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paulho77
08-05-12, 11:41
Introduction
You are a middle-class earner. The catch is; don’t try to be funny and take risk. Market rewards patient investors. In strategy games like Dune and Warcraft, you must build your foundation before conquering new lands. I believe now, more than ever, that we need people to understand for the rule of economics, and acknowledge that they do not have the authority to do whatever they please + no such thing as “money grows money” in an super-efficient informed economy in the years ahead. Money only grows money if you are not a long-term slave to the banking system. (That means, in modern economics, if you have to borrow money to grow, you will eventually get tripped).

Do you know that many retired teachers are living in million dollar properties that are fully paid up? They saved and grab cheap properties during recession with their stable income. My topic today will focus on dwelling, income sustainability, transport and family.

Dwelling
You stand at important crossroad in history being the sandwiched middle-class. Making the wrong decision will have repercussions for many, many years.

• I don’t have a HDB flat now.
Nothing to be ashamed of. It is actually better to stay with parents. You do less household chores. If your in-laws bully you, you can always move out. If they are nice, stay with them and wait for the right time to enter the property market. Why? Because you can definitely get your dream condo at a more affordable price a few years down the road (yes, jump straight to condo) if you don’t have to force yourself to buy at the current high prices now.

The catch is timing. You will live for nearly 80-100 years, so what is a few years of waiting for the right price. Just make sure you got good savings. If you don’t have savings after clocking this kind of salary for years, something is wrong somewhere.

• I have a small house now.
Do you want to upgrade? Remember: when you sell high, you buy high. When can you buy cheap? Probably recession. There is no such thing as a good debt. A debt is a debt, because you are indebted, it limits your artillery firepower when the recession comes, then you will really miss the boat.

Please be patient. You cannot afford to be wrong in timing. Once you are wrong, you are stuck for life. It is not like playing computer games, you can’t restart. Don’t think about upgrading now, be thankful that you have a roof, for many newly-weds got to buy at much higher price than you, to start their family.

• I think I overstretched and committed to a million-dollar condo
I have only one thing for you; Please try to offload or pay-off asap. Look, housing loans interest rates used to be >5% years ago. Do your sums and you know that you will be killed by the higher interest rates if you loan 70-80%.

The best property prices will come when interest rates are high. Do not compromise your values or beliefs in cesspool of corrupted financial advisors or loans/housing salesmen who tell you to maximize your gearings to enjoy the low interest rates. The world will fall back to reward forthright people who will invest and works honestly, even if it means that they endure severe criticism and derision by some financiers/deal-markers who are enjoying fat bonuses.

Income sustainability
Congratulations, if you had worked hard to be fiscally responsible and debt-free. >90% of the people reading this article will not be in this category. The global economy have contributed to the deflation of fiat value, for which people like you and I will have to suffer the consequences a few years later (payback time).

You draw 4-7K, that means you are executive/manager-calibre. In a way, we are slowly become like South Korea. Most South Korean middle-income earners lose their jobs when they hit 40-45 years ago. The good thing is that conglomerates are more ethical and really compensate them $100-400K. The Korean society accepts this because it makes way for young blood in a company and those who managed to stay behind will be groomed as division/dept directors.

Human resource is like commodity now. You want a thousand dollars more, chances are, you got to work harder. I foresee many will lose their jobs when they hit >6K in the forties. The odds are as high as you getting bitten by mosquitoes when you trek through the forest. Nevertheless, it is not exactly your fault, it takes another long weekend to explain this but let’s focus on what you can do to mitigate the crisis when it happens.

Do you think you have hit the highest income ceiling possible for your calibre? If yes, try to job-hop to civil service (under non-contract hiring), including uniformed service (not only police or military). If a middle-incomer can get a civil service job for $500 less, please switch immediately.

Try not to think about entrepreneurship unless you willing to do dirty-jobs or work 6-7 days a week running your own business. Worst of all, when you start a new business when you are enjoying 7K fixed income, you are not taking a calculated risk. Overheads are too high in Singapore, even if you are hardworking, the rental will kill you.

If you lose your job suddenly. it is not a bad idea being a taxi-driver first, before planning your next move. This line is still something that is reserved for Singaporeans. You can usually clock 3K-5K depending on your working attitude. Taxi drivers in Korea makes only average US$1200-1500 each month.

Transport
You can really afford to buy a car (thanks and no thanks to cheap car loans) but you will stretch to your limit. Die lah, Toyota camry costs >$160K, a new C-class cost $10-20K more. Sure upgrade right? The price discrepancies are forcing people to buy more European cars. Now you see a lot of German on the road but then how many drivers can meet the monthly loan payments. Trust me, many more didn’t even have the spare cash to go for regular servicing after paying loans. Die x 2 lah.

