How much are you earning per annum?

Originally Posted by Unregistered

Thanks for the advice. We just booked this weekend as we cannot afford to go without car as we don't think COE will drop with so many cars deregistering. The demand will outstrip supply.

Good move. Don't buy an expensive car. It is a depreciating asset. Buy a cheap, good car and save your money for your retirement. Invest your money in dividend stocks. If I have $200k cash, I will not buy a $200k car. I will buy a $100k car, paid in cash and invest $100k in dividend stocks which give me 5% yield. Every year, I get $5k dividend and over 10 years, I get $50k dividend which I can use to buy my next car. If I buy a $200k car, my $200k will be burnt after 10 years.

Originally Posted by Unregistered

Good move. Don't buy an expensive car. It is a depreciating asset. Buy a cheap, good car and save your money for your retirement. Invest your money in dividend stocks. If I have $200k cash, I will not buy a $200k car. I will buy a $100k car, paid in cash and invest $100k in dividend stocks which give me 5% yield. Every year, I get $5k dividend and over 10 years, I get $50k dividend which I can use to buy my next car. If I buy a $200k car, my $200k will be burnt after 10 years.

Are you all so hard up for so call convenient? If you are filthy rich and when money is no more money in real term, then go ahead. If you are just a wage earner, and you still have to calculate how much is the opportunity cost, then forget about it. Convenience always come with a price. Just imagine through out your life span, how many cars you have to change, how much you have to spend on petrol and maintenance. Sum up the total expenditure spent on cars, that could make you live comfortably after retirement.

Many people in Singapore are rich. Households with income of $500k and above are very common nowadays. A lawyer couple, a doctor couple a banker couple in their early 30s can already earn a household income of more than $600k pa. No need to be in their 50s to reach this level. So what is a $100k COE? They can buy two brand new cars paid in cash just from their annual bonus. So current COE prices are cheap.

Plus the new immigrants who are rich. Read the article in today's Sunday times about the Indian guys makes $30k per month. Singapore has many of such foreign talents!

if you have to think so hard whether to buy a car or save the money, it is obvious you shouldnt be buying a car. Dont blindly follow the Joneses. Buy only if you can spare the cash and afford the maintenance of the car for your family's travelling comfort, convenience and privacy.

I think there is little status in owning a car nowadays since there are so many around, where once it used to be a status symbol. A few years ago, those owning BMs, Mercs and other Luxury brand cars are considered to be high status, but again these kind of cars are so common now. Worse, you see so many breaking down on the roads. Really lose face.

But now there lies the problem of perception. Since there are so many cars around, then those without cars could be perceived to be unable to afford one.

Originally Posted by Unregistered

Are you all so hard up for so call convenient? If you are filthy rich and when money is no more money in real term, then go ahead. If you are just a wage earner, and you still have to calculate how much is the opportunity cost, then forget about it. Convenience always come with a price. Just imagine through out your life span, how many cars you have to change, how much you have to spend on petrol and maintenance. Sum up the total expenditure spent on cars, that could make you live comfortably after retirement.

Originally Posted by Unregistered

if you have to think so hard whether to buy a car or save the money, it is obvious you shouldnt be buying a car. Dont blindly follow the Joneses. Buy only if you can spare the cash and afford the maintenance of the car for your family's travelling comfort, convenience and privacy.

I think there is little status in owning a car nowadays since there are so many around, where once it used to be a status symbol. A few years ago, those owning BMs, Mercs and other Luxury brand cars are considered to be high status, but again these kind of cars are so common now. Worse, you see so many breaking down on the roads. Really lose face.

But now there lies the problem of perception. Since there are so many cars around, then those without cars could be perceived to be unable to afford one.

Kiasu? At par with peers? Show off? How frequent you use your cars? Take total cost of owning one, of course have to include cost associated like parking lot, parking cost etc, divide by number of hours car in active use. How much is cost per hour? Will it be cheaper if you hire a taxi, or rent a car instead.

Yes, if you have to think so hard whether to buy a car or save the money, it is obvious you shouldn't be buying a car. So car is only for those who really can afford without have to think of retirement. They must have sufficient passive income to last even if they are to face loss of job the next day.

