How much can you save from loan early settlement?

Typically, there are 2 types of loans. One is fixed interest rate type, and another is variable interest rate type.

Some examples of fixed interest rate loan are: car loan, personal loan, credit card loan, study loan, business loan, etc.

Since the interest rate is fixed throughout the loan tenure, you can calculate its total interest using the simple interest formula of P x R% x T. The total loan repayment amount will then be principal plus total interest. The installment amount will be total repayment amount divided by no. of installments.

Variable interest rate loan has its interest calculated daily (daily rest), monthly (monthly rest), or other predetermined interval period. Property loan is normally of this type.

For this type of loan, since the interest rate in the future is unpredictable, the actual interest saved from early settlement is also unpredictable until the time has reached its original repayment end date. If we fix the last interest rate before the early settlement made for the rest of the original tenure, then the interest saved can be estimated using the simple interest formula above. Just substitute P with the early settlement amount will do.

The rest of this article will focus on how much we can save from early settlement of fixed interest rate loan.

The interest saved is usually called interest rebate, and is calculated according to the rule of 78. For Islamic loans, it is calculated according to the formula of Ibra'. Basically, both formulae are identical.

As an example, let's say a 7 years loan with principal 100k, 3% interest per annum, if we fully settle it 3 years after the borrowing, how much interest rebate can we get back?

Principal = 100k

Interest = 100k x 3% x 7 = 21k

7 years total repayment = 100k + 21k = 121k

Monthly installment = 121k/84 = 1440.476, rounded up to 1440.48

Since there is a round up of 0.004 for every installment, the last installment will then be 1440.16 only.

The sequential sum of all installment no. = 1+2+3+...+82+83+84 = (84)(84+1)/2 = 3570

According to rule of 78:

Interest for installment no. 1 = 21k x 84/3570

Interest for installment no. 2 = 21k x 83/3570

Interest for installment no. 3 = 21k x 82/3570

and so on...

Putting all the above information into an Excel worksheet, we can produce the following... 

and from the table above, we can produce the following graphs for better visualization of the interest portion:

We can observe that, for earlier installments the portion of interest is higher, and this will gradually reduce over time.

Back to our question, if we make an early settlement at the 36th installment, how much interest rebate can we get?

The interest rebate will be the sum of interest portion of the 37th installment until the last 84th installment.

There is a formula to quickly calculate this interest rebate:

Interest rebate = n(n+1)/N(N+1) x I

where:

N is the overall no. of installments

n is the no. of remaining installments

I is the overall interest amount = P x R% x T

Many financial institutions require an early notice period of at least 3 months, else a penalty will be imposed based on the interest amount of the notice shortcoming installments.

Some financial institutions also charge a fee, such as processing free, or early settlement fee, for early settlement.

By including these factors, our final formula will be:

Interest rebate = (n-t)(n-t+1)/N(N+1) x I - C

where:

t is the shortcoming of notice period

C is the related charge for early settlement

Last but not least, looking at our example above, we can observe that the interest is nearly fully paid off during the last 1.5 years of the loan tenure. As such, the interest rebate available in that time range is very minimal, and you can't save much for making early settlement at the final stage of the loan tenure.

Investing in Kenanga Digital Investing (KDI)

Kenanga Digital Investing (KDI) has been around for a few months since early 2022, and I have just joint on the bandwagon last week.

KDI is a robo-advisory investment platform under Kenanga Investment Bank. It can be accessed either using web browser to its website, or via its mobile app available for Android and iOS.

FYI, this is the same Kenanga Investment Bank which has another popular investment platform called Rakuten Trade for online stock investment.

I just put in the minimum starting fund requirement of RM100 in KDI Save and RM250 in KDI Invest respectively for a trial to test its performance. I've used my friend's referral code during registration and got RM10 as a result. Therefore, my invested amount in KDI Invest has become RM250 + RM10 = RM260.

