Quote:
Originally Posted by Unregistered
So you are holding on to an engineering degree?
Also same as the previous guy, I am curious why don't you pay off your loans when you have the means to do so. You have $570k, just a fraction can pay off the car. And the house too, you can use half of the savings to pay house loans.
I'm really curious why people like to continue paying installments and interests when they have the means to pay in full with their savings. My friend who has a $200k+ loan chose to pay only $30k for car down payment and take up $80,000 loan(before MAS policy stepped in). I'm really dying of curiosity.
Perhaps the previous guy is saving for his marriage and honeymoon, for your case, I'm honestly confused.
Care to explain why? |
Go and read up some basic economics books and you will understand.
Basic economics teach us that in a high inflation environment coupled especially with low borrowing cost, one should borrow money to invest. Singapore has been experiencing relatively high inflation rate (4 - 6%) and low borrowing interest rate (can be as low as 1% for housing loans) in the last 4 years. And it does not look like the situation is changing anytime soon.
Under such an environment, the lender "loses" and the borrower "wins" for the very simple reason that the money that you borrow from the bank will shrink in value with time. The borrower wins by investing the borrowed money (not anyhow spend) buying eg. condo, which will maintain (or grow) its value with time.
That is one of the main causes of rising property prices in Singapore. People got money, got no money also want to invest in property - because the value of money they keep in the bank shrinks by the day, and borrowing cost is sooo low (1%).
So people dont pay up their house loans, but instead they keep the cash for the next investment opportunity, like buying stocks...