Renting VS buying a property?

A few weeks ago, I came across an article by Ryan Goh who mentioned about the younger generation purchasing flats with a low tenure left. This means that they would need to pay the loans back and the flat might not even allow them to extract equity from it due to the limited time left.

I find this really relatable as I am entering my mid-20s, buying a property has always been on my mind. With land space in Singapore decreasing, property prices would definitely react to that especially when properties in them prime areas.




I stay in the East side and prices here are on the high side according to this image that I have taken from DrWealth which shows that if I were to get a property (HDB) near the MRT stations in the East, it would be at least more than half a million.

Taken from: https://www.drwealth.com/singapore-property-prices-along-mrt-lines/

I have been thinking about buying a property because recently I have realised that after being an adult, I have started wanting my own space so that I can have the freedom of inviting friends over or to have time and space to myself to unwind. Of course, I find it a blessing to be able to stay with my mum and brother but sometimes some alone time would be nice.

Properties around our areas are flats with around 64 years left including ours. So, with me being 23 years old right now, adding 64 years to that would mean that the land would be taken back when I am around 87 years old. Rental at my area is around $2900 for a 3-room flat and $2000 for a 2-room.

This means that it would be more safe for me to get another flat that has a 99-year lease to be able to live in it without worrying. Of course, many factors can change it for example enbloc. So to the main question, is it more worth to rent or to buy?

RENTING VS BUYING A PROPERTY
One advantage is that renting could be cheaper in the long run because the rent usually tend to be lower than the payment of loans for a property. This is also one big point on why people would rather rent than to buy as they predict that the total amount that they will pay for renting would be lower than purchasing a property.

This also brings us to the next advantage of renting, since you will not need to have a down payment being made where rents usually require a deposit which is a much lower sum. This means that you are able to free up a sum of money and can place that money into investments or on your businesses if you do require.




However one disadvantage is that your rent will most likely grow over time and you are subjected to the price increase if you are aiming to stay at somewhere with accessibility to transports and good locations.

BUYING
Buying has an advantage of providing a greater privacy as you can call it yours with no one coming up to check or take things and you are able to do what you want. This is also a huge reason why so many people want to own a property.

After you have purchase a property, to lessen the load of repayments, there is always the option of option of renting out a room. This means that you can become a landlord as well and at the same time be in the process of owning your own property.




Long-term commitment is one disadvantage of buying a property is that you need to be prepared to pay for your property over a substantial period. Due to the prices of our flats, most of us would be paying for it over a long time and this can lead to lack of flexibility in terms of our cash flows.

Conclusion
All in all, I find that people nowadays do not see a property as an asset as lesser are forming families therefore a house is not so much the priority but instead experiences like traveling is something that should be fulfilled first. However, a place to call your own is what everyone aims for in later life and that means purchasing a property is to allow comfortable retirement. Both have its pros and cons and depends really on what the individual wants.

SSB VS STI ETF: what to invest in over a period of 5 years and which is better?

My brother recently asked me when he goes overseas to study should he put his money (roughly around a very low 5 figure) which he have saved up from his jobs and NS into Singapore Savings Bonds (SSB) or the STI ETF. This is because he would receive allowance for his time overseas so he would not use the SGD that he has been saving up.




I told him the advantages and disadvantages of both and told him that he should think about it and maybe read up more but I could see that he was leaning more towards SSB as he knew that he would not be actively looking at the prices of the STI ETF and that he was also unsure if the market conditions would be good when he ends his studies and get back to work. Of course, I told him that he would also receive some dividends from STI ETF and that it would offer him a better amount than SSB however his capital is not guaranteed by the Singapore government and he does not need to worry that after his studies, the amount would have any fluctuations. He mentioned too that the interest he would earn from the bonds is lower than he expected since his capital is low.




Right now, he is in a dilemma but is leaning towards SSB. But I am also thinking of maybe putting 40% into STI ETF and 60% into SSB. If you do have any suggestions or feedback, do comment and let me know:)