How much are you earning per annum?

A friend of mine sold his hdb flat and got a profit of $200k. Because mortgage rates are low, they bought a $1m condo and took $800k loan. Their combined income is only $7k. They are in their late 30s. Crazy !!!!

Originally Posted by Unregistered

This is very good advice indeed.

It applies though to people who are 1. disciplined about not spending their excess cash and
2. investment savvy

Those who are prone to buying stuff to keep up with their friends / neighbours would be better off paying off their housing loan.

Actually I already covered that in my 1st reply to him, with his general background its easy to tell he is not well versed in the markets. I don't believe its right for people to preach investment advise to those not versed in it, unless the individual is willing to discard anonymity and physically meetup and explain how things work. Even banks have to perform risk assessment first before preaching products.

If he loses a ton of money based on rubbish advise from this forum a lot unregistered preachers of stock investment will just turn around and blame him for lack of knowledge, but really reckless advise should be penalized as well. I purely advise him the safest approach based on his situation. If he feels the need to suddenly trade in Fx or Stocks surely this is not the right place to gain that kind of direction steer.

Originally Posted by Unregistered

Some on this forum will advise you to invest in stocks and what not, unless you're a guru or have a stable emotional mindset you have to decide if this is for you? One thing for sure many on this forum dish out advise on how to generate 5% or even 10% returns but no one can really provide in detail what is the right approach. Without this most of the information is garbage really.

Originally Posted by Unregistered

The advise of promptly paying down housing loans is not always good advise especially in today's low interest climate. There are such thing as good loans and bad loans. Housing loans are considered good loans and they are the only ones that come with the lowest interest rate. Banks give low interest rates because the collateral is the property the loan is taken for.

So let's say you have study loans, car loan, renovation loan and housing loan, your priority should be to pay off the ones with the highest interest rates. And after that, if you still have money left over, you should explore investing those money for higher returns than the housing loan rate.

In my case, I took a $1m loan for my condo and the interest was slightly above 1% pa. Instead of paring down the loan, I invested the money into blue chips and reits for 5% or more returns pa. Even my CPF OA gives 2.5%. Be nimble, not need to rush to pay off a good loan when you have one.

What a hypocrite. Does the below look familiar to you?

"If you're a hardworking and lead a simple lifestyle, my advice to you is to pay off your Mortgage loan sooner. 15 years if possible? This way you will be cleared by the time you hit 50 and perhaps can look to invest cash without risking you're home or maybe buy a 2nd home for investment. Or if (touch wood) you get retrenched you can at least drive a cab without stressing about lack of cash. You will be suprised how much you pay goes into interest just on that extra 10 years."

You talked about investing, and not only that, here you were even advising him to buy a 2nd home!!!

Simple stock investing (not trading) is not rocket science. At the end of the day, it is your life and your money. People here are sharing what works for them. You dont have to follow them if you think the risks are too high. Just dont feel envious about the success of others.

Originally Posted by Unregistered

Actually I already covered that in my 1st reply to him, with his general background its easy to tell he is not well versed in the markets. I don't believe its right for people to preach investment advise to those not versed in it, unless the individual is willing to discard anonymity and physically meetup and explain how things work. Even banks have to perform risk assessment first before preaching products.

If he loses a ton of money based on rubbish advise from this forum a lot unregistered preachers of stock investment will just turn around and blame him for lack of knowledge, but really reckless advise should be penalized as well. I purely advise him the safest approach based on his situation. If he feels the need to suddenly trade in Fx or Stocks surely this is not the right place to gain that kind of direction steer.

Middle income millionaire household couple, 50 / 52. Total income, $140k pa.
Condo home valued at $1.1m, paid up. Resale Cat A car, paid up.
Other assets include cash, CPF, stocks valued at $1.4m. Debt free.
As a middle income household, we hope to sell our condo when we retire.
With the money, we will buy a small HDB flat and use the cash balance to spend for our retirement. We will also get monthly payout.

At combined income of $140k pa, I think you are living above your affordability level.

Something to ponder on: <<extract below copied from salary.sg website>>

Many people often wonder if they can afford to stay in private housing. There are various ways to find the answer. You can ask a bank, calculate your debt ratios, use our 7.6x guideline, or compare your income with the average income of your desired housing type – which is the main topic of this article.

The easy way is to ask your banker. But if you and your spouse are working professionals with stable incomes, your banker will most likely grant you the loan even if you will be overstretching yourselves to pay the loan installments. See how a couple got saddled with a property loan they can hardly afford.

To be safe, we recommend you carefully consider your condo purchase (or landed property purchase). Read our articles on debt ratios and 7.6x guideline, and do your sums properly. And with the recent release of the Household Expenditure Survey (HES) report by the Singapore Department of Statistics, there is one more way to confirm if you’re suited for a certain housing type.

According to the HES report, the average monthly household income of families staying in private housing is $17,795/mth.

Families staying in landed properties make an average of $20,427/mth, while those in private apartments (including condos) earn an average of $16,311/mth.

Originally Posted by Unregistered

Middle income millionaire household couple, 50 / 52. Total income, $140k pa.
Condo home valued at $1.1m, paid up. Resale Cat A car, paid up.
Other assets include cash, CPF, stocks valued at $1.4m. Debt free.
As a middle income household, we hope to sell our condo when we retire.
With the money, we will buy a small HDB flat and use the cash balance to spend for our retirement. We will also get monthly payout.

Since you are debt free and both your home & car loans are cleared, you are actually better off than couples who earn $250k pa but still saddled with housing and car loans. Don't listen to fools.

