Investing in Property.. My Choice and My Plan

Hi Everyone,

As readers might know, I have been aiming for 2 bedroom condo ever since I started this blog, or should I say way before I started this blog (in wordpress). Condo is the choice that I choose to go for due to some reasons that requires me to do so.

Understand that many people might think I might leverage too much just to purchase a condo, but sometimes people must take risk in order to achieve higher goals. My fiancee and my goal are pretty similar, is to able to generate enough passive income for our retirement. I believe this is the goal for everyone.

Why condo? many might asked. The reason why I choose condo over HDB resale flat, I believe I have mention in my first few post, but I don’t mind mentioning again, the reason is because of investment opportunity.  Some people might say that getting HDB will have better resale values and able to earn much more as compared to condos. Yes it might be true but the fact is that it really applies to BTO flats in a good location (some even fetch million).

In addition to that, I choose to purchase condo is also because of the investment opportunity, whereby my wife is able to purchase or retain her current condo to gain rental yield. Of course, subtracting the interest and the monthly repayment to the bank, it might not left much but still might have 100 to 200 dollars left per month.

Well, 100 to 200 dollars is a pretty good return and is a start of the journey, because after the loan period is over, we will be getting around 2k for the rental which is quite a good sum of money after we hit our 60s (if we still keep that condo). So for this property, we can already put one side and not to touch it and let it generate passive income for us (which is pretty good deal).

But of course, nothing is smooth, we also consider that what if no one rents our place? or what if every month instead of getting 100 to 200 dollars, we need to pay 100 to 200 dollars even if we manage to rent? Of course, money needs to be managed, that’s why it is important to understand your risk appetite before purchase big ticket item.

How much do I need to make down payment for 2 bedroom condo?

There is no fixed amount that you need to have in order to purchase 2 bedroom condo, because it will have to depend on the price of the condo that you wish to purchase. Some might cost around 600K++ and some might cost around 800K++. So it really depends. For me, of course if can get it cheaper, i will go for cheaper but in decent location. So let’s say I aim for 650k condo, with a rough estimation of 23% down payment (including lawyer fee and etc.) It will cost around $149,500 for the down payment. Quite high isn’t it. As I am still below 30s and just started working, how am I going to achieve that amount?

To tell you the truth, it is indeed hard, especially that now, I have to spend 20K+ for my wedding (of course I am happy for the wedding but it put stress in achieving that target). Really, can someone able to save 45K in just 1 year 2 months? That is pretty much insane isn’t it. Of course my 45K includes CPF (Central Provident Fund). So let’s us do a break down! Why $45K, you might think, it is because this is a target that I set for myself to hit before I purchase a condo.

I earn around 4K and I break down into details.

Net Salary: $3.2K per month
Ordinary Account: $920 per month
Passive Income: $130 per month
Expenses: 1.2k per month

So if based on the figures above, I am able to save around $3,050 per month (excluding bonus). So in the range of 14 months, the calculation will be shown as below:

$3,050 * 14 months = $42,700

Still fall short for $2.3k but if we include bonus for lets say 3 months, we will have additional 12k more to the total which hit $54,700! Of course there are variables that we have yet to include. Like my increment, possible of raise in passive income, CPF interest and etc. With that, hitting my dream goal will not be an illusion but a reality. So with a mere 1 year 2 months, I can attain more than 50k savings which is quite an extensive amount!

So finance management is really important in order to achieve your goal. If you lost control of your finances, and anyhow spend, it will cost you a lot. But of course, savings is important but living your life comfortably is as important as savings. Try not to starve yourself just to save that small amount of money. It is not worth it. If you cannot achieve that goal, try to extend 2 more months or 3 more months in order to get your desire goals.

For me, well, I will be reporting my monthly update to let you reader know where I have hit that target. But of course, I need to spend money on wedding as of now, so might be a little tough to follow through for the first few month. We shall see how it progress!

 

 

 

 

 

Expenses Allocation

Hi Everyone!

Recently there are more and more article regarding how to manage your expenses. The reason for these article is to enable the young working adults to have a better management of their own finances so that they will not land themselves in a huge debt. Of course there are many ways to manage your finances like putting aside a sum of money (for the entire month) for expenses and the rest goes to your saving account. Or some people prefer to set a daily budget for them to spend, like a daily allowance so that they can ensure that they wont overspend their money. Of course there are many ways to manage your expenses depending on what kind of structure you prefer.

