View Full Version : How best to prudently invest $2m in properties.
Amber Woods
02-12-11, 09:10
Hi Everyone,
Would like to get ideas to invest prudently in Singapore real estates to generate passive income of about $4000 per month. Of the $2m, about half will be used to buy a PC for own stay. Should I buy 2 more PC to generate rental incomes or just one? Should I fully pay for the properties or take an asset backed loan to buy more? I am a retiree.
Appreciate very much if anyone here care to share your experiences and wisdom.
devilplate
02-12-11, 09:21
just buy one for own stay now...;)
Get 2 units, one for own stay another MM for rental income. All fully paid. Use rental for monthly expenditure. Maybe can only have $2.4k rental yield... enough. More importantly must have spare cash on hand for emergencies. Not wise to take loan coz low tenure for retiree unless u r very young... :o
ikan bilis
02-12-11, 09:34
wow... can help to guide me steps to have 2mil cash on hand first??... me very ikan bilis... :ashamed1: :D
wow... can help to guide me steps to have 2mil cash on hand first??... me very ikan bilis... :ashamed1: :DHe retired already mah.. spent the last 40 yrs of his life earning... r u even 40 years old now? Maybe when you retire, you'd have $5mil??? :o
Amber Woods
02-12-11, 10:12
just buy one for own stay now...;)
Do you mean not to buy the second now cause prices is too high?
Was discussing with a friend just the other day about S$2m in Spore...
Assuming an average Sporean office worker earns $4-5k, how many can even earn S$2m in work life, not to even mention save $2m???
That's why, reality is 20-30% will stay in private, 70-80% will continue to stay in HDB... :scared-2:
Amber Woods
02-12-11, 10:14
Get 2 units, one for own stay another MM for rental income. All fully paid. Use rental for monthly expenditure. Maybe can only have $2.4k rental yield... enough. More importantly must have spare cash on hand for emergencies. Not wise to take loan coz low tenure for retiree unless u r very young... :o
I am not in favour of MM for investment for reasons being already discussed in this forum. Target is to maintain a passive income of $4000 pm. No issue with emergencies as I am well covered.
$1m on investment properties hard to generate nett $4k passive income because of maintenance, property tax, income tax etc. You can talk to your banker or adviser whether they would suggest a very modest gearing of 20-30% to get you up to that 4k mark.
Hi Everyone,
Would like to get ideas to invest prudently in Singapore real estates to generate passive income of about $4000 per month. Of the $2m, about half will be used to buy a PC for own stay. Should I buy 2 more PC to generate rental incomes or just one? Should I fully pay for the properties or take an asset backed loan to buy more? I am a retiree.
Appreciate very much if anyone here care to share your experiences and wisdom.
retiree? bank's loan tenure a bit tricky right?
in the mean time where are u staying? dont tell me renting also...
just park $1m in bonds can get $48k a year already. ;)
devilplate
02-12-11, 10:38
Do you mean not to buy the second now cause prices is too high?
bcoz i aso waiting to buy....LOL
Amber Woods
02-12-11, 10:43
retiree? bank's loan tenure a bit tricky right?
in the mean time where are u staying? dont tell me renting also...
Can still get 15 yrs loan tenure. Currently staying with my extended family so is free lodging.
Amber Woods
02-12-11, 10:45
just park $1m in bonds can get $48k a year already. ;)
Bonds usually 5 to 10 years and is too long. Not sure is best to tie up $1m with bonds and miss opportunity in real estate.
Prudential M Class monthly payout not bad. With $500k investment can get over $2000/mth. Can sell when price goes up too.:D
Regulators
02-12-11, 10:50
Hi Amber, if you are already living in a pty with two million cash in the bank, it should not be difficult to generate $4k passive income a month but you need to spend more than one million to generate that. If you not into mm, the only bigger ptys you can buy below one mil are 99yr older suburban ptys like northvale, woodsvale, regent grove, regent heights, lilydale, all can yield 4%+ rental yield and bring you at least $3000+ a month in rental income. If you buy two of these at 1.6x mil, you can effectively generate $6k plus in rental income with $4xxk plus of emergency cash in the bank. Being a retiree, I don't think you care if the pty has 85yr left on the pty. 80 odd years on these ptys imo is still a decent remaining tenure coz 15 odd years of rental is all that is needed to cover back the cost of the two condos
Prudential M Class monthly payout not bad. With $500k investment can get over $2000/mth. Can sell when price goes up too.:D
Hi DC33_2008
0.4% interest per month, if your quote is right, i am very interested.
what is the tenure period?
I am not in favour of MM for investment for reasons being already discussed in this forum. Target is to maintain a passive income of $4000 pm. No issue with emergencies as I am well covered.If you have no concerns for emergencies, then no problem... pump $1mil into a 2 bedder for own stay and another $1mil into another 2 bedder at good location for rental yield. Not sure if that can fetch $4k/mth but certainly $3k is within reach. Maybe $3.5k/mth even. :cheers1:
No tenure period. Your banker should be able to advice you.
Hi DC33_2008
0.4% interest per month, if your quote is right, i am very interested.
what is the tenure period?
Amber Woods
02-12-11, 11:10
Hi Amber, if you are already living in a pty with two million cash in the bank, it should not be difficult to generate $4k passive income a month but you need to spend more than one million to generate that. If you not into mm, the only bigger ptys you can buy below one mil are 99yr older suburban ptys like northvale, woodsvale, regent grove, regent heights, lilydale, all can yield 4%+ rental yield and bring you at least $3000+ a month in rental income. If you buy two of these at 1.6x mil, you can effectively generate $6k plus in rental income with $4xxk plus of emergency cash in the bank. Being a retiree, I don't think you care if the pty has 85yr left on the pty. 80 odd years on these ptys imo is still a decent remaining tenure coz 15 odd years of rental is all that is needed to cover back the cost of the two condos
I will need to buy one for own stay so have $1m to invest to generate the passive income. Buying older LH at current prices would mean that any possible capital gain (if any at all) in the future would be offset by the lease. rundown In another words, there is a good chance of a negative investment returns when you eventually sell off the properties.
Regulators
02-12-11, 11:10
This is the product http://www.prudential.com.sg/corp/prudential_en_sg/solutions/invest/PRU_Monthly_Income_Plan.html
Hi DC33_2008
0.4% interest per month, if your quote is right, i am very interested.
what is the tenure period?
Waiting for it to go below 0.92.
devilplate
02-12-11, 11:15
I will need to buy one for own stay so have $1m to invest to generate the passive income. Buying older LH at current prices would mean that any possible capital gain (if any at all) in the future would be offset by the lease. rundown In another words, there is a good chance of a negative investment returns when you eventually sell off the properties.
there is a diff between buy a ppty for passive income vs capital appreciation?
