Regret parting with CPF-OA savings 9 years ago.

Hi AK,

I've been reading your blog recently and have been very inspired by the way you invest.

I need to seek your advice for the Prudential units trust and SRS account

I used my CPF-OA account to invest in the Prudential unit trusts 9 years ago when my insurance agent said that they will earn me more interest than the 2.5% interest CPF gave me.

Fast forward 9 years now, my $80k original invest is only worth $71k now.

I really regret listening to the insurance agent.

My question is should I cut my losses now and put the $71k put into my CPF OA account or SA Account? At least I can earn some interest rate on my $71k before I retire.

My only comfort is that shld anything happen to me now, my family can get $100k from the unit trust as it has some insurance coverage.

As per your blog, I've also set up my SRS account.

Can you advise which fund I should buy with the money in the SRS account. It's sitting there doing nothing and the interest rate in DBS is very low.

Many thanks and I look forward to hearing from you soon.

J

 

Hi J,

1. Buy insurance for the sake of insurance. Don't mix insurance and investment.

You might want to read this:
http://singaporeanstocksinvestor.blogspot.sg/2016/06/how-many-20-years-and-29000-do-we-have.html

2. No one cares more about our money than we do. Always read the fine print.

You might want to read this:
http://singaporeanstocksinvestor.blogspot.sg/2016/09/posb-manuregular-payout-better-than-cpf.html

3. I won't tell you what to use the SRS money for but I will say to avoid investing in anything which might have rights issues.

You might want to read this:
http://singaporeanstocksinvestor.blogspot.sg/2015/07/srs-account-cpf-account-and-rights.html

Best wishes,
AK

Parents nudging 32 year old to buy private property.

Hi AK

I have been reading your blog for a couple of years. Very inspiring. Thank you very much for talking to yourself. 

I have been talking to myself a lot lately but I couldn’t get to anywhere. Not sure how should i proceed, appreciate you could talk to yourself if you were in my shoes. 

I am a 32 yr old Singapore PR - currently stationed overseas but will be going back to Singapore for good soon. 

Savings of around S$150k, investment of around 150k (which gives me around 10k in dividends per year), CPF OA of around 80k. I will be earning around 8k-9k per month when i return. 

All these while, I have been savings up - with the idea of buying a home in Singapore. Unfortunately, I could only buy a private  property. 

My parents have been encouraging me to buy a property in Singapore (as my sister who is 10 years younger will be graduating next year and she could live with me; my parents could also stay with us whenever they visit). 

I used to rent a room in a HDB flat, should I do the same when i return to Singapore? I have been waiting for the prices to drop but it is still not dropping significantly. 

What would you do if you were in my shoes? How to balance between comfort and being prudent? How to talk myself out that I need to own a roof over my head? 

I hope God AK could enlighten me. 

Thanks! YR.

Hi YR,

I would ask readers who are thinking of a bigger home to read this blog post:
http://singaporeanstocksinvestor.blogspot.sg/2015/07/do-i-need-bigger-home-and-what-to-do-if.html

Ask the 3 questions I shared in the blog post.

In your situation, you can only buy a private property since single PRs are not allowed to buy resale HDB flats and you need one by next year when your sister graduates.

If you are thinking of leaving your home as a legacy, then, you might want to get a freehold or a 999 years leasehold condo instead of a 99 years leasehold condo.

To be prudent and not to stretch finances too much, get a property that is priced $1 million or lower. 

This is going to be a consumption item. A (30 year) loan of $700,000 to $800,000 will keep monthly mortgage repayments at around $3,000 a month or lesser. This repayment amount will rise when interest rates rise in future but it should remain manageable for you, everything else being equal.

With a $1 million budget, a 2 bedroom or even 3 bedroom condo in OCR Singapore are within reach.

Best wishes,
AK

Sometimes, we might have to do what is less financially prudent because of more onerous obligations in life.

So, although it might make sense sometimes to rent a home rather than buy one, we just have to make the best of a financially less prudent decision.

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Interesting trivia:
Julian Cheung Chi-lam and Anita Yuen Wing-yi decided years ago never to buy property in Hong Kong. The reason was simple. Prices were outrageously high... Cheung once reportedly remarked: “With the amount I need to pay for a house [in Hong Kong], I can rent till I’m over 130 years old.”
Source:http://www.scmp.com/comment/insight-opinion/article/2020388/when-even-hong-kongs-super-wealthy-opt-rent-something-not

Related posts:
1. Affordability and value for money.
2. Wife wants to sell flat and buy condo.
3. Rule of 15: Buy or rent?