2Q 2017 passive income from non-REITs.

After my blog on 2Q 2017 passive income from S-REITs, of course, it has to be a blog on 2Q 2017 passive income from non-REITs.

Well, 2Q 2017 was also pretty quiet for me in the non-REIT space as I also pretty much kept the status quo here.

Total income received from non-REITs in 2Q 2017 was:

$52,045.09


If we were to include dividends from 1Q 2017 which saw a total collection of $13,543.31, total dividend received in 1H 2017 is 

$65,588.40


The portfolio saw a rather significant reduction in contribution by SPH since I trimmed that investment by 50%.





However, contributions from the enlarged investment in QAF as well as dividends received from a pretty significant investment in Centurion more than made up for this.

I must also mention that the quarter's dividend income received a big boost from Hock Lian Seng which declared a generous special dividend.

This is unlikely to be repeated anytime soon. So, everything being equal, I would expect lower dividend income in 2018.

Of course, everything is probably not going to remain equal.

Last quarter, Croesus Retail Trust was the biggest non-REIT income contributor. Accordia Golf Trust is the biggest contributor this quarter.

With Croesus Retail Trust being one of my biggest investments and likely to go the same way as Saizen REIT, future passive income from non-REITs would naturally take another hit.

The upside is that I will be receiving many years of "income distributions" in advance and the cash position in my portfolio will see a big increase.

I would probably have to sit on more cash for the foreseeable future.

"It takes character to sit with all that cash and to do nothing."
- Charlie Munger

My seat is likely to be quite cushy.

Related post:
1Q 2017 passive income from non-REITs.

2Q 2017 passive income from S-REITs.

Once every quarter, I would spend half a day or so going through my dividend vouchers and checking my bank accounts. It is that time again.

2Q 2017 was a pretty quiet quarter for me as I maintained the status quo for my portfolio of S-REITs.

The portfolio received contributions from a couple of new investments made in 1Q 2017:

1. Starhill Global REIT
2. Frasers L&I Trust


Industrial Real Estate Market Update Q4 2016 | JLL Australia

Total income distributions received from S-REITs in 2Q 2017: 

$21,069.52

This is about a 2% reduction from 1Q 2017 which saw $21,477.10 received.

What happened?

We are missing contributions from IREIT and CRCT this quarter as they distribute income half yearly.

Keeping the status quo should see more income collected from my portfolio of S-REITs in 3Q 2017.

How much more? 

We will have to wait and see.

For now, $7,000 a month in "salary" is pretty comfortable for me.

Related post:
1Q 2017 passive income from S-REITs.

Frasers Hospitality Trust (FHT).

Reader:
Frasers Hospitality Trust. I like this and invested in it last year and applied for excess rights.

I find FHT attractive because mostly freehold and spread across many countries. Yield is 7%+. Plus strong sponsor and brand name.

I am not good in analysing. Hope you will talk to yourself. :)


AK:
I don't like it when a REIT purchases properties and DPU goes down.

And the rights issue was in part to strengthen balance sheet which did nothing to improve DPU.

"The issue would also reduce FHT's debt levels and strengthen its balance sheet."
http://www.straitstimes.com/business/companies-markets/frasers-hospitality-trust-to-raise-266m-in-rights-issue

I don't like it when total distributable income goes up but DPU goes down.

"Distribution income for the quarter was up 3.1 per cent year-on-year... DPS in the three months as at end December 2016 was down 18.9 per cent year-on-year..."
http://www.businesstimes.com.sg/companies-markets/frasers-hospitality-trusts-dps-down-on-enlarged-stapled-security-base

As a shareholder, I should be very interested in what happens to the DPU. I feel that the shareholders could have been better off without the rights issue.

There are probably things to consider beyond that but my plate is full. ;)

Related post:
REITs and rights issue. 

AK is speaking at InvestX Congress 2017.

Quite a few readers have been asking me whether I am going to have another session (or two) of "Evening with AK and friends" this year. 