Myself, I prefer to do allocation because from there I can see how much I required myself to spend for that particular month. Also I can keep track of my own spending and which category should I cut down in order to save much more without interrupting my daily life.

Below is my allocation. Is a simple allocation that I have in order to keep track of my own expenses.

This is my May expenses, well still quite good as only some of them hit the target. Only left with 11 days, so I hope I still can manage my expenses well, to prevent overshot!

So, this is my update for this month, I will update every month and at the end of the month, I will do an overview on my current savings with charts so to have a better illustration on how well I fare.

Big Saving Small Planning

Hi Everyone!

Its been awhile that I have posted anything on this blog, the reason is because I have been busy with various stuff like wedding preparation and etc. During this period when I am not active in this blog, I have created my own finances tracking website which is called Big Saving Small Planning.

It is still in beta testing as I would need to collect more information on how to improve this saving website. Below is a short intro of the Big Saving Small Planning website.

SGD$100,000 before the age of 30

Hi Everyone,

I have been hearing from friends, peers, and from the internet that people are having financial target of having SGD$100,000 in their bank account before the age of 30.

SGD$100,000 seems to be an impossible goal especially when you just graduate from school (University) because by the time you graduate, you will be around 22-25 for ladies and 24-27 for guys (of course with the exception of people who have no debt to pay after studies).

So lets take a my perspective for this calculation (around 2 years worth of data):

I graduate at the age of 26 years old (with no school debt, because I paid it myself)

So let’s start as if I have no saving at all.

I started working in mid 2014, so my starting salary is relatively low – $3,200:

So for the year 2014, my income is $3,200*6+$1,600(bonus – pro rated) = $20,800, after CPF- 16,640.

Every month I spend around $1k, so my expenses = $6k

So my first year, I saved $10,640 (Quite alright in my opinion)

So my second year, my salary increase to $3,302*8 (worked for 8 months +$1,651 (performance bonus – pro rated) + $900 (Extra for leave encashment) + 3862*3 + 2,500 (bonus – pro rated)  = $43,053, after CPF – $34622.40

Interest earned from OCBC: $1,800

Every month I spend around $1,200 = $14,400

So my second year I saved $22,022

After 1 and a half years, I have saved more than $30,000. Imagine I have 3 more years to go. I will definitely hit $100,000 if I continue to do what I have done.

However, I am getting married, so the expenses needs to be taken into consideration as well. So each individual are unique, we have our own circumstances. So if you are unable to hit the $100,000 target, do not feel sad and frustrated. Take a step by step approach to make it happen.

 

End of 2015! The JYKL financial review

Hi Everyone,

4 more days to 2016! A brand new year with a brand new goals and event for me. 2016 is a special year for me because I am getting married with a wonderful wife 🙂 Together with my wife, we will strive for a better future and build our small family. Of course, we will build our retirement fund together as one!

Certainly, getting married is a good event and of course, a memorable one, however, people around me thinks that married is very costly. Because there are article stating that people are spending too much money of wedding which leave them to little to no savings left. Of course, my wife and I plan this wedding together and had in mind that we need to cut down cost. I will state my wedding planning in the next post (So do remember to check it out!).

2015 Review

2015 is a fruitful year for me because firstly, my wife say yes to my proposal and also 2015 is the year where I truly start my saving/investment journey. For investment journey, it is really up and down for me. I still remember when I bought DBS at $19.70 and few days later it drop down to $19.20, this gives me a panic attack, but in the end, it rose up to $20.50 and I sold it for around one year worth of dividends. (Which is not too bad)

Of course there are profit and loss, and right now, I have stabilized my portfolio where by my entire investment portfolio worth only $8,000. The reason why I only invest $8,000 is because of the marriage and the possibility of purchasing condo in the near future. So I do not want the risk of capital loss which might hinder the opportunity of purchasing a condo. (I will write more about purchasing of condo in the future post)

2015 Goal Result aka Report Book

Understand that there are 4 more days to go, however, I think today might be good enough to show my result because it will not change much in my opinion. (At most $100 to $200 difference)

So the below are the goal that I set for myself (Stated in the Goal link):

Total Liquid Asset (Cash Saving + Stocks): SGD$74,000 – SGD$75,000
Cash Saving: SGD$66,000 – SGD$67,364
Stocks: SGD$8,000 – SGD$8,015
CPF (Ordinary): SGD$17,000 – SGD$18,319
Main Income Per Month: SGD$3,700 – SGD$3,862
Passive Income Per Year: SGD$2,200 – SGD$2,400

Good report book for the year of 2015. Although I thought I might raise the bar too high when I adjust my goal from SGD$73,000 to SGD$74,000, which makes it more interesting for myself and more challenging. But right now, I think I can go further in 2016. However, I cannot be ambitious as I have wedding cost to take into consideration, but cannot be too dull for the reader here, which is why I intent to keep my original goal for 2016 as below.

