How am I doing? - Help yourself and everyone else series.

[confused_newbie]

Hi Everyone,

I was wondering if we could start a session where people could present their financial plan and the members especially people like D.O.G. and MW and others who work in the financial industry as well as others who develop and maintain their own plans to give their views on how the person is doing and what they could do to make it better and answer any questions that the person has.

I think it would help the individual who is asking as well as everyone who learns from each other's planning and the comments and reviews.

I think it would also make this board more lively!.

How about it ?

I would love everyone's feedback on my plans . ;P

I'm sure everyone would love to get feedback on theirs. We can make it anonymous also so that people don't have to reveal who the submitter is.

Regards,

Confused newbie.

[brattzz]

ok, u start the ball rolling?

[d.o.g.]

I'm sure everyone would love to get feedback on theirs. We can make it anonymous also so that people don't have to reveal who the submitter is.

The trouble is that while most people mean well, not everyone is competent to make an appropriate judgment or give useful advice. In fact those who know best are the least likely to speak out, because they are aware of the limits of their knowledge. Also they are probably busy giving their advice elsewhere for fees instead of for free. People have to eat, after all.

Feel free to ask for help. but keep in mind that most of the people who give you advice are not in fact licensed to give advice at all. So following the advice could be good, neutral or even bad for you. Always remember that free advice is worth what you paid for it.

[confused_newbie]

I'm sure everyone would love to get feedback on theirs. We can make it anonymous also so that people don't have to reveal who the submitter is.

The trouble is that while most people mean well, not everyone is competent to make an appropriate judgment or give useful advice. In fact those who know best are the least likely to speak out, because they are aware of the limits of their knowledge. Also they are probably busy giving their advice elsewhere for fees instead of for free. People have to eat, after all.

Feel free to ask for help. but keep in mind that most of the people who give you advice are not in fact licensed to give advice at all. So following the advice could be good, neutral or even bad for you. Always remember that free advice is worth what you paid for it.

Hi D.O.G,

Thank You for your feedback and comments. Certainly professional advice is different from community advice.

However, I thought it would be good to see the different views that a community presents on the same issue. Also, people learn from each other on why their view is correct or wrong or can be seen differently.

Ultimately, professional fee based advice is different, but take is getting community based advice.

Care to share whatever free knowledge you are willing to part...;P

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ok, u start the ball rolling?

Sure.!!! ;P

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So let me the first to start this and hopefully not the last.

Age :40
Goals: A) To own a 4 - 5 room HDB Flat. Max Budget : 350,0000.
B) To save up for retirement in 20 yrs time. Expected expenses 3500 per month in today's dollars
C) To save up for education of kids. - 200,000 K

HDB = Pay using CPF Full = 170,000 + 30000 (HDB Grant) = 150,000 mortgage debt.

Take HDB Loan : Loan Payment for 20 yrs = 802 per month.

Investment Portfolio = 450K. ( To reach 450K in December)

Emergency Cash = 50K.

Questions:

1) I am not sure when to buy the flat, as the prices even in ulu places like Woodlands are very expensive now.
2) If I buy the flat as expressed above and mortgage is 802 per month. Do you think at my age paying 802 for 20 yrs is risky?

3) How do you think I am doing? Do you think I will reach my goals?

4) Do you think I am prepared well, as I have small kids and I want to ensure they are not impacted by any layoffs or other income generating problems.

Please feel free to ask me any questions.

Thank You.

[confused_newbie]

Hmm.

No one wants to give their inputs?? D.O.G.? MW? thinknotleft? Yeo? Anyone?

Just looking for opinions and feedback.

[kazukirai]

d.o.g. probably scared everyone off with his view.
Let me share my 2cents worth to get the ball rolling.

2) If I buy the flat as expressed above and mortgage is 802 per month. Do you think at my age paying 802 for 20 yrs is risky?

That depends a whole lot on how much you're earning no? Also, are you paying rent now? If so, how much?

If the choice is a) pay 802 per month to own a place versus b) pay 802 per month to rent (excluding things like ppty tax and conservancy fees etc to simplify things)....I'm sure you get what I mean.

3) How do you think I am doing? Do you think I will reach my goals?

Whether you get there or not depends a lot on how fast you can grow your savings and investments no?

Anyway, assuming inflation rate of 3.5% p.a (if you believe in the concept of CPI in the first place that is), your $3500 of expenses today will equal some 80k per year.

