Yes extend till 16 january 2017. Interest pm me

How long is your asb loan tenure? 30/25 years?

122k (4 years) 70k (when you proceed)

your ASB with insurance or not?

How old are you now? Below 35?

You use your own money or dividend to pay for your installment every year?

To answer your question i need to know the information above.

And this phrase below,

"would it be better if i save RM5004 (1 year installment) and put it in my asb directly instead of paying the loan on top of the yearly dividend from the 122k?"

Do u mean u will paid for the whole installment for 1st year installment and let the dividend to paid for the rest installment? Can u explain more?

Can pm me. I will advise what you can do. tq

Need to learn to say new words, "No".

25 years

122k is my own money that i can take out anytime. 70k is the loan i took in 2012.

got insurance

32 this year

own money

What i meant was, is it better if i cancel the asb loan, but continue putting RM5004 (equivalent to what i pay every year to service the loan) into my asb account every year instead of continue with the loan? Assuming i keep on depositing every year for another 20 years



This post has been edited by munky: Jan 6 2017, 08:27 AM

If you put RM5004 every year without loan the dividend will be calculate based on RM5004 only. If the dividend rate is 7% you will only get RM350.28/year

instead with 70k (RM5004/year) of ASB you will get approx. RM4900 (dividend) + principal you paid

You should know ASB dividend calculate based on the balance in your account every end of month so the more amount you have in your ASB the more dividend you will get.

Why making ASB with loan?
because we start with higher volume to gain more profit

so the answer to your question ASB loan is better than saving every year

what i have in mind is like this (correct me if im wrong):

lets assume for 2017, dividend is 6.5%

so in my account now, i have RM192k (122k + 70k)

end of the year i will get RM192k x 0.065 = RM12.48k dividend

minus the installments i actually get 12.48k - 5.004k = about RM7.5k

scenario 2, without 70k loan:

so dividend is 122k x 0.065 = 7.93k

but since i have saved RM5.004k from not having to pay the loan, i can say that i get a total of 7.93k + 5.004k = about RM13k

so technically i get more money every year. But if i continue the loan until the end of the loan tenure, i will get more money in the asb

so what i would like to know now is, what if i plan to cancel the loan in maybe 3 or 4 years time? What is the amount that i would get?

im afraid that one day the dividend will be go lower than the interest rate

From my understanding the 7.93K comes from dividend profit but the 5.004K comes from your own pocket (because u don't have the 70K loan anymore). So u don't get more actually.

U only get more when your loan principal amount reduces over the years.

In scenario 1, you don't just get 12.48k, when you terminate the loan, you will get back the ammortised value as well. So it's 12.48k + ammortised value.

In scenario 2, why plus 5.004k to the dividend of 7.93k??? Not paying the loan DOES NOT equal savings in cash. But if we follow you logic then the ammortised value that you get back in scenario 1 should bring to about 13k or a little less.

At the end of ONE year you will get roughly the same amount. The big difference is when you loan for 3-4 years then terminate and reapply. There will be a big difference in the 2 scenarios figures due to compounding interest and ammortised values.

This post has been edited by buggie: Jan 6 2017, 04:38 PM

scenario 2, by not having to pay the loan, i plan to still save the same amount as the yearly installment into my asb account

if i terminate and reapply, will i get more money? i dont really get how this amortization works. All i can do is use a loan calculator to see the reduced balance. Still no idea how they calculate how much interest and principal i pay every month

Getting more money means making money from OPM (Other People's Money). That is investing, what u plan to do is saving..

ahhh make sense

i guess i should continue with the loan eh?

what if dividend go equal or lower than the interest? (assuming i have no problem paying the installment)

If you are disciplined enough to save the amount, taking the loan will still earn you more as the dividend is on a higher amount. Add compounding interest and ammortised value, your money will multiply like rabbits.

And remember that ASB has a limit. So if you plan to put in your own saving, with already 122k in there, you only have a quota of 78k left which translate to about 15 years @ 5k per year. after that, you cannot put in anymore and your ASB is crippled. By the time, you will be too old to take a loan with max tenure to maximise the returns.

Here's what I would do if I were you. Firstly, congrats on amassing 122k at the age of 32. That's no easy feat by any means. Now make it work for you. Take out that 122k, put into ASB2. Apply full 200k loan on ASB. So technically, that 122k is earning you interest at 2 places.... ASB @ 6.5% & ASB2@6.0% for a total of 12.5%!!! your loan is only 5%

So in a nutshell, for a loan of 200k @ 5% you are already earning interest on 322k. Later when your budget permits, take out the 122k ++, put into TH or ASD and take another 200k ASB2 loan for the same reasons as above.

Add into the mix with ammortization... that'll just be your bonus.

Ammortization simple means that when you take a loan, every month the amount that you pay consist of 2 things - the interest to the bank & the prinsiple amount. Basically, at the beginning of a loan, the interest portion is higher and and the prinsiple portion is lower. As the loan progresses it will have an inverse relationship.

So.... basically when you terminate the loan, the bank will keep the interest paid but will give you back the prinsiple. When you get this back, it will increase your ROI. For me, i just treat myself to something nice as a bonus for being disciplined paying the loan. Or else, you can put it somewhere to generate further interest for you. As a guide, for 200k loan @ 5% should get you about 3k++ per year in the first few years.... that's almost 10k back into your pocket if you terminate after 3 years. Now tell me that isn't awesome!

And don't worry about the dividend rate so much! When you have compounded so much already, it's really a small matter. And the best thing is when it really doesn't make sense to take the loan anymore, Terminate and look elsewhere with no risk or penalty at all to you! Just walk away... 0 risk!

Hope this helps

This post has been edited by buggie: Jan 6 2017, 05:16 PM

When that happens, terminate the loan and look elsewhere. 0 risk, no penalty.

Revisit when the economy improves.

great explanation. Thanks

and that idea of yours, brilliant, just that i cant afford the 200k loan at the moment. Will think about it when i can afford it

btw, any idea when we should stop/cancel the loan? for example very2 low dividend?

Bro, no offense but i'm a little apprehensive when people say they can't afford. But everyone's situation is different at any point in time so I won't judge. But for me, I started a 200k loan when I was 25. Fresh out of Uni and earning 1800 per month. And at the time, interest on the loan was 5.2-5.4%! paying 1200 per month. Had only 600 to survive. Now 15 years later repayment is MUCH easier. Take a step back and relook into your finances and see if you REALLY can or cannot afford. You might be surprised. This loan works it's magic when it is taken as early as possible. The longer you wait, there is an opportunity cost which is a shame as you can't get back that time.

To answer your question, terminate every 3 years and reapply as much as you can afford. or until you can't get max tenure anymore.

Stop completely if the economy is bad and ASB dividend not attractive enough. When dividend is low, bank interest may also go lower. who knows.

Amen. Bank plz lower your %

Any asb agent can pm me? I would like to know the longer tenure asb loan scheme. I know about CIMB but what about other banks?

excellent idea bro buggie.. or another idea you may consider, convert your 122k into cert and go to bank.. pledge for OD, you will get about 67% from the amount.. take that money, put in ASB2.. OD interest is 5.2% and ASB2 dividend is 6%.. 0.8% is still money..

afaik;
cimb/affin/rhb - 30 yrs
mbb - 25 yrs

Thanks for this. I thought they blocked ASB OD for individuals long time ago and only allow sole proprietors. But after reading this it seems they allow back to individuals up to 67%.

Need to read up on this technique as 0.8% gain can be increased by reducing interest when you put in your salary in this OD account and pay your bills and commitments as late as possible. Timing would be crucial.