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Old 15-08-2014, 05:32 PM
lazyplane lazyplane is offline
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Well, it is not that scary. Dont get yourself too worried by all the stories out there. Here are some real life point stages/pointers :

1. Like any good parent, i guess you wish to bequeath your HDB to your children. . If so, would it ok to receive a form of appreciation with that ?
Eg monthly allowance from them say $500 pm per kid?

2. Related to point 1 - Will you be receiving any inheritance from your parents or in laws ?

3. Despite all the negative news in the press about CPF, the CPF minimum sum is precisely what is going to help you with monthly expenses. Assume $117k in RA, that is around $ 700 - 1k per month from 65 depending on the plan you choose.

The above points alone can help you up to around S$2-2.5k. So you just need another 750k . To achieve this

4. You already are saving 30k pa. 30k x 25 yrs = 750k !

5. While you have some expenses ahead - ie children education, remember that after your children graduate ie year 17 onward to 25 , expenses for you should drop significantly. No more pocket money to kids, enrichment lessons, etc and possible income back from them. Those 8 - 10 yrs should build your retirement nest egg nicely.

Hopefully, the above 5 points should give you some idea and comfort.

Now onward to your question of passive income and investing.

This is a relationship of risk and reward. Higher risk, possible higher reward .
Lower risk, more certainly low reward.

I have asked my friends why they want a 2nd property. From a financial perspective, the main answers are : capital appreciation and rental income. The risk from over leveraging (ie bank loan , interest rate, etc) . Based on present property sentiment for the past 7 years, this has been a good bet. However, it is a capital intensive bet. A mishap along life journey ie job loss can cause severe stress instead providing the comfort and peace of mind. From a social and political point in Singapore, the government if they are really concerned (and that another debate) , will not allow this situation of property price to run away in a similar manner. So likely, my view is that an investment in this area and in Singapore is going to be marginal for the next 5-10 yrs. Rental yield is not likely to rise above 5-7% with capital appreciation of the property likely to remain relatively flat at max 1-3% as well. Coupled with ABSD and sales tax for flipping early, this long term bet to me can really be rather inflexible. I am sure someone will counter that there are good buys etc, but I tend to think that will be dependent other factors like location, dis-stressed asset sale etc. . I will skip further discussion on this eg overseas investment etc based on your life profile needs.

The traditional way of investing have always been equities. In achieving good returns on equities, there are many theories. For me, I am a fundamentalist. ie analyse the PE of companies, their annual reports, management track records, and products /business they are in.

To confine this discussion a bit, I will just share what kind of service /products Singapore needs in the future and Singapore equities directly involved in meeting that need.

If you look at it, the first no-brainer is that Singapore healthcare needs a reform. The greying population and rising health care cost poses a great threat to the growth of Singapore. So in this regards, companies that have proven track records in unlocking the value will be greatly desired. My take , eg buy Raffles Medical when you feel the time is right and hold hold hold !

What else is required ?

Traditionally, Singapore strengths lie in the airline/logistic/freight sector. This sector has been badly hit by competition and companies like SIA etc have posted weak growth and poor earnings. Will this turn around and when ? If you think you know the answer here, buy these stocks and you should reap a nice reward.

Finally, Singapore is going to remain a financial sector. If this sector collapse, we will really see dismal future for Singapore. There are rumors of financial distress due to overseas eg Fed raising i/r and Singapore banks will be caught up with this wave if it hits. But otherwise, really, take a look at UOB/DBS / OCBC. Their cheap source of funding (by giving Singapore miserably interest) is likely to remain regardless of worldwide interest rate shooting up. Competition from the foreign banks will snap up some depositors but I am sure competitive actions in return will be taken. On a long long run, these stocks can be held to your retirement.

Whew ! I think that enough from me for today

Originally Posted by Unregistered View Post
Thanks for the advise. For retirement as base on your scenario, $1.5 million and this shouldn't include property that we live in by then, it is really scary how stressful it is living in Singapore. I am definitely very far from this goal and I don't think i can achieve this by simply working till retirement. Hence I hope by achieving more passion income and by investing on property, I can be nearer to the impossible goal.

For education, I would think local university will be our only option. We do not have high income and can't afford to send our kids oversea for studies.

To everyone, assuming you are in my position, what would you have do? All advise and comment are appreciated.

Many thanks
Clueless and worried daddy
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