Get out of debts

[winnipegjets]

paiseh, no offense. Those are sales talk by housing loan sales man. The tide turns against you when SIBOR surges. Historically, you enjoy the best prices in property when SIBOR exceeds 3%. So do you wanna buy-cheap or buy-expensive with cheap loans that are meant to trap you? If you wanna buy-cheap, then we should save our bullets.

I didn't say that investing in property is a good debt. Now, if you borrow $1 million to invest in equites that pays 4 pct dividends and has growth potential, that's a good debt.

 

[Muthukali]

Thanks Borom and many others who contributed to this thread which I feel is very important, as being debt free did changed my life. I fully paid up my humble 3-room HDB pigeonhole using CPF and cash within 8 years of purchase during the late 90s.

Initially, I opted for the maximum 30 years load period. But after calculating the interests, I was determined to shorten it to 10 years but did it in 8 years! Nothing magical or fantastic. I used all my CPF to paid them off and the rest paid with cash.

And why I did it? Remembered receiving the HDB statements during the first few years of purchase. And looking at the statements make me very upset and demoralised. KNN, every month deduct and deduct. still owe so much, almost like never move like that.

BUT, Now, this pigeonhole is a profit centre and also my private room money. If continue to rent out for another 4 years, all my capital cover back plus interest plus upgrading cost.

Dey, why you never thanks the PAP

 

[chonburifc]

Dey, why you never thanks the PAP

Dey, you are right lah. On second thoughts, have to thank the pappies for the cock up FT policies. If not FTs, me worry liaoz. But have to thank my agent more for intro 'no problem' type of FT tenant.

 

[zeebjii]

I didn't say that investing in property is a good debt. Now, if you borrow $1 million to invest in equites that pays 4 pct dividends and has growth potential, that's a good debt.

Even if $1 million loan at 6% interest? And remember dividend and growth potential are not a given, esp in bad times.

For sinkies of peasant class like us, hard to get loans at rates lower than typical dividend rates.

 

[Runifyouhaveto]

I didn't say that investing in property is a good debt. Now, if you borrow $1 million to invest in equites that pays 4 pct dividends and has growth potential, that's a good debt.

Hi, just for discussion let's fine-tune a bit

Your Plan: Borrow $1m to invest in shares for 4% dividends + potential capital gain.
Risk 1: 4% yield cannot cover much of the borrowing cost ( i understand that share financing/margin accounts interest is about 3.5% to 7%)
Risk 2: potential capital loss

Fine-tuned suggestion:
1. Bond-financing for private-banking client is currently 1.7 to 2% now. This is cheaper than shares-margin financing.
2. OCBC/UOB/DBS Preference Shares gives about 3.9% to 6% tax-free yields. Consider these instead of shares and reits because these three banks are safe; any failure to pay interest or redeem at first-call date = default = banks' credit rating crash
3. No capital loss at redemption or minimal capital gain/loss if offloaded before redemption/maturity.

I welcome more examples for deeper discussions.

 

[SgGoneWrong]

Hi, just for discussion let's fine-tune a bit

Your Plan: Borrow $1m to invest in shares for 4% dividends + potential capital gain.
Risk 1: 4% yield cannot cover much of the borrowing cost ( i understand that share financing/margin accounts interest is about 3.5% to 7%)
Risk 2: potential capital loss

Fine-tuned suggestion:
1. Bond-financing for private-banking client is currently 1.7 to 2% now. This is cheaper than shares-margin financing.
2. OCBC/UOB/DBS Preference Shares gives about 3.9% to 6% tax-free yields. Consider these instead of shares and reits because these three banks are safe; any failure to pay interest or redeem at first-call date = default = banks' credit rating crash
3. No capital loss at redemption or minimal capital gain/loss if offloaded before redemption/maturity.

I welcome more examples for deeper discussions.

How to buy OCBC/UOB/DBS Preference Shares? I'm thinking of buying some as it definitely beats banks fd rates.

