Retirement Planning

[existential_reality]

I can't say I wholeheartedly agree but with property nothing is a sure thing so I'll agree to disagree, but in a broad sense the market has been rising for the last 10 years straight with low interest its hard to say if we are due for a continued moderate rise or a correction and then rise and if it were the latter you prob need to time the market or find a suitable investment that can weather a possible storm.

Bearing in mind if you are looking to buy now you be burdening yourself with more debt choose the wrong investment and you might still be paying for it 20 years down the road (i.e like people who invested in 1997) so make sure you consider the right property investment is all I'm saying.

I'm somewhat vested in the West area i.e Pasir Panjang/Lab Park, I bought a old freehold apartment in 2009 @ $700- $750 psf that time the market was spooked there was only two viewers myself included, recently I bought an freehold industrial unit around the same area for about $750 - 800 psf both are within 5-10 mins from the MRT.

Prior to buying I calculated given the location/freehold status/proximity to mrt etc if the market took a really really bad hit I would lose at most $100 - $150 psf which was acceptable risk. So if this is gonna be part of your retirement portfolio I would suggest you do a similar exercise.

Statistics provided by property agents shows that leasehold has higher upside than freehold for the last 10~20 years. This is the reason why i don't mind going for a 99 years leasehold.

 

[BBCWatcher]

I can't say I wholeheartedly agree but with property nothing is a sure thing so I'll agree to disagree, but in a broad sense the market has been rising for the last 10 years straight....

No. that's not what the actual URA data show. Nominal real estate valuations in Singapore gently rose until early 2013, declined until late 2017, then gently rose again to the present. HDB resale units have performed somewhat less well over the same timespan. It's too early to judge the full impact of the ABSD and LTV changes in July, 2018, but it's reasonable to forecast that they, along with rising interest rates, will be significant headwinds for some period of time.

 

[existential_reality]

Well when I say broad sense I mean most people would made money during this period if they purchased reasonable properties. i.e not Sentosa cove properties, high end luxury properties, overpriced new launched properties etc.

But its a general statement anyway to emphasis the ts should consider the general market trend and how value for money the property he is considering. TS should be able to form his own reasonable calculations based on the available data.

No. that's not what the actual URA data show. Nominal real estate valuations in Singapore gently rose until early 2013, declined until late 2017, then gently rose again to the present. HDB resale units have performed somewhat less well over the same timespan. It's too early to judge the full impact of the ABSD and LTV changes in July, 2018, but it's reasonable to forecast that they, along with rising interest rates, will be significant headwinds for some period of time.

 

[mummy1234]

Sg is a good place to work and earn money but too expensive to retire in for most.

Above 50 years old, I would recommend the Sarawak MM2H scheme. Then can live anywhere in Malaysia and be close to family atvthe same time.

But must check that still can get cpflife and medishield life.

Do do yr own due diligence.

 

[BBCWatcher]

Well when I say broad sense I mean most people would made money during this period....

That's not at all special! A monkey could have experienced a nominal gain depositing funds in a fixed deposit, for example.

Such assessments should properly be based on comparisons of real returns, net of all costs and taxes, across a range of investment choices. Over that particular timespan, real net total real estate returns in Singapore were, at best, mediocre relative to other possible investment choices.

 

[existential_reality]

Lol BBC I think you are reading too much into this, my statement is for TS to have think about how much property has risen over the years and consider if buying now and obtaining a return in 10/20 years time is realistic given he also buying a new launch property. It is not about property vs equity etc etc returns over a period of time etc etc or how special people where to make that money.

Anyway property investment has its own merits, the illiquidity of the assets forces people to hold it during tough periods (assuming they have holding power) whereas if it were stock they might have sold at the low and lost their retirement savings. (Most investors are just regular folk after all)

When you say real estate returns what sort of returns is this in relation to?
I've known investors who eke out 8 - 10% (even 15%) rental return. For example an associate converts industrial spaces to shared office work space (URA grey area) (7 - 8% return), 1 guy turn a 1400 sq feet apartment into 8 rooms with ensuite toilets and rented out to students (about 8 -10 %). Another one got URA to approve conversion a of warehouses to worker dormitories (12 - 15%). My own industrial investments return me roughly gross 11.9% yield or 5.3% if adjusted to current market value.