Prudential M Class monthly payout not bad. With $500k investment can get over $2000/mth. Can sell when price goes up too.:D
this one?
https://www.prufunds.com.sg/FundsDetail.aspx?fcode=SG2123&sclass=&sellingcountry=Singapore&MipClass=M
imo the Initial Sales Charge of 5% and Annual Management Fee of 1.25% is too high, besides "its dividends or coupons (if any) may rise or fall". so far they show 1H10 results which works out to 5.2% annual yield based on par price of $1 and before subtracting annual mgmt fee of 1.25%. After subtracting is 3.95% yield.
latest price is $0.953, if based on 1H10 payouts the yield is 4.1%. After subtracting initial sales charge of 5% it will be even lower haha. Lastly what they invest in is not transparent to me.
heh :o
p.s. to shoulder this kind of risk i personally would just buy blue chip shares where dividends yield 5 to 7%.
devilplate
02-12-11, 11:31
just wait patiently for GSS lor
basic pls chant more!!!
Amber Woods
02-12-11, 11:33
there is a diff between buy a ppty for passive income vs capital appreciation?
If that is the case, shouldn't we buy newer LH properties as investment so that when you finally sell them off, the properties is still fairly new; thus reducing the risk of negative investment return. Looks like older LH properties are not good for longer term investment.
Ask your private banker. Can get better deal.
this one?
https://www.prufunds.com.sg/FundsDetail.aspx?fcode=SG2123&sclass=&sellingcountry=Singapore&MipClass=M
imo the Initial Sales Charge of 5% and Annual Management Fee of 1.25% is too high, besides "its dividends or coupons (if any) may rise or fall". so far they show 1H10 results which works out to 5.2% annual yield based on par price of $1 and before subtracting annual mgmt fee of 1.25%. After subtracting is 3.95% yield.
latest price is $0.953, if based on 1H10 payouts the yield is 4.1%. After subtracting initial sales charge of 5% it will be even lower haha. Lastly what they invest in is not transparent to me.
heh :o
p.s. to shoulder this kind of risk i personally would just buy blue chip shares where dividends yield 5 to 7%.
devilplate
02-12-11, 11:36
If that is the case, shouldn't we buy newer LH properties as investment so that when you finally sell them off, the properties is still fairly new; thus reducing the risk negative investment. Looks like older LH properties are not good for longer term investment.
just hunt a condo for self stay or continue to stay at ur current plc for free and den join me here for TCSS session while waiting for GSS ;)
or u can buy a 1mil ppty and rent it out first which can be subsequently use it as own stay?
Regulators
02-12-11, 11:50
why is it negative investment if you are renting out? I have explained at length in another thread some time ago. If you fully pay off a condo with 85yr left in the tenure, at $3500 rental a month, it takes about two decades of rent to break even with whatever price you sell later as pure profit. More importantly in that time, you have lost no money and if you sell at $600k (let's say the price drops by $200k), you still pocket $600k in profit
I will need to buy one for own stay so have $1m to invest to generate the passive income. Buying older LH at current prices would mean that any possible capital gain (if any at all) in the future would be offset by the lease. rundown In another words, there is a good chance of a negative investment returns when you eventually sell off the properties.
Amber Woods
02-12-11, 12:19
why is it negative investment if you are renting out? I have explained at length in another thread some time ago. If you fully pay off a condo with 85yr left in the tenure, at $3500 rental a month, it takes about two decades of rent to break even with whatever price you sell later as pure profit. More importantly in that time, you have lost no money and if you sell at $600k (let's say the price drops by $200k), you still pocket $600k in profit
Base on your scenario, If I buy a older LH property for $1m and lease out for 20 years for $2500 pm (assuming 3% return) and Ignoring time value of money, I would earn rental income of $600K over the 20 year period. If I sell it off 20 years later at say $600K, I will recover a total of $1.2m vs $1m of my initial investment. Thus, I gain $200K over 20 years.
If I put the money in the bank to earn say just 1% interest pa over 20 years, I will earn $200K interest over 20 years with my capital of $1m in tact.
Given the scenario, I am not any better buying a older LH property comparing a safer option of putting the money in the bank for pure interest.
Amber Woods
02-12-11, 12:50
just hunt a condo for self stay or continue to stay at ur current plc for free and den join me here for TCSS session while waiting for GSS ;)
or u can buy a 1mil ppty and rent it out first which can be subsequently use it as own stay?
It sounds very prudent indeed.
With all the talk about an impending recession or huge housing price correction, it might be wise to wait for the falling durian so not wise to buy 2 units now.... at most get 1 for own stay and setting aside cash to pick the durians later... :cheers1:
Amber Woods
02-12-11, 13:07
With all the talk about an impending recession or huge housing price correction, it might be wise to wait for the falling durian so not wise to buy 2 units now.... at most get 1 for own stay and setting aside cash to pick the durians later... :cheers1:
Thanks! So the big question is timing the purchase.
Regulators
02-12-11, 13:26
Won't advise you to buy if rental yield is just 3%. leasehold ptys typically good for rental returns but of course, got to select pty wisely, not buy blindly. The current rate is $3k+ monthly rental for a leasehold suburban 3 bedr and you can buy it for $8xxk, not $1 million. There are 35 year old hdb flats selling for almost $800k, so paying $8xxk for a leasehold 3 bedroom condo with 85 years remaining is prudent based on your limited budget. based on your analysis, those leasehold condos in shenton way must be terrible investment options so do you think buyers like devilplate who bought the clift are investing blindly?
Base on your scenario, If I buy a older LH property for $1m and lease out for 20 years for $2500 pm (assuming 3% return) and Ignoring time value of money, I would earn rental income of $600K over the 20 year period. If I sell it off 20 years later at say $600K, I will recover a total of $1.2m vs $1m of my initial investment. Thus, I gain $200K over 20 years.
If I put the money in the bank to earn say just 1% interest pa over 20 years, I will earn $200K interest over 20 years with my capital of $1m in tact.
Given the scenario, I am not any better buying a older LH property comparing a safer option of putting the money in the bank for pure interest.
1 Mil PC own stay
1 Mil PC investment max ~3% nett return ~$2.5k/mth
For me,
1 Mil PC own stay
1 Mil GLC blue chip e.g. singtel 5% yield ~4k/mth
- Dont need to manage tenant
- 5% nett dividend tax free and when sell stocks no capital gain tax
- Very liquid, if property takes a beating then option to go for FH prime near MRT
- Can compound the dividend
this one?
https://www.prufunds.com.sg/FundsDetail.aspx?fcode=SG2123&sclass=&sellingcountry=Singapore&MipClass=M
imo the Initial Sales Charge of 5% and Annual Management Fee of 1.25% is too high, besides "its dividends or coupons (if any) may rise or fall". so far they show 1H10 results which works out to 5.2% annual yield based on par price of $1 and before subtracting annual mgmt fee of 1.25%. After subtracting is 3.95% yield.
latest price is $0.953, if based on 1H10 payouts the yield is 4.1%. After subtracting initial sales charge of 5% it will be even lower haha. Lastly what they invest in is not transparent to me.
heh :o
p.s. to shoulder this kind of risk i personally would just buy blue chip shares where dividends yield 5 to 7%.