If, big IF, you can grow your current portfolio at 5% p.a, with a dividend rate of 5% p.a and extra savings of 20+k (savings contribution increasing at 2.5% p.a) , then yes (from your starting point of 450k), you'll have a portfolio in 11 years time whereby you can draw 80+k a year in dividends to meet your monthly expenditures.

Of course, all this is an exercise on paper. You can expect lots of volatility a long the way and lots of curve balls that life throws at you. I'm not sure how useful this exercise is but Ive used it as a guidepost to see whether I'm closer to getting to where and I want to get to and I suppose it helps to have some map than no map at all.

4) Do you think I am prepared well, as I have small kids and I want to ensure they are not impacted by any layoffs or other income generating problems.

This is the tricky question. After all, you stated that your age is 40. Correct me if I'm wrong but that's the usual age where people start to get laid off and subsequently find it hard to gain employment with the same terms as before. That's assuming your occupation is one of that nature. If you're a professional i.e doctor. lawyer etc. or one with an iron rice bowl i.e govt sector, then less of a worry I suppose.

Otherwise, maybe you might want to start thinking about other streams of income?

Anyway, as d.o.g. said, the advice here is free and probably only as good as it's worth. I'm not a certified financial planner nor have I been through that much in life but I hope it might help you in any way it can.

[brattzz]

can u make do with a 3 rm flat instead? how about HDB BTO? don't buy resale.. lower the mortage debt. Try to take CPF loan at 2.6%. (some say it's good debt though..)

Use the extra cash to invest in blue chips (sole licences SGX/SPH/SMRT..etec) , if u can get 5-6% returns, put them in again, let it compound.. 10 to 15 yrs.

In case of emergency, u can still tap in...cos ur 40 yrs old, getting retrench might be quite real, so cash is important.

How old are the kids? try to plan out their expenses till they reach Uni or poly.. etc... if life is hard, it's ok, cos we, adults can take the hardship, make sure the kids can grow up to a good health and education.

Possible to take 2nd job? tution etc?..

[d.o.g.]

1) I am not sure when to buy the flat, as the prices even in ulu places like Woodlands are very expensive now.
2) If I buy the flat as expressed above and mortgage is 802 per month. Do you think at my age paying 802 for 20 yrs is risky?

3) How do you think I am doing? Do you think I will reach my goals?

4) Do you think I am prepared well, as I have small kids and I want to ensure they are not impacted by any layoffs or other income generating problems.

Since I am not licensed to give advice let me state upfront that the ideas below are for discussion only.

You have stated your goals i.e. endpoint. But we don't know your situation i.e. start point. In order to have some idea of whether you can get "there" from "here" it would be good if you shared your situation:

1. Nature of job held by self and spouse
2. Salary (ballpark) of self and spouse
3. Monthly household savings
4. Current net worth and breakdown (bank, stocks, bonds, property etc)

Also, your education goal for the children needs more details:

a. Number of children and their ages
b. University type (local? US? UK? China? Japan? Australia?)

Also, is the $200k goal in today's dollars or future dollars?

One final thing that was not discussed: do you wish to leave anything to the children?

If you are willing to die poor, then you can draw down your capital in your final years, which could materially reduce the amount needed at retirement. If you want to leave a meaningful sum to the children, then you will need a lot more at retirement, so that your spending doesn't erode the principal.

[yeokiwi]

Some humble opinions...(free and therefore does not worth much....)
1) Are you properly insured for death, disability and hospitalisation? Insurance planning must take precedence over investment planning.
2) If you are drawing a monthly salary, you may want to factor in the lower CPF contribution when you hit 50.(http://mycpf.cpf.gov.sg/Employers/Gen-In...ntriRa.htm)
3) HDB loan is quite safe to get and most likely, the interest rate will stay at 2.6% for a long long time. However, I think it may not be advisable to empty your CPF ordinary account. Preferably, your CPF ordinary account should hold enough money to repay your mortgage loan in the event of job loss. You can actually take the maximum period (25 years in your case) and do lump sum repayment along the way that will reduce your repayment period.

need to go and sleep now... hehe...

[Musicwhiz]

It's not that I don't want to give advice, but as d.o.g. mentioned - we need more info from you; a LOT more info, in order to even begin to give reasonable pertinent advice.

Even then, as I am also not licensed to give advice, it's probably not going to be awfully useful. I still suggest meeting up with a licensed financial planner to discuss in greater detail.