By The End Of 2016 (31st December 2016):

Total Liquid Asset (Cash Saving + Stocks): SGD$103,000
Cash Saving: SGD$95,000
Stocks: SGD$8,000
CPF (Ordinary): SGD$30,000
Main Income Per Month: SGD$3,900
Passive Income Per Year: SGD$1,500

So, we shall see if I can achieve this result at the end of 2016.

Expenses for Nov 2015

Hi Everyone,

As Nov 2015 is over, I have do a summary for my expenses. As starting from this month, I will have an addition of extra $333 for my monthly expenses (until Oct 2016 – one year). The reason for this extra expenses is because I have proposal to my girlfriend with a 0.71 carat diamond ring.

So this is my expenses breakdown:

Travel: $146
Food: $160
Entertainment: $196
Bills: $91.76
Mum’s Allowance: $120
Ring: $333

Total: $1048.76

I have increase my monthly expenses cause I have to include the ring installment, which gives me a total of $1300 per month, I have done pretty well of just spending less than $1,100 for this month. I have spend $200 less than expected. This is certainly a good start and I hope I can lower my expenses to less than $1,000 but it’s December, it will be hard. So I will try to maintain as much as possible, and try not to over shot.

 

 

 

[Review] How you can save 1 million dollars with your partner in 18 years

Hi Everyone!

Today, I have come across a website called www.salary.sg which shows a calculation via spreadsheet of how much you can save with your partner in 18 years. In the spreadsheet below, you can see the picture (illustration) of how much you can save with your partner for 20 years. When you look at the accumulated savings with interest, you can notice that in the 18th years, the couple will be able to save $1 million dollars in their saving account.

Source: http://www.salary.sg/2015/heres-how-you-can-save-up-1-million-together-with-your-partner-in-18-years-spreadsheet-provided/

There are several assumption that they put into this calculation. In order to reach out to the mass, they make the minimal increment and interest for the calculation. Of course, you can adjust the increment or bank interest (on average) on your own. This can roughly tells you how much you can save in the end of 20 years.

However, there is one things that this spreadsheet did not take into consideration, which is CPF, because CPF takes up 20% of your saving. I assume that the target audience is Singaporean as this is after all hosted in Singapore domain. Well, some may say that CPF also savings but this is quite a grey area as some people (like me) do not consider CPF as part of the target as we only consider cash as our target goal.

But this is no doubt a good and basic calculation spreadsheet to do a simple prediction on how much you will have after 20 years.

The Secret of Having Targets

Hi Everyone,

Everyone has their own target in life. In this topic, we will be talking about how can we effectively setting out own targets. As the increase in information being expose on the internet, there is an increasing amount of people are searching on their desire targets on the internet. Well… that is not a good option to seek out your long and short term targets.

These are the few reasons why I say that it will do more harm than good if we are expose to the information on the internet.

1. Tends to set their target at an unbelievable heights

With more people with different caliber from all around the world showing their target set for themselves, people tends to compare their target and with the winning mentality, those who have less capability (just started work, different family background and etc) will try to go as high as possible so that they will achieve the same or better than those people that they look up to. I am not saying that this is bad, but by setting ridiculous target will only bring stress to themselves. With the amount of stress in order to achieve the target, highly likely that it will go back fire.

2. Boast too much

People tend to boast their target or even have a super high income to increase their ego on the internet. This will cause delusion to themselves and make their own virtual target which they can never be able to achieve.

3. Personal Target being Criticize

People who expose their target to the internet or their friends, will likely to get criticize because some people will compare it with their own target. This will make the person depress and try to hit as high as possible in order to have some ego left.

So these are the reasons why people fail to maintain or hit their target, it is because of external factors which influence their capability to set their goal reasonably.

Important Lesson:

Be yourself, and set your own target without the influence of other people. Of course, the target you set must be something that you need to work hard to achieve. Don’t set something that you are already achieving and your target must grow and grow even more.

