BBCWatcher
Arch-Supremacy Member
- Joined
- Jun 15, 2010
- Messages
- 24,504
- Reaction score
- 5,549
I think the video below does a relatively good job explaining the investment-related pros and cons of buying versus renting a home. Yes, it's an oversimplified comparison and uses U.S.-oriented data. As an example of an oversimplification, the renter surely would've invested the down payment in installments as it was accumulated, not waited to amass the down payment in a bank account before investing it. But the general principles still apply here in Singapore. If anything, the higher relative taxes associated with homes (especially second homes) and the more unfavorable price-to-rent ratio here Singapore tend to favor the renter. We also often have leasehold decay complications here.
But the presenter is exactly correct, and I've emphasized the same point in this forum. The fundamental mathematical "secret" to wealth accumulation is to start saving early and to maintain a dogged, consistent, and high savings rate over the long term. Even if Saver A picks a lower yielding investment portfolio than Saver B, Saver A can still win by practicing better savings habits. Mortgages and illiquid home equity effectively enforce some good savings habits. Many people need the persuasive power of monthly mortgage bills.
In any event, if you prefer being a renter, that's very OK! The financial math is probably on your side if you take advantage of it. And you have huge flexibility including the option to zero out your housing costs in Singapore to spend 18 months working in Brussels (random example) if that'll help boost your career and earnings. Likewise, if you're a home buyer, that's OK too. Make sure the home isn't too lavish in your circumstances. For example, you probably shouldn't buy the most expensive home a mortgage lender is willing to help you buy.
But the presenter is exactly correct, and I've emphasized the same point in this forum. The fundamental mathematical "secret" to wealth accumulation is to start saving early and to maintain a dogged, consistent, and high savings rate over the long term. Even if Saver A picks a lower yielding investment portfolio than Saver B, Saver A can still win by practicing better savings habits. Mortgages and illiquid home equity effectively enforce some good savings habits. Many people need the persuasive power of monthly mortgage bills.
In any event, if you prefer being a renter, that's very OK! The financial math is probably on your side if you take advantage of it. And you have huge flexibility including the option to zero out your housing costs in Singapore to spend 18 months working in Brussels (random example) if that'll help boost your career and earnings. Likewise, if you're a home buyer, that's OK too. Make sure the home isn't too lavish in your circumstances. For example, you probably shouldn't buy the most expensive home a mortgage lender is willing to help you buy.