Here’s some considerations:
- If you don’t need a car, good for you, you can save a lot.
- If you can delay having a car for 10 years, think about the countless $$$, that you will save fuel, taxes, etc. imho, >$100K by today’s standard.
- If you need a car, please buy resale. Choose carefully, I can’t teach you how to choose a good condition car but you can narrow down to some models. Eg. I recommend larger 2-3L Korean cars below 50K. These cars are made with high standards and low maintenance cost.

Family
Are you still motivated to fight unceasingly for the dreams that you have for your new-formed family when you married? I hope you still do. The rules of the game will be changing from wealth creation to wealth preservation.

Family is important. However, we got to admit that the hectic work schedule affects our family life. I am not going to lie to you and tell you rubbish like work-life-balance. There is no such thing in Singapore, wake up ok? But you can choose, you decide for yourself.

If you cannot spend time with your loved ones, make sure you save something for them. It is the bare minimum that we can do. In US and Korea, many kids got to pay off university debts when they start working, it is actually the same here if your kids got to use your CPF. Therefore, try to put aside some savings for them.

Family members cannot forgive us when we lose money in stock market, they might even call us gamblers when we lose money. When we win money, they take it for granted. So, why buy shares when you still have debts to payoff? If you don’t have to buy, don’t buy.

phantom_opera
08-05-12, 11:47
Again another extremist like Mr B ... I am really amazed when ppl take the stand of either you are 100% in property or 100% in cash

Both are equally bad

roly8
08-05-12, 11:51
nothing wrong with the article..

having a good strong foundation is most important... good cashflow to support your installment in the long run..:o

yowetan
08-05-12, 12:18
Thanks for the article.

I am still pondering with my 7k+ household income with 2k+ disposable rental income.

PN
08-05-12, 12:18
This looks like a summary of some of the topics discussed in this forum for last few years.

Who wrote this article?

phantom_opera
08-05-12, 12:20
This article is full of problematic assumptions ...

"The best property prices will come when interest rates are high"

=> proof??

Leeds
08-05-12, 12:22
The intents of the writer can be summarized as follow:

1. Real estate is a good hedge against inflation especially so during the earlier years when the country was experiencing very high growth.

2. Timing is important when making real estate investment be it for own stay or investment especially your first property.

3. High leverage (high personal gearing) especially in today's complex financial market is dangerous.

An interesting article by a prudent writer.

Agree that in today's context, the traditional thinking of using debt to create wealth needs hard thinking. When loan is cheap, it is highly risky.

Naruto
08-05-12, 12:22
It is nothing wrong with the article to caution ppls to think carefully
before making one of our big decision in life.

roly8
08-05-12, 12:25
This article is full of problematic assumptions ...

"The best property prices will come when interest rates are high"

=> proof??

quite true.. assumption like this should take as pin of salt.. do not trust it too much

other than that, the article does give a good read :o

smarian
08-05-12, 12:36
Introduction
You are a middle-class earner. The catch is; don’t try to be funny and take risk. Market rewards patient investors. In strategy games like Dune and Warcraft, you must build your foundation before conquering new lands. I believe now, more than ever, that we need people to understand for the rule of economics, and acknowledge that they do not have the authority to do whatever they please + no such thing as “money grows money” in an super-efficient informed economy in the years ahead. Money only grows money if you are not a long-term slave to the banking system. (That means, in modern economics, if you have to borrow money to grow, you will eventually get tripped).

Do you know that many retired teachers are living in million dollar properties that are fully paid up? They saved and grab cheap properties during recession with their stable income. My topic today will focus on dwelling, income sustainability, transport and family.

Dwelling
You stand at important crossroad in history being the sandwiched middle-class. Making the wrong decision will have repercussions for many, many years.

• I don’t have a HDB flat now.
Nothing to be ashamed of. It is actually better to stay with parents. You do less household chores. If your in-laws bully you, you can always move out. If they are nice, stay with them and wait for the right time to enter the property market. Why? Because you can definitely get your dream condo at a more affordable price a few years down the road (yes, jump straight to condo) if you don’t have to force yourself to buy at the current high prices now.

The catch is timing. You will live for nearly 80-100 years, so what is a few years of waiting for the right price. Just make sure you got good savings. If you don’t have savings after clocking this kind of salary for years, something is wrong somewhere.

• I have a small house now.
Do you want to upgrade? Remember: when you sell high, you buy high. When can you buy cheap? Probably recession. There is no such thing as a good debt. A debt is a debt, because you are indebted, it limits your artillery firepower when the recession comes, then you will really miss the boat.

