This is good - borrow 200K to put into the ASB, & earning the differential interest of 2.5% minimum, amounting to RM5K going into the pocket effortlessly every FY-end for the ASB.

Am I right in the above, chums ?

Then you can only earn the differential of 2.5% against the 70K, and NOT 200K. Amounting to RM1750 per year.

Still it's effortless, and on borrowed money - no harm and good too. Loan is for 15 years, and I believed the interest will 'compound back into the ASB account' over the 15 years. I say it's still a good deal.

Sorry, but I don;t get it - what has FD got to do with borrowed money ? Are you talking about loan rates ?

If you are talking about loan rates. yes, surely it will go up with BLR, but again that depends on the type of package from the bank.

Secondly, I believed if the economy inproves and the BNM raises the BLR, the ASB dividend will go up too.

No, Cybermaster,... one reason why some poeple can't save is not because of discipline, it's just they don;t have any money left to be saved. Sadly, there are really such people around.

Hence, for this group of people, the loan will help them to "save some money for the rainy days".

To save via FD, one must use money that comes out from own pocket.

To save using the above method, one uses other peoples' money.

Both ways will get you the 3.5% provided it is not hit by the BLR.

Same as ASM.

Miles, good explanations there.

Hmm, looks like it's a good way to place cash inside PNB Funds as Emergency Funds. Good liquidity, and good dividend for the Fixed Price Funds. Can withdraw for, say, medical emergencies.

Then, for Daily Expenses - another creative way. Meaning : a Fixed Price Fund unitholder will only need to travel to any bank to selloff some units at every month-end, and use the money for the rest of the month. Then comes another month-end, do the same thing again.

The calculation must be good - the total units sold away, being equal to the total amount withdrawn for monthly expenses; -> when totalled up for the whole year must be equal to the total amount of divdend earned in the previous year to keep the principal constant, and therefore, be able to generate the same "expenses amount" again for the following year.

One must be careful not to withdraw more than what one earns as dividend at the preceding year.

In this way, so long as the dividend yield remains constant year in and year out, there will be income earned consistently for spending.

Have I missed anything ?

Hi, does any Bumi do what I say as in the below posting ?

Miles, good explanations there.

Hmm, looks like it's a good way to place cash inside PNB Funds as Emergency Funds. Good liquidity, and good dividend for the Fixed Price Funds. Can withdraw for, say, medical emergencies.

Then, for Daily Expenses - another creative way. Meaning : a Fixed Price Fund unitholder will only need to travel to any bank to selloff some units at every month-end, and use the money for the rest of the month. Then comes another month-end, do the same thing again.

The calculation must be good - the total units sold away, being equal to the total amount withdrawn for monthly expenses; -> when totalled up for the whole year must be equal to the total amount of divdend earned in the previous year to keep the principal constant, and therefore, be able to generate the same "expenses amount" again for the following year.

One must be careful not to withdraw more than what one earns as dividend at the preceding year.

In this way, so long as the dividend yield remains constant year in and year out, there will be income earned consistently for spending.

Have I missed anything ?

Vargas, thank you for your replies.

Yes, the PNB Fixed Price FUnds are certainly a good place for storing Emergency Funds.

Secondly, that was a good eg there that you have constructed, very clear and simple to understand. Yes, exactly like what I wanted to say earlier in my post.

Throughout the year, the 200K remains there to keep earning the dividend for the coming year expenses, and then the untouched 2K will help to earn more "expenses money" for the coming year to fight inflation.

Yes, correct, it will be like a pension fund that will never be exhausted forever if we do not take out the 200K, and of course, if PNB does not fail.

About the RM1K, it's certainly not enough, but imagine if your principal amount is RM400K instead of RM200K, then you can afford to spend RM2K, and so on and so forth. Meaning -> the bigger the principal amount, the more you can afford to withdraw from your "perpetual pension fund".

Am I right in the above assumptions ?

No, be careful here, you CANNOT transfer. The moment someone sells his/her units, they're out in the open for others to buy if such units are limited.

There is only one way to "transfer" - via inheritance and a will in the event a holder passes away.

If the Chinese are in it for wealth accumulation, then I would think the chances are very low for any freed-up units this morning.

If there is continous income to be generated from this line, why sell-away so easily ?

OR;

1) They are migrating. But still why sell-away when PNB can TT the divdeinds to them every year ???

2) They think the current government, being the National Coalition is going to lose the GE and when the next government comes in, PNB will be affected and audited badly.

3) They see Petronas releasing a bad Financial Report.

For those who are vested, it's not that we can be totally happy and ecstatic too. Who knows what will happen to the fund in future ? Perhaps first year, give a lot, then what about second year onwards ?

It's hard to say for this PNB thing, the transparency level is truely low.

Thank you, Miles. Yes, better than FD, but honestly, don't compare with FD, the risk level here is higher, I believed.

This post has been edited by Hansel: Oct 2 2010, 04:33 PM

Gentlemen, it's definitely a case of Misrepresentation if it is announced officially by PNB that the AS1M dividend is 6.38% per annum. No argument about it. Even if it appears in the newpapers reports.

Better be careful of PNB Announcement in future.

Or is it that the forummers here thought or misinterpreted it as 6.38% per annum, but it was not officially announced in this manner by PNB ? We have to be clear on this, and to be fair to PNB too.

This issue here is not so much as whether the dividend rate is good or not, but has a case of misrepresentation taken place or not ? And should we be more careful in future - to ourselves and/or against issuer ?

MGM, thank you. As you can see, there is NO misrepresentation from PNB. It's just us which misinterpreted.

BUT --->>> I will be more careful of PNB from now on, why ? I must say that's a neat trick (if it's a trick) by extending the number of months and then giving out more sen per unit against the higher number of months.

I am sure many who are rushing to invest now will really be surprised next year WHEN THEIR DIVIDENDS FALL SHORT AGAINST "6.38%". And I am sure many would have been caught, still, it's better than FD.

Hopefully, no more legal tricks again from now on.

Guys, if the counters you are holding are Blue Chips, and the index you are playing is already at 75% to the high before the Global Financial Crisis, then it is time to stay out of the market. The higher your stock climbs, the bigger your margin of safety, and of course, the more your profit.

Do not chase a runaway counter. If it falls, it will be very painful.

Zeist, do NOT depend ONLY on the PNB mechanisms, and wait for it everyday. Enhance your knowledge of investments, look out into the world for more investment opportunities, investment instruments and tactics.

DO NOT DEPEND ON PNB ONLY.

What is your reason for selling please if you can share ?

This post has been edited by Hansel: Oct 11 2010, 12:12 PM

Thank you. Which means you have found another instrument that yields more than 6.5% pa. If you are able to share with me, it would be great, perhaps via PM if it's personal.

This is not particularly good news to me, I'm afraid, what will happen to our money if the tower fails due to whatever reasons, say eg, a contractor managed to absconded with the money ?

Dos PNB have a good track record in building towers ?