What is ASB FINANCING? ASB Financing VS ASB Saving 2020
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- เผยแพร่เมื่อ 2 ก.ค. 2024
- In this video, we go through ASB Financing and you can use it to build a RM1,000,000 retirement portfolio.
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Amanah Saham - one of the greatest investments for eligible Malaysians. But did you know about it’s younger, better sibling ASB financing?
Unfortunately, some of you wouldn’t be able to participate in this and we really wish that wasn’t the case.
For those of you who can, consider yourself fortunate!
WHAT IS AMANAH SAHAM (1:05)
All Amanah Saham funds (AS1M, ASB, ASB2,etc.) are managed by a fund manager named Permodalan Nasional Berhad (PNB).
They were formed in 1978 as one of the instruments of the New Economic Policy.
These funds were created to encourage a behaviour not many Malaysians participate in - investing.
In order to do this, they decided to create fixed NAV funds that return yearly “dividends”.
What this means is each unit in Amanah Saham Bumiputera is fixed at RM1. Essentially, you can’t lose money investing in ASB.
With the launch of this product, banks came up with an idea.
“What if we provided loans for Malaysians to invest in Amanah Saham, creating a win-win situation?”
Thousands of the greatest minds as they brainstormed this concept and a product was born, ASB Financing.
ASB Financing is a simple concept. Banks provide loans at a BR + x% rate (depending on bank) that will automatically be put into your Amanah Saham account as an investment in ASB.
When you look at your ASNB account, there will be a split between your cash investments and loan certificate.
I (Emir) have an ASB loan of RM100k.
They split this amount to show you what portion of your account is available for withdrawal.
The banks have agreements with ASNB that prevents you from withdrawing the loan amount of RM100k, meaning its sole purpose is as an investment in ASB.
If I default on my monthly installments, the banks can withdraw this entire loan certificate from my account meaning they have zero risk in disbursing these loans.
For as long as I continue paying my monthly installments, this RM100k will be in my ASB account generating returns for me over the long run.
ASB FINANCING VS ASB SAVING (3:16)
This entire concept of ASB Financing is called leveraged investing: borrowing money from others to invest.
We don't usually recommend leverage investing since you can lose a lot of money very quickly.
ASB is slightly different though. Since the funds are fixed at RM1/unit, we can’t lose money.
So, we can utilize leverage to outsize our returns that couldn’t be achieved if we invested regularly.
Let me give you a personal example of how this would work. I’ll work on the assumption of 6.5% ASB returns & 4.8% ASB Financing interest rates. This gives us a spread of 1.7%.
I’ve decided to apportion RM530 of my monthly income to invest in ASB.
After a year, I would have RM6,360 of invested capital and (Insert complex calculations here) RM224 returns from ASB. This brings me to a total of RM6,583. Very nice results for a year of saving!
If I use the same RM530/month and decide to go the ASB financing route however, things get better. With that monthly installment amount, I get an ASB Financing agreement worth RM100k. This nets me RM6,500 in dividends.
On top of this, I’ve paid off RM1.5k of my RM100k loan. This means that if I decide to terminate the contract, I would get the money deposited into my ASB. This brings my total returns to RM8,000, nearly 23% higher compared to standard ASB deposits.
HOW TO USE ASB FINANCING
First up, you need to see what your retirement timeline is. For me being 24 this year, I have 31 years till I become 55. Let’s make it 30 for simplicity sake.
Over the next 30 years, I expect average ASB returns & ASB Financing interest rates of 6.5% & 4.8% respectively.
These are pretty safe assumptions as although ASB returns were lower in 2019, interest rates have also fallen below the 4.8% mark.
Next up, I take up an ASB Financing amount of RM150k. Note that the highest loan amount you can take is RM200k, so you can earn more if you’re willing to set more money aside every month.
This leads to a monthly installment payment of roughly RM790, or RM9,500 . After 30 years, I’ve fully paid off my ASB loan and the net amount in my ASB is now…. RM992k.
Without adding anymore funds, I’d be raking in RM65k per year in dividends alone.
