How much savings do you have?

Originally Posted by Unregistered

Only you will know.

Then it's you.

Chanced upon this forum recently and admire that so many here have successfully build up their saving and retirement. I hope to get some advise.

My wife and myself are in early 40's with 2 young kids (3 and 5yo). Our combine income/saving are

Income = 170k pa (exclude bonus)
Savings= 30k
Stock=150k
CPF OA = 170k
Property (hdb) = 600k (fully paid)
Passive Income= 5k pa (Stock)
1 car (6 year old, fully paid)
Debt = 0

We hope to achieve
- more passive income
- invest in property (but have little saving)
- build up education fund for children
- build up retirement fund

Thanks in advance.
Clueless daddy

[lazyplane]

What is the order of priority for your plans : ie

Originally Posted by Unregistered

We hope to achieve
- more passive income
- invest in property (but have little saving)
- build up education fund for children
- build up retirement fund

Thanks in advance.
Clueless daddy

To start you off, think about the following :
1. Based on your age profile, conceptually both you and your spouse have around 25 years of working life to go.
How much do you need when you retire and how long ? A general recommendation is plan to live on your own means without charity up to 90. ie 25 years post 65 yrsold.

Assume you need $5000 pm as a couple and without need to support anything else and ignoring all the other stuff like time value of money, inflation and simple mathematics = 5 k * 12 mths * 25 yrs = S$1.5 million.

And with that you have a off hand calculation of a retirement goal

2. Also you mentioned you have kids , so around 12~15 years time, when they start their university studies , you may have some financial commitments there to think about.

Do you think your kids will study overseas or Singapore ?
Will any of them be doing post grad or those super expensive course like doctors , lawyers and architecture ?

If Singapore and not the so expensive course, i will assume 75k to 100k max for a 3 year duration of study.

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

Originally Posted by lazyplane

What is the order of priority for your plans : ie



To start you off, think about the following :
1. Based on your age profile, conceptually both you and your spouse have around 25 years of working life to go.
How much do you need when you retire and how long ? A general recommendation is plan to live on your own means without charity up to 90. ie 25 years post 65 yrsold.

Assume you need $5000 pm as a couple and without need to support anything else and ignoring all the other stuff like time value of money, inflation and simple mathematics = 5 k * 12 mths * 25 yrs = S$1.5 million.

And with that you have a off hand calculation of a retirement goal

2. Also you mentioned you have kids , so around 12~15 years time, when they start their university studies , you may have some financial commitments there to think about.

Do you think your kids will study overseas or Singapore ?
Will any of them be doing post grad or those super expensive course like doctors , lawyers and architecture ?

If Singapore and not the so expensive course, i will assume 75k to 100k max for a 3 year duration of study.

[lazyplane]

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

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

Your post had me thinking back to when I was in my late 30s, some 16 years ago. Our combined income then was similar to yours now. Times was hard for us. Here was what happened.

Years earlier when we got married, we applied for an exec HDB flat. When we were told we had to wait 3 years for it, we decided to buy a small private apartment instead. As our children grew they wanted their own rooms and with my parents staying with me, we upgraded to a 4 bedroom private property. We bought the bigger property first while waiting to sell our smaller property. Then the Asian Financial Crisis hit, and we were stuck with 2 properties and 2 loans!

Luckily we were "relatively young" then, we held on to both properties and rented out our smaller apartment for a song. Would you believe for only $900 a month!? For a further agonizing 10 years we held on to the smaller apartment, where at long stretches it remained vacant, because for that rental we were getting unsavory tenants. So we decided that we rather leave the apartment empty.

Then enblocs got into fashion, and we got 3 x what we paid for the small apartment. There was no looking back for us. With the money, we invested in another 4 bedroom condo for rental. And at the same time, our own 4 bedroom apartment also got enbloc-ed! Buoyed by the property magic, we bought yet another.

We are now staying in the newer 4 bedroom condo apartment with another brand new condo apartment for rental income. Both fully paid.

Looking back, my wife and I felt that had we waited for the HDB flat, we would still staying in the HDB.

Originally Posted by Unregistered

Chanced upon this forum recently and admire that so many here have successfully build up their saving and retirement. I hope to get some advise.

My wife and myself are in early 40's with 2 young kids (3 and 5yo). Our combine income/saving are

Income = 170k pa (exclude bonus)
Savings= 30k
Stock=150k
CPF OA = 170k
Property (hdb) = 600k (fully paid)
Passive Income= 5k pa (Stock)
1 car (6 year old, fully paid)
Debt = 0

We hope to achieve
- more passive income
- invest in property (but have little saving)
- build up education fund for children
- build up retirement fund

Thanks in advance.
Clueless daddy

Hi Lazyplane,

Many thanks for your advise I really appreciated it. I have been pondering over what you mention over the weekend, and explain to my wife (she is less savvy) and with some friends. At this stage, I think I will continue to look at investing in stock for passive income, as I am mainly investing in SGX I plan to also look at oversea stock investment (if you have any advise to kickstart a newbie like me it will be great), and also looking at bonds (to balance the risk and exposure in stock only) and wait for opportunity for a second property when timing is right and saving is sufficient (maybe after the ABSD is lifted).

Thanks again, and really appreciate it.

Regards
Cluess daddy.

Originally Posted by lazyplane

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

16 years ago, the same income should be quite high as compare to now. Now, even a small condo will cost at least close to $1M Your story serve as an inspiration to me. Hopefully 16 years later I can share a similar story

Cheers
Clueless daddy

Originally Posted by Unregistered

Your post had me thinking back to when I was in my late 30s, some 16 years ago. Our combined income then was similar to yours now. Times was hard for us. Here was what happened.

Years earlier when we got married, we applied for an exec HDB flat. When we were told we had to wait 3 years for it, we decided to buy a small private apartment instead. As our children grew they wanted their own rooms and with my parents staying with me, we upgraded to a 4 bedroom private property. We bought the bigger property first while waiting to sell our smaller property. Then the Asian Financial Crisis hit, and we were stuck with 2 properties and 2 loans!

Luckily we were "relatively young" then, we held on to both properties and rented out our smaller apartment for a song. Would you believe for only $900 a month!? For a further agonizing 10 years we held on to the smaller apartment, where at long stretches it remained vacant, because for that rental we were getting unsavory tenants. So we decided that we rather leave the apartment empty.

Then enblocs got into fashion, and we got 3 x what we paid for the small apartment. There was no looking back for us. With the money, we invested in another 4 bedroom condo for rental. And at the same time, our own 4 bedroom apartment also got enbloc-ed! Buoyed by the property magic, we bought yet another.

We are now staying in the newer 4 bedroom condo apartment with another brand new condo apartment for rental income. Both fully paid.

Looking back, my wife and I felt that had we waited for the HDB flat, we would still staying in the HDB.

31yo, male
Annual wage >$142k
Stocks >$210k
Unit trusts >$35k
CPF > $220k
Property ($1.2mn; paid up $300k)

But I only have $2k savings. How?

Originally Posted by Unregistered

31yo, male
Annual wage >$142k
Stocks >$210k
Unit trusts >$35k
CPF > $220k
Property ($1.2mn; paid up $300k)

But I only have $2k savings. How?

Your net worth and salary is quite ok for your age. My wife and i had about the same at 31 ( 1.4M combined ). What you can do is use the cpf and cash from selling your stocks to invest in property if prices come down. Thats what we did and we doubled our net worth in the next 7 years