Keep your Housing Loan, Grow your Money Instead to Be Rich

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Dennis Ng
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Keep your Housing Loan, Grow your Money Instead to Be Rich

Post by Dennis Ng »

in some internet forums, I still see people arguing that one should try to pay off one's Housing Loan as soon as possible, which I find it quite amusing.

Back in year 2003, I had S$250,000 and a Housing Loan of S$200,000, if I had paid off my Housing Loan then, I would be left with S$50,000....even adding the S$200,0000 I saved from year 2003 to year 2008, I would have about S$250,000 by end year 2008.

However, I did not pay off my Housing Loan, invested the S$200,000 instead and keep S$50,000 as Contingency fund, enough to pay for 1 year of my expenses if I lose my income......

By doing so, I rode the Bull market in Stocks and Property and turned the S$200,000 into over S$800,000 by year 2008, that's how I became a Millionaire in year 2008.

I became financially free in year 2008, since if I earn 5% on S$1 million, that would be S$50,000 a year and enough to pay for all my expenses.

And now 1 year later, becos I grew the money further in year 2009 plus additional savings, I currently have about S$1.4 million.

I thought my personal experience is a very Good Example to illustrate how one should try to grow one's money than pay off Housing Loan.

What is the benefit of paying off Housing Loan? The returns you get is the interest saved on Housing Loan, which can range from 2% when interest rate is low to about 4% when interest rates are high, eg. in year 2007.

So at best you Gain 4% per year, so little. In the bull market in stocks and property from year 2003 to year 2008, I personally made over 300% returns, and it is just average returns, since the STI went up over 200% in the same time period and property prices went up over 100% as well.

Be selective in reading information from Internet Discussion Forums. Many postings are made by people who are in the process of searching for answers themselves, yet they write as if they are experts in the subject matter being discussed.

If you want to climb Mount Everest, do you want to listen to a guide who has not climbed Mount Everest himself/herself, or you want to search out and listen and learn from those who have already climbed Mount Everest. The choice is yours to make.

12 years ago in 1998, I began learning about How to Invest from mentors and sifus who belong to the second category (they have successfully become Rich through Investing themselves), and I became Rich as well, by learning and applying what they teach.

Dennis Ng - When You Master Your Finances, You Master Your Destiny

Note: I'm just sharing my personal comments, not giving you investment advice nor stock investment tips.
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Post by wemakebread »

Thanks Dennis!

Perhaps those who advocate paying off home loan first, doesn't know how to invest. They don't know how to get > 4% per annum. So to them, paying 0% interest is definitely better than paying 4% interest.

Before I started my financial education, I thought the same way too!

It's really a shame that our education system has not taught us this.
But fortunately I found many good mentors along the way :D
So now, I try to share & pass the knowledge on.
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