Usually how many years would it take to have balance below than 200k?

Hi guys, was wondering if there is any calculation method to tabulate ASB surrender value?

Hey thanks alot. Just another question (probably a silly one), the total principal amount exclude the dividends we pay? I assume upon surrender, the total amount is the surrender value + dividend paid during the loan tenor?

Guys,
Would it be possible if we withdraw our share from asb into any agent bank account online?
What if im living overseas, and i wish to sell some of the share when im there? In no way i could come to the branch.

Question:
In which year is the best to cancel the ASB loan (to maximize ROI)?
According to my calculation its the 2nd year with ROI 16% p.a.

Loan: 200k (No insurance)
Rate: 5.2%
Monthly: RM1,100
Total cost 2yrs: RM26,400
Total Dividend 2yrs: RM28,900 (assuming 7% dividend and dividend remain in account)
Principal refunded after 2 yrs: RM5,843.27

Profit after 2 yrs: RM8,423.27
ROI: RM8,423.27 / 26,400 / 2yrs
ROI%: 16% p.a

is this correct?

Long story short, I left the dividend in there all these years and never touched it.
Took my first 200k loan when i was 24.
After 10 years it grew to 400k (200k cash from dividend)
Then took another loan and transferred the 200k cash to ASW and ASD since no ASB 2 back then. So- 400k ASB sijil + 200k cash in ASD/ASW equals 600k
Transferred to 200k to ASB2 when the fund was created
After 7 years compounding 600k, got another 200k cash. = 400k sijil + 400k cash
ASB2 loan was introduced last year so I took it. Transferred the 200k cash in ASB2 to ASD again
So now is 600k sijil + 4++k cash. Took out almost 100k to renovate my new house so now left 950k


Some facts:
- The figures above are rough approximates.
- Everything here is pure organic growth and injections by way of asbf/asb2. None of my own cash was injected.
- My limit now for asb is essentially 600k now. I can remove say 50k for emergency and put it back later
- 8 years ago, it was possible to take loan up to 400k.they don't allow that now. So you're strategies differ slightly now. Only slightly....
- The years is approximate, I can't remember exactly but it was around year 2000 I think when I just started working.
- I am an average Joe salary earner punching the clock 9-5 with a public listed company. Started out at the end of 1999 after the 1998 economic crash. My starting salary was only 1600. I'm still with  the same company albeit in a very much more comfortable post now.
- The loan installment was 1200 at that time so I only had 400 to spend a month. But I had an understanding gf back then who started work with gomen much earlier than me and pretty much supported me. She is now my wife of 15 years. I repaid her generosity by supporting her when she pursued her PhD. 
- It says 4 funds here, namely ASB, ASB2, ASD & ASW2020. throughout the years, I transfered the funds around. But I don't have any in ASW anymore.
- I employed the terminate and reapply method. Everytime I terminated, I earned back 9-10k surrender value of which I spent as a reward to myself for being disciplined enough to continously pay monthly instalments. Down-payment on my first car - a kancil. Paid for my wedding. Even Stupidly bought a gaming pc costing 10k once which is now practically a door-stopper cum flower pot.

My target is to earn 80k in dividends yearly to support me when i retire. When I die, my son can inherit the Cash.
My last dividend was 41k plus ASB2 coming in march estimated to be 15k and ASD in June estimated to be 6k. So 41 + 15 + 6 = 62k

I'm now 42 so insyaallah I can reach 80k soon since I'm still compounding. That's additional 120k into the pool every 2 years and still going.

Remember the power of OPM. I pay 32k in installments but earn 62k for a nett of 30k. Actually more than that because the 32k a year i pay I will get back in ammortized value (the principal) when surrender.

I don't terminate anymore since once I terminate i cannot apply full 400k loan anymore. Also because my age is 42 so I can't get max tenure anymore thus my monthly repayments will be higher. But I did this religiously when I was younger to treat myself when i get the principal back. sort of a incentive to keep going with this.

