If I have extra cash eg. 50k is it better to pay off HDB since the interest is 2.5% or is it better to put in to investment? - Seedly

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Seedly PFF 2019

Asked by Anonymous

Asked on 02 Mar 2019

If I have extra cash eg. 50k is it better to pay off HDB since the interest is 2.5% or is it better to put in to investment?

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Jefremy Juari
Jefremy Juari, Financial Writer at Medina Books
Level 3. Wonderkid
Answered on 12 Jul 2019

With 50k you can buy many assets. Did you know in 2017, Singapore's medical inflation rate was 10%. It means your money is worth 10% less today compared to last year. 2.5%? Any good asset with cash flow could beat that even with no capital appreciation. Don't burn your money so easily.

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Milly Fbk
Milly Fbk
Level 3. Wonderkid
Answered on 12 Jul 2019

Unless you have an investment that earns you more then 2.5%, do a CPF cash refund!

Basically you are putting the cash into your OA, which will earn 2.5%. So you if you somehow decided to just use the money to pay HDB loan, then just leave the money in OA and continue paying off the HDB loan.

But if you somehow want to spend on an investment, you can do an CPFIS. In the future CPFIS will be 0% fees!

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Dawn Fiona
Dawn Fiona
Level 5. Genius
Answered on 04 Mar 2019

Invest if you can get returns of higher than 2.5%.

Pay off your debt if you don't think you can.

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If you are confident in getting more than 2.5% returns, by all mean do what you feel is the best for you. However, a lot times investments returns are not guaranteed but loan/debts interest are guaranteed.

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