Some people would like to accumulate their capital by saving. Well, saving is simple but not a smart way to grow your investment. But at least it is a good start. Whenever we do saving, we should look for the highest rate of return or annual dividend. Some saving like saving in Cooperatives can give you a return as high as 15% (or more!) per year. But it may lack the liquidity. Most people especially youngsters need immediate cash for whatever reasons. So, the best investment should also consider liquidity as an important consideration.
One of the best and simplest investment which give high return and liquidity is Amanah Saham Bumiputera (ASB). Below is its historical annual returns:
| 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 |
I am sorry to my non-bumiputera readers, you are not eligible to invest in this scheme. But you may find similar loan scheme and do you own calculation and risk assessment.
Now, the trick is how to maximize the investment return.
The answer to that question is simple: use ASB loan.
There are three main reasons to have an ASB loan:
1. Force yourself to have saving and reduce expenditure on non-essential
2. The rate of return is a lot higher in the long term compared to manual saving.
3. An assurance to your family.
First, one of the main reasons people especially those who are new in the market force cannot make any saving is they always calculate the budget based on what they have in their hands. So, let us reduce what we always have in hand by automatically facing ourselves to do investment in an ASB loan. There is also a small side effect of investing in ASB using a loan. You can get back what you have spent!
Imagine, if you are allowed to spend RM3,600 a year in a shopping complex and at the end of the year, you can get back the whole money. Are you going to take the offer? Only an idiot will not! That is what actually happen in an ASB loan. Before we go further, the discussion is based on below parameters:
a) Loan amount: RM50,000
b) Loan tenure : 25 years
c) Monthly installment: RM302 (RHB bank)
If the announced dividend is 7% and bonus is 1%, the estimated annual return is about RM4,000.
The annual payment is RM3,624.
The estimated loan reduction is about RM2,000 per annum. Of course in reality, the calculation is more complex than that.
So, after spending RM302 every month, you can get back the money on 2nd January every year. In fact, there are some balance. And what you also get is an increasing principle. Combining both of them, you get back more than what you spent!
a) The monthly deposit must be made before the 26th on the previous month.
b) To simplify calculation, only the dividend income is calculated at 7.6%
c) There is no withdrawal.
You can see the dividend difference in the first year with the same amount of investment. But, let us see what happen if you continue the investment for the next 10 years. After 10 years, you have deposited RM36,240 in either ways.
There are many more tricks in ASB loan which I can teach if you enroll in the Affordable Property Investment Seminar. For example, what can you do if you cannot afford to begin with RM50,000 loan? Is there any other way to maximize the profit further? Why I choose 25 years of loan? Etc...
Looking at the calculation, only a fool will say he or she does not have sufficient fund to invest in property after planning for 5 years! And if your couple has the same mind set, you can easily multiply the capital by two. So, you should bring along your couple in the Affordable Property Investment Seminar.
Third, when you take an ASB loan, you can also pay an additional RM10/month for a life insurance. Thus, if the borrower is dead, all principle owed to the bank is paid by the insurance company. And the family of the borrower will get the full amount of the principle. It is a cheap way to insured yourself!
Having look at the above calculation and comparison, that is why I put capital as number 5 in my Affordable Property Investment Seminar.
NOW EVERYBODY CAN INVEST IN PROPERTY!!
Update on 5 January 2015
Here are a few critical questions for thought:
1. In a glance, it looks like as time grow, the ASB investment through cash can accumulate more cash than loan, is it true?
2. There are a few practical questions must be raised in order for cash investment in ASB can really be done by anybody, what are they?
3. How can I optimize the cash return from this investment based on the ROI camparison?
4. If I have only about RM200 of excess money per month, how can I reach a maximum loan of RM200,000?
5. When is the best time to buy or sell my ASB loan investment?
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