Yup agreed with you about the management fees, otherwise, Amber Wood wouldn't have to ask how to invest his $2mil.
Not sure blue chip can earn 5%-7% annually, my blue chip this year already eat into last year profit, definitely no 5% for me.
Amber Woods
02-12-11, 14:08
1 Mil PC own stay
1 Mil PC investment max ~3% nett return ~$2.5k/mth
For me,
1 Mil PC own stay
1 Mil GLC blue chip e.g. singtel 5% yield ~4k/mth
- Dont need to manage tenant
- 5% nett dividend tax free and when sell stocks no capital gain tax
- Very liquid, if property takes a beating then option to go for FH prime near MRT
- Can compound the dividend
Great option!
Putting money to work and should property prices come down to realistic level, can liquidate the share to buy PC for possible capital gain and rental income.
Only risk is blue chip like Singtel may also sink if indeed STI falls below 2000. Singtel share may be only $2 then and cannot liquidate to buy property when prices may have corrected.
Sigh! it is not easy to make investment decision.
Great option!
Putting money to work and should property prices come down to realistic level, can liquidate the share to buy PC for possible capital gain and rental income.
Only risk is blue chip like Singtel may also sink if indeed STI falls below 2000. Singtel share may be only $2 then and cannot liquidate to buy property when prices may have corrected.
Sigh! it is not easy to make investment decision.
Its all about managing upside/downside risk. Singtel 2009 ~$2. They give 15cents per year. If you dont sell you get back cost in 6-7 years but no one is stopping you to buy more as the price goes down. You also use the dividend to buy more and average your cost down. You definitely have more options than property that is not so liquid. You can also transfer your cash to badly beaten fundamental stocks if market really crash... those will gain you 1-200% :)
phantom_opera
02-12-11, 14:21
For non-leverage play, properties has higher txn cost compared to stocks ... I would think just put in STI ETF will be safer than throwing at one stock or one property ... you can probably start accumulating STI ETF now ... SMRT also not bad
Base on your scenario, If I buy a older LH property for $1m and lease out for 20 years for $2500 pm (assuming 3% return) and Ignoring time value of money, I would earn rental income of $600K over the 20 year period. If I sell it off 20 years later at say $600K, I will recover a total of $1.2m vs $1m of my initial investment. Thus, I gain $200K over 20 years.
If I put the money in the bank to earn say just 1% interest pa over 20 years, I will earn $200K interest over 20 years with my capital of $1m in tact.
Given the scenario, I am not any better buying a older LH property comparing a safer option of putting the money in the bank for pure interest.
Hi Woods
That is provided you are selling the condo at 600K in 20yrs. I think you probably sell more than 600K in 20yrs time. If it en-bloc, you may even cash out earlier than 20yrs.
For the other calculation you made (deposit in the bank), its a vanilla investment, no other scenario can happen to make you improve your chance of better return in 20yrs.
What is your risk appetite?
all the asset classes will have it's time to shine.
real estate is preferred here coz the forummers are into RE.
shares has it's own advantages too - liquid/low unit cost/lower tx cost/no hidden cost like agent fee or property tax.
This allows the investor to scale in or out of shares over a prolong period of time to smooth out returns ansd risk.
Amber Woods
02-12-11, 15:13
Hi Woods
That is provided you are selling the condo at 600K in 20yrs. I think you probably sell more than 600K in 20yrs time. If it en-bloc, you may even cash out earlier than 20yrs.
For the other calculation you made (deposit in the bank), its a vanilla investment, no other scenario can happen to make you improve your chance of better return in 20yrs.
What is your risk appetite?
The example is only for the purpose of comparing buying a 15 year LH property over a 20 year period (by then will be 35 years) vs putting money in the bank. Unless there is en bloc potential, the resale value of a 35 years property cannot be very high even if property prices rises. The latter is indeed vanilla investment thus this posting for ideas.
Aging LH or FH properties will not command high rental as times passes. Hope for en bloc should not be part of long term investment equation because it may never materialise. If it happens, it is more of a windfall.
To be prudent, I think investment decision should not be based on potential en bloc.
The example is only for the purpose of comparing buying a 15 year LH property over a 20 year period (by then will be 35 years) vs putting money in the bank. Unless there is en bloc potential, the resale value of a 35 years property cannot be very high even if property prices rises. The latter is indeed vanilla investment thus this posting for ideas.
Aging LH or FH properties will not command high rental as times passes. Hope for en bloc should not be part of long term investment equation because it may never materialise. If it happens, it is more of a windfall.
To be prudent, I think investment decision should not be based on potential en bloc.
Hi Woods
You are right. I am not emphasizing En Bloc potential rather, bringing out this to emphasize in your bank investment strategy - is a plain vanilla investment without any chance of any excitement (except you consider bank run as excitement).
The next point, I have the idea why can't LH sell more than 600K in 35yrs time? (especially when you mentioned to take out the factor abt time value)
Example, if my grandfather bought a (30+ yrs old) condo, say Ridgewood, at $600psf, now he should sell below $600psf? or if my aunt bght a HDB 30yr ago, now she should sell below her purchased price? is my sum correct or am i better off investing in a HDB?
For non-leverage play, properties has higher txn cost compared to stocks ... I would think just put in STI ETF will be safer than throwing at one stock or one property ... you can probably start accumulating STI ETF now ... SMRT also not bad
or look for GLC's bonds that yields > 4%. serves your purpose of a steady yield. ... and assuming GLC will not fail.
no I'm not in favor of using pty rental for your yield purpose.
Amber Woods
02-12-11, 16:15
Hi Woods
You are right. I am not emphasizing En Bloc potential rather, bringing out this to emphasize in your bank investment strategy - is a plain vanilla investment without any chance of any excitement (except you consider bank run as excitement).
The next point, I have the idea why can't LH sell more than 600K in 35yrs time? (especially when you mentioned to take out the factor abt time value)
Example, if my grandfather bought a (30+ yrs old) condo, say Ridgewood, at $600psf, now he should sell below $600psf? or if my aunt bght a HDB 30yr ago, now she should sell below her purchased price? is my sum correct or am i better off investing in a HDB?
