I will need to make an assumption and my assumption is that you’ve got some money say for example RM1 million cash in the bank. So if you were to take the cash that you have to settle all the loans that you have, of course, you would have no more loan. That is good on one hand but if you were to need to take a loan to invest into any new property, then the bank may not give you a loan anymore because you are going to retire or you-you are retired. You don’t have any active income anymore. You see current effective loan interest rate for the property is about 45%. Based on track record, that is considered to be quite low and quite cheap interest rate.
So if you don’t settle the loan and you find ways to grow your RM1 million cash you have in the bank generating return about say 6% and above, then it is better returning than you’re getting compared to you take the money to settle the loan which may save you 45%. When effective loan interest rate rises from 45% to 65%, then you can see that interest rate now become more expensive and is no longer low anymore. So for that matter, if you’re to invest, it’s quite difficult for you to get a better return and in that case.
I would suggest that you were to use your money to settle the loan instead. So, what is important when you apply this strategy that I share with you is that you must make sure that when you don’t settle or use the cash to settle the loan, you must not spend the money away as well. If you are determined to grow money with high certainty, I would suggest that you must learn how to use the loan as an leverage when the loan interest rate is low.