How much are you earning per annum?

[Kenn]

A kind and gentle reminder,

This post is meant to be an encouragement and not delusion hence do respect each other opinions.

I've written somewhere here a year ago (forgot about the actual details) regarding my personal tiny networth - age of student

Currently serving, I am still broke and future is bleak (does this mean bad sign?). Though I have a clear path, it is imperative to find a breaking point to initiate and progress.

Will update here again,
Thanks.

This new info you provide is shocking, I can't believe you're an MD for RM of a bank.

Regarding your investment properties, you are over leveraged for sure, your LTV for is 75%. If market crash by 25% your equity will be gone. This is not impossible as there are banks who predict this. What if you lose your job? What if your investment properties can't be rented out due to the big oversupply?

I think you're just being overconfident and greedy due to your high pay. You have not managed your risk well enough. If I were you, I will be very nervous.

This is the worst case scenario:

1. You lose your $500k pa job. Your wife lose her $200k pa job.
2. Property prices crash by 40%.
3. Your investment properties can't be rented out.
4. Interest rate goes up high.
5. You can't service your investment properties' loans.

What are you going to do? What's your Plan B?

Originally Posted by Unregistered

Finally, someone who actually believe in me and willing to give advice on my financial situation...

My idea of financial freedom is to have passive income equal my expenses, or better yet equal my combined income. I estimate that $5m cash and $10 networth would fulfil the former objective. I am targeting to hit the milstones by 50 years old.

We are comfortable in our current residence (5rm HDB) but as with everyone else, we aspire to a higher standard of living but will only upgrade on my own terms.

My $4.3m networth breakdown as follows:

a) 5rm HDB = around $800k (although it may have dropped a bit due to the cooling measures)
b) Savings / liquid investments = $1.7m
c) CPF = $383,000
d) 3 investment properties (2 of which are shared with a relative) = combined market value is $6.2m; my share is $4m and equity is around $1.03m (therefore my share of the mortgage liability is around $3m).
e) Deferred bonus which is due to me = $150K (my bonus usually deferred over 3 years)
f) Market value of 6yr old MPV = $65K
f) Miscellaneous = $240K (e.g. cash value of insurance, cash in bank, wife's own investments etc).

I'm seriously considering various types of properties (including overseas) but for the local market, thought that it's the wrong part of the cycel to add on to my property portfolio.

@ 3937

Thanks for the analysis. I agree we are quite leveraged and your scenario could happen.

My plan B is to use my $1.7m in liquid assets to pay the monthly instalment. If I go into negative equity and the bank insists I pay the difference I can still sell the HDB and get another $800k (or whatever it can be sold for).

My only comfort is that if your scenario happens a lot od people will also suffer the losses and I believe the PAP govt will step in to support the market just like it has done so many times before.

One of my investment properties just got TOP so I'm in the process of selling it off. Another pty is still under construction and the first instalment will come in 2 years time. Only the 3rd pty is ready and leased out and I'm paying stalments for it.

Btw I'm not MD yet.

Let me know your analysis with the latest info.

Originally Posted by Unregistered

This new info you provide is shocking, I can't believe you're an MD for RM of a bank.

Regarding your investment properties, you are over leveraged for sure, your LTV for is 75%. If market crash by 25% your equity will be gone. This is not impossible as there are banks who predict this. What if you lose your job? What if your investment properties can't be rented out due to the big oversupply?

I think you're just being overconfident and greedy due to your high pay. You have not managed your risk well enough. If I were you, I will be very nervous.

This is the worst case scenario:

1. You lose your $500k pa job. Your wife lose her $200k pa job.
2. Property prices crash by 40%.
3. Your investment properties can't be rented out.
4. Interest rate goes up high.
5. You can't service your investment properties' loans.

What are you going to do? What's your Plan B?

Just to add, another way to look at this is that I have $3m of liabilities and $2.5m in assets (will be $3m by sometime next year given my level of savings and assuming I still keep my job). So at the most I finish paying down all my liabilities and hold a portfolio of much less valued assets.

@3937

Hi,

Thanks for replying and in such detail too,

I don't think your situation is that dire, mainly because you have a 1.7 M buffer but I agree with the other chap about how leveraged you are on your assets. I won't bother pointing the positives (since you know them already) but the negatives of your situation please do not take it personally.

- I am not sure if your income stream was this constant for the years (i.e 5 and above) but if I am honest but given such a high combined income I would have thought your net worth be a lot higher. You might want to track your spending carefully just to review where it goes. Then again we live to enjoy so long as you're comfortable with your position its fine.

- Your properties cost about 2M per which is a pretty pricey investment can I ask how much returns have you gotten on top of your original purchase price?