Expenses For Oct 2015

Hi Everyone!

As today is the last day of October 2015, I have do a summary of my expenses.

Travel: $140
Food: $313.45
Entertainment: $185.45
Bills: $113.14
Mum’s Allowance: $120
Others: $8.70

Total: $880.74

This is a good start for me as my projected (amount set aside) expenses is $970, which is $89.26 lower than the targeted amount.

So certainly, I over-estimated my expenses as I did not really adjust my lifestyle (in order to reduce expenses). This can be adjusted but I will not do that for now as these coming few months, it will be a busy month because is the year end period! I will need to spend some extra money for some other stuff like gifts and etc.

This is a first step for me and I believe that I can do better and try to cut down whatever cost I can but will not disrupt my lifestyle so much that I make myself uncomfortable.

Work While You Are Still Young

Hi Everyone!

Personally, I have come across many investors/bloggers and people around me saying that they aim go get at enough passive income (more than their expenses), they will quit their job and enjoy life. In my opinion, this is an awesome choice, only when you are above 40s to 50s and your passive income is at least 2.5 times more than your expenses.

So how did I come out with such requirement?

This requirement is based on my observation and my conservative nature which enables me to draw to this requirement.

Why only when you reach 40s to 50s before deciding whether or not to retire, can’t we retire earlier?

Certainly you can however, if you retire too early, you will missed out lots of experience in life for example, working together as a team, have gathering with colleagues, grumble about stuff, waking up early and making your life full of nonsense. Wait wait wait… Well, not all the things that I mention are great, and seems like most of them are crappy things to go through with. Yes, it is crappy but all these experience makes you grow and able to socially integrate with the people around you.

Maybe you still do not get what I mean, let me say this in other perspective, lets say you retire at around 30 years old, you will most likely be at home or do those stuff that interest you. But this really cannot last long because you will feel bored and you can’t really travel around especially if your passive income just barely cover your expenses. So what you can only do it stay at home and enjoy the minimal lifestyle and sooner or later, you will get bored.

Also, what happens to the knowledge you learn from you 18 to 20 years of education? All kept inside your own memory storage and archive it in somewhere where they will be hidden forever. So why not use your youth to work for another 10 to 15 years before you decide whether or not to retire. Probably, by that time, you are able to retire comfortably at the age of 40s to 50s.

Why Passive Income Should be 2.5 Times More?

Why 2.5 is the magic number for me? There are a few reason for it.

Firstly, most people tend to calculate the bare minimum for their expenses so that they can quickly hit their target of the passive income and throw their resignation letter to their boss and off they go! Bare minimum is NOT enough! Because you won’t know when you will need to activate your emergency funds like hospital fees and etc. So if people don’t plan properly, they will ended up using their investment to cover the cost, which will lead to lesser passive income, and unable to survive without a job.

Secondly, inflation rate, need to take into consideration of inflation rate and also taxes. these factors will increase over time, and most people that I know of, don’t take these into consideration.

Thirdly, your insurance premium will increase over the years, can your passive income cover the increment of the insurance premium?

The reason why 2.5 times you expenses is the target for me is because firstly, you can save those extra income for emergency usage or re-invest them for more income. This will ensure that you will have sufficient income in any case where there is a need to spend much more than you expected.

Also, if there is a time where you get married (before that you are single), you will need to take into consideration of the expenses of your spouse, which gives you a safe calculation of 1.8 times* of your expenses. Then you still have 0.7 times of your expenses left to save for emergency or re-invest for more passive income.

Always bear in mind that there is a need to take into consideration of emergency funds and the unexpected situation to occur which will burn your pocket. Each people have different ways to calculate the amount of passive income that they need to retire. For me the magic number 2.5 times the expenses is the comfortable figure for me.

Conclusion

Don’t rush to get yourself retire, although working world is tough but you can still get to experience lot’s of things and accomplishment in your career as well. Also, working is the best place to share your knowledge and if you have a plan to retire early, you can take your job easy and can stay out of politics where you can just collect your salary at the end of every month by completing on the task that you are given (which is the minimal).

Of course, this is just my opinion, so share with me your thoughts bout retiring early, for me, is a no no for retiring before 40 years old.(Even if I have enough passive income to survive)

*1.8 times expenses explanation: Because some of the expenses overlaps (like electrical bills, phone bill, internet bills) which is why I did not multiply by two but just 1.8 times more.