Whats your net worth

In investments, the most important aspect you have to take seriously is risk management. Have you heard of the term "tail risk". You have to consider this in your investments. Look at the worst case scenario. Here are your worst case scenario.

1. Both you and your wife loses your job. In this uncertain global environment, this is not impossible. Just ask around you, the seniors who have gone through tough times. Btw, which sector are you working in? If you are in cyclical sectors, you are at a highest risk.

2. Both your condos have no tenants. Even though, you could rent at rock bottom rents, there are simply no tenants as the flow of FTs just stopped and reduced big time.

3. The value of your properties collapsed, which means you are stuck as you cannot sell. There are no buyers at all. The banks will foreclose your property.

4. Your combined salary of $12k a month is of no comfort if you have to service $5k a month in mortgages, while you still have to meet monthly household expenses of $9k.

Not sure who is your financial advisor. I will fire him immediately if I were you. Or perhaps you are fooled by the many property agents and property seminars that persuaded you to leverage up?

Originally Posted by Unregistered

Have those who walked the path before also been at a similar risk position at one time or another during your journey?

I calculated I have 200k buffer to meet any increase in interest rates and since we are still working and all rental excesses are saved, if rental market soften, we have no issues renting on the cheap since my breakeven rent is pretty low. I think we can be very very competitive in rental rate if that happens as we bought the properties before the period of escalating prices.

I think if the following happens we can get caught out:

Interest Rates to be above 5% from current
Rental drop by more than 50%
Property price remaining for long sustained period of time (say > 5 years)

Otherwise should not we take this manageable risk and build our wealth?

Originally Posted by Unregistered

In investments, the most important aspect you have to take seriously is risk management. Have you heard of the term "tail risk". You have to consider this in your investments. Look at the worst case scenario. Here are your worst case scenario.

1. Both you and your wife loses your job. In this uncertain global environment, this is not impossible. Just ask around you, the seniors who have gone through tough times. Btw, which sector are you working in? If you are in cyclical sectors, you are at a highest risk.

2. Both your condos have no tenants. Even though, you could rent at rock bottom rents, there are simply no tenants as the flow of FTs just stopped and reduced big time.

3. The value of your properties collapsed, which means you are stuck as you cannot sell. There are no buyers at all. The banks will foreclose your property.

4. Your combined salary of $12k a month is of no comfort if you have to service $5k a month in mortgages, while you still have to meet monthly household expenses of $9k.

Not sure who is your financial advisor. I will fire him immediately if I were you. Or perhaps you are fooled by the many property agents and property seminars that persuaded you to leverage up?

Thanks for the advice. There is no financial advisor. DIY actually. I understand the worst case scenario, which of course can happen. Our employment income is stable. We took the risk and built this current portfolio through our own efforts and income and now that we have some gains I want to steady the ship going forward.

Originally Posted by whizzard

However, health is certainly a very important matter and if you really need to disengage because of that, it is a pretty rational decision. Money can't buy health, as the saying goes.

There is a lot of research, including some even published in the Straits Times that says retiring early leads to premature death. If a job is too stressful, change it. There is no need to stop working.

Originally Posted by Unregistered

There is a lot of research, including some even published in the Straits Times that says retiring early leads to premature death. If a job is too stressful, change it. There is no need to stop working.

There is no need to be afraid of death. Be afraid of hellfire.

Type "HELLFIRE" in YouTube

May you be given guidance

Originally Posted by Unregistered

I have 2 condos rented out and choose to live in our HDB with my wife. We are easily contented and wants to simply, just not to simply live. We are between 35 to 40 yrs old.
No kids yet but planning for one.

Total property valued at $3 mil
Outstanding loan $1.5 mil
Net worth including cash and CPF about $2.2 mil

Gross Rental Income $7k
Monthly Housing Loan Instalment $5k
Working Household Income $12k
Monthly Expenditure $9k
Monthly Savings $5k

We bought the typical term insurance and critical illness coverage, medishield plus and riders.

Is our retirement plan secure say around 50 yrs old? Given that we keep the properties for passive income? Really sincere in hearing from wise people who have walked the path before. Thanks!

Your one sentence caught my attention....."No kids yet but planning for one."
upbringing of kids is the heaviest in costs to family. Although you are, in my humble opinion, highly levergaging.... but the least, you have S$700,000 cash/CPF/in kind to buffer, should the housing market correct, or rental return drops with over-supply.

[whizzard]

Originally Posted by Unregistered

I have 2 condos rented out and choose to live in our HDB with my wife. We are easily contented and wants to simply, just not to simply live. We are between 35 to 40 yrs old.
No kids yet but planning for one.

Total property valued at $3 mil
Outstanding loan $1.5 mil
Net worth including cash and CPF about $2.2 mil

Gross Rental Income $7k
Monthly Housing Loan Instalment $5k
Working Household Income $12k
Monthly Expenditure $9k
Monthly Savings $5k

We bought the typical term insurance and critical illness coverage, medishield plus and riders.

Is our retirement plan secure say around 50 yrs old? Given that we keep the properties for passive income? Really sincere in hearing from wise people who have walked the path before. Thanks!

Looks OK given your age profile. Some leverage is important to amplify your wealth accumulation.

Two things to look out for:-

(1) Focus on your job because that provides you with the needed recurring income to sustain your expenditure and savings;

(2) Retain the spare buffer you have built up for rainy days - don't be too tempted to invest it in high risk ventures.

Your expenditure of $9k does appear a little high given your profile of simple living though.

My wife is now 42, I'm 46. She earns $80k pa while I earn $120k pa. Our family of four lives in a humble D10 condo. We save $45k pa. My net worth is $1.7m while my wife's net worth is $0.8m. Are we doing ok? Can we retire by the time we reach 72? Appreciate the advice of wise men in this forum. Thank you.

Originally Posted by Unregistered

My wife is now 42, I'm 46. She earns $80k pa while I earn $120k pa. Our family of four lives in a humble D10 condo. We save $45k pa. My net worth is $1.7m while my wife's net worth is $0.8m. Are we doing ok? Can we retire by the time we reach 72? Appreciate the advice of wise men in this forum. Thank you.

Retiring at 72?? Thats not a target, that's time you should had retired for years...
Sorry to be harsh, imagine you studied and worked for 3/4 of your life (ideally live up to 100 y/o) and your target to retire at 72? What can you do after that, enjoy your life sitting at home? Can you go to fulfill your dreams anymore, touring around the world? This is crazy.. even retiring at age 65 is crazy enough.. How many can make it to 70?

Originally Posted by Unregistered

Retiring at 72?? Thats not a target, that's time you should had retired for years...
Sorry to be harsh, imagine you studied and worked for 3/4 of your life (ideally live up to 100 y/o) and your target to retire at 72? What can you do after that, enjoy your life sitting at home? Can you go to fulfill your dreams anymore, touring around the world? This is crazy.. even retiring at age 65 is crazy enough.. How many can make it to 70?

Sorry, I don't quite understand you. Are you saying I should retire earlier than 72? How early? Or I should retire later? What age? 85? I don't think I will live till 100. I expect to live until 85. Nowadays, not many people live till 85. Many die in their 70s or even 60s actually.

Originally Posted by Unregistered

My wife is now 42, I'm 46. She earns $80k pa while I earn $120k pa. Our family of four lives in a humble D10 condo. We save $45k pa. My net worth is $1.7m while my wife's net worth is $0.8m. Are we doing ok? Can we retire by the time we reach 72? Appreciate the advice of wise men in this forum. Thank you.

Your combined net worth is higher than mine when I retired at 44. Just for info, most of my friends plan to retire between 55 to 65.