Yes, I know. AK has been so lazy this year. Lazier than last year.

Bad AK! Bad AK!

Well, I am not sure if I want to do it this year but I did promise my friends at The Fifth Person to make an appearance at InvestX Congress 2017.

Yes! So exciting, right? 

So, if you really want to take a photo with me badly, here are the details:

Date: 19th August 2017.

Time: 9am to 6pm.

Venue: NTUC Auditorium Level 7.

Address: 1 Marina Boulevard.


At the last InvestX Congress a couple of years ago, some readers complained that I had to share the stage and I had too little air time. 

Alamak, what air time? AK is just full of hot air lah but the organisers have taken the feedback seriously.

I will be alone on stage for a full hour this time and I will also be on the panel at the end of the event.

I wonder how many songs would I have to sing to fill up that one hour? Hmmm.

If you decide to go, you will find out on that day.

How much will the ticket cost?

Get it by 19th July: 

$127.00.

Get it later: 

$147.00.

For those who drag their feet:

$197.00 at the door.

But I doubt anyone will have the chance to buy a ticket at the door. The last InvestX Congress sold out 3 weeks before the event!

Still, who wouldn't want to pay less? So, do you want to get a cheaper ticket? What is the lobang?

Come in pairs! 

Then, you get the second ticket at $97.00.

On a serious note, go to InvestX Congress not because you want to hear me sing or take photos with me. I am just the event mascot lah. ;)

Get more information and also to purchase tickets: HERE.

Downsizing flat and upsizing parents' retirement adequacy!

Reader:
Thank you for sharing your financial journey and thoughts on your readers’ queries with us.

My husband and I bought a BTO 4 room HDB flat 4 years ago.

We are thinking of changing our HDB from a 4-room to a 3-room flat some time after the MOP (5 years).




We are thinking of transferring the monthly CPF-OA contributions, excess of our monthly repayments, to SA for the 4% interest.

My father is 63 years old and my mother is 57 years old. 

If I am not wrong, topping up $60K to my father’s RA means he can apply for CPF LIFE. 

The monthly CPF LIFE payouts will be about $360.




AK:
If you have no other use for your CPF-OA savings after the move, transferring the money to the SA is always a good idea if you are thinking about a more secure retirement. 

Let the magic of compounding do its work. Your savings will amount to much more 20 years later.

With more cash in hand, you are planning to top up your parents' CPF accounts? I like that too. 

If you have only $60K to spare, you might want to consider splitting it so that both parents get $30K in their RAs. 

This is because the first $30K will get 6% interest. The next $30K gets 5%. Of course, above $60K, it is 4%.




If you have $120K to spare instead of only $60K, of course, topping up both parents' CPF-RA with $60K each is a good idea. 

Make the government do some work in supporting your parents financially. ;)




Related post:
Mom is stunned by her CPF-RA.

This job is unpaid but offers exposure.

From time to time, I would receive emails like the following:

Example 1:

I wrote to you some time ago and was essentially rejected by you. maybe you are more open to it now...please allow me to suggest two ways where we can collaborate...

--------------------------
Example 2:

...we do not pay panelist. However, we still hope that you would consider to be a panelist... talking about how each individual should build their portfolio at every stage of their life which also fits into our theme for this year.... looking forward to your favourable reply.
--------------------------
Watch this! ROFL!

"Oh, this job is unpaid but it does offer excellent exposure."

Yes, the word "exposure" is used pretty much all the time when people want me to work without pay.

Hey, see how I disguise myself? Do you think I want "exposure"?

I am just a hobbyist blogger. I don't have any product or services to sell. I won't make a ton of money if I have more "exposure".

When I am asked to do some work, I am giving up my time and putting in effort. I think it is fair that I get paid.

"When I am asked to give talks or make public appearances or do any kind of work, one way or another, I am always paid a fee because I am doing something on request.

"So, to be fair to others who have paid me for my time and effort in the past and to be consistent, I will have to decline your invitation."

If I am blogging for a living, then, I would probably want more "exposure".

