the return is:
a) A direct calculation of RM50,000 X 7.25% = RM3,625
b) By monthly calculation, the total dividend = RM3,747.91
    (provided investment were done before 26 Dec 2014)
c) Bonus = RM50,000 X 0.5% /10 years = RM25
d) Total Return of Investment = RM3,625 + RM25 or RM3,747.91 + RM25
                                                = RM3,650 or RM3,772.91

The annual loan payment:
a) monthly for 25 years = RM314
b) a year payment = RM3,768

Profit/loss = RM3,650 - RM3,768 or RM3,772.91 - RM3,768
                 = -RM118 or RM4.91

Is it a profit or loss? It all depends on how you calculate and what is your target period of investment. Let assume, an investor has current investment using ASB loans as below:
a) RM50,000 loan for more than six years at RM334 per month
b) RM50,000 loan for more than two years at RM314 per month
c) RM50,000 loan for more than one year at RM315 per month

The ASB loans ROI is:
a) By monthly calculation, the total dividend are = RM3,747.91 X 3 = RM11,243.73
c) Bonus for 3 different periods = RM150 + RM50 + RM25 = RM225
d) Total Return of Investment = RM11,243.73 + RM225
                                                = RM11,468.73

The annual loan payment:
a) Monthly for loan of 6, 2, 1 years = RM334 + 314 + 315 = RM963
b) a year payment = RM963 X 12 = RM11,556

Profit/loss = RM11,468.73 - RM11,556
                 = -RM87.27

     But, if the investor did not invest in any ASB by loan, the investor is not sure whether he can accumulate cash in hand. By using ASB loan, the investor have forced to accumulate the capital for the past six years+. While the two loans which are two or less years can be assumed there is no capital gain.  If the investor sell the ASB loan which have been serviced for more than six years, the capital gain is about RM10,185+.

Therefore, the actual gain for 2015 = RM10,185 + (-RM87.27)
                                                         = RM10,097.73

Thus, ASB loan is still profitable for a medium term investment with high liquidity after the 2nd year.

Does this mean it is still wise to add more investment using ASB loan? You should decide what is the period, the risk you are willing to take and if there are other better alternative of investment to be done.

With the deteriorating of ASB investment return, does this mean Malaysia will face a lot of tougher economy condition this year?

HAPPY INVESTING!!