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The widely-queued-for fund from Amanah Saham Nasional Berhad will stopped transaction from 26th Aug to 1st September 2008 for the calculation of their newly declared 7 sen dividend.

Also, upon calling up the helpdesk at ASNB, the staff confirmed that there’ll be no new units open for subscription this time around.

All unitholders for ASW2020 might want to check your new account balance soon!

KUALA LUMPUR - Amanah Saham Nasional Berhad (ASNB), a wholly owned subsidiary of PNB, today announced an income distibution of 7.00 sen per unit for Amanah Saham Wawasan 2020 (ASW 2020) for the financial year ended 31 August, 2008.

PNB Chairman, Tun Dato’ Seri Ahmad Sarji Abdul Hamid said, the income distribution will involve a total payment of RM498.52 million, an increase of 42.02% compared to RM351.02 million last year.

“It will benefit 789,472 unit holders which currently hold 7.76 billion units of ASW 2020,� he said during a press conference here, today.

Source: www.asnb.com.my

And here are some stats for the ASW2020’s annual returns in the past few years:

ASW2020 return for 2001 - 7.25%
ASW2020 return for 2002 - 7.25%
ASW2020 return for 2003 - 6.60%
ASW2020 return for 2004 - 7.00%
ASW2020 return for 2005 - 7.10%
ASW2020 return for 2006 - 6.80%
ASW2020 return for 2007 - 7.10%
ASW2020 return for 2008 - 7.00%

How much is the contribution rate?
A contribution constitutes the amount of money credited to members’ individual accounts in the EPF. The amount is calculated based on the monthly wages of an employee. The current rate of contribution is 23% of the employee’s wages of which 11% is from the employee’s monthly wage while 12% is contributed by the employer.

Effective 1 January 2007, the Account is divided into two parts, namely Account I and Account II. Contributions received on your behalf from your employer will be credited into the two accounts according to the following percentages:

1) Account I - 70% of monthly contribution
2) Account II - 30% of monthly contribution

What are the types of withdrawals available?

1) For Account I
Savings in this account is meant to be used for your retirement, and it cannot be fully withdrawn before you reach the age of 55, become incapacitated, leave the country or deceased (payment will be made out to your nominee / heir).

You are allowed to invest part of this savings to allow you to add the value of your savings.

2) For Account II
Savings in this Account is meant to help you to make early preparations for a comfortable retirement. Withdrawals are allowed for the purposes of:

(i) Attaining the age of 50 years;
(ii) Owning a house - the downpayment for your first house;
(iii) Settling the balance of your housing loan - first house;
(iv) Financing education for you and that of your children’s;
(iv) Medical expenses for you and that of your children’s

Where are they invested?
Your monthly contributions are invested in a number of approved financial instruments to generate income. They include Malaysian Government Securities, Money Market Instruments, Loans & Bonds, Equity and Property.

Source: www.kwsp.gov.my

An endowment insurance policy is structured more like a savings account than an insurance policy and to help us easily understand the endowment policy, we can basically dissect the endowment policy into 2 main components- Savings and Insurance.

What’s an Endowment Policy and How does it Works?

(1) The Savings Component
For most endowment policies in the market, you can opt to save for a period of 12 years, 15 years, 18 years, 21 years, 24 years, 27 years or 30 years. For instance, if you choose a 21-year endowment policy, your savings will mature 21 years later and the policy will be considered void. At the end of the 21 year period, you shall receive a big fat cheque from the Insurance Company.

Most endowment policies allows you to make regular withdrawal, which is usually every 3 years once. Like any whole-life policies, you can also apply for policy loan. Regular withdrawal can affect the outcome of your savings, since every withdrawal you made will reduce the total cash amount in the policy.

(2) The Insurance Component
The insurance component is also pretty straighforward. In the event of a Death or Total Permanent Disability (TPD), you will be paid the Insured Amount. However, if you are diagnosed with Critical Illness, the premium of the endowment policy will continue to be paid by the Insurance Company, of course, until you kick the bucket.

In the case of the father setting up the endowment policy for his kid, the insurance component would work slightly differently. If the kid kicks the bucket first or suffer from TPD, the same thing applies- the Insured Amount stated in the Endowment Policy will be paid out, in this case, to the father. If child is diagnosed with Critial Illness, the Company will continue to sponsor the policy. Let’s say if the Father kicked the bucket first, suffer from TPD or diagnosed with Critical Illness, the Company will sponsor the kid until the policy matures.

For the scenarios shown above, you should refer to the Insurance Companies’ respective riders that is attachable to the endowment policy and understand the terms and conditions to fully take advantage of the policy.

Why an Endowment Policy?

So, after going through the mechanics of how an endowment plan works, what’s the purpose of getting one?

