OPM: Good debt vs Bad debt

[stanlawj]

OPM = other ppl's money

1. Property loans
2. Broker's margin
3. Investor money

How many Singaporeans actually use OPM safely? You have ideas like:

• Huge home loans
• Use margin to average down on stock
• Loans with personal guarantees, MLM, pyramid schemes

The line between good vs bad debt is very fine. Beware of those who promote OPM without understanding the risk of ruin.

 

[highsulphur]

I don't need drive a fancy car or fly in private jet. Absolutely no leverage but I can sleep well even if my assets crash

 

[DevilPlate]

OPM = other ppl's money

1. Property loans
2. Broker's margin
3. Investor money

How many Singaporeans actually use OPM safely? You have ideas like:

• Huge home loans
• Use margin to average down on stock
• Loans with personal guarantees, MLM, pyramid schemes

The line between good vs bad debt is very fine. Beware of those who promote OPM without understanding the risk of ruin.

i max out mortgage loans during my 30s and 40s
Then now debt free

 

[stanlawj]

i max out mortgage loans during my 30s and 40s
Then now debt free

Well done, good for you. Is it a repeatable process? can you do it again and again to scale up to multi-million $?

 

[stanlawj]

I don't need drive a fancy car or fly in private jet. Absolutely no leverage but I can sleep well even if my assets crash

As long as you are happy and contented. No need the extra headaches and worries.

 

[DevilPlate]

Well done, good for you. Is it a repeatable process? can you do it again and again to scale up to multi-million $?

It is still possible for a yng graduate starting out today.
property investment imo better start to de-accumulate from late 40s

 

[hwmook]

Good debt are
1. Debt that you can manage, able to pay back, can sleep well at night.
2. Low interest rate, close to SORA.

I am over 1.2m in debt.

 

[sohguanh]

This is an often discussed topic. Older generation those conservative type want less debt as much as possible after see how loanshark harass debtors. The newer generation saw it as borrow at low rates and get monies to earn much more so after deduct still earn with capital provided by others. Nothing wrong with both sets of thinking. The problem come when how do one define in their own dictionary what is good or bad debt?

 

[1l92041H]

Good debt are
1. Debt that you can manage, able to pay back, can sleep well at night.
2. Low interest rate, close to SORA.

I am over 1.2m in debt.

in investments or property?

 

[DevilPlate]

Good debt are
1. Debt that you can manage, able to pay back, can sleep well at night.
2. Low interest rate, close to SORA.

I am over 1.2m in debt.

I had like peak 2M debt 15years ago. That was a huge sum back then hehe

 

[DevilPlate]

This is an often discussed topic. Older generation those conservative type want less debt as much as possible after see how loanshark harass debtors. The newer generation saw it as borrow at low rates and get monies to earn much more so after deduct still earn with capital provided by others. Nothing wrong with both sets of thinking. The problem come when how do one define in their own dictionary what is good or bad debt?

Good debt for eg mortgage debt because property value increases over time in theory due to inflation.
Bad debt is like credit cards and car loans. I normally paid my car in full cash and took max mortgage loan.

Take max loan and keep more cash buffer is actually more prudent then someone else who take min loan with little to no cash buffer js because to save some interest paid to bank.

 

[Laneige]

Good debt are
1. Debt that you can manage, able to pay back, can sleep well at night.
2. Low interest rate, close to SORA.

I am over 1.2m in debt.

Can sleep or not
If can makes gd debts? Last I heard mortgage loan (paid liao then wana get $) had criteria one not suka suka let u mortgage n get $
Sg no such thing
I tiagong because I want to up my general knowledge

 

[stanlawj]

I had like peak 2M debt 15years ago. That was a huge sum back then hehe

It is still possible for a yng graduate starting out today.
property investment imo better start to de-accumulate from late 40s

 

[stanlawj]

Good debt for eg mortgage debt because property value increases over time in theory due to inflation.
Bad debt is like credit cards and car loans. I normally paid my car in full cash and took max mortgage loan.

Take max loan and keep more cash buffer is actually more prudent then someone else who take min loan with little to no cash buffer js because to save some interest paid to bank.

I think you need to differentiate between YOLO and wealth engine.

You YOLOed and got lucky.
But you can't repeat the process because you borrowed based on your age, so it is not a wealth engine at all that you can re-use.

If you observe Eric Chiew carefully, his wealth engine is actually his knowledge consulting biz for HDB-to-condo upgrading that drive sales for his mortgage broking biz. The income and bank contacts through his mortgage broking biz enables him to take all kinds of property investments.

That's the difference: a process to get wealthy, vs just betting.

I'm trading the stock market, and it's not my singular multi-baggers that make me rich.
It's the system of identifying and betting big (with OPM) at right time that makes the wealth engine. It's repeatable regardless of my age.

 

[stanlawj]

Good debt are
1. Debt that you can manage, able to pay back, can sleep well at night.
2. Low interest rate, close to SORA.

I am over 1.2m in debt.

Ahem.. actual reason your debt is good is because your stock portfolio > $1.2M and can generate returns that exceed the interest payment?

 

[BBCWatcher]

Can we all agree that when the government is willing to loan you money at 2.6% interest (HDB loans), and the same government is willing to borrow from you at ~3.7% (current 6 month T-bills), that that’s superb debt to enjoy to its fullest (if you’re so fortunate to qualify for that deal)?

 

[royalmix]

My BEST Debt = short term & interest free!

 

[sky1978]

Can we all agree that when the government is willing to loan you money at 2.6% interest (HDB loans), and the same government is willing to borrow from you at ~3.7% (current 6 month T-bills), that that’s superb debt to enjoy to its fullest (if you’re so fortunate to qualify for that deal)?

The 2.6% is a good deal in the current context for anyone who can get it, but this 2.6% came from pegging 0.1% on top of 2.5% CPF ordinary account rates, so there is still a vast pool of funds where it cost the government 2.5% rather than 3.7%.

 

[DevilPlate]

The 2.6% is a good deal in the current context for anyone who can get it, but this 2.6% came from pegging 0.1% on top of 2.5% CPF ordinary account rates, so there is still a vast pool of funds where it cost the government 2.5% rather than 3.7%.

So how about 4% SA? How govt fund it?

 

[DevilPlate]

I think you need to differentiate between YOLO and wealth engine.

You YOLOed and got lucky.
But you can't repeat the process because you borrowed based on your age, so it is not a wealth engine at all that you can re-use.

If you observe Eric Chiew carefully, his wealth engine is actually his knowledge consulting biz for HDB-to-condo upgrading that drive sales for his mortgage broking biz. The income and bank contacts through his mortgage broking biz enables him to take all kinds of property investments.

That's the difference: a process to get wealthy, vs just betting.

I'm trading the stock market, and it's not my singular multi-baggers that make me rich.
It's the system of identifying and betting big (with OPM) at right time that makes the wealth engine. It's repeatable regardless of my age.

Yes, i got lucky and yours is true skill no luck involved.