Plenty of threads have been created about ASB financing in Kopitiam (mohon mods not move this to the Finance sub-forum as this is more of a chill thread), this thread is no different except that it starts without the ignorance by the threadstarter (me) of the ASB fund and ASB-financing. Many (either purposely or sincerely) mistook ASB-financing returns as the difference between the interest rate vs the yearly returns (distribution). Nothing can be further than the truth. The loan interest is calculated as a reducing balance, while the distributions (often mistakenly referred to as"dividend") is calculated on a yearly compounding basis.

In a way, ASB-financing is no different than buying a house with a mortgage. Both has a collateral which backs the loan, allowing the bank to approve the loans at low interest rates (4.4%-4.85% VS personal loans and credit cards with much higher rates). The main difference is in the collaterals themselves. To buy a house, you would bleed money to:

a) buy - SPA/LA/MOT/SD/Valuation/MRTA/10%-deposit
b) maintain - damages/rental-defaults/maintenance-fees/sinking-funds/cukai-pintu/cukai-tanah/fire-insurance
c) sell - RPGT/agent-fees/charge-to-discharge

No such thing with ASB and ASB-financing. You can invest in ASB just like any other unit trust, but at the same time you have the option of taking a loan to finance the investment:

a) There are no deposits required, you can get 100% financing
b) No legal fees involved other than RM60 for endorsement and stamping fees (not stamp duty)
c) Distributions are calculated on a prorated basis, there are no "distribution defaults" like when you are renting out your properties
d) No fees nor taxes to sell, there is a ready buyer - ASB is always ready to purchase the units and return your investment value to you in cash

Projections and assumptions:

1. Bank interest (financing) rate of 4.85% p.a - which may change according to the bank's base-rate (BR) movement
2. ASB expected returns of 6.5% p.a - which is lower than the historical lowest return of 7% a year for 2018 distribution
3. Loan and investment tenure of 35 years - maximum tenure, for 30 years old and below
4. Distributed units left in the ASB account to experience the effects of compounding
5. A small one-off insurance with the bank's panel insurance for RM350, capitalized into the financing

Total unit value after 35 years: RM1,812,450.97


Total loan repayment after 35 years: RM416,665.20


Bonus info. Total unit value after 35 years, but with cash-investment of the same monthly installment of RM992.06: RM1,528,086.67 . A difference of RM284,364.30 compared to investing using financing



This post has been edited by wild_card_my: Dec 17 2019, 10:05 AM

ah long got.

my bank forced me to sign MRTA which almost wiped out half of first year dividends

im pretty sure there are upfront cost to this

anyways, i dont take it because its full already. but i am facing a problem now beecause ASB 2 and ASB3 also full, and need to claw for units.

Only for bumi

Mehh

Parking at deleted thread because derailed into Vroom Vroom thread.... Pretty norm in K.

If BLR naik 5% during that 35 years period.

GG

they cannot force you. But they can appear as if it was compulsory

gotto use all the tongkat available right?

jsut cancel it. With ASB units you can sell it in 2 months. You can't do the same with properties.

GG

but u cannot put in more than 200k kan?

992 monthly, in 16 years already reach 200k

cannot pump in more money

so if target to get 1mil, better take loan

please correct if ayam wrong

too bad. most of us dun have that 35 years

Then only realize you're already in your late 40s. Too late to sketch up a new retirement plan.

Thee's a trend free money gonna keep coming down.

thats only a problem if you plow in money MANUALLY

as far as ASB loan is concerned, you took a 200k loan upfront

ur just paying of ur debts.

if u plow in money into ASB slowly, ur gonna hit that 200k (far later than the loan)
so once u reach the cap, u gotta put it somewhere else with lower return.

Can. Any distributions (mistaken referred to as dividends) received into you account would increase your softcap

https://forum.lowyat.net/index.php?showtopi...post&p=91527495

Haha. Well take what you can get I guess. I have clients as young as one born in 1999 (daddy kasi). Father would become a joint applicant, the child will continue paying once reach the age of 25 when she would be stably working

Whatever you have earned in the past years are yours to keep. The dividends are given on a yearly basis, but calculated on a prorated monthly minimum balance.

You can say sketching all that retirement plan in every investment vehicles - including properties. Plenty of people go bankrupt buying properties.

Opr expected going down at nxt bnm meeting.

