Why defensive investing is a good idea for most of us?

If you have been following my blogs, you would be familiar with my reminder to myself that in the current environment, it is probably not a bad idea to be more defensive as investors.

The heightened geopolitical tensions in many parts of the world, sticky inflation, higher for longer interest rates, slowing economic growth and the prospect of economic recession in major economies make for a troubling brew.

I have also said that as a retiree investor for income, it really makes more sense for me to be more defensive and seek out capital preservation options, reducing beta or volatility in my portfolio.

When interest rates were very low, there were people who would borrow money to invest in real estate investment trusts and thought they were actually investing defensively.

Why?

An idea in defensive investing is to invest in assets which deliver stable earnings and meaningful dividends and real estate investment trusts, for the most part, looked like a good fit.

However, these investors who were borrowing money to invest in real estate investment trusts were not investing defensively. 

What they were doing was actually aggressive and would fall in the same class as margin trading and options trading.

If interest rates were to rise rapidly which they did, they could find themselves in a boatload of trouble as the unit prices of real estate investment trusts fell and cost of financing rose.

What they were doing had little difference with borrowing money to invest in Alibaba's common stock.

If the price of the common stock fall below a certain price, the lenders will come knocking which was what happened to some investment "gurus."

I never want to have to deal with such a possibility which is the reason for the word "bread" in "eating crusty bread with ink slowly."

If you are new to my blog and don't understand, I will leave a link to the relevant blog below.

Now, is defensive investing only good for retirees like AK?

I would argue that defensive investing is probably a good idea in varying degrees for people who do not have deep pockets.

For regular folks who still need their earned income, capital preservation should have a place in the overall scheme of things.

For retirees and people who do not have the ability to stomach big financial losses, their investment portfolio should be more defensive than not.

The ability to stomach big financial losses will vary from person to person.

How defensive an investment portfolio should be should have an inverse relationship with the ability to stomach big financial losses, theoretically.

The more able a person is able to take big losses, the less defensive his investment portfolio could be, therefore.

However, I have often seen people who are ill able to take big financial losses adopting very aggressive investing ideas.

I think they should ask themselves if they liked the idea of living next to an active volcano.

Defensive investing is also a good idea for people who are mentally unable to take big financial losses.

Losing sleep because you lost a few thousand dollars in a recent investment?

Well, then, you might want to do more defensive investing.

How do we do defensive investing?

I will not tell anyone what to invest in but I will say this.

As long as we invest with an eye on capital preservation, minimizing the risk of financial losses, we are taking a step towards defensive investing.

Promises of astronomical growth and future returns from businesses which are burning cash do not interest defensive investors.

Thinking of becoming more defensive in your approach to investing now?

If AK can do it, so can you!

Related posts:
1. "Eat crusty bread with ink slowly."
2. Update on saving for income.
3. More in equities or fixed income?
Recently published:
Investing or speculating in properties?

Bankrupt before 30. Is this a trend? Don't let it happen!

This blog is just some stuff for my pensieve.

I know that being on the verge of bankruptcy is not fun. 

I am talking from experience. 

Becoming bankrupt must be a lot worse. 

The combination of high inflation and very high interest rates is expected to send many economies into a tailspin. 

Bankruptcies are expected to increase. 

Allianz Trade estimates that bankruptcies will increase globally by 19% in 2023. 

Bankruptcies in Australia increased to 238 Companies in February 2023 from 175 Companies in January of 2023. 

The US is expected to experience a 40% rebound with 18,900 bankruptcies. 

If we think this is only happening in places like the USA and Australia, consider this. 

In Singapore, we already saw bankruptcies rose last year in 2022. 

Although the Covid-19 pandemic hurt Singapore's economy, the number of people who were made bankrupt in 2021 sank to the lowest in five years! 

Ministry of Law data shows that 3,648 people filed for bankruptcy last year in 2022. 

That was fifteen per cent higher than the 3,160 applications filed in 2021. 