 

[winnipegjets]

Hi, just for discussion let's fine-tune a bit

Your Plan: Borrow $1m to invest in shares for 4% dividends + potential capital gain.
Risk 1: 4% yield cannot cover much of the borrowing cost ( i understand that share financing/margin accounts interest is about 3.5% to 7%)
Risk 2: potential capital loss

Fine-tuned suggestion:
1. Bond-financing for private-banking client is currently 1.7 to 2% now. This is cheaper than shares-margin financing.
2. OCBC/UOB/DBS Preference Shares gives about 3.9% to 6% tax-free yields. Consider these instead of shares and reits because these three banks are safe; any failure to pay interest or redeem at first-call date = default = banks' credit rating crash
3. No capital loss at redemption or minimal capital gain/loss if offloaded before redemption/maturity.

I welcome more examples for deeper discussions.

Create a portfolio of ETFs (US, Europe, Emerging economies, Bonds) - average returns is 7 pct. Best customer of DBS can get loans at 4.25 pct. Over time, you will be ahead. Long term investing is simple and boring. But the returns are there for the taking.

 

[scroobal]

Good thread for everyone. We used to get a lot of these types of discussions in the early years of SBF, thats more than 10 years ago.

 

[Debonerman]

Good thread for everyone. We used to get a lot of these types of discussions in the early years of SBF, thats more than 10 years ago.

Bob is sick......but so be it.........................

 

[Runifyouhaveto]

How to buy OCBC/UOB/DBS Preference Shares? I'm thinking of buying some as it definitely beats banks fd rates.

They are either listed

1. Listed on SGX
You can buy/sell directly them like shares. The share price will include accrued interests.

2. Listed on Secondary market
You buy/sell through remisiers or Bank RMs who will check with the Central dealers. The share price excludes accrued interests. if you are buyer, you need to reimburse the seller accrued interests (on top of the agreed price). If you are seller, you will received accrued interests (in addition to the agreed price)

 

[Runifyouhaveto]

Good thread for everyone. We used to get a lot of these types of discussions in the early years of SBF, thats more than 10 years ago.

Thank you for your kind words.
Let me share another concept called fractual banking.

Bank ABC needs to issue Bonds at 4%pa to Bank ABC's customer (Mr RUN).
Mr RUN took up Bonds-financing facility at 2%pa (fixed) with ABC to buy the ABC's 4%pa Bonds.

In the end, Mr RUN makes 2%, ABC bank reduced their cost of financing to 2% (4%-2%)
lalala, I scratch your back, you scratch mine.


Be a lender, not a borrower, going forward.
In this age, if you lend money to bank (instead of borrowing), I salute you.



Disclaimer: This is just an simplified example that i risk oversimplifying.
I am not telling you to take up bond-financing. There are many other factors to consider.

 

[Runifyouhaveto]

haha....Same same for me.

zero plus zero equals Zero.

zero minus zero also equals Zero.

Asset - Debts = Capital
200 minus 100 = 100
1,000,100 minus 1 million = 100

Satanists want you to believe in Keynesian so that they can trap you one day.

 

[Tuayapeh]

Debt is modern slavery. At least, do not roll over your credit card dues or use unsecured personal credit lines.

Best way for the pap to ensure that you kuaikuai stay here and do their bidding like a good slave........

 

[winnipegjets]

Satanists want you to believe in Keynesian so that they can trap you one day.

Do you really know what is keynesian economics?

 

[winnipegjets]

Thank you for your kind words.
Let me share another concept called fractual banking.

Bank ABC needs to issue Bonds at 4%pa to Bank ABC's customer (Mr RUN).
Mr RUN took up Bonds-financing facility at 2%pa (fixed) with ABC to buy the ABC's 4%pa Bonds.

In the end, Mr RUN makes 2%, ABC bank reduced their cost of financing to 2% (4%-2%)
lalala, I scratch your back, you scratch mine.


Be a lender, not a borrower, going forward.
In this age, if you lend money to bank (instead of borrowing), I salute you.



