This is a question which I have been asking myself a lot over the last few years without coming up with a definitive or even satisfactory answer.
I know that there are people who manage to account for every dollar that they earn and for every cent that they spend. Unfortunately, I am not one of them. I operate a lazy man's budget (separate post to follow) and do not track expenditure closely. So long as my expenditure is roughly within the budget, I pay relatively little attention to my spending on day to day items. Larger items do get closely scrutinised. Some examples:
1.We shopped around for mortgages to get the best terms available each time we borrowed;
2.We do not own a car, prefering to rely on public transport.
I do save a respectable portion of my income each year - but I do not know off the top of my head exactly how much or what percentage of my income is saved each year. I suspect it would be possible to do better.
I can only give myself a C or, at best, a B grade for frugality. In future posts I will examine my budgeting system and selected items of expenditure to see where improvements can be made.
Really interesting site. It's nice to see there are others out there trying to do the same thing.
I'm relatively new to Hong Kong (been here for one year) and have been thinking about purchasing a property. I wanted to ask you some questions if you don't mind?
I just found out that you have to pay profit tax on your property when you sell. This seems to put property at a big disadvantage to shares? What are your thoughts?
Similarly you have to pay tax on rent, but not on dividends.
Also, I'm wondering if there are any fixed rate (like 5-10 year) mortgages available in order to protect yourself from large upswings in the mortgage rate?
Thanks and keep adding to your interesting site!
Thanks for the commnent.
In answer to your query, I view stocks and properties as each having their advantages and their disadvantages compared to each other.
The primary advantage of property is that it is easy to gear against and the interest rates are lower than you will pay on a share margin loan. In effect you can enhance returns through gearing.
There are some disdvantages: transaction costs, depreciation and tax among them. It is for these reasons (and others) that I am building a portfolio that comprises a mix of asset classes.
On fixed interest rates, when I last checked you could get fixed rate products up to about five years - but the cost was much much more expensive than the floating rate.
One thing I did learn about mortgage loans is that it really pays to shop around for the best deal each time.
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