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

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