Get a bigger apartment with a baby on the way.

Hi ,

Would like to get your view on this plan that my Husband was thinking of. At the moment we are staying in a 1 bedder that belong to me that was bought in 2012. The original plan was to rent out this place but ended up stayed in after our marriage. Both of us SPR.

As I am expecting , we have to make plans for the future. My hubby has not own any property in Sg and he was thinking to buy a property for rental and in a way to cash out his CPF. With the rental (estimated 1.8-2k) of the new property, he planned to use the rental to pay my current property and new property instalment and pay the rest in cash. His Budget could only afford a 600K condo. Anything more than 600K will be too heavy for him.

I do have some cash to TOP up if we want to buy a 800K condo but somehow with the current economy situation (plus I am a home maker) and foresee will remain the same for the next 2 years , I am worried and indecisive of whether we should commit purchasing another property plan. What would be your advise? Thanks.

Hi,

1) Make sure you have sufficient cash put aside for emergencies. As you are a homemaker, on a single income, having enough cash to cover 12 to 24 months of expenses is a good idea.

2) You might want to put aside some cash (in your war chest) in case there are good investment opportunities in future since you feel that the economy is not doing well.

3) There is opportunity cost in using money in our CPF-OA. When the gross rental yield is less than 4%, you want to be very cautious. Your $600K condo is expected to have a gross yield 3.6% to 4%. There is a 10% property tax plus monthly maintenance fee which you have to pay. You will also be incurring borrowing costs on the bank loan. The net yield is likely to be lesser than 3%.

Of course, with vacancy rates increasing, rental is likely to drift lower. Real estate is also very illiquid and with Seller Stamp Duty (SSD) thrown in, if there is a need to liquidate, in the short run, the cost will be hefty.

4) Since you are both PRs and cannot buy BTO HDB flats and single PRs cannot buy resale HDB flat, buying a 2 bedder condo for your future bigger family is one option and with a $800K budget, a 2 bedder is well within reach. Move into the 2 bedder and rent out your one bedder or if you would like to strengthen your balance sheet, you could sell the one bedder and not worry about the SSD.

Buy what we need. :)

Best wishes,
AK


Related posts:
1. CCR, RCR or OCR for rental?
2. Buy shoebox apartment in NE SG?
3. What to do if I need a bigger home?

Never bored! (Thoughts on preparing for early retirement.)

UPDATED (19 DEC 16)

She is one scary lady!

It would be nice to be strong!

Recently, when I met a few friends for dim sum, one of them asked me if I was bored in (early) retirement? 

It is a question I get asked a few times before, online and offline. So, it was no longer a surprise.






I have a list of stuff I want to do. Some people call it a "bucket list" (i.e. a list of things to do before we die or kick the bucket). 

In retirement, my bucket list doesn't get shorter. It gets longer! 

I am discovering more things that I want to do in retirement.





Let me share a bit about my childhood. 

I always liked the arcade as a boy but didn't have the luxury of visiting regularly. 

I always envied friends for having game consoles as a boy but didn't have the luxury of having one. 

Something happened many, many years later:

I bought a Nintendo Game Cube for myself more than 10 years ago as a birthday present but as I still had a busy working life, I didn't have much time to play. 

Now, I have plenty of time and I am living one of my boyhood dreams. Bored? Impossible!




--------------------------------------


Reader says:

We have seen many old retirees becoming aimless in their life and it’s becoming a waiting game.


I can understand for many, they have little money after retired and for some, they are rich enough but their life evolve around having dinner with a few friends and family members, travelling around as long as they are healthy enough.






Nothing meaningful and to fill their time, some even continue working….it’s sometime reminded us what is soon becoming to us but maybe we can do it differently.

I would ready like to know if you can share with us your personal experience when one retired early ?

How do you prepare yourself ?

How do you manage retirement mentality and physically when you retired early ?

What do you do daily ?

Do you plan ahead for 10 years and more ? If you start all over again, what would you have done differently ?

Any advice is much appreciated ?

Thanks !

AK says:


I don't know about doing it differently but here are my thoughts.


I am a worrier and I plan almost everything in my life. 

Of course, I am aware that I cannot always get it exactly right but being approximately right is enough to make me happy.





I think it is important not to be married to our jobs and I have seen many people who do not have a life outside their working life. 

The danger for these people is having a feeling of emptiness if they no longer have their jobs.


I can understand that sometimes we really have to work very hard to make more money. I have been in that situation before. 

So, I know the feeling. 





For a few years, I was monetising all my free time to make more money because I wanted to retire early.


However, at some point, if we have free time, we should find something else to do. 

Hobbies we enjoy. Spending time with people we love. There must be quite a few things to do that is not work related.

I won't tell you what I do in my free time because each of us will have different likes and dislikes. 

To put it crudely, have a "bucket list". :)






Retirement is not about being unemployed and having nothing to do. 

It is about having the time to do things we enjoy and not having to work for money.




Related posts:
1. To retire by age 45, plan...
2. Retiring before 60 is not a dream.
3. Work not because you have to.
4. AK answers questions on early retirement.

(Added 1 Jan 17 from FB wall.)