As from April 2013 my Journey in Investing is to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

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This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

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Sunday, 14 November 2010

Will You Try To Pay Off Your Housing Loan ASAP If You Have One? (4)

Read? Will You Try To Pay Off Your Housing Loan ASAP If You Have One? - 3rd revisit

Good debt and bad debt?

If you take out a loan for consumption e.g. car loan, or even housing loan; you are really mortgaging your future for current gratification. Don't mistaken the idea that your residual home is an investment. The house you live in is actually a consumption item. You can't really make any returns on your house unless you sell it and then either downgrade or rent another home to stay. But, do remember you only live once, are you sure you want to really downgrade your current lifestyle for the sake of having returns on investment?

In simple terms, any loans taken for purpose of consumption cannot be considered as good debts. Right?

Why housing loan is so cheap?

Housing loan is a secured loan and the bank has nothing to lose except you and so that is reason why it is so cheap.

Expect the Unexpected

Don't believe me? Ask those people who file for bankruptcy how they have ended in such a sorry state. Many would say they have taken calculated risks but didn't expect things can happen so badly and left with no alternatives except bankruptcy.

Anchoring your residual home

Pay off your housing loan for living in is like anchoring your residual home to the sea-bed. Once your boat (residual home) is strongly secured to where it is and it will no longer be affected by drifting currents.

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