Enjoy staying in your condo until you retire at 65. Then you can downgrade to a studio condo unit and sell your car. Your retirement payout of $1200 per month for you and wife each would be useful. If you eat simply and don't lavish on employing a maid and spending on unnecessary things, you should be ok.

Originally Posted by Unregistered

Middle income millionaire household couple, 50 / 52. Total income, $140k pa.
Condo home valued at $1.1m, paid up. Resale Cat A car, paid up.
Other assets include cash, CPF, stocks valued at $1.4m. Debt free.
As a middle income household, we hope to sell our condo when we retire.
With the money, we will buy a small HDB flat and use the cash balance to spend for our retirement. We will also get monthly payout.

The below poster is a real fool. People like them usually sit in a corner and suck their thumbs and occasionally come out and make foolish remarks. See how he asked you to compare with people who earned $250k pa and are saddled with debts? Why don't he ask you to compare your yearly savings with these people, and their net worth. People who are astute know how to make their money work for them. Housing loans have the lowest interest rates around, and smart people deliberately do not pay up their loans because they can make more more by investing their money than to pay up their housing loans.

But bottom line is, to live within one's means. The survey by salary.sg showed that people who stay in condo do typically earned over $16k pm and that was based 2011 dollars. Many earned more. So don't blindly follow the Lims and Tans. It is better to live within one's means.

At 50/52, you don't much time horizon to grow your savings.

Originally Posted by Unregistered

Since you are debt free and both your home & car loans are cleared, you are actually better off than couples who earn $250k pa but still saddled with housing and car loans. Don't listen to fools.

Enjoy staying in your condo until you retire at 65. Then you can downgrade to a studio condo unit and sell your car. Your retirement payout of $1200 per month for you and wife each would be useful. If you eat simply and don't lavish on employing a maid and spending on unnecessary things, you should be ok.

Be careful about saying others as fools as you make the the biggest fool. I think what the poster is trying to say is that of the guy already has no mortgage and car loan, then his expenses no longer include mortgage and car loan payments. His $140k pa combined will cover his other expenses like food, utilities, etc which amounts to less than $140k pa. Whereas of a couple whose income is $250k pa but spends a lot on car and mortgage payments and other luxuries, they mat spend more that $250k pa. If they have $2m mortgage and $200k car loans, this couple will spend tons of money servicing their huge debt. If they lose their job, then they will be forced to sell their condo whereas the guy who paid off his mortgage can still live in his condo.

Originally Posted by Unregistered

The below poster is a real fool. People like them usually sit in a corner and suck their thumbs and occasionally come out and make foolish remarks. See how he asked you to compare with people who earned $250k pa and are saddled with debts? Why don't he ask you to compare your yearly savings with these people, and their net worth. People who are astute know how to make their money work for them. Housing loans have the lowest interest rates around, and smart people deliberately do not pay up their loans because they can make more more by investing their money than to pay up their housing loans.

But bottom line is, to live within one's means. The survey by salary.sg showed that people who stay in condo do typically earned over $16k pm and that was based 2011 dollars. Many earned more. So don't blindly follow the Lims and Tans. It is better to live within one's means.

At 50/52, you don't much time horizon to grow your savings.

You are no better than that fool. You don't compare with somebody else's financial situation (who you might wrongly conclude as worse off than you) and then comfort yourself that you can afford to live a certain lifestyle.

Many HDB dwellers have no loans because they got their flats direct from the gahmen with all the discounts. But they are not blindly upgrading to condos just because they can now afford to pay off their condos at once without any loans. They are keenly aware of the higher cost of condo living and the need to save for their retirement.

It is a foolish argument to say that just because there are people poorer than you, you are rich, and therefore can live like the rich. This was what the fool was advocating and you foolishly took up his cause.

Sad but true that not many people will do sufficient calculation to see if they can afford condo living, but sites like salary.sg which provides average household incomes against the types of homes that these people are staying, can help provide general sensing. And the couple with $140k pa income is clearly rounding up the bottom of the income range.

Originally Posted by Unregistered

Be careful about saying others as fools as you make the the biggest fool. I think what the poster is trying to say is that of the guy already has no mortgage and car loan, then his expenses no longer include mortgage and car loan payments. His $140k pa combined will cover his other expenses like food, utilities, etc which amounts to less than $140k pa. Whereas of a couple whose income is $250k pa but spends a lot on car and mortgage payments and other luxuries, they mat spend more that $250k pa. If they have $2m mortgage and $200k car loans, this couple will spend tons of money servicing their huge debt. If they lose their job, then they will be forced to sell their condo whereas the guy who paid off his mortgage can still live in his condo.

My wife and I upgraded from our HDB flat to a condo in 2003. We paid $500k for the condo. Now we have finally fully paid the condo. We use all our bonuses to pay down as much as possible. We can finally sleep in peace because even if property prices crash, we will not be worried as we no longer have bank loans. There are many stupid people out there who thinks they are so smart and take max loan and when the market crash and the bank ask them to top up cash, they cannot and have have to force sell at at a huge loss.

Now our condo is worth $1.2m and our combined income is only $150k, we have no problem financially living in a condo even though our income is lower than a typical condo owner. Timing your property purchase is very important. Now is definitely not a good time to buy property for investment. For stay, does not matter as long as you like the property and you can afford it (you must be able to pay down payment of 50% and loan only 50%, so that if prices crash by 50%, you will still be ok even though on paper you lose your downpayment).