4 mths 6% returns
Company doing distribution business of liquor and wines

Following previous post. What does different Loan Tenure mean to our personal cashflow .

I’ll try to show it here with a chart.
Assuming we got a property.

Cost of Property $125,000
Down Payment 20% $25,000
Loan Amount 80% $100,000
Yearly Interest 5%
Yearly Cash Supply $13,000
Yearly Inflation 3%

With the above figure.
A 10 year loan will require monthly instalment of $12,727.86
A 30 year loan will require monthly instalment of $ 6,441,86

10YrC is Cashflow (cash on hand) with a 10 Year Loan
30YrC is Cashflow (cash on hand) with a 30 Year Loan
10YrPV and 30YrPV the those cash in todays value (Present Value).

As you can see, at end of 30 Years, we’re $65,000 or 25% richer with the shorter loan. In today dollar term, we’re $27,000 wealthier.

From another angle, if we use longer loan, by year 5-6, we’ve save enough cash (~$30,000) for down payment to another property even if we’ve 0% interest for those cash on hand.

Break even for both is around 20years. After which we’ve more cash on hand with the shorter loan.

So, is it better to have long or short loan?

There are always 2 groups of people. One that like to have as short a mortgage loan as possible and the other groups who advocate stretching it to the limit.
Lets take a look at the argument of both group.

Short Loan : I’ll save on interest, imagine if you take a $1M loan at 5% for 30 years. You are paying a total of $1.93M at the end of the loan. 2X..
Long Loan : Money is depreciating. with inflation of 5% annually. $1.9M is nothing in 30 years. Assuming house price inflate at the same rate as inflation. the $1M house will be $4.3M
Short Loan : That value will not change. If you paid it up, lets say in 10 year. You paid a total of $1.27M. Saving $660K, this is before taking into consideration of compounding if put in other investment.
Long Loan : Thats future money. At 5% inflation, money devalue by half in 15year. Its better to make good use of current money.
Short Loan : You’ve the point, to make good use of current money. If you can use the money saved now and  earn more than bank interest of 5%. If not, it make sense to pay of the bank, else you’re loosing on booth end. Paying bank interest and loosing on dollars depreciation.

Leaving Singapore to Medan soon. Grandma funeral will be tomorrow.  A great mother of 5 girls and 2 boys. She is very kind and is always alert.
Grandma passed away on Wednesday at 2.40pm.

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Market Profile.
Uses Volume information across time period to help identify VPOC and S/R. Giving visual indication for possible market reaction when price touches these high probability areas.

Market Cycle.
Market moves a different cycles or frequencies. sometime faster, sometime slower. That’s the fundamental reason why indicators don’t really work over long period of time. A setup will be accurate for a period of time and failed to give similar result one or two months down the road.

Zig-Zag Indicator.
Zig-Zag indicator uses setting for minimal price movement to plot a saw-tooth like line on the chart. the highs and lows will dance around at different frequencies.

Combining the above.
One strategy is to use Zig-Zag indicator to plot the dominant cycle/frequency that the market is currently trading at. Couple with POC from Market Profile. We can make decision to long or short the market.