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Sweetangtang

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Naturally you wouldn't switch from a HDB loan to a bank loan unless you could lower your interest costs more than a few dollars.

The same basic scenario can apply with resale units. Let's suppose you buy a resale HDB unit with a HDB loan, but then...surprise! Your family is growing, and you or your spouse give birth to twins. Maybe your existing HDB unit isn't big enough, and maybe you can afford a bigger one, fairly soon anyway. So you decide you'll do the best you can for 2 or 3 years, but in the meantime you refinance with a lower interest bank loan to save some money for the babies. In other words, if you know you're going to sell your home within a couple years, that's one great time to take a look at mortgage refinancing with a bank. Really any scenario involving sale of the property in about 3 years (or less) works fine, because that's within the available bank loan's fixed interest rate period.

I think it's important to understand what the impact of a possible rate increase is. Let's suppose that you're financing $500,000 at 2.6% interest for 25 years. If my particular mortgage calculator is correct, that should be $2,264.81 per month.

OK, you make payments for a few years, then you decide to refinance $450,000 with a bank at 1.8% interest for 21 years with a 3 year rate lock. Now your payment is $2,144.33 per month. OK, now with about $400,000 and about 17 years to go the interest rate zooms up to 4.0%. Now your monthly payment shoots up to ~$2,698.84. These numbers are only very rough, but you get the basic idea, hopefully. When the interest rate increases you can get a fairly substantial increase in the monthly payment amount. (I picked 4.0% because that's probably right about at the level where the bank rate could be while the HDB loan rate is still at 2.6% and OA interest rate still at 2.5%. Above about 4.0% I think we'd start to see OA and HDB loan interest rates rise.)

Of course if that higher monthly payment is troublesome, one solution that may be available is to refinance to stretch out the loan term. (Maybe.)

Anyway, you can and should play with these numbers in your particular situation, but the basic idea is that you should be prepared for the possibility that a bank loan repayment amount could rise fairly significantly after the fixed interest rate period. And if your general reaction is something like, "$2264 rising to $2698? I can live with that," and if the interest cost savings is decent enough, then maybe refinancing with a bank for a lower interest rate is right for you.

Thanks BBCW for the enlightenment! It is because the loan duration is long, there is a lot of uncertainty in the interest rate though it is very attractive now to go with bank loan as the interest rate is as low as 1.2% but no one knows when this low interest rate will last and if it really increases to 4% after 3 years, I will be stuck for my remaining loan unless I refinance it. So I guess it really depends on individual preference, affordability and the risk appetite. Not sure if it makes sense to use OA to wipe off part of the purchase price and reduce the loan amount so I can save some of the 2.6% hdb loan and AI assuming I use cash to service the now lower monthly loan, or transfer OA to SA to earn 4% and use cpf to service the remaining hdb loan?
 

celtosaxon

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Have you considered 529 plans? If they are Singaporean citizens or Permanent Residents then CPF MediSave top ups (and 5% interest) could potentially be interesting.

I think the unearned income threshold is now $1,100 (2019 and 2020 tax years at least).

Good thoughts. I had suggested 529 this morning but she doesn’t want the money locked up or restricted, and she also wants to give the kids some exposure to investing, with around a 10 year time horizon. I guess this will work, just wanted to make there weren’t any gotchas.
 

BBCWatcher

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Not sure if it makes sense to use OA to wipe off part of the purchase price and reduce the loan amount so I can save some of the 2.6% hdb loan and AI assuming I use cash to service the now lower monthly loan, or transfer OA to SA to earn 4% and use cpf to service the remaining hdb loan?
No, I don’t think that paying more principal than you need to with today’s low interest rates makes sense, assuming you are a responsible individual. You can keep up to $40,000 combined (per couple) in your OAs when taking a HDB loan. The amount above can go into your SAs.

I had suggested 529 this morning but she doesn’t want the money locked up or restricted, and she also wants to give the kids some exposure to investing, with around a 10 year time horizon.
You can do some of both. The lesson with 529s is that you’re saving for a particular goal, and that’s a great lesson, one would think.
 

celtosaxon

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Over the weekend I re-read the prospectus for S27. One interesting feature is the ability to transfer the ETF shares from CDP to DTC in the US and sell them as SPY on the NYSE. Back in 2015, SRS rules changed to allow withdrawals of shares rather than cash by way of transfer to CDP. That could help defer realizing the capital gains until it makes sense, and in the amount that makes sense... without leaving it to grow and become more taxable inside SRS.
 