I am assuming that the property price index is still at current level of 190 after 20 years. This is possible because over the last 20 years, the URA price index has been hovering between 80 to 200 due to many crisis and cooling measures. Base on the last 20 years, we are now at the peak of the index.
I am assuming that the property price index is still at current level of 190 after 20 years. This is possible because over the last 20 years, the URA price index has been hovering between 80 to 200 due to many crisis and cooling measures. Base on the last 20 years, we are now at the peak of the index.
hi Woods
You are an academic or maybe you are approaching from an analyst in a bank? The real money is there on the street in the making (don't get me wrong, that i am suggesting you should buy now, you can hold from buying until you think the index has come down)
Plain vanilla has its advantage. It depend your risk/reward appetite and your holding power.
i
If I've 2 mil, I will spent $800k+- to buy a 2 bedder for own stay...$900k+- to buy 2 bedder sub sale unit... Eg DBR, top next yr, rental income est $3k pm, $32k pa after mantainance fee, left $300k, buy 100 lot singtel at $3 which will generate ave $13-14k pa. In total abt $45k pa.
Amber Woods
02-12-11, 21:40
HI Everyone,
Thank you for sharing your knowledge and wisdom. It is more like a focus group discussion with some interesting ideas generate
I like the idea of investing in listed Corporate Bonds and high dividend stocks such as Singtel which will provide a return of 4 to 5 percent.
Investing in properties does not appear to give the desired returns unless there is a component of capital gain when we sell off the properties.
With prices now at its 20 year high, there is a higher element of risk if one is looking for capital gain.
I also like the idea of investing in two smaller apartments (non MM) for own stay and for investment and the remaining cash on high dividend stock to generate the desire return.
Thank you for your sharing. I am now much more enlighten than I was before.
Donate some to charity hor... next life will be better.
You are most welcome... sharing and asking questions in this forum is definitely much better than talking to any housing agents (who'll tell sellers its the best time to sell and then turn around to tell buyers its the best time to buy :doh:) or insurance agents (oops). Cheers! :cheers4:
When I retire, we would like to stay in a small place w/o stairs (easy to clean up) in close proximity to mrt stn but not above or facing it (too old to drive), amenities (eg library, eateries, malls, etc). Not too crowded and noisy. :cool:
You might want to add some physical gold in your holdings as well. It doesn't generate income automatically, but every two-month you can sell back 100g Gold (worth about S$8k) to UOB (the only bank selling physical gold in Singapore). Just for your information, a batch of PAMP Physical Gold has just arrived at UOB Bank - after waiting for 3 months.
Physical gold is a hedge for unexpected hyperinflation, unexpected market crash, and it is portable - so a hedge for unexpected geopolitical risk.
Thanks,
Richard
When I retire, we would like to stay in a small place w/o stairs (easy to clean up) in close proximity to mrt stn but not above or facing it (too old to drive), amenities (eg library, eateries, malls, etc). Not too crowded and noisy. :cool:
i think ur still young..
I hv alr found my retirement home, to add to the above, need to add is, a good condo, with nice pools, and space, so can strolll after dinner..
but cost of living in Sg is getting very high, gg to Penang to retire when my property there is TOP, with unblocked seaview, at 10% of the price in Sg
Waiting for it to drop.
You might want to add some physical gold in your holdings as well. It doesn't generate income automatically, but every two-month you can sell back 100g Gold (worth about S$8k) to UOB (the only bank selling physical gold in Singapore). Just for your information, a batch of PAMP Physical Gold has just arrived at UOB Bank - after waiting for 3 months.
Physical gold is a hedge for unexpected hyperinflation, unexpected market crash, and it is portable - so a hedge for unexpected geopolitical risk.
Thanks,
Richard
But Penang is exposed to potential threat of tsunami.
i think ur still young..
I hv alr found my retirement home, to add to the above, need to add is, a good condo, with nice pools, and space, so can strolll after dinner..
but cost of living in Sg is getting very high, gg to Penang to retire when my property there is TOP, with unblocked seaview, at 10% of the price in Sg
i think ur still young..
I hv alr found my retirement home, to add to the above, need to add is, a good condo, with nice pools, and space, so can strolll after dinner..
but cost of living in Sg is getting very high, gg to Penang to retire when my property there is TOP, with unblocked seaview, at 10% of the price in Sg
and the food taste better in Penang.
shauntanzs
03-12-11, 10:05
i think ur still young..
I hv alr found my retirement home, to add to the above, need to add is, a good condo, with nice pools, and space, so can strolll after dinner..
but cost of living in Sg is getting very high, gg to Penang to retire when my property there is TOP, with unblocked seaview, at 10% of the price in Sg
Laguna,
Did u bought the Light at Penang? I was there last month.
Regulators
03-12-11, 12:35
Went to gurney drive food street not too long ago, standard drop liao and not much variety also
and the food taste better in Penang.
But Penang is exposed to potential threat of tsunami.
The site is facing west malaysia, not banda aceh should be safe bah.
Look at what happened in the last tsunami when it hit Penang. Penang bridge is so small. Imagine houses near the coast.
http://i332.photobucket.com/albums/m356/DC33_2008/TsunamiPenangBridge.jpg
Went to gurney drive food street not too long ago, standard drop liao and not much variety also
gurney drive hawker centre standard low, must go to the smaller coffee shops. damn shiok!
It is rather sad to retire in a foreign land leaving behind siblings, good friends, relatives, etc. Although I am young, I have already found my retired home as people can retire or semi-retire young these days too.
i think ur still young..
I hv alr found my retirement home, to add to the above, need to add is, a good condo, with nice pools, and space, so can strolll after dinner..
but cost of living in Sg is getting very high, gg to Penang to retire when my property there is TOP, with unblocked seaview, at 10% of the price in Sg
It is rather sad to retire in a foreign land leaving behind siblings, good friends, relatives, etc.
Very, very true... Some times it's not even monetary... For example only when u r really in it can you find fun complaining PAP every day :D :D
To Woods
u posting has been in my mind for couple of days. It is a very good question and forumers have also given valuable feedback.
U definitely can take loan based on your worth. In other words, u can leverage for the second property with first property fully paid.
Overall, the conclusion seems that, buy a 2 bedroom for own stay and fully paid for. I agree with this. Do pick one which can give u the life style u wish to have. U have lot of monies to enjoy your retirement.
As for the second $1m, I would take a loan of $500,000, and buy a 2 bedders at a better location. $1m 2 bed is just a so so location nowadays. U should capitalise on the lowe interest rate now, and interest paid is tax deductible.
Of course, the difficult issue is the timing. I think u can start to source for the first 2 bedders, usually it takes about 6 months to find u true love. By that time, the financial markets will of clearer picture.
