Retirement Planning

[ELKYme]

I can understand your fear in investing as the 320K saved to date is hard earned through blood & tears.
Look thru my thread “stay vested and be rewarded”, it has information within that will give you the confidence to overcome this fear.

AFTER doing up the masterplan, start putting your current savings (320k) to work Immediately. It’s “lazy money” doing little in building wealth.

Now’s the time to use the wonderful investment options suggested by many here (eg: read Shiny things & BBC thread) to grow your wealth faster.
Start investing your savings as well as your monthly income into the allocation that make up your portfolio.

Disclaimer: Not adverting my other thread, it will indeed provide TS with the confidence to start investing.

 

[Toni90]

Of cos no. She don't mind hdb even.

Then you can buy 2 resale condo now. One for stay, one for rent. Buy them near from each other to manage it easily. Now quite easy to find 1,2 good condo near from MRT.

The condo you currently eyeing must buy car as public transport is not very good there.

 

[ocs_woodlands]

Then you can buy 2 resale condo now. One for stay, one for rent. Buy them near from each other to manage it easily. Now quite easy to find 1,2 good condo near from MRT.

The condo you currently eyeing must buy car as public transport is not very good there.

Not a good choice at all.

If one can, keep the HDB & use it as a yield instrument. It's a lot easier to achieve >5% for HDB then 3% on condos..

 

[SBC]

Mai tu Liao, TS.

Very comfortable high income to get investment property.

 

[BuiBuiZai]

ELKYme, me have finished reading your thread. Yes I understand shares bonds cpf is worth vesting in and will surely be doing so. But property investment is a form of investment too. Question is whether I should go into which one first with my current financial position.

This is something I don't really see it in money mind being discussed. I might have missed it since I'm only exposed to hwz this week.

Bbcworld and shinythings thread is full of information but there is just too many post for me to digest within a short time. Not sure if they posted info pertaining to property investment in their thread too.

While I agree in retirement master plan drafting is impt to ascertain the level of money required during retirement. One can still continue to invest without such master plan for the time being.

You're in the opinion that shares and bonds investing is better than property purchase at this point of time for my case specifically in relation to me wanting to retire 20 years from now?

In general, I'm still unable to decide whether I should go ahead with the property purchase despite the many kind soul here that had responded to my thread.

I did not post my dilemma in bbcw or ST thread worried that it might be inappropriate. I do hope that they spend some time in replying to my thread of cos.

 

[JuniorLion]

All we need now is the guy who made +99.77% CAGR on FH CCR to come in. I've just summoned him. He'll be here shortly to convince you.

 

[ELKYme]

Oh, I see, that case your main concern is whether you should be investing in property with your current finances and secondary concern is if this purchase will jeopardise your retirement, correct?

The 2 threads that I recommended has info. on:
1) % of local/overseas ETFs for ideal exposure.
2) % of stocks~bonds ratio (balance for protection).
3) The hows to invest in those ETFs.
4) Not much info on property investment though.

Other than property, if your other option is just investing in STI in the manner you describe, than I would encourage you to get the property.

ELKYme, me have finished reading your thread. Yes I understand shares bonds cpf is worth vesting in and will surely be doing so. But property investment is a form of investment too. Question is whether I should go into which one first with my current financial position.

This is something I don't really see it in money mind being discussed. I might have missed it since I'm only exposed to hwz this week.

Bbcworld and shinythings thread is full of information but there is just too many post for me to digest within a short time. Not sure if they posted info pertaining to property investment in their thread too.

While I agree in retirement master plan drafting is impt to ascertain the level of money required during retirement. One can still continue to invest without such master plan for the time being.

You're in the opinion that shares and bonds investing is better than property purchase at this point of time for my case specifically in relation to me wanting to retire 20 years from now?

In general, I'm still unable to decide whether I should go ahead with the property purchase despite the many kind soul here that had responded to my thread.

I did not post my dilemma in bbcw or ST thread worried that it might be inappropriate. I do hope that they spend some time in replying to my thread of cos.

 

[ELKYme]

Here’s why:
1) You’ve never bought shares before, your intention to “buy-in” if market is down 30%-50% and do averaging if market deteriorate further, will never be executed. Because IF the market do drop 30%, you’ll be too scared to buy. Even if you really bought, you would not do averaging-down if it drops another 20%. -Trust me, not many people have the nerve to do this, especially 1st-timers like yourself.