This comes amid much higher cost of living, rapidly rising interest rates and the loss of pandemic support measures. 

The number of bankruptcies is expected to increase this year in 2023. 

Property auctions and mortgagee sales are, therefore, expected to rise in 2023 on the back of increasing number of bankruptcies. 

I always say that it is not a bad thing to have a crisis mentality. 

Always think of what might go wrong. 

Even though it might not look like it could happen, things do go wrong when we least expect them to. 

Take precautionary measures. 

Limit your exposure. 

If you run a business, evaluate credit limits and terms extended to customers. 

This is especially so for customers who are at risk for bankruptcy or already struggling to pay.

Businesses could be made bankrupt because too many debtors could not pay up.

Don't let other people's problem become our problem.

What I did when I was working as a business manager back in the day was to ask for larger upfront payments and allowing a smaller amount on credit. 

As an individual, although it is important to make sure to have an adequate emergency fund, to avoid bankruptcy, it is more important to make sure we are not over-leveraged. 

An emergency fund is unlikely to save us if we are excessively leveraged when things do go wrong. 

If we are using 60% or more of our earned income to service debt and if we do not have any meaningful passive income, then, we should seriously consider deleveraging.

If we must have leverage, how much is prudent?

Well, I don't know exactly how much leverage we should limit ourselves to in order to be considered prudent.

However, if 20% or less of our earned income is used to service debt, I feel that is relatively comfortable.

It will give us the option to put aside more money, and in an environment where money has a much higher cost, it is not a bad asset to hold.

Why not use all our money to pay down debt?

Well, for most of us, if we do that and if we become unemployed, we are in trouble.

With global recession a greater possibility now, be very careful.

Of course, having less leverage will also give us the option of investing more money when Mr. Market goes into a depression.

We must remember that it is pretty easy to sink into bankruptcy if we are careless. 

In Singapore, bankruptcy is a legal process involving an individual or firm that is unable to repay any outstanding debt of at least $15,000.

Only $15,000.

Don't Y.O.L.O. 

Don't be like an ostrich sticking its head in the ground. 

There is no automatic way to be released from bankruptcy in Singapore. 

The good news is that bankruptcy is avoidable. 

How? 

To me, it is simply being careful and not to do anything financially irresponsible. 

I saw in the news that the young in Singapore are increasingly relying on credit card debt. 

There is also a growing "buy now, pay later" culture. 

These generate sounds of ticking time bombs to me. 

This is the story of a young person who was declared bankrupt before turning 30 years old. 

He got his first credit card soon after graduating. 

He was excited when he got the card and took it as a sign that he had arrived. 

Soon, he found how easy it was to spend money or, more accurately, future money. 

Scratch that. 

It was simply money he didn't have. 

Then, came the interest free repayment offers. 

No interest for 12 months? Really? 

He maxed out that card and applied for a line of credit. 

Rinse and repeat. 

Before long, he had a mountain of debt. 

How does one who is making $2,500 a month get out of a $50,000 debt pile? 

Warren Buffett famously said the following to people, especially those with credit card debt. 

"I think people should avoid using credit cards as a piggy bank to be raided." 

We have to be financially prudent before we can work towards financial freedom.

Recently published:
1Q 2023 passive income.

Reference:
Survivability and opportunity.

Bankruptcies and property auctions rising. Rule of 15 ten years later. Are those who ignored the rule paying the price?

"Bankruptcy petitions are on the rise amid interest rate hikes, growing inflationary pressures and the expiry of pandemic support measures for borrowers, notes real estate consultancy Knight Frank."

Source: 

The Business Times, 31 Jan 2023.

I first blogged about the Rule of 15 in 2013.

That was 10 years ago.

Scary how quickly time flies.

It was something that generated plenty of discussion.

Most readers were curious.

Many agreed while some, mostly property agents trying to sell properties including those trying to sell properties in Iskandar Johor, disagreed.

Some who disagreed were even pretty belligerent and said I was spouting nonsense, which, to be fair, I do from time to time.

