ASB financing still worth?

Malaysia Inflation rate vs the world.

Dear friends,

I hope it's not too late for me to wish everyone here a happy new year 2023. Today is the first working day and I wanted to kick off this new year with this topic. Is ASB financing still worth it?

ASB declared a total dividend distribution of 5.1% ( 4.6% + 0.5% ) for 2022.

For ASB investors, how much do you really receive?

If you have RM30K or less in your ASB the calculation is simple

RM30K x 5.1% = RM1,530 dividend received.

For investors that have more than RM30K, let’s say RM100K

Step 1: RM100K x 4.6% = RM4,600

Step 2: RM30K x 0.50% = RM150

Total RM4,750 dividend received.

Now here is the critical part.

According to media reports last year, Malaysia will experience a recession in the year 2023. But the fact is they don’t pluck the right data from the correct source, which is Bank Negara.

This is not the case for Malaysia as our economic data is not as depressed as the US, Europe, and some other developed countries in Asia.

77 countries worldwide have double-digit inflation whereby Malaysia's core inflation is 4.2% while headline inflation is 4%. - relatively moderate compared to most countries.

Bank Negara targets Malaysia's inflation to be stabilized at 3.24%. This means there will be some more interest rate hikes. But this round, it will not be as steep as last year.

What is the effect of a rate hike?

ASB financing/loan will be more expensive.

The current Maybank ASB financing for tenure >30 years is 4.7% 🥲 for RM30k or less

&

The current Maybank ASB financing for tenure >30 years is 4.35% 🥲 for more than RM30K

ASB loan still worth the investment?

You received a 4.6% dividend from ASB and have to repay a 4.35% loan from ASB. Then your net return is worth 0.25%? Not worth it?

It can get worse this year if Bank Negara decides to increase OPR (interest rate). Remember Bank Negara have to increase interest rate to fight against inflation and make sure inflation stays at 3.2% (right now is 4%)

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