Take out loan for ASB
admin August 5th, 2008
Afiq and I have decided to take out loan as our savings in ASB - following the advices from both Ayah and Mama. We applied for a loan from Maybank.
Wanna know how this works?
Firstly, to make this method works, you have to have upfront money that can be used as your “modal”. Let say if you plan to take out a RM20k loan for 10 years, make sure you have the monthly installments (RM217/month) for one whole year ready, which is about RM2604.
Let me show you how this is profitable:
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Now, the average deviden that you will get from ASB is about 8%, which is about RM1600/year.
For the first year, you will have to pay RM2604 out of your own money.
Then, you will only use the dividen (RM1600) to pay the loan plus your own RM1004 (RM83.68/month)
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After 10 years:
Out of pocket money= RM2604 + (RM1004×9) = RM11,640
You end up having in ASB = RM20,000
So, you have extra = RM20,000 - RM11,640 = RM8360
You have saved RM8360 in 10 years!
And remember, if you don’t take out the money from ASB and reserve it as your savings for emergency uses, you will get RM1600/year continuously as the dividen!
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Okay, that amount of money might not sound impressive. So, if you have at least RM10,850 to spare, by all means, go and get the RM100,000 loan for ASB.
dividen at 8% = RM8000
amount you have to pay per year = RM10,850 - RM8000 = RM2850 (RM237.50/month)
After 10 years:
Out of pocket expenses = RM10,850 (first year) + (RM2850×9) = RM36,500
So, you get RM63,500 after 10 years, for free! Who will ever give you free RM6,350 per year? None!
And remember, if you continue to keep the RM100,000 in ASB, it will give you RM8000 every year.
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Of course, all these calculations follow the assumption that the dividen stays at 8%. It might fluctuate to any number but as the money is kept in ASB, you will be assured that you will never lose your money, unlike if you buy shares, etc. Even though the return in ASB might not be as high as a booming share, it is a no-risk investment. Consider it as your prime savings so that you will always be prepared for any emergency.
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- Comments(5)
Hopefully the interest rate is always lower than the dividend… or Dividend is always paying higher rate.. otherwise, you are in trouble.
Today news, Banks are restructuring car loan.. many have problem paying their installment since the increase in petrol price..
actually, it doesn’t really matter since right now, the rate is higher than the dividen, that’s why you have out-of-pocket money cost. If the rate is lower than the dividen, you won’t have to pay anything. However, following the calculations I made - you’ll benefit from this loan for a few reasons:
1) Your average daily balance is higher since you will have $100,000 continuously in your account (Hence, your average balance will be $100,000). If you put $1087 per month for 12 months, your daily balance WILL be less than $100,000. So, you will get only small dividen for that year.
2) Are you that discipline to put in $1087 per month into your ASB account? Taking the loan solves this. Haha =)
Ini la kali pertama saya melihat pemikiran yang lurus dan betul. Good thinking and i think you will xuccess..
TQ for the idea. Saya pun byk memikirkan perkara ini dan saya rasa memang betul sekali
kiraan daripada kak long ini..TQ..Saya pun akan membuat perkara yg sama selepas ini..
CUma nk tanya, brapa byr bulanan tok loan RM200,000..nk hitung budget sket..
Tolong ye kak long..
for RM200,000 i think it’s better to consult with bank manager or anybody from bank. because I’ve once try to look out for this kind of investment. and it’s apparently shows only investment up to RM100,000….according to the paper that they gave to me.
but maybe out kaklong can help….
Sorry for the late reply. Yep, I think you can only put $100,000 max in ASB. And if i’m not mistaken, $1087/month for $100,000. But according to my mom, it’s better to take 5x $20,000 or 3 x $30,000 or 2 x $50,000 so that if something bad happen and u cannot pay the loan, you will only need to sell one certificate instead of the whole $100,000.