Sadness.

From that blog, a few more were published.

Since it has been so many years, readers new and old might ask what is the Rule of 15?

Basically, the "Rule of 15" says that if we could buy a home at a price that is 15 times (or less) the annual rent a similar property would fetch in the area, it makes more sense to buy than to rent.

I felt that the simple "rule" could be used as a guide to help in decision making not just in buying and renting properties but also in selling if we happen to own properties.

I still feel the same today.

Anyway, if you are new to my blog or if you need to refresh your memory, this is the link to the blog which has examples too:

To rent or to buy: Rule of 15.

You could also tune in to a video AK produced on the Rule of 15 if you prefer to listen than to read:

At the time, I said that the low interest rate environment which, of course, persisted more or less till early last year, made the very much lower rental yields acceptable to investors.

Now that interest rates have risen or normalized, if we have purchased a property with the help of a bank loan, we would have a heavier debt burden and would have to demand a higher rental yield from the property.

Property value could, however, reduce if the property we own is unable to command a higher asking rent which is highly possible in a weaker economy.

Doctor Evil getting a haircut in Iskandar, Johor?

Paying more every month to service the loan and seeing the value of the property reducing which might or might not lead to lenders knocking on our door?

Double whammy?

So stressful.

It would be even more stressful if we took on huge loans or many loans and leveraged to the hilt.

Interest rates rising seems to have led to the tide receding and we could begin to see who are the people who were swimming naked.

So embarrassing.

Very cham like that.

Remember this blog in which I said we could grow richer if we didn't think of three things?

Don't think and grow rich.

I also shared a story about what happened to someone I knew:

From rich to broke.

Of course, as usual, AK is just talking to himself.

Is my blog for entertainment or education?

I blur.

You decide.

Related posts:
1. Rule of 15 revisited (2017.)
2. Cash flow is more important.
3. Buying property in Iskandar Johor?

Rising interest rate and home loans.

This blog is in reply to a comment from a reader.

I blogged about home loans before: 

Fixed rates, SIBOR, FHR18 or HDB housing loan? 

That was about 6 years ago but I think some bits are still worth reading. 

My gut feeling is that mortgage rates will rise faster than the SSB's 10 year average coupon. 

Even the fixed deposit rates are rising rather quickly now as banks have started competing for deposits. 

Banks are trying to lock savers in with higher rates now because they think interest rates will go even higher in future. 

My mom went to renew her fixed deposit a few weeks ago and was pleasantly surprised to be offered 1.1% for 1 year. 

This was because my aunt did her renewal a month before and she was offered 0.8% at the same bank. 

Another bank offered my mom 1.5% per annum but it was a 2 years fixed deposit. 

For a 3 years fixed deposit, they offered her 1.9%. 

That's too long and we are not compensated enough when interest rates are expected to rise rapidly in the next couple of years.

I told my mom to just go with the 1 year fixed deposit because interest rate would probably continue rising rapidly. 

We could soon see 2% interest rate offered for a 1 year fixed deposit.

In fact, it could even go higher if inflation stays stubbornly high and the Fed has no choice but to continue raising interest rate to a point where it is higher than the inflation rate. 

After all, the most effective way of bringing down inflation if past experience is anything to go by is to have interest rate higher than what inflation is and inflation is at about 8% in the USA now. 

We can say that inflation is lower in Singapore but, unfortunately, when it comes to interest rate, Singapore is a price taker because we do not control the interest rate in our country. 

"Most countries, including the United States and China, adopt an interest rate policy where central banks raise or cut interest rates. 

"Singapore is the only major economy in the world to use the exchange rate, guiding the Singdollar higher or lower. 

"MAS says the exchange rate is the best tool for a small, open economy like Singapore" 

Source: The Straits Times. 

Still, no one can be sure what the longer term picture is going to be but in the shorter term, there will be pain and most of us should be prepared to tighten our belts. 