After invested for about a week, this is my portfolio performance so far. 

My KDI Save has gained RM0.08 (0.08%) from RM100, equivalent to 2.92% p.a over a period of 10 days.

My KDI Invest has gained RM2.03 (0.78%) from RM260, equivalent to 28.49% p.a. over a period of 8 days.

I would say, this investment result is pretty impressive. Hope that KDI can keep up this kind of performance for a long period of time.

Currently, KDI only has 2 investment products: KDI Save and KDI Invest.

KDI Save is similar to Opus Money Plus Fund (MPF), Touch n Go (TNG) GO+, StashAway Simple, and other money market fund (MMF). It is quite impossible to incur losses, and its return is expected to be just slightly higher than the bank's fixed deposit rate. This is a kind of investment of low risk low return.

KDI Save's return is daily calculated and daily credited into your account. Currently, for an investment amount of RM100, you can get RM0.01 per day. KDI does not incur any management fee, pretty similar to fixed deposit savings with bank.

KDI Invest is an A.I. operated ETF investment fund. It invests into ETF funds listed in the US market, which coverage is around the world.

The investment profit or loss of KDI Invest is daily updated in its returns value. Being an ETF fund, its fluctuation is pretty small.

You can decide your KDI Invest portfolio risk profile to be set as either Very Conservative, Conservative, Balanced, Growth or Aggressive Growth. That will determine the level of fluctuation of your daily profit or loss.

Invested amount of RM3,000 or less in KDI Invest is free from fund management fee. More than that, there will be a management fee of 0.3% to 0.7% per annum. On top of that, there is also an ETF transaction fee of 0.2% to 0.4%. per annum. This amount of fund charges is considered very minimal, compared with the charges of majority of the mutual funds in the market.

Both Malaysian and non-Malaysian who has bank account in Malaysia can invest with KDI. You can sign up your account in their website or via their mobile app.

If you want to get an additional RM10 in your KDI Invest account, you can sign up using this referral code: 114053

After signing up, before you can gain access to KDI and start investing, you need to wait for 1 or 2 days for the processing of your KYC verification. You will receive an email from KDI once your account application is approved.

Please remember that, in order to get your RM10 for using my referral code: 114053, you are required to transfer a minimum of RM250 from your bank account to KDI Invest within 30 days upon account creation. If your KDI Invest account is not activated with an initial investment after the expiry date, you will miss your opportunity of getting that RM10.

e-LATiH - thousand over free online training courses with cert by HRD Corp

FYI, there is an online e-learning portal called e-LATiH by HRD Corp (formerly known as HRDF, under MOHR), which you can freely register for an account to enroll for a selection of 1000++ free online courses.

The URL of e-LATiH is: https://elatih.hrdcorp.gov.my/

This online e-learning portal is open to Malaysian and also non-Malaysian. Basically, everyone are free to use it without much restriction.

Categories of the courses, which could be either in English, Malay or Chinese, including:

• Leadership or organisational development
• Education, skills development or languages
• Marketing and innovation
• Management / business management and corporate governance
• Public relations, customer service or communications
• Purchasing, logistics, supply chain or electronic business
• Process and operation
• Quality management and productivity
• Safety and health
• Sustainability
• Scientific or technical, statistics or research and development
• Wholesale or retail or electronic commerce
• Building, construction, maintenance or landscaping
• Creative arts, journalism or entertainment
• Digital technologies and digital transformation
• Engineering
• Financial services and financial technology

The courses are conducted in the form of pre-recorded video. Upon completion of watching the full video, you will be given a Certificate of Completion by HRD Corp. No examination is needed for most of the courses, while some courses may have assessments in the form of quizzes or short assignments.

You can start learning anytime, and complete a course at your own pace with no specific deadlines.

Which handphone can you buy with your monthly fixed income?

Handphone is a necessity nowadays.

Every now and then, new models of handphone are being introduced into the market, with price tag ranging from a few hundred ringgit to a few thousand ringgit.

