ASB Investment FAQ: How to Buy Units, How Lucrative Are They?

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ASB Investment FAQ: How to Buy Units, How Lucrative Are They?

ASB. You might’ve come across this term on numerous occasions in the past, but unsure of how exactly it works and why it’s a big deal. Some of you may actually have a fair idea of what it is all about but don’t know how to get some of its units.

Well, it’s time to clear the clouds as we explain the fundamentals of ASB. Read on!

Q1) What is ASB?

Launched in 1990 exclusively for the Malaysian Bumiputeras, ASB or Amanah Saham Bumiputera is a popular unit trust fund owned by the country’s largest investment company, Permodalan Nasional Berhad (PNB). ASB was started by the government-linked PNB with an objective to strengthen the economic standing of Bumiputeras by providing the community with an additional vehicle to save and invest.

ASB is basically a long-term income equity fund with a fixed price of RM1 per unit that doesn’t charge for any unit sales or redemption.

Q2) How much can I invest into ASB?

You can invest any amount below RM200,000 any time to purchase ASB units and are also free to subscribe to additional units within the limit. Having said that, there’s no cap on the total value of an ASB account which can exceed RM200,000 if it’s boosted by dividend gains.

Related: Credit Report FAQ: What’s CCRIS and How Is It Different from CTOS?

Q3) What are the risks involved?

ASB is regarded as a low-risk but consistently high-returns fetching savings and investment tool. Low-risk because the capital value of your ASB investments is unlikely to depreciate as its bounded by government regulations.

However, low-risk is not no-risk. The value of ASB investments might fluctuate depending on the country’s economic health, overseas capital market performance, the performance of local stocks, etc.

Q4) How much returns do ASB units fetch?

Now coming to ASB’s dividends, the principle reason why it remains so popular in Malaysia. The fund computes its dividend every month but distributes it once a year to its account holders who receive a dividend and a bonus on their purchased units.

In December 2017, the PNB announced a total annual dividend of 8.25% (7% dividend + 0.25% bonus + 1% special bonus on the occasion of PSB’s 40th anniversary) amounting to RM10.7 billion for the 9.1 million ASB account holders who own at least 145.6 units.

In fact, ASB has fetched an average annual dividend of 8.42% in the last 10 years.

Click here to see an infographic table on ASB dividends since its inception in 1990.

Q5) From where can I purchase ASB units?

You can purchase ASB units with cash from any of the 30 branches nationwide of Amanah Saham Nasional Berhad (ASNB), the company that manages ASB.

You can also buy into ASB from its authorised banking agents like Maybank, Maybank Islamic, CIMB, RHB, Affin Bank, Bank Simpanan Nasional, Alliance Bank, AmBank, AmBank Islamic and Pos Malaysia (only non-banking agent). You can also use the internet banking facilities offered by some of the aforementioned banks to avail ASB units.

Related: No More Excuses: 4 Reasons Why You Should Get Life Insurance

Q6) Can I withdraw ASB investments if there’s an emergency?

Yes. In case of an emergency, you can withdraw your ASB investments immediately during working hours at any ASNB branch or agents banks.

Q7) How can I use my ASB returns?

Depending on the amount you’ve invested into ASB, the accumulated returns and dividends for, say 3 years, can be used for your house downpayment. You can also use the returns to pay off debts like credit card dues, personal loan prepayment (if your loan provider allows for that) or any other major expense like a new car or a vacation abroad with family.

Related: 4 Key Differences Between Islamic Banking and Conventional Banking

Q8) How can I purchase ASB units if I don’t have liquid funds?

You can do it in three ways:

  • Withdrawal from EPF funds: if you’re 18-55 years old and you’ve at least RM5000 exceeding your Account 1 basic savings amount, you can withdraw up to 20% from the excess savings. For more information, click here
  • Salary deduction: Salaried professionals can go for this option to raise capital (private sector employees need to submit completed BS1 F(1) form to their payroll unit; public sector employees need to submit completed SPG ASNB form to their payroll unit. For more information click here)
  • ASB loans: Most of the authorised agent banks like Maybank, BSN, CIMB, AmBank, RHB and Affin Bank offer loans to Bumiputeras to purchase ASB units. (More on this in the point below)

Q9) What are the features of an ASB loan?

Most ASB agent banks offer basic term loans with a flexible rate of interest (interest percentage to change according to the bank’s Base Lending Rate (BLR) movements) to invest into ASB. The borrowers can also choose to safeguard their loans with insurance or Takaful cover with an additional cost.

The ASB financing amount is generally in the range of RM10,000 to RM200,000 for a maximum duration of 25-30 years (or when the borrower reaches 66 years, whichever earlier), where lock-in periods vary from 2-5 years. The banks offer the loans based on the borrower’s credit score and after receiving all the relevant documents essential to process the loan. Borrowers can opt for early settlements of their ASB loans without any extra charges only after the completion of the lock-in period. Otherwise, they’ll have to pay an exit penalty.

Learn more about ASB financing offered by Maybank, CIMB, RHB and BSN.

Related: 9 Essential Questions About Fixed Deposits That Everyone Needs to Ask Before Investing

Q10) Shall I go for an ASB loan or try to invest from my savings?

There are many who argue that it’s better to go for a loan to purchase ASB units because it’s convenient and profitable if yearly loan repayment amount is lesser than the unit trust’s annual dividend.

On the other hand, there are others who argue that the risk to lose capital is more if borrowed money is used to invest into ASB. Not only does ASB loans come with additional costs, interests may increase if markets underperform. Plus, the borrowers are left with a small amount of return after repaying the loan.

We suggest you take stock of the risks involved and opt for ASB financing only if it’s worthwhile.

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