PROS OF ASB FINANCING (7:37)
CONS OF ASB FINANCING (9:42)
HOW TO GET STARTED WITH ASB FINANCING (13:32)
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Selamat Hari Raya & Happy Holidays to all of you! :) What do you think? Do you prefer ASB financing over manual deposits into ASB?
As Malaysian, it is VITAL to know about ASNB, like one of the safest way to gain returns. Not get rich quick but definitely something we should have on our portfolio
Yep we agree! One of the best places to get started too especially if you don't know much yet :)
so happy to stumble upon this channel. great content ! selamat hari rayaa
Thank you! Glad you enjoyed it :)
In depth content, love it.
Thanks Amir! Glad you did :)
Thank you for the sharing !! It is really useful and really thanks to some one have share to us the knowledge on investing in Malaysia ! We need more on this. Bdw, really appreciate the hard work !
Glad you enjoyed it Jason! Thanks for the support :)
I think it's important to highlight the first 2 cons of asbf properly.
1. For the DSR issue, this is only true for the first few years (assuming you've been paying every month) but once your dividend is higher than the monthly commitment you pay for the loan, asbf actually adds value to your DSR. The dividends you get is included in your income calculations for your house loan. So if u plan to take a house loan the same year you take an asb loan, then asbf may not be a great idea. But if u plan to get that house in 3 years, it would be better to take the loan.
2. You don't really lose money persay. You only get lower returns. If interest rate is 5% and returns 4%, you didn't lose money, but you gained 3% (returns - spread). The only time you do lose money is when the spread between interest rate vs dividends returns is so large, it actually negates the dividends. Ex: interest rate 7% and return is 3%. Then you lose 1%. And not to mention, this has to happen for an extended period of time and not just a one off incident.
Thanks for taking the time to write this Akid! Our response as below:
1. From what we read up a bit previously, only some banks consider ASB dividends as a source of income. You're probably right in the scenarios that they do, though.
2. Hmm, would be interesting to compare calculations on this one as a lower return compared to dividend does show a loss in terms of net capital (principal paid+dividends) less installment amount on our model. Yeap, it of course has to be on extended time period to be an actual loss and it probably should've been explained better. On another note, a lower return vs standard ASB is considered a "loss" for us in terms of opportunity costs since it should be comparative.
Omaigod. I feel this video is the most useful ever. Speaker keeps answering question I have in mind, exactly perfectly I want to know. Thank you for the knowledege !
Haha glad it helped! We tried thinking of what kind of questions ppl would ask :D
i love your videos brother
Haha thank you man! Appreciate the kind words
Keep it up!
Will do!
Nice content...really like the way you explain it so that it's simple to understand. Especially the calculations are useful to get the picture. I went to check the Maybank monthly instalment schedule and noticed there are 2 types: with and without PRTA/PRTT. Do you know what is the difference between the two and which option did you go for? Thanks!
Hi June. Believe PRTT is Takaful option, and I can't remember exactly but I think I went for that one. Glad this video helped!
Good content
Thank you!
Very informational thank you. Can I know at what age did you start ASBF investing and how many years already did you start the ASB finance? Thank you.
Thanks for the kind words Umar! Started right when I got my first job at 22, its been 2 years :)
Future Finance Minister
hahaha no way man. Screenshot this if it happens
Currently I’m taking 2 certificates total of rm 150K. Might expect lower return from the dividends this year. Luckily, moratorium does help me for monthly payments
Nice Halmeey! Yep, we're making use of the moratorium too and delaying our payments. Hopefully the dividends aren't too bad though 😕
@@MillennialFinanceMalaysia what is the impact of making use of the moratorium? do the banks charge our profits instead for the year?
Unfortunately all the other fixed rate amanah saham's which were open to the general public are sold out
That's true. They do have slots occasionally but it's a hassle to keep trying your luck
But then we can choose to use the return as the monthly payment after we successfully pay for the first year right?
Yep you can! We recommend not to this though as it'll impact your returns a lot over the long run.
Hey bro, u forgot to mention about zakat saham. That's one of the factor many left behind😅
thats a good point man, thanks for bringing it up!
