50/50 into ASM & Versa cash?

[reallivegirl]

Let's say I have RM900 available to invest monthly, do I put 50/50 into ASM & Versa cash? Or is it mathematically more optimal to put more funds into one of them? ASM has higher rates (~4.5% p.a. iirc) but has a limit of 100k units available to buy, but with Versa being lower in rates (Currently 3.5% p.a. currently) but no limit.
If I'm not wrong, Versa is better right? Eventually I can't any more after reaching the limit from ASM, and the wonders of compound interest will do its job on Versa Cash? There might be something simple that I might be missing out but I'm too stupid to see.

Also if there's a better place to put my money into, please do share.

 

[cadams2]

@reallivegirl With 900 monthly, it would take you around ~9 years to max out ASM. After that you can max out your EPF as well, I think it’s 100k a year of contribution. EPF has always have atleast ~4% p.a. I do place money in Versa Cash, but it is only because I need a short tem savings to have my cash to be ready for emerngencies.

 

[reallivegirl]

@cadams2 Just checked online recently it says epf have a return of ~2.5 p.a. maybe I'm looking at the wrong thing.
Also I didn't know there was a limit on EPF.

 

[dazza_73]

@reallivegirl https://www.kwsp.gov.my/en/dividend

refer to the dividend rate in the link above. historically they have returned an average of 5%. and yes, the epf self contribution is increased from 60k to 100k in Budget 2023.

As for whether you should commit to ASM first, you need to first establish your financial goals and your risk appetite. ASM is safe (capital guaranteed, RM1 per unit) but ultimately low dividend rate (4.5%, just slightly above reported inflation rate) so at best it can be considered a hedge against inflation, not for growth. Also, take into consideration your age before dumping all into epf since epf is fixed except for certain situations until you are 55/60 even if the dividend rate have historically been slightly higher.

As the person above mentioned, if you can only commit RM900/month into ASM, it would take 9 years to max out the 100k. Not financial advice but if I were in your position, I would take some risk in growth fund since I can see from your previous posts that you are only 28 this year. I'd allocate 30/70 into ASM/MMF/high yield savings and 70 into growth and slowly scale it according to age and risk tolerance.

FYI, I am also new to ASM so take my advice with a grain of salt. I just recently created ASNB account with the announcement so I am not sure about the liquidity and the number of days to cash out the units if and when necessary.

 

[reallivegirl]

@dazza_73 Dang that rate looks pretty nice

 

[dazza_73]

@reallivegirl Yes, but important to consider that it technically cannot be withdrawn until you have reached a certain age/for specific purposes. I personally do not self contribute to EPF too to have cash ready in case of emergencies. If you really want to, you can put into your parents epf as they are probably closer than retirement age than we are.

 

[reallivegirl]

@dazza_73 Might consider public mutual funds

 

[colossians116]

@dazza_73

ASM is safe (capital guaranteed, RM1 per unit)

Hello, I stumbled upon your comment, wanted to know about this "capital guaranteed" you mentioned. As I read on the website, ASNB funds (I assume all funds including ASM and ASB) are not protected by PIDM, so how is the capital guaranteed? Did I misunderstand something here?

 

[bandiron]

@reallivegirl The 2.5% guaranteed returns is exclusive to EPF’s Conventional Account. This means if EPF has somehow incurred losses for a particular fiscal year (touch wood), you will still get that 2.5% returns for that year.

What baffles me is that EPF is actively campaigning for non non-Muslims to convert their Conventional account to a Shariah one, when it does not even guarantee any returns…

 

[reallivegirl]

Also, on maxing the ASM part, do I fully commit to ASM first?

 

[seayhere2]

@reallivegirl Assume ASM gives you 4.5% every year:

RM100 > RM4.50 per year

RM10,000 > RM450 per year

RM100,000 > RM4,500 per year

That means you have to put in at least RM10,000 to see any kind of significant return (RM37.50 a month) but you can withdraw it anytime unlike an FD. So that means if you contribute RM900 a month, you'll take a year to hit the 10k mark.

I'm not familiar with Versa cash but at 3.5% you should consider putting your excess money in a 6 month to 1 year FD instead, some banks will offer this for 4% occasionally. Just keep in mind this money will be stuck for the maturity period.

 

[reallivegirl]

@seayhere2 Oh yeah bank FDs, forgot about those, they once the maturity period ends, It will automatically go back to my savings right?

 

[seayhere2]

@reallivegirl Well you have to physically show up at the bank and say "yes I want the money" or "no I'd like to continue, whats the rate like?"

 

[reallivegirl]

@seayhere2 I'm using hong leong, what's the difference with eFD and eFD-i? Also it says 12 months 2.30% minimum 500 and the earliest 1 month 1.75% minimum 5000. The rates looks bad for 12 month compared to 1 month

 

[seayhere2]

@reallivegirl You should go look at other banks. Those rates look awful.

 

[reallivegirl]

@seayhere2 Yeah I should, only have hong leong bank account since it's the only bank close to my home. Any bank you recommend? Would drive a bit far for it if it's worth it. Any thoughts on BSN? On the SSP could maybe leave 1000 in it and just let the 1000 entries do its thing.

 

[seayhere2]

@reallivegirl No idea, and the best bank is often ones that are most convenient to you since it depends on where you live.

 

[reallivegirl]

@seayhere2 Well I guess, on my commute to work, there will be a Maybank, might be better?

 

[seayhere2]

@reallivegirl If I were you I'd just open up google maps and type in Bank. Sometimes they open in unexpected places nearby.

 

[reallivegirl]

@seayhere2 Checked, nearest banks which is the Hong Leong Bank near me, 7 ATMs and the next closest bank is Affin bank which is 2.5km away.