Are the loan rate also will be lower?

in the end if you had a bigger target, just take the loan but higher risk

if wanna play on safe side, put in monthly

so people got choices and all they have to do is to choose wisely

Good info. Keep it up.

i am 100% sure this is wrong

its always better to take the loan, because you cap upfront, and pay it off

and even if rates rise, you can sell off your holdings and close the loan.



if you put money every month manually (instead of using the debt route), you will quickly hit the cap, then you gonna have lower returns.

the difference in 40 years can be almost half a million

After 5 years: RM274k in ASB


After 5 years: RM188k outstanding loan balance


After 5 years, if you feel like cancelling, you would still have earned RM86k, cash in hand For the uninitiated, the RM86k figure comes from RM274k value deducting RM188k balance that you owe to the bank.

Depends if the banks would respond to the OPR decreasing. If they don't shame them. OPR naik they naik (in fact, for some banks OPR tak naik pun, but they tetap naik the BR)

This post has been edited by wild_card_my: May 2 2019, 02:28 PM

Whats your argument against “but ASB is haram”

Seems like by the end of 35 years.
Monthly investment is better than taking an ASB loan.

ASB loan net profit after 35 years : Total unit value - Total Repayment
= 1,812,450.97 - 416,665.20
= RM1,395,785.77

Monthly investment after 35 years: RM1,528,086.67

ya lah but if bank rate is crazy, some people lazy to check, they will rugi

so up to you lah

i do think up front 200k is better but still prefer put in manual lah

haha

Boss, itu is provided BLR didn't naik or ASB didn't turun within that 5 years

Later got berita buruk like the TH habis

This post has been edited by ListenToTheWind: May 2 2019, 02:30 PM

wait for master to answer

Thank you

You can't argue and give fatwa if you are not one of these things below. You can only keep it to yourself, which is referred to (taqwa).

1. Appointed by the government in power
2. Educated in fiqh
3. Educated in the matter at hand (in this instance, Finance)

If everyone who belajar from their ustaz (who is not super qualified anyways, especially not in finance) is giving out Fatwa, the Islamic world would be quite in chaos - as in more chaotic than it is right now. In this instance, I would refer to the Majlis Fatwa Negara and the Fatwa Council in the SC. ASNB, as a Unit Trust Management Company (UTMC, just like Public Mutual and CIMB Principal) would be under the purview of SC.


This post has been edited by wild_card_my: May 2 2019, 02:36 PM

you can do the same with epf for instalment.

the power of compaunding

This post has been edited by tikaram: May 2 2019, 02:33 PM

The another question u have to ask yourself or who even help ASB to invest...

If u can get such a high return for ASB, why national debt still.....

word....

Simple

You forgot to calculate the fact that when you are doing cash monthly-investment you would also be making the RM902 monthly payments. Which is RM1,528,086.67 - 416,665.20 =

A) Loan: RM1,395,785.77
B) Cash: RM1,111,421.47

so if we cancel after 5 years
dont have to pay any cancellation fees, penalty etc? any hidden fee or what?

how much is the installment for 35 years rm200k?

oh. i just realized. there is 200k limit.
so the calculation for the monthly investment is only valid until it reaches 200k.
Then kena tunggu another year to let it compound to break the 200k limit.

haha ok

if wanna make bank more money take loan, u also in the end will get more

bro. the monthly investment is still our money, so, no need tolak.

in 40years you'll be ded anyway.

Unit trust is private money. Why should it settle the national debt? The kinds of questions Malaysians ask are so...

No hidden fees (except for the RM60 one-off setup fee, payable to bank), and no lock-in period thus no penalties. Installment for that amount and tenure is RM903/m.

Not really. Because throughout the time you have been investing to reach that 200k limit, you would have earned dividends right? These dividends would have increase the softcap of your fund anyway.

Btw, it should be referred to as distribution, not dividends, sometimes I am guilty too. Malas nak reedit

I was referring to the downside of manual monthly investment.

Can transfer my account if too full.
DM me for my acc number.

yes. people complain about ASB-f giving banks money, but they never complained about mortgages also give banks money. It is either ignorance or plain "you-tongkat" sentiments in play everytime people mistakenly-argue against ASB-financing. It has its cons, but these people are pointing and arguing at the wrong trees .


You are wrong. After 35 years, the 1.8M is all your money. There is nothing to tolak.

Lolx.. I never say ASB to settle national debt...

If it’s indeed so good, why not hire those ppl who can make tons of $ to help national to invest better.

Don’t twist my sentence.. anyway, as long as related to bumi/etc.. Jagan dipersoalkan.... kan...

ic. i china. can hoot asb?

got T&C right?

agree

all give bank money

bank kaya, rakyat sengsara

property investment not good lah because price also gonna hit limit

buy 1mil property cannot easily get double return after 20 years

You wont find it in the SC Syariah Compliant list

And I understand.

