$100,000 Spare Cash? Should You Invest Or Pay Off Mortgage?

[@joshconsultancy]

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[@darylchew8739]

is moomoo cash plus really risk free?

[@stylerho6278]

Young man and hello everybody, from 1970s till end 1990s, mortgage rate of 4-8% was the norm. So, the last 20 years of very low mortgage rate was abnormal and may NOT occur again or any time soon. Be very prudent when budgeting to buy a house. This is the best and most sensible approach instead of guessing or hoping for low mortgage rate era!

[@vincenttravelsg]

Good sharing on the options available. My take on it. 1) Strongly agree we should use CPF OA to pay mortgage partially or fully. 2.5% from OA vs 4.5% from mortgage. And we can't touch our CPF OA until old age. 2) Also agree we shouldn't cash out from investments. As these are diversification and more liquid. Paying mortgage does not allow us to liquidate quickly. 3) I beg to differ in using $100k cash to pay mortgage. Certain banks actually give quite good interest rates like OCBC if you put in $100k, credit salary, use their credit cards. Their interest rates can be higher than mortgage rates. Cash is king. Mortgage are like CPF, very illiquid and hard to cash out. It is better to hold $100k in cash as buffer than lock them into properties.

[@joshconsultancy]

Thank you. You’ve valid points

[@DonYang73]

Very often it isnt a financial decision. I paid off all mortgages by age 38 and hv been 100% debt free since. Every dollar goes into other use. Never felt better.

[@ahbai1976]

Kudos to u to encourage people to be prudent and be debt free by repaying their home loan asap……

[@joshconsultancy]

🙏🙏

[@SgAlvinOng]

If your loan is fixed at 3.4% for 3 years and suppose SSB return average 3%, then in fact you pay only 0.4% for the idle cash of $400k assuming couple max it out. Surely you can find an opportunity to make up the 0.4% in that time frame.

[@joshconsultancy]

There are min sizes for loan. The ssb is indeed cost but as a price for war chest cash

[@jamieopulence]

Debt free club. Mortgage free. What a wonderful headspace. My only focus now, is pumping my income into investments each month.

[@joshconsultancy]

👍👍👍

[@henrylau116]

Definitely, using cash to pay off the mortgage partially or fully (if you can). We had paid off all our property debts, and as to whether, "there is a huge psychological burden being lifted" .."...still sleeping easy at night", frankly, personally, I don't feel that. It just that another milestone in our list of things we want to do, and we have checked this off. And, every night we do have good easy sleep, because we never do anything evil.

[@joshconsultancy]

Sleep easy as in financial worries/annoyance. For mine, it has been hard to see the number climb more than $1,000/m on my end for the last 1 year with floating rate 1%+ to 4.9% But ya lets avoid doing any evil. Thats peace of mind to life in general =)

[@aileronyakadventures9505]

What if that property is an investment property which you are renting out to collect rental proceeds / income? I would not deploy my cash to pay off any mortgage if I can use the cash to generate higher returns somewhere. Using the rental proceeds to pay off the mortgage sounds better since you are not sacrificing liquidity Liquidity is also very important. By paying off that $100k, you lose that liquidity right away to your real estate.

[@joshconsultancy]

Sufficient liquidity w emergency cash will do. Paying down will free up monthly cashflow, that can be invested too

[@aileronyakadventures9505]

Agreed Josh. Most important is to maintain a healthy liquidity in your portfolio. You must have done your maths well 😊 Just like running a biz, your cash is king, liquidity is of utmost importance for success. So I would say before paying down with a huge chuck of cash, make sure it will not affect you financially as a whole on your cashflow.

[@wtan1851]

Most people have no issues using a lower interest fund to pay off a higher interest debt. Most people (firms) sell their investments (assets) to pay off a loan only if they are few options. How about using the $100k cash? Many countries have tried it using tax cuts (aka supply-side economics) to see if people will spend it (what armchair economists hope for) or use it to repay debt. The verdict? Most people use it to repay debt. In a high interest rate environment, firms are more likely to fail, i.e. investments are risky. Bottom line: Unless you have a good investment opportunity, clear your debt but leave some funds for rainy days. I like your clear explanation, Josh.

[@youtubeprofile2070]

Very interesting considerations. Thank you for sharing. Please fix the mic distortion. ☺️

[@joshconsultancy]

Oops 😅

[@micah1754]

Interest rates in NZ at the moment are more like 7 percent. 3.45 seems relatively low/moderate

[@joshconsultancy]

wow. How are latest housing price trends there?

[@magchan2816]

But as Kiyosaki put it, u will not hv mortgage interest to offset the rent or employment income and tax will be much higher

[@joshconsultancy]

Singapore IRAS has 15% allowances on rent income in personal taxes

[@foreveryoung999]

Having a peace of mind will lengthen a person's lifespan. Stress kills.

[@joshconsultancy]

agree

[@thegreenbaby9365]

To the point 👍concise presentation of ideas

[@joshconsultancy]

Thank you. Share w someone who has the same dilemma 👌🏻👍

[@raytan9824]

If I am currently 48yrs old getting a resale private property, we have option A to get 75% loan + 25% downpayment and assuming the loan tenure is 18yrs, Option B to loan 55% + 45% downpayment based on 28yrs loan tenure. Option A seem to maximise the opportunity cost because we have more cash in hand however the loan tenure is short and it does not stretch the loan tenure like Option B with higher downpayment but longer tenure and lower monthly recurring charges. Which is a better option?

[@joshconsultancy]

My general inclination is to advice for paying off home early and for investment property loan to be stretched. Hope it helps =)

[@King33337]

UOB got 3 year fixed term housing loan package at 3.6% pa.

[@joshconsultancy]

Oohz I can share, if quantum bigger it can be lower

[@stupidww1]

Hello there. Young chap here has a question to ask. Can I ask for example, if I am taking hdb loan for my flat and I have 100k spare, could I do the same for repayment upfront & incur lesser interest & monthly repayment? Does hdb allows that?

[@stupidww1]

Ok, just completed this video and I suppose the answer is yes. 😂 Thanks, I love watching your video. Good job Josh!

[@joshconsultancy]

No probs, all the best in your journey. Stick around k =)

[@csow623]

Does the same apply if it were downpayment for property instead of early mortgage repayment?

[@joshconsultancy]

Yes, same consideration coz loan still needs to be paid off some day and high interest rate is also felt

[@river550]

Thanks for this video! I have been more actively working to pay off my housing loan since this year due to increasing increase rate. Saving 50% of my salary to do a one time lump sum partial repayment that I am allowed to do free per year. Hoping to reduce the loan gradually over time and once I'm off the 2 years lock in period, am seriously considering paying off the rest using CPF and have the peace of mind.. Agree it's always good to not have to worry about the loan though pp will say mortgage loan is not entirely a bad loan. With rising interest rate and uncertainty if we will have attractive rates in 1 to 2 years' time... I think it's still a gamble.

[@joshconsultancy]

If ur home loan is close to full repayment, You are way ahead of many already 👍