Please be patient. You cannot afford to be wrong in timing. Once you are wrong, you are stuck for life. It is not like playing computer games, you can’t restart. Don’t think about upgrading now, be thankful that you have a roof, for many newly-weds got to buy at much higher price than you, to start their family.

• I think I overstretched and committed to a million-dollar condo
I have only one thing for you; Please try to offload or pay-off asap. Look, housing loans interest rates used to be >5% years ago. Do your sums and you know that you will be killed by the higher interest rates if you loan 70-80%.

The best property prices will come when interest rates are high. Do not compromise your values or beliefs in cesspool of corrupted financial advisors or loans/housing salesmen who tell you to maximize your gearings to enjoy the low interest rates. The world will fall back to reward forthright people who will invest and works honestly, even if it means that they endure severe criticism and derision by some financiers/deal-markers who are enjoying fat bonuses.

Income sustainability
Congratulations, if you had worked hard to be fiscally responsible and debt-free. >90% of the people reading this article will not be in this category. The global economy have contributed to the deflation of fiat value, for which people like you and I will have to suffer the consequences a few years later (payback time).

You draw 4-7K, that means you are executive/manager-calibre. In a way, we are slowly become like South Korea. Most South Korean middle-income earners lose their jobs when they hit 40-45 years ago. The good thing is that conglomerates are more ethical and really compensate them $100-400K. The Korean society accepts this because it makes way for young blood in a company and those who managed to stay behind will be groomed as division/dept directors.

Human resource is like commodity now. You want a thousand dollars more, chances are, you got to work harder. I foresee many will lose their jobs when they hit >6K in the forties. The odds are as high as you getting bitten by mosquitoes when you trek through the forest. Nevertheless, it is not exactly your fault, it takes another long weekend to explain this but let’s focus on what you can do to mitigate the crisis when it happens.

Do you think you have hit the highest income ceiling possible for your calibre? If yes, try to job-hop to civil service (under non-contract hiring), including uniformed service (not only police or military). If a middle-incomer can get a civil service job for $500 less, please switch immediately.

Try not to think about entrepreneurship unless you willing to do dirty-jobs or work 6-7 days a week running your own business. Worst of all, when you start a new business when you are enjoying 7K fixed income, you are not taking a calculated risk. Overheads are too high in Singapore, even if you are hardworking, the rental will kill you.

If you lose your job suddenly. it is not a bad idea being a taxi-driver first, before planning your next move. This line is still something that is reserved for Singaporeans. You can usually clock 3K-5K depending on your working attitude. Taxi drivers in Korea makes only average US$1200-1500 each month.

Transport
You can really afford to buy a car (thanks and no thanks to cheap car loans) but you will stretch to your limit. Die lah, Toyota camry costs >$160K, a new C-class cost $10-20K more. Sure upgrade right? The price discrepancies are forcing people to buy more European cars. Now you see a lot of German on the road but then how many drivers can meet the monthly loan payments. Trust me, many more didn’t even have the spare cash to go for regular servicing after paying loans. Die x 2 lah.

Here’s some considerations:
- If you don’t need a car, good for you, you can save a lot.
- If you can delay having a car for 10 years, think about the countless $$$, that you will save fuel, taxes, etc. imho, >$100K by today’s standard.
- If you need a car, please buy resale. Choose carefully, I can’t teach you how to choose a good condition car but you can narrow down to some models. Eg. I recommend larger 2-3L Korean cars below 50K. These cars are made with high standards and low maintenance cost.

Family
Are you still motivated to fight unceasingly for the dreams that you have for your new-formed family when you married? I hope you still do. The rules of the game will be changing from wealth creation to wealth preservation.

Family is important. However, we got to admit that the hectic work schedule affects our family life. I am not going to lie to you and tell you rubbish like work-life-balance. There is no such thing in Singapore, wake up ok? But you can choose, you decide for yourself.

If you cannot spend time with your loved ones, make sure you save something for them. It is the bare minimum that we can do. In US and Korea, many kids got to pay off university debts when they start working, it is actually the same here if your kids got to use your CPF. Therefore, try to put aside some savings for them.

Family members cannot forgive us when we lose money in stock market, they might even call us gamblers when we lose money. When we win money, they take it for granted. So, why buy shares when you still have debts to payoff? If you don’t have to buy, don’t buy.