BBCWatcher

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Over the weekend I re-read the prospectus for S27. One interesting feature is the ability to transfer the ETF shares from CDP to DTC in the US and sell them as SPY on the NYSE. Back in 2015, SRS rules changed to allow withdrawals of shares rather than cash by way of transfer to CDP. That could help defer realizing the capital gains until it makes sense, and in the amount that makes sense... without leaving it to grow and become more taxable inside SRS.
Interesting! I wonder if it'll actually work when the time comes. ;)
 

agent_719

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Hi BBCW, need some insurance advise. Been speaking to different brands insurance and each of them have different opinion / beliefs (some recommend me to go whole life or term life etc )

Mind giving me some solid advise? Thanks

Some profile
- 26 non smoker
- forever alone. Don’t have dependent or much responsibilities
- want to be well covered if CI or disability hits me and have some money to tide over
- have Aviva GTL 280K Life + 100k PA
- have AIA PrimeLife (wholelife) with 30k cash value. Passed down from parents
- don’t have ISP

Looking at a well balanced health insurance coverage.

Some questions off my mind
- I’m fine with Public hospital but have been recommended to go for Private + riders because I can choose to downgrade in future. So is private + riders really the better option even though I can afford
- DII, looking at Aviva riders for it but it’s only 50%. GE covers 75%. Usually for DII which will you recommend?
- PA wise, if covered by company so should I go for it? Good to have but not necessary to have kind of products?
- Whole life vs term life.. gosh I’m really can’t make up my mind.. I’m thinking what if something happens after 65 or 75 and **** hits me, will whole life better?
- if goes for whole life, should I stretch the payment period ?
- which brand is more value for each of the case above?


Apologies if there are too many question. Lost sheep here

Posted from PCWX using iPhone10,5
 

BBCWatcher

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Hi BBCW, need some insurance advise. Been speaking to different brands insurance and each of them have different opinion / beliefs (some recommend me to go whole life or term life etc )

Mind giving me some solid advise? Thanks

Some profile
- 26 non smoker
- forever alone. Don’t have dependent or much responsibilities
OK, so this part means you don't need life insurance of any sort. You don't have any dependents. That's easy.

- want to be well covered if CI or disability hits me and have some money to tide over
- have Aviva GTL 280K Life + 100k PA
- have AIA PrimeLife (wholelife) with 30k cash value. Passed down from parents
- don’t have ISP

Looking at a well balanced health insurance coverage.

Some questions off my mind
- I’m fine with Public hospital but have been recommended to go for Private + riders because I can choose to downgrade in future. So is private + riders really the better option even though I can afford
No, that's silly. If you're fine with public hospital care, then just insure to that level. If you're a Singaporean citizen then I suggest Great Eastern's Supreme Health B Plus, optionally with their Classic-B rider. That's an Integrated Shield plan designed to cover public hospital B1 ward on an "as charged" basis.

- DII, looking at Aviva riders for it but it’s only 50%. GE covers 75%. Usually for DII which will you recommend?
If you want DII coverage to 75% then yes, you could buy it all from Great Eastern ("PayAssure"). I believe it's also possible to buy the MINDEF/MHA group DII policy to 50% then "top up" to 75% (+25%) with Great Eastern or with AIA. But please check the policy conditions to make sure that's allowed, particularly Aviva's policy letter. You don't want Aviva to knock down its payout by half (from 50% to 25%) if/when you're also claiming from Great Eastern.

I'm not fond of Aviva's lack of tolerance for periods of unemployment. However, they generally have a relatively low premium. You get what you pay for, I suppose. ;)

- PA wise, if covered by company so should I go for it? Good to have but not necessary to have kind of products?
I don't think PA is particularly important.

- Whole life vs term life.. gosh I’m really can’t make up my mind.. I’m thinking what if something happens after 65 or 75 and **** hits me, will whole life better?
You have no dependents, and evidently you don't have any plans to have any. Are you planning to spend Singapore dollars in your afterlife? That might be hard. :s22:

If you're "forced" to take life insurance in order to get some other policy you actually need and like -- and if the total premium is still attractive -- OK, so be it, but then you'd make that bundled life insurance as small and as inexpensive as allowed.
 

