Tips: Investment on Insurance and Savings

At a early adult age I was influenced by mother to invest of insurance and savings. I greatly appreciate and thank her because I was able to saved a lot. There a lot of investment instruments nowadays that even double your investment in 5 years. For example, my mother invested in a double your money in 5 years and it will mature this year. Her investment of 500k will be 1M. In this type of investment, we have to be careful of the companies offering these types of products and make sure these companies are stable.

You have also stocks where you can invest your money,
a) short term where you profit from buy low and sell high
b) long term where you gain from dividends issued by companies, increased in stock value over long period.

My first insurance saving investment I made was when I as in the early 20's.  My total investment in 5 years was 150k and since 2003 I have been getting a pension of 2k a month and this is for life. I hope the investment company will not close.

The second insurance investment was long term savings with a huge international insurance firm. Since 2010, I have invested over 500k over for 8 years. Since 2011, the investment's income has paid for my premium. To date, I have a cash dividend amounting to 200k and this investment is returning to more than 60k year on year. Not bad right? If you are interested on the insurance company please drop a comment.

Auto Loan: To Settle or not to settle

I am planning on settling my auto loan this year. I have about 26 months of amortization still and the main reason for considering this settlement is that I can be able to control my cost ie.

1. Achieve cost avoidance, that is by settling the loan early, the settlement amount is smaller than the total balance loan to be paid.

2. Reduce my cost for insuring the car, ie I can dictate the insured amount for the car. The lower the insured amount, the lower will be my premium.

I called up the bank and inquired about my settlement cost. Likewise, I checked also my capability to pay the settlement amount either thru loan from family member or from another credit facility. My credit company was offering a low monthly interest. I evaluated the situation and I made a graph to simplify my analysis.

 

From the graph above, I can say,

1. I can avoid cost of 11k if I settle my auto loan by this month. That's about 10% cost saved. Now the only thing to do is here is to look for the money to settle it.

2. My credit card offered me a low interest per month. This facility will give at least few months to look for the money to pay the loan aside from the fact that I can still achieve cost avoidance. This cost saved will get smaller as the payment duration is increased. Another advantage of this option is I can earn reward points which I can use to pay my annual credit card free.

3. Let's say you have the settlement money of 104k. What if we just invest it and continue to pay the monthly amortization. At the interest rates banks are offering, 104k will not yield 11k in two years time.

The bottom line here is that settling this auto loan will let me avoid cost. I can be able to reduce also my insurance premiums and that's another cost avoidance. So what's the next thing to do? Find a family member whom I can borrow money with little or no interest, and/or check my credit card facility for good low interest offers? What do you think, should I continue paying my dues or settle it if I can get the money?