To give you some idea of what I mean I personally do not look at new builds at fancy and unproven location (cough Jurong), my properties generally do not cost more than 1.2 M and are not less than 1200 sq feet in size. All freehold except my commercial units and in relatively central locations. Typically I target about 60% - 80% return on capital returns on the original purchase price for any property investment within a 5 -8 year holding span (or 400% returns on investment outlay). If your into property investment your target returns would be about the same and if not you have to ask if the returns are worth the risk you are taking?

- Overseas property, this is always a risk but can prove lucrative. But I would advise investing too much unless you are really familiar with the market and have someone local to sort things out for you. I can tell you from experience property management (rental etc) of properties even in places like London can be a nightmare. But if you are keen go attend some talks on the market to give you an insight but more importantly look for a good local property management company who can advise you and help manage the property. But one for sure do not buy off the plan from some roadshow go down physically and check the location etc. I myself am looking into Msia and Indonesia properties.

- I reckon given your current profile you will need about 10M if not 15M in cash to have the financial freedom you are seeking? Conservatively 3% - 5% yield in properties or solid stocks would get you about 300K - 500K a year which matches your lifestyle/income. With only 5M you will be hard pressed to get returns to match your salary without taking on a good amount of risk which might jeopardize your egg nest. (10M - 15M cash/investment assets is my own goal as well).

I think you will achieve your goals, seems you and your wife are very frugal in comparison to your net income, however do not over leverage too much. Bad news all come at once you do not want to be without a job and owe the bank if the economy tanks.

With regard to local property be patient and wait for the right timing/signal. I've seen it happen in 97 and 08 and history repeats itself. Its like the stock market we wait for the sheep to get slaughtered first.

Originally Posted by Unregistered

Finally, someone who actually believe in me and willing to give advice on my financial situation...

My idea of financial freedom is to have passive income equal my expenses, or better yet equal my combined income. I estimate that $5m cash and $10 networth would fulfil the former objective. I am targeting to hit the milstones by 50 years old.

We are comfortable in our current residence (5rm HDB) but as with everyone else, we aspire to a higher standard of living but will only upgrade on my own terms.

My $4.3m networth breakdown as follows:

a) 5rm HDB = around $800k (although it may have dropped a bit due to the cooling measures)
b) Savings / liquid investments = $1.7m
c) CPF = $383,000
d) 3 investment properties (2 of which are shared with a relative) = combined market value is $6.2m; my share is $4m and equity is around $1.03m (therefore my share of the mortgage liability is around $3m).
e) Deferred bonus which is due to me = $150K (my bonus usually deferred over 3 years)
f) Market value of 6yr old MPV = $65K
f) Miscellaneous = $240K (e.g. cash value of insurance, cash in bank, wife's own investments etc).

I'm seriously considering various types of properties (including overseas) but for the local market, thought that it's the wrong part of the cycel to add on to my property portfolio.

@ 3937

I supposed you have heard the saying "it ain't over until the fat lady sing". Whether you are poor or rich now, it is but a phase in your life journey. If you are poor now, you could still end up wealthy. Conversely if you are rich now, you could still end up being a bankrupt later. The future can spring surprises on people especially the unprepared.

The Internet and especially forums like these have helped open up awareness of what others are earning and owning. Long ago, I was poor as a church mouse and I couldn't care less, blissfully oblivious to the wealth of others. But it turned out ok for me after 30 yrs of continuous employment. Is it a good thing to have more awareness or not? I am not sure. Do you feel discouraged knowing you are poor when others are earning half a million $ a year? Or do you take that knowledge to spur you to work harder?

Originally Posted by Kenn

A kind and gentle reminder,

This post is meant to be an encouragement and not delusion hence do respect each other opinions.

I've written somewhere here a year ago (forgot about the actual details) regarding my personal tiny networth - age of student

Currently serving, I am still broke and future is bleak (does this mean bad sign?). Though I have a clear path, it is imperative to find a breaking point to initiate and progress.

Will update here again,
Thanks.

You now make more sense.

Make sure your $1.7m liquid assets are cash because if they consists of stocks and junk bonds, they won't help you in a downturn as their value will also plunge along with your stocks. Good that you will delever after selling one of your condos. You should delever more, preferably paying off all loans. So, if you and your wife got retrenched, you won't have to worry about servicing your loans. Save as much cash as possible from your jobs.

Originally Posted by Unregistered

Thanks for the analysis. I agree we are quite leveraged and your scenario could happen.

My plan B is to use my $1.7m in liquid assets to pay the monthly instalment. If I go into negative equity and the bank insists I pay the difference I can still sell the HDB and get another $800k (or whatever it can be sold for).

My only comfort is that if your scenario happens a lot od people will also suffer the losses and I believe the PAP govt will step in to support the market just like it has done so many times before.

One of my investment properties just got TOP so I'm in the process of selling it off. Another pty is still under construction and the first instalment will come in 2 years time. Only the 3rd pty is ready and leased out and I'm paying stalments for it.

Btw I'm not MD yet.

Let me know your analysis with the latest info.

