OK that was some fun number crunching. I used this guy's calculator here. In short for what it's worth, it pays rather good I think. If I did everything correctly.

First, assumptions:-

• The difference between BLR and ASB return rate is roughly constant throughout the tenure, barring recession/depression every decade or so.
• ASB return (dividend + bonus) is ~9-9.5% per year.
• Inflation rate is at the average of 4% per year.
• This country doesn't go to war.

Say you take a RM100K loan over 25-year tenure, and pays off the first year out of your own pocket money (looks like a common practice). This amount to RM6984 (Maybank rate). This is the only time throughout the entire tenure where you would have to pay the loan using your money.

You started paying the loan from the second year on using only the dividend and on the 5th year, you take out another RM100K loan for the final 100K shares (this is the part I'm not sure if it's possible), also being paid using the dividend.

By the end of both loan tenures (25+5 years), you'd have around RM670K. That's a pretty useless figure, so adjusting for inflation it's ~RM200K in today's money. Paying RM7K for RM200K is not a bad deal, I think. The return would be magnitudes higher if you use your own money, but that would be more than RM7K and frankly why would you want to put RM200K of your cash in ASB when you'd probably get better return elsewhere?

Some catches that I can see:-

• You're effectively surrendering your quota of shares to the bank, though you get them back after paying off the loan.
• It's very long term and frankly is only good for pocket money. But hey I get to buy a house with RM7K.
• It shouldn't be your principle/main investment (seriously, 200K after 30 years...).
• Requires huge self-restraining super power.

IMO it's good if you're just starting up or you're just damn dirt poor (like me).

Or course, I'm also a total financial illiterate (engineering background ) and logic can only get you so far so please enlighten me if there's something I miss. Otherwise I'll probably going to look into applying for one

This post has been edited by Fhaarkas: Feb 14 2012, 01:57 AM