Have a $327K home loan and $200K in savings.

What to do?

Hi,

I have been following your blog for last two years and would like to have your opinion on whether to pay off my mortgage or to invest the money I have in my bank.

I have a mortgage loan of S$327,000 of 12 yrs tenor at current interest of 1.625% per annum.  Following year about 1.9% to 2% per annum.  Currently, I have about S$200K idle in my bank and do not know whether to pay off the mortgage or invest it in bonds, etc.  I was advised to invest in UOB United SGD Bond, but I'm not sure about it.

Appreciate your professional opinion on the matter.  Thank you.

Best Regards,

M

Hi M,

Alamak. I am not a professional. So, if you want a professional opinion, I have nothing to offer you. -.-"

This is my unprofessional opinion:

You managed to lock in interest rates of less than 2% on your home loan for the next 2 years and you wonder if you should invest your money for higher returns which really isn't difficult. However, if your investment horizon is only for 2 years (because you managed to lock in low interest rate for the next 2 years), then, better not. Investing is best done if we are using money we won't need for anything else (and we wouldn't have to liquidate our investments at a time not of our own choosing to meet those needs).

As for buying into a bond fund, er, I won't touch a bond fund even with a 5 feet pole. ;p

Best wishes,
AK

Related posts:

1. Get income from investments to pay interest.
2. Nobody cares more about our money. (Bond funds).