Should I bet my money in property or mutual fund?
So, answering the scenario of the RM500k house earlier few days, I would say:
- Buy the house as a necessity to live.
- Do NOT use extra money to pay off the loan.
- Use the extra money for investment vehicles (based on your appetite above) to earn more money.
- Only pay off in lump sum when you need to get rating.
- Always take loan (when you still can) as mortgage is the lowest interest of all loans.
Remember, being eligible for a loan is a benefit – as banks would look at the below 3 criteria:
- Age of borrower (young age to earn this point)
- Type of employment or profession (doctors for eg.)
- Repayment stability (gov servant vs self employed)
*Of course, bank also consider your type of property (residential vs commercial; landed vs strata) as they have different targets in their business strategies.
** If you are buying for investment, do the maths from No.2 – 5, and invest only when your money is worst than putting in your mode of investment vehicle.
Hence, if you have all the credits point above and not taking a loan, you probably miss out one of the most important benefits as a ‘head count’ of this population.