An endowment policy works great as a passive retirement fund. Since the policy does not actively invest in shares and equities, the returns from an endowment policy is somewhat predictable. For business owners who doesn’t contribute to KWSP, the endowment plan is a great substitute.

An endowment policy is also usually used to structure a child’s education fund, since it gives basic protection to the kid and most importantly, the policy allows waiver of premium should anything happens to the Payor.

Also, you can use an endowment plan to distribute your estate or to setup a trust fund. Compared to tangible assets like properties or jewelleries, the endowment plan is much more transparent and hassle-free.

Create Now Save Later or Save Now Create Later?
The underlying concept of an endowment policy is to create now and save later. This basically means that the moment you start an endowment policy, the amount of wealth is created on the first day itself. Say if you are thinking of saving RM 300,000 for 30 years, the endowment policy would create the RM 300,000 in paper value. If any misfortunate incident (either through Death, TPD or Critical Illness) should stop your contribution to this policy, the RM 300,000 will be paid out. That’s the “Create Now” phase. Hence, “Save Later” means you have the option of contributing to the policy regularly.

A typical example of “Save Now and Create Later” strategy is a normal savings account, whereby contributions is made now and the results is seen years later. You don’t get compensated if anything goes wrong in the wealth creation journey, since there’s no insurance componenet involved.

The Downside
Nothing good comes without drawbacks. An endowment policy should be setup with the appropriate contribution amount. Unlike a savings account, you are unlikely to be refunded in full if you decide to terminate the policy in the first 10 to 15 years of the policy.

Unlike an investment funds, the endowment policy lacks liquidity and aggressiveness. This means you should not expect double digit annual returns from your endowment policy.

And that wraps up the Endowment Insurance for this section. If you have any questions, do post it in the comments below.

In the next section, I am going to be covering on Whole-life Insurance.

Centennial Max Plan is Great Eastern’s latest Investment-linked plan, and it’s the first plan that offers 100% Capital Protection. The investment period is 5 years.

What this means is that if you invest RM 50,000, it would still at least be RM 50,000 five years later when the fund matures.

The fund manager for this fund is BNP Paribas, which adopts the BNP Paribas Spectrum Long/Short Style strategy. Generally, the strategy is to buy expected outperformers and to sell expected underperformers simultaneously. Hence, one can expect the Portfolio Turnover Ratio to be quite high.

The potential return in 5 years, generated using historical data ranging from January 1999 to April 2008 is projected at 57.56% (excluding potential currency returns) or 74.21% (including potential currency returns).

The minimum investment is RM 20,000 and maximum is RM 1 million per account. Included in this investment-linked plan is Death and Total Permanent Disability, without any insurance charges. Other than no insurance charges, there are also no fund management and policy charge. The initial service charge of 5% applies.

Centennial Max Plan is open for investment between 27th May 2008 till 26th June 2008. So hurry up!

Press Releases

Via Business Times…

GREAT Eastern Life (Malaysia) Bhd expects RM100 million in sales for its latest single premium investment-linked product.

The new plan, Centennial Max, invests in a close-ended capital protected investment-linked fund and matures at the end of five years.

It can see an average return of 74.2 per cent or a high of 160.7 per cent over five years, based on backtesting results.

“The plan will provide capital protection and generate high returns in a time of market volatility as it invests in structured products,” chief executive officer Koh Yaw Hui said at the product launch in Kuala Lumpur yesterday.

The structured products include two components which are ringgit-denominated financial instruments, such as money market instruments, and a euro-denominated option on a portfolio of indices and defensive assets such as a zero coupon bond.

The latter component refers to the BNP Paribas SPECTRUM Long/Short Style Excess Return Index.

“We chose this index because amidst market uncertainty driven by high crude oil prices and rising food prices, it employs a ‘market neutral’ strategy,” said Alan Tan, vice- president for equity investment.

This strategy captures returns and capitalises on up and down markets.

It also provides diversification as it invests in a basket of eight indices comprising of four American and four European indices.

Tan said the life insurer will be adopting a cautious investment strategy for now as local market uncertainty continues due to inflation pressure and the local political climate.

The Centennial Max plan, which targets the financially mature market, sees a minimum investment of RM20,000.

The plan includes insurance coverage on death and total permanent disability during investment period.

It offers protection up to 125 per cent of the capital.

Offer period is till June 26.

Via
The Star Online…

KUALA LUMPUR: Great Eastern Life Assurance (M) Bhd plans to unveil at least two more products this year following the launch yesterday of its Centennial Max Plan, said chief executive officer Koh Yaw Hui.

The insurer would be “exploring an annuity plan and also enhance our already very strong medical plan,� he told reporters after the launch.

Koh said Great Eastern was targeting new business premium growth of 10% to 15% this year.

