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Showing posts with label Ms. Y. Show all posts
Showing posts with label Ms. Y. Show all posts

Tea with Ms. Y: Single, turned 35 and getting a resale flat?

Thursday, June 4, 2015

A guest blog by Ms. Y who recently turned 35 and got herself a resale HDB flat:

I'm just a regular white collar worker with not bad a job. Work hard and long hours and get decent pay. However, I do need to provide for my parents as they age. My biggest concern is that they do not have much insurance coverage (but might be different now with Medishield life!) Anyway, they both have some medical condition which doesn't allow them to get insurance coverage now. I'm also now eligible to buy a hdb flat!

I don't worry abt a 1 time operation need. 30k or 50k, it's not difficult to fork out of my savings or even if I have to borrow, it's not difficult. What I worry is about the long term chronic illness such as chemo for cancer and kidney dialysis that is very cash draining. Who knows? I may even have to take no pay leave to look after my parents. Or at least until I can arrange nursing home, domestic help, etc. I don't know how much all that will cost but if I have to fork out 2 to 3k per month, my finances would be drained surely.

So, my plan is to buy a cash generating asset. Need to generate 3k cash per month by renting my flat in the event of need (moving back to parents' place to take care of them as reason for renting out whole flat b4 meeting 5 years minumum occupation period can be approved by hdb).


Of course, my plan needs to be backed up by a good financial standing by complying with the TDSR and MSR. MSR is only applicable to hdb flats purchased. So, I'm using less than 30% of my monthly salary to service my loan calculated at an imputed interest rate of 3.5% by regulation. Tip: b4 buying property, get a mortgage broker to calculate all these. I did so even when I studied the regulations and calculated a couple of times.

Anyways, after getting an approval in principle from 2 banks (w help of mortgage broker), I went shopping for a flat. To yield 2 to 3k of cash flow, it has to be at least 4 room flat and at a good location. Then I checked hdb website for such rental yield and decide amongst them one of a cheaper place for such yield.

Also, I'm quite sick and tired of the >1 hr travel each way to and fro work. So, I'm getting a flat near to town area. It is expensive no doubt, but it is serving my purpose. 


Oh yeah, another reason why I do this is because I know myself. I'm not such a stock whiz that I get great returns in the stock market. Not so good in fact. I do well by squirreling cash away. Out of sight, out of mind. So, I don't spend it. Haha....I have most of my savings tucked away like this. I can say that I can afford this flat quite comfortably. In fact, after I have bought it, another transaction was done with price higher than mine.....hit above the 1 year high. Seems property market is going up again.

My flat is less than 5 years old. So, I plan to stay in it as long as I can. I will downgrade when I am retired to realized gains for retirement (hopefully). Or I'll just leave it and rent it out to finance my stay in a nursing home when I need it.

I have some amt in OA tied up in investments and paid 15% downpayment, stamp duty and lawyers fees. Found that I still have a small excess in OA. I just transferred them to my SA. My mortgage loan is ending when I am 60. So, I plan to pump up my SA now with min sum cpf top up and any excesses in my OA will be trf to SA. Trying to get govt to pay for part of my flat when I am 55.  4% interest in SA vs the around 2% mortgage interest....decision making is a piece of cake.  ;)

A nursing home in Singapore run by First REIT.

Now I have half the current prevailing min sum amt in SA and hit the ceiling of my MA. The only issue I have is that as my SA hits min sum earlier, I may not be able to make further contribution for tax relief purposes.

So, this is the story of my flat. :)


Congratulations, Ms. Y!


TDSR:
Total Debt Servicing Ratio refers to how much of our monthly income do we use to pay our debts. MAS policy is that TDSR cannot exceed 60%.

MSR:
Mortgage Service Ratio refers to how much of our monthly income do we use to pay our debt secured by properties (i.e. mortgage).  Applies to HDB flats and ECs only. MAS policy is that MSR cannot exceed 30%.


Related posts:
1. Buying an apartment: Considerations for first timers.
2. Build a bigger retirement fund with CPF-SA.
3. Don't see money, won't spend money.
4. National Day Rally: Retirement funding adequacy.
5. Millionaire or not, plan for retirement.

Tea with Ms. Y: 3 points to share with fresh graduates.

Wednesday, September 17, 2014

A regular reader graciously agreed to contribute a guest blog and here it is:


I'm very honoured to have AK71 request for a guest blog post from me. I would like to share some of my experiences and hope that people would benefit from these.

1. Get a job before graduation.

In my last semester in university, I was busy writing resumes and sending them out. My goal was to get a job ASAP. To me, the ability to secure a job at graduation or before demonstrates how good a student is. It is not just the grades we get.

Moreover, a few months of unemployment would set me back financially. We all have some living expenses to take care of, right?

2. Save money: Keep it away until you forget you have it.

I'm not inclined to save money. I find going the extra mile to hunt for cheap deals or reduce spending is quite troublesome and tiring. I like to spend money. I like to go for holidays, shopping trips etc. 



However, I do know the importance of having savings. One thing I learnt from my mother is to keep some money away until I forget I have it. So, I have some endowment plans and monthly savings accounts.

These tools are very useful especially in terms of timing my savings to prepare for my resale flat purchase. Of course, this method might not be good for everyone but it forces me to save.


3. Invest in yourself.

Take courses to improve yourself. The journey just started.


I believe that if I am not giving real value in my job, my employer has no incentive to give me an increment that is beyond inflationary rate. My real wage will be stagnant.

Plan your career path. Invest in yourself to cross disciplines. Employers pay good money for people who can bridge gaps.


I realized that when I took courses, I had less time to spend money. That resulted in more savings for me.
                     
Focus on doing what will secure higher pay for us. Seriously, because it's just going to get more difficult when the bigger demands of life kick in later on. For examples, getting married, setting up a family, buying an apartment and taking care of parents who are aging with medical needs.


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