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

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

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.

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

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

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

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

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.

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

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.

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.

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

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

Penatlah!!!!!

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.

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.

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

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.