Calculate Daily Rest Interest | Malaysia Financial Blogger | Financial Freedom Ideas

My Investing Strategy for 2012 [ February 5th, 2012 ] | 214 views | Leave a Comment

Although the market outlook is uncertain due to the European debt crisis but I will also plan to make minimal stock investments. I will only invest my savings in high yield dividend stocks when the market plunges. I think property is the best hedge against inflation. Therefore, I will invest in a medium cost apartment soon. Besides, gold is another option to preserve our money and diversify our portfolio. It would be great if you can plan to allocate some funds for gold of 20g to 50g.

investing strategy

My recent strategy is to invest for income and capital preservation in view of the market volatility. For my unit trust investment, I will try to diversify by allocating one third of my portfolio into medium term aggressive fund. Meanwhile, for my stock portfolio, I will try to minimize my risk by investing in defensive counters which also provide dividends consistently.

How to Calculate Loan Interest Monthly Rest and Daily Rest?

If you have purchased house before then you may hear that the home loan is calculated on monthly rest and another is on daily rest. But, nowadays most banks calculate your mortgage interest based on daily rest. Have you even heard people saying that daily rest loans are more cheaper? If you do not know what this means, then you really need to understand how it works.

Monthly Rest vs Daily Rest Interest

Here are my brief explanations.

i) Monthly Rest

Your loan interest for the current month will be calculated based on the previous month’s outstanding balance (which consists of principal and interest not paid, if any).

The Advantage of Monthly Rest

You do not have to worry about making installments at a certain date, as long as the payment comes in before month end.

Example: For a RM100,000 loan at 4.05% interest per year, monthly rest for a 30 years loan. The monthly installment is RM481, paid on the 20th of the month.

Month 1
Outstanding loan amount: RM100,000
Interest charged: RM481
Monthly capital repaid: RM481- RM337.5 = RM143.50
Outstanding loan at month end: RM100,000 - RM143.50 = RM99,856.5