Property vs Stocks

 Interesting video I watched last night

In the video he mention about S$450k to finance a $1.5mil property versus the investment returns on S$450 invested in stocks. But if I'm a salaried worker and I can afford a $1.5mil property that probably mean I also have a substantial amount of money in my CPF OA account and I need only S$150k in cash + S$300k in CPF. The remaining S$300k I can then invest in stocks. I feel he should just compared S$150k in cash to purchase a $1.5mil condo vs S$150k equivalent in shares....

10-15 years ago I would say as-many-properties-as-you-can-afford all day long, but with the invention of ABSD everything went out of the window. Nowadays I think minimally everyone will need at least 1 property and stocks. If a couple can finance 2 units without ABSD that's all the better. Maximize the number of units one can own without paying ABSD, once that is settled just continue to serve the mortgage and focus excess funds on building stock investments.

I don't believe in all-in on stocks without owning a property because nobody can guess where the rental market is going, and neither can anyone promise anything about the stock market. 20-30 years down the road the returns on stocks might not catch up with the rental increase. Having a roof over one's head is always better. 

In the video it was probably assumed the investor is staying rent-free with family/friends. It will be interesting if he add the following scenarios:

i) Rental income - rental rates in Singapore has increased by 40-50% in the last 10 years. But the calculation is pretty flat in the video

ii) If the investor gets kicked out of his rent-free residence after 5 years. How much will he/she spend on rental (offset with the investment gains) vs taking back his property to stay. 

For someone like me who has children, a roof over our heads is one of the most important and fundamental issue. I see alot of YOLO investors on Youtube sharing about how much you've spent and earn on the stock market. When you dig deeper you realise they are saving 90% of their salaries because they are staying with their parents, no spouse/partner and no kids. 

Damn, kids are expensive! LOL~

Planning for retirement

At this stage of my life, this is the start of my 4th 15-year arc and I have to plan for retirement. Below is a very interesting video from Mr Loo which should help many people with their retirement planning.:

He mentioned the Four Levers of Retirement Income and I breakdown my own thoughts and strategies below:

i) CPF Life (estimated to be S$1.1k when I reach 65)

Having a few properties, I will opt for Basic Retirement Sum (BRS). I rather invest that S$100k myself or spend it. The breakeven point for CPF life between FRS and BRS is around 80yo. I rather invest or spend that money in my 50s and 60s.

ii) Investments (Target $500k with 4.5-5% annual return of $22-$25k/year or around S$2k/mth)

Consistent investment is important and is essential to match inflation. I've been investing around $10k/yr in unit trusts + equities + REITS a year in recent years, but from this year I hope to invest $50k/year. 

The reason why i've not been investing more in previous years? I've been investing in 3-4 holidays with the family. I think at that stage of my life, as well as the age of my kid, it was the best way to spend my money. Investing that money will definitely earn me so much more in the long term but I'm never going to get that travel experience with my kid when he's 100% with us. 

With a bit of self-discipline, I hope to hit my target of S$500k invested in the next 3-4 years. If not I should hit it when I reach 55 when I get that S$100k from CPF.

iii) Property Rental (est S$1k-2k/mth based on 50% of returns based on ownership share of property + assuming still servicing mortgage of S$3k/mth)

Right now I'm servicing mortgages on 2 properties housing my families. There will come a time the family will become smaller and a unit will be available for rental and income will come in. But even without that I look at it as paying cheap rental considering the interest repayment component of the mortgages come up to under S$2k a month. 

I think in Singapore property is a great way to fight inflation but since ABSD and other measures were introduced, the barrier to having a 2nd property for investment is becoming a distant dream.

The target is to pay off at least 1 of the unit in the next 4-5 years and that will be for self-stay while the other unit will be rented out and the rental will cover the mortgage repayment + some income.

iv) Part-time Work (S$1k/mth)

I think part-time work is great not just for the income but also necessary to stimulate our brain. I've heard too many stories of people dropping dead once they retire. Stopping work altogether after 20-30years is like a Ferrari racing at 200kmh and then stopping to 0kmh in 20metres. Even if the car does not hit a wall, the inertia would have caused serious damage to the internal organs of the driver. 

Just targeting 20 hours of part-time work a month = 4-5 hours a week is really do-able for me. Hopefully I am healthy enough to do the things I like when I retire. 

Summary

As long as I can clear the mortgage on 1 of the properties and hit S$500k on my investments, I think I can effectively retire in 4-5 years' time. I will have around S$5k of income and more when I reach 65 and CPF Life kicks in.

But that does not mean I have to retire. If I'm healthy and my job continues to be interesting I will propose to work in a reduced capacity, lower salary and less hours a week. 

In the meanwhile I'll continue to look for other sources of recurring income~

Wishlist on Nintendo Switch

 My son doesn’t ask for many things. It’s nearly impossible to solicit an answer from him on what he wants for his birthday present. But if he wants something he will open his mouth and ask… it’s really just waiting for the right time.

And not too long ago he asked me if he can purchase Hollow Knight: Silksong on Steam. 

