KUALA LUMPUR: There are many ways that Amanah Saham Bumiputera (ASB) unit holders can opt for to maximise investments, especially with its recent five year high dividend.
Instead of cashing out the dividends, Malaysian Financial Planning Council (MFPC) president Andy Ng Yen Heng suggested unit holders to reinvest their dividends back into ASB, taking advantage of its compounding returns.
"ASB's relatively stable returns make it an ideal vehicle for long-term growth. Automate reinvestments where possible to avoid spending dividends and maximize compounding potential," said Ng.
He also said that investors should ensure that the returns outweigh the loan interest rate.
The current returns have made ASB financing as an attractive investment tool but it also requires careful cash flow planning.
Ng said unit holders should avoid over-leveraging and assess whether they can sustain loan repayments in the long term.
Although ASB is highly stable, Ng said investors may want to consider other investment types that might offer competitive returns and cater to different risk tolerances.
"Allocate a percentage of funds to moderate- and high-risk investments for growth potential if it aligns with your higher risk profile," Ng said.
He added that ASB investments should be utilised as part of a larger financial goals where unit holders can build a retirement fund based on compounded dividends.
It also serves as an education fund for children through disciplined contributions.
Lastly, Ng advised unit holders to consult a financial planner to tailor a holistic financial plan that maximises ASB returns.
He noted that a financial planner can provide comprehensive advice that covers investments and other components of personal financial planning including insurance/takaful planning, retirement, risk management, zakat/tax planning, and legacy planning.
"The ASB dividend and bonus announcement is a reminder of its value as a stable, income-generating investment.
By adopting disciplined financial planning, ASB holders can secure long-term financial growth while mitigating risks associated with over-concentration in a single investment product," he said.
Permodalan Nasional Bhd announced a combined dividend and bonus of 5.75 sen for ASB this year.
The 5.75 sen dividend is made up of 5.5 sen dividend and 0.25 sen bonus dividend.
The dividends involve a total payout of about RM10.1 billion to 11.1 million ASB unit holders.
The dividend payout of 5.75 sen surpassed its benchmark Maybank 12-month fixed deposit rate of an average of 2.64 per cent for 2024.