However, the day I have to blog for a living is probably the day I will stop blogging. Very cham.

Related post:
Life is about many things and my time is in short supply.

My investment portfolio or my investment philosophy?

I am an investor but I am probably not a very good investor. Why? 

I also do a bit of speculation but when I do speculate, I know I am speculating and not investing.

When we speculate, we should know we are taking on more risk. There is less certainty. 




So, when I do speculate, I try to size my positions more conservatively. For me, speculation is to investment like spice is to food.

Those who like to ask me if prices are going up or down in future should take note.

For example, when I decide that I would like to have some Rosemary herb in my food, I don't fill the entire bowl with Rosemary leaves. That would be too much.

Reader:
Hahaha AK now I know why u don't show your portfolio numbers Liao ... ppl will start questioning about the integrity and performance but missed the whole point on the method to financial independence ... hahaha

AK:
Aiyoh. So cheem. You need to decode that for me please. I very stupid one.




Reader:
no la I shared my portfolio then share the mode I use to achieve financial independence just to motivate those just started and those that are planning to start.
Hahah kana question on performance lah but that's not the point.

AK:
I always say don't focus on my portfolio. Focus on my philosophy. 🙂







Reader:
yea so I think don't show numbers better else ppl will focus wrongly especially those with ill intention


It's much easier to buy companies that are already well-run. Warren Buffett shares his investment philosophy.



-------------
Philosophy is the bedrock of all knowledge or so I was told. Our philosophy will guide all our actions in life, including those we make as an investor.

Related post:
Impressive passive income but are you lying?
Why? Why? Why?

What to do if we don't trust the CPF system?

...




I have been sharing quite a bit of stuff on Facebook regarding the CPF in recent days. 

Nothing new, really. 

They are mostly conversations with readers on stuff I have blogged about.




I shared how I grew my CPF savings and also why it is an important part of my overall retirement funding strategy. 

I have also shared my numbers to exemplify the magic of compound interest.





Of course, we know that there are people who do not believe in the CPF. 

This is nothing new.

I am constantly amused by the reasons put forth as to why we should not trust the CPF system.

People are free to trust or not to trust. 

Hey, I am not dogmatic. 

Don't believe me? 

OK, you happy can liao.

What do we do as investors when trust is lacking? 

Avoid investing any money.

For example, I no longer invest in S-chips although some of them might have fantastic looking numbers.

I used to. 




Remember China Minzhong?

I simply don't know if their numbers are bona fide.

Don't trust the CPF? 

Don't top up. 

Don't make voluntary contributions.

Simple.




Wait a minute.

How do I know if the companies which I do invest in have bona fide numbers? 

What if their books are cooked too?

Alamak. 

Stress!




Is our country financially sound? 

Is the government going to default on its obligations?

Alamak. 

Don't ask me lah. 

Stress!





Hey, do you believe in feng shui? 

The late Mr. Lee was asked why did he want his house demolished? 

AK is trying to change topic, right? 

Shhh...





What? 

You really want to know? 

These posts might interest you then:
1. Do better than the CPF?
2. Worried about retirement adequacy in the right way?

What should I do with my bonus?

Reader:
I received a bonus and I was wondering which of these should I do:

1) voluntary top up my CPF SA

2) contribute to SRS

3) help my parents to buy hospitalization insurance

4) keep it as warchest

I would be required to pay income taxes for this year of assessment. I would like to ask for your opinion.


AK:
You have to decide what is more important for you. No one can do this for you. 😉

For me, having insurance is important. Bad things happen and could wipe us out.

Having said this, your parents should be covered under Medishield Life. Check to be sure. If they are OK with staying in class C or B2 wards, there is no need to buy private shield plans.

You might be interested in this:
http://singaporeanstocksinvestor.blogspot.sg/2015/03/should-i-top-up-my-cpf-sa-cpf-ma-or-srs.html

Related post:
Enough H&S coverage for parents?

Ascendas Hospitality Trust should do well.