Hate to be the bearer of gloomy news. I just think it's only fair, being a realist to highlight the other side of things to future folks...not to be swayed so much and jump in blindly. What buggie has accomplished with the system is great and all...It's always nice to hear one take advantage of a system. Alas, it's in the past and as with all investments.. One must look towards the future to plan accordingly and not live on mere hype or belief system from the past. Up until recently, simply to get some folks to sign up (ala commission, goodwill, etc..), people were being told it's okay to roll their dividends and use it to pay back the loan..In the end, banks never lose. Sure, you'll still get something than nothing in the end. But do not expect similar results. Especially as:
*The ringgit was much stronger back then.
*Cost of living was significantly lower.
*ASB dividends were almost double what they are today and dropping. Last year's returns, they had to be creative with numbers to appear good. Read into that what you may.
*400K limit vs 200K today. Sure you can workaround this by using family members. Be careful as you are basically entrusting your money to someone else.
*Toss in the recent hike in loan interest rates cuz as the economists say "the economy is booming".

ASB Dividends History
[attachmentid=9561096]

ASB2 Dividends History
[attachmentid=9561100]

ASW 2020 Dividends History
[attachmentid=9561103]

Summary: His technique worked for then.. Right time, right moves.. Do NOT assume such will work for this time. Keep your eyes and ears open for other opportunities and as he said.. Be disciplined, move cash around and let it grow. Finally, don't kiasu until you forget to live. You are only young once and when older, you do not want to feel like you missed out on key experiences cuz you were being to calculative. We remain humans with physical limitations.. 

hye..
i read somewhere about asb loan for 25 years for about 100k then after 5 years terminate loan.
is it really good or just bank romours.tq

Hi,

can anyone like teach me basic 101 of ASB Loan

since my parent requested me to apply ASB loan.

i'm not really have an experience with ASB loan as i only been self-funded my ASB.

plan: 15yrs tenure, RM35000.
salary: 2150

at first was thinking of max loan but when i calculate, i'm might not able to cover back the installment
so,i thought wanna start low as RM35000, tenure 15yrs (approx: RM280/month) 

If live with parent, 1 shot 200k = 1k/m if bank allowed

At last amount disburse in my wife asb acc on 28 nov..

But want to ask for an opinion, which one is better to pay for the instalment, monthly or yearly? I mean pay using own source, not rolling the dividen..

Hye.tq for reply

Let say i able to save rm550 monthly..so get loan that close to rm550/month..and drag to 30years?after 5@6 years surrender sijil n pay loan balance?correct sir?

Thanks for the reply.

1. In general, if your bank DOES NOT ALLOW paying to reduce the loan principal then it would be much better to pay it by the month because you could not save any interest by paying upfront. Just keep the money you have in ASB or ASB2 account and generate dividends on them

My opinion is, if you are thinking to pay (more than the monthly installment) to reduce the loan principal, why bother applying for ASBF? Because the concept of ASBF is using OPM. The cash you use to reduce the principal will not be compounded, so I think it's better if you use that cash to take up higher loan amount OR just left it in the ASB and let it compounding.

2. For some banks like CIMB, there are 3 options, if you choose "reduce loan principal", you would save interests but you would still be responsible for paying the subsequent monthly installment. So you can't have a cake and eat it too.



So my answer would be that it is better to just pay by the month and keep whatever money you have on hand in ASB/ASB2 as cash

1. On the first part, the so-called "hybrid method" is nothing more than two separate ASB loan accounts, one paid using cash on a monthly basis, and the other paid using the rolling-method. In this thread we have had a long discussion about this a few pages back of which we were unanimous about categorizing this "hybrid method"

Here's the link to the discussion

Yes, basically the so-called "hybrid method" is just combination of rolling and compounding method; hence the name.

2. I disagree that the "hybrid method" would allow you to get more profit over the long run. Since the hybrid-method utilizes the rolling-method, it would generate less return than paying your installments normally in the next 30 years; and if you are adventurous, to refinance it every 5 years or so to maximize the capital.

The key for hybrid is, ONLY when you can't afford to take up full RM 200K ASBF in one shot. E.g. RM 100K ASBF compounding 5 years < RM100K hybrid for 5 years (adding new sijil on 2nd year). This method really leverage the OPM concept. Else, go for RM200K componding any day.

3. As for surrendering the policy, the bank will sell your unit-certificate, and if there is a balance you would have to pay for it. This happens if you:

a. make a settlement too early into your loan tenure, for example about a year into it
b. you took a high-premium ASB-Reducing-Term-Assurance (ARTA), which would be capitalized into your total loan amount



I believe you will only need to pay for the shortfall only if you opt for takaful/insurance and you terminate it too soon where the principal balance is more than the loan amount (as per in picture).

If you don't opt for takaful/insurance, even if you terminate after 1 month, you will not have to pay anything since the principal balance < loan amount. Correct me if I'm wrong.

