Reader:
Time flies and I’m glad to have taken your advice previously to do well in studies. I am currently reaping what I’ve sowed for my study & career.

The good news is that I have gotten a job that pays me well compared to my first job three years ago; I got close to 50% pay increment!

However, my life had been quite a drama due to conflicts at home. So, I end up moving out, renting a room to keep myself in peace. With that, expenses increased, and I am having difficulty sustaining it.

As I am single (28 years old) and I have to wait to reach 35years old to be eligible for an HDB BTO 2 room flat (considering the waiting time for BTO or higher price of resale flat).

I am currently thinking of getting a piece of private property (studio) which if possible, I would like to save enough down payment before committing to own one.

I calculated at least three to four years of saving to reach that goal. Do share with me your opinions too to handle my current situation.

AK:
Whether to buy or rent a property, especially if buying a property is going to strain your finances, the Rule of 15 helps you to stay grounded.

Read: http://singaporeanstocksinvestor.blogspot.sg/2017/05/to-rent-or-to-buy-rule-of-15-revisited.html

Think carefully what is the financially most prudent thing to do when it comes to housing for you now.

Reader:
That is an interesting rule to use as a guide, but do other factors affect the outcome if we factor in the inflation, demand & supply of housing and uncertainty of the house value in future?

AK:
It is about cash flow.

How can we tell what the demand and supply situation is going to be like in future?

The Japanese didn’t know they were going to suffer two decades of decline in housing prices.

The Americans didn’t know they were going to suffer a huge crash in housing prices that wiped out ten years worth of wealth.

If cash flow is going to be an issue, forcing ourselves into buying a private property because we fear prices are going up higher in future is silly.

Too many people have too much of their wealth stuck in their homes.

This is why so many people in a wealthy nation like Singapore must work till the day they die.

Are You “Asset Rich” But “Cash Poor”?

Read related: Are You “Asset Rich” But “Cash Poor”?

Reader:
I see. That’s is a very good insight for me to learn. I trust your experience in this.

AK:
Alamak. Don’t trust me. I don’t have a crystal ball. I cannot see what the future is going to be like.

I am just saying that we should stay prudent especially if cash flow is tight.

If you have plenty of money lying around and cash flow is not an issue, then, if you want to take a bet on properties, go ahead.

Having healthy cash flow is always important.

This article originally appeared on AK’s blog.