I remember when I paid off my last home loan, my mortgage rate was 5.1%.

Yes, young people might find that rather surreal but it wasn't a bad dream.

It was real.

Interest rates are going higher but no one knows for sure how much higher.

Still, if we are not overleveraged, all else being equal, we should do better than most.

See: 

Do not make difficult times more difficult.

Recently published:

Lucky to have Singapore Savings Bonds.

Related posts:
1. Disastrous property investments.
2. Buying a home for first timers.

Reallocate as interest rate rises in a slowing economy.

Interest rate is rising.

PM Lee recently warned of a possible recession in the quarters ahead.

Put rising interest rate and a slowing economy together, we get a rather gloomy picture.

The evil which is inflation is preferred to the evil which is deflation.

Although inflation is the lesser evil, it isn't as benign when it is heightened which is what we are seeing now in the world.

We can reduce inflationary pressure either by increasing supply of goods and services which are in demand or tempering demand for such goods and services.

As it is difficult to increase supply right away, central banks are trying to tame inflation by increasing interest rate in an effort to reduce demand.

Increasing interest rate increases the cost of debt.

Credit is the lifeblood of commerce and most businesses are leveraged to some degree.

If the economy is healthy, businesses can pass on the higher cost of doing business to their customers and higher finance expense that comes from higher interest rates are naturally a part of such cost.

However, it becomes more difficult for many businesses to pass on such higher costs to customers if the economy is suffering from malaise.

Heightened inflation, rapidly increasing interest rates and low economic growth is not a good mix.

In such a situation, even very strong companies will not be spared a slowdown as most entities would be less ready to part with their money.

Already, we see some big name MNCs both in the old and new economies warning of very difficult quarters ahead.

Only the fittest will survive but even they might not emerge unscathed from such a toxic cocktail.

As an investor for income, I believe that businesses which are able and willing to pay a meaningful dividend should be favored.

To make sure that dividends are sustainable, these businesses should also provide necessary goods and services and have stronger balance sheets.

They too will take a few punches during hard times but they should be able to roll with the punches.

I think staying invested is still the way to go but, like I said, I should mostly be invested in businesses which are able and willing to pay dividends even during hard times.

So, with this in mind, I have taken a hard look at my largest investments since they impact the performance of my portfolio the most.

The strategy to increase my investments in DBS, OCBC and UOB during the COVID-19 induced bear market has turned out well and sticking with this strategy makes sense to me especially with interest rate rising.

I am also interested in increasing my investments in ComfortDelgro and CLCT on weakness as they seemed to have lagged in price recovery while their businesses look more attractive to me in recent times but for different reasons.

I am leaning more towards ComfortDelgro which has a stronger balance sheet and also because looking at the numbers which have improved, there is a fairly good chance that future dividends will be higher and could even go back to pre-pandemic levels.

CLCT's plan is to increase the proportion of new economy assets in their portfolio and I foresee more fund raising in the future.

So, I will increase my investment in CLCT slowly and not bulk up in a hurry.

REITs are required to pay out at least 90% of their operating cash flow to investors to enjoy tax benefits and this is a source of comfort to me.

The REITs in my portfolio are rather conservative when it comes to debt and in the case of IREIT Global, some of their rental income is linked to the German consumer price index and higher inflation could see a greater increase in income.

In my list of largest investments, the only entity which did not pay a dividend during the last bear market was Centurion Corporation.

Amongst my largest investments, Centurion Corporation also has the weakest balance sheet apart from Wilmar International.

However, Wilmar International is in the business of food production and distribution which, in my opinion, is recession proof. 

Given their size and market dominance, they should be able to charge higher prices.

Wilmar also has good options available to unlock value for shareholders and they were paying dividends even during the pandemic.

I increased my investment in Centurion Corporation as Singapore decided to live with COVID-19.

For those who are interested in my thoughts on the matter, read:

1Q 2022 passive income.

In an environment of rapidly increasing interest rate and slowing economy, however, with a rather weak balance sheet, it could be harder for Centurion Corporation to bring home the bacon.

