Read? Compound Interest is not the same as Compound Returns
Read? Will You Try To Pay Off Your Housing Loan ASAP If You Have One? (5)
Compound Returns of 2.6% by 100% re-investing may be far more difficult than you think
E.g. When you can afford to take a 20-year HDB Housing Loan at 2.6% but choose to take advantage of low interest rate and opt for 30-year loan and use that extra money saved for investment.
So what is the difference?
When you take a loan, you pay compound interest to the bank and the total interests payable is definite; but when you invest and re-invest for compound returns that is NEVER a sure thing that the compound returns over 10 years of market cycle of bulls and bears will definitely be more than 2.6%. Just one or two big bears over that 10-year market ......