In fact, I am not worried about the 4 years SSD with the shorten cycle. The 4 years SSD has also created a vacuum in supply as well as no one will sell within the four cycles, and by then, who know what is next. If the economy is not doing that well, the rate of the SSD will be reduced.
The next issue is on the timing, the recent huge supply of HDB flats will only hit the resale market 8 years later with 3 years of construction and 5 years of MOP. Now, first timers will be fully addressed very soon, and second timers will be addressed from as early as next year. After this, the Govt will normalise the HDB flat supply to perhaps 15,000 units a year. HDB has learnt the costly lesson of holding the unsold properties, and this history wil never repeat again.
Sg Govt wants growth, to support the aging popluation and lower birth, import of FT is a must, it is just how many of them.
I still don't understand why retired people want to take a loan?
Why cannot people just enjoy DEBT FREE lifestyle?
By making a loan, you are assuming net rental income > loan interest cost, which may not hold true mathematically:
1) What if a financial shock results into rental to drop? Some East Coast landed is now asking S$2.5K rental;
2) What if central banks need to pay 6%++ to attract bond buyers? Why there is no bank offer 10+ years fixed rate loan any more? Why central banks are the main buyers of physical gold recently? Do they trust their own paper money?
When financial crisis comes, you will have both: depressed rental income and usually high loan rates.
Your leverage should be gradually decreased as you approaching retirement age. I will definitely live a DEBT FREE lifestyle when I retire. That will increase my individual happiness index.
Thanks,
Richard
devilplate
04-12-11, 13:43
Let say got 1mil cash....better take 500k loan n keep the 500k as buffer....provided below 60yo la.....
Investment ppty anyway.....int rate so low now....make use of it to improve the roi and also reduce rental income tax...can also park the 500k cash into mortgage1 acct wat...so effective borrowing cost vy little....
If stock market crash below 2k, can use part of the 500k to fry fry....
Should always leverage on banks' money. Wealthy people also do it. :D
phantom_opera
04-12-11, 15:14
Should always leverage on banks' money. Wealthy people also do it. :D
It is not the bank's money, they are just the middleman :)
Amber Woods
04-12-11, 21:34
To Woods
u posting has been in my mind for couple of days. It is a very good question and forumers have also given valuable feedback.
U definitely can take loan based on your worth. In other words, u can leverage for the second property with first property fully paid.
Overall, the conclusion seems that, buy a 2 bedroom for own stay and fully paid for. I agree with this. Do pick one which can give u the life style u wish to have. U have lot of monies to enjoy your retirement.
As for the second $1m, I would take a loan of $500,000, and buy a 2 bedders at a better location. $1m 2 bed is just a so so location nowadays. U should capitalise on the lowe interest rate now, and interest paid is tax deductible.
Of course, the difficult issue is the timing. I think u can start to source for the first 2 bedders, usually it takes about 6 months to find u true love. By that time, the financial markets will of clearer picture.
In fact, I am not worried about the 4 years SSD with the shorten cycle. The 4 years SSD has also created a vacuum in supply as well as no one will sell within the four cycles, and by then, who know what is next. If the economy is not doing that well, the rate of the SSD will be reduced.
The next issue is on the timing, the recent huge supply of HDB flats will only hit the resale market 8 years later with 3 years of construction and 5 years of MOP. Now, first timers will be fully addressed very soon, and second timers will be addressed from as early as next year. After this, the Govt will normalise the HDB flat supply to perhaps 15,000 units a year. HDB has learnt the costly lesson of holding the unsold properties, and this history wil never repeat again.
Sg Govt wants growth, to support the aging popluation and lower birth, import of FT is a must, it is just how many of them.
Indeed, I have been toying the idea of getting an asset based loan for the second property and keep the additional cash for investment in higher yield instruments. Should interest rate increases beyond a point where the return of my invested instrument is narrowing, I could always redeem the loan. Question is the return for my second $1.5m (taking another $500K asset based loan) justify the loan? Let say, the $1m property can easily rent out for $2500 pm. The $1.5.must achieve a rental of at least $4000 to justify taking the loan. Can the additional $500K investment give me an additional $1500 pm in rent? Am I taking on unnecessary risk?
It is not the bank's money, they are just the middleman :)
The banks created the money out of thin air to loan to people and businesses. http://www.cscollege.gov.sg/cgl/pdf/Notes%20from%20Mr%20Lam%20CL's%20lecture%20on%20The%20Banking%20System%20and%20the%20Financial%20Crisis.pdf
Look at what happened in the last tsunami when it hit Penang. Penang bridge is so small. Imagine houses near the coast.
http://i332.photobucket.com/albums/m356/DC33_2008/TsunamiPenangBridge.jpg
touch wood..lightning unlikely to strike twice at the same place...:scared-1:
I still don't believe an average retiree with just 1M spare money should leverage.
What if your leveraged 1.5M becomes 1.2M? That is a loss of 300K over your 500K capital. What if your other 500K cash investment suddenly becomes less liquidity? When you need your money to pay your loan, that will be the time market will be very bad. What is the chance your cash investment will be above water?
For a person in his 30s or 40s, I will fully support leverage. But for someone who has retired, i don't see the point of leverage. Enjoy a peaceful life should be higher priority than taking more risk.
Thanks,
Richard
PS. My day job is in Risk Management, so if I sound a little bit dis-encouraging, forgive me.
Can never tell anything about nature. Underground activities are getting more intense these days than 10 years ago.:scared-3:
touch wood..lightning unlikely to strike twice at the same place...:scared-1:
Amber Woods
05-12-11, 07:27
I still don't believe an average retiree with just 1M spare money should leverage.
What if your leveraged 1.5M becomes 1.2M? That is a loss of 300K over your 500K capital. What if your other 500K cash investment suddenly becomes less liquidity? When you need your money to pay your loan, that will be the time market will be very bad. What is the chance your cash investment will be above water?
For a person in his 30s or 40s, I will fully support leverage. But for someone who has retired, i don't see the point of leverage. Enjoy a peaceful life should be higher priority than taking more risk.
Thanks,
Richard
PS. My day job is in Risk Management, so if I sound a little bit dis-encouraging, forgive me.
Richard, you are not at all discouraging. Your points are well thought and are also my concern. That is the reason why I am bring up this to the forum to have more diverse views.
If the timing is right, leverage may make more sense. Perhaps, when the time is right, having $1.5m (with 500K loan) for two smaller apartments for investment makes more sense than putting the entire $1.5m into one single apartment.
Retirees should take on lesser risk
$1M cash is not a lot of money for retiree if the person is in his 60s. How much is sufficient for investment at 60s?
I still don't believe an average retiree with just 1M spare money should leverage.