Property investment is not a one size fits all deal. There are so many kinds of properties investment from Residential condos, industrial B1/B2, Food Factory, Warehouses, Cold storage warehousing, Retail shops, HDB Shophouses, Coffeeshops, Geylang whorehouses, KTV lounges etc and multiple variation of squeezing out rental income (i.e above) I can't see how one can lump everything under property returns and declare it as below par.

That's not at all special! A monkey could have experienced a nominal gain depositing funds in a fixed deposit, for example.

Such assessments should properly be based on comparisons of real returns, net of all costs and taxes, across a range of investment choices. Over that particular timespan, real net total real estate returns in Singapore were, at best, mediocre relative to other possible investment choices.

 

[JuniorLion]

BBCW, could you please kindly advise what kind of returns you have achieved with stocks and other investments over past 20 or 30 years (so much so that you claimed "real net total real estate returns in Singapore were, at best, mediocre relative to other possible investment choices")?

From what you have written, you seem like a novice investor, read too much books and theory but yet have very little experience in earning high investment returns, is this so?

Let me share with you my experience, and a FACTUAL one, about investment about property.
In 2009, I bought a property for $2M, paying only 20% downpayment for it or $400k (that is my invested capital).
Now, in 2018 or 9 years later, this property now has a market value of $3.4M. After netting all costs and adding a net rental of about $300+k, that means my profit for now = ($3.4M - 2M - 0.06M + 0.3M) = $1.64M.
With an investment capital of $400k and making a profit of about $1.64M over 9 years, so my CAGR return is about = 26.62% p.a.!!!

Now, BBCW, tell us, have you ever achieved anything even barely close to that kind of CAGR return or 26.62% p.a. from investing in stocks or other investments?
If not, then the facts just shows that you are dead wrong indeed and in reality, properties give so much much higher sustainable returns than stocks and your so called other possible investment choices (contrary to what you are preaching here)! Obviously, we are not going to compare to futures and options' super high returns (which are never sustainable over the long term of 20 years or more!).

And could you kindly advise what kind of returns you have achieved with stocks and your so-called other investment choices over past 20 or 30 years so far? It is very important for you to answer this question of mine so that we can understand the context you are speaking from. Otherwise it just goes to show that you are just making empty talks, and we can just ignore you from now onwards.

Two things:
a) You didn't sell your property, so your 'market value' is paper gain.
b) Sample size n = 1.

 

[mummy1234]

No. that's not what the actual URA data show. Nominal real estate valuations in Singapore gently rose until early 2013, declined until late 2017, then gently rose again to the present. HDB resale units have performed somewhat less well over the same timespan. It's too early to judge the full impact of the ABSD and LTV changes in July, 2018, but it's reasonable to forecast that they, along with rising interest rates, will be significant headwinds for some period of time.

I bought my freehold terrace in 2010 for S$1.1 mil and sold it for S$1.82 mil in 2018. I think that is pretty good returns over the last 8 years. Though I could have sold it for the same price in around 2013/2014.

After I sold, valuations for it continued to rise, if I waited a few mths more, could have sold it for S$1.9+ mil according to srx valuations.

And with leveraging and using my other MM condo rental to help pay for the instalment, my upfront cost is not a lot. Also used equity loan against it to buy a freehold JB semid.

After selling it and the MM, we bought a freehold 3 bedder PC and can pay in full hence achieving financial security for ourselves since we can now theoretically rent out the PC for S$2800 and retire in JB as a couple. Our kids can continue to study in Sg. So now we have this JB back up plan . We feel less stressed and not so worried about retrenchments etc.

Retrenchment is very real in Sg. One must prepare for it....

So much as CPF is good, we cannot keep topping it up as u recommend, we need standby emergency cash. Cash is king. No point feeling rich on paper looking at our CPF statements whild struggling to make ends meet till CPF payout date. Which now one study says, cpf withdrawal date may be pushed back in view of rising longevity. Something I contributed to ie the rising longevity....

 

[BBCWatcher]

I bought my freehold terrace in 2010 for S$1.1 mil and sold it for S$1.82 mil in 2018. I think that is pretty good returns over the last 8 years. Though I could have sold it for the same price in around 2013/2014.

After I sold, valuations for it continued to rise, if I waited a few mths more, could have sold it for S$1.9+ mil according to srx valuations.

OK, that's the gross capital delta. Net total returns are, of course, lower. There were transaction costs on both ends, significant custody costs (including property taxes, insurance, and maintenance/upkeep, including the value of your time in managing the property), and some distributions (in the form of taxable rental income or imputed rent with occupation). A mortgage has costs too, of course. To do a proper analysis and comparison you would have to account for these real factors, and that's quite difficult to do (which is why a lot of people don't understand real estate). Then convert nominal dollars to real dollars.