Good point ... Noted

carbuncle
08-05-12, 13:03
Especially true on the part when salary hit 6k in your 40s you lose your job... I not even 40 :'(

ikan bilis
08-05-12, 13:40
someone wrote that article for cna forumers.... targeting readers in cna forum,... not that applicable to forumers here... cna side is more of stock market gamblers...

original thread here...

http://forum.channelnewsasia.com/showthread.php?87103-For-locals-making-4-7K-(I-spent-another-long-weekend-writing-this)

title as:
For locals making 4-7K (I spent another long weekend writing this)



and another one here....

http://forum.channelnewsasia.com/showthread.php?72208-For-Malaysian-workers-(I-spent-my-long-weekend-writing-this)

title as:
For Malaysian workers (I spent my long-weekend writing this)

Arcachon
08-05-12, 14:22
I don't understand, why buy property to stay and not to invest. The article only tell you to buy and stay. I would rather buy and get someone else to pay the property on my behalf in the first 30 years and the balance I can use it to do what I want. Imagine wait and wait till the sunset and the property price never go down. One should buy within his/her mean and leverage when they are young. My father work hard and rest only one day a year and he is broke now although he use to have 100k in CPF and 5 room HDB is only 50k then. He chose the easy way, stay in his 3 room HDB fully paid for $6600 and let his money in CPF eaten away by inflation.:simmering:

alamak
08-05-12, 16:23
Introduction
You are a middle-class earner. The catch is; don’t try to be funny and take risk. Market rewards patient investors. In strategy games like Dune and Warcraft, you must build your foundation before conquering new lands. I believe now, more than ever, that we need people to understand for the rule of economics, and acknowledge that they do not have the authority to do whatever they please + no such thing as “money grows money” in an super-efficient informed economy in the years ahead. Money only grows money if you are not a long-term slave to the banking system. (That means, in modern economics, if you have to borrow money to grow, you will eventually get tripped).

Do you know that many retired teachers are living in million dollar properties that are fully paid up? They saved and grab cheap properties during recession with their stable income. My topic today will focus on dwelling, income sustainability, transport and family.

Dwelling
You stand at important crossroad in history being the sandwiched middle-class. Making the wrong decision will have repercussions for many, many years.

• I don’t have a HDB flat now.
Nothing to be ashamed of. It is actually better to stay with parents. You do less household chores. If your in-laws bully you, you can always move out. If they are nice, stay with them and wait for the right time to enter the property market. Why? Because you can definitely get your dream condo at a more affordable price a few years down the road (yes, jump straight to condo) if you don’t have to force yourself to buy at the current high prices now.

The catch is timing. You will live for nearly 80-100 years, so what is a few years of waiting for the right price. Just make sure you got good savings. If you don’t have savings after clocking this kind of salary for years, something is wrong somewhere.

• I have a small house now.
Do you want to upgrade? Remember: when you sell high, you buy high. When can you buy cheap? Probably recession. There is no such thing as a good debt. A debt is a debt, because you are indebted, it limits your artillery firepower when the recession comes, then you will really miss the boat.

Please be patient. You cannot afford to be wrong in timing. Once you are wrong, you are stuck for life. It is not like playing computer games, you can’t restart. Don’t think about upgrading now, be thankful that you have a roof, for many newly-weds got to buy at much higher price than you, to start their family.

• I think I overstretched and committed to a million-dollar condo
I have only one thing for you; Please try to offload or pay-off asap. Look, housing loans interest rates used to be >5% years ago. Do your sums and you know that you will be killed by the higher interest rates if you loan 70-80%.

The best property prices will come when interest rates are high. Do not compromise your values or beliefs in cesspool of corrupted financial advisors or loans/housing salesmen who tell you to maximize your gearings to enjoy the low interest rates. The world will fall back to reward forthright people who will invest and works honestly, even if it means that they endure severe criticism and derision by some financiers/deal-markers who are enjoying fat bonuses.

Income sustainability
Congratulations, if you had worked hard to be fiscally responsible and debt-free. >90% of the people reading this article will not be in this category. The global economy have contributed to the deflation of fiat value, for which people like you and I will have to suffer the consequences a few years later (payback time).

You draw 4-7K, that means you are executive/manager-calibre. In a way, we are slowly become like South Korea. Most South Korean middle-income earners lose their jobs when they hit 40-45 years ago. The good thing is that conglomerates are more ethical and really compensate them $100-400K. The Korean society accepts this because it makes way for young blood in a company and those who managed to stay behind will be groomed as division/dept directors.

Human resource is like commodity now. You want a thousand dollars more, chances are, you got to work harder. I foresee many will lose their jobs when they hit >6K in the forties. The odds are as high as you getting bitten by mosquitoes when you trek through the forest. Nevertheless, it is not exactly your fault, it takes another long weekend to explain this but let’s focus on what you can do to mitigate the crisis when it happens.

