Lowyat.NET: Latest topics by RphAcng

Saving tax using investment-linked insurance

RphAcng — Mon, 05 Dec 2022 18:15:27 +0800

Hi,

I'm looking for feedbacks (disagreements welcomed) on the idea of saving tax by buying investment-linked insurance.

In an annual individual tax assessment for non-public servant, we are eligible for the following tax relief:

- Life insurance premium (Restricted to RM3,000)
- Education and medical insurance (INCLUDING not through salary deduction, restricted to RM3,000)

Let's say I'm in the tax bracket of 21%.

Case A

I max out the life and medical insurance contribution using investment-linked insurance:
- I pay RM6,000 in cash on insurance annually
- In return, I save a potential of RM6,000 * 0.21 = RM1,260 of tax annually
- Even when the insurance premium is expensive, most of the premium paid will become "cash value" that accumulates into the future (subject to market condition), which can be used to offset the increasing cost of insurance.

Remark: I pay less tax + am able to save for the future.

Case B

I choose to buy cheaper term life and medical insurance (roughly ~RM100 per month in total at my age):
- I pay RM1,200 in cash on insurance annually
- I save RM4,800 compared to Case A, but they are taxed at RM4,800 * 0.21 = RM1,008
- I have spare cash of RM4,800 - RM1,008 = RM3,792

Remark: I have cash in my pocket, but also a sum of tax has to be paid for them.

Thoughts

In Case B, even if I were to invest the spare cash of RM3,792, I presume it will have to do very well to offset the annual tax payment of RM1,008. In contrast to Case A, all the premium payments, less cost of insurance, will be invested (without tax) into the insurer's fund.

What are the pros and cons in each case?

Insurance should only be purchased as a protection, and not for investment/saving/tax reduction, but this scenario really pique my curiosity.

Proton Insurance Program, premium increasing?

RphAcng — Thu, 19 Nov 2020 18:24:57 +0800

Hello,

My car insurance is expiring soon, and I'm now looking at different options, comparing between different products and its pricing to choose which one to go for.

This is my first year renewing car insurance and road tax.

My vehicle is currently insured under Proton Insurance Program (PIP), via Zurich provider, product name Z-Driver. The weird thing is that this year's quotation is more expensive than the previous year.

Here's my payment for 2019 insurance:

The new quotation for the upcoming 2020 renewal under PIP:

So my questions are:

1. Why is the basic premium much more expensive? In 2019 it was RM 1.1k, but in 2020 it went up to RM 1.3k.

2. Wondering as well, what is ACT premium listed in the payment detail?

3. Should I continue with PIP? The benefits seem good, 10 years waiver of betterment, 12 years agreed value coverage, key care, flood, PA

Regards.

Hire purchase high interest rate?

RphAcng — Tue, 29 Sep 2020 18:14:32 +0800

Hello LYN,

I bought a car last year during December 2019, and my agent secured a Maybank Islamic Hire Purchase for the purchase.

Thing is, this hire purchase is variable rate, which isn't usual for a car purchase. I only got to know from friends and colleagues after a few weeks later, that car purchases are usually covered with fixed rate loan. It was my first time securing a loan from bank, so I was still green back then.

When signing the loan agreement with the bank, I was told the equivalent flat rate is 3.00%. Since this is a hire purchase from Maybank, I was later able to view the loan account online via Maybank2u. Under my loan account, it showed profit rate as whopping 5.64%. That was before MCO. After multiple adjustments of bank rates these few months, it now shows profit rate as 4.22%.

Some numbers:

- My loan tenure is 5 years, loan amount RM 36,400.00.
- Initial monthly instalment before MCO was RM 708/month, right now it is down to RM687/month, but I still opt to pay the initial amount.

Also my credit history back then was rather blank, since I didn't apply for any loans and credit cards, no PTPTN as well.

So my questions are:

- Is variable rate loan for my car purchase something new in the market?
- Is the interest rate too high, even for one that does not have credit history?
- For the knowledgeable ones, what does "Profit rate" as shown in Maybank2u Hire Purchase means, is it nominal rate?
- Should I look for and consider refinancing this loan to one with fixed and lower interest rate?

