To loan or not to loan

balance_else_complacent SG

Hi folks,

I am not sure where to post this. So, am doing it here.

I am not financially literate.

I like to get some views.

If currently inflation is very high, is it better an idea to make loans or to spend with cash to say invest in property?

Would appreciate if I can get some advice.

Thanks in advance!

regards

B_E_C

maurizio13 SG

Depends on how much interest rate you can get the loan.

It also depends on how much returns you can get from your cash.

balance_else_complacent SG

Hi Mau,

lets say 2.5% interest for loan.

am not sure what you mean by your 2nd sentence.

Thanks.

maurizio13 SG

Meaning how much interest can you make from your cash. Ah longs can make 20% a month from their cash.

If your cash makes less than 2.5% p.a., then it's better you use your cash to buy instead of taking a loan.

If you cash can give you 3.5% p.a. returns, obviously you take a loan.

balance_else_complacent SG

Thanks Mau, for enlightening :)

well, my cash in the bank is earning me a lot of peanuts ;)

and paying banks or financial institutions interest always makes me feel like a slave to them.

I am saving up now so that in 10 years time, I may be able to buy myself some property.

So, if my cash can somehow be invested in something that gives me more interest than loan interest, I would now consider loaning from banks and re-invest it.

cheers!

maurizio13 SG

If you intend to buy property after 10 years.

You could try investing in REITS or listed property companies.

But don't expect price to go up within this 1-2 years or maybe even 3 years.

You must also have the power to hold on to these stocks that you purchased for maybe 10 years.

balance_else_complacent SG

If you intend to buy property after 10 years.

You could try investing in REITS or listed property companies.

But don't expect price to go up within this 1-2 years or maybe even 3 years.

You must also have the power to hold on to these stocks that you purchased for maybe 10 years.

You mean the price of both real estate including flats and company shares probably might not be rosey in the next couple of years? Or just the real estate?

Might there be some chance that flat prices going down in the next couple of or 3 years? Or might it be that the private properties only could be most affected?

FireIce SG

i think u can find some good info at www.qotion.sg

redDUST SG

edit: removed. too much baloney...

redDUST SG

my apologies. i realize that i could have summarize everything in 1 sentence; generally it is bad to take loan, unless your profit is greater than the interest on the loan you are servicing. just do that maths.