This morning, I had a whatsapps conversation with E. She is one of those agents who believe in property price is forever increasing and each property is a savings plans.
Well, we agree to disagree. I told her about my cashflow philosophy and to get her expenses in control and replace her expenses with passive income from business, property or other sources. Free up her salary for investment. Trading up is not a way to go, it merely increases the liability forever.
As always, I shared my favourite OCBC 360 accounts with 3.05% and she was surprised she did not know about this account. I also disagree about putting her money into different accounts, eg savings in her children's account. I told her the prudent way is to consolidate to get better income as a bigger client for the bank is a better way of getting higher returns.
We discuss HDB as well. HDB loan is one of the biggest stumbling blocks today. It requires you to empty the CPF account to pay for the downpayment. Which leaves the average Joe dependent on each month's salary to meet the mortgage service requirement without a massive base to depend on in case of emergency. This, I feel is very sad. I took a bank loan to preserve my base so that I could quit at anytime of my life and I have a sizable base for monthly installment. This is prudence.
Lets recap and work out a system :
1. Go through your expenses and work out the fixed income and decrease the variable income.
2. Protection, get yourself protected with term insurance.
3. Work on your credit ratings and leverage power.
4. Invest in network of agents, bankers, investors and attend free workshops.
5. Tap on their expertise.
6. Invest in cashflow income stream.
7. Create multiple income stream.
When passive income > expenses, work on capital growth investments.
As always, build a solid base, only then can you use that base to leap high and far!