Disclaimer: This is just an simplified example that i risk oversimplifying.
I am not telling you to take up bond-financing. There are many other factors to consider.

The bank doesn't want your money ...they can get funds at super low rate.

 

[Thick Face Black Heart]

Do you really know what is keynesian economics?

TS has a point. The core of Keynesian economics is to encourage the govt to run debts and deficits during economic slowdown in order to boost the recovery process, and then let the debt be washed away during the upswing. Problem is during the upswing not all debt gets washed out; in fact sometimes the debt remains or even builds up to a greater level due to human greed and lust for leverage.

That is why the world is caught in a debt spiral now. We had 50 years of debt supercycle in which every economic cycle (defined as one downturn followed by one upturn) saw the overall debt level increase. Now the debt supercycle is coming to an end (as all unsustainable trends eventually will), and the next 20 years may be miserable years. I pity our young who have just graduated from school. They are entering the world economy at about the worst possible juncture.

And all because of Keynesian economics. Or rather to be fair, the implementation of Keynesian economic theory by modern central bankers who are fucking beholden to the banking cartel. I'm sure Lord keynes himself did not envisage his theory to be used in this fashion. Unfortunately unlike LKY he won't rise from his grave if something goes wrong.

 

[chonburifc]

Have mentioned this book before but like to recommend this book for those in "Money not Enough" category. This book "The Richest Man in Babylon" by George Samuel Clason. Very simple to read without all the financial and economics jargon. To summarize, the main point is 10% of the income is to save and invest.

Sound easy right? I went through this and call tell you that it's not easy.

For myself, being debt free helps me in many ways. I don't have to worry about the stupid property mortgages or becoming a bankrupt due to credit card debts. If you are young, it might be OK, but once after 40, it's not healthy to be constantly in debt.

 

[tonychat]

getting out of debt is like trying to slim down, you need will and discipline to do it.

 

[Papsmearer]

Debts are just a kind of lure. Before every economic crash, they are always preceded by a period of easy money (eg. weimar republic) or cheap interest rates (subprime). Hahaaa, today, we have both; easing + low rates and bubbled leveraged asset prices. This is how how each generation gets wiped-out.

In one way or another, I have been trying to encourage you to get out of debts now. There are no such things as good debts or bad debts when interest rates are rising - these are just sales talk by loan salesmen.

Read what you read carefully, people share with you about superior yields without exposing the hidden capital losses. I have also received unhappy pm from people who bluntly call me a fearmonger. Look, there is a big group of sellers here who want to encourage you to buy things from them to bail them out.

Yes, defaulting multi-millions is a glamorous defeat because such people usually have some spare bullets hidden somewhere, but most of us don't. 2 members in my extended family are bankrupted and they never recovered. Unlike computer games, there is no way to restart for most of us.
There are still 101 things out there for you to invest or buy, but maybe, just avoid things that are highly geared.

Thread carefully.

In the context that you are using there is no plural in Debt. Hence, there is no such word in your sentences as Debts. I don't know how you can start a thread on Debt without knowing how to spell.

 

[potter]

Thanks Borom and many others who contributed to this thread which I feel is very important, as being debt free did changed my life. I fully paid up my humble 3-room HDB pigeonhole using CPF and cash within 8 years of purchase during the late 90s.

Initially, I opted for the maximum 30 years load period. But after calculating the interests, I was determined to shorten it to 10 years but did it in 8 years! Nothing magical or fantastic. I used all my CPF to paid them off and the rest paid with cash.

And why I did it? Remembered receiving the HDB statements during the first few years of purchase. And looking at the statements make me very upset and demoralised. KNN, every month deduct and deduct. still owe so much, almost like never move like that.

BUT, Now, this pigeonhole is a profit centre and also my private room money. If continue to rent out for another 4 years, all my capital cover back plus interest plus upgrading cost.

I feel ~10 yrs is an ideal timing pay them off.
Spoken n learned from a 70+ taxi driver still paying his 3 room flat.. OMG. WTF!