Hi There... Millennials don't usually think bout the future. They live in the Now. So I'd say you're a rare breed! lol

5.65%? wow! with the dividends @ 6.75% this year, you earned only 1.1%.... You need to change this. Pronto. That's why terminating and reaaplying is so important, if only to keep up with the most competitive rates, let alone the amortisation kickback. 

Here's what I would do. Walk into any bank, ask to see the officer for ASB loans. Ask him/her whether you will be eligible for the max loan. Be honest with your history. Let them do their background checking and come back to you. If no, look elsewhere. But I have a feeling that they will accommodate given your recent history. Problem 1 solved!

If they do, terminate and re-apply as soon as you can. You should be looking at an IR of 5% and a monthly payment of about 1k and a bit with a max loan of 200k and max tenure of 30 years. You mentioned that you pay 80% - 90% from your salary which means your'e about 140 - 280 short every month. Well with this new loan, you should have no trouble at all paying 100% from your salary since it's about 300 less than what you are currently paying. Problem 2 solved!
Some questions about your calculation above.

(2007 - 2016) = 9 years. 25 year loan means you have 16 years left. By my very simple calculation, assuming we start fresh from now with your current loan and you only have 200k sijil loan with no cash dividends in there:-

After 16 years, you'd have RM 590k (compounded from 200k @ 7%)
Total payment made : 1440 x 12 x 16 = 276k
Gain : 314k (adjust for inflation at your will)

It's still a decent gain from 16 years. But if you terminate and reapply, after 16 years, you gain will be 380k (before inflation)

All the above is well and good where we have an endpoint and we know where we are after X number of years. We would know how much we have in our bank accounts. But that's not the point of all our previous discussions here.

I go into these loans with no end in sight. I don't even care how long i've paid and how many more years i have left to pay. I'm in this for maximising capital and utilising other people's money for my gain. And compounding interest is what makes all of this work. If you're employing the terminate and reapply strategy, your loan will always be at max tenure.

From a humble single 200k loan 15 odd years ago when I was 25 years old, earning 14k dividends per year, i'm now earning dividends from 1M of about 70k per year @ 7%. 600k loan with ASB & ASB2 and 400k cash in ASB, ASB2 & ASD. Not a single cent of my own money was injected other than the loan repayments and earnings from the dividends. From 1.2k per month installment for the first 200k loan back then to 3.5k installment for the 600k loan now. Here's the kicker.... after 15 years of loan, i still have about 27 years left to pay..... I THINK! I've now reached 40 and i can't take max tenure anymore, thus making my monthly repayments a little higher. Still calculating whether it's still worthwhile to terminate and reaaply. But that's a discussion for old people! lol

That's why i said before, you have youth on your side and there is an opportunity cost the longer you wait.

So to recap, 70k per year... just to put that into perspective is 140k every 2 years. Assuming I let this 1M compound for the next 10 years, it will be 2M (@ 7% dividend) that's a gain of 1M in 10 years! Just to put things into perspective again, it took me 10 years of compounding dividend to get 200k cash from the first 200k loan. Now, due to the magic of compounding interest, that same 10 years earns me 1M!

Now let's say disaster strike and for some reason, I can't pay off the loan anymore. I'd terminate everything. No questions asked and no further payments need to be made. If I do it now, I'd have 400k cash. If I do it in 10 years i'd have 1.4M cash. Hopefully this will be enough for my retirement earning me 98k per year, i.e 8k per month and....peace of mind.

So forget the past, start fresh from here. the sooner the better.

Hi Mohamadf, if only for the fact you have an emergency fund of 6 months tells me that you are a prudent and and someone who think of the future. Congrats to you for taking your first steps towards your financial goals.

Now that you've got the ASB loan on automatic, its time to build on your career or your business. This is so you have the funds to expand your loan, and diversify your investments into properties, stock market and mutual funds, among other things.

When I started out with the loan at 25, I was a fresh grad earning 2k and paying 1200 per month. I had to really had to  ikat perut. I really worked at  my career and now it's a little easier paying 3.5k asb loans with a monthly income of 18k.

If or when you can afford, look into asb2 loans or even another asb loan by proxy, if you know someone you can really trust.

U should join the Facebook group as well, for motivation. Just search 'himpunan teknik asb'. There are many more Otai2 in there that are more experienced and are always willing to help.

hi there.

congrats for your 1st step to achieve financial freedom. The best way to maximize profit actually is not by terminating and reapply but to max the OPM. Your current rates now (5%) is already the lowest (put aside the 2 month 4.8% special rate) If u r eligible try using the hybrid method by adding another 200k (asb2) to max out your ASB loan to 400k. This method will be a good choice and give you more profit if u dun have any intention to use the money in the near time.

Please take note the compounding effect will be much bigger when you hold your loan longer than start afresh after few year.