As at end-2007, total premiums were slightly over RM800mil.

The Centennial Max Plan is a single premium investment-linked product that is close-ended and capital protected.

The product has a maturity of five years and provides life as well as total permanent disability coverage up to 125% of the initial investment.

Based on historical back testing, the plan aims to give an average return of 74.2% upon maturity, but could potentially hit a maximum of 160.74% return over five years.

The minimum achieved in back testing was a return of 26.47% over five years.

Koh said Great Eastern was confident of hitting its sales target of RM100mil for the new plan.

The minimum investment for the plan is RM20,000. The offer period is one month.

On whether there would be other similar single-premium products from Great Eastern, Koh said this depended on market response.

The plan is open to anyone aged from one year up to 70 years on their next birthday.

The investment-linked product employs an active “market neutral� strategy in investing to capture returns in both bull and bear markets, with the reference index being the BNP Paribas - SPECTRUM Long/Short Style Excess Return Index.

This free personal finance e-book is compiled from my previous writing on how you can start accumulating wealth slowly and surely. I’ve done a bit of “fine-tunings” and included a few graphical eye-candies in this e-book.

How to Save a Little Fortune basically explains how by saving a little every month from your paycheck, you can start seeing your networth growing positively without the need to strike lottery.

Also emphasized in the e-Book is the automation of your wealth accumulation process. This can have a very huge impact in the outcome of your “Get Rich Slowly” scheme.

To get a free copy of this “How to Save a Little Fortune” by email, click here!

Hypothetically…

Imagine, you’ve been running the Organisation for 50 years, together with your board of directors. In the meeting, you’ve been calling the shots, signing the cheques and throwing the boardroom parties.

Suddenly, there was a knock on the door. Of course, in the midst of the celebrations, it was easily dismissible as your annoying secretary. Then the knock got louder and louder, and finally a “BANG!”. The door was forced open with a sledgehammer and in came a few man dressed like Will Smith in Men in Black.

They proceed to read you a few statements that immediately caused you to piss right in your pants.

He reads, “The Organisation is now no longer 100% yours. In fact we have been trying to tell you that a long time back, but the music in this room is too loud for us to get anything through. Hence, we’ve no choice but to use a little force. As from today onwards, the minority stakeholders have all jointly voted in a new board of directors, which you will now co-operate with to run this Organisation.

Oh yah, by the way, they’ll be starting work tomorrow morning.”

Once he finished the statement and walked out, you freaked out gasped in disbelief. Few hours later, as reality kicks in, you decided that there’s no way the new board of directors is going to just take away everything you have built in the last 5 decades. No, you are not going to make it easy for them. In fact, you’ll make them suffer to have even thought of trying to overthrow you.

You began with shredding all important documents and the “skeletons”. Next, you sit down with your like-minded directors and figure out various strategies to transfer out as much money as you possibly can from the Organisation’s vault.

On the next day, when the new board of directors reports in, you begin by distracting them with various minor issues that would keep them busy for the next few months.

Of course, being stuck with so many issues at hand and pressures from the public stakeholders, the new board of directors must look like they are working for everyone. You are happy that they took the bait so easily. And everything is running on smoothly now. And it will be too late before the stakeholders realizes anything- that the money in the vault is already empty.

Story inspired by Shadow Fox’s “National Treasury Siphoning”.

None. There’s no difference between the two terms above. In Malaysia, the term Unit Trust and Mutual Fund is used interchangeably. It’s really a preference thing, like

Mutual Fund is more of a American termed, whereas in Malaysia, it is more commonly referred as Unit Trust. The regulatory body for unit trust industry in Malaysia is the Federation of Malaysian Unit Trust Managers (FMUTM).

Both terms refers to the same practice of collecting a large pool of money from investors which is then invested according to a prospectus written down according to the type of funds.

Here’s a list of EPF-approved fund management companies.

Or I should call it lock breaking, since the lock was effectively useless after my attempt to open up the mailbox which has been locked up by my previous tenant. It so happened that my previous tenant had one of the biggest locks around…Gulp!

Apart from such thievery acts, there are various other “house-keeping” chores that is involved when renting out this 900 square feet apartment.

Yes, I believe there’s lots of money you can make from real estate, but the learning curve of making it big is equally huge, and small timers like myself would probably not see any significant gain from such a puny investment.

The various tasks generated from my property such as timely rental collections (even with online payments), utilities fee payments, quit rents is another major turn off for me. One could have easily make better returns with an REIT fund.

That’s something I learnt from one of my first investment decision. A good investment package should be as passive as possible and should not take up too much time to monitor. After all, what we really want to be doing is to control the risk and return we are taking, and not spending 30 minutes breaking locks.

Update 2nd April 2008: The changes on Creation of Units Purchased was deferred until further notice.