BBCWatcher

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Updated Global Demographic Forecast

Fertility rates are falling across most of the planet, which suggests that the global human population will peak at about 9.7 billion around 2064. Then if the same or similar trends continue we should see about 8.8 billion people by 2100.

Countries will vary in how soon and how much their populations will decline. For example, it looks like Japan's population peaked in 2017 at 128 million and will fall to 53 million by 2100. These demographers estimate 23 countries will see their populations more than halve by 2100, including Spain, Thailand, Italy, Portugal, and South Korea. China will probably peak at 1.4 billion in 2024 then fall to 732 million by 2100. If it hasn't already, India will very soon pass China as the world's most populous country.

These are demographic projections, not guarantees. These changes are fairly rapid in human demographic terms, so in that sense they'll be fairly disruptive. But they're not "bad" as such. In terms of the global environment and climate change these trends are rather favorable, actually.

Singapore may have some relative advantages here, for a couple or more decades anyway. Singapore's total fertility rate is already either the lowest or among the very lowest in the world. However, Singapore's total population is stable or even rising. That's because Singapore has significant net inward migration, and Singapore seems to be managing its net inward migration at least fairly well. Many other countries struggle with their immigration policies for a variety of reasons.

Importantly, the world's largest economy, the United States, is currently projected to see a relatively stable total population with a slight increase expected by 2100. Nigeria will likely be the country that most bucks the global trend with its population expected to more than triple by 2100.

Demographic trends can have a tremendous impact on investment results. For example, if a country's population halves, what impact will that have on real estate valuations? It probably isn't a bullish factor. ;)
 
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Sweetangtang

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Hi BBCW,

Need to seek your advice. I just started rsp 500$ monthly into ES3 (60%) and MBH (40%) via FSMONE. Not long after, I also started buying into VWRA at $1500 bi-monthly. Many have said don't waste time on STI. May I ask should i stop buying into ES3 and put money into cspx or ogig instead? Are they correlated to VWRA? I read the return for S&P is about 7% if you hold it for long term. What's your take on it? Thank you!
 

BBCWatcher

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Need to seek your advice. I just started rsp 500$ monthly into ES3 (60%) and MBH (40%) via FSMONE.
So that's $300/month into ES3 and $200/month into MBH.

Not long after, I also started buying into VWRA at $1500 bi-monthly.
So that's $750/month into VWRA. As percentages it works to be:

ES3: 24%
MBH: 16%
VWRA: 60%

Many have said don't waste time on STI. May I ask should i stop buying into ES3 and put money into cspx or ogig instead?
Assuming you plan to retire in Singapore and have a right to do so, and assuming you're at least 10 years away from retirement (since you're tilted toward stocks), your allocations seem fairly reasonable. It's a little STI heavy for my tastes, but that's probably just due to rounding to nearest hundred dollar increments.

Are they correlated to VWRA?
First of all, assuming you're not a U.S. person you probably don't want to touch OGIG for tax-related reasons. VWRA already includes all the stocks in CSPX and OGIG, quite substantially, so yes, they're correlated. I'd just stick with VWRA.

CSPX and OGIG have been really high flying lately, near or at record all-time highs. If you're trying to time markets (you shouldn't), then this isn't the obvious time to get more interested in CSPX and OGIG.

I read the return for S&P is about 7% if you hold it for long term. What's your take on it?
It has been 7% or better retrospectively. That doesn't mean it will be even 7% going forward. I generally use 6% (nominal, U.S. dollar terms) as a long-term projection for the U.S. S&P 500, but I "stress test" using much lower figures.
 

Sweetangtang

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So that's $300/month into ES3 and $200/month into MBH.

<It's roughly there based on the buying price of the index.>


So that's $750/month into VWRA. As percentages it works to be:

ES3: 24%
MBH: 16%
VWRA: 60%


Assuming you plan to retire in Singapore and have a right to do so, and assuming you're at least 10 years away from retirement (since you're tilted toward stocks), your allocations seem fairly reasonable. It's a little STI heavy for my tastes, but that's probably just due to rounding to nearest hundred dollar increments.

<I an 35 yo this year and plan to retire in Singapore. My investment horizon will be at least 20 years. Do you recommend me to transfer some from STI to VWRA? What should the right mix be? Is the current proportion ok? I am buying VWRA via SC.>


First of all, assuming you're not a U.S. person you probably don't want to touch OGIG for tax-related reasons. VWRA already includes all the stocks in CSPX and OGIG, quite substantially, so yes, they're correlated. I'd just stick with VWRA.