Comparison between compounding and hybrid method. Look at below :

Compounding method
-------------------------

200k loan
terminate after 3 years

Your estimate profit

compounding dividend = 43,295
Principal = 9,313
Total = 52,608
Nett profit
52,608 - (1073 x 36) = 13,980 @ 39.19% ✔

Hybrid method
-----------------

200k loan (1st year)
200k loan (2nd year)

Terminate after 3 years

Last dividen (1st year loan) = 13,500
Compounding dividen (2nd year loan) = 27,911
Dividend balance x 2 years (after paid for 2nd year loan) = 1248
1st year principal = 9313
2nd year principal = 6053
Total = 58,025
Nett profit
58,025 - (1073 x 36) = 19,397 @ 50.21% ✔✔

Between the 2 above method which one do you think give more profit at the end with the same amount of installments?

This im not calculating if you hold the loan much longer assume 5 years and above. I just want to show you what you will get if u optimize the OPM.

Any further question PM me. TQ

I've spent some time going through the thread and the earlier one. While I understand the power of compounding interest over decades, I'm still quite noob on this, so correct me if the following calculation is wrong.

How is taking a loan and gaining 13,980 (above) in 3 years > than simply paying/saving the same 1073 x 36 = 38,628 (dividends not included)? Doesn't this mean that one essentially "lost" at least RM24,648 (38,628 - 13980) to the bank? The maths simply does not compute. Be glad to know if I'm missing something here.

Given the recent decline in interests + bonus announced each year. Did some more calculations on how interest and bonus is calculated to arrive at the real interest to be applied on amount invested and have decided to save using own money instead of the loan. Starting with say RM50K and consistently paying per month for say 10 years (same as paying a max 200K loan anyway....willpower present) yields more cash at hand in the end than using the loan. Yes, some arguments can be made that one could use that startup cash elsewhere, but the benefits of using one's cash at this level outweighs that of being tied to a bank loan and subject to additional fees, interest fluctuations and what else in the future.

ASB saving
RM1100 x 36 monthly should not be deducted to calculate net profit as it is not considered as cost. That RM39,600 saved is your own money. You are not servicing any loan

Hi All,

I signed up for ASB loan around 3 months ago, and now I think I need to cancel because I am having difficulties to pay every month (money problem). I haven't missed any payment so far and if I wish to cancel, will they charge me any penalty fees and do I get back what I paid so far?

I just get an info regarding bank rimau asb financing. They already revised the installment start from 1 april.

Thats why all of the bank rimau customer received a letter regarding the increment in the installment.

200k asb increment is about 30+/month.

RHB bank also do the same start from 1 mac.

Only bank sotong and few banks still remain the installment.

To me, its not an inter-related strategy. There's no connection between the asb and asb2.

Seems to me that if you did that, it would be asb strategy and asb2 strategy.

Yeah you can say getting more dividen for the same commitment (1k) but I could also say that by not doing asb2, you'd get money for free (rolling)

Yup a valid strategy for asb2 (rolling) and a valid strategy for asb1(kompaun)

Still don't see where is there is a connection between the 2 asbfs.

I guess the only benefit is that by deferring a year on one asbf, you get to save 12k (1k a month) but then again you'd lose 1 year dividen as well.

or rather this is a strategy for someone without the means to get started on 2 asbf simultaneously. Thus differing a year on one will enable them to eventually get both. Now that makes sense I guess.

Very solid strategy. Thanks for the explanation. Very clear.

But wouldn't it be better if you had 60k that u dump that whole thing into asb2 earning you 20k dividend (@6%)?

In plan A you would get 17k+14k+13k+62k+2k=108k

Plan B you'd get 17k+80k=97k

Add 20k to plan B: 97k + 20k=117k

My calculations may be wrong.... Correct me if I'm wrong or missed something

What is the effective lending rate that you're using to calculate these returns? You mentioned RM 1K per month earlier but otherwise didn't state explicitly in your calculations.

Thanks.

Noob question here: That "Jumlah" is the amount we own or the total investment?

Let say if we cancel the loan (bank sell the certificate) the amount would be adjusted to how much we actually own?

Wow congrats! well on your way there... keep at it
come come, get on that money train!
No dilemma.... as wild card says, it's constant. almost as sure as death and taxes.

it'll be a dilemma if i didn't have that 7 digits tho!
That's right, timo... you get the idea.

People think that this loan is a liability. like a car loan or a house loan. talking about financial freedom and stuff....

But they forget that ASB loans are unique. You are still technically financially free at all times with this loan as for any reason whatsoever, be it low dividends, high interest/BLR/BR, medical emergency, suddenly becoming jobless, etc... just TERMINATE AND WALK AWAY. Zero risk, or shall i say minimal risk should you terminate on the first year.

Even if you die, the banks just take back the sijil and your next of kin is not burdened by your debts.

Hi, I only have ASB1 & ASB2, are the remaining worth to buy?

Noted bro. Btw, ASM is open for all, right?

That guy so funny wanna debate with buggie who HAS already done it compare to his Account and Finance Education along with his theory haha. What a good read to laugh on.

flyingspaghettimonster asb forum.