lai chin kwok asked 10 years ago
Hi KC,
How are you? Hope you are well.
Would love to get advice from you in terms of this ETF.
Many of my friends say that this fund’s performance is below average.
http://www.spdrs.com.sg/etf/fund/fund_detail_STTF.html
By the way is it normal to have unit trust with 22% 5 year annualized return? Seems too good to be true if you ask me.
Lastly would be should I invest or payoff my house loan first? House loan interest 4.5% and after running the amount i wish to add on every month I could have reduce the interest by RM300k.
Hope to hear from you soon
KCLau Staff answered 10 years ago
Hi Lai,
1. Sorry no comment on the ETF you mentioned since I don’t do any research on it to be able to make any good comment.
2. About 5 year 22% p.a. annualized return for unit trust, I might be possible but not likely to happen to every UT investor though.
3. The rate to compare homeloan with your investment return is quite straight forward. For example, EPF gives 6%, and your housing loan is 4.5% only. So it is best to leave money in EPF. So if you are able to invest profitably and get above 4.5% interest charged on your mortgage, it means it is more profitable for you to invest on your own rather than paying off home loan.
The figure of total interest you save is actually meaningless. It is because the difference of time value of money. RM1000 now is much more higher in value than RM1000 30 years later. So the figure you see by totaling up all money now and the future is practically meaningless.