Tea with AK71: Kwan Im Thong Hood Cho Temple.

As a boy, I used to visit the temple dedicated to the Goddess of Mercy on Waterloo Street regularly with my parents. During the very difficult years of the 1980s recession, we were even more regular. Till today, my dad would still visit regularly.

Personally, I have not been to the temple in years. Today, I made use of the public holiday to visit the temple. I went through the usual routine of prayers and making a donation to the needy when I got there.

A visit to the temple always sets my mind at ease, not because I think the Goddess of Mercy would make things right but because I would reflect on my life and realise that things are not too bad. Sometimes, life gets a bit choppy but we have to count our blessings. Remember to be humble and remember to help the less fortunate.

As I was leaving the temple, on impulse, I took a photo with my Samsung Galaxy Ace. It was hastily taken and as it was very sunny, I could not see the photo taken clearly then. I looked at the photo when I got home just now and I was really amazed by it.

佛光普照

May the benevolent radiance of the Lord Buddha shine on all of us.

Good debt is always good?

I look at debt as a necessary evil. Sometimes, I need that extra help in order to buy something.

Then, do I take as long as I can to repay the debt? Well, in this environment of very low interest rates, the concept of good debt has gained traction. Why not?

The idea of good debt is appealing because it gives us more funds which could possibly generate higher returns than the interest paid on the borrowed funds. What is the catch here? Yes, only if we can use the funds to generate higher returns.

The late Dennis Ng said that the rich always take on debt while the average man tries to be debt free. This is not always true. I know of rich towkays who have so much money in their bank accounts that they would pay for a luxury car in cash instead of taking a car loan! No matter how low the interest rate is on a car loan, it is still some 10x more than what a savings account pays in interest. I also know of average people who are leveraged to the max to capitalise on good debt.

So, who is right and who is wrong?

Recently, UOB came up with a 50 year home loan offer. Khaw Boon Wan has called this a gimmick, advising people not to fall for that and that it doesn't make sense. Now, does it make sense? For someone who is financially savvy and who is able to make his money work much harder, it could possibly make sense.

Personally, I am rather apathetic about the whole matter. There will always be people who are more comfortable with debt. Hey, ask the Americans. Then, there are those who are less comfortable with debt. I have heard of mainland Chinese buying condominium units with cold, hard cash.

Again, who is right and who is wrong? It is really subjective, isn't it?

For people who are proponents of good debt, the pertinent question to ask is whether our money can always make higher returns than the interest paid on the loans? For now, it looks that way. What happens the day the party ends? Are they getting drunk on debt?

For people who are more conservative, the pertinent question to ask is whether they could be short changing themselves by being debt free in this environment of very low interest rates. Of course, if the most sophisticated wealth building tool they know is fixed deposits, staying debt free is the way to go.

Like a friend told me, I have a choice. His intended message was that I have a choice whether or not to embrace good debt. Personally, I understand the concept but I am more comfortable being debt free.

I feigned ignorance and replied: "People who do not have a choice should not be investing in property." With this, I deviated from his line of reasoning that good debt is always good. Instead, I insinuated that people who do not have a choice but to borrow to invest in properties just because of the very low interest rate environment and the perceived future returns should think twice.

Of course, the choice is theirs. ;)