What if your leveraged 1.5M becomes 1.2M? That is a loss of 300K over your 500K capital. What if your other 500K cash investment suddenly becomes less liquidity? When you need your money to pay your loan, that will be the time market will be very bad. What is the chance your cash investment will be above water?
For a person in his 30s or 40s, I will fully support leverage. But for someone who has retired, i don't see the point of leverage. Enjoy a peaceful life should be higher priority than taking more risk.
Thanks,
Richard
PS. My day job is in Risk Management, so if I sound a little bit dis-encouraging, forgive me.
Richard, you are not at all discouraging. Your points are well thought and are also my concern. That is the reason why I am bring up this to the forum to have more diverse views.
If the timing is right, leverage may make more sense. Perhaps, when the time is right, having $1.5m (with 500K loan) for two smaller apartments for investment makes more sense than putting the entire $1.5m into one single apartment.
Retirees should take on lesser risk
That's assuming you are in the pink of health and your name hasn't appeared in the other world's namelist.
I still don't believe an average retiree with just 1M spare money should leverage.
What if your leveraged 1.5M becomes 1.2M? That is a loss of 300K over your 500K capital. What if your other 500K cash investment suddenly becomes less liquidity? When you need your money to pay your loan, that will be the time market will be very bad. What is the chance your cash investment will be above water?
For a person in his 30s or 40s, I will fully support leverage. But for someone who has retired, i don't see the point of leverage. Enjoy a peaceful life should be higher priority than taking more risk.
Thanks,
Richard
PS. My day job is in Risk Management, so if I sound a little bit dis-encouraging, forgive me.
wats ur night job....:D:D:D
Regulators
05-12-11, 14:52
A 65yr old retiree who need not plan for children and have enough set aside for medical insurance don't need to scratch head about how to spend $2 million. Spend $800k for old 3 bedroom condo with full condo facilities and keep the remaining $1.2 million as spending cash. Already calculated if the person can live to 100, that is 35 years away with $28xx a month to spend. No point worrying too much about protecting principal coz when we are in the coffin, nothing else matters.
$1M cash is not a lot of money for retiree if the person is in his 60s. How much is sufficient for investment at 60s?
phantom_opera
05-12-11, 14:59
Richwang has a point. How about suddenly get sick and need $$$ for treatment ... sorry to say this but you know you will never know. Medical insurance at this age could be very expensive too.
A 65yr old retiree who need not plan for children and have enough set aside for medical insurance don't need to scratch head about how to spend $2 million. Spend $800k for old 3 bedroom condo with full condo facilities and keep the remaining $1.2 million as spending cash. Already calculated if the person can live to 100, that is 35 years away with $28xx a month to spend. No point worrying too much about protecting principal coz when we are in the coffin, nothing else matters.Agreed... at 65, one should not just think of how to further invest his cash. Must also consider how to lead an active lifestyle to age gracefully and constantly keeping the mind engaged... one will then be happier... :o
Amber Woods
05-12-11, 15:13
There are many contributors who have the thinking that as you age, your needs for investment should differ greatly. While this could be the case for most people. However, as an investor, the focus is on best returns for your investments (prudently). Every retiree has different needs. Many retirees still want to invest wisely and pass on the investments to his/her next of kins. Look at Jim Rogers and Warrant Buffett , they are still investing wisely even though they are in their seventies.
I am not be in the same league as these two gurus. However, my desire to grow my investments remain the same when I was 30. I believe many people at retirement age and have built up some assets will want to build on instead of simply living on his savings. The energy channel into making investment decisions will serve as his next "full-time" job and keep his brain alive.
Hopefully, more of the same thinkers could share your thoughts, experience and wisdom.
I concur with you on this. :D
There are many contributors who have the thinking that as you age, your needs for investment should differ greatly. While this could be the case for most people. However, as an investor, the focus is on best returns for your investments (prudently). Every retiree has different needs. Many retirees still want to invest wisely and pass on the investments to his/her next of kins. Look at Jim Rogers and Warrant Buffett , they are still investing wisely even though they are in their seventies.
I am not be in the same league as these two gurus. However, my desire to grow my investments remain the same when I was 30. I believe many people at retirement age and have built up some assets will want to build on instead of simply living on his savings. The energy channel into making investment decisions will serve as his next "full-time" job and keep his brain alive.
Hopefully, more of the same thinkers could share your thoughts, experience and wisdom.
phantom_opera
05-12-11, 15:34
Forgive me of saying this, 2 million is not a lot of money to invest at retirement age especially it includes the roof on top ... if you have 5 or 10 millions then decision will be easy
Amber Woods
05-12-11, 15:37
Forgive me of saying this, 2 million is not a lot of money to invest at retirement age especially it includes the roof on top ... if you have 5 or 10 millions then decision will be easy
I bet to differ. The art and science of investment starts with nothing. This is what I learn when I was in my 30s'.
phantom_opera
05-12-11, 15:44
I bet to differ. The art and science of investment starts with nothing. This is what I learn when I was in my 30s'.
It is because you said your 2 million including a roof over your head, so you are only left with less than 1 million to invest, and given you are already at your retirement age, that is not a lot of capital. Of course it will be totally different if you are at 35. I just comment based on facts, it is nothing to do with your investment skills which none of us can comment.
Amber Woods
05-12-11, 15:52
It is because you said your 2 million including a roof over your head, so you are only left with less than 1 million to invest, and given you are already at your retirement age, that is not a lot of capital. Of course it will be totally different if you are at 35. I just comment based on facts, it is nothing to do with your investment skills which none of us can comment.
The focus is how best to invest the $2m or $1m in this case and how best to get the best return. Age should not be a barrier at least for this case as stated.
First, I dislike the idea that once retires, one just enjoy the hard-earned money, dun take risk and indirectly, wait to die.
I suggested earlier of $500,000 loan with $2m cash is of minimum risk, I did not suggest more than 25% leverage.
Next, I would strongly encourage Woods has the following
1. $1m 2 bedder for own stay
2. $1m for an investment property
3. $500,000 for share.
I would like to share again, my father in law, 94, refused to stop work (just go office and take care of his boss's money), he holds a big porfolio of share investment. Other than good diet, swimming, one thing keeps him alive and alert is through share investment. U will be amused of his skill, knowledge and strategy in share trading.
So, Woods, think about this, share investment is good, this will keep u learning and keep abreast of the market, which is always dynamic. Of course, how to pick counters which can out-perform market and timing, risk mgt are separate issues.
The focus is how best to invest the $2m or $1m in this case and how best to get the best return. Age should not be a barrier at least for this case as stated.
That's in theory.
In reality, age becomes an obstacle for some instruments. A simple example will be u can no longer take a 30 yr loan to enjoy 1% free money now.