Do you think you have hit the highest income ceiling possible for your calibre? If yes, try to job-hop to civil service (under non-contract hiring), including uniformed service (not only police or military). If a middle-incomer can get a civil service job for $500 less, please switch immediately.

Try not to think about entrepreneurship unless you willing to do dirty-jobs or work 6-7 days a week running your own business. Worst of all, when you start a new business when you are enjoying 7K fixed income, you are not taking a calculated risk. Overheads are too high in Singapore, even if you are hardworking, the rental will kill you.

If you lose your job suddenly. it is not a bad idea being a taxi-driver first, before planning your next move. This line is still something that is reserved for Singaporeans. You can usually clock 3K-5K depending on your working attitude. Taxi drivers in Korea makes only average US$1200-1500 each month.

Transport
You can really afford to buy a car (thanks and no thanks to cheap car loans) but you will stretch to your limit. Die lah, Toyota camry costs >$160K, a new C-class cost $10-20K more. Sure upgrade right? The price discrepancies are forcing people to buy more European cars. Now you see a lot of German on the road but then how many drivers can meet the monthly loan payments. Trust me, many more didn’t even have the spare cash to go for regular servicing after paying loans. Die x 2 lah.

Here’s some considerations:
- If you don’t need a car, good for you, you can save a lot.
- If you can delay having a car for 10 years, think about the countless $$$, that you will save fuel, taxes, etc. imho, >$100K by today’s standard.
- If you need a car, please buy resale. Choose carefully, I can’t teach you how to choose a good condition car but you can narrow down to some models. Eg. I recommend larger 2-3L Korean cars below 50K. These cars are made with high standards and low maintenance cost.

Family
Are you still motivated to fight unceasingly for the dreams that you have for your new-formed family when you married? I hope you still do. The rules of the game will be changing from wealth creation to wealth preservation.

Family is important. However, we got to admit that the hectic work schedule affects our family life. I am not going to lie to you and tell you rubbish like work-life-balance. There is no such thing in Singapore, wake up ok? But you can choose, you decide for yourself.

If you cannot spend time with your loved ones, make sure you save something for them. It is the bare minimum that we can do. In US and Korea, many kids got to pay off university debts when they start working, it is actually the same here if your kids got to use your CPF. Therefore, try to put aside some savings for them.

Family members cannot forgive us when we lose money in stock market, they might even call us gamblers when we lose money. When we win money, they take it for granted. So, why buy shares when you still have debts to payoff? If you don’t have to buy, don’t buy.

This article is excellent, rational and true (pragmatic) to the point if you are a salaried worker. We can totally relate to it especially the part about people in the fourties being high end executive, managers losing their job. Don't be complacent ..No one own you a living even with your high degree, master or Phd. You are not master of your own fate unless you learn to create value or add value for yourself. I won't expound on this.

This is the situation in Singapore for the last 10 years. It will be for your children unless there is a change in the Regime "mindset". No more job gurantee and no such thing as long-term career prospect as Singapore is open and HR hire policies don't provide protection for Singaporean. You can be hired and fired aka retrenched for no apparent fault of yours. We are the most competitive and open free labour market, easiest to setup business (for foreign companies ).

Gahment is aware of the problem and netizens do not scream of unfair FT competitions for nothing. There is no minimum wage (except for the elite Ministers and civil servants) and they don't give a hoot about it until they lost another 4/5 GRCs in 2016.

Don't buy (overbuy) properties unless you are sure can manage it. Simple message.:D

Douk
08-05-12, 20:36
Good read.

Many make their money from buy low sell high, but forget this golden rule soon after.

Risk is high for a middle/low income to hold a property with huge loan through the cycles. Best bet is still to buy it at crisis with enough buffer.

Dream realistic.. Not dream a dream.



Introduction
You are a middle-class earner. The catch is; don’t try to be funny and take risk. Market rewards patient investors. In strategy games like Dune and Warcraft, you must build your foundation before conquering new lands. I believe now, more than ever, that we need people to understand for the rule of economics, and acknowledge that they do not have the authority to do whatever they please + no such thing as “money grows money” in an super-efficient informed economy in the years ahead. Money only grows money if you are not a long-term slave to the banking system. (That means, in modern economics, if you have to borrow money to grow, you will eventually get tripped).

Do you know that many retired teachers are living in million dollar properties that are fully paid up? They saved and grab cheap properties during recession with their stable income. My topic today will focus on dwelling, income sustainability, transport and family.

