Posted by: kamaruzamanomar | July 10, 2008

ASB : Loan And Invest

This is my 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. I 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 analyse the ones that I think the best.

If you would like to share your ASB investment plan,
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 = $587 (using online calculator)
Conventional Method 1: Invest $587 monthly for 10 years in ASB


Verdict:
Loan Method :Total Investment at the end = $98357 ( 39.63%)
Conventional Method:Total Investment at the end = $103888 ( 47.48%)
Total Cost: $587 x 120 = $70440


Loan Method 2 :
Dividend will be used to pay monthly loan payment.

Monthly loan payment minus Monthtly Dividen = 587 – 291.66 =$295.33
VS. Conventional Method 2 : Invest $587 monthly for 12 months, and $295.33 for 108 months


Verdict:

Loan Method :Total Investment at the end = 50,000 ( 28.40%)
Conventional Method:Total Investment at the end = 58884 (51.22%)
Total Cost: ($587 x 12) + (295.33 x 108) =38939.64

Click For to see How I get the Numbers: Click the Thumbnail Below

Free Image Hosting at www.ImageShack.us


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