Now imagine someone invested RM993 a month for the next 12 months... at 6.5% return, he would have received RM415 in distribution. This distribution would have increased his soft cap.

After 137 months, this fella would have about RM200k in his ASB account. RM136k as his principal investment , and RM64k as dividend earned. At this point, his capping would have increased by RM64k, and he can continue to invest his cash on a monthly basis

bro.

ASB method:

After 35 year, total units left in ASB is RM 1,812,450.97. This RM 1,812,450.97 belongs to the investor.
But throughout the same 35 years, the investor would have also have to pay a total of RM416,665.20 to the Bank. This RM 416,665.20 belongs to the bank not the investor.
So, of course need to tolak.

Can I take a loan to buy?

No?

You can soal, but plenty of soalan adalah soalan kurang bijak.

Why not hire those people who can make tons of RM? Well first of all you need to understand the role of ASB, ASNB as UTMC.

Can. Masuk Islam.

Not kidding. Chinese (or any other race) Muslims (mualaf) can invest in ASB. I have many mualaf clients.

To sell? Nope. As long as your loan balance is lower than ASB balance, you are good to go. RM200k that you took will always remain as RM200k. So you will never go bankrupt with ASB financing, unlike mortgages-properties.

This just sounds like the country giving away free money.

Bank loan you X amount at 4%, then you loan the same amount back to bank at 6%. You earn 2%. what a farce

this sort of practice conpletely go against the tenants of the free market, tongkat in its purest form

This post has been edited by Aud power: May 2 2019, 02:53 PM

liao.

with this anti bumi govt, i expect dividend 1% or so like tabung haji

Yeah. but the investor won't be able to deposit more because already reach cap at 200k...

After the loan tenure is completed, do you still have to pay the bank? You have already paid the bank RM416,665.20. That was the past.

I understand why you are confused. Do yourself a favor, and calculate the amount of money you would have spent out of pocket if you were to do the same RM903/m payments into the ASB account as cash.

Both situations you would need to pay into the account right? One is paid to the bank, while the other is paid to your own account. Both require you to pay throughout the 35 year tenure

Yes. Masuk Islam. Not kidding

Not going to happen. TH got scandals because under the purview of MOF (haha). ASNB under purview of SC. No scandals at all, so far.

Strategy wise. If have lot of money put je 200k. I have fren full asb1 n 2. Proxy his wife and children. Total initial investment like 1.6million. Thats was way back.now dunno sudah brapa untung

And I am telling you, in fact, based on the calculation above, he can further invest in cash due to the already increased capping.

Yeah but not a lot of people have 200k capital. They have a salary but no capital. Use the salary as proof to the bank to advance them RM200k to buy the units. No different to buying properties, but I have talked about property investment up above

Park

I have solution to solve malaysia national debt, remove the 200k asb deposit limit, make it unlimited, everyone and their son go borrow 1mil from bank to put in asb and earn that sweet sweet 3%. For sure whole bumi being millionaiire

The only regret I can say after taking this ASB financing is


Why I didn't start earlier

I told you, it is not "3%". Reducing balance vs compounding interests.

Penatlah!!!!!

the same with epf.

i wonder why no bank willing to loan epf member loan 4.5% and contribution every year getting 6%?

better late than never. If you have younger siblings, colleagues, who are Bumiputera or Mualaf (converted to Islam), tell them about this before they regret not starting earlier. As per any investments, the earlier the better.

All questions are good question.. depend on how ppl r open-minded enough and willing to front it or not...

Effectively the bank is giving you a loan for less interest rate than the rate you earn from investing it back into asb.

Its like a chicken and egg situation, they both rely on each other to get tru the deposit loophole

this will never happen in a free economy

Nope, not the same as EPF. the returns have been wholly lot more than 6.5%. The reason I picked 6.5% is to preemptively counter the detractors.

Bro, so if you put it your own money monthly rm900 then after you hit the 200k ceiling in 16th year, meaning you dont have to pay the rm900 monthly anymore?

For 17th year onward just watch your money grow until 1.8mill is it?

well you all know what people say,

if it's too good to be true ...

I have 100k loan asb at 23 y/o (2017), the first year divident i use to pay my education loan lum sum (ptptn & mara), the second year (2018) still didn't touch.


I wonder how much I have in the next 3 years if i sell huhu, but anyway this has helped me alot to be discipline.

Not at all. There are troll questions asked to derail conversations.

