Should you invest in SARA 1Malaysia Fund?

Our government launched the Skim Amanah Rakyat (SARA) 1Malaysia which is offering 32.16% return per annum on your investment. Is this too good to be true? 32.16% return is definitely higher than most of the investment vehicles available in the market right now.

How it works?

SARA 1Malaysia is a hybrid of a unit trust investment and a loan product aimed at encouraging low-income earners to save and invest.

1. Invest with your own money.
The investment is limited to RM5000 per household and you’ll receive RM134 dividend every month up to 5 years, according to PNB president and group chief executive Tan Sri Hamad Kama Piah Che Othman.
In this case, the effective rate of return is more than 30% per annum!

2. Invest with bank’s money (taking up RM5000 loan)
You’ll still receive a handsome dividend of RM134 a month and after deducting the bank’s monthly repayment of RM84, you get to enjoy a profit of RM50. But in this case you’re not forking out any money so the actual return is “INFINITY”. These is how rich people get rich by using other people’s money to invest.

For how to calculate the actual return, you can refer to this great article by LCF:
SARA 1Malaysia Return Calculation

Are you qualified?

The purpose of this investment scheme is to help the poor to start investing and saving.
You are qualified to invest the fixed amount of RM5000 if

• Malaysians aged between 18 and 58 years;
• Applicants must have a combined gross household monthly income of between RM500 – RM3,000;
• Applicants must not be declared bankrupt throughout the loan funding period
• Applicants and / or spouse(s) must not be a beneficiary of other Government special schemes managed by Amanah Saham Nasional Berhad (ASNB) i.e.”Program Pembangunan Rakyat Termiskin (PPRT)”, “ASB Sejahtera” and “ASW2020-Bandar”;
• Applicants and / or spouse (s) do not have any investments in ASNB unit trusts, OR, if there is, applicants and /or spouse(s) (household) have a combined aggregate investment totaling RM10,000 or less in all ASNB products;
• Only one household is eligible to obtain the loan funding

How to invest?

• Apply for loan from any of these 4 banks: Maybank, CIMB, RHB and Bank Simpanan Nasional
• Applications open on January 30th 2012 and will extend for a year or upon full subscription. (I think it will be fully subscribed within the first few hours, if not days)

More information: visit the official website: SARA 1Malaysia.

Should you invest in SARA 1Malaysia Fund?

So now it comes to the big question of whether you should invest in SARA 1Malaysia fund?

I guess if you are eligible, the question should be “why not?”. Get the loan to invest. It is free money.

What do you think about this investment scheme? Are you eligible to invest?

Source from: http://kclau.com/investment/sara/