2) It’s such a waste having 320k sitting sideline and earning a paltry 2% where you actually have 20 years to make it grow.

Possible to provide the amount you’re comfortable to use from your monthly income to finance this property? This figure should not include savings budgeted for children’s higher education (current plan of 160k which matures in 17 years time is DEFINITELY insufficient)

Only with this monthly figure can we can share ideas and discuss on how you can purchase this property most prudently.

 

[BuiBuiZai]

All we need now is the guy who made +99.77% CAGR on FH CCR to come in. I've just summoned him. He'll be here shortly to convince you.

Nono. I'm not looking for specific property at specific time... To do this we can also pick a high performance stock that has share price increasing few folds compared to 5 to 10 years ago. That's not what my original intend is.

If I were to go ahead with shares and bonds, very unlikely me will go for leveraging. Whereas for property, I have no choice but to take up a loan thus magnifying my actual gain/loss.

If buying property is a good choice, next question is for the first 25% how much cash/cpf should I use. Also for the monthly repayment does it make sense to repay by cash.

I used cash for hdb purchase to avoid cpf accrued interest, looking back this seems not a wise choice?

I'm oso unsure if I made a mistake in fully paying my hdb in year 4. Of cos I did this before the new cooling measures hoping to retain hdb n buying 2nd property and renting out the hdb while shifting to new purchase. With the new absb, it does not make alot of sense to retain the hdb now.

I hope I'm not deviating from my original post. Me still hope some guru to advice if going for a condo purchase prior to shares n bonds investing is a wise choice with my current finances.

 

[Knight_Rider]

I post in #11. We can take it from there or you can ignore it

 

[BuiBuiZai]

I post in #11. We can take it from there or you can ignore it

What is low expense investment? I'm a noob and not sure what you're driving at. Can you elaborate abit? Thanks

 

[JuniorLion]

I used cash for hdb purchase to avoid cpf accrued interest, looking back this seems not a wise choice?

Wise choice. Your OA is earning a nice +2.5% interest.

I'm oso unsure if I made a mistake in fully paying my hdb in year 4. Of cos I did this before the new cooling measures hoping to retain hdb n buying 2nd property and renting out the hdb while shifting to new purchase. With the new absb, it does not make alot of sense to retain the hdb now.

Decouple and use 1 person's name to buy the second property to avoid the ABSD.

I hope I'm not deviating from my original post. Me still hope some guru to advice if going for a condo purchase prior to shares n bonds investing is a wise choice with my current finances.

Equities (i.e. Global ETFs) may have good returns. See this post: https://forums.hardwarezone.com.sg/stocks-shares-indices-92/iwda-etf-one-best-etf-5781627.html

If you *MUST* invest in property, then go for FH, no less. 99-leasehold you need to time the market to sell it (e.g. within 10-15 years) or else you'll be holding on to decaying leases.

 

[BuiBuiZai]

Here’s why:
1) You’ve never bought shares before, your intention to “buy-in” if market is down 30%-50% and do averaging if market deteriorate further, will never be executed. Because IF the market do drop 30%, you’ll be too scared to buy. Even if you really bought, you would not do averaging-down if it drops another 20%. -Trust me, not many people have the nerve to do this, especially 1st-timers like yourself.

2) It’s such a waste having 320k sitting sideline and earning a paltry 2% where you actually have 20 years to make it grow.

Possible to provide the amount you’re comfortable to use from your monthly income to finance this property? This figure should not include savings budgeted for children’s higher education (current plan of 160k which matures in 17 years time is DEFINITELY insufficient)

Only with this monthly figure can we can share ideas and discuss on how you can purchase this property most prudently.

1. Yes, it is difficult but i have my own bro did it successfully and i believed i will bite the bullet and do the same even if it continues to drop after my initial entry. I do believe in DCA.

2. I dunno how to simulate the CAGR if i were to consistently put in say 3k into STI on a monthly basis 5 years ago to see what i have missed out by gainning a 2% yield in bank deposits.

4k cash household mothly repayment is what i can comfortable do, this value is derived w/o bonus. So far variable bonus on average is about 50k p.a which i do not want to consider as this is dependent on company performance. This 4k has to take into shares n bonds investment moving forward. Variable bonus received can then be put into partial property loan redemption or share n bond purchases.

