Including Zimbabwe?

Hi all. I'm just curious, why do people still insist of taking the ASB loan? If you invest the money every month rather than paying every month for the interest, you'll gain more than taking the loan. I'll give you an example.

Loan amount RM10,000.
Monthly payment if charged 5.95% interest per annum for 15 years-RM106
RM106X 180 months=RM19,080 - RM10,000 = Amount you've to pay in interest RM9,080

RM10,000 invested in ASB that gives you 10% return per annum will be RM41,772 in 15 years time.

So the actual return is RM32,692 (RM41,772 - RM9,080)

If instead you invest RM106 a month for 15 years with 10 % return per annum, the total amount will be RM43,934.

So which one is better? If I'm wrong please correct me. Thanks.

This post has been edited by amirbashah: Sep 11 2008, 02:43 PM

Oohh~ excellent observation!

I took your RM106 multiplied by 12 months = RM1272/year

Then checked the compounded interest of 15 years for both lump sum RM10,000 vs annual addition of RM1272 with 10% return/annum

Then I used http://www.moneychimp.com/calculator/compo..._calculator.htm to see the outcome.

The result was surprisingly RM41K++ for the lump sum and RM49K++ for the annual addition!

which means people would benefit more by putting in money THEY HAVE as opposed to money THEY BORROW!

Would never have thought to check until you pointed it out Excellent!

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Added on September 11, 2008, 8:27 pmGuess I'm correct after all

This post has been edited by amirbashah: Sep 11 2008, 08:28 PM

Dont just put money into ASB loan. Its a bad way of investing. Loan is still money u owe to the bank, which you must to pay back to the bank. What if something unexpected happens? Like loosing your job?

ASB only applicable to Bumi nia... I can't invest every lor

You can go for ASW and ASM. They are performing quite well also.

Haizz, I'm still waiting for ASW2020, last time when the ASN(April 2008) released but I couldn't manage my time to go to buy that funds as I'm having final exam. But now I'm having a long holiday from September to October, but seems like they haven't release the ASW 2020 to public yet.

PS: When I'm free they don't want to release, when I'm busy they only release, erkk.

This post has been edited by reevephon: Sep 18 2008, 10:02 AM

YOu know anyone working at post office? Maybank? RHB? CIMB?
They can help you to put in no need to wait for the release

I know some, but not so close, I think they won't help me...

Don worry. Don need to be in a hurry to invest your money
There are still a lot of investment tools around beside ASW, ASM

what's the expected divident for ASB this year ?

No one know what dividend will be paid out. But there is risk there for ASB considering political uncertainties which may affect the mega projects which they have invested into and als GLC companies...

it seems to be lower than the last year..global economic crisis, inflation, bla bla bla

7 percent..bonus none

Not being anal or anythin but can u show me how u get these figures? Doin some online checkin, u should only be payin RM84.12 for a RM10,000 loan on 5.95% over 15 years. I think u counted the insurance payment too but as far as I can remember they dont need insurance for these type of loans as they hold ur ASB certificates as collateral.

And that put your yearly saving down to RM 1,009.44 and total contribution of RM15,141.60

If you put RM10,000 at start of 15 years you are guaranteed a return of RM41,772.48 as the principal is already at RM10,000 at the start so at the end of the year (assuming you buy the stock at the start of the year) your average monthly balance is RM10,000 in case they use percentages or monthly rate at 10/12=0.833%monthly to pay dividend to prevent people bumping up their investment only in the month before the interest calculation. P/S I remember my mom told me that once ASB calculated end yearly balance for interest calculation for a year and it was at 15%. They were crazy rich then I guess.

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On the other corner, assuming my calculation is correct in the first place RM84.12 monthly investment only came up to RM 1,009.44 and total investment of RM15141.60

Using the link you provided, i check how much money you can get at the end of the 15 years and the total come out at a lowly RM32,072.41. From the calculation I can see that the website assumes that the dividend is calculated right at the end of the year on the total of the account balance at that time (see my interest calculation argument).

I think someone (with better understanding of interest payable/received) to do a comparison to end all argument and stickied at the start of this thread or something.

P/S - remember that they (CIMB bank at least) used some of your monthly payment to pay off the loan principal so any interest you get from the investment or any monthly payment minus interest (+ kopi money too i guess) will be returned back to you after they sell your ASB certificate.

Example, u can get a RM10,000 loan and pay monthly payments until the end of the year and gets RM1,000 ASB interest (which would be yours)as opposed to RM1,009.44 (+10% interest at RM100.95 if they calculate the interest at the end of the year). As you are not paying interest-only loan, some of your monthly payment will be used to pay off the RM10,000 principal which will be paid back to you. The best way to see this is to look for mortgage/loan calculator with an amortization table, just an example for this scenario after 1 year you paid RM1,009.44 which RM425.88 is principal payment and the rest is the interest charged. So, at the end of the year you will get back RM1,000 from ASB and hopefully RM425.88 back from the bank after they sold your ASB certificate (but remember that this amount will be sooo much lower due to early redemption charges and of course kopi money).

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Therefore I think there is Pro and Con to Loan vs Addition and it is up to you to check and find the best loan bargain (this examples looks extreme as the interest is only calculated at 5.95% which I think is wayy too low and the ASB dividend at 10% which I think is a tad high). I think the simplest way to look at it is if the interest you are paying for the loan is greater than dividend you are getting from ASB = bad loan deal.

I am for the loans as it helps me get my investment in check as I will usually use my extra income to pay loans than to invest. Priority is Essentials>Loans>stuff(bottomless pit, hahaha)>investment.

Any news about ASW 2020? Not coming in this year?

Hey guys, Is Amanah Saham is the best investment at market now compare others investment like Unit Trust.

That would be subjective... however, correct me if I'm wrong, the advantages of these Amanah Saham from the other unit trust would be that it is backed by the government and it is capital protected...

Yeah, but low divident compare to unit trust hehehe