ASB loan work differently. It is not you borrow 100k, you must pay 100k. As at any time you can terminate the loan. Whatever excess in principal payment will be refunded thru your book.

For e.g say I took 100k ASB loan for 25 years. After 2 years, I plan to terminate it. I still can get around 1k plus 2 years dividen refunded into my book.

Hi,

1 - By that, its mean by understanding is wrong because I am talking about early settlement while you and masami talk about terminating the loan?

2 - So for example in case of 30k @ 25 years = RM 185/month;

If the customer already PAID for example 3 years (RM 185x12x3 = RM 6,600, dividend 8.0 p/a), meaning after 3 years if the customer terminate the loan, he will get approximately RM 6,600 + (dividend x 3 years) in his account?



Thank you in advance,

The RM185 will go to principal and interest payment. So you only get the principal payment.
If you want for early termination, there is another technique doing it.

This is just an example. You take 100k LASB for 25 years but spilt into 5 cert (20k each).
Every 3 years you buy back 1 cert with the dividen money (RM6500 x 3 years = RM19500)
Instead of waiting 25 years to get the cert, you'll get 100k cert in say 10-12 years.

A friend of mine doing this technique and he already bought 2 cert.

When the basic concept is simple enough, it is worthwhile to keep things simple and straightforward. When you're on a straight road, why keep twisting and turning the steering? Tyres no balance ah?

If the asb loan can more or less provide leverage (ie. interest paid is lower or equal than the dividends earned) then get as much loan as you can possibly get... and this is usually with the longest possible tenure with the lowest monthly installment you can pay.

If there's still extra savings left after expenditure every month, then get more asb loan. Simple.

Unless of course, if you have already touch the ceiling of 200k, and cannot take any more loan and cannot invest more into asb, then settle the loans with the extra savings.

The 2nd basic thing to keep in mind is 'compounding of interest'. This is the reason why one should begin investing as soon as possible. If you can start with a large amount, better still. (Be it from loan, or own savings, it does not matter. But if there's leverage with a loan... then get the loan to start off with a bigger amount.)

With a return of 7-9%, 'compounding of interest' will double the initial invested amount every 8-10 years. 100 becomes 200 in 8-10 years. It is 2, 4, 8, 16, 32, 64, 128 times... in 56-70 years. So if you delay in starting the investment, it is not delaying the investment in a number of years or so, but cutting off the last number of times that you can double the investment. And the difference is huge... say 16 times instead of 64 times.

And of course, to have this compounding interest effect, you don't take out the dividends.

You don't pay the monthly installments with any dividend, but out of your salary. So it's back to "take as much loan as you can possibly can with your monthly budget". Simple.

This post has been edited by j.passing.by: Oct 8 2014, 01:13 PM

different people with different needs. everyone got their own style on how to invest.
if investment is as easy as ABC, everyone becomes a millionaire in MY.

there is a saying, same is lame.

below is an example of how you can manipulate ASB to buy car.
at the end of the day, for RM500, i'll have both ASB savings and car instead of only car.

even you can pay off your car loan quickly by terminating the loan.
as i mentioned, different people different needs.

This post has been edited by navink: Oct 8 2014, 01:22 PM


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That's why I said it depends on whatever budget you can afford.

Any variation or technique is not any better to keeping things simple. If you want to save and invest, say, 10 years, then keep things simple and take a 10 years loan. Why take a longer loan and apply 'special technique' terminating or settle the loan?

No plan or there's changes in the plan, then okay la to twist and turn. Why set a plan to twist and turn here and there when it is not more benefit than a simple plan?

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I take back that 2nd para....because it contradicted the previous post on taking the longest possible tenure...just terminate/earlier settlement of loan when it is necessary to do so.



This post has been edited by j.passing.by: Oct 8 2014, 01:32 PM

wah, u can do like this. split the amount into few cert

but the dividen we get is less than 1 cert 100k right ? [ correct me if wrong ]

no different, u took 100k loan on 5 certs or 100k on single cert u still get the same amount of dividend.. LASB works exactly as mortgage loan where the interest is calculated base on principle, unlike hire purchase.. so i get why he took multiple certs instead of one..

spot on. I was thinking the same, but was2 if that's the answer

.. that is why u need to manipulate instead of taking the known path.

Awesome ! Thanks for sharing

need to learn more from sifu here

TY guys

let me rephrase my words. maybank does not offer a better rate to its staff for asb loan. i know cimb gives, but not maybank

is this true? coz last week I enquiry asb loan with maybank staff and they said that it will not affect any housing loan etc...

Thanks

Maybank, CIMB, RHB & AmBank consider ASB as Income (or take 200k ASB loans) thus won't effect if take housing loans from them

Thanks for the tip. will try to take loan next week with your tip.just wondering whether bank will approve my application.

They should approve.. The only problem is that you need to pay 5 diff loan.. If u got online accounts like maybank2u or cimbclicks then it is easier..