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Coffeeshop Chit Chat - how much would i have made? (MAH fallacy</TD><TD id=msgunetc noWrap align=right> </TD></TR></TBODY></TABLE><TABLE class=msgtable cellSpacing=0 cellPadding=0 width="96%"><TBODY><TR><TD class=msg vAlign=top><TABLE border=0 cellSpacing=0 cellPadding=0 width="100%"><TBODY><TR class=msghead><TD class=msgbfr1 width="1%"> </TD><TD><TABLE border=0 cellSpacing=0 cellPadding=0><TBODY><TR class=msghead vAlign=top><TD class=msgF width="1%" noWrap align=right>From: </TD><TD class=msgFname width="68%" noWrap>LauZoeTay <NOBR></NOBR> </TD><TD class=msgDate width="30%" noWrap align=right>Apr-12 10:45 pm </TD></TR><TR class=msghead><TD class=msgT height=20 width="1%" noWrap align=right>To: </TD><TD class=msgTname width="68%" noWrap>ALL <NOBR></NOBR></TD><TD class=msgNum noWrap align=right> (1 of 7) </TD></TR></TBODY></TABLE></TD></TR><TR><TD class=msgleft rowSpan=4 width="1%"> </TD><TD class=wintiny noWrap align=right>31628.1 </TD></TR><TR><TD height=8></TD></TR><TR><TD class=msgtxt>How much would I have made?
When you sell a flat, you still have to buy another
Letter from Tong Jee Cheng
05:55 AM Apr 13, 2010
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THERE has been a lot of discussion recently about HDB flats being affordable, and how they are valuable assets and profitable investments.
I'm just the typical Singaporean who bought an HDB unit to house my family. I got my four-room flat in 1984 for about $67,000. I took a $48,000 loan from the HDB - the interest rate that time was 6.25 per cent - for a repayment period of 20 years.
In total, I paid $23,000 in interest, which amounted to 47 per cent of my loan.
So, in reality, my flat cost $90,000.
Many would point out that should I sell the flat today, I would have made a huge profit - the value of my $90,000 would have multiplied many times over. It would be worth in the hundreds of thousands.
But the forgotten aspect of the equation is that once I sell, I'll still need a place to stay. There is no point selling to stay in a similar unit - or I would just stay put. So let's presume that if I do sell my flat, I would downgrade to a three-room flat.
The price difference between three- and four-room flats now is about $100,000, so that is the cash I would end up with.
So, to make $100,000 after 26 years - just $3,846 a year - I would have to downgrade to a smaller unit. If HDB flats are indeed such valuable investments, shouldn't I be upgrading instead?
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When you sell a flat, you still have to buy another
Letter from Tong Jee Cheng
05:55 AM Apr 13, 2010
<!--replace -->
THERE has been a lot of discussion recently about HDB flats being affordable, and how they are valuable assets and profitable investments.
I'm just the typical Singaporean who bought an HDB unit to house my family. I got my four-room flat in 1984 for about $67,000. I took a $48,000 loan from the HDB - the interest rate that time was 6.25 per cent - for a repayment period of 20 years.
In total, I paid $23,000 in interest, which amounted to 47 per cent of my loan.
So, in reality, my flat cost $90,000.
Many would point out that should I sell the flat today, I would have made a huge profit - the value of my $90,000 would have multiplied many times over. It would be worth in the hundreds of thousands.
But the forgotten aspect of the equation is that once I sell, I'll still need a place to stay. There is no point selling to stay in a similar unit - or I would just stay put. So let's presume that if I do sell my flat, I would downgrade to a three-room flat.
The price difference between three- and four-room flats now is about $100,000, so that is the cash I would end up with.
So, to make $100,000 after 26 years - just $3,846 a year - I would have to downgrade to a smaller unit. If HDB flats are indeed such valuable investments, shouldn't I be upgrading instead?
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