CSPX and OGIG have been really high flying lately, near or at record all-time highs. If you're trying to time markets (you shouldn't), then this isn't the obvious time to get more interested in CSPX and OGIG.

<I am a Singaporean. Agree with you that it is too expensive to go into CSPX and OGIG now. Probably have missed the boat. I am actually looking at DCA monthly but still the price is too high now. Since you mentioned VWRA is correlated to these 2 index, I will just stick with VWRA. Regarding tax reason, is it correct to say the tax on dividend is actually very small as ETF generally pay very little?>

It has been 7% or better retrospectively. That doesn't mean it will be even 7% going forward. I generally use 6% (nominal, U.S. dollar terms) as a long-term projection for the U.S. S&P 500, but I "stress test" using much lower figures.
<Am I right to say it is genarally safe to put money into S&P500 for long term till retirement since the long term projection is 6%? would you even recommend using CPA OA to buy into S&P500 with endowus? Thanks!>
 
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viventa

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<Am I right to say it is genarally safe to put money into S&P500 for long term till retirement since the long term projection is 6%? would you even recommend using CPA OA to buy into S&P500 with endowus? Thanks!>

Past performance is no guarantee of future results. Also, there's an issue of under diversification if you're betting on just 500 large companies (with the 5 big tech giants making up a disproportionately large chunk of the S&P500) listed only on US stock exchanges...
 

BBCWatcher

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Your buying pattern looks fairly good to me. ES3 will throw off some dividends (so will MBH), and you could use those dividends for rebalancing. At your age in your circumstances a target allocation of something like 20% ES3, 15% MBH, and 65% VWRA would make sense to me, and you’re very close to that on the buying side and can get even closer, if you wish, via dividend reinvestments. (I’m assuming some CPF savings are occurring, too.)

The U.S. S&P 500 stocks already make up roughly half of VWRA, so you’re already well covered there. VWRA is domiciled in Ireland so you’re getting Irish dividend tax rates (good) and automatic dividend reinvestments within the fund.
 

polar27

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Any advice if term CI/early CI plans are worth getting, either solely or to complement DII?

Also, can suggest when to sell your stocks, for a person who does not monitor the markets daily? When it grows above/goes below a certain percentage? Or when cash is required?

Thanks :)


OK, so this part means you don't need life insurance of any sort. You don't have any dependents. That's easy.


No, that's silly. If you're fine with public hospital care, then just insure to that level. If you're a Singaporean citizen then I suggest Great Eastern's Supreme Health B Plus, optionally with their Classic-B rider. That's an Integrated Shield plan designed to cover public hospital B1 ward on an "as charged" basis.


If you want DII coverage to 75% then yes, you could buy it all from Great Eastern ("PayAssure"). I believe it's also possible to buy the MINDEF/MHA group DII policy to 50% then "top up" to 75% (+25%) with Great Eastern or with AIA. But please check the policy conditions to make sure that's allowed, particularly Aviva's policy letter. You don't want Aviva to knock down its payout by half (from 50% to 25%) if/when you're also claiming from Great Eastern.

I'm not fond of Aviva's lack of tolerance for periods of unemployment. However, they generally have a relatively low premium. You get what you pay for, I suppose. ;)


I don't think PA is particularly important.


You have no dependents, and evidently you don't have any plans to have any. Are you planning to spend Singapore dollars in your afterlife? That might be hard. :s22:

If you're "forced" to take life insurance in order to get some other policy you actually need and like -- and if the total premium is still attractive -- OK, so be it, but then you'd make that bundled life insurance as small and as inexpensive as allowed.
 

BBCWatcher

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Any advice if term CI/early CI plans are worth getting, either solely or to complement DII?
You wouldn't get either without DII, assuming you're able to purchase DII. Or at the very least I lack the imagination to come up with a scenario when DII is less important than CI or ECI. (If someone has such imagination, please chime in.)

I don't think CI or ECI are particularly important. I wouldn't classify them as genuine insurance necessities.

Also, can suggest when to sell your stocks, for a person who does not monitor the markets daily? When it grows above/goes below a certain percentage? Or when cash is required?
Two major occasions, really:

1. When you're periodically (once or twice a year, for example) rebalancing your portfolio to align with your desired allocations in your particular circumstances, such as your planned retirement date.