Seeing I have a long flight to US in the near future, I'm thinking of charging up my old Nintendo Switch and download a few games to accompany me on that flight across the big pond. Below are my top picks:

Unicorn Overload

Shinobi : Art of Vengeance

The Adventures of Elliot: 

Katana Zero:

Metal Slug Tactics

Thronefall

Building a Multi Asset Portfolio in Singapore - Property vs Equity

I've been watching videos from the FifthPerson recently. And this week they touched on a topic which I really have an interest in: How to build a multi-asset portfolio

My key takeaway from this video is that property market work in cycles, so one must not over leverage. I think that is a very important advice, especially in the present climate where job security is filled with uncertainties. 

If a working couple purchase a really expensive property together, maximizing their capability to repay the loan, then it will be serious stress should one of them lose his/her job.

However owning 2 properties together with the intention to stay in one while renting the other out will justify this as the 2nd unit is an investment which have capital gain potential and is returning monthly rental income. 

But in order to buy 2 properties as a couple, they will have to pay ABSD of up to 20% on the 2nd property. That is S$160k for an $800k unit. Loan-to-value (LTV) for 2nd property is lower at 45% so that means one have to fork out higher cash/CPF upfront for the 2nd property.

Nowdays, alot of couples buy 2 properties decoupled, thus allowing them to avoid the ABSD and utilize the full LTV of 75% on each unit. Stay in one, rent out the other one. Even if one of them loses the day job, the rental return from the 2nd unit should be enough to cover the running cost (property tax, maintenance cost and loan repayments) with some cash returns.

Of course one will ask where the money for the downpayment for 2 units is coming from. Either through parents or from the sale of the first property they purchased together. The profits from the matrimonial home should be enough to pay for the downpayment of a 2nd home. 

Property Market trend in Singapore for the past 5 years

Many people say that property today does not give the same return compared to 10-20 years ago. I think that's not 100% true. Why not just buy S-REITS which have decent returns without all the hassles? 

The 2 charts above showing the private property price vs rental index for the past 5 years shows a correlation between the property price (albeit a bump in 2023 for rental) and rental in Singapore. For someone who bought a property 10 years ago at S$1000psf expecting S$2.5psf/mth rental return are now getting around 20-30% more 

We used to stay at Parc Seabreeze in a 4-bedder 10 years ago. We were paying around $5-5.5k/mth rental then. Today its easily $7.2-7.5k/mth, an increase of around 30% or more. If you had bought that exact unit 10 years ago? S$2.5mil and today its probably S$3.5mil.

So if you've bought it 10 years ago at S$2.5mil and getting rental income today of S$90k/annum. It's only a 3,6% return before property tax + maintenance + loan repayment. Actual return might only be 1% but the capital gain is already 40%. 

Whoever bought that unit 10 years ago, now they can sell it and use the profit and the original downpayment to fund the purchase of 2 units. There are many resale property opportunities in Singapore which I feel are undervalued and yet can consistently give reasonable rental returns.

What is success to me?

What is success to you? What is your KGI in life? 

For me its rather simple:

• I just want to tell my kid at my deathbed that I was happy to be able to watch him grow up. And I've brought him up to be a good person.
• I want to tell my wife I was happy I was able to bring her everywhere she wanted to go, and experience everything she wanted to do in life.
• I want to be able to tell everyone that I've tasted, seen and experienced nearly everything I wanted in life and I'm contented.

But to achieve all the above, I must have sufficient financial wealth, and to achieve that I have to exchange my time and energy to earn money. It doesn't have to be the work I like most but it has to be endurable else its not sustainable. 

The lady in the video (Qi) seems like she found the answer in life. Spoke with so much wisdom yet so simple and relatable. Definitely a role model for me~

My Anime List

Completed

• Demon Slayer
• Solo Leveling
• Frieren: Beyond Journey's End
• HAIKYU!! 
• Blue Box
• THE FIRST SLAM DUNK

Watching Now

• Mushoku Tensei
• The Fragrant Flower Blooms with Dignity

Watching Next

• Re:ZERO -Starting Life in Another World
• The Fragrant Flower Blooms with Dignity

Got my Apple Watch 10~

As part of my effort to improve on my Physical Wealth, I bite the bullet and invested in an Apple Watch. The major reason why I chose an Apple Watch is because of easy synchronization with my iPhone. And from the 3 models available (SE/10/Ultra2), I went with Series 10.

The reason for choosing Series 10 is mainly because of the balance between cost and functionality. Given I'm looking for the ECG and Blood Oxygen app support, the Series 10 does the job and the Ultra 2 is definitely too expensive for the stingy me. 

Ordered and got my Apple Watch last night. 

Considering its nearly $600 on Apple Store, I'm glad I was able to snag one at $400+. Here is the link to a listing on Amazon Prime: Apple Watch Series 10

And after 1 night of playing and sleeping with it, I am very happy to see various information like my ECG, Blood Oxygen and Sleep Pattern.

Next I'm going to use it to track my steps and other activities. If you can't measure it then you can't improve on it!