Justunittrust | Myth ASB Loan – Busted ! (Part 1)
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Myth ASB Loan – Busted ! (Part 1)

Myth ASB Loan – Busted ! (Part 1)


Question : What is a good investment ?

Answer : Pulangan yang tinggi dalam jangkamasa yang pendek.

Question : What does a good investor look like ?

Answer : Like Warren Buffet – discipline, patient & sabar, looks at fundamentals of investment (true value, including the intrinsic or hidden value), willing to take calculated risk (short-term) for good gains (long-term), focus, belief etc

So ask ourselves, can we find “good investment” and be “good investor” ? So, this time around I’d like to share and a little preview into our recent Coaching Session conducted 7 May 2011 by combo of Jaslinah-Ida-Shahrul where we analyse this theory and long-time belief in ASB and ASB Loan. How many of us have blindly accepted the miracle of “feeling rich” almost instantaneously by taking loans and thereafter making so called “wise investment” decision with the loan amount.

Well, dear friends, we have all been deceived for oh so many years. Join me here and let me share with you the myth being busted !

Before that – a quick comparison :

Also note that the ASB dividends – pro rated over 12 months (means each months lowest amount is used to compute dividend) whilst ASB bonus units – pro rated over 120 month.

Also note that ASB has ZERO entry fee or charges whilst Unit Trust in Malaysia usually charges between 5% to 6.5% front loaded fee. This fee is insignificant for investors investing beyond 5 years ie. approximately 1% per year versus prospect returns of 12% or more per year. And often the unit trust comes with personal touch – consultants service at door step, with free valuation and professional advice. Investors are treated uniqe and special under unit trust versus ASB, where investors are merely a pool of investors. In addition many unit trust company package value-added benefits such as FREE Group Insurance, Wasiat & Trust Nomination to investors investing above RM100,000. No limit to RM250,000 per investor as ASB schemes.

So how did we bust the myth of ASB Loan Schemes ?

Two approaches Method 1 – common sense and Method 2 – perfect sense using software (will be discussed in Part 2).

METHOD 1 – Common Sense

Take a scenario. Persoalannya, is it bijak to take loan from bank and invest the amount lump sum (sekali gus) dan bayar bank bulan-bulan. Or is it more bijak to just do investment bulanan yang regular & discipline (seperti amount yang bayar bank) ?

Some basic assumptions :

BLR = 6.45% (historically Malaysia’s BLR averages 8% (cost) similar to return on ASB)

UT returns = 12% (average industry standard for 3 to 5 years period, moderate risk)

UT returns = 8% (average based on historical returns)

Period = 20 years

Amount capital (invest or loan) = RM100,000

Based on analysis & computation it doesn’t make sense to take loan and invest. Lebih bijak to just buat investment bulanan with the same amount (bayar bank). Can you see that the difference is almost 2 kali ganda in 20 years ? RM312,016 (with loan) versus RM652,346 (tanpa loan). Sebab itu perlu bijak sikit. Call me +012-2037003 if you still don’t belief or choose to disagree with these illustration.

We also illustrated and proved the above figures using a simple pocket calculator (PMB) during our coaching session and for some, the results were plain shocking ! Further we discussed and showed proof that ASB is not endorsed as Syariah compliant.

1. Bank Muamalat, Bank Islam –  why are they NOT agents to ASB ?

2. Features of ASB – Securities Commission does not endorse complying to Syariah Guideline on Islamic Unit Trust Funds via a circular letter (will post here soonest I get the copy).

3. Review and ask why is Maybank Stocks where ASB Funds invest above threshold.

4. The feature of capital guaranteed in itself doesn’t fit into the Syariah investment features.

5. Ask any Pusat Zakat, that you wish to pay zakat from your ASB investment and you will be surprised that the investment is not zakat-able

I’m not going to deliberate further on the halalness (some state Fatwa declare “harus” based on issues of “maslahat” or darurat) but I prefer to deliberate ASB vs UT on grounds of financial planning and the numbers resulting from such investment plan. View the following.

The computation and detail illustration shown in this article can be downloaded here. Careful that the spreadsheet contain formulas and can be customized to your needs.

If I go even further to compare and benchmark ASB returns & UT returns against KLCI (Stock market performance) the results are even more obvious. Here, I’ll use a proxy of the best Syariah unit trust (moderate risk/return) available in Malaysia – over 10 years old and has won many awards & recognition locally as well as internationally, presenting Public Ittikal the maiden Syariah Fund of Public Mutual Berhad. (I’m aware that I should not promote PMB in this manner, this is merely a rel life illustration for comparison purposes only)

They say “A picture speaks louder than words” , so let the picture speaks for itself. You can view it here KLSI-ASB div+bonus units – PITTIKAL

Thanks for reading and hope you understand the dilemma involved in this topic.

Will be writing Part 2 soon. Sabar yea…

  • Humaizi
    Posted at 07:12h, 14 August Reply

    very good article..membuatkan saya rasa mcm nak cancel my ASB loan esok gak…posting Part 2 dah ada ke?

  • Azim
    Posted at 20:05h, 14 September Reply

    Assalamualaikum Jas,
    Reading through your articles are very interesting. Wish you could advise as why there is NO CAPITAL gain for ASB n EPF as compared to Unit Trust investment. Tq

  • fauzi
    Posted at 06:45h, 10 July Reply

    just found your blog and totally agree with you.
    i'll use the picture your article and post it in my blog.
    Senang nak faham dengan gambar tu.

    terima kasih ye.

  • man
    Posted at 23:57h, 09 October Reply

    how can u compare 8% with 12%? it should only be loan vs savings comparison, with the same dividen lor

  • ops
    Posted at 01:35h, 06 December Reply

    oopss… u forgot to include that unit trust have typically around 5~6% sales/purchase charge, as well yearly admin fee, i think usually around 1~2% 😀

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