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I’m not sure if this holds through for all families but at least for mine, liabilities are a real no-no in our family.

I was brought up to believe that if you can’t afford a TV, don’t buy a TV. My parents carried this conservative behaviour because they had seen their parents living from hand to mouth, mainly because to survive, their parents ended up in debts and then it was a vicious cycle. They struggled to pay the interest for the following month and put food on the table at the same time. So my parents grew up really afraid of debt. They never bought a single thing on instalment even interest free ones. With this same approach, they made their first foray into property.

More than 10 years ago, after my parents had sold off their EM because it was too big for my parents to manage, they had wanted to downgrade to a 4-room flat. However, the prices of 4 rooms were about the same price as the EM despite being in a central area. So they ended up not buying a flat. In hindsight, it was a blessing in disguise as we started looking for an avenue to put the money into. And that was our first foray into private property.

At that point in time, we had the option of buying a 2 bedder and a 3 bedder and taking a loan, or just buying a 2 bedder paying in full. My parents decided to buy something that could afford to pay for in full.

To date, both units have more than doubled in price and my parents could have made an additional 800k – 1mil if they had decided to risk it by taking a loan and investing in 2 properties instead of only 1. It was only recently when my mum saw how I have helped my clients to purchase properties and how my husband and myself have purchased properties that she understands the power of leverage. And she now regrets not making that move.

Lesson learnt: Liabilities are not always something bad. If managed carefully, it can be a tool to help you in your wealth accumulation plan.

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