A reader saw my blog on Ascendas H-Trust earlier this year and, after doing some research, decided to invest in the Trust for income. He shared the following with me:

1. 52% of net property income is derived from Australia and this proportion could rise because of the boom in tourism. Number of international flight routes have increased with more Chinese tourist arrivals.

2. 25% of net property income is derived from Japan and tourism has been on the rise in Japan as well. The Japanese government's drive to almost double the number of visitors to 40 million by 2020 is going to give a continued boost to the hospitality sector.




3. The Trust has a gearing level of 33%. Backed by a strong sponsor and having natural forex hedge with its debt largely denominated in local currencies are positives.

4. Through Park Hotel, the Trust derives only 15% of its net property income from Singapore. So, the slowdown in the Singapore hospitality sector is less of a concern for the Trust compared to CDL H-Trust and FEHT which have much larger exposure to the market here. The fact that Park Hotel is master leased provides greater income visibility too.

5. Assets owned by the Trust are mostly freehold and do not suffer from lease decay which is another plus when compared to CDL H-Trust and FEHT.





Good stuff.

I will end this blog by saying that I got into the Trust at lower prices and I am investing for income. Not too concerned with the fluctuation in unit price.

As long as the trust continues to do well enough to pay me an income that makes sense, I am happy.

Related post:
More income from Ascendas H-Trust.
See my Japan travel photos: HERE.

Planning a $1.4m legacy but be aware of this.

Reader:

I have an idea to bounce off you. 

Just chit chat. 

I know you don't give advice.

I am 54 and just became a father. 

I married rather late in life.





As a father, I am thinking about my child's future. I am well aware that by the time he is 21, I would be 75 if I am still alive by then.

Next year, I will be able to withdraw more than $100K from my CPF account as I have already met the minimum sum for my age. 

I am thinking of putting the money into my child's CPF SA instead of leaving it in my OA.





I could top it up to $166K and do a one time top up to his CPF SA and, compounding at 4% a year, he will have a retirement nest egg of more than $1.4 million when he turns 55. 

I won't be here for most of his life and this is something I can do for him.







AK:

You have to remember that your CPF money is meant to help fund your retirement. 

If you have other ways to fund your retirement adequately, then, OK.

Yes, your child won't be able to touch the money until he turns 55. 

If your plan is to help your child be financially secure in his old age, I would say that this is a very generous and thoughtful thing you are doing for him. 





However, remember, the CPF SA interest rate could change over the very long term and 55 years qualifies as very long term. 

After all, the plan is to peg it to long term government bond coupons eventually, if I remember correctly.





When would this happen? 

I have an inkling that this might happen when the 10 year SGS bond rises to a level that is at 4% or a bit higher. 

We will have to accept higher or lower returns on our CPF savings in future from then on.





So, we won't be wrong to expect CPF SA interest rate to fluctuate over the very long term. 

So, don't think of 4% as something that is sacrosanct.

Even so, at 3.5% per annum, $166K will become $1.1 million in 55 years. 




At 3% per annum, it will be about $844K in 55 years. 

That is still quite a bit of money.

Your child won't have to worry as much about retirement funding and can be quite comfortable as a working adult, I imagine. Lucky kid.

A father's love. :)





Related post:
Make CPF part of child's savings.

Want to withdraw $500,000 from CPF at 55?

Reader says...

A quick intro about myself.

I am 34 this year, staying in a bto hdb flat and have existing housing loan of $20k outstanding (serviced by my wife and myself).

Checking with you on my strategy for CPF.

I have around $5k in ordinary account, and $145k in special account.






Already met my min sum for medisave. Am hoping to hit my S.A. min sum when I reach 35yo.

My thinking is that once my min sum (FRS of $166k) for S.A. is met, all employment contribution will flow into my ordinary account(~$2k a mth), and I would be able to hit around $500k when I reach 55 ( $24k x 20yrs - not including contribution from bonuses) and withdraw this amount.

Am I missing out on anything here? Thanks!








AK says...

