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How much are you earning per annum?

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  #7181 (permalink)  
Old 01-04-2015, 10:45 PM
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39/37, wife is homemaker, self earning $200k in 2014
1 condo in singapore, loan 900k left, worth $1.5m
1 condo in singapore, rental income, loan 400k left, worth $850k
cpf OA barely anything left, cash position $500k.
2 kids, 1 dog, no car.

Am I doing fine?

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  #7182 (permalink)  
Old 01-04-2015, 11:28 PM
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You guys seem fixated on the need to pay off your home loans. That may not be the wisest thing to do.

Private property home loans come with one of the lowest, if not the lowest, loan interest rates. For first home loans, the rates can be as low as 1.1%. Would you want to rush to pay off the loan when:

1. You can put money in your CPF OA to earn 2.5% pa compounded
2. You can top up your CPF SA to earn 4 - 5 % pa compounded
3. You can Invest in shares for an average of 5% dividends returns (more if you count capital gain)
4. You can invest in another property for rental income

Many property owners chose not to pay off home loans to leverage on the low interest rates to generate better returns from other investments. Don't be mistaken that they cannot pay up. They are making their money work hard for them rather than tying them up by paying up for their property fully.

Remember, a fully paid up property doesn't generate income for you when you are using it for a home.

Quote:
Originally Posted by Unregistered View Post
There seem to be no data on wealth by age group so we can't do peer comparison. However you could compare yourself against the whole Singapore population. I think about 18% lives in condos, many are still paying their mortgage. Let's assume only 20% of those living in condos have cleared their mortgage loan. This means only the top 3.6% (i.e. 0.18 x 0.2 = 0.036 or 3.6%) of the population lives in a fully paid condo and you are one of them. So, you are among the top 3.6% in Singapore in terms of economic standing. This is awesome!


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  #7183 (permalink)  
Old 01-04-2015, 11:49 PM
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Quote:
Originally Posted by Unregistered View Post
39/37, wife is homemaker, self earning $200k in 2014
1 condo in singapore, loan 900k left, worth $1.5m
1 condo in singapore, rental income, loan 400k left, worth $850k
cpf OA barely anything left, cash position $500k.
2 kids, 1 dog, no car.

Am I doing fine?
Asset rich, cash strapped. If suddenly get retrench, you will go bankrupt !!!

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  #7184 (permalink)  
Old 01-04-2015, 11:58 PM
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Quote:
Originally Posted by Unregistered View Post
Asset rich, cash strapped. If suddenly get retrench, you will go bankrupt !!!
Can elaborate how to go bankrupt if suddenly retrenched? $500k cash, monthly mortgage is $4200. Rental income is $2k. please explain, I am really keen to know your insight.
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  #7185 (permalink)  
Old 02-04-2015, 07:51 AM
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Quote:
Originally Posted by Unregistered View Post
39/37, wife is homemaker, self earning $200k in 2014
1 condo in singapore, loan 900k left, worth $1.5m
1 condo in singapore, rental income, loan 400k left, worth $850k
cpf OA barely anything left, cash position $500k.
2 kids, 1 dog, no car.

Am I doing fine?
We are the same age as you and your wife, but with $3M net worth, which I consider just ok. So, I think you need to set your sights higher.
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  #7186 (permalink)  
Old 02-04-2015, 08:25 AM
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You are overleveraged. At your age, you should already own a fully paid home. You have a huge $900k mortgage which depends on your salary to pay. In a worst case scenario of (1) you lose your job (those earning $100k pa and above 40 are at higher risk), (2) property market crash due to high interest rates and massive oversupply and (3) no rental income due to no tenant as flow of expats may drop significantly. If property market crash, the value of both your condos will plunge but your mortgage remains high plus your mortgage rates are high. Property is a very risky thing.

What you should do is to sell your investment property and use the net proceeds of $450k to pay down on your home mortgage. You can then use your savings to pay down further your home mortgage and clear it off fast. Then you build up you and your wife's CPF SA so that you can choose the best option to get $1750 pm each when you retire at 65.

