facebookIf I have excess cash to redeem whole of my HDB housing loan (after setting aside >1yr worth of emergency funds).. Should I do it? Or any other better alternatives to grow the money? Any thoughts? - Seedly

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Anonymous

26 Oct 2020

βˆ™

Property

If I have excess cash to redeem whole of my HDB housing loan (after setting aside >1yr worth of emergency funds).. Should I do it? Or any other better alternatives to grow the money? Any thoughts?

Currently using CPF to repay monthly installments..

Discussion (2)

What are your thoughts?

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This depends on your risk appetite. If you're very conservative, paying your loan now gives you a guaranteed 2.6% interest on the amount since won't won't have to pay the loan interest any more.

If you are willing to take more risk, you can always invest the extra money instead. If it has an average if over 2.6% of returns, you would have made more than if you paid off the loan.

Combinations of the 2 are also available to you. Not to mention you could always try to refinance your loan to a bank loan, if the fees aren't alot, to gain more interest with your bank account too

Jiayee

25 Oct 2020

Salaryman at some company

Depending on your income tax bracket and risk appetite, you may consider the following:

  1. Top up CPF Medisave voluntarily. Check the terms & conditions. Cannot top-up if Medisave is already at BHS or mandatory CPF contributions already hit the annual contribution limit of approx $37,740.

  2. Top up CPF SA via RSTU. Tax relief up to $7,000 when topping own CPF SA and another $7,000 when you top-up across family members.

  3. Contribute to SRS and invest the monies via DIY, robo-advisors, unit trusts, etc. Tax relief up to $15,300.

  4. Other financial products which help with retirement and/or future financial goals

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