Once you have hit the FRS, you will still be making mandatory contributions to your SA. 

So, monthly CPF contribution goes to OA and SA but nothing to your MA if it has maxed out.

When you hit 55, the prevailing FRS goes to the newly created RA and you can withdraw whatever is left in your OA and SA, if you like.







If we do the right things, we could withdraw a more meaningful sum of money from our CPF account at age 55 instead of a token $5,000. 

Do you like that? 

I know I do.







Related posts:
1. Changes to the CPF and SRS.
2. My CPF-SA (Jan 2016).

A big loan to buy a condo and CPF not enough.

The focus should be on the CPF but I cannot help but wonder if Kelly has little money, why is she spending it on dogs and cats?
Shouldn't she use the money to better prepare for her old age?
(Credit goes to Raymond Ng for sharing the above with me. )

Reader (not Kelly):
I came to know of your blog recently and find it to be full of useful information.I regret that I did not know what you know and had not done what you've done in terms of CPF voluntary contributions when I first started working.

I've recently bought a condo and borrowed serious money from a bank to do so ,so much so that I can only pay off the housing loan at the age of 65.:(

I've attended trading courses/read up on trading for the past few years and through my experience,have some confidence in generating returns of 10-20% /annum

If you were me and have some confidence in beating the CPF rates,would you still consider contributing voluntarily to CPF or try to 'frontload' and payoff the housing loan first as the loan amount is much much more than what I currently have in my CPF?

I'm also conflicted towards contributing to CPF as it will still eventually go towards paying off (at least the OA portion) the loan and I may be able to generate more( in terms of %) on my own through trading.

Hopefully you can shed some light on what you would do if you were on a similar situation financially (short of selling the condo).



"...higher income ceilings for new HDB flats..."

AK:
We are all made differently. So, we will look at things differently.

However, I think we should be able to agree that there is a place for risk free and volatility free savings instruments in our life, especially one that rewards us relatively well like the CPF.

We can be confident as an investor or a trader. Confidence is a good thing but we should also be sensitive to the fact that things do go wrong and sometimes very badly wrong.

I am reasonably confident in my ability as an investor and I used to trade quite a bit as well but I did not chuck CPF in the back seat and I am still contributing to my CPF account in my retirement.

What would I do if I were in your shoes? I don't really know because I would not ever put myself in such a position.

I don't know if you have read my blogs on how our homes are really consumption items. Something that costs more than $1 million, which does not generate income and which requires me to borrow hundreds of thousands of dollars to purchase is mind boggling to me.

I can only say don't discount the importance of the CPF in your life especially if you believe in having a risk free and volatility free bond component in your investment portfolio.

Best wishes,
AK

Why do we buy insurance? To transfer risk because bad things do sometimes happen in life.

What about the CPF? 

I told friends and family years ago that if all my investments failed, I would still have my CPF money.

I am sure Dr. Lee Wei Ling would agree with me. To recapt,

Related posts:
1. 4 ideas on housing loan repayment.
2. We need a home but a condo?
3. $1.2m in my CPF acount by age 65.

CPF members above 55 should use it as a savings account. (Deposit for 5 years 11 months for higher returns?)

Some readers might remember this blog post:

http://singaporeanstocksinvestor.blogspot.sg/2016/06/mom-stunned-at-what-happened-to-her-cpf.html





My mom has met the minimum sum for her cohort and she has also maxed out her CPF-MA. So, guess what my reaction was when she sent me the following SMS:

"I went to XXX bank because my fixed deposit matured and they asked me to deposit for 5 years 11 months. Get 1.6% per year for first 5 years, Balance 11 months see how is performance. Get minimum 1% and maximum 2%. Principle guaranteed upon maturity but suffer penalty if withdraw before maturity. Can put or not?"

Noooooooo! 

A thousand times, nooooooo!







I told her she might as well put the money in her CPF account and enjoy 2.5% interest per annum. She is allowed to withdraw the money anytime she likes too.

