Asked by Anonymous
I am more financially savvy and my returns from investments are ~5% annually, whereas she prefers to keep her money inside DBS multiplier and have returns of ~2% annually.
When one is young leverage, when old de-leverage.
When you put cash into your BTO, it is still a form of savings as it will continue to appreciate in value,albeit a form of forced savings.
I believe the BTO would not be the final place of residence and you may look to upgrade in future when your family grows in number. CPF put into financing the flat would incur accured interest that you can't see now at this point of time. You will feel the effects when you find that the cash proceeds from your future sale of flat is less than what you expected because part of it goes into paying the accured interest.
I would recommend working out your budget carefully. Work out a cash amount that you and your future wife are comfortable with putting into the mortgage for BTO, and use CPF to pay the remaining amount. Since you are financially savvy,continue to set aside that money to invest, at some point of time, use the returns to lower your outstanding loan. Savings in the house and your own investments are separate baskets of investments. This is also considered diversification. Most importantly consider the expenses that you might incur as a young family before arriving at the amount of cash/CPF to use
cash flow might be tight if you do not use the CPF to fund the payment. I think a mix of both CPF and cash would be a good balance.