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Old 23-09-2018, 10:28 AM   #181
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Is this the reason why costs of livings, particularly food and basic necessities are increasing by a lot, but because they are small % components vs items like rental which is dropping (but >90% of Singaporeans don't rent but own their properties), and vehicles prices dropping (but >60% of Singaporeans don't own cars), so the CPI has been distorted to become rising very little when the real basic necessities cost of living is increasing by a lot but the CPI didn't capture it?

Same analogy with CPI.

Big items will move the CPI. Small items like steamed buns won't move the CPI much.

The small caps are unlikely to move the MSCI Singapore Index.
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Old 23-09-2018, 12:30 PM   #182
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Is this the reason why costs of livings, particularly food and basic necessities are increasing by a lot, but because they are small % components vs items like rental which is dropping (but >90% of Singaporeans don't rent but own their properties), and vehicles prices dropping (but >60% of Singaporeans don't own cars), so the CPI has been distorted to become rising very little when the real basic necessities cost of living is increasing by a lot but the CPI didn't capture it?
if u think about it, one of the main reasons why food costs are going up is mainly still because of rental.

many hawkers and f&b stalls are unable to sustain due to high rental costs, so when they can't think of anything else to help increase their income, they can only resort to increasing their prices.

Thats why in those very old market food centres, usually a lot of stalls only open on weekday mornings and afternoons and closed at nights and on weekends. Why are they able to do this and yet sustain? Because some of them are the stall owners themselves and had bought over the stall many many years ago, compared to people who are only starting out now and have to pay hefty rental fees.
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Old 24-09-2018, 09:30 PM   #183
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but it's the small items that matter to most of us. we may not change car frequently but we do need to eat bun/rice daily.

calculating personal CPI compared previous price result in big inflation figures for small items.

am thinking of comparing with annual budget instead which should be able to show percent changes in annual budget required

Same analogy with CPI.

Big items will move the CPI. Small items like steamed buns won't move the CPI much.

The small caps are unlikely to move the MSCI Singapore Index.
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Old 24-09-2018, 09:33 PM   #184
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never eat at kopitiam, crazy prices
hope NTUC bought over to control food prices to more reasonable level
Kopitiam Cai Png 2vege 1meat in my place increased from $3.2 to $3.7 to $4.2 in just 3 years...thats 50cents increament yearly.. half the kopitiam stalls are empty. Cai Png queue reduced drastically. No surprise they allow themself to be bought by NTUC. Business very bad.
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Old 25-09-2018, 07:38 AM   #185
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Hi, i will like some advice from experts here.

I am 40yrs w/ wife and 2 kids, earning 170k per annum. Net worth currently is abt SGD 3.2M in total. Breakdown as follows:

- Sg investment ppty SGD 1.4M, rental income of 3K per month, fully paid
- Oversea investment ppty SGD 1.2M, fully paid
- Sg Primary residence SGD 1.3M but with loan of 900K
- Cash in bank SGD 70K
- CPF SGD 180K
- Term insurance covered for self and spouse, including medical.

How can i continue to grow my net worth? I feel that my options are limited save for slogging till 62 (if i am lucky).
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Old 25-09-2018, 09:02 AM   #186
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Hi, i will like some advice from experts here.

I am 40yrs w/ wife and 2 kids, earning 170k per annum. Net worth currently is abt SGD 3.2M in total. Breakdown as follows:

- Sg investment ppty SGD 1.4M, rental income of 3K per month, fully paid
- Oversea investment ppty SGD 1.2M, fully paid
- Sg Primary residence SGD 1.3M but with loan of 900K
- Cash in bank SGD 70K
- CPF SGD 180K
- Term insurance covered for self and spouse, including medical.

How can i continue to grow my net worth? I feel that my options are limited save for slogging till 62 (if i am lucky).
You should borrow against your investment property and pay off your residence mortgage as your interest payment for your investment property can be offset against your rental income for income tax

Is your overseas property giving any yield or return?
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Old 25-09-2018, 09:27 AM   #187
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My overseas ppty is not giving any rental yield at the moment.

Can you elaborate more on the borrowing against my investment ppty to have income tax impact?

As of now, my rental income is used to offset the mortgate instalments for the residence ppty.
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Old 25-09-2018, 09:42 AM   #188
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First of all, congratulations on being a multi-millionaire at age 40.

To a first order approximation, youíve poured practically your entire savings into three individual pieces of real estate, and youíre now looking around wondering why you arenít wealthier. Well, you took a giant gamble, actually, by pushing all your chips into real estate ó and in three specific spots on the globe, two in Singapore. In Singapore the government takes the view that real estate is for living, working, playing, etc. Itís not for speculation, and to the extent itís for investment those investment gains will be strictly capped, by government policy. So the government uses all sorts of policy levers to make sure that you donít profit ďtoo muchĒ from real estate, including stamp duties, property tax, and income tax. Real estate investing is the most heavily taxed passive income activity in Singapore, by far, and just this past July the government raised ABSD again.

....So you see where Iím going with this? You might want to diversify at least a bit, and pick one or a couple other horses to ride alongside your real estate holdings.

Malthead has an interesting idea. Since mortgage interest is an allowable deduction, it could help you save some income tax on your rental income. But I disagree with his/her idea to accelerate repayment on your primary residenceís mortgage. Thatís a separate decision, and at current low interest rates ó while they are low ó I donít think thatís a smart idea. Not when even Singapore Savings Bonds (SSBs) and Ordinary Account yields are outrunning bank interest rates (SSBs from year 2 onward). When the government is guaranteeing a yield thatís higher than your mortgage rate, itís really not smart to repay that mortgage any faster than you need to. You just put those extra dollars in some higher yielding savings, and as long as the yield is higher, you pocket that profit. This assumes that you actually do prudently and responsibly save those spare dollars.

