Loan Or not to Loan

[Dennis Ng]

Just my 2 cents on the statement at the bottom base on an earlier post:

If you are not investment savy and put it into fix deposit, you will definitely get less. The bank will always make sure their home loans is higher then fix deposit rates!

(2) Secondly nothing beats the feeling that you do not owe anyone money!!!!

My comments:
1. I have to disagree. Even if a person is not investment savvy, just putting money into Endowment savings plan generate about average annual compounded returns of 3% to 4%.

2. "nothing beats the feeling not owing anyone money"

well, this is a typical mind set. However, a really financially smart person would realise that there's nothing wrong with owing people money if a person do a proper Asset/Liability management.

Do you know that banks have a specialised department known as Asset/Liability management that specialises in "maximising" the benefit of Asset/Liability management? Thus, what you expressed are typical of "mis-conceptions" held by the general public.

[Dennis Ng]

dear Poseidon,

I have to repeat myself, one do not have to be investment savvy to try to beat "Housing Loan" interest rates.

For instance, currently, you can get a Housing Loan paying 3.25% interest rate. However, in the market there's a AA rated CDO (Collateralised Debt Obligations) with 11% protection level that pays 4.9% interest per year.

You are entitled to your own opinion. I personally have "investible funds" about double that of my Housing Loan outstanding and I'm not making lump sum repayment on Housing Loans for reasons stated. Investment returns is just one reasons, if you read the article I wrote "Some Forms of Debt are Good" I have raised several other reasons other than what you "disagree" with me about.

In my daily work, I have personally witnessed many people who regretted using their cash and CPF to pay off their Housing Loans.

As our clients would know, we do not try to make our clients do what I personally do. Because at the end of the day, I understand that different people might place different "weightage" and "priority" on the factors to consider. As we always mentioned, our role at http: //www.HousingLoanSG.com is to provide consumers with ALL the information they need to consider to make an informed decision. You might also be glad to know that our analysis is unbiased and our business philosophy is always "place our clients' interest first".

I personally do not in anyway impose my own way of thinking onto my clients.