From the perspective of personal finance management, one simple formula to evaluate your affordability for new handphone is that: the handphone price should not exceed your one week worth of net income for each year of usage.

Therefore:

• If you tend to change a new handphone every year, your handphone cost should not exceed 1/4 of your net income (equivalent to 1 week of net income).
• If you tend to change a new handphone every 2 years, your handphone cost should not exceed 1/2 of your net income (equivalent to 2 weeks of net income).
• If you tend to change a new handphone every 3 years, your handphone cost should not exceed 3/4 of your net income (equivalent to 3 weeks of net income).
• If you tend to change a new handphone every 4 years, your handphone cost should not exceed 1 month of your net income (equivalent to 4 weeks of net income).

If you are going to trade in your old handphone when buying a new handphone, your cost will then be the selling price of the new handphone deducted by the preloved selling price of your old handphone.

With this simple evaluation method in mind, the tables below show the maximum cost of handphone you can buy, relative to your monthly salary.

and the table below maps the handphone price range with some popular handphone models for your reference.

Assumptions and conditions:

• Net income = Salary - EPF contribution - SOCSO - EIS - income tax PCB
• Employee's portion of EPF contribution = 11%.

You might probably be interested to also read about:

• Which models of car can you afford with your monthly fixed income?
• How much housing loan can you afford with your monthly fixed income?

How much housing loan can you afford with your monthly fixed income?

Recently, we talked about which models of car can you afford with your monthly fixed income?

Now, let's apply the same method to find out how much housing loan can you afford with your monthly fixed income, for your own residence (not for investment purpose)?

Certain residence types, such as single-storey linked house, double-storey linked house, town house, semi-D, bungalow, etc. do not need to pay monthly maintenance fee and sinking funds. Even some of the gated and guarded ones involve monthly security fee, the amount is minimal compared to those that require payment of maintenance fee and sinking funds, such as apartment, condominium, SOHO, etc.

As the maintenance fee and sinking funds is a form of monthly commitment to own the property, we need to consider these 2 commitments in our calculation.

The formula is pretty simple: your monthly house loan instalment should not exceed 1/3 (one-third) of your net monthly fixed income.

As such, for properties without maintenance fee and sinking funds, your affordability will be as follow:

and for properties with maintenance fee and sinking funds, your affordability will be as follow:

Assumptions and conditions:

• Net income = Salary - EPF contribution - SOCSO - EIS - income tax PCB
• Employee's portion of EPF contribution = 11%. Although currently the employee can opt to contribute only 9% monthly to EPF, we use the normal rate at 11% for this budgeting purpose.
• Housing loan instalment upper limit = 1/3 of net income, which is the same as your car loan instalment upper limit. If you are serving both housing loan and car loan at the same time, a maximum of 2/3 of your net income will be committed to these 2 loans.
• Maintenance fee and sinking funds: normally within the range of RM300-RM400. We take RM350 for calculation here. These 2 fees will cause a deduction of RM350 in your available fund allocation, and affect your residence affordability of about RM86.5k in selling price.
• Housing loan assumption: taking 90% loan, at interest rate of 3.5%, 30 years instalment plan. Although nowadays quite a number of financing institutions are still offering housing loan interest rate of 2.x%, and provide instalment period of up to 35 years, since we are foreseeing a hike in interest rate is happening now, it is reasonable for us to take interest rate at 3.5% for our calculation. 
• Price of residence = the price of residence that you are affordable to buy for your own stay, based on the assumptions and conditions above.

You might probably be interested to also read about:

• Which models of car can you afford with your monthly fixed income?
• Which handphone can you buy with your monthly fixed income?

Which models of car can you afford with your monthly fixed income?

Have you ever made a simple evaluation on which models of car can you afford with your monthly fixed income?

Or, in other words, if you already have a car model that you want to buy, how much salary do you need to earn so that you can pay for its monthly loan instalment without too much financial stress?