Now let's turn to an asset class that has comparable risk and look at its "headline" figures. If we look at the U.S. S&P 500 and compare mid-2010 to mid-2018, and assume dividend reinvestment (which I can assume because the data are at my fingertips), on a gross nominal basis S$1.1 million would have turned into about...S$3.2 million over that same timespan. There too some adjustments are properly required to understand net total real returns, but the adjustments are easier to make. There too there are buying and selling costs (currency conversion and broker commissions, but no stamp duties, no advertising, no closing costs, and no real estate agent commissions), carrying costs (a fund manager's annual fee of about 0.2%, any interest cost if this is a leveraged bet), taxable distributions (15% dividend withholding tax), and of course converting nominal to real dollars and adjusting for currency (which didn't change much over that period).

I could toss around "headline" figures of S$1.1 million and S$3.2 million over 8 years. But what's the point? It's not real, and nor are the headline figures you cite. They are bragging and boasting about two mere inputs into a careful, meaningful calculation. And they are not impressive inputs.

Shiny Things is often fond of saying that real estate has the risk characteristics of stocks with the total return characteristics of bonds. I would add that it has the liquidity characteristics of collectibles, such as fine art. As an investment, the "headline" figure of S$1.1 to S$1.82 million on a particular property from 2010 to 2018 is just not that impressive compared to the available alternatives of comparable risk. But OK, congratulations, you probably made a real net total return. I guess that's something.

And now you really head off the rails....

Cash is king.

Which is not real estate. Direct holding of individual properties is lumpy and illiquid. If you want to hold liquid cash for whatever reason(s), real estate isn't it.

Over an 8 year span, $100,000 in a CPF Special Account, Retirement Account, or Medisave Account grows to $136,856.91. That's excluding bonus interest (which increases that figure), and it's still a nominal figure, but there are zero transaction costs, zero carrying costs, zero taxes (well, for most of you -- indeed there's tax relief which isn't counted in that figure).... Do the math, carefully, and you'll see just how impressive that is, and with practically zero risk.

Yes, lots and lots of people toss around "headline" real estate figures in this forum to brag about them. They are just not impressive, I'm afraid. Which is not at all the same thing as saying you shouldn't buy an owner-occupied home. My view is you should be well diversified. If you'd like to buy a home and can afford it, no problem! You should take advantage of CPF, too. AND you should invest in some stocks and bonds, in a prudent and age appropriate way, doggedly and in low cost fashion. You might be an investment extremist and enjoy gambling everything on one comparatively low yielding and still risky asset class, but that's not what I recommend, not generally anyway. (I might make an exception for CPF, which is not low yielding, for somebody age 58, for example, who has not yet established meaningful retirement income security. Yes, then it makes sense to be "extreme" and to get a lot of funds pushed into CPF.)

 

[Knight_Rider]

Wah essay sia. Let's look at some numbers can we. A picture is worth a thousand words or we have to assume all the gurus are from Interactive Brokers who champion theory. You guys know the Singapore context (and law) better then the locals wow.(from the Temasek bond)

 

[mummy1234]

Wah essay sia. Let's look at some numbers can we. A picture is worth a thousand words or we have to assume all the gurus are from Interactive Brokers who champion theory. You guys know the Singapore context (and law) better then the locals wow.(from the Temasek bond)

Ya lor, BBCW and Shinythings r not local Sgpn but they want us to believe them and teach us how to use our own money. I say follow yr gut instinct better.
They don't understand that there is no longer iron ricebowls i Sg and that we need more cash as security.

 

[Knight_Rider]

Small boy Mike from day 1 like to use the salesman trick. I prefer the term Interactive Brokers.

 

[Knight_Rider]

Ya lor, BBCW and Shinythings r not local Sgpn but they want us to believe them and teach us how to use our own money. I say follow yr gut instinct better.
They don't understand that there is no longer iron ricebowls i Sg and that we need more cash as security.

Shiny small boy lah. Poke people can. Kena poke call people troll. Oh and he haven't answer my question yet.

https://forums.hardwarezone.com.sg/...-investing-$500k-lump-sum-etfs-5911708-4.html


So again theory they champion but comes to actual execution all run away.