In my original blog on why I invested in Centurion Corporation, I crunched some numbers on how rising interest rate could impact Centurion Corporation's interest cover ratio.

For those who are interested, read:

Added Centurion Corp to portfolio.

Of course, if they are able to increase asking price per bed meaningfully to balance the increase in the cost of debt, then, they should be OK.

Although they would be able to do so easily in a healthy economy, it might not be so easy during times of economic malaise.

Wait, didn't Centurion Corporation do quite well even when the economy was unhealthy?

Yes, they did but they didn't have to deal with rapidly increasing interest rates.

I don't know everything and I might be missing a few things here.

So, I have decided to only reduce my exposure to Centurion Corporation and not go to zero.

As my total passive income held up quite well during the two years when Centurion Corporation suspended dividend payouts, I doubt reducing my investment would have any meaningful impact in terms of passive income generation which makes this decision an easier one for me.

Although Centurion Corporation still looks undervalued to me as it trades at a huge discount to NAV, to be honest, this discount could reduce as valuation of their assets could take a hit.

It would be interesting to see how the management navigates the challenges ahead and how they might unlock value for shareholders.

They are trying to sell some assets in the USA now which if successful should help in reducing leverage and unlocking value.

To this end, I believe they should ramp up their effort and sell more assets.

Like Phua Chu Kang said at the onset of the COVID-19 pandemic, "Things different already."

In the grand scheme of things, this is a relatively minor shift of resources but because I am more inactive than active as an investor for income, it might seem like a big event.

Remember, mentally unstable AK is just talking to himself, as usual.

Have a plan, your own plan.

Recently published:
Avoid this in a rising interest rate environment.

Related posts:

1. Rising interest rate flashback... 

2. Largest investments 1Q 2022.

3. Investing with peace of mind.

Do not make difficult times more difficult for ourselves.

When I was blogging more actively, advocating prudence and reminding readers to be careful of overleveraging financially was something I did on a pretty regular basis.

I also said that we should always have an adequate emergency fund and do not think that we can always depend on lenders to extend a helping hand.

We should develop a crisis mentality and do not think that we are invincible.

Remember that bad things do happen and when they happen, it is often without warning.

See this blog and the related posts:
Husband lost his job and my savings is zero!

The COVID-19 crisis is not just a bad thing happening as it is probably the worst thing to happen in many decades.

We are probably familiar with the saying "spare the cane and spoil the child."

Sounds heartless but it works.

I am one such beneficiary or victim. ;)

I believe that people do learn better after a painful lesson or a few and the COVID-19 crisis has probably left some cane marks on most of us.

Unless we are very rich, we cannot afford to feel invincible.

Just because some people we know are buying a second home or an investment property, it does not mean we should too, especially if it means having to borrow large sums of money and having a harder time to make ends meet.

Why risk so much for something we don't really need but maybe want?

So, when do we know we are overleveraged?

Do some stress testing and imagine losing our jobs or our business doing badly resulting in income going to zero.

How long would we be able to last financially in such a situation?

Ah, I have passive income!

Some wonder why I have such a big emergency fund even though my passive income seems more than adequate. 

The COVID-19 crisis is probably eloquent enough to provide the answer.

Dividends can be suspended or reduced and that's what happened during this crisis.

See this blog: An unbeatable level of certainty...

So, what triggered this blog?

An article on investing in properties in Iskandar, Johor and how difficult things are for some.

This is a topic I blogged about before as well.

"The Johor skyline is now dotted with empty condominium units, due to an oversupply in the market and lack of foreign buyers.

"When Singapore business owner Jonathan Gan purchased a four-room condominium at Lovell Country Garden in 2018, he thought he had clinched his dream retirement home.

"The freehold apartment located near Johor Bahru’s city centre was twice the size of his three-room HDB flat in Singapore, but the cost was only half of the latter when he bought it directly from the developers.

