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They chose financial independence over home ownership.

Wednesday, December 14, 2016

This is somewhat extreme but watch how this Canadian couple chose financial independence over home ownership. They are in their 30s and, well, they are retired.

If we qualified for a BTO HDB 5 room flat which costs, maybe, $500,000 today, why do we need to buy a condominium which costs $1.5 million, for example?

If we didn't need so much living space, would a BTO HDB 3 room flat in Choa Chu Kang which costs less than $180,000 be good enough for us?

Now, would you rather have $1 million in income producing assets (e.g. income stocks) or a $1 million home (which doesn't generate income but instead would incur expenses)?

Very often, people over consume when it comes to housing and, not surprisingly, they might also be the people who find financial independence out of reach despite enjoying higher than average earned incomes.

Today I had a conversation with a colleague. She has a relative who is very unhappy at work due to unfair treatment and feels like quitting. However, this relative's family intends to buy a condo while retaining their HDB. The wife of this relative told him that if they go ahead and buy the condo, he MUST not quit. If he buys a condo, he is stuck between a rock and a hard place, and that is not good for mental well-being."

"Often, it is peer pressure.

"Keeping up appearances is more than just financially destructive.

"Do you believe me when I say that when I tell people I downsized from a 2 bedroom apartment to a 1 bedroom apartment, most of the time I would get a negative response?

"Recently, when I told my new banker that I bought a small car, he said the same thing as my dad that he would not buy a small car unless he could not afford a bigger one.

"It is peer pressure but it is also how we deal with it."


"maybe i have the wrong perception. i thought AK got the funds from property investment. thats why you have the funds to invest in stock market."

"You might have missed this:
How did AK create a 6 digits annual passive income?"

It doesn't hurt to have some advantages in life but unless severely disadvantaged, all of us can be financially independent.

Related posts:
1. Housing and the CPF.

2. To rent or to buy?
3. The biggest and most expensive.
Purchasing a 3-Room BTO flat:


STE said...

Hi AK,
Yah! This is very important point ,,,,as matter of " life style inflation " and keeping up status from " peer pressure " , we keep upgrading our housing need,,, 1 room , 2 rooms, 3 rooms , 4 rooms, 5 rooms,5I , EC , Condominium (OCR,RCR,CCR), Detach , Semi-D, Bungalow, Good Class Bungalow, VGC Bungalow,,,,,,never ending ,,,, chasing and chasing ,,,, how to retire ? Of course housing is matter of choice and very personal,, for me ,,, I would rather staying in HDB ,,, and having decent size of portfolio which would give me enough passive income.
,,,, and enjoying my holiday at skiing resort , Interlaken , Switzerland,,,
Cheers !! :-). Also always remember that house is being classify by how many room and size it have ,,, but the more important is " home" ,,,,on family bonding and relationships of family members in that " house " matter ,,, not the size and rooms ,,,

AK71 said...


We are on the same page here. :)

This is possibly why the tiny house movement is gaining momentum in the USA. A smaller mortgage and, in some cases, no mortgage allows people to do a lot more with their limited resources.

sinkie over said...

I have gone the extreme. I am renting a room. I can stop working anytime. A friend of mine who was financially independent in his 40s lives in a 1 room flat.

overseas sinkie

AK71 said...

Hi OS,

An asset light strategy with a focus on cash flow. You've cracked the code. ;)

sinkie over said...

Ak71, thanks lol.

in Singapore, property tax is very low especially for HDB flats. Overseas, housing tax can be a few thousand dollars a year for a regular sized apartment or house. In addition, there are numerous other fees to pay.

If ever I have a property, it will be a tiny house or one of those mickey mouse apartment. Cheap and good.

overseas sinkie

AK71 said...

Hi OS,

Unfortunately, many Singaporeans do not know how fortunate we are and in more ways than one too. :(

I have friends who moved overseas for a while and came back singing praises about Singapore. It is very ironic. Some of them were very unhappy with Singapore before they left. Truly, we do not know we had a good thing until we lose it.

Oh, I downsized to a shoebox apartment. It was a bold move as there were so many voices against it. To be fair, I must say that anything smaller than 400 sq feet would probably be too much of a challenge for me.
How is shoebox apartment living in Singapore?

AK71 said...

We need a home but a condo?

steady said...

"However, this relative's family intends to buy a condo while retaining their HDB."

Maybe the family wants to buy a condo and rent it out as part of their retiremment planning & investment strategy.
Some family are not savvy and good at stock investing hence they opt for property investing.

AK71 said...

Hi steady,

Investing in real estate is actually a lot more daunting than investing in stocks because of the amount of money involved, the relatively less liquid market and also the concentration risk.

Some might say they would like to invest in properties because they think it is easier to understand and even execute. I would say it isn't. -.-"

AK71 said...

Also, see:
Buy that 2nd residential property and pay the ABSD.

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