Here’s the latest development from EPF-FMUTM.

Effective 1st April 2008, under the Investment Management Standard, the following changes are made pertaining to the Creation of Units Purchased.

1) Creation of Units
Units will only be created at the point UTMCs receive the EPF payments or other official confirmation from EPF and NOT on the day the applications for EPF withdrawals.

2) Cooling-off Period
Cooling-off period shall only commence on the date UTMCs receive payments or other offical confirmation from EPF.

What this means to you as an unit trust investor is that it’s no longer possible to time exactly at what fund price or date you are investing into the fund. This is because nobody has any idea when EPF will disburse the money from your Account 1 into your selected investment fund, since it could take from 3 weeks to probably 2 months.

Hence, it would be a good idea to first invest into a conservative or balanced fund, before switching to a higher risk fund if the market sentiment permits.

With service charges capped at 3% for all funds invested through EPF, I guess it won’t affect too much, but it’s still good to know that you can’t be timing your EPF investment in the future.

Via ChannelNewsAsia.com

PENANG, Malaysia : Weekend elections that have reshaped Malaysia’s political landscape will reverberate in the stock market and could dampen investor confidence, economists said Sunday.

Massive defections by the small but economically dominant Chinese community and once loyalist minority Indians have highlighted resentment towards the Malay-led government’s economic policies, they said.

The Barisan Nasional coalition, led by Prime Minister Abdullah Ahmad Badawi’s United Malays National Organisation (UMNO) failed to win a two-thirds majority in parliament for the first time in four decades.

It also lost control of four states, including the technology hub of Penang, to a resurgent opposition in Saturday’s polls.

Analysts said that although the government also suffered a rejection from the Muslim Malays who form its bedrock, investors may be concerned that the results could trigger political and racial instability.

“Fund managers will be concerned with the racial divide,” Chua Hak Bin, a Singapore-based economist with Citigroup told AFP.

“With the Chinese and Indians voting for the opposition, you raise the question if Malaysia’s fundamentals are intact and whether there will be racial violence even though the Malays also voted for the opposition,” he said.

Malaysia’s minorities are concerned over rising “Islamisation” and angry over the government’s refusal to abandon positive discrimination policies that give Malays advantages in education, housing and business.

Chua said the “shocking” election results could keep investors at bay for the next three months.

“The polls outcome has rattled investors. There will doubts raised whether the development projects under the previous state governments will continue. The political shake-up could affect projects and companies,” he said.

In the run-up to the elections, the Barisan Nasional launched a series of big-spending economic development plans touted as bringing tens of billions of dollars in investment and infrastructure to Malaysia’s regions.

Chua said the fall of Penang, Malaysia’s “Silicon Valley” which is home to many high-tech firms and the only state dominated by ethnic Chinese, could affect equity prices.

“It could also have an impact on billion-dollar projects in Penang, including the second bridge crossing,” he said.

Wan Suhaimi Saidie, economist with Kenanga Investment Bank, said there could be a drop in share prices when the bourse opens on Monday.

“Some investors may shift their position when trading opens on Monday while others may take to the sidelines. But I think it will just be temporary,” he said.

Wan Suhaimi said that with a strong new opposition, the government could hopefully fine-tune its investment policies to woo overseas funds.

But Chua said that Malaysia’s long-term political prospects were in the balance, amid uncertainty over the future of Abdullah who is facing calls to resign.

“The election speaks for itself. It shows there is no confidence in his leadership. I will not be surprised if he steps aside,” he said.

“They (investors) will not come in aggressively and we will see the Malaysian bourse remain marginalised vis-a-vis other regional bourses.”

Kaladher Govindan, head of research at TA Securities, tipped the bourse to fall Monday and said that in the short-term it would suffer from fears over looming instability.

“My gut feeling is it will fall sharply. It is due to concerns of political uncertainties and whether there will be unrest. But it will not crash,” he said. - AFP/ch

Wait a minute, who is this Chua Hak Bin dude? I totally disagree with his comments on the racial divide. I have not seen Malaysians united this way in my 28-years living in Malaysia, united against a government that has failed to deliver every one of its promises made in the previous election.

Yes, the Malaysia bourse will definitely take a hit come Monday, 10th of March. And all this talk of dampened confidence and foreign investors getting worried etc is just groundless without actually really looking at the real root of the changing political landscape. Yes, big projects might come to a halt, companies might need to rethink their existing policies. But people has had enough of unaccountability, intransparency and cronism. If the drop in equity price is the price to pay, the price tag would seem well worth it. If the new State Governments are sincere in delivering their manifestos, what is a few hundred points southwards for KLCI?

If there’s one word to describe the moods of average Malaysian’s like myself, it’s “hopeful”.