"Just three years after he purchased it, Gan, who bought the unit at around RM1 million (US$242,000), is having a hard time trying to sell it, even though the asking price is a fraction of what he paid for it.

"Property analyst Debbie Choy, who is director of Knight Frank Malaysia’s Johor branch, said the situation is particularly bad for condominiums and serviced apartments, of which there is an oversupply in the Iskandar region.

"Even owners of the more premium, newer developments in Johor Bahru are having problems trying to attract tenants.

"In its report, Henry Butcher Malaysia highlighted that Johor was the state with the highest proportion of unsold residential properties in the country, even before COVID-19."

Source:
CNA, 12 June 2021. 

Remember not to ask barbers if we need a haircut.

When the tide goes out, we will find out who have been swimming naked.

In a more recent blog, I said that some people have nothing to risk but everything to gain when asking us to part with our money.

Even people we think of as friends who are not property agents might be getting a commission when they recommend that we buy a property.

Remember to be careful with our money as nobody cares more about our money than we do.

For sure, external factors are making things financially more difficult for many of us. 

If we have made the situation worse because of bad decisions we have made in the past, learn the lesson and avoid making similar decisions again in the future.

Do not make financially difficult times more difficult for ourselves. 

References:

1. Buying property in Iskandar, Johor.

2. Two questions to ask when buying a property.

3. Use CPF savings for homes and investments.

2Q 2019 passive income.

It has been almost three months since my last blog and I hope everyone is doing well.

1. Update

So, what have I been doing?

OK, I will tell you and, maybe, there is a message for everyone in this somewhere too.

I have been having a blast in Neverwinter!

Many things have changed with the new expansion (Module 16: Undermountain) and I love the game even more now.

In fact, I enjoy Neverwinter so much that I created a third character just a few days ago.

This time, I created a wizard.





Neverwinter is a free to play (F2P) MMORPG and although we could use real money to buy game currency, we don't have to do it.

Everything in the game could bought by earning game currencies while playing the game.

There will always be adventurers who are impatient and want to get everything faster, of course.

I have met quite a few impatient adventurers in Neverwinter and they are the ones who have spent hundreds or even thousands of dollars on the game.

Thanks to them, AK has a free MMORPG to play.

As for me, after taking some time to understand Neverwinter's economy and how to make Astral Diamonds (i.e. the most important in-game currency), I have become quite wealthy in Neverwinter and, like in real life, having wealth in the virtual world makes life more comfortable.





I no longer have to run random dungeons with pick up groups (PUGs), which basically means groups of strangers, just to earn some Astral Diamonds.

I used to have to do it everyday as a newbie in the game, of course, and it is just like exchanging our time for money as an employee in real life except that it is more fun.

Just like in real life, being AK, I tried to get to a point where I didn't have to do that and, now, I don't have to.

I am a Neverwinter multi-millionaire.

I am enjoying Neverwinter without having to worry about not having enough Astral Diamonds.

It is like enjoying real life without having to worry about money.

Anyway, did I say there could be a message for everyone here?

I wonder what that message is?





2. Blogging

I have not been blogging and will probably not be blogging much in the future either.

I am tempted to say that I won't be blogging anymore and that this is my last blog, seeing how much time I am spending on gaming, but never say never.

Gaming is like how blogging was for me until recently.

I first discovered blogging 10 years ago and blogging took up more and more time until a point when it became a full time activity.

So, I apologise for my tardy replies to readers who have left comments here in my blog and I also apologise in advance to readers who might leave comments for me henceforth.

It is probably a good idea not to leave comments which require timely replies from me.




3. Facebook

I am unable to log in to Facebook anymore.

I don't know why and after they removed all the links to my blog from my page, to be honest, I don't really care about Facebook now.

After all, quite obviously, they don't care about me.

See:
Financially free and Facebook free.

It has been almost three months since I last logged into Facebook.

So, there are probably many messages from readers there which I won't be able to read or reply to now.

