A new flat on the way and $200K in spare cash.

She and her husband have some $200K in spare cash. She is in her 20s and they have a new flat on the way. This is my reply to questions posed by her:

Hi YX,

Firstly, please remember that I am not giving advice. However, I can share what I would do given the same set of circumstances. :)

1. I would take a 30 year housing loan instead of 10 years even though I might have the ability to pay it off at one go. It is less of a burden in case bad things should happen. If I had more spare cash over time, there is the option to pay down the loan, doing partial capital repayments.

2. I would invest some of my spare cash for higher returns. This would make sense as long as the returns are higher than the interest payments on the housing loans, all else remaining equal. If interest rates go sky high, then, it would be time to pay down the loan. Some of the spare cash goes into an emergency fund and the rest goes into a war chest, waiting for investment opportunities.

3. I don't think it is a good time to be in bonds. Higher interest rates on the horizon make bonds a bad investment now, I feel. Cash, we always need to have. Doesn't matter that the banks pay peanuts for our savings. Gold is an insurance and conventional wisdom says we should have 5 to 10% of our wealth in precious metals. However, it doesn't generate income.

My approach is about having stronger cash flow while keeping necessary debt manageable, if any at all. Also, we always need liquidity and insurance in life. Why? Because bad things happen in life. As long as we are prudent in our finances, always saving some money and investing for income, we will do well over time. :)

Best wishes,
AK

If you have any ideas which you would like to share, please do so in the comments section. I am sure a meaningful discussion would be appreciated.

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A friend's dad told me about them recently and, quite coincidentally, while checking my messages over the weekend, I found a pending offer from them to become an affiliate. Get good deals and maybe make some pocket money by spreading the word? Sounds like a fair enough proposition. I decided to check it out. Link:

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Remember what I said about ZUJI (ZUJI Flights Home Page) before, we want to buy only when we get good value for money. There is no guarantee that CheapOair will get us the lowest prices for air tickets but having one more option for comparison guarantees a higher chance of getting a good deal.

If you get a good deal using the text link above, AK gets a small commission:

Win-win. Kamsiah you. Yeah!

Related posts:
1. Macarons from ZUJI.
2. Planning to travel? Check out ZUJI.