Does it make sense for me to use the compulsory provident fund to pay off my monthly housing loan, rather than using my salary savings.
provident fund dividend rate = 6%.
less Housing loan ~5% interest rate + 4% fiat inflation = 9%
Net loss = -3%.
Based on this logic, it does seem to make sense, for me, to use provident fund's 'concierge' service to pay housing loan repayments directly, leaving salary to be saved into a hard savings store of value, bitcoin.
On the above, it makes sense but it depends on several other factors:
1) instalment amount
2) balance in provident fund *
3) net contribution per month (addition less withdrawal)
*loan instalment is only allowed from account 2 which is 30% of your total balance, assuming no prior withdrawal.
On average a person earning RM15k, paying a RM3.3k loan will utilise RM20k of their balance each year. If this person has RM500k to start with, it will only pay the loan for maximum 8 years after which, there will not have balance in account 2 (yes that is possible).
If you do not want to utilise the balance in your account 2 at all, for every RM1000 loan you need to earn RM14.5k per month. So a RM3.3k loan, you’ll need a monthly salary of RM47850 to have net contribution of zero per month.