Thank you for putting in time to reply to my concern! Appreciate

 

[Knight_Rider]

What is low expense investment? I'm a noob and not sure what you're driving at. Can you elaborate abit? Thanks

Can you afford to spent 19 years investing in a loss.

https://www.edgeprop.sg/property-news/hefty-loss-incurred-despite-19-year-holding-period

District !0. Very prime district. And yet make a loss. We always stress on location location location but how much better in location we can chose from D10.

I already say your endgame is capital appreciation like everybody else. You can choose the expensive way with no guarantee or a wiser route which is cheaper.

Expensive I already stress. You pay loan, property tax,income tax, ABSD, maintenance (fees unit roof wadever). Can the value double like before is another risk.

 

[ELKYme]

I’m a little confused, will u consider more options other than:
1) Property
2) Shares only from STI?

The part about using cash for your HDB purchase is actually a great decision.

Whatever your final investment decision is, as you already have sufficient cash for downpayment (320K), I would still recommend:
1) You proceed to transfer funds from your OA to SA for yourself till FRS. (Int. on housing loan is still <2%, SA yield is 4%).
2) Your spouse proceed to transfer OA to SA the max amount though it’s still not sufficient to hit FRS.

This will go a long way in building your retirement nest egg because of the 4% compounding effect.

 

[BuiBuiZai]

Can you afford to spent 19 years investing in a loss.

https://www.edgeprop.sg/property-news/hefty-loss-incurred-despite-19-year-holding-period

District !0. Very prime district. And yet make a loss. We always stress on location location location but how much better in location we can chose from D10.

I already say your endgame is capital appreciation like everybody else. You can choose the expensive way with no guarantee or a wiser route which is cheaper.

Expensive I already stress. You pay loan, property tax,income tax, ABSD, maintenance (fees unit roof wadever). Can the value double like before is another risk.

Now i understood better... Shares + bonds trading is a wiser choice vs property investment as it is a cheaper form of investment as the expenses are lower compared to property investment. Furthermore property investment is effectively timing the market as one enters in a specific time and w/o DCA avenue and with no diversification in place since 1 is unable to buy multiple property usually.

Appreciate and will seriously consider your comments.

 

[ELKYme]

For 1&2, why must it be only STI? Why not get more exposure? Even if it’s Just STI, are u buying specific shares or STI ETF. (ES33)

For 3, As you have said, buying a property is a form of leveraging. If your monthly re-payment comfort zone is 4K/month, the maths just don’t make sense for a 1.5 million property purchase at this moment.

1. Yes, it is difficult but i have my own bro did it successfully and i believed i will bite the bullet and do the same even if it continues to drop after my initial entry. I do believe in DCA.

2. I dunno how to simulate the CAGR if i were to consistently put in say 3k into STI on a monthly basis 5 years ago to see what i have missed out by gainning a 2% yield in bank deposits.

4k cash household mothly repayment is what i can comfortable do, this value is derived w/o bonus. So far variable bonus on average is about 50k p.a which i do not want to consider as this is dependent on company performance. This 4k has to take into shares n bonds investment moving forward. Variable bonus received can then be put into partial property loan redemption or share n bond purchases.

Thank you for putting in time to reply to my concern! Appreciate

 

[BuiBuiZai]

I’m a little confused, will u consider more options other than:
1) Property
2) Shares only from STI?

I'm open to all and willing to learn and explore

The part about using cash for your HDB purchase is actually a great decision.

Whatever your final investment decision is, as you already have sufficient cash for downpayment (320K), I would still recommend:
1) You proceed to transfer funds from your OA to SA for yourself till FRS. (Int. on housing loan is still <2%, SA yield is 4%).
2) Your spouse proceed to transfer OA to SA the max amount though it’s still not sufficient to hit FRS.

This will go a long way in building your retirement nest egg because of the 4% compounding effect.

Good suggestion, did not think of this previously and would have benefited from it previously but i did top up 7k p.a to my SA to enjoy tax savings and i just did a quick simulation and it no longer make sense for me to do now (comparing the extra interest gain in SA vs the tax savings i will be getting). Will definitely be doing for my wife

For 3, As you have said, buying a property is a form of leveraging. If your monthly re-payment comfort zone is 4K/month, the maths just don’t make sense for a 1.5 million property purchase at this moment.

Can elaborate why the maths does not make sense at this moment?

 

[Knight_Rider]

Other then the tax savings there is no incentive to top up SA.

 

[BuiBuiZai]

Other then the tax savings there is no incentive to top up SA.

The 4% interest. Better than my current 2% interest in bank. For retirement wise for my situation is worthwhile.