How much are you earning per annum?

I think it was a good plan to buy 2 condos rather than 1 expensive one. In this way, you are able to make your money work for you.

There are not many investment choices here. It seems to be either property or shares. Gold doesnt pay dividend and the value seems to be heading south. And Fixed D are a total washout. Many professional couples are earning $200k pa combined by their mid to late 30s. If they managed their expenses well, they could easily be saving $100k pa. This savings rate could only grow as they progress in their careers.

Unless there are other investment avenues, it look like they will be putting their savings into properties. It is either locally or overseas.

Originally Posted by Unregistered

I am an optimist, as you will see from my view which is also based on my path. Your combined net worth is around $2m including your CPF. At 40, my wife and I had about the same amount, but our combined income was just above $200k pa. Our expenses was $100k pa allowing us to save $100k pa (including CPF).

We upgraded to a 4bedroom condo at 45, capitalized on the gains of the HDB, and took a loan to cover the shortfall. In the meantime our income grew to $300k pa, while we kept our expenses at $100k - $120k pa. We save $180k - $200k pa.

At 53, our income grew to $400k pa, we bought another condo for rental income. Currently, although our income has stagnated, we are able to save well above $300k pa including rental and dividend income.

I do not know what profession or business you are in, only you can best assess your situation, but I would say that at 40, you have a lot of time and upside on your side.

Be careful. There are many old, ignorant, optimistic fools who like to dish out stupid advice. Those fools have enjoyed a property boom, which has now ended. Prices will fall drastically due to the huge oversupply coming. The more costly your condo, the more you will lose. If you buy a $2m condo, if price falls by 50%, you will lose $1m. But if you buy a $1m condo, you will only lose $500k. The best is to buy a cheap condo, fully paid up. Even if prices crash, there is no bank to chase after you. Worse, if you lose your job. You can't finance your condo's loan and you have to force sell your condo as the banks are chasing after you. Also don't buy any investment condo as you risk losing your capital.

Originally Posted by Unregistered

Can we comfortably afford a $2m condo?

Wife and I, both 40, have $1m in cash, $300k in stocks and a half-paid HDB EA which we may keep (we are aware of the ABSD, but it's another topic).

Jobs are semi-stable. Both of us made a combined $500k this year, but we got higher than usual payouts this year. I would say its safer to assume a $300k income.

Or should we lower our condo budget to $1.5m?

Thanks in advance.

Originally Posted by Unregistered

Be careful. There are many old, ignorant, optimistic fools who like to dish out stupid advice. Those fools have enjoyed a property boom, which has now ended. Prices will fall drastically due to the huge oversupply coming. The more costly your condo, the more you will lose. If you buy a $2m condo, if price falls by 50%, you will lose $1m. But if you buy a $1m condo, you will only lose $500k. The best is to buy a cheap condo, fully paid up. Even if prices crash, there is no bank to chase after you. Worse, if you lose your job. You can't finance your condo's loan and you have to force sell your condo as the banks are chasing after you. Also don't buy any investment condo as you risk losing your capital.

No bank will chase you if you are prompt in paying your installments. And buffer it with savings that can pay off 2-3 years of mortage, you are as solid as a rock.
Be careful of risk averse fools who dish out equally stupid advice

Originally Posted by Unregistered

I don't see why not. You have almost enough liquid assets and other assets (hdb) to cover the cost of the condo, so even if you were to take a loan you would have little net debt, even if the worst were to happen

What's a good range for debt-to-wealth ratio for households? Eg is it prudent to borrow $1m (or even more) when the household net worth is $2m? Husband and wife are both 40, as per the question.

It's interesting to see that the risk adverse sorts see it as balance sheet problem while the extreme risk taker see is purely as a cash flow issue..while in reality.. you should deal with it from both perspectives

What I found not satisfactory, no, actually disturbing, was that the risk averse poster always throw insults and pluck figures from thin air (like 50%, 60% price fall) without any facts or proper arguments. No etiquette and no substance (boh liaow). Doesn't add knowledge to the discussion.

Originally Posted by Unregistered

It's interesting to see that the risk adverse sorts see it as balance sheet problem while the extreme risk taker see is purely as a cash flow issue..while in reality.. you should deal with it from both perspectives

Originally Posted by Unregistered

What's a good range for debt-to-wealth ratio for households? Eg is it prudent to borrow $1m (or even more) when the household net worth is $2m? Husband and wife are both 40, as per the question.

I can't speak in general, but my wife and I have about 1.9m condo loan outstanding vs about 1.5 in liquid asset - this is not including equity value of home of about 800k. In another 2 years we should have saved enough to have sufficient liquid assets to fully cover the mortgage.

If your household has net worth of 2m, and loan is 1m, I don't see it as a risky thing to do if you are talking about a mortgage loan that has low rates and is secured.

I am disturbed by the "advice" given by unqualified people in this forum. These people are encouraging others to overleverage. In today's uncertain global economic environment, it is best to be prudent. A reasonable loan-to-value ratio of a property purchase should only be 50%. This is so since property prices are expected to crash due to the huge oversupply in the pipeline. This crash situation can only be reversed if no more land supply coming out and if the number of FTs are increased significantly to rent the empty condo blocks.

The advice are not meant for the uninitiated. Those with the means, and in the know, will know.

An investment approach may work very well for one person but may be disastrous for another. A person with deep pocket, solid income and relatively stable job has more flexibility and wherewithal to take on riskier but more lucrative investment. Obviously one without the means should not follow the same investment plan of the rich.

If you have little means, you should just stick with what you are comfortable with. No need to feel jealous or resentful of the opportunities of others. To each his own.

Originally Posted by Unregistered

I am disturbed by the "advice" given by unqualified people in this forum. These people are encouraging others to overleverage. In today's uncertain global economic environment, it is best to be prudent. A reasonable loan-to-value ratio of a property purchase should only be 50%. This is so since property prices are expected to crash due to the huge oversupply in the pipeline. This crash situation can only be reversed if no more land supply coming out and if the number of FTs are increased significantly to rent the empty condo blocks.

Hmm, a balanced comment.

I would like to add that we should also avoid comparing with others. Some just cannot stand losing out to others and this makes them envious and resentful.

Imagine how hollow it is for them to label everyone who is ahead of them fools, stupid and idiots. The resentment and jealousy is obvious.

Originally Posted by Unregistered

The advice are not meant for the uninitiated. Those with the means, and in the know, will know.

An investment approach may work very well for one person but may be disastrous for another. A person with deep pocket, solid income and relatively stable job has more flexibility and wherewithal to take on riskier but more lucrative investment. Obviously one without the means should not follow the same investment plan of the rich.

If you have little means, you should just stick with what you are comfortable with. No need to feel jealous or resentful of the opportunities of others. To each his own.