ASB Loan Consideration

I've been wondering whether ASB loan makes sense and have spent some time reading about it. Opinions are varied but these are few things that is important to know for whoever is considering this kind of investment. For the record, the dividend and bonus for 2012 is 7.75 and 1.15 respectively, which gives us the total of 8.9%

1. Dividend and bonus are calculated on minimum balance each month. If you save AND take a loan, you might want to find out how much of the dividend and bonus belongs to your savings and loan.

For e.g. Jan ($5000 x 0.089)/12 + Feb ($3000 x 0.089)/12 + Mar ($10000 x 0.089)/12 +....

2. Dividend and bonus for the loan investment, let's say is $1600 for the year and your monthly installment is $200 i.e. $2400 per year. Does that say you're making a lost because you have to pay $800 more than what you're getting? You must look at how much from that $2400 goes to interest and principal. The yearly statement will show (if you already have that loan) the interest and principal figure. Let's say out of $2400, $700 goes to interest. Which means $1700 from your monthly installment is like a savings which you will get at the end of loan tenure.

3. Therefore, with $1600 dividend and bonus, and $700 interest, you still net $900. 

4. So now can you happily go and apply for a loan? There is this another consideration of halal or haram. 

- Securities Commission's decision on ASB

- Fatwa Council decision

- use Islamic Financing instead of loan

Basically SC said it did not comply with their guidelines on Islamic Trust Fund as 30% invested in banks and SC guideline only allows 5% of syubahah (non-halal) and the Fatwa Council said it is Harus due to weak economic situation of Muslims in Malaysia. You can read the long version in the fatwa page. So, read up all the views and choose your stand. Will our personal economic situation collapse if we didn't invest in ASB? Certainly not. Will the country development be affected with no fund from PNB? I have no idea but some speculations have been made. So some may say it is black and white and others might say it is grey.

5. Any savings/investment alternative?
- Bank Islam profit sharing ratio RM50,000.01 minimum to enjoy rate of 0.88 % per annum and above RM500,000.01 for 1.53% per annum for savings and 3.84% for 48 months and 3.99% for 60 months and above for GIA.
- Other syariah compliant unit trust
For e.g. PM Ittikal at 5.25 sen per unit

ASB Loan Consideration - Part 2