This thread proves that there are many rich Singaporeans. Family income of more than $300k pa are common among the posters here. So, please to not forget the poor and destitute. You should donate to the poor, destitute, orphans, disabled, etc. Remember you don't need $5m to retire. $1m in cash is enough to retire comfortably. Many old folks retire with much less than that. As long as you don't gamble, own a car, drink, womanize and buy wasteful things, splurge on round the world holidays. Do not be attached the this temporary world.

Well analysed.

Let me address your questions:

a) you are not the first to suggest that our networth is on the low side given the income levels. I don't have a good explanation for it, as my wife and I are really quite frugal and spend each dollar carefully. My suspicion is (i) age - as we are still relatively young, we did not have enough time to build up networth; (ii) our income stream for the past 5 years is not constant. In 2008, our combined income was only $350K and our savings level was also lower then.

b) breakdown of my 3 invt properties: (i) freehold D11 condo just TOP, actively marketing for sale now; (ii) freehold condo in Raffles Place / Tanjong Pagar area under construction, TOP 2017; (iii) leasehold terrace house which I plan to move in next year to be nearer kids school. After I move in, will decide whether to rent out or sell my HDB. Each of the properties in the region of $2m.

c) agree with your analysis of overseas property so looking carefully at them now but not in a rush to buy anything.

d) I agree that $10-15m cash would be ideal, but given my spending patterns would be happy with $5m anytime.

@3937

Originally Posted by Unregistered

Hi,

Thanks for replying and in such detail too,

I don't think your situation is that dire, mainly because you have a 1.7 M buffer but I agree with the other chap about how leveraged you are on your assets. I won't bother pointing the positives (since you know them already) but the negatives of your situation please do not take it personally.

- I am not sure if your income stream was this constant for the years (i.e 5 and above) but if I am honest but given such a high combined income I would have thought your net worth be a lot higher. You might want to track your spending carefully just to review where it goes. Then again we live to enjoy so long as you're comfortable with your position its fine.

- Your properties cost about 2M per which is a pretty pricey investment can I ask how much returns have you gotten on top of your original purchase price?

To give you some idea of what I mean I personally do not look at new builds at fancy and unproven location (cough Jurong), my properties generally do not cost more than 1.2 M and are not less than 1200 sq feet in size. All freehold except my commercial units and in relatively central locations. Typically I target about 60% - 80% return on capital returns on the original purchase price for any property investment within a 5 -8 year holding span (or 400% returns on investment outlay). If your into property investment your target returns would be about the same and if not you have to ask if the returns are worth the risk you are taking?

- Overseas property, this is always a risk but can prove lucrative. But I would advise investing too much unless you are really familiar with the market and have someone local to sort things out for you. I can tell you from experience property management (rental etc) of properties even in places like London can be a nightmare. But if you are keen go attend some talks on the market to give you an insight but more importantly look for a good local property management company who can advise you and help manage the property. But one for sure do not buy off the plan from some roadshow go down physically and check the location etc. I myself am looking into Msia and Indonesia properties.

- I reckon given your current profile you will need about 10M if not 15M in cash to have the financial freedom you are seeking? Conservatively 3% - 5% yield in properties or solid stocks would get you about 300K - 500K a year which matches your lifestyle/income. With only 5M you will be hard pressed to get returns to match your salary without taking on a good amount of risk which might jeopardize your egg nest. (10M - 15M cash/investment assets is my own goal as well).

I think you will achieve your goals, seems you and your wife are very frugal in comparison to your net income, however do not over leverage too much. Bad news all come at once you do not want to be without a job and owe the bank if the economy tanks.

With regard to local property be patient and wait for the right timing/signal. I've seen it happen in 97 and 08 and history repeats itself. Its like the stock market we wait for the sheep to get slaughtered first.

Lousy choice if investment properties - CCR properties and landed properties overpriced. Will surely fall. Panic selling for overleveraged and greedy owners.

Originally Posted by Unregistered

Well analysed.

Let me address your questions:

a) you are not the first to suggest that our networth is on the low side given the income levels. I don't have a good explanation for it, as my wife and I are really quite frugal and spend each dollar carefully. My suspicion is (i) age - as we are still relatively young, we did not have enough time to build up networth; (ii) our income stream for the past 5 years is not constant. In 2008, our combined income was only $350K and our savings level was also lower then.

b) breakdown of my 3 invt properties: (i) freehold D11 condo just TOP, actively marketing for sale now; (ii) freehold condo in Raffles Place / Tanjong Pagar area under construction, TOP 2017; (iii) leasehold terrace house which I plan to move in next year to be nearer kids school. After I move in, will decide whether to rent out or sell my HDB. Each of the properties in the region of $2m.

c) agree with your analysis of overseas property so looking carefully at them now but not in a rush to buy anything.

d) I agree that $10-15m cash would be ideal, but given my spending patterns would be happy with $5m anytime.

@3937