Target networth

[BBCWatcher]

It is meaningless to marry with no plans to have kids.

I disagree. There are numerous rights and privileges uniquely associated with legal marriage. I certainly don’t object when couples decide not to get married, but it’s just factually incorrect that legal marriage is meaningless. Common examples in Singapore include HDB privileges, ease of estate/probate, some occasional income tax benefits, a few CPF-related benefits, the automatic ability to make medical decisions on behalf of an incapacitated spouse, immigration privileges (if one spouse doesn’t have an independent right of abode for example), and employer-provided benefits (such as certain medical benefits).

 

[Mecisteus]

So, if we use the same simple present value cashflows of a property rented out for $2.5k per month for the next 9999 years,
this freehold property has a PV of $229.97 Millions!

Uncle,

within next 8,888 years, aliens already invaded the earth.

So you need to factor in all those uncertainties into the PV.

 

[Mecisteus]

I disagree. There are numerous rights and privileges uniquely associated with legal marriage. I certainly don’t object when couples decide not to get married, but it’s just factually incorrect that legal marriage is meaningless. Common examples in Singapore include HDB privileges, ease of estate/probate, some occasional income tax benefits, a few CPF-related benefits, the automatic ability to make medical decisions on behalf of an incapacitated spouse, immigration privileges (if one spouse doesn’t have an independent right of abode for example), and employer-provided benefits (such as certain medical benefits).

These benefits are not appealing. As a single, you can still buy a HDB in Singapore.

Look at the down side. You are marrying your wife. You are going to live with her for like the next 40 to 50 years?

You are living under 1 roof seeing the same person every day and nobody else. I don't think I can live like this.

 

[ST Optimist]

According to you,
"a simple present value cashflows of a property rented out for $2.5k per month for the next 80 years.
This leasehold property has a PV of $2.4M assuming discount rate and inflation are 0%. ...
So it doesn't make sense for a leasehold property with 80 years remaining to value at significantly lower than $2.4M."

So, if we use the same simple present value cashflows of a property rented out for $2.5k per month for the next 9999 years,
this freehold property has a PV of $229.97 Millions!

Wow! PV of $229.97M for freehold property vs $2.4M for leasehold property with 80 years left!
In this case even if pay a premium for the freehold property, your PV of freehold to leasehold is a HUGE 124.98 times(!!!) and so the small premium of 15-25% only for freehold compared to 99-years leasehold is so much worth to pay for it!

No price for guessing why I only buy freehold properties!

u dreaming sibo uncle.....the further the yr from present....when you discount to the present using a constant interest rate....you get closer to the value of zero.......only idiots buy a property value of $229 million to rent out $2500 every month for 9999 yrs........if a leasehold property of 80 yrs vs a freehold of 9999 yrs get only $2500 a month for the period .....the present value of the freehold 9999 yrs the most is more expensive by 20% to 30% only using the PV method

 

[iamveryguailan]

freehold or leasehold, doesn't matter much unless you intend to hold for the next few generations.

some people make money buying freehold. some lose money on freehold.
some people make money buying leasehold. some lose money on leasehold.

regardless of freehold or leasehold, there are always good opportunities in both areas. No need to purely focus on freehold, or leasehold alone.

 

[Sinkie]

freehold or leasehold, doesn't matter much unless you intend to hold for the next few generations.

some people make money buying freehold. some lose money on freehold.
some people make money buying leasehold. some lose money on leasehold.

regardless of freehold or leasehold, there are always good opportunities in both areas. No need to purely focus on freehold, or leasehold alone.

Not sure who will still buy a 50 years old rundown freehold condo in the future

 

[Mecisteus]

u dreaming sibo uncle.....the further the yr from present....when you discount to the present using a constant interest rate....you get closer to the value of zero.......only idiots buy a property value of $229 million to rent out $2500 every month for 9999 yrs........if a leasehold property of 80 yrs vs a freehold of 9999 yrs get only $2500 a month for the period .....the present value of the freehold 9999 yrs the most is more expensive by 20% to 30% only using the PV method

My Excel and finance formula are abit rusty.

Anyway, based on the following assumptions:

Discount rate =3%
Inflation rate =1%
Rental per annum = $30,000

PV of 80 years = $1,187,519
PV of 9999 years = $1,500,000

Premium is 26% for a 9999 years property over a 80 years property.

