I need 100k cash in 3 years time when my bto is ready for key collection. Currently, I have a debt of 32k which I borrowed from my parents (interest free). What should I do? - Seedly

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Asked by Anonymous

Asked on 25 Oct 2018

I need 100k cash in 3 years time when my bto is ready for key collection. Currently, I have a debt of 32k which I borrowed from my parents (interest free). What should I do?

Should I use my bonus and savings to quickly clear the 32k first or use them to invest? I recently started StashAway and is contributing $100 monthly.

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Gabriel Lee
Gabriel Lee
Level 6. Master
Answered on 26 Oct 2018

$100k is a huge sum of money and all investments carry risks and the returns are not guaranteed. Hence, you might want to consider other alternatives to investing which are safer such as buying Singapore Savings Bonds, put it in a Fixed Deposit account or put it in a high interest savings account. As for your debt, maybe you can negotiate with your mum if she is fine with you repaying small sums every month since it does not have any interest so there isn't an urgency to try to clear off your debts as soon as possible as compared to a debt with (high) interest.

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Jean Chua
Jean Chua
Level 1. Freshie
Updated on 26 Oct 2018

I would like to offer a slightly different slant to this issue in my answer.

  1. Speak to your parents and ask them if they have any preference for the debt repayment schedule. Are their finances strong enough that they can withstand a slower repayment schedule? Would they feel more at ease (安心) if you could return the money to them sooner?

It would be good to take more care and factor in your parents' preferences. Better to not take for granted that our parents must always be our standby financiers.

  1. If you are going to need a lump sum in a short period of time like 3 years, just concentrate on saving and putting the money in SSB. This will guard against any major drawdowns to your net worth closer to key-collection time.

You may or may not meet your target of $100K within 3 years, but with a high percentage of your income saved, you will at least hit your highest potential savings.

As others have said, save, hustle and optimise your finances 😉

  1. As for that $100 you are putting into Stashaway, it depends on what proportion of your salary that is. If it isn't much out of your monthly pay, just carry on with it and you might just be able to cash out with good profit when your first child arrives (haha).

Just be prepared that any investment carries risk.

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Lee Jiahui
Lee Jiahui
Level 5. Genius
Updated on 26 Oct 2018

$100/month x 9 yrs= $10.8k

$1000/month x 9 yrs = $100.8k

Only invest money that you can afford to reduce to $0.

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Gabriel Tham
Gabriel Tham, Kenichi Tag Team Member at Tag Team
Level 8. Wizard
Answered on 26 Oct 2018

investing wont get you 100k in 3 years. too much risk to take. better to just save up

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Good Day Every Day
Good Day Every Day
Level 6. Master
Answered on 26 Oct 2018

You could always negotiate with your parents regarding the repayment of the 32k. What you should do is to earn and save more of your income. A portion of your savings (75%) could go into Singapore Saving Bond or fixed deposit, another(25%) could be used for investment or trading, depending on your risk profile. However, please do your homework and research before investing or trading your hard earned money. The % is based on my observations of the current market situation. Just my humble opinion.

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How much is your savings excluding stashaway? How much is your bonus? Whats your income?

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Nicholes Wong
Nicholes Wong

26 Oct 2018

You probably have to talk to your parents about paying them after bto payment. Current 8k savings shouldnt touch and keep it as your emergency fund. You can conside putting it into high interest saving account. Right now market is not doing too well, it might be hard to get a good return if you invest in stocks or you might suffer some loss in the short run. Honestly, it will be pretty hard to hit 100k in 3 years with market not doing well now. High interest savings account/singapore saving bonds/fixed deposit are your options if you dont know how to invest
Nicholes Wong
Nicholes Wong

26 Oct 2018

Im not expert in housing but 100k is alot of money for BTO with your pay of 2.7k after cpf
Yong Kah Hwee
Yong Kah Hwee
Level 6. Master
Answered on 25 Oct 2018

It depends on the following questions:

  1. Do you forsee your parents needing the 32k within the next couple of years?

  2. How much knowledge about investments do you have? As 3 years is a short period of time, it seems risky for you to invest if you do not have much knowledge in investing.

  3. The market does not seem to be doing well right now. In the event of any downturns within the next 3 years, do you have any backup plans if your investments do not do well?

In my opinion, if you do not have much knowledge in investments, I'd recommend you to put your money in somewhere safer. I.e. Singapore saving bonds, fixed deposits or a high interest savings account. 3 years might not be enough for you to make a decent return on your investments.

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