I recently shared a simple evaluation result in the Little Red Book (a.k.a. Xiao Hong Shu) and have received overwhelming likes and discussions on that article.

Now, I've decided to share the same piece of information here, in English, with my fellow readers on this blog.

The formula is pretty simple: your monthly car instalment should not exceed 1/3 (one-third) of your net monthly fixed income. 33.33% should be the maximum level you can go, which is also a level that you can most probably secure a hire purchase loan from the bank without much problem. Of course, if you can lower this proportion to 25%, 20%, 15%, 10%, or even 5%, you will be even more healthy in your monthly cash flow.

With that, with can then calculate the corresponding car price. From the car price, we will know which models of car can you afford.

Here is the result:

Assumptions and conditions:

• Net income = Salary - EPF contribution - SOCSO - EIS - income tax PCB
• Employee's portion of EPF contribution = 11%. Although currently the employee can opt to contribute only 9% monthly to EPF, we use the normal rate at 11% for this budgeting purpose.
• Car loan instalment upper limit = 1/3 of net income
• Car loan assumption: taking 90% loan, at interest rate of 3.5%, 7 years instalment plan.
• Car price (the 4th column in the table) is calculated based on the assumptions and conditions above.
• Car model is the lowest specs new car model with current market price near to the car price in the 4th column. In other words, you are affordable to buy the models in the same row and also those in all the rows above it.

It is quite impossible to list out all the car models, so the more popular models are listed here. Base on the information in the tables above, you should be able to easily match with those non-listed car models as well.

Note that most financial institutions in Malaysia have a policy to only approve car loan with monthly instalment of RM500 and above. You are unlikely to get a car loan with monthly instalment that is less than RM500.

As such, it is very difficult for those with salary below RM2,000 to buy a car without a loan guarantor.

Also note that, if you are targeting the car model listed in the same row with your salary range, you are pushing your monthly cash flow to a limit. You might be more financially comfortable to target for car model that is 2 to 3 rows above your salary range in the tables above.

You might probably be interested to also read about:

• How much housing loan can you afford with your monthly fixed income?
• Which handphone can you buy with your monthly fixed income?

The 3 generations of timer switch plug used in my household

Timer switch plug is a kind of gadget that can easily convert a normal wall socket into programmable timer socket. 

I have been using it for quite a long time, from one generation to another.

Some scenarios of using timer switch plug include:

• To supply electric power to TV and audio-visual devices in the morning, so that they are well standby to be turned on instantly, and to cut off the power at mid-night.
• To switch off the air purifier when you go to work, and to switch it on when you back home.
• To turn on the light at night, and turn off in the morning.
• To turn off the wall charger power 2 hours after charging.
• etc.

Here are some photos of the 3 generations of them (front view, side view and back view):

Surprisingly, all the 3 generations are selling at almost the same price in the market now.

The 1st generation only support programmable timing interval of 15 seconds time period, and you can decide during that particular 15 seconds it should be turned on or turned off by toggling its key position to be up or down.

It will rotate and repeat its setting every 24 hours. It has no clock to keep track on the actual time. In the event there is a power blackout, it will stop rotating, and therefore after the power resume, its setting will be offset and you might need to readjust its setting.

The 2nd generation, a digital one, is more advanced. It has an internal clock, powered by an internal rechargeable battery, and its programmable period is up to a week.

With this capability, and its programmable timing interval of 1 second, it is possible for you to set it to turn on and turn off at different timing for each day in the week.

The 3rd generation, a smart plug which I am using now, is even more advanced. You need a mobile app (either Smart Life or Tuya Smart) to control it.

The smart plug connects with the corresponding mobile app via 2.4GHz WiFi network that is connected to the Internet. There is a gateway server in the cloud that link it to your mobile app.

One mobile app can be used to control multiple smart plugs.