Settle car loan as early as possible? or invest?

RphAcng — Sun, 12 Apr 2020 17:43:34 +0800

Hi brothers and sisters sekalian,

One day I was doing an analysis of using extra cash to repay my car loan earlier, versus investing the cash on fund / stock.

All along I was thinking that investing would give more yields throughout the years, if investment return is more than loan interest rate, but my analysis showed otherwise.

The case is right now I have a leftover loan of RM 35,000.00, for a tenure of 5 years, with a monthly repayment of RM 708.00. Interest rate about 3%.

Assuming investment yields 6% of return annually, here's my analysis.

===

Option one: Invest extra cash in investment, repay car loan on monthly basis

Yield of investing extra cash in investment for 5 years, compounded
= 35,000 * 1.06 * 1.06 * 1.06 * 1.06 * 1.06
= 35,000 * 1.06^5
= 46,837.90

But given throughout the 5 years I pay off my loan amounting RM 35,000.00, my net yield
= 46,837.90 - 35,000
= 11,837.90

===

Option two: Repay car loan now, and invest on monthly basis

Say if I repay car loan now, I will not have any extra cash on hand, hence investing my supposedly monthly repayment of RM 708.00 into fund / stock.

Each year I would have invested
= 708 * 12
= 8,496

I would invest consistently for 5 years, hence total investing yield after 5 years
= ((((8,496 * 1.06 + 8,496) * 1.06 + 8,496) * 1.06 + 8,496) * 1.06 + 8,496) * 1.06
= 8,496 * (1.06^5 + 1.06^4 + 1.06^3 + 1.06^2 + 1.06)
= 50,766.30

Net after deducting my initial lump sum early repayment
= 50,766.30 - 35,000
= 15,766.30

This is disregarding that I might get rebate for early settlement, which in this case the net yield will be more than RM 15,766.30.

===

So repaying of car loan early is actually better? Am I missing something?

Economics: Making Sense of the Modern Economy

RphAcng — Sat, 05 Oct 2019 03:26:57 +0800

Item(s): Economics: Making Sense of the Modern Economy, Third Edition, edited by Saugato Datta

Package includes: 1 book

Price: RM 15

Warranty: None

Dealing method: COD

Location: KL sentral / KLCC

Contact method/details: PM me
---

Item(s) conditions: Opened

Picture:

Superforcasting: The Art and Science of Prediction

RphAcng — Sat, 05 Oct 2019 03:22:47 +0800

Item(s): Superforcasting: The Art and Science of Prediction, by Philip Tetlock & Dan Gardner

Package includes: 1 book

Price: RM 25

Warranty: None

Dealing method: COD

Location: KL sentral / KLCC

Contact method/details: PM me
---

Item(s) conditions: Opened

Picture:

[WTS] FITGEAR Wind T-Shirt (2 pieces)

RphAcng — Thu, 05 Sep 2019 22:10:33 +0800

Item(s): FITGEAR Wind T-Shirt (Men, Black, M-size), 2 pieces

Price: RM 40 per piece

Warranty: No warranty. Please verify during COD.

Dealing method: COD

Location: KLCC / KL Sentral

Contact method/details: PM me
---

Item(s) conditions: Brand new

Reason for sale: Bought too many of them

Picture(s):

Can't stop thinking about her

RphAcng — Sat, 30 Jul 2011 01:44:58 +0800

Well my story is like this........i have fallen in love with a girl and it has been 1 year plus since i meet her n i felt an incredible feeling towards her. I met her in a camp n i have been keeping my feelings since then but recently i was rushing to finish my video assignment and my group doesn't have any girls and eventually our video needed a girl to act n i felt desperate and i accidentally called her and ask her to help me. At first i thought she would reject the offer but she agreed to help and i was seriously shocked cuz normally girls will reject every time i ask help in the video. And from that day my feelings grew stronger and i can't sleep for 1 whole week thinking of her. This is the 1st time love someone this strong and i dunno what to do. I think i'm going crazy............

if there is really good advise plz reply A.S.A.P...............