A lot of my friends have been querying me on why I do not buy a property for investment in Singapore. Initially, I was interested with such idea. However, I no longer have such idea as I feel that having the property will mean that I will have to incur debt relating the housing instalment. I am not the type of the person who likes debt. Debt will mean that I will be stuck with the full-time employment which will hand the initiative back to the paymaster which has the control over me. I believe that the proceeds from my investment portfolio will cover me for a lifetime. This is better than the rental income which the said property will generate for me. I still have the problem of handling the tenants whenever there are defects in the said property. This will give me a lot of headache in handling such issues. It will be better to invest the proceeds into the investment portfolio with the knowledge that I will not have the headache of handling the tenants.
Some of my friends indicated that I can still use the CPF to pay the housing loan. I feel that the CPF will be better left in the account to generate the interest at the current and prevailing rate of 2.5% in the ordinary account. I am happy with such approach.
I do some mental calculation. Let say that I bought a HDB property at about $400,000. I earn $2,000 a month for the rental income for renting the entire property. Bear in mind that I can only rent the entire property after a minimum of five years of ownership of the said property. By the way, the ownership of the HDB property is not considered as ownership and should be leaseship of the property for the remaining balance of year (second-hand onwards ownership type of property) and 99 years leaseship type of property. It will be about 6% annual return of the investment in respect of the property.
The above circumstance can be replaced by the return rate in respect of the investment portfolio. I will say that this is up to the individual’s preference on the type of investment in accordance of his/her priority.
Investment through shares is my preferred choice.
To each of our own.