TODAY, I would like to talk about FINANCIAL PLANNING. It’s something that affects everyone’s lives. What you do now can have wide range and long term implications in the future. There are a lot of books of personal finance management such as those by Robert Kiyosaki (Rich Dad Poor Dad and Cashflow Quadrant) and we also have local Gurus in this field such as Azizi Ali who himself has become a millionaire from an astute wealth management. Azizi Ali, MBA, Ch. Fin. Planner has produced a couple of books on finance management such as Millionaire Landlord etc.
My focus here today is to share with some burning questions that people have with AMANAH SAHAM NASIONAL (ASB) i.e. to invest straight into the scheme through monthly wage cuts or take out an ASB loan. Let me put it in another way, is it better to put in, RM500 monthly into ASB a/c or to make RM500 loan instalment on say RM50,000 ASB loan? The answer is simple, as long as you have a good margin spread between the cost of borrowing and the return, go ahead and borrow the money. After all, it’s the basis of all investment decisions in the purchase of property for investments or any other investments for that matter. But can we actually make money through this way with ASB? ASB, Boleh?
In the current interest rate environment, the answer from me is the AGAIN, will be based on the margin spread. Untuk betul-betul CARI DUIT anda perlu pandai merancang bagaimana BOLEH BUAT DUIT dan juga CONSIDER ALL RISKS Jika tidak anda akan kehilangan DUIT anda. Let’s look at my case study below:
Being a fussy accountant and financial planner myself, I naturally did up a special spreadsheet in Excel to compare the returns from savings consistently with the returns from borrowing for ASB. Assuming that I am saving the same amount of money every month that I pay for my loan instalments, I started to chart out the return mechanics. On interest rates, after some shopping around I have found RHB’s ASB LOAN scheme to be the best deal:
First 3 years: BLR -1.00%
The rest of the years: BLR-1.25%
Processing Fee: RM30
Taking ASB Dividend Rates as declared last year:
Let’s say we take out RM 50,000 loan, with 10 year-loan period, with monthly instalment of RM549. Here is what I found out:
SAVINGS MONTHLY CONSISTENTLY
ENDING BALANCE: RM 98,350.50
TAKING OUT A LOAN/PINJAM DUIT UNTUK ASB
This involves both INFLOWS (Through Capital Appreciation and Dividend+Bonus Payments) and OUTFLOWS (Loan Installment Payments including interests+Processing Fees+Loan Insurance).
General rule of thumb is that if INFLOWS is greater than OUTFLOWS then you will be making on the investment (on borrowing per se).
Here’s what I found out:
Net Inflow is Positive After Deducting all the Transaction Expenses – Good!
ENDING BALANCE: RM 101,255.73
So, you are better off by taking out loan by RM2,475.23 (RM 2,905.23 margin less Processing Fees and Loan Insurance Premium). Good isn’t it? You pay the similar amount monthly to the bank to the amount you save every month over the same number of years and you end up with a better ending balance in your ASB a/c. Cun kan..hehe..So you are better off taking out the loan.
What if the dividend granted is much higher, thus the margin spread is higher? Say dividend becomes 8.5%? Well from my worksheet, the amount of margin difference with conventional savings is a lot higher at a whopping RM 7,997.98.
But if the Government chooses to declare dividend below or close to your ASB loan rate? Tough…you could end up losing some money on the loan transaction.
Also, the above ending balance assumes that you NEVER EVER take out your ASB dividend at any point in time over the loan period. If this happens, you won’t be able to get the return or ending balance as stated above. Ni sesetengah orang kita kononnya nampak duit dividen banyak, mulalah nak berbelanja tak tentu pasal, modify keta lah, sambung rumahlah etc.. DON’T BE STUPID! If this happens, you are better off going through the SAVINGS route, kerana anda akan menguntungkan pihak bank sahaja! Duit untuk simpanan hari tua! The spreadsheet that I use to make the above calculation is attached ASB LOAN CALCULATOR HERE!
Jangan biarkan sayang anda menderita sebab tak de duit nak kahwin! Ketahui cara-cara terbaik menguruskan kewangan untuk perkahwinan. Kupas bagaimana anda boleh menjana lebih dari RM 3 ribu dalam masa beberapa jam sahaja. Klik Banner di atas.
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