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"E-book" by AK

Second "e-book".

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A big loan to buy a condo and CPF not enough.

Wednesday, June 14, 2017

The focus should be on the CPF but I cannot help but wonder if Kelly has little money, why is she spending it on dogs and cats?
Shouldn't she use the money to better prepare for her old age?
(Credit goes to Raymond Ng for sharing the above with me. )




Reader (not Kelly):

I came to know of your blog recently and find it to be full of useful information.I regret that I did not know what you know and had not done what you've done in terms of CPF voluntary contributions when I first started working.

I've recently bought a condo and borrowed serious money from a bank to do so ,so much so that I can only pay off the housing loan at the age of 65.:(

I've attended trading courses/read up on trading for the past few years and through my experience,have some confidence in generating returns of 10-20% /annum

If you were me and have some confidence in beating the CPF rates,would you still consider contributing voluntarily to CPF or try to 'frontload' and payoff the housing loan first as the loan amount is much much more than what I currently have in my CPF?

I'm also conflicted towards contributing to CPF as it will still eventually go towards paying off (at least the OA portion) the loan and I may be able to generate more( in terms of %) on my own through trading.

Hopefully you can shed some light on what you would do if you were on a similar situation financially (short of selling the condo).



"...higher income ceilings for new HDB flats..."

AK:
We are all made differently. So, we will look at things differently.

However, I think we should be able to agree that there is a place for risk free and volatility free savings instruments in our life, especially one that rewards us relatively well like the CPF.


We can be confident as an investor or a trader. Confidence is a good thing but we should also be sensitive to the fact that things do go wrong and sometimes very badly wrong.


I am reasonably confident in my ability as an investor and I used to trade quite a bit as well but I did not chuck CPF in the back seat and I am still contributing to my CPF account in my retirement.


What would I do if I were in your shoes? I don't really know because I would not ever put myself in such a position.


I don't know if you have read my blogs on how our homes are really consumption items. Something that costs more than $1 million, which does not generate income and which requires me to borrow hundreds of thousands of dollars to purchase is mind boggling to me.


I can only say don't discount the importance of the CPF in your life especially if you believe in having a risk free and volatility free bond component in your investment portfolio.


Best wishes,

AK

Why do we buy insurance? To transfer risk because bad things do sometimes happen in life.

What about the CPF? 


I told friends and family years ago that if all my investments failed, I would still have my CPF money.

I am sure Dr. Lee Wei Ling would agree with me. To recapt,





Related posts:
1. 4 ideas on housing loan repayment.
2. We need a home but a condo?
3. $1.2m in my CPF acount by age 65.

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