5 years 11 months? 1.6% per year? Penalty for early withdrawal? 

You must be kidding me.







For those who do not wish to deposit more money into their CPF accounts, they could enjoy similar returns by simply parking their funds in Singapore Savings Bonds (SSB).

Held for 10 years, the SSB yield is about 2.1% per year but if withdrawn after 5 years, the yield is about 1.6% per year.  (See: Daily SGS Prices.) Safer and no penalty for early withdrawal too.




Don't ask barbers if we need a haircut.
Also read these which are from my FB wall:

"At 55 and older, cannot top up SA anymore.
And any top up to RA cannot be withdrawn suka suka." - AK

"After 55 (after creation of CPF-RA and meeting BRS or FRS) and if unemployed, yes (the member can still do VC to his CPF and any money in CPF-OA and SA can be withdrawn anytime).
Note that this is for regular VC which puts money into OA and SA when MA is already maxed.
If MA is not maxed, most of the VC will go to the MA for older members and will be locked up.
Top Up to the RA will also be locked up.
At 55 and older, Top Up to SA is not allowed." - AK

If the CPF member is still gainfully employed after 55, withdrawal is allowed once a year.






Shirl Wong:
The rules have changed. Withdrawal not restricted to once a year if employed. I have checked this at CPF board recently.

Desmond Lee:
Yes the rules have changed. CPF officer told me last week and I did a check at their website.

Updated on OCTOBER 17, 2017.





Related posts:
1. Nobody cares more about our money.
2. Bad experience at a local bank.
3. Singapore Savings Bond.

An average HDB household and $1 million.

Some might remember that I talked about an article written by Cai Haoxiang in The Business Times in 2013. He wrote about what an average household's monthly expenses could look like in 2042, using the Household Expenditure Survey 2007-2008 from the Department of Statistics as reference.

1997-1998, an average HDB household's expenses was S$2,681. 2007-2008, it was S$3,138. That was an increase of 17%. By 2042, if core inflation is 2% a year, that number would hit S$6,400. In 3 decades, the number doubled and then some. 

If we were to assume that costs would increase steadily, monthly expenses for an average HDB household could hit S$7,500 by 2052.





Many people say they need $1 million in savings when they retire at 65. I don't know if they know this for sure or if they are just saying it because $1 million sounds like a big deal.

OK, let us look at how long would that $1 million last?

Hold on to your seats.

At a draw down rate of $7,500 a month, about 11 years, assuming that the banks did not pay interest on savings and that there would be no further inflation. 

The money will run out at age 76.

Alamak, how like that? Many people are expected to live till 85 or older these days.

2052. 

Hmmm. 

That is 35 years away.

So, if you are 30 years old this year and you are from an average HDB household, this could well apply to you. 

Aiyoh. Stress.

OK. Before you run around doing a Chicken Little, an average HDB household was assumed to have 3 to 4 members. So, if your household size is smaller, then, expenses should be lower. 




Single or DINK at 65, anyone?

Of course, even for married couples who have children, at 65, their children should be financially independent of them. So, again, expenses should be lower than what is assumed here.

I am going to stick my neck out here and say that, in 2052, $4,000 of spending money a month could probably give most people who are 65 and retired a comfortable life.

If you are 30 this year, have $1 million in savings by age 65, you should be able to fund a $4,000 a month retirement easily into your 90s.

If we max out our CPF contributions annually and top up our CPF SA to hit the Full Retirement Sum (FRS) earlier, we could have this magical $1 million in our CPF account by the time we are 65.

Don't believe me? Read this:

http://singaporeanstocksinvestor.blogspot.sg/2016/08/1m-in-cpf-by-age-65-what-about-12m.html

From an average HDB household? If you do not have the temperament to be an investor, this is something to seriously consider.





Singles and DINKs will find this easier to achieve than those who are married with kids, everything else remaining equal.

Some might have to try harder and some might take more time but if this is important enough to attain, then, do the right thing. Start today.

Related posts:
1. Retiring a millionaire is not a dream.
2. A cornerstone in retirement funding.