 

[mummy1234]

Shiny small boy lah. Poke people can. Kena poke call people troll. Oh and he haven't answer my question yet.

https://forums.hardwarezone.com.sg/...-investing-$500k-lump-sum-etfs-5911708-4.html


So again theory they champion but comes to actual execution all run away.

You earn from forex too? I attended a free class before and was taught that options r safer as forex can have unlimited loss?

Is that true?

 

[Knight_Rider]

You earn from forex too? I attended a free class before and was taught that options r safer as forex can have unlimited loss?

Is that true?

I trade forex but that is not my question. Option must ask Mike. He expert sia. Put put here call call there take money. He is the person to go to.

My question to shiny is the Fx risk of buying a US$ etf. US dollar is rising so is etf price. So when US$ tank and mkt dip how will the last in units affect the account. This type of question I am open to constructive discussion as we are all here to learn.

 

[Knight_Rider]

You earn from forex too? I attended a free class before and was taught that options r safer as forex can have unlimited loss?

Is that true?

You are right in a way. Esp gold easy profit. But forex learn from trader better. Candlestick dun happen immediately and you need their experience to have more insight. The levels entry exit very important. You ask those course speakers the right side of the chart many or should I say 99% cannot tell you what the candles will look like. Then I simply ask "How you trade"? Support resistant also can break then how?

Ok Mike will soon say I earn $500 a day why I am still here. I would like to ask him put put where call call where and how to sit down and collect money.

Also no need to go to the other forex thread in Stock unless you like KFC or you got bottomless wallet.

 

[celtosaxon]

Agree with all points made by BBCW on property as an investment (ok, maybe the liquidity comparison with fine art was a little extreme, but the point made about the lack of liquidity is 100% spot on).

Singapore property market has actually lagged other major global cities in the world, which is not surprising given all the efforts made to keep prices from rising.

The majority of Singapore properties here are leasehold, so you’ve also got long term depreciation risk that many here dismiss or ignore... sometimes to their detriment. Don’t forget to add in policy risk. Cooling measures - who knows what might be next.

Stock market returns always outperform property market returns in the long run.

The one advantage with property investments is leverage. You don’t need to cough up the entire $1.1m for the chance to earn $0.7m. I think that is the #1 appeal for property investors here... the potential to make a return on a large amount of money that doesn’t belong to you.

 

[Knight_Rider]

My father bought his HDB $30K. Now have to add 1 more zero. What depreciation what risk what cooling measures?

 

[BBCWatcher]

The one advantage with property investments is leverage. You don’t need to cough up the entire $1.1m for the chance to earn $0.7m.

You don't clear $0.7m over that span in that example, to be accurate.

No, mortgage debt is not a unique benefit. You can make very highly leveraged bets on stocks if you wish. It's less fashionable to borrow to buy stocks, perhaps, but it can be done if you insist. [However, it's very fashionable among institutional investors and private equity investors. Those "Shark Tank" programs celebrate as much.]

The interest rate on stock margin debt specifically is generally a bit higher (2.88% versus about 2% in Singapore currently), but again that's just looking at one input number, not the full financial picture. Realistic, complete accounting is always important.

I'm just pointing out that the "real estate über alles" philosophy is downright nutty. I don't believe any investment class ought to be your only, or nearly only, vehicle. I believe you should strive for at least reasonable diversification across asset classes and geographies.

My father bought his HDB $30K. Now have to add 1 more zero. What depreciation what risk what cooling measures?

Yes, back in 198X or whenever. Let's suppose that was 1985. Had he taken $30K and put it into the U.S. S&P 500 and reinvested dividends, on a gross pre-tax basis he'd have $900K, not $300K.(*) So he's two thirds poorer today, right? (And with an ever diminishing 66 years remaining on the leasehold, assuming he grabbed his keys in 1985.)

Aren't "headline" numbers fun?

A monkey can grow nominal "headline" money. A fixed deposit will do that. That's not at all impressive, and nobody who knows anything about investing is impressed. Cut out the nonsense.

(*) The $900K number isn't accurate and honest either, because it doesn't include some costs. But it's actually much more honest than "Oh, look at that 10X valuation!" boasting and bragging that impresses nobody, at least not anybody who understands this stuff more than superficially.

 

[peipei1]

My father bought his HDB $30K. Now have to add 1 more zero. What depreciation what risk what cooling measures?

Hallo my parents paid in full for our old 5 room HDB.

Today we have to take decades long loan to buy our own homes because of idiots allow for Singapore property speculation. Pay longer for smaller floor area, please go away lah all idiotic property flippers.