Dwelling
You stand at important crossroad in history being the sandwiched middle-class. Making the wrong decision will have repercussions for many, many years.

• I don’t have a HDB flat now.
Nothing to be ashamed of. It is actually better to stay with parents. You do less household chores. If your in-laws bully you, you can always move out. If they are nice, stay with them and wait for the right time to enter the property market. Why? Because you can definitely get your dream condo at a more affordable price a few years down the road (yes, jump straight to condo) if you don’t have to force yourself to buy at the current high prices now.

The catch is timing. You will live for nearly 80-100 years, so what is a few years of waiting for the right price. Just make sure you got good savings. If you don’t have savings after clocking this kind of salary for years, something is wrong somewhere.

• I have a small house now.
Do you want to upgrade? Remember: when you sell high, you buy high. When can you buy cheap? Probably recession. There is no such thing as a good debt. A debt is a debt, because you are indebted, it limits your artillery firepower when the recession comes, then you will really miss the boat.

Please be patient. You cannot afford to be wrong in timing. Once you are wrong, you are stuck for life. It is not like playing computer games, you can’t restart. Don’t think about upgrading now, be thankful that you have a roof, for many newly-weds got to buy at much higher price than you, to start their family.

• I think I overstretched and committed to a million-dollar condo
I have only one thing for you; Please try to offload or pay-off asap. Look, housing loans interest rates used to be >5% years ago. Do your sums and you know that you will be killed by the higher interest rates if you loan 70-80%.

The best property prices will come when interest rates are high. Do not compromise your values or beliefs in cesspool of corrupted financial advisors or loans/housing salesmen who tell you to maximize your gearings to enjoy the low interest rates. The world will fall back to reward forthright people who will invest and works honestly, even if it means that they endure severe criticism and derision by some financiers/deal-markers who are enjoying fat bonuses.

Income sustainability
Congratulations, if you had worked hard to be fiscally responsible and debt-free. >90% of the people reading this article will not be in this category. The global economy have contributed to the deflation of fiat value, for which people like you and I will have to suffer the consequences a few years later (payback time).

You draw 4-7K, that means you are executive/manager-calibre. In a way, we are slowly become like South Korea. Most South Korean middle-income earners lose their jobs when they hit 40-45 years ago. The good thing is that conglomerates are more ethical and really compensate them $100-400K. The Korean society accepts this because it makes way for young blood in a company and those who managed to stay behind will be groomed as division/dept directors.

Human resource is like commodity now. You want a thousand dollars more, chances are, you got to work harder. I foresee many will lose their jobs when they hit >6K in the forties. The odds are as high as you getting bitten by mosquitoes when you trek through the forest. Nevertheless, it is not exactly your fault, it takes another long weekend to explain this but let’s focus on what you can do to mitigate the crisis when it happens.

Do you think you have hit the highest income ceiling possible for your calibre? If yes, try to job-hop to civil service (under non-contract hiring), including uniformed service (not only police or military). If a middle-incomer can get a civil service job for $500 less, please switch immediately.

Try not to think about entrepreneurship unless you willing to do dirty-jobs or work 6-7 days a week running your own business. Worst of all, when you start a new business when you are enjoying 7K fixed income, you are not taking a calculated risk. Overheads are too high in Singapore, even if you are hardworking, the rental will kill you.

If you lose your job suddenly. it is not a bad idea being a taxi-driver first, before planning your next move. This line is still something that is reserved for Singaporeans. You can usually clock 3K-5K depending on your working attitude. Taxi drivers in Korea makes only average US$1200-1500 each month.

Transport
You can really afford to buy a car (thanks and no thanks to cheap car loans) but you will stretch to your limit. Die lah, Toyota camry costs >$160K, a new C-class cost $10-20K more. Sure upgrade right? The price discrepancies are forcing people to buy more European cars. Now you see a lot of German on the road but then how many drivers can meet the monthly loan payments. Trust me, many more didn’t even have the spare cash to go for regular servicing after paying loans. Die x 2 lah.

Here’s some considerations:
- If you don’t need a car, good for you, you can save a lot.
- If you can delay having a car for 10 years, think about the countless $$$, that you will save fuel, taxes, etc. imho, >$100K by today’s standard.
- If you need a car, please buy resale. Choose carefully, I can’t teach you how to choose a good condition car but you can narrow down to some models. Eg. I recommend larger 2-3L Korean cars below 50K. These cars are made with high standards and low maintenance cost.

Family
Are you still motivated to fight unceasingly for the dreams that you have for your new-formed family when you married? I hope you still do. The rules of the game will be changing from wealth creation to wealth preservation.