Originally Posted by Unregistered

Good move. Don't buy an expensive car. It is a depreciating asset. Buy a cheap, good car and save your money for your retirement. Invest your money in dividend stocks. If I have $200k cash, I will not buy a $200k car. I will buy a $100k car, paid in cash and invest $100k in dividend stocks which give me 5% yield. Every year, I get $5k dividend and over 10 years, I get $50k dividend which I can use to buy my next car. If I buy a $200k car, my $200k will be burnt after 10 years.

Base on above reasoning, you should not buy a car.

The reason why COE prices will rise is because of high demand. Supply cannot increase much due to our limited land space.

The high demand is due to:

1. Rising disposable income of dual income families. Many households have income of $10k pm or more. These families can easily afford a new car easily provided they have enough savings for the 50% downpayment. Given that most families bought their HDB BTO flat very cheaply, they can finance their housing loan just by using their CPF funds without having to use cash from their take home pay.

2. Many cars are old. So this means many existing car owners will need to replace their old cars and buy a brand new one. So over the next two years there will be high demand for new cars.

3. Increase in population. As the population increase, there will be more drivers and so demand for cars rise.

4. Strong property market over the past few years. There are many families who made a lot of money after they sold their BTO HDB flats. For instance, they may buy a BTO flat for $200k and after 5 years MOP, they sold at $500k. So they make profits of $300k which they can use to buy a new $100k car, paid in full without any loan. There are also many successful property investors who made a million dollars in profits over the last few years (now no longer possible though). So these people can easily buy new cars for their family members, one for husband, one for wife, one for son to drive to Uni, one for daughter to drive to work. Will only cost $400k in total if they buy four $100k cars.

5. Fresh graduates earn a lot more today than 10 years ago. A fresh grad working in the finance industry can easily earn $100k pa if he has good degrees. He can easily buy a new car with his salary.

I am 55 this year and will be retiring next year. Let me share my story. I first started with a HDB flat and then upgraded to a condo and finally upgraded to a landed property in 2006. My landed property then appreciated so much and became very overvalued. I sold it last year and made a lot of money. I then downgraded to a 4 room HDB flat. I told my children that it will be our retirement home. They understood and they don't mind as they have enjoyed staying in a condo and landed before. Since they too will be moving to a HDB flat when they get married, it is no big deal for them. My wife likes the flat as it is smaller and therefore easier and cheaper to maintain. In the past we spent a lot more maintaining our landed.

I paid the 5 year old flat in cash and have lots of cash balance. I invested my cash. I now earn a good passive income. My kids are working and contributes to the family expenses. We are managing well financially.

Originally Posted by Unregistered

The reason why COE prices will rise is because of high demand. Supply cannot increase much due to our limited land space.

The high demand is due to:

1. Rising disposable income of dual income families. Many households have income of $10k pm or more. These families can easily afford a new car easily provided they have enough savings for the 50% downpayment. Given that most families bought their HDB BTO flat very cheaply, they can finance their housing loan just by using their CPF funds without having to use cash from their take home pay.

2. Many cars are old. So this means many existing car owners will need to replace their old cars and buy a brand new one. So over the next two years there will be high demand for new cars.

3. Increase in population. As the population increase, there will be more drivers and so demand for cars rise.

4. Strong property market over the past few years. There are many families who made a lot of money after they sold their BTO HDB flats. For instance, they may buy a BTO flat for $200k and after 5 years MOP, they sold at $500k. So they make profits of $300k which they can use to buy a new $100k car, paid in full without any loan. There are also many successful property investors who made a million dollars in profits over the last few years (now no longer possible though). So these people can easily buy new cars for their family members, one for husband, one for wife, one for son to drive to Uni, one for daughter to drive to work. Will only cost $400k in total if they buy four $100k cars.

5. Fresh graduates earn a lot more today than 10 years ago. A fresh grad working in the finance industry can easily earn $100k pa if he has good degrees. He can easily buy a new car with his salary.

Very good analysis. Agreed fully on Point #2. I used to wait patiently for COE to drop in anticipation that there is going to be a big deregistration. But somehow COE refuse to drop. Then when my time comes and need to scrap, I realize the reason. People who scrap will buy new car. There is a huge number of people waiting at sideline. But when this group start to realize this fact, PANIC buying will occur. That's when COE will head back to $100k.