In my opinion, every Malaysian should have the following three types of assets for accumulating wealth. Let us go through them one by one.
ASNB fixed price funds
I think most Malaysians heard about these funds. If you do not know about these funds, click here to learn more. For Bumiputera, you should invest in ASB funds. For non-Bumiputera, you can only go for the ASM funds. Generally, the dividends of ASB funds are higher than the ASM funds. To learn about the dividend history of these funds, click here.
What is great about these funds is that their unit price is fixed at RM 1.00. Thus, there is no risk of capital loss. They also distribute dividends annually. The lowest dividend rate is 3.75% but generally, you can expect a return of more than 4%. Furthermore, these funds have the implicit, if not explicit, guarantee of the government.
Its main drawback might be the withdrawal process. If you need to withdraw a large sum, you have to go to the counter to perform the transaction. You may have to wait for one to two working days before receiving the sum in your bank account.
EPF
Employees’ Provident Fund (EPF) is also one of the must-have investment assets. It is a mandatory savings program and retirement planning for private and non-pensionable public sector workers. It also allows contribution from individuals not in the previous two categories.
EPF also distributes dividends annually. In the past 10 years, the lowest dividend rate was 5.20%. To learn about the dividend history of EPF, click here. I think it is safe to assume that the dividend rate will be at least 5% in the future.
Although it offers a good return, it is lacking in withdrawal flexibility. We can only withdraw the money after the age of 55, except for some circumstances which allow withdrawal before retirement. Recently, the creation of Akaun Fleksibel (click here to learn more) allows us to access a portion of our fund without restriction.
Nonetheless, I think we should not touch the money in EPF if possible as it is meant for retirement and also offers a good return. If we let the money compound in our EPF accounts, the resulting amount could be very significant.
Stocks
A stock, also known as a share or equity, represents ownership in a corporation. When you purchase a stock, you are buying a small piece of the company. Stocks are a type of security that signifies proportional ownership in the issuing corporation and entitles the stockholder to a share of the company’s assets and profits.
Stocks are bought and sold on stock exchanges, and their prices fluctuate based on supply and demand, company performance, and broader economic factors. Investing in stocks can be a way to grow wealth over time, but it also comes with risks, as stock prices can be volatile. Stocks have the potential to provide high return in the long term. However, during the short term, the price of individual stocks could fluctuate wildly. Furthermore, not every stock would do well. Some stocks might be delisted and cause you to lose all the capital invested in that stock.
Why should we include stocks in our portfolio? That is because other asset classes might not be able to provide the return of the stock market. But the stock market also comes with risks discussed above. Diversification is the key. However, individual stock trading is not for everyone due to various factors. You could invest in unit trusts or exchange traded funds to access the stock market instead.
Conclusion
ASNB fixed price funds, EPF and stocks are assets that I think should be in every Malaysian’s investment portfolio. They will definitely help you to grow your wealth. Do you have these three assets? Or do you think other asset(s) is/are better? Let me know by commenting below.
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If you are confused about the investment landscape, I can help to devise and implement an investment plan for you. Or if you do not want to spend much time on investment, I can help you to monitor your portfolio so that you can focus on other things that interest you.
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Disclaimer: This post is for informational purpose only. You should use judgment and conduct due diligence before taking any action or implementing any plan suggested or recommended in this article.