Family is important. However, we got to admit that the hectic work schedule affects our family life. I am not going to lie to you and tell you rubbish like work-life-balance. There is no such thing in Singapore, wake up ok? But you can choose, you decide for yourself.

If you cannot spend time with your loved ones, make sure you save something for them. It is the bare minimum that we can do. In US and Korea, many kids got to pay off university debts when they start working, it is actually the same here if your kids got to use your CPF. Therefore, try to put aside some savings for them.

Family members cannot forgive us when we lose money in stock market, they might even call us gamblers when we lose money. When we win money, they take it for granted. So, why buy shares when you still have debts to payoff? If you don’t have to buy, don’t buy.

buttercarp
08-05-12, 21:09
I think I overstretched and committed to a million-dollar condo
I have only one thing for you; Please try to offload or pay-off asap. Look, housing loans interest rates used to be >5% years ago. Do your sums and you know that you will be killed by the higher interest rates if you loan 70-80%.


TS, thanks for posting this good article.
I like the part about paying up housing loan asap.

phantom_opera
08-05-12, 21:44
I beg to differ ... I hate LTV 60% ... I can afford to pay even 50% but I want to borrow if possible 100% for my condo :D

In the era of high inflation and low rate... borrow $$ = take advantage of the savers ... obviously it cannot last forever but it is going to last more than u expect

Leeds
08-05-12, 22:03
I beg to differ ... I hate LTV 60% ... I can afford to pay even 50% but I want to borrow if possible 100% for my condo :D

In the era of high inflation and low rate... borrow $$ = take advantage of the savers ... obviously it cannot last forever but it is going to last more than u expect
You are not at risk since you can afford even a lower LTV. The risk associate with cheap loans is that many people stretch to their limits only to find themselves in trouble when interest rate increases.

The writer is not too concern with people from your segment. However, as a piece of writing, it is well written with good intent and with prudence.

evergreen
09-05-12, 00:10
The contents of the article show clearly why the writer is stuck where he/she is.


I beg to differ ... I hate LTV 60% ... I can afford to pay even 50% but I want to borrow if possible 100% for my condo :D

In the era of high inflation and low rate... borrow $$ = take advantage of the savers ... obviously it cannot last forever but it is going to last more than u expect
I'm with you on this I think MOE should make finance and economics compulsory subjects.

Leeds
09-05-12, 05:13
The contents of the article show clearly why the writer is stuck where he/she is.


I'm with you on this I think MOE should make finance and economics compulsory subjects.

Sure it makes sense to borrow cheaply from others and let others pay for your loan especially now. It makes sense to borrow even if interest is high in business sense since you are using other people money to acquire your own assets.

However, most people who do that usually do not have a lot of buffer and thus need to take higher risk to leverage. For those who have a lot more buffer, they usually strike a balance to be prudence on their gearing. Good company with sound management does that too.

Banker like to lent to the rich but for the average guy, banker want to double sure your ability to pay before they even consider giving you a loan. Thus, it is not easy to get a loan from the bank with high LTV for the average Joe in Singapore. The sub-prime crisis in the US was the result of banks lending freely to the average Joe.

However, one must know what you do with the cash you have even as you can borrow cheaply for now? If you are a savvy investor, sure you will invest in securities that give you higher returns than the interest you are paying for your housing loan.

However, for the average Joe or risk averse guy, it may not be their cup of tea. They would rather be debt free, sleep well and enjoy the fruit of their labour especially if they have past the stage in their lives of taking higher risk.

You may enjoy waking up or staying up in the early hours of the morning looking at your computer screen about the US market and the position to take later in the day. This kind of life may not be what most people desire. They may not even have the skills or interest to live their lives this way.

There is no right or wrong in investment finance. The key is what is your risk profile and how far you want to go to achieve your goals? Are you enjoying what you are doing?

samuelk
09-05-12, 06:12
Sure it makes sense to borrow cheaply from others and let others pay for your loan especially now. It makes sense to borrow even if interest is high in business sense since you are using other people money to acquire your own assets.

However, most people who do that usually do not have a lot of buffer and thus need to take higher risk to leverage. For those who have a lot more buffer, they usually strike a balance to be prudence on their gearing. Good company with sound management does that too.

Banker like to lent to the rich but for the average guy, banker want to double sure your ability to pay before they even consider giving you a loan. Thus, it is not easy to get a loan from the bank with high LTV for the average Joe in Singapore. The sub-prime crisis in the US was the result of banks lending freely to the average Joe.