And health cost rises exponentially when one ages. One needs to provision more for health cost.
Also obligation changes. In Asian context, parents are expected to take care of the young. Another cost item.
Lastly, most of my friends need to spend more when they grow older, to maintain a lifestyle. When I was 20, a KFC meal is good enough. Now, no.
So yes, when one grows older, the perspective will be different.
Regulators
05-12-11, 18:53
Amber, if I may say so, after you have come this far in life and accumulated substantial wealth by normal standards, do take the time to smell the roses more and not be too caught up by multiplying wealth and money. The money you have is enough to last you for the remainder of your life, you don't even need to think about your children coz they have your productive genes and will succeed just like you so you don't need to leave them this and that. You can dabble with stocks and shares just for leisure but don't let greed get the better of you. I know retirees who have their monies wiped out due to greed so don't fall into that trap.
If you have accumulated 2mil, you must have done something right. Just keep on doing what you have been doing all these years.... Why change now?
Unless, the 2 mil landed on your lap unexpectedly :D
Amber, if I may say so, after you have come this far in life and accumulated substantial wealth by normal standards, do take the time to smell the roses more and not be too caught up by multiplying wealth and money. The money you have is enough to last you for the remainder of your life, you don't even need to think about your children coz they have your productive genes and will succeed just like you so you don't need to leave them this and that. You can dabble with stocks and shares just for leisure but don't let greed get the better of you. I know retirees who have their monies wiped out due to greed so don't fall into that trap.Good advice! :cheers5:
If you have accumulated 2mil, you must have done something right. Just keep on doing what you have been doing all these years.... Why change now?
Unless, the 2 mil landed on your lap unexpectedly :DRetirememt means active income becomes passive so approach and perspective will be very different le so of course must take stock lor! Lifestyle changes lor... :o
Amber Woods
06-12-11, 09:32
When I think of retirees myself some 10 years ago, my impression of retirees were at least 60 years, not likely to have much educational opportunity in those days of the early 40s'. Quite a lot of today's retirees are likely to be from the baby boomers era; ie those born from the mid 50s' to early 60s'. These lots are likely to be well educated, well traveled and not likely to have grandchildren yet. They may be single or married late with school going children. They are also likely to be financially independent and chose early retirement than competing with the young scholars.
These lot of retirees are not your typical retirees who will spend their times at the negibourhood coffee shops talking politic. Nor are they enjoy pushing the supermarket trolleys looking for bargains everyday. They are likely to want to lead an active life after retirement and still want to enjoy the finer things in life. They still aspire to grow their personal wealth in a more prudent way than during their professional days.
Hopefully, my writing could change some of the perceptions that we all use to hold about a typical retiree.
Can never tell anything about nature. Underground activities are getting more intense these days than 10 years ago.:scared-3:
But that doesnt mean it will hit the same place again...so its very very very unlikely.
I like Marc Faber's asset allocation:
25% physical gold
25% cash and corporate bonds (no gov bond pls)
25% stocks (Asian stocks are preferred)
25% property
If you think the place you are staying will eventually be yours, you do have 2M to play around. That is 500K for property. Otherwise only 250K for property, not feasible in the current market.
http://marcfaberchannel.blogspot.com/
Thanks,
Richard
In the old good days when fixed deposit rate was 5%, someone with 2M hard cash can expect a good retirement life. That was 8K per month for interest income. If you only use 4K, you can even see your capital growing.
But now, if the interest rate is 0.5%, you will only have less than 1k per month. No way to enjoy. Thus we see this post.
But the world is very differently now. If you want AAA safety, the real return is virtually negative. So don't blame yourself if you see your capital is shrinking. You might be just doing the right thing of not taking unnecessary risk.
If you still want your 5% return, you are likely entering into BB- or even C.
Thanks,
Richard
http://www.slideshare.net/manish.pucsd/investments-at-different-stages-of-life
I cannot find the nice CFA Magazine article on life stage and asset allocation changes. But the slides above should gives us similar idea.
Thanks,
Richard
PS. I respect senior citizens.
I like Marc Faber's asset allocation:
25% physical gold
25% cash and corporate bonds (no gov bond pls)
25% stocks (Asian stocks are preferred)
25% property
If you think the place you are staying will eventually be yours, you do have 2M to play around. That is 500K for property. Otherwise only 250K for property, not feasible in the current market.
http://marcfaberchannel.blogspot.com/
Thanks,
Richard
25% gold is a little too overweighted.
Regulators
06-12-11, 22:56
what you say reminds me about my father, he is supposedly retired ten years ago, but in his early seventies now, he is still working away and refuse to retire. This is not because he ain't got money (coz he is already a millionaire), but because he feels that work makes him feel less left out and more useful in society.
When I think of retirees myself some 10 years ago, my impression of retirees were at least 60 years, not likely to have much educational opportunity in those days of the early 40s'. Quite a lot of today's retirees are likely to be from the baby boomers era; ie those born from the mid 50s' to early 60s'. These lots are likely to be well educated, well traveled and not likely to have grandchildren yet. They may be single or married late with school going children. They are also likely to be financially independent and chose early retirement than competing with the young scholars.
These lot of retirees are not your typical retirees who will spend their times at the negibourhood coffee shops talking politic. Nor are they enjoy pushing the supermarket trolleys looking for bargains everyday. They are likely to want to lead an active life after retirement and still want to enjoy the finer things in life. They still aspire to grow their personal wealth in a more prudent way than during their professional days.
Hopefully, my writing could change some of the perceptions that we all use to hold about a typical retiree.
In the old good days when fixed deposit rate was 5%, someone with 2M hard cash can expect a good retirement life. That was 8K per month for interest income. If you only use 4K, you can even see your capital growing.
But now, if the interest rate is 0.5%, you will only have less than 1k per month. No way to enjoy. Thus we see this post.
But the world is very differently now. If you want AAA safety, the real return is virtually negative. So don't blame yourself if you see your capital is shrinking. You might be just doing the right thing of not taking unnecessary risk.
If you still want your 5% return, you are likely entering into BB- or even C.
Thanks,
Richard
This is so true. AAA safety is virtually zero return whilst AUD can give you nearly 4% but subject to commodity pricing risks
I would never want to be in a position to have accumulated 2m when I am approaching retirement age and not have owned assets either partially or fully along the way.
One should not underestimate the power of leverage. It is that astonding 20 years ago when you have 30K and can borrow 300K to buy a property which could be worth 2m today.
maybe maslow hierarchy of needs is a better measure for retirement.....
@ self actualization stage with $$$$ = retirement
shouldnt be concern with x wealth anymore. anyway also cannot bring along. Leave too much also destroy beneficiary's life. Make the person forgot how to fish....