1. At 4.85%, if you are looking at borrowing RM100,000, the monthly installment is only RM528/m

2. Provided that you took some minimal insurance for a premium of RM150, your total loan amount is just RM100,150

3. After 5 years (60 months), the total loan balance is RM91,769. Your certificate value does not change, it remains RM100,000 in those 5 years. RM100,000 - RM91,769 = RM8,231

4. You would be left with RM8,231 in your ASB account upon settlement with the bank.

5. At this point you are ready to reapply at full RM100,000, and the units in your account will be RM100,000 plus RM8,231, plus whatever dividends earned that you have left untouched in the past 5 years.

This is considered an "advanced-method", but don't let it scare you, all you need to do is to reapply when the time is right, to maximize the capital.

Try consider using "hybrid method"

I want to explain what is the hybrid method by using calculation. Why its better not to stay compounding when you still not max out your 200k asbf. Here I will give you 2 different calculation.

1st method compounding

100k compounding for 5 years.

Prinsipal sv - 8172
Compounding div. - 40,255
Total - 48,427

2nd method hybrid

apply 100k at 1st year than another 100k 2nd year (hybrid) for 5 years

1st 100k

Principal sv - 8172
Div. Balanced (7000 - 6441.84) x 4 years) - 2232
(div. Balanced = dividen - 1 year installment)
5th year div. - 7000
Total - 17,404

2nd 100k

Principal sv - 6370
Compounding div. (4 years) - 31080
Total - 37,450

Nett total for both certificate after termination - 54,854

Additional 6427 if using hybrid technique than compounding only from 100k. Just think how much the different gap if you terminate at 10,15,20 or 30 years.

Its just a simple comparison and hybrid will give more for you at the end. You just need to pay installment the same like you did with your 100k.

This method only suitable for those who cant afford to max out 200k asbf to maximize the potential return from the normal compounding technique.

You can start as low as 10k and max out till 200k however it will take many years to achieve it.

Dun stay compounding when you still not max out your 200k asbf.

Notes :

Loan rate 5%, tenure 30 years without insurance. Dividen prorate 7% (monthly - 536.82)

-haziq-

Kudos, I have to give it to you. Figures differ a little as I made it so the "dividend balance" would be compounded as well

Yes correct. However if the client can use proxy to maximize the opm more than 200k this technique should be best to apply with.

So you are suggesting a hybrid method with a proxy, for those who cannot afford RM400k loan, but would like to use this method eh? So it is a similar method, but they would have RM200k + RM200k (proxy)? That's very adventurous of you     

Yeah hopefully what happened to TH wont happen to ASB.

I actually asked the previous question because, when I ran some calculation, I found that (with loan interest 4.8%), 6.4-6.6 cents dividen is the thereshold where asbf starts to be more profitable than self-contribute each month.

Duly noted...
Very tempting.. But I don't have any such proxies to trust with such amounts.. Later big quarrel over how to share.. Friend/family now, in 5 years, many things can change.. Much safer I dump elsewhere to earn.. 

1. Thanks. But including the bonus in the setup would be quite confusing, my intention was to simplify and illustrate the flow for a hybrid-method. Not to mention bonus rules can change like how it was for the year 2017.

2. ASB2 financing is perpetually full, you may plan to do a hybrid-method with 200k in ASB and another 200k a year after with ASB2, but there may not be enough quota by the time you want to do it, which may get in the way of your plans. It is an option, but it has its drawbacks.

1. I disagree, if the dividend is the same as the interest rate then it would be folly to take up an ASB financing. Essentially, you would only be paying interest for the bank's profit and to repay the loan (thus reducing your balance outstanding). You might as well just do a cash investment then.

2. And if you were to do a rolling-method including the hybrid method, you would be facing a negative cash-flow. This is due to the fact that ASB financing is a term loan, installments made are used to pay both the interest as and loan repayments - unlike an overdraft. Unfortunately, OD is expensive in Malaysia 

For example, if the dividend is declared at 5%, and your interest is set at 5%, for an RM100,000 financing you would be paying RM536.82 a month, but your dividend (sans bonus) is only RM5,000.

3. I am sure we can discuss this imaginary scenario at great lengths with more calculations but as it is, I believe there would always be a good margin between the average interest rate and the  ASB dividend declared in the long run.

Sorry.. If asb just for Bumiputra?