This is an analysis of investing using loan. As some of you might know, investing on loan is quite popular among Malaysians. Even some banks make a fully describing brochures to attract people. One of the main confusions is the monthly pay. Do noticed some banks use lower monthly payment but here, I’m going to use standard BLR + 0.4% as the interest rate which is 6.9%. Some calculations are done with the help of online calculator. There are a lot of methods to invest using loan. I will just analyze the ones that I think the best.

Update: Too tired of numbers? Or use the Excel simplified ASB calculator instead.

If you would like to share your ASB investment plan, check here is the place

The data that I used in this calculation is as follow:
Interest Rate:6.9%
Dividend Rate:7%
Lending Terms: 10 years

Loan Method 1:

Dividend will be used to buy more ASB shares

Monthly Payment = RM587 (using online calculator)
Conventional Method 1: Invest RM587 monthly for 10 years in ASB

Verdict:
Loan Method :Total Investment at the end = RM98357 ( 39.63%)
Conventional Method:Total Investment at the end = RM103,888 ( 47.48%)
Total Cost: RM587 x 120 = $70,440

Loan Method 2 :

Dividend will be used to pay monthly loan payment.

Monthly loan payment minus Monthly Dividend = RM587 - RM291.66 =RM295.33
VS. Conventional Method 2 : Invest RM587 monthly for 12 months, and RM295.33 for 108 months

Verdict:
Loan Method :Total Investment at the end = 50,000 ( 28.40%)
Conventional Method:Total Investment at the end = RM58,884 (51.22%)
Total Cost: (587 x 12) + (295.33 x 108) =RM38,939.64

The scenario of banks giving out loans to fund your ASB investment is like as though like the banks themselves wants to invest in ASB, but unable to (Maybe because of the 200,000 limit). So what do they do? They use your entitlement Ex: your account to gain access to the ASB dividend, by providing you the capital upfront. They collect their dividend monthly from you. I remember calculating using “Time Value of money”, “Compounding Interest” and such formula and concluded that there’s no significant advantage to getting a loan to finance your investment, other than handing over your dividend entitlement to the BANK.

Start compounding savings + must have a strong self discipline.

Extra Notes:

Maybank is an appointed authorised agent for Amanah Saham Nasional Berhad (ASNB). Investors can perform transactions for the following ASNB’s unit trust funds at Maybank branches nationwide:

1. Amanah Saham Nasional (ASN)
2. Amanah Saham Bumiputera (ASB)
3. Amanah Saham Wawasan 2020 (ASW 2020)
4. Amanah Saham Nasional 2 (ASN 2)
5. Amanah Saham Malaysia (ASM)
6. Amanah Saham Didik (ASD)
7. Amanah Saham Nasional 3 Imbang (ASN 3)
8. Amanah Saham Gemilang
9. Amanah Saham Pendidikan
10. Amanah Saham Kesihatan
11. Amanah Saham Persaraan

One more thing is the SSPN ( Skim Simpanan Pedidikan Negara / National Education Savings Scheme) , has anyone take a look on the overall benefits?