If you are one of the affected readers and would like to reach me, please leave a comment in this blog instead.

Apologies for my tardy reply in advance and, again, if it is something that requires a timely response, it might be better not to write as you would most likely be disappointed.





4. Passive income

Now, that we have addressed the important stuff, the numbers.

How much did AK receive in passive income in 2Q 2019?

S$ 60,906.39

Not a lot to the very rich but it is a meaningful sum of money to me.





Some investments that generated more than $2000 in passive income for me in 2Q 2019:

1. AA REIT
2. Accordia Golf Trust
3. Comfort Delgro
4. Wilmar
5. VICOM
6. Frasers Logistics Trust
7. AHT
8. OCBC
9. DBS
10. Ho Bee Land

Readers who have been following my blog will know that what I have achieved did not happen overnight, of course.

See:
How did AK create a 6 digits annual passive income?





5. Plan.

People might ask me what is my plan now with all the economic uncertainties.

I like to think that what I have now is strong enough to weather any financial shock.

I have a meaningful income generating investment portfolio.

So, I have been receiving passive income and that has been beefing up my war chest.

This will probably go on.

See:
Wait to pick durians.





I have a sizable emergency fund for if things should go terribly wrong.

I would like to remind everyone not to ever think that credit is always easy to obtain.

When things go terribly wrong like they sometimes do, credit could easily dry up as even existing lines of credit could get chopped.

Having money we can easily get our hands on when we need it fast with no strings attached means we are our own masters.

See:
Emergency fund.





I will continue to fully contribute to my CPF as I treat it as the risk free and volatility free investment grade bond component of my investment portfolio.

If I have to, I will be able to withdraw money from my CPF when I turn 55 which is only 7 years from now.

Otherwise, I will continue to use my CPF as a savings account.

I hope nothing so financially disastrous happens that I would have to tap on my CPF savings in future.

See:
$1.5 million in CPF savings.






6. Mantra

Always remember this.


If AK can do it, so can you!

I believe it and so should you!

Keep doing the right things and the right things will most likely happen for you.

Gambatte!


See:
Is AK a rags to riches story?






Related posts:
1. 1Q 2019 passive income.
2. Financial freedom and a break.
3. AK is a full time gamer.

Buy a private condo and wage slaves we become?

Over the years, quite a number of male readers have asked me if they should upgrade from HDB flats to private condos.

For some reason, it is always the wife's desire for an upgrade.

I wonder if the husbands were being honest with me.

Hmm...

I wonder also if there is some truth in the saying that it is easier to sell luxury goods to females than males?

Hmm...






Aiyoh!

Did some (female) readers throw shoes at me?

Ouch!

Wait, I see some branded ones.

Maybe, I can sell these later.

OK, yes, I know.

Bad AK! Bad AK!






Well, these readers should know that, easily, on a per square foot basis, a condo is going to cost 3x to 4x more than a HDB flat.

Just getting something that is the same size as their current HDB flat would be quite a big deal.

So, it is not surprising that many who upgraded from HDB flats ended up downsizing.






A home is probably the biggest purchase we will make in life especially with home prices being what they are in Singapore.

If we want to upgrade, be sure that we can pull it off comfortably and this should also be in the unfortunate event if we should lose our job (or if we cannot continue working for some reason).

That is the ultimate stress test.

We should also bear in mind any other financial objectives which we might have and how this upgrade in housing could impact our ability to meet those objectives.






Even if we can afford the upgrade, remember that it is not just about affordability.

In order to upgrade our housing, if we have to become wage slaves, the price, to me, is way too high.

Not overstretching will allow us to stay financially resilient in good and bad times.

Of course, if you are financially a "jin satki" (very capable) person, please ignore this blog.






Related posts:
1. https://singaporeanstocksinvestor.blogspot.com/2018/09/free-ourselves-from-wage-slavery-now.html
2. http://singaporeanstocksinvestor.blogspot.com/2016/08/wife-wants-to-sell-hdb-flat-to-buy-condo.html