datolee32, thanks for the message. I thought it would be more appropriate to answer your question in the correct thread, and allow others the opportunity to chip in their point of view as well.

Everyone’s journey to FI/RE will be different, with different goals and endpoints. It’s hard for me to say how you can achieve yours - our incomes would be very different, our commitments similarly so.

In our example, my wife and I have a very generous combined income, derived from our professions - she being a chartered accountant and I am a consultant medical specialist. We have no children, and are are in our late 40’s, only a couple of years away from turning 50. We also have no outstanding loans and mortgages, and have been debt free since nearly 10 years ago.

This is already clearly very different from the background which you’ve shared with me.

Having said that, I believe you’re on the correct approach. My first step towards FI/RE was to be debt free. To that end, we poured all our extra income into paying off all our property mortgages, including our primary place of residence, in the shortest time possible.

To be honest, what I’ve shared with the forum and what you’ve seen is only the cash/bonds/stocks component - and all of these were accumulated only in the last 10 years after we had cleared our mortgages. We calculated, just on the basis of paying off the mortgage on our primary place of residence here in Singapore (a 5500sqft detached gated and guarded freehold landed property in the central core district), we would have “saved” nearly $1,000,000 in total interest payments.

My logic was that I wasn’t savvy enough to make $1,000,000 in profits with whatever money I had, so that money was better spent helping me save $1,000,000 in interest payments instead.

Now, imagine replicating this mindset on a dozen other properties scattered in Singapore and Australia. Hence my reference that the cash component of our total assets didn’t happen until relatively later in our careers/financial journey - every dollar we had in our initial years was spent paying down the capital, and paring down our mortgages.

Others may have a different viewpoint - I know a lot of gurus and experts here will say that the power of leverage should have been employed, and our money should have been made to work harder for us to generate higher returns, rather than to be used to pay off any loans. And I believe that is also a valid argument.

But, my wife (despite being an accountant and perhaps because of it) and I are very conservative by nature, and as it turned out, this approach has served us very well insofar as shielding us from the worries of outstanding loans and mortgage repayments due in the time of COVID-19 uncertainties.

So, in summary, my opinion/answer to your question on how to achieve FI/RE is to be debt free - not merely having a higher return from your investments than your outgoing loan repayments, but to be truly debt free, so that every dollar, every ringgit you make from that day on, is a dollar or ringgit saved, and pure profit.

I would like to leave the floor open for other contributors to share their perspectives and opinions with all of us - I neither for a second claim that my way is the only way, nor do I assert that it is the best way to FI/RE: it is our way, and it worked for us because of our unique circumstances which will definitely differ from yours and everybody else’s.

Thank you for your advise. By looking the house loan, for example interest of 3.5% VS investment return lets say 4-5% pa, may I know is it good to have early loan settlement or use the extra cash in the investment?

This is a very good question, and I'm sure there are many answers, but here is mine, and please note, this is how my wife and I did it: it is NOT the final word on how it should be done for everyone else. You’ll have to decide on your own paths - I’m just privileged to be able to share mine.

I'll quote the same example which I've used, which is the primary place of residence. We bought our house in Singapore for a little more than $5,000,000. At that time, we qualified for an 90% loan based on our combined income, but because I could only buy it under my wife's name (she converted to Singaporean in order to be eligible to buy landed property & for us to keep our other investment properties - otherwise, the law states that PRs have to sell all other residential properties in order to qualify to stay in landed housing in Singapore), in the end, we could only take 80% of the loan. We paid $1,000,000 from our savings and took out a $4,000,000 loan (we decided against using CPF, since it was only her CPF that would be deducted).

Let's say the returns from our remaining savings/investments were 5%, where as the interest for the house loan was say, 4%. On paper, we would be making 1% "profit" - but this is only true if we had $4,000,000 in investments generating 5%, while paying the interest on a $4,000,000 loan. For the purposes of simplifying this discussion, I'll just use a one for one comparison - you make 5%, you pay 4%. This is not even taking into amortization factors, where you pay more interests upfront in the earlier years of repayment.

Let's say, with all our other mortgages that we were busy paying, and after paying the $1,000,000 for the house, we only have $500,000 left in our savings. Now, the equation starts to look less favourable. You might be making 5% on $500,000, but you're paying 4% on $4,000,000.

It's because we knew we didn't have an equivalent counter-balance amount to offset the loan that we worked hard to pare down the capital on the mortgage - we paid at least $500,000 in principal payments alone, on a yearly basis, often more, to clear that $4,000,000 mortgage ASAP - and in doing that, we estimate we saved nearly $1,000,000 had we went the full 30 years.

It's a very simplistic example - and I know there maybe wrong assumptions/accounting involved in the example above, but it was something that worked for us, and helped us focus on our goal of being debt free & achieving financial freedom.

Hope that helps.

Thank you for your advise. By looking the house loan, for example interest of 3.5% VS investment return lets say 4-5% pa, may I know is it good to have early loan settlement or use the extra cash in the investment?

The house that you are living best to settle in cash as its a liability vs investment properties where tenants pay the mortgages..well that's what some financial gurus are preaching.. there's one lowyat forumer princile  rent what you own live what you rent.. Very interesting

Thank you for your advise. By looking the house loan, for example interest of 3.5% VS investment return lets say 4-5% pa, may I know is it good to have early loan settlement or use the extra cash in the investment?

Thank you for your advise. By looking the house loan, for example interest of 3.5% VS investment return lets say 4-5% pa, may I know is it good to have early loan settlement or use the extra cash in the investment?

Best is settle loan first.

Becuz loan principal is guaranteed to be there until u settled all of it..

While investment profit is not guarantee, dun even talk about principal guaranteed..

If u go invest, investment bust.. u risk losing ur house when ur cash flow doesnt maintain..

It's interesting & quite refreshing to find so many with a similar/like-minded strategy!

Yea.. eradicated the feel that u owe something.. then life is so much better and peaceful

For me as long as loan interest < EPF/ASx dividend, I will take the loan.

I have this mindset that loans taken, an paid longer term will be more beneficial. Cause the value if money in the future is lower. And if inflation picks up, thou the dollar amount seams a lot. Value might be the same.

Same. Plus, whatever say 100k value is today, it’s ‘value’ is much less 30 years later. So I delay paying off debt/loan as much as I can as long as the above principle remains true.

I’m all about growing $$$ rather than paying loan/debt.

Yeah, our strategy now is all about growing our retirement nest - it's just that we felt it was more for our peace of mind to be able to grow our nest without the burdens of loans and debts, and we were lucky to be in a position to achieve that.

Says a doctor who can earn thousand dollar an hour.

Anyone who has the ability to do the above, will have no problem settling any debt since money will never be an issue.

Says a doctor who can earn thousand dollar an hour.

Anyone who has the ability to do the above, will have no problem settling any debt since money will never be an issue.