Scheduling the time for it to be switched on and switched off is a basic function, available in the app.

On top of that, the smart plug also has the capability to monitor and record down the electric power consumption of the devices attached to it.

Together with the sensors in your handphone accessible by the mobile app, it is possible to program for scenario-based automation, such as:

• Turn off when you are away (your handphone detected location is leaving the smart plug)
• Turn on when you are back (your handphone detected location is near to the smart plug)
• Turn on/off at sunrise/sunset, which will be on different timing during different season
• Turn on/off when it rains (it can get the weather information from your phone)
• etc.

It even can integrate with some voice control assistants, including Alexa, Google Assistant, SmartThings, IFTTT, etc. so you can actually speak to your voice assistant and ask it to be turned on/off with your voice command.

Converted my Asus RT-AC86U router into AiMesh node and linked it to my new Asus RT-AX86U router to form home AiMesh system

Recently, I purchased a new Asus RT-AX86U router to replace my 4-years-old Asus RT-AC86U router. The main reason being I want to take advantage of the RT-AX86U's WiFi AX (a.k.a. WiFi 6) capability for some of the newer devices in my household.

What should I do with my old Asus RT-AC86U router after I have successfully replaced it? Well, I converted it into an AiMesh node to form a stronger, stabler home WiFi with larger coverage area, by creating an AiMesh system with the 2 routers.

Initially, I faced difficulty in getting my RT-AX86U to discover my RT-AC86U AiMesh node via wireless network, in order to add it into my home AiMesh system. I managed to resolve the issue by using a network cable.

Here are the steps to form an AiMesh system, with RT-AX86U as the AiMesh router, and RT-AC86U as the AiMesh node.

• Make sure both the routers have already been updated to the latest firmware version. I am using  AsusWRT-Merlin firmware for both the routers, and the current latest version for both of them is 386.5_2.
• Use a network cable to connect your PC or laptop to one of the LAN ports of the old RT-AC86U router. This is for you to use your browser to access the router's configuration web interface. Alternatively, you can also use WiFi connection to access the router's configuration.
• Go to Administration > Operation Mode and select AiMesh Node. Click the Save button to confirm your selection.

• Wait for your router to reset and restart itself into an AiMesh node, ready to join an AiMesh network.
• Use your network cable to connect the WAN port of your AiMesh node directly to one of the LAN port of your AiMesh router.
• Now, login to the configuration web interface of the AiMesh router, which should be the new router that links your home network to the Internet.
• Click on the AiMesh button at the bottom of the Network Map page. The right panel will switch to AiMesh function.

• Click on the Search button to search for your AiMesh node.
• You should be able to find the old router as the search result almost immediately. If you don't use a network cable to join the routers together, but trying to use wireless connection instead, you might have trouble in finding the AiMesh node.
• Follow the screen instruction to setup your AiMesh system. This process will take some time (about 1-2 minutes).
• Once the AiMesh system is successfully established, you will be able to see the content inside the AiMesh function of the new router.

• Congratulations. If you reach this step, your AiMesh system should be established. Now you can remove the network cable joining the 2 routers, and they should continue to link up with each other using WiFi connection.
• Put your AiMesh node router to the location where you want to place it, and you are done.

You might want to configure your DHCP to give a fixed internal IP address to your AiMesh node router. You can find out its MAC address used to join the AiMesh system by clicking on its icon under the "List of AiMesh nodes in your AiMesh system" section, then click on More Config.

In future, you can update the latest firmware to your AiMesh node(s) from the AiMesh router's configuration page, under Adminstration > Firmware Upgrade.

#WorryFreeWiFi #ExtendableRouter

PERSOLKELLY Salary & Employment Outlook 2022 (Malaysia edition & Singapore edition)

Unlike the Jobstreet salary report 2022 (Malaysia Edition & Singapore Edition), which provides the insight of the current median salary figure in various popular industries, and also from the perspective of career specialization, the PERSOL Salary & Employment Outlook 2021/2022 (Malaysia edition & Singapore edition) provides a similar salary market value insight from a different angle.

