Yesterday, the government announced the establishment of a new trust fund scheme called Skim Amanah Rakyat 1Malaysia or SARA 1Malaysia. Basically, its a fund similar to ASB (Amanah Saham Bumiputera) where people with a household income of below RM3000 can purchase RM5000 worth of shares at RM1 per share and get a guaranteed return of RM134 per month. Read More

If you a bumiputera in Malaysia I’m sure you have heard of Amanah Saham Bumiputera or better known as ASB. In fact most of you might already have invested in this type of unit trust, afterall is there any reason for you not to invest in it? I don’t see any reason to say no. Lately there are some banks like CIMB,MAYBANK and RHB offering loans to invest in ASB and the frequent question ask is does it worth it to take a loan for your ASB investment? Well today I’m going to compare it for you so that it will help you to decide what is the best method to choose, the method that I want to show to you are:

1)      Bank Loan ( pay the whole installment tenure with your income)

2)      Bank Loan (pay only the 1^st year with your income and the year after by using the dividend generated from ASB)

3)      Regular investment (No loan taken)

Before we going further let set a few details, let set the dividend, installment and interest charge on the loan are same as below for the whole loan tenure:

Loan Amount              : RM 50 000

Loan Tenure                : 25 years

Interest rate                 : 4.95%

Monthly Installment   : RM 292

ASB Dividend            : 8%  annually

Now let proceed to the method that we are going to compare.

METHOD 1: BANK LOAN (pay the whole installment tenure with your income)

For this method your investment of RM 50 000 will become RM 342 423.76 after 25 years if you don’t disturb the dividend and let it compounded for the whole 25 years. The amount that you have pay for the whole 25 years is RM 87 600. So it means your net profit is RM 254 823.76 .

METHOD 2: BANK LOAN (pay only the 1^st year with your income and the year after by using the dividend generated from ASB)

For this method your investment of RM 50 000 will become RM 89 764.58 after 25 years. Since you only pay for the first year so the amount that you actually pay for your self is RM 3504. But by using this method RM 84 096.00 of your ASB dividend has been used to pay for the installment which also will effect the compounded effect on your net profit which is reduce to RM 86 260.58 compare to the first method where the net profit is RM 254 823.76

METHOD 3: REGULAR INVESTMENT (No Loan Taken)

Now let see if you decide not to take the loan but discipline yourself to invest regularly  RM 292 monthly for 25 years.  In 25 years your investment  will be RM 267 133.11 and the amount that you have invest is RM 87 600. Your net profit is RM 179 533.11

The topic that we will discuss is about retirement fund. Have you ever wondered how much do you need to retire? Well it’s all depends on the lifestyle that you want to retain during your retirement. To be more precise,  the power of expenses that you want during retirement. Because inflation causes the value of money to lessen each year, the table below will show the amount of fund that you need to have to retain a lifestyle worth 3000, 5000, and 7000 worth of today’s Ringgit. Read More

“ The average EPF contributor’s have only RM 94 000 at age 55” -  Personal Money, 2004

“ An average EPF contributor would have exhausted 70% of their retirement benefits in just 10 years”. – Personal Money, 2007

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Do you want to invest but don’t have the cash? Don’t worry. Did you know you can use money from your EPF account to invest in unit trust? In fact, you can invest your EPF money every 3 months. What you have to do is to check your EPF statement and check the balance in your account. Read More

Have you ever wondered what is the difference if you invest now rather than later?

Here we have an example to illustrate what we are talking about. Let’s say Lim started investing since he was 18 years old and Khoo only starts investing since he was 28 years old. Let’s also assume the return of investment is estimated at a conservative 10% per year (Yes, for Unit trust 10% is quite a conservative estimate). Read More

Earlier we have looked into Unit Trust. Now, we look into compound interest which is closely related and the backbone of unit trust.

Have you ever heard of compound interest? Compound here does not mean the compound you have to pay when you get a speeding tiket but on the contrary, it’s a reward you get when you invest for the long term. This is probably why your unit trust agen will always advise you to invest for the long term, because the longer you invest, the bigger the reward you will receive. To help you understand this concept, lets see the example below : Read More

Editor’s Note: I would to introduce you to our newest contributor, Sheyzal Azman.

He is a Financial Consultant specializing in unit trust.

He was interviewed by the Personal Money magazine in the March 2009 edition.

In this part, he will introduce us to Unit Trust.

WHAT IS UNIT TRUST INVESTMENT?

Unit trust investment is a collective investment method that pools the resources of many individual who have the same investment objective. The investment will be managed by a professional fund manager according to the fund portfolio and objective. Read More