If I were to ask you about your financial safety nets, what would you say? For most of us, the answer is almost automatic: “I have an emergency fund” and “I save in ASB or other ASNB fixed price funds”.
And you know what? That’s fantastic. Having an emergency fund and investing in ASNB fixed price funds are foundational pillars of financial wisdom. They are safe, relatively accessible, and have helped millions of us sleep better at night.
But here’s the uncomfortable truth I see every day as a licensed financial planner: Your greatest financial strengths might be silently holding you back from building real, lasting wealth.
This is what I call The Irony of Liquidity.
The Comfort Zone: ASB/ASM & Your Savings Account
Let’s break it down.
1. The Emergency Fund Trap
The rule of thumb is to have 3-6 months of expenses in a savings account for emergencies. This is non-negotiable. But what happens when that fund balloons to 12, 18, or even 24 months of expenses?
I’ve met clients with RM50,000, RM100,000, or more, sitting in a savings account earning a paltry 0.5% – 2% per annum. Meanwhile, inflation in Malaysia is historically around 2-3%. Your money is actually losing purchasing power every single year. That “safe” money is eroding in silence.
2. The ASNB Fixed-Price Fund “End-Game”
ASNB’s fixed-price funds (like ASB, ASM, etc.) are brilliant products. Their stability—the unit price never drops—makes them a fantastic tool for capital preservation and steady growth. For many, they become the beginning and the end of their investment strategy.
The problem? While these funds are excellent for their purpose, relying solely on them is like training for a marathon by only ever going for a gentle jog. It’s good, but is it enough to win? The returns, while generally better than a savings account, are primarily dividends that can fluctuate and may not always outpace inflation by a significant margin for true wealth acceleration.
The Irony: When Being Too “Liquid” Costs You
Liquidity—the ability to quickly access your cash—is a double-edged sword.
- Psychological Cost: Money that is too easy to access is also easy to spend. That “emergency fund” can slowly morph into a “new handphone fund,” a “last-minute holiday fund,” or a “car downpayment fund” without a true emergency in sight.
- Opportunity Cost: This is the big one. Every ringgit sitting idly in a low-yield account is a ringgit that isn’t working harder for you in other avenues. That money could be:
- Fueling a well-diversified investment portfolio in global markets.
- Serving as a down payment for a second property to generate rental income.
- Being invested in private retirement schemes (PRS) for additional tax relief and long-term growth.
The irony is that in our quest for safety and liquidity, we are often forfeiting the higher returns needed to achieve financial freedom and outpace inflation.
So, What’s The Solution? A Strategic Layering Approach
The goal isn’t to abandon ASB/ASM or empty your emergency fund. It’s to optimize them. Think of your finances as a football team: you need a solid goalkeeper and defenders, but you also need strong strikers to score goals.
Here’s a practical framework:
- Define Your True Emergency Fund: Calculate 6 months of essential expenses. Park this amount in a high-yield savings account or a money market fund. This is your untouchable “goalkeeper.” Protect it.
- Use Fixed-Price Funds as Your Core “Defender”: Your ASB, ASM, and other fixed-price funds are your reliable defenders. They are perfect for your medium-term goals and the low-risk portion of your portfolio. Decide on a strategic cap for this portion based on your age and goals. Once you consistently hit your monthly investment target here, it’s time to diversify.
- Build Your “Wealth Acceleration” Portfolio: This is where you bring on the “strikers.” Any surplus funds beyond your emergency fund and ASB/ASM cap should be strategically allocated to higher-growth potential investments. This could include:
- Global Unit Trusts: To tap into the growth of international markets like the US and China.
- PRS (Private Retirement Scheme): For extra tax relief and a structured retirement plan.
- Real Estate (REITs): For exposure to property without the hassle of being a landlord.
- A Balanced Portfolio of Stocks and Bonds: Tailored to your specific risk appetite and time horizon.
You Don’t Have to Navigate This Alone
Making this shift can feel daunting. How much is “enough” in ASB/ASM? What other investments are right for a Malaysian like you? This is where a professional can make all the difference.
As a licensed financial planner, my job isn’t to sell you products. It’s to be your strategic coach. I help you:
- Conduct a thorough financial health check-up.
- Define your life goals (retirement, children’s education, house).
- Create a personalised investment strategy that uses your ASB/ASM and emergency fund as a foundation, not a ceiling.
- Implement a plan that balances security with smart, growth-oriented investing.
Stop letting the irony of liquidity hold you back. Your financial future has the potential to be so much brighter than a savings account statement.
Ready to build a strategy that goes beyond the conventional?
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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.