First of all, you basically need 3 stuffs to make this method working.

• A significant amount of ASB saving (this can be either from your saving or loan)
• An overdraft facility against the ASB account above.
• Credit Card

1. When you have these 3 items, the first thing that must do is to pay all outstanding balance in your credit card (CC) account.

This step is to avoid paying expensive 18% charges by CC providers. Instead, you only have to pay (7%) OD fees.

2. When you receive your first paycheck for the month, put 70% of your paycheck to OD account, and 30% to your ASB account

You want to do this because you can save OD fees by reducing the balance as soon as possible. Remember that OD fee is charged daily. Meaning, the balance in OD is charge 0.0191% (7% divide by 365) daily. The 30% investment is to grow your ASB account as you get more benefits investing in ASB than saving OD fees.

3. Use your CC for the bills and other expenses that are payable by CC. Don’t spend more than you usually do. If not, you won’t be able to improve your financial state.

Why use CC? CC enables you to use money free (for 50 days) without paying any fee if you can clear the balance before Due Date. If you instead use your OD account, you’ll be charge 0.0191% daily. So from alternative point of view, you are actually saving 0.0191% daily.

4. Pay your CC balance only at the Due Date for the current month (which is usually next month). Use the money from OD to clear all your balance. If you spend less that you should with your CC, make a cash advance from your CC (I could only advice doing so when there aren’t much fee to do cash advance)

The reason to pay at the due date is to maximize saving by delaying the use of money from OD account. For the cash advance part, please do not do this if you are charged expensive fee to make cash advance.

5. For the expenses that need cash, withdraw it from your OD account.

Please minimize the usage of OD this way.

6. Repeat the process for the next month.

As pointed out by one of the comments in my first post, this method is highly effective if you have substancial amount of credit card outstanding balance. This is because you can avoid 18% charges by moving the balance to your OD account. I’m not sure how much saving you could get if you are debt-free as what you could save is only the 0.0191% daily OD fees for maximum of 50 days.

OD method is not that easy to follow as you need to micromanage your money by remembering the important dates, paying your CC at due date and so on. I could only advice this method if you have CC debt. Other than that, it’s not worth the trouble and the risk.

If you have any comment or opinion or want to correct me, please use the comment section below.

Pengurusan Kewangan Yg Betul.doc

Any questions are welcome.

clarification : The term loan here is not pointed to specific loan for ASB because loan for ASB can’t be used for OD application. Use of personal loan or own money is some of the options.   

First Step:

Here you can edit the start date of your investment and the amount of your initial investment. Nothing complicated here.

Second Step:

This is the adjustment option if you have any in particular year. For monthly column, the amount will be added every month in that year. This is for standing instruction or money that you put monthly. Yearly column will adjust only once in that year. Both columns can be positive or negative value.

Thirds Optional Step:

If you scroll enough to the right, you’ll see a small calculator for loan calculation. You can use the calculator to see how much you lose to a bank for taking loan. This part doesn’t have effect to the table below.

That’s all. Post a comment if you are still having a problem with the calculator.

1. Monthly and yearly contributions are editable for every year.
2. Users can now scroll the table without losing the headers’ sight.
3. Mini Loan calculator to show how much you lose to the bank.
4. Starting date and year of investment is now specifiable.

I have run through the formulas used in the Excel and everything seems okay. Download it and take a look.

Download: ASB Calculator V3.3
Contributor: m.ridzuan[at]gmail.com

Update: Usage tips can be found here http://www.irwan.biz/asb-calculator-usage-tips/

Tahun Dividen Bonus
1990 8.0 6.0
1991 8.5 4.0
1992 7.5 5.0
1993 9.0 4.5
1994 9.5 4.5
1995 10.0 3.0
1996 10.25 3.0
1997 10.25 1.25
1998 8.0 2.5
1999 10.50 1.5
2000 9.75 2.0
2001 7.0 3.0
2002 7.0 2.0
2003 7.25 2.0
2004 7.25 2.0
2005 7.25 2.0
2006 7.20 1.5
2007 7.30 1.25

Investing world is very personal. Some could take bigger risk, while some prefer secure investment like ASB. To know which side you are belong to, you can fill this short quiz and check the result yourself. Just make sure to be as honest as possible.

Risk Tolerance Quiz

Here What I got:

Your score for risk capacity is 34:
With a score between 30 and 38 you have the wherewithal to take selective investment risks that includes both stocks – which carry higher risk – and bonds, that have much less risk. You might consider a portfolio that is anchored by large company U.S. stocks — perhaps 40 percent — maybe in an index fund. Include small company U.S. stocks, too, at about 20 percent. International stocks should play a role — perhaps another 20 to 25 percent of your portfolio. The final 20 percent could split between short to medium term bonds and some type of hedge, such as a natural resources fund. This type of portfolio could lose about 20 percent in a year.

Your score for risk tolerance is 34:
With a tolerance of 33 to 41, you have a healthy tolerance for risk with the capacity to match. You have the wherewithal to take selective investment risks that could lose as much as 20 percent of its value in any given year

Now, go there and let me know how are you doing.

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Don’t lose the opportunity to invest in one of the hottest, most wanted Unit trust in Malaysia.

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ayie:
Loan=$20k
Duration= 20 years
Monthly Payment= $157 + 100 extra investment
1) loan method –> Balance after 20 years: $155,726.08
2) Conventional –> Balance after 20 years: $149,149.98

Difference = $6,576.10 (4.409% increase in 20 years)

Mýr
Loan=$10k
Duration= 10 years
Monthly Payment= $115 + 100 extra investment

1) loan method –> Balance after 10 years: $39,411.00
2) Conventional –> Balance after 10 years: $38,474.00

Difference =$937.00 (2.435% increase in 10 years)
Now it’s your turn. Grab this calculator and post what you got. Or you could just give the detail and I will calculate for you.

My last ASB calculator doesn’t calculate the bonus for ASB. In this new version, I implemented an extra algorithm to include the bonus. If you find any glitch or error, please let me know

ASB Calculator v2