However, one must know what you do with the cash you have even as you can borrow cheaply for now? If you are a savvy investor, sure you will invest in securities that give you higher returns than the interest you are paying for your housing loan.

However, for the average Joe or risk averse guy, it may not be their cup of tea. They would rather be debt free, sleep well and enjoy the fruit of their labour especially if they have past the stage in their lives of taking higher risk.

You may enjoy waking up or staying up in the early hours of the morning looking at your computer screen about the US market and the position to take later in the day. This kind of life may not be what most people desire. They may not even have the skills or interest to live their lives this way.

There is no right or wrong in investment finance. The key is what is your risk profile and how far you want to go to achieve your goals? Are you enjoying what you are doing?
the average Joe when he had the loan was a bus driver who had 5 houses. That was how average he was in the US. And the fact that when there was a down turn, he just let the bank take away whats actually a whole lot lowere then whats its worth. He had aleardy amass a small profit and left the bank holding the baby.

Leeds
09-05-12, 10:39
the average Joe when he had the loan was a bus driver who had 5 houses. That was how average he was in the US. And the fact that when there was a down turn, he just let the bank take away whats actually a whole lot lowere then whats its worth. He had aleardy amass a small profit and left the bank holding the baby.
One must not look at things just at face value.

The acute situation in the US is beyond repaired. The short selling of distressed homes and using the money to buy more short sale homes is an opportunity caused by the crippled economy created by the banks lending too easily to the average Joe during good time. When you are in the same situation as in the US now, where you are going to loose your homes anyway, you might as well sell short and use the money to buy more distressed homes and still might make some profits. It is certainly not a calculated risk the average Joe in the US was taking when they signed up for the cheap loans. Many average Joe actually loose their homes after walking away and hopefully with some money left to tie loose ends. However, most of them do not not enough to buy more distressed homes after walking away.

If the average Joe had taken cheap loans to buy houses and sold them before the crash, he is certainly not your average Joe.

Rosy
09-05-12, 11:34
poor dad's mentality

amk
09-05-12, 16:25
The contents of the article show clearly why the writer is stuck where he/she is.

exactly.

the same writer very likely will complain (sooner or later) "property prices have outpaced income growth".

Leeds
09-05-12, 17:13
Try to view the article in its entirety and the main message was about being prudence. While some of the thinking may not be consistent with investment concepts, nevertheless, it is err on the caution side.

For example, his rejection on borrowed money to create wealth may appear controversial but if we view it as a caution toward borrowed money and not to over stretch oneself, than it is quite a different thing altogether.

The writer could be a victim of the US sub-prime crisis and spoke from the heart. The writer could well be a millionaire who had witnessed the eroding of wealth in the US and trying to share with us his "wisdom".

Learning to understand and respect differing views is as good a virtue as accepting people who are different from us.

felicia_sg
09-05-12, 18:49
So? In the name prudence, LTV lowered. Middle incomers can't afford invest in properties to earn more money by taking Adv of cheap funding, create policy to benefit the rich? I believe 80% LTV is enough, & private market should be left to market forces because many suppliers. If gov can't even manage HDB prices properly when they are sole supplier, don't understand why they keep mandling in private market as though they know best? They should just focus 100% to fix Runnaway HDB prices! And don't take easy way out of massive building now & cause oversupply a few years down the road due to hogging for rental rather than genuine demand!



Sure it makes sense to borrow cheaply from others and let others pay for your loan especially now. It makes sense to borrow even if interest is high in business sense since you are using other people money to acquire your own assets.

However, most people who do that usually do not have a lot of buffer and thus need to take higher risk to leverage. For those who have a lot more buffer, they usually strike a balance to be prudence on their gearing. Good company with sound management does that too.

Banker like to lent to the rich but for the average guy, banker want to double sure your ability to pay before they even consider giving you a loan. Thus, it is not easy to get a loan from the bank with high LTV for the average Joe in Singapore. The sub-prime crisis in the US was the result of banks lending freely to the average Joe.

However, one must know what you do with the cash you have even as you can borrow cheaply for now? If you are a savvy investor, sure you will invest in securities that give you higher returns than the interest you are paying for your housing loan.

However, for the average Joe or risk averse guy, it may not be their cup of tea. They would rather be debt free, sleep well and enjoy the fruit of their labour especially if they have past the stage in their lives of taking higher risk.

You may enjoy waking up or staying up in the early hours of the morning looking at your computer screen about the US market and the position to take later in the day. This kind of life may not be what most people desire. They may not even have the skills or interest to live their lives this way.

There is no right or wrong in investment finance. The key is what is your risk profile and how far you want to go to achieve your goals? Are you enjoying what you are doing?