Amber Woods
07-12-11, 09:18
In the old good days when fixed deposit rate was 5%, someone with 2M hard cash can expect a good retirement life. That was 8K per month for interest income. If you only use 4K, you can even see your capital growing.
But now, if the interest rate is 0.5%, you will only have less than 1k per month. No way to enjoy. Thus we see this post.
But the world is very differently now. If you want AAA safety, the real return is virtually negative. So don't blame yourself if you see your capital is shrinking. You might be just doing the right thing of not taking unnecessary risk.
If you still want your 5% return, you are likely entering into BB- or even C.
Thanks,
Richard
We are discussing about longer term investment. The current low interest rate is only temporary due to the current debt crisis. This is exactly the reason why people are investing in hard assents rather than bank deposits. The question many people still asking is should I commit to property now? If so, how do I Cushion the expected softening in prices due to the economic slow down?
That is exactly why I am trying to get opinions and feedback from the forum how best to prudently invest the $2m or $1m.
We are discussing about longer term investment. The current low interest rate is only temporary due to the current debt crisis. This is exactly the reason why people are investing in hard assents rather than bank deposits. The question many people still asking is should I commit to property now? If so, how do I Cushion the expected softening in prices due to the economic slow down?
That is exactly why I am trying to get opinions and feedback from the forum how best to prudently invest the $2m or $1m.
The low interest rates don't seem to be temporary. I thought it should go up end of this year but it didn't due to persistent debt problems in US and EU. With so much debt and many fragil economies in the west, it is hard for interest rates to move up in the next few years. Hard assets like gold or properties near MRT are the way to go.
devilplate
07-12-11, 10:10
The low interest rates don't seem to be temporary. I thought it should go up end of this year but it didn't due to persistent debt problems in US and EU. With so much debt and many fragil economies in the west, it is hard for interest rates to move up in the next few years. Hard assets like gold or properties near MRT are the way to go.
since end of 2009, many formmers warned us to beware of rising int rates .....now end of 2011 still so low....ZZZzzzzzzzzzzzz
remember some even say better to take up 3yrs FIXED int rate tat time? hohoho....pay 2yrs of higher int for nothing......LOL
Again there are warnings (rant, whatever you call it) that interest rates will go up come 2012 but I doubt it will go up that much even if it does rise... the most potent combination is if interest rates go up to 4% and recession hits, durians will plummet like nobody's business le... :D How possible is this? :scared-5:
devilplate
07-12-11, 10:30
Again there are warnings (rant, whatever you call it) that interest rates will go up come 2012 but I doubt it will go up that much even if it does rise... the most potent combination is if interest rates go up to 4% and recession hits, durians will plummet like nobody's business le... :D How possible is this? :scared-5:
anything is possible
prepare for the worse and hope for the best ;)
since end of 2009, many formmers warned us to beware of rising int rates .....now end of 2011 still so low....ZZZzzzzzzzzzzzz
remember some even say better to take up 3yrs FIXED int rate tat time? hohoho....pay 2yrs of higher int for nothing......LOL
I still want to add beware of rising interest rates. It may not kill you but it will affect investment sentiment and those who loaned >$1 mil to buy properties for investments but without holding power. It takes a few caveats of fire-sales to kick-start downward momentum.
devilplate
07-12-11, 12:25
I still want to add beware of rising interest rates. It may not kill you but it will affect investment sentiment and those who loaned >$1 mil to buy properties for investments but without holding power. It takes a few caveats of fire-sales to kick-start downward momentum.
Anything can happen
Prepare for the worse and hope for the best
What will be a prudent/good interest rate to use, to prepare for the worst? 4% interest (as opposed to current 1.5%)?
Anything can happen
Prepare for the worse and hope for the best
devilplate
07-12-11, 17:02
What will be a prudent/good interest rate to use, to prepare for the worst? 4% interest (as opposed to current 1.5%)?
3.5% shd b ok
Over let say nxt 10yrs, i expect average 2.5%
Prob inflation (asset bubble) wld b so high tt govt dictates banks to raise e rates for property loans.
phantom_opera
07-12-11, 17:09
Prob inflation (asset bubble) wld b so high tt govt dictates banks to raise e rates for property loans.
Why should that happen, banks just pay depositors 1% and turn around and lend you 1.5% .. it is the margin that matters right?
Juz toying ard w e possibility. Good for e banks.
If you still want Equity exposure, maybe this is a easier guideline formula to use for asset allocation (with life stage adjustment):
100 - Age
So if you are 30 years old, you could allocation around 70% in equity. I like CapitalLand, Citibank, etc.
But if you are 60 years old, you should reduce the equity exposure to 40%. Maybe StarHub, IBM will be more suitable.
For those who are less aggressive, maybe you can use:
(100 - Age) / 2
So your equity exposure will be 35% when you are 30 years old, and 20% when you are 60 years old.
My points are:
1) It is better to take asset allocation approach at strategic level, you can then time the market within the asset allocated;
2) Life stage must be taken into consideration systematically. I have seen too many successful traders become gamblers and lost their fortunes because they forgot to de-leverage when their age has already called so.
Thanks,
Richard
If you still want Equity exposure, maybe this is a easier guideline formula to use for asset allocation (with life stage adjustment):
100 - Age
So if you are 30 years old, you could allocation around 70% in equity. I like CapitalLand, Citibank, etc.
But if you are 60 years old, you should reduce the equity exposure to 40%. Maybe StarHub, IBM will be more suitable.
For those who are less aggressive, maybe you can use:
(100 - Age) / 2
So your equity exposure will be 35% when you are 30 years old, and 20% when you are 60 years old.
My points are:
1) It is better to take asset allocation approach at strategic level, you can then time the market within the asset allocated;
2) Life stage must be taken into consideration systematically. I have seen too many successful traders become gamblers and lost their fortunes because they forgot to de-leverage when their age has already called so.
Thanks,
RichardThank you for sharing your wisdom here... :o
phantom_opera
12-12-11, 08:21
90% of retail players lose $ in stock market, it is nothing to do with how much they allocate ... it is because normally they don't have any strategy or discipline at all ... when losing money, hold long term, when a bit of profit cheong to sell, China Aviation Oil and ACCS normally their favorites b4 they got suspended
Most retail players are not even aware of STI ETF and they rather trust their insurance agents
90% of retail players lose $ in stock market, it is nothing to do with how much they allocate ... it is because normally they don't have any strategy or discipline at all ... when losing money, hold long term, when a bit of profit cheong to sell, China Aviation Oil and ACCS normally their favorites b4 they got suspended
Most retail players are not even aware of STI ETF and they rather trust their insurance agents
You sound like TKL:
http://tankinlian.blogspot.com/2009/10/invest-in-sti-etf.html
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