I realized nowadays quite many people are financing their house with flexible home loan.If you have a flexible home loan, you can deposit extra money into your account to reduce the interest charges and also make use of your excess payment when needed. Of course, it will be added to the amount available for withdrawal, and will also affect the daily interest amount charged thereafter to be lesser.
I have received email from readers request for my input regarding the flexible home loan account. They faced the problem with the decision whether bank in to home loan account or put into fixed deposit?
Let us assume that you have a housing loan of RM300k and you have a surplus of RM100k. A fixed deposit account will give you 3% interest.
Mortgage outstanding = RM300,000
Mortgage interest = BLR – 2.2%, BLR = 6.6%
Mortgage tenure= 30 years
Monthly repayment = RM1,502
Long term interest charged = RM240,821
Fixed deposit has been seen as a lower return saving vehicles. But, it is low in risk and high in liquidity as well. In current situation where interest rates are expected to go up, people may start to question how long they should place their money in the FD account.
Based on my personal calculation, it’s better to place your FD in a shorter tenure so that you can take advantage of the expected interest rate rise in future. I still remember in the mid of May, Bank Negara Malaysia revised its Overnight Policy Rate (OPR) by 25bps to 2.5%. You can try to put your fixed deposit in a shorter tenure such as 1 month, 2 months or 3 months. This is because if you put in a longer tenure now and you can gain an extra 25bp from it, but you won’t profit from it if the rate rise by another 50bp in a couple of months perhaps.
2 days ago, my friend Thian Thian come to visit me and from the conversation, i only know that she is working in CIMB bank now and provides me the latest information about the CIMB newly launched product – “Go for Gold” which is a nationwide deposit campaign. I never heard about this campaign before but I am eager to get more details from her, she said that you would stand a chance to win the prizes if you make deposit with CIMB Bank.
She also explained to me that with every incremental deposit of RM1,000 during the campaign period, you will entitled to get 1 entry for the contest.
As an fixed deposit account holder, they will enjoy added bonus during this campaign period, customers will get the interest of 2.45% per year on their 8 months fixed deposit placement. For me, the idea is very simple which encourage more people to deposit in bank; the more they put into fixed deposit the higher chances of winning.
CIMB “Go For Gold” Campaign
Previously, there have great promotion on this Max InvestSave, which you top up your deposit, then you can get to participate in the contest and also get free gift. So, pioneer investors of Max InvestSave will receive bonus units of up to 30 percent of their total investment value.
At a glance, it is saving plan + investment linked. It is not sound too good to be true, the profit stated is projected based on last few years market data which is not so guaranteed. The capital is only guaranteed if one held until maturity period of the scheme.
Hope with my little information here may clear a lot of doubts, and uncertainties among those people who plan to save and invest.
– For me, this kind of investment really pays out highest RIV when you deposit.
– Secondly, what you see is what you get. What’s on the T&C is what investors will get. The bank won’t take investors’ money and invest in ponzi schemes, simply because the bank is not allowed so. A lot of investors seem to have the view that banks always have their ways to invest such as buying properties.
– This Max InvestSave product works best in the long term and it is very suitable for retirement planning.
Why CIMB Islamic Max InvestSave Better Than Fixed Deposit?
Do you think investment through property rental can guarantee you to earn higher return in the long run if compare to fixed deposit saving? Anyway, you should make a proper plan before buying any property for investment.
Based on my understanding, if buying a house now, then for sure the price will go up. But, will you really earn? You need to know that some of the money have to be paid to bank interest first and also you might spend some money to renovate your house and other expenses like maintenance fees for the house.
How to Calculate Return On Investment for Property Rental?
Property Type: Apartment
Size: 650 square feet
Housing Price: RM 75,000
Down Payment: RM 7,500
Housing Loan Amount: RM 67,500
Loan Interest Rate: 5% (assumption)
Loan Tenure: 15 years (assumption)
Housing Loan Installment: RM 534 per month
Gross Rental: RM 600 per month
Other Expenses: Maintenance fees and renovation cost
Monthly Net Rental = Gross Rental – Loan Installment
= RM 600 – RM 534
= RM 66
Fixed Deposit vs Property Investment