Anyway, those are the broad outlines here. Maybe, yes, itíd make sense to juggle the mortgage to save some tax, and most probably youíre way, way too heavily concentrated in real estate (and in Singapore) and need to be in a more diversified investment posture at least for the next 20+ years.
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Old 25-09-2018, 11:32 AM   #189
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Thanks BBC for the sound advice.

I am still comtemplating how to invest the SGD 70k in cash right now. Knowing full well that some of which needs to be kept as contingency for rainy days.

As it is, it looks like paying off the principle amount is not recommended. However what if interest rates were to raise in the short to medium term? Will this be a considering factor??
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Old 25-09-2018, 12:31 PM   #190
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Hi, i will like some advice from experts here.

I am 40yrs w/ wife and 2 kids, earning 170k per annum. Net worth currently is abt SGD 3.2M in total. Breakdown as follows:

- Sg investment ppty SGD 1.4M, rental income of 3K per month, fully paid
- Oversea investment ppty SGD 1.2M, fully paid
- Sg Primary residence SGD 1.3M but with loan of 900K
- Cash in bank SGD 70K
- CPF SGD 180K
- Term insurance covered for self and spouse, including medical.

How can i continue to grow my net worth? I feel that my options are limited save for slogging till 62 (if i am lucky).
You are the expert and people should learn from you. 2 investment properties valued at 2.6m plus your own residence at age 40 and 170k pa income

If you are a successful property investor then you should carry on and do what you have been doing...
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Old 25-09-2018, 12:58 PM   #191
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As it is, it looks like paying off the principle amount is not recommended.
Right.

However what if interest rates were to raise in the short to medium term? Will this be a considering factor??
Sure. IF AND WHEN a mortgage gets too expensive relative to prudent alternatives, accelerate repayment. In the meantime, get that much wealthier while you can so that'll be that much easier to pay off the mortgage if and when that event occurs.

If you're ultra conservative you could park most of the $70K in SSBs, which is a terrific emergency reserve fund combined with your CPF OA (for mortgage servicing). Then use spare cashflow (total income less normal monthly spending) to dollar cost average into something reasonable and prudent that isn't real estate, or a couple somethings. Why not real estate? Because real estate already represents >92% of your wealth if my math is right. You're also heavily Singapore weighted at present, so you might want to pick something global. (And as you pay down your $900K mortgage you'll get more Singapore concentrated, other things being equal.)

....OK, now for a bit of "bad" news. The U.S. stock market is roaring, setting new records. If you were trying to time global stock markets -- not recommended, but if you were -- this isn't the ideal moment in time to pick. So I wouldn't do anything aggressive, such as dump all $70K of your bank account in stocks. Instead, I'd take the next 15+ years and push some monthly savings into IWDA (or VWRD), keep it up, and leave it at that. Having $70K on hand in SSBs seems reasonable to me. If there's a market correction -- something I think is likely at some point -- great, your dollar cost averaging should pick up cheaper stocks quite nicely. You really should be hoping for a falling global stock market, because you don't own any stocks right now.

You can also look for tax reduction opportunities. In addition to Malthead's idea (which might make sense, especially if interest rates drift higher), you could take a look at CPF and SRS top-ups once you feel a little more comfortable about defending your $900K of mortgage. Don't forget the CDA matching funds if you and your child(ren) qualify for those. Maxing out the government's free matching CDA money is well worth doing.
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Old 25-09-2018, 01:00 PM   #192
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Right.


Sure. IF AND WHEN a mortgage gets too expensive relative to prudent alternatives, accelerate repayment. In the meantime, get that much wealthier while you can so that'll be that much easier to pay off the mortgage if and when that event occurs.

If you're ultra conservative you could park most of the $70K in SSBs, which is a terrific emergency reserve fund combined with your CPF OA (for mortgage servicing). Then use spare cashflow (total income less normal monthly spending) to dollar cost average into something reasonable and prudent that isn't real estate, or a couple somethings. Why not real estate? Because real estate already represents >92% of your wealth if my math is right. You're also heavily Singapore weighted at present, so you might want to pick something global. (And as you pay down your $900K mortgage you'll get more Singapore concentrated, other things being equal.)

....OK, now for a bit of "bad" news. The U.S. stock market is roaring, setting new records. If you were trying to time global stock markets -- not recommended, but if you were -- this isn't the ideal moment in time to pick. So I wouldn't do anything aggressive, such as dump all $70K of your bank account in stocks. Instead, I'd take the next 15+ years and push some monthly savings into IWDA (or VWRD), keep it up, and leave it at that. Having $70K on hand in SSBs seems reasonable to me. If there's a market correction -- something I think is likely at some point -- great, your dollar cost averaging should pick up cheaper stocks quite nicely. You really should be hoping for a falling global stock market, because you don't own any stocks right now.

You can also look for tax reduction opportunities. In addition to Malthead's idea (which might make sense, especially if interest rates drift higher), you could take a look at CPF and SRS top-ups once you feel a little more comfortable about defending your $900K of mortgage. Don't forget the CDA matching funds if you and your child(ren) qualify for those. Maxing out the government's free matching CDA money is well worth doing.
Very great point here, thank you for sharing. I am always curious to hear on someone's else thoughts about net worth and all, more on a personal level and not like a celebrity status.
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Old 25-09-2018, 02:26 PM   #193
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Can i ask as a noob how to subscribe to SSB? And to monitor the interest rates being offered?
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Old 25-09-2018, 02:29 PM   #194
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Can i ask as a noob how to subscribe to SSB? And to monitor the interest rates being offered?
http://www.sgs.gov.sg/savingsbonds/Y...nths-bond.aspx
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Old 25-09-2018, 02:40 PM   #195
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Solid link! Thanks!
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