Have you ever think of how to achieve financial freedom while we are burden by all sort of loans?
Here is an idea on how to transform your loans into asset and create wealth!
Mr A. owns a house.
Value increased from RM750,000 to RM1.2million.
No savings.
Total debts amounted to RM530K (Housing loan – RM400,000, Personal loan RM100,000 & Credit Card RM30,000).
After a mortgage health check review, he took a AIA Fixed Rate loan of RM980,000 fixed at 4.85%p.a. (No risks in rising BLR which would upset his investment strategy.)
Settled his debts of RM530K and remain of RM450K he invested into ASB (Amanah Saham Bumiputra) or any investment with 8% returns
Before leveraging
Liabilities (RM530K)
Loans RM400,000 @ BLR-2.20% Instl: RM2051
Credit Card @ 18% RM 30,000 5% RM1500
Personal Loan @ 7.60% RM 100,000 Instl: RM1193
Total loan payments: RM4744
Assets (NIL)
No savings. No assets
After leveraging with AIA fixed rate
Liabilities (RM 980K)
Loans RM980,000 @ 4.85% Instl: RM 5171 (An increase in commitment of RM 427)
Asset created RM 450K
ASB or other investment of RM450K @ 8%= RM 3000 per month
Net payment = 5171-3000= 2171 only!
1) Assuming ASB/investment dividends of RM3K is invested to compound at 8% p.a. yearly,
accumulated ASB/investment = RM971K (10yrs), RM1.731Mil (17.5yrs) & RM2.097Mil (20yrs)!
2) Assuming client did not take loan but only saves RM1,000 a mth, need 17.5 yrs to accumulate ASB/investment RM450K (with compounding interest 8%)
HOW TO MITIGATE RISKS BY USING LOANS TO INVEST?
BLR LOANS
Cannot fixed the interest costs!!!
For example:
With BLR hike 1%, total interest
UP by RM214,196
With BLR hike 2%, total interest
UP by RM439,598
(Based on loan of RM980K @ BLR-2.20% for 30 years)
BLR loans can totally WIPE OUT your investment returns
AIA HOME LOAN
FIXED RATES
COST IS FIXED
MANAGE ONLY YOUR YIELD
If you would like me to do a FREE mortgage health check and consult based on your situation, please pm/call/SMS/whatsapp/line/viber me at 01six7173zero7six.
This post has been edited by MaxWealth: Apr 25 2014, 12:22 PM
Consultancy Maximize Wealth Through Leveraging!, Create positive cash flow via loans ;)