Archives for December 2007

Calculating ASB Dividends & Bonus

Oh my goodness, the dividend rate and bonus rate for your ASB investment is so-and-so percent! That’s great! So… What does it mean actually? How much are you actually getting? How do you calculate that?

Alright, two of the main components of returns from Amanah Saham Bumiputera (ASB) are the DIVIDENDS and the so called BONUS. Always, Permodalan Nasional Berhad (PNB), will release announcements of the dividend and bonus rates in the media towards the end of the year. Remember that the rates are annual rates. Now, let’s learn on how to ACTUALLY make sense of these rates.

Calculating Dividend

The formula is:
Annual Dividend Rate/12 Months X Average monthly balance for the year


Say, Dividend rate = 10%, Average monthly balance for the year= RM10,000
So, (10% / 12) X RM10,000 = RM83.33

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Journey Towards Financial Freedom: Food for Thought

Think about this for a second.

Whenever we talk about investing our money, there’ll always be excuses. There’ll be talks about the need of being careful. There’ll also be talks about investing only the money you can afford to lose. In fact, there’s even this fellow blogger of mine who has a friend that when confronted with the idea of investing, the friend said “I’ll just wait when I’m rich“. Imagine that! Wait to invest only after we’re rich. The only way that’ll happen is perhaps through inheritance or maybe lottery? There goes the hope of wealth for the majority of the world’s population. Basically, there’ll 1001 excuses of not wanting to invest (or save money for that matter). The image we project is that, investment is a dangerous thing and a sure way to waste your money.

On the other hand, when it comes to other things in life, mainly luxuries and WANTS, it seems like, making those sort of decisions are much easier. Be it buying the biggest plasma screens, the latest mobile phones, the latest cars, the latest designer clothes, and etc. There are no talks that these sort of things being depreciable assets that give you no returns whatsoever.
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Having an Emergency Fund

Another important component of a ‘complete’ financial plan is having a contingency plan. An important element of that contingency plan is by having an emergency fund (i.e. some money set aside for those rainy days).

It is indeed important to have some significant money set aside just in case something bad happens like major car repairs, major home repairs, urgent surgery, and etc. Yes, having insurance can cover these instances but sometimes, you yourself need to pay first before claiming from your insurance company. Plus, sometimes, it can get a long time for your claims to be processed. Who knows, you might even have problems with your insurance policies?

So, how much money should be left aside? It all depends on the individuals. 6 months worth of your expenses is fine. 12 months is better. 18 months worth of expenses is even much better! The idea is, the more you have, the better.

Where should you park this money? Under the pillows maybe? Hell no!

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Property Investing: Battle of Conscience

Alright, let me give you a situation:

Imagine that you own a house. The house is being rented out to a family of husband and wife with 4 children. The husband is the only breadwinner of the family and the wife is a homemaker.

You’ve signed a one-year lease with the family (i.e. the family is liable for one year’s rent).

A few months in, the husband suddenly dies of a mysterious illness. Naturally, upon his death, all of his assets will then be frozen (because he doesn’t have a will). Take note that all the bank accounts with substantial amount of money is under his name (including the checking account).

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Risk Tolerance Level: Part 2

This is a continuation of my previous article on risk tolerance level. This time, we will be having a look at real-life examples. A lot of people are sucked in by the potential high-returns that are often matched with aggressive funds. Sometimes, they do not understand what they are diving into. They just look at the rewards factor, not the risk factor. I will be using two products from Public Mutual to illustrate this. Let’s have a look at the first one, Public Asia Ittikal Fund, which is an aggressive fund.

Have a look at the chart below.

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Estate Planning: Should I draw up a Will?

Believe it or not, in the journey of financial freedom a.k.a wealth creation, preparing your will is one of the most important thing that one needs to do. In a person’s financial plan, if there’s no consideration of drawing up a will, then that financial plan is not complete.

The same as chicken curry is not complete if santan (coconut milk) is not added, a financial plan is not complete without a will.

It is also of my belief that you’re never too young to prepare a will. It doesn’t matter if you’re 18, 19, 21, 30, 40, as long as you own some assets, having a will is important. Let’s have a look at why this is so.

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ASB Rates for Previous Years

As requested by Shirley, here are the ASB Dividend rates and the bonus rates for previous years.

Year Dividend(%) Bonus(%)
1990     8.0                 6.0
1991     8.5                 4.0
1992     7.5                 5.0
1993     9.0                 4.5
1994     9.5                 4.5
1995     10.0               3.0
1996     10.25             3.0
1997     10.25             1.25
1998     8.0                 2.5
1999     10.50             1.5
2000    9.75                 2.0
2001     7.0                 3.0
2002     7.0                 2.0
2003     7.25                 2.0
2004     7.25                 2.0
2005     7.25                 2.0
2006     7.20                 1.5
2007     7.30                 1.25

(Source: From all over the World Wide Web)

Latest ASB Dividend Rate

Just heard in the radio. The latest dividend rate for ASB for the end of financial year 31 December 2007 is 8 sen per unit plus 1 sen per unit bonus. That’s a total of 9% return. Watch out for the news.

ASB holders, get your account books ready. Account-book-update-period coming up!

Back to Basics: Asset, Liability, Equity

Alright, let’s talk about the concepts of Asset, Liability, Equity.

We start off with this accounting formula:

Asset = Liability + Equity

To give these terms simple definitions:

Asset: What you control
Liability: How much of that control is not actually yours (yet…)
Equity: How much of that control is yours

Let’s have a look at this example here:

You bought a house worth $100,000 and paid a 10% down payment for it ($10,000). The rest of the amount is financed by a bank.

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My Story: Lim Goh Tong

My Story: Lim Goh Tong

I just finished reading another book today entitled ‘My Story’. It was written by non other than our very own Tan Sri Lim Goh Tong, the brain behind Genting Highlands. The book is about his journey from rags to riches. He talked briefly about his childhood and his earlier projects. A big part of the book was concentrated on his Genting idea.

I have to say, I like this book very very much. Easy to read and very inspirational.

Here are some quotes and phrases from the book that I have to share with all of you.

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