Earn $350K a year and on track to financial freedom.

Hi AK,

I hope this email finds you well!

I have been your loyal reader for the past 2 years and have written occasionally to you. I like to share one additional perspective to achieving financial freedom which have not been written as much in your blog I believe:

Focus on maximizing your earning potential so that you have a nest egg to use to achieve financial freedom

I manage to develop my career in a niche field that is sought after and relevant- currently, I am making S$350K per year and will take 3 years to make S$1mil in income. My previous role paid S$250K per year so it took me 4 years to make S$1mil. Before that, being more junior in my career and making about S$150K per year, it took me about 6-7 years to make S$1mil in salary.

So with a high salary income and keeping expenses to a minimum, I have:

- maxed out CPF SA by 42 years old

- ensured my family is well covered with various relevant term insurance plans

- grown and still growing my SG stocks and REIT portfolio towards S$1mil now generating passive income that covers 70% annual expenses

- fully paid retirement plans (~pay out S$2K per month from 55 yr old)

- fully paid house and car (no loans)

- my two kids who are teenagers each have their own CPF SA accounts and $70K SG shares portfolios

I fully agree on being prudent in expenditure and financial planning for the future. But I strongly believe the FIRST step is to properly build your career if you can, so that it can one of your stable pillars to help you gain financial freedom.

I thought I share this perspective to encourage people to take charge of their careers, whatever that may be =)

Have a very happy Sunday!

Best regards,
L

Hi L,

There is a reason why I don't blog about careers much. I didn't really have a good career and didn't make more than $100K a year. Really.

I share my experience to show that we don't have to be high flyers to achieve financial freedom but I have also said that for some who have a very good career, investing for income becomes optional. Just be better savers. :)

http://singaporeanstocksinvestor.blogspot.sg/2016/08/just-be-better-saver-and-forget.html

I will share your perspective in my blog. Thanks for this. :)

Best wishes,
AK

Related post:
Very first step to becoming richer.

Thinking of moving out of the family home?

Dear AK,

As we know, Singapore citizens can buy a HDB if they are married. If they remain Single, they can get a flat at 35 years old.

Each citizen cannot own more than one HDB at any point in time

My father passed away some years ago, and I co-inherited the HDB with my mum. Hence, I am the half owner of my parent's HDB apartment.

I do not get along well with my mother, and I wish to move out as soon as possible. However, as I am already an owner of parent's HDB apartment, I will not be able to get my own HDB apartment even if I get married, or pass 35 years of age.

This means I have only the following options:
1) Rent forever (or until my mum passes on, and I inherit the entire flat)
2) Buy a private property, with no subsidies

The Dilemma:
I am able to afford both options with ease, but the dilemma I have is I'm not sure which option is the most prudent.

Asian culture tend to favor home ownership, so I feel compelled to select option 1), to buy a private property. However, this option would mean most of my net worth will be locked up in a property, and my CPF account will be exhausted.

If I chose option 2), and rented, then my net worth will be liquid. This allows more opportunities for investments or whatever other endeavors; after all, cash is king.

When my mother passes on, I will inherit the entire HDB from my her. Then I can terminate my tenancy and move back home.

If you were in my shoes, what would you have done? Please start talking to yourself so that I can eavesdrop hahaha.
I really appreciate your help.




Hi ,

I won't tell you what is best for you. I will just raise a few points.

1. You already have a property (i.e. HDB flat).

2. Do you want more of your wealth to be in property or would you rather have more cash to invest with when Mr. Market is feeling depressed?

3. A home is a consumption item and it does not generate income. If you are concerned with having more passive income, buying that private property would probably set you back. As long as you are staying in the property, it is not an investment.

4. If you must use your CPF money if you were to purchase a private property, remember the cost of borrowing money from yourself.

However,

5. If you able to find a good value for money private property in Singapore, buying could be a good choice.

Related posts:
1. Accrued interest.
2. Buy or rent?
3. Affordability or value for money?