Daud has an outstanding RM 20 000 loan from PTPTN that he need to pay. He plans to pay the loan in lump sum after 5 years, assuming he did not sign up for the 1% Ujrah payment method that will make this technique irrelevant and also assuming he somehow avoided PTPTNs blacklist effects. Now let see how much actually that he has to pay after 5 years if the annual interest rate charge by PTPTN is 3%.

As you can see the RM 20 000 have become RM 23 185 after 5 years. Now let us see how much that he need to invest monthly if he plans to use the money from his unit trust investment after 5 years to settle the loan in lump sum.

Example :

Target amount                         : RM 23 185

Annual rate of return              : 10 %

Duration                                  : 60 Months (5 Years)

After key in the details above and some sci –fi algorithm like out of the Matrix Trilogy

1  1  0  0  1  0  0  1  1  0  0  1

0  1  0  1  0  1  1  0  0  0  0  1

1  0  1  0  1  0  1  0  0  0  1  0

1  1  1  0  0  0  1  0  1  1

1  1  1  1  0  0  1  0

1  0  0  1  0  0

…….

RM 301/MONTH

That means the total you actually pay is RM301 x 60 months = RM18060

Which is less than the amount you actually borrowed!

I know some of you might be wondering how I come out with that figure. The process is actually similar to the example I give on the table above only this time it is doing backward. So to save some time, I decided to just write the amount after making all the calculation using my special Calculus LS3000X software. HAHAHA. If you still confuse please read my previous article about THE POWER OF COMPOUND. So what are you waiting for? Start investing !

Sheyzal Azman
Financial Consultant