Don't get caught in your desire to get rich but risking losing everything. Worse still, if you become jobless as you are the sole breadwinner. Don't listen to those people who say don't clear your mortgage but take more loan to buy investment property. These people will just paint a rosy picture but fail to advise the big downside. Our property market is dangerously oversupplied and mortgage rates are rising high.


Quote:
Originally Posted by Unregistered View Post
39/37, wife is homemaker, self earning $200k in 2014
1 condo in singapore, loan 900k left, worth $1.5m
1 condo in singapore, rental income, loan 400k left, worth $850k
cpf OA barely anything left, cash position $500k.
2 kids, 1 dog, no car.

Am I doing fine?
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  #7187 (permalink)  
Old 02-04-2015, 10:26 AM
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both myself/wife 33yrs old working with one young kid

Total annual income: 230k
savings(cash/stock/cpf oa): 500k
loan: hdb (300k +), car (<20k)
Property value based on last transacted: 650k
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  #7188 (permalink)  
Old 02-04-2015, 11:35 AM
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Quote:
Originally Posted by Unregistered View Post
both myself/wife 33yrs old working with one young kid

Total annual income: 230k
savings(cash/stock/cpf oa): 500k
loan: hdb (300k +), car (<20k)
Property value based on last transacted: 650k
You should pay off your HDB mortgage and your car loan using your cash and CPF and then build up lots of cash. When the property market crash due to high interest rates (because of weak SGD) and property oversupply (due to excessive purchase by property speculators for investments), you can then sell your HDB flat and upgrade to a fire sale condo paid in full. Cash is king.
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  #7189 (permalink)  
Old 02-04-2015, 12:12 PM
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This is very good, prudent advice. Listen to this guy. He knows what he is talking about. Don't listen to those with little knowledge on finance and global markets.

Quote:
Originally Posted by Unregistered View Post
You are overleveraged. At your age, you should already own a fully paid home. You have a huge $900k mortgage which depends on your salary to pay. In a worst case scenario of (1) you lose your job (those earning $100k pa and above 40 are at higher risk), (2) property market crash due to high interest rates and massive oversupply and (3) no rental income due to no tenant as flow of expats may drop significantly. If property market crash, the value of both your condos will plunge but your mortgage remains high plus your mortgage rates are high. Property is a very risky thing.

What you should do is to sell your investment property and use the net proceeds of $450k to pay down on your home mortgage. You can then use your savings to pay down further your home mortgage and clear it off fast. Then you build up you and your wife's CPF SA so that you can choose the best option to get $1750 pm each when you retire at 65.

Don't get caught in your desire to get rich but risking losing everything. Worse still, if you become jobless as you are the sole breadwinner. Don't listen to those people who say don't clear your mortgage but take more loan to buy investment property. These people will just paint a rosy picture but fail to advise the big downside. Our property market is dangerously oversupplied and mortgage rates are rising high.
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  #7190 (permalink)  
Old 02-04-2015, 03:31 PM
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While i think the advice is good, it will be hard for anyone to let go an investment property at this stage esp if they are receiving rental income.

Prices have come off quite a bit. For this guy, he is probably counting the loss opportunity cost by missing the boat to sell earlier and which can be estimated to be a sizeable S$100-200k

Can he hold ? Well, as he is receiving rental income and he holds just 3 years, he will "recover" this loss . And who knows what will happen in 3 years time ? If it recovers, then he would have made a bad call by putting himself out of the capital gains + rental income.

I know this because i have friends in similar situation. It is easy to say cut because prices etc but this is a very difficult call to make when it is your own
money and you dont really have a "burning" bridge situation.

Having said that, when a burning bridge situation comes, getting out is near impossible. We can only place our bets as best as we can see.


Quote:
Originally Posted by Unregistered View Post
This is very good, prudent advice. Listen to this guy. He knows what he is talking about. Don't listen to those with little knowledge on finance and global markets.
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