So the premium calculation is about right based on the market values.

 

[Mecisteus]

I am doing the calculation using the exact same method as MikeDirth. You should tell MikeDirth that his calculation method is WRONG first and tell him to re-calculate!

Uncle you never learn to read my assumptions?

Already mentioned 0%.

My point is 80 years is still a long period to factor in the worry of decay.

 

[Mecisteus]

Not sure who will still buy a 50 years old rundown freehold condo in the future

Well if the selling price is right, I am sure there is a buyer.

$100 is definitely a too low price.

 

[Mecisteus]

You don't cheat lah!
You never factor in lease-decay for that leasehold property!
Caught you!

I don't think you really understand. There are multiple of models to calculate a fair value of an asset.

Anyway why don't you show us your calculations.

Maybe you want to cheat us like your example of a 40% average returns of a property investment?

 

[Flearnstoinvest]

Exactly. Our daughter's schooling routine is the main part of our lives. My wife passes most of her time, dropping my daughter to school, picking her up, teaching her. Without that she will be bored to hell. She also hates going to work like me. I have no choice but she can enjoy stay at home mom, life.

If you think such life is exciting...

 

[revhappy]

If you think such life is exciting...�

Indeed, it is.

Sent from Dont Take Any Of My Statment As Investment Advice. Do Your Own Due Diligence. using GAGT

 

[Sinkie]

If you think such life is exciting...

No need your own children, you can also feel such joyness even when he is your Nephew

 

[Flearnstoinvest]

Marry but with no plan for child is marry for what? Earn so much then donate to charity when one pass on?

Family and children are my source of motivation to work hard and continue making money, or else I would have stopped working myself

So, having children is your only reason to get married?

 

[celtosaxon]

Do you guys have a target networth and stick to it? Once attained, do you relax in any way like changing your job for something that you wanted tor try?

Or do you revise your target when you hit it?

The reason I am asking is that I wonder if I am able to tell myself "that's enough" and stop fretting or at least fret less about whether I have enough. Obviously there are other considerations like if you are single, married or with kids. The last scenario will definitely complicates matters in terms of the budgeting for their future expenses.

As a general rule, take 80% or what you earn annually, divide it by 0.04 and that should be your target today, then add inflation - about x2 if you are planning to retire in 25 years. This should give you your target net worth excluding your primary residence. Adjust that if you intend downgrade or move to a more affordable location or put kids through college or change your lifestyle significantly. This assumes you are capable of managing a balanced, low-cost portfolio of indexed equity and fixed income instruments.

 

[revhappy]

As a general rule, take 80% or what you earn annually, divide it by 0.04 and that should be your target today, then add inflation - about x2 if you are planning to retire in 25 years. This should give you your target net worth excluding your primary residence. Adjust that if you intend downgrade or move to a more affordable location or put kids through college or change your lifestyle significantly. This assumes you are capable of managing a balanced, low-cost portfolio of indexed equity and fixed income instruments.

Shouldn't it be based on expenses rather than earnings?

Sent from Dont Take Any Of My Statment As Investment Advice. Do Your Own Due Diligence. using GAGT

 

[Sinkie]

So, having children is your only reason to get married?

It is one of the major reasons, another major reason is for me to pass on all my wealth and asset to in future too.

If there is no target, then I find no reason or motivation to work anymore

 

[malthead]

Yes without family and kids what is there to life?

Posted with HardwareZone Forums app

family yes.. kids are subjective. I feel some people will be happier without kids

 

[malthead]

Have u ever got a 6 month trip before?

No.. longest was 3 weeks but i was in my twenties. Now in my forties, i would love to travel with my wife but hard to leave the kids behind. need to wait at least 10 more years

 

[malthead]

As a general rule, take 80% or what you earn annually, divide it by 0.04 and that should be your target today, then add inflation - about x2 if you are planning to retire in 25 years. This should give you your target net worth excluding your primary residence. Adjust that if you intend downgrade or move to a more affordable location or put kids through college or change your lifestyle significantly. This assumes you are capable of managing a balanced, low-cost portfolio of indexed equity and fixed income instruments.

80% then times 0.04. Ok!

but wait.. still need to x2????

without times 2, i think i just need another 4-5 more years to hit