Not at all, ASB invest in other industries other than finance as well. It can be finance heavy, but so are the other unit trusts in the market such as the ones from PM and CIMB PRINCIPAL

We are talking about cash or asb financing? In either case, both examples require you to continue to invest for the next 35 years.

..find out if it is. If it isn't stay away. If it is, then proceed with it. All this too good to be true is a lazy excuse not to do research

How much you have? easy just look at your myASNB account now and calculate the compounding dividend for the next 3 years

The bumi is just the mule in all this. The bank is using this as a way to loan money to themselves to earn that investment management fees, while offloading the liability to the bumi. If the investment fails then the government is forced to come in to guarentee the loan.

What i say is incorrect?

Im talking about cash. Not loan financing

1) why need to continue pay until year 35 if already hit the 200k limit in year 16?
2) cash financing is liquid right? You can withdraw it anytime you want?
3) which will generate better return after 35 years? Own cash or loan financing?

Thank you for your feedback sifu

Not much liabilities

1. no negative returns (unlike UT)
2. no loan guarantees, it is treated like any other loans

What you said is incorrect and misleading, but I cannot expect more from you

1. No one said you need to continue paying, you can stop anytime. But I can guarantee you wont reach the 1.5M target I posted above

2. Yes, anytime, during fund hourse, Sunday-Friday, 9-4PM

3. As shown in the first graph. Financing yields RM300k more in returns.

So in other word, every eligible asb people can generate money out of thin air la?

Thin air? Would you describe that with properties?

Because ASB-f and mortgages have the same principle. Collateral-borrowings

This post has been edited by wild_card_my: May 2 2019, 03:24 PM

1) Ok, now ayam confius after reading 4 pages of comment.
I thought limit is 200k? If continue paying sure exceed 200k?

2) so better take loan? Hmm..

1. Hard limit is RM200k. But soft limit is increased as you earn your yearly distributions (or mistakenly referred to as dividends). Your total limit is the combination of both hard and soft limits.

2. In general, yes, better to take a loan if you look at the numbers. But there are risks. Lets say the return for a year is lower than a certain level that it makes it not profitable to maintain the loan; then you can always terminate it in 2 months time.

This post has been edited by wild_card_my: May 2 2019, 03:29 PM

You have to consider this from the other side , or even just impartially , theres always a catch

so, the point is.. there will be no loss at all if i apply for ASB loan?

for any amount? how about loan value vs time period?

how's the 'cancel the loan earlier than agreement, how that works' actually?

If my property fail im screwed

If asb fail the government guarentee me

bankrupt because property?
as far i know longer you hold property can sell higher later tahn when you buy it or im wrong?
what exactly happen?

1. the unit price is fixed, whatever you borrow, would remain the same in value decades later
2. your returns are in the form of distribution of more units, also in the same fixed-price unit
3. there cannot be any negative returns because there are no negative "distribution"
4. the worst that can happen is 0 distribution announced for year. In this case, you would have paid the interests of your loans but received no distributions. Of which you can choose to cancel the loan and be done with it.

This is much more liquid that buying properties through mortgages

From your explanation, soft limit maciam unlimited saja?
Then what's the purpose of the original 200k limit?

This

You are so in for a treat: https://forum.lowyat.net/topic/4431314/+300

1. YES SIR!!! Softcap is unlimited.
2. I dont know. They don't want you to lump sump 20mil into it? To give others a chance perhaps? You can only reach a million in softcap if you have invested RM200k for about 25 years anyway

Can I refinance my loan to 35 years? Currently taking 30 years rm 200k from CIMB? If yes, is there any pro & con? My age is 26 years old btw.

Actually more like u can take the money to buy asb one shot and then every year withdraw amount ngam ngam to repay the loan amount. I bet with this technique you still have some money left in your asb after u have repaid the amount. Tat is what I meant by generating money out of thin air.

Already covered it in the first post. Check the "spoilers" for 1 and 2.

As for the "cancel the loan earlier than the full tenure":


After 5 years: RM274k in ASB


After 5 years: RM188k outstanding loan balance


After 5 years, if you feel like cancelling, you would still have earned RM86k, cash in hand For the uninitiated, the RM86k figure comes from RM274k value deducting RM188k balance that you owe to the bank.

Guarantee in what sense eh? please elaborate, no speculations. Just hard facts

I thought you guys are smarter than this

thanks will reading that thread tonite

Yes, can!

Any different than using rental income to pay your installment? You guys are not being fair with your comparison.

I am going to pre-emptively address the tongkat issues: Please, don't involve tongkat in this argument, we are debating the feasibility of this financing and investment, not whether or not some groups are persecuted. For that topic please bring it up in other threads or subforums.