2. Yes, when you need to cash for immediate spending, and your stock holding is the best source of funds.

There's another possible reason that doesn't really apply to most residents of Singapore, and that's a sale for tax optimization reasons. For example, if you're getting ready to emigrate to a country with a capital gains tax, it might make sense to sell appreciated stocks before emigrating provided that's actually a legitimate, compliant approach to resetting the cost basis.
 

ChinoGirl

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I have been paying for my mum’s NTUC Enhanced incomeshield advantage rider, and as she goes up the age group, it gets more expensive. I’m paying about $793 for her age group now. She is 62 this year.
She has claimed once when she stayed at TTSH private ward for about 7 days (cannot recall as it was more than 7 years ago) due to a bacterial infection, and the hospitalisation expenses (about 7k) were covered by NTUC.
As with most old folks her age, she doesn’t have adequate insurance coverage (like DI or term etc). I feel that it would be a “waste” to let go of the rider as she could only rely on the private medical insurance for big medical bills.

I’m also paying for the rider for my own Ntuc enhanced incomeshield advantage.

Would like to get your opinion on whether we should continue with the rider. Thank you!
 

BBCWatcher

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I have been paying for my mum’s NTUC Enhanced incomeshield advantage rider, and as she goes up the age group, it gets more expensive. I’m paying about $793 for her age group now. She is 62 this year.
That appears to be the Deluxe Care Rider, which is actually $753 per year. Please correct me if I'm mistaken.

She has claimed once when she stayed at TTSH private ward for about 7 days (cannot recall as it was more than 7 years ago) due to a bacterial infection, and the hospitalisation expenses (about 7k) were covered by NTUC.
Yes, but she may have had the Plus Rider back then. She had the option to switch to the Deluxe Care Rider which requires a 5% co-payment (cash or usually MediSave payable), capped at $3,000 per policy year. So a $7,000 bill at TTSH would result in a $350 co-pay.

There's a Classic Care Rider available which operates pretty much the same way except it's a 10% co-pay, still with a $3,000 per policy year cap. So a $7,000 bill at TTSH would result in a co-pay of $700. The Classic Care Rider costs $322 per year in her age bracket ($431 less). That's quite a big premium difference, isn't it?

As with most old folks her age, she doesn’t have adequate insurance coverage (like DI or term etc).
Actually, DII is term to age 65, typically. So she's not really missing that. Term life insurance is only necessary if she has a dependent, and that's unlikely if you're paying for her Integrated Shield rider. NTUC's Enhanced IncomeShield Advantage plan is their public hospital A ward Integrated Shield plan.

I'd say that next on the list of policies to consider is CareShield Life, which should be available to her starting in mid 2021. (Does she have ElderShield already?) CSL is basically long-term care insurance.

I feel that it would be a “waste” to let go of the rider as she could only rely on the private medical insurance for big medical bills.
Fortunately there's a much lower cost rider that still caps out of pocket costs for covered services at $3,000 per policy year. Another possible option is to shift to NTUC's Enhanced IncomeShield Basic plan, but that's designed to cover public hospital B1 ward (i.e. 4 bedded rooms), not the single bedded room.

I’m also paying for the rider for my own Ntuc enhanced incomeshield advantage.
Same deal, really: if you're on the Plus Rider (a "legacy" rider that's no longer available) or Deluxe Care Rider, you could consider the Classic Care Rider.
 
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Sweetangtang

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Your buying pattern looks fairly good to me. ES3 will throw off some dividends (so will MBH), and you could use those dividends for rebalancing. At your age in your circumstances a target allocation of something like 20% ES3, 15% MBH, and 65% VWRA would make sense to me, and you’re very close to that on the buying side and can get even closer, if you wish, via dividend reinvestments. (I’m assuming some CPF savings are occurring, too.)

The U.S. S&P 500 stocks already make up roughly half of VWRA, so you’re already well covered there. VWRA is domiciled in Ireland so you’re getting Irish dividend tax rates (good) and automatic dividend reinvestments within the fund.

Thanks BBCW! Glad to know I am on the right track.
 

Sweetangtang

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Past performance is no guarantee of future results. Also, there's an issue of under diversification if you're betting on just 500 large companies (with the 5 big tech giants making up a disproportionately large chunk of the S&P500) listed only on US stock exchanges...

Thanks Viventa!
 
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