PERSOLKELLY is a joint venture established in 2016 between PERSOL HOLDINGS (previously Temp Holdings) and Kelly Services. They are a prominent workforce solutions provider in the APAC region.

The PERSOL Salary & Employment Outlook report has listed down the market value range of salary by their minimum and maximum, according to the job title and job grade, coupled with the no. of years of experience.

Sample pages of the report are as follow:

Malaysia edition of the report has coverage of the following industries:

• Banking & Financial Services
• Engineering
• Finance & Accounting
• Human Resources & Administrative
• Information Technology
• Property & Construction
• Sales & Marketing
• Supply Chain & Logistics

Meanwhile, Singapore edition of the report has coverage of the following functions and industries:

• Accounting
• Customer Service
• Human Resources
• Office Support
• Procurement, Supply chain & Logistics
• Sales & Marketing
• Banking & Finance
• Engineering & Technical
• FMCG & Retail
• Healthcare & Life Sciences
• Information Technology
• Japan Desk

You can:

• Click here to download the full 42 pages PERSOLKELLY Malaysia Salary & Employment Outlook 2021/2022 report
• Click here to download the full 66 pages PERSOLKELLY Singapore Salary & Employment Outlook 2021/2022 report

Jobstreet salary report 2022 (Malaysia Edition & Singapore Edition)

Recently, Jobstreet has just released their salary report of Malaysia’s job landscape, and also of Singapore's, respectively. 

The reports aimed to provide insight of the current post-pendemic regional job market, as a reference guide for the hiring managers, HR, job seekers. as well as students planning for their tertiary education field of studies.

The information and statistics in the reports are analysed from Jobstreet own job advertising database, to come out with the median salary from various perspectives, and presented in multiple ranking by industry, by specialization, by position level, by location, etc.

From the reports, we can find out the current top 10 salaries by industry in Malaysia (figures in MYR):

and also the same in Singapore (figures in SGD):

In another perspective, we can also see the top 10 salaries by career specialization in Malaysia (figures in MYR):

and also the same in Singapore (figures in SGD):

There is also a section comparing the salary difference between SME and corporate, so that we can know how much is the salary gap between them.

The reports are pretty comprehensive and is a valuable tool for evaluating oneself whether he/she is well-paid, underpaid, or overpaid, comparing with the median salary of the peers in the job market at the same location.

You can:

• Click here to download the full 54 pages Jobstreet Salary Report 2022 (Malaysia Edition)
• Click here to download the full 56 pages Jobstreet Salary Report 2022 (Singapore Edition)

My Youpin Suanglng JC-B18 2.5 litres mini washing machine

Do you remember my portable ultrasonic turbine mini washer that I bought at the price of slightly above RM40 that I used it to wash the mopping cloth of my Roborock S7 robot cleaner?

Unfortunately, I have to tell you that it cannot last long, and started to malfunction after about 3 months of daily usage. Maybe its motor is too weak to handle daily usage, and now it could hardly spin.

It is still a very good mini washer, probably for occasional use, such as when you're travelling.

Anyhow, I have found a more robust replacement for it, which is my Youpin Suanglng JC-B18 2.5 litres mini washing machine, which cost me around RM150.

This mini washing machine has a higher power motor than my previous mini washer, operating at 12V 10W.

It has its own bucket with touch power button. Other than the washing function similar to my previous mini washer, it also has voilet ray and ozone bubbles to sanitize virus and bacteria.

See it in action below:

Note that its bucket is pretty small, at the size of 165mm x 165mm x 187mm only.

Other than mopping cloth, it is also suitable to wash handkerchief, socks, underwear, baby clothes, saliva napkin, and other small items.

Hopefully this Youpin Suanglng JC-B18 mini washing machine can last for 2 years or more.