Looks like the haze is forcing many of us to stay home as a result. Ah, that means more time to write and scribble. Do you have a little time for a short story?

Updated 15th Sept 2015 (3:45pm) – I should also clarify that this short story, while based on a real-life event, is not my personal story. Sorry if I misled you unknowingly! I love my HDB apartment!

My dad had $10,000 earmarked for his retirement sitting in a high interest account earning 2.5% each year. I borrowed the money from him so that I could pay the downpayment for my new apartment.

I can foresee that cash is going to be tight during the first couple of years. Therefore, I told my dad that I will eventually return him the money in 5 years time.

Compounding 2.5% Interest In Account

This was what my dad’s bank account would have looked like if the money was left untouched.

  • $10,000.00 (end of year 0) – Magic of compounding starts ..
  • $10,250.00 (end of year 1)
  • $10,506.25 (end of year 2)
  • $10,768.90 (end of year 3)
  • $11,038.12 (end of year 4)
  • $11,314.07 (end of year 5) – Instead of S$11,250 there is an extra $64!

The 5th year approaches and I am selling my apartment. My dad, being the super nice guy, insists that we are family (自己人!) and the loan should be interest-free. He says that he doesn’t need the money now, anyway.

I insisted that I should repay the money with compounded interest, seeing how much my apartment has since appreciated in price. Life after retirement is increasingly expensive in Singapore and living costs can only go up. I would like to give back to my dad what is rightfully his to begin with.

What would you do?

If you were in my shoes, would you return $10,000 or $11,314?

More Than Index Investing

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