Could you share how does the BR/IBR affects the interest rate? Which one better, lower or higher?
Hey Gloria! Lower BR/IBR will definitely be better for ASB financing. The higher the BR/IBR, the higher the interest rate, and the more we gotta pay the banks for taking this loan. Hope it clarifies :)
@@MillennialFinanceMalaysia thank you for sharing! personally, would you consider CIMB or Maybank?
@@GloriaAnne i have a slight bias towards Maybank cause i like it better overall haha, but just compare the rates!
Which one did u prefer?
1. Upgrade ASB loan from 50k to 100k or
2. Add another 50k (i.e got 2 ASB cert)...
Hi Ridzuan, don't think there's much of a difference between the two. I would probably get the other certificate to see if I can get better rates from another bank!
@@MillennialFinanceMalaysia Okay...thanks for ur thought . Such a good channel for youngsters.
No problem :)
I just wanna ask. Lets say i started my asbf in 2021 with interest rate from bank around 3.6% and asb dividend of 4.25%, that means it is still higher by 0.7%. Example i take 100k loan and pay rm530/month. Then fast forward 2022, if the dividend drop again to 3.5% (case example), and ive been paying bank the 3.6% interest since 2021, does that mean i actually have a loss by -0.1%? Or the interest rate will eventually change annually and i have to pay according to the current interest rate? But if that is the case, if the interest is changing each year, does it effect my monthly payment? Because maybe in 2021 the interest is 3.6% and in 2022 it can be 3.2%, but ive been paying rm530 in 2021 using the 3.6% interest rate. Im sorry but im just wanna clear out my curiosity on this
Yes the interest rate changes from time to time, subject to Bank Negara's OPR that they set. Usually, the bank will only notify you of a change in monthly payment if the difference is more than RM50, otherwise you'd just be paying off your loan quicker :)
Is it still worth to take asbf this year(2021)?
Hi, i just want to ask is it possible for students who apply for ptptn but at the same time they want to apply for asb financing loan? Or this loan entitle for those who has started their career?
Think you need to have a career first, cause they need your income proof to get a loan
May I know which bank do you use for ASB financing
Currently using HLBB, but I'm not sure which has the lowest one for now. From what I know, CIMB seems to have pretty decent rates too
Millennial Finance Thanks for that, I’m going to wait first until Jan 2021 to see if it’s still worth it
@@mak99344 Good thinking! All the best :)
here in my garage...haha nampak tai lopez punya video di situ...
haha known for get rich quick schemes! 😂
When is DEBT a good thing?
It can be good in many situations, as long as its working in our favour!
May I know, I'm fresh graduate and just working for 5 months, and looking forward to take 100k loan, but not sure should i took 30 years loan for 100k or 70k loan for 20 years
Hey Hakimi! Personally, I feel that we should always go for 30y loan with ASB financing. It gives the best returns, but its up to you!
@@MillennialFinanceMalaysia i see, but im worried about the interest i will pay ahahhah, the difference was so huge between shorter tenure and longer tenure,
@@hakimimastor6777 Yep, but its fine to pay more interest if you're gonna earn even more. Just gotta look at it that way!
Your name is emeer? What’s your name?
its Emir! :)
@@MillennialFinanceMalaysia oh how old are you? Looks young but You hv so much knowledge. Proud of you
Aphal baju melayu kau mcm baju cine je?
Quick one, Stashaway or ASB financing?
Hey Nassmin! It's difficult to pinpoint a single investment just like that. Why don't you try out StashAway for a bit while depositing in ASB and see which you prefer?
Millennial Finance Understandable 😊 Just I did invest in ASB since uni time 2014 but only for 50k so doesnt have much return. So I drop out in 2016, but I’m currently on Stashaway. We see for few years 😊
Asbn non bumiputera boleh join?
Unfortunately tak boleh :( non bumis have to go for the other Amanah Saham products
@@MillennialFinanceMalaysia fortunately la. Bagus la bumiputra ada asb sendiri.
Is it still worth to take asbf this year(2021)?
Personally I think so, but you gotta do on evaluation based on your current financial standing!