The great read: Young people struggling with inflation – to save, invest or keep cash?

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WHAT TO PAY ATTENTION TO WHEN TAKING LOANS

When it comes to refinancing loans to help families ease inflation-induced financial strains, Mr. Nelson Neo, Head of Home Finance Solutions at DBS Consumer Banking Group, said that although he s Whether an option, homeowners should be aware of the costs involved, such as legal fees and expert fees.

“Regardless of the evolution of interest rates or the choice of mortgage formulas, we strongly advise borrowers to set aside sufficient funds as a buffer in the event of further interest rate increases or unforeseen circumstances”, Mr. Neo said, adding that it would ideally be a buffer for around two years.

While getting a loan can help young people through tough times of financial need, experts have also warned of the need for caution.

Noting that taking out a loan is a “significant financial commitment” over a period of time, Mr Anthony Seow, Head of Payments and Platforms at DBS Consumer Banking Group, said young people should ensure they have the ability to repay their loan, and if possible, increase their loan repayments to reduce their interest payable.

He said they should also pay attention to fees and charges, loan repayment flexibility and the lock-in period of the loan, noting that some loans carry penalties for paying it back early.

“Any late payments or repayment difficulties can reflect on your credit rating and records, and unfavorable records can impact your future financing needs,” Seow said.

IS IT THE RIGHT TIME TO INVEST?

With a month-old baby, a home loan to pay, and three businesses under his belt, Jonathan Ong, a 32-year-old realtor and business owner, has quit making risky investments in the stock market and crypto scene.

“I was lucky to cash out before the crypto crash and stock prices crashed, but right now there’s too much risk of not having enough cash in hand,” he said. -he declares.

He runs restaurant Daddy On Madras, a Metaspace virtual tours company, and works on a real estate app called Homee SG — all of which have seen profit margins shrink as people spend less and the cost of goods rises.

As for Jessica, a 25-year-old principal, who declined to reveal her last name, saving for further education has become more difficult due to inflation.

She added: ‘I had considered taking longer term investment plans but with inflation I don’t want to do that as they are not easily accessible or usable in an emergency.

“Interest rates for long-term investment plans also look bad compared to the current rate of inflation.”

However, experts said it is important for young people to start investing for their future, if they have enough savings.

Mr. Timothy Ho, co-founder and editor of the investment website Dollars and Sense, said: “If inflation is high, choosing not to invest means that any savings you have will lose their power to invest. purchase over time.

“As a youngster, our biggest advantage is age. We can easily invest today in good companies and keep them for 20 or even 30 years, without worrying about having to sell them as long as we have our emergency savings and we manage our finances well.

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