Why Your Investment Did Not Grow?

You have been investing for the past 10 years, but the amount has mostly stayed the same when you look into your ASB Account.

At some point, you feel there is no point in investing if the amount of savings does not grow while you have to save and spend prudently every month to invest.

However, there are friends of yours who are telling the story that they are able to pay the house deposit with the money invested in ASB. Some friends can solve financial problems using their savings in ASB even though their salary is more or less the same as yours.

However, your investment is not growing despite subscribing to the AutoLabur@myASNB facility to ensure you invest consistently monthly.

So, what is the reason that your investment isn’t growing despite consistent contributions?

There could be several reasons why you’re not seeing the growth you expected.

1. Frequent Withdrawals

You invest at the beginning of the month and withdraw the investment at the end of the month or when you need money.

The money withdrawn reduces the principal. Therefore, if you invest in ASB, you will only receive a small amount of dividends because ASB calculates dividends based on the minimum monthly balance.

This means that every time you withdraw money, the balance in ASB will be at the lowest level, and when the dividend is calculated, it is calculated based on the lowest amount for each month in question.

If you’re regularly withdrawing from your investment or frequently changing your strategy, it can hinder growth.

Frequent withdrawals reduce the principal, which limits compounding, while constantly changing strategies can prevent you from benefiting from market recoveries.

2. Dividend withdrawn

You invest consistently every month and finally receive dividends after a year of your investment. However, every time a dividend is announced, every time you take it out.

Based on the power of the compounding interest concept, investment will only grow if dividends and the principal are not withdrawn for an extended period.

If you use Rule 72, the principal will only double after 12 years if you receive an average annual return of 6%.

Therefore, if there is no urgent need to use the dividends received, it is better to refrain from withdrawing them so that you can see your savings grow year after year and eventually double.

Summary

These are two simple reasons your investment is not growing, especially if you invest in low-risk instruments such as ASB. To enjoy seeing your investment grow and double from the initial investment, avoid withdrawing your principal and dividend for an extended period.

Train yourself only to withdraw the money if you are really in need of the money.

If you still consistently entertain your short-term wants by withdrawing the money supposed to be invested, you will never achieve your dream of having a solid financial standing.