Appreciate For Views On Housing Matters

[kzone]

Hi Guys, would appreciate your views on what I had done with regards to my housing. Its something i have done so I'm not looking for advise whether i shud have done it or not but rather want to get people views and if there serious downside on what i have done, I can take other defensive measures to mitigate the downside.. so here goes my story :

 

- Bought new 5RM HDB fm govt in 2006 for 260K

- Rent out the HDB rooms in 2009 and rented a landed property to stay (rental returns & cost cancel each other)

- Sold the HDB in 2011 for 520K and received 208K cash nett & have balance 190K in CPF (combine with wife)

- bought EC at 1.05m for TOP 2014

- plan to continue renting the landed at 1.7K/mth till the EC TOP date

- paid 5% cash & the balance 156K is invested in trust funds

 

So what do u guys feel abt this and what are the possible downside?

[Throttle]

it all depends on your income and how much of it you are spending.

also do you hv other debts to service?

if both you and wife are working?

at least the risk is split.

 

downside?

 

mortgage interest triples to from 1.5% to 4.5%

you and/or your wife loses the job

your trust fund crashes and you lose 50%

property market normalises and prices come off.

 

you will be stuck with lower income and a $7k mortgage instalment monthly.

requiring you to top up cash to make instalments more manageable.

failing which, you may be forced to sell your EC if rules allow.

 

like i say it all depends on how much your income is and how much of it is committed.

 

Best

[Throttle]

a very simple litmus test.

 

if you have to keep on questioning yourself or even others about it.

 

the likelihood is that you could hv overdone yourself.

 

but as of today if things remain this way, you should be fine.

[kzone]

Hi Throttle, i have thought abt it myself and when interest rate goes too high or if I loose my job, my plan is to encash part of the funds to reduce mortgage or supplement the mthly payment. However, I dont know how what to do if the fund crashes. Are there instruments that I can move the fund to when fund market dont look positive? Something that behaves opposite of stock/funds? Wud precious metals be an option?

 

I dont have other loan commitment, and u r right that as it is, I'm ok.

[Throttle]

  kzone said:

Hi Throttle, i have thought abt it myself and when interest rate goes too high or if I loose my job, my plan is to encash part of the funds to reduce mortgage or supplement the mthly payment. However, I dont know how what to do if the fund crashes. Are there instruments that I can move the fund to when fund market dont look positive? Something that behaves opposite of stock/funds? Wud precious metals be an option?

 

I dont have other loan commitment, and u r right that as it is, I'm ok.

 

dude, when it comes crashing down, it comes crashing down.

some people say buy gold.

nothing wrong bu there is not single best asset class to hold and there is no escaping market crashes.

 

the only thing is whether you can withstand the crash and come out better.

or it wipes you out.

 

there are alternative funds and hedge funds which short the market but in this century everything is interlinked one way or another.

 

by the time you lose your job, perhaps your funds will be also making losses.

so dont assume the rosiest of picture in your asumptions

 

theres no secret, just dont spread yourself too thin, thats all.

Edited August 9, 2011 by Throttle

[kzone]

bro, how to identify those hedge funds?

[Throttle]

To many things to highlight and unless you are talking about at least a few hundred grand, the likelyhood is you end up paying exhorbitant fees.

 

Historical performance and track record is important

Percentage of leverage is important

Strategies of the manager is important

Liquidity of fund is important

Size of fund is important

Sharpe Ratio is important

Ref currency of fund is important

Etc.......

 

 

 

Good luck in your endeavors

[cougar]

I dont know much about funds, but your 2006 flat was a good buy, and fabulous you cash out on the uptrend and double from your purchase. But you now committed to a cool $1m EC which puts your back to mortgage life again. And the loan commitment is higher now. But then again, housing prices nowadays, also no choice lah.

[Throttle]

  kzone said:

bro, how to identify those hedge funds?

 

if i were you, i would use the CPF funds as much as possible for the committed EC instead of putting it into any mutual fund.

 

taking that you commit to a loan of $800k, that would keep your monthly instalments in the range of about $3k in the current rate market

I assume, your combined income to be at least $10k after taxes.

With $200k of cash in hand as buffer and for you and your wife to continue working, things would be quite fine.

 

if interest rates triple, which you should expect in the years to come, your monthly instalment would be in the range of $4k - 5k.

I would not advise you to get a car at this point. Stabilise you career first and reduce your leverage exposure overall and take the next 3 years to save up for a car.

 

In all tis planning , you may want to consider the event of having kids adding to your cost.

so balance it all out.

 

dont forget, interest rates are all its all time lows and asset prices are about its all time highs.

when this reverses and one is heavily leverage, it could spell serious financial woes.

[kzone]

Throttle, I didnt mention any thoughts on getting a car but if its just a general advise, point noted.

 

CPF funds is being used to cover the 15% + stamp duty and the little balance + accumulation fm now till TOP will be used as partial payments if loan interest rate goes above CPF interest rate.

 

The trust fund investment is fm the cash proceed of the HDB sale, none goes to savings. I do however have abt 6 mths worth of current expense as "untouchable" cash emergency savings. I have abt 10-20K worth of shares on long term investment (hopefully meant for reno budget).

 

How do you find out Strategies of the manager and Sharpe ratio?

 

On a separate note, what stocks wud u recommend for to take advantage of the current stock market (local market)? Have abt 5-6K spare cash dunno whther to add to the emergency fund or nibble on stocks.

[Throttle]

  kzone said:

Throttle, I didnt mention any thoughts on getting a car but if its just a general advise, point noted.

 

CPF funds is being used to cover the 15% + stamp duty and the little balance + accumulation fm now till TOP will be used as partial payments if loan interest rate goes above CPF interest rate.

 

The trust fund investment is fm the cash proceed of the HDB sale, none goes to savings. I do however have abt 6 mths worth of current expense as "untouchable" cash emergency savings. I have abt 10-20K worth of shares on long term investment (hopefully meant for reno budget).

 

How do you find out Strategies of the manager and Sharpe ratio?

 

On a separate note, what stocks wud u recommend for to take advantage of the current stock market (local market)? Have abt 5-6K spare cash dunno whther to add to the emergency fund or nibble on stocks.

 

yes, the car bit is just general advice.

 

you have to read the propectus or fact sheets to know what strategies they take as well as the other points i've mentioned. i will stop short of making any specific recommendations whatsoever.

 

spare cash of $5-6k , just add to your emergency fund.

 

as you might already know the market is facing a turmoil currently.

your mutual funds holdings would have lost easily 10% by now.

be prepared to stomach more volatility along the way.

 

it seems you are overall quite down to earth and clear minded.

so all you need is just for the wind to continue to blow in your direction.

good luck

[kzone]

  Throttle said:

spare cash of $5-6k , just add to your emergency fund.

 

bro, dont throw wet blanket ah... no advise on how to capitalize on current market conditions? I can stretch it to 10K if 5/6K too small..

 

fund value drop short term drop not a concern for me. I'm looking at min 3 yrs horizon and if I can avoid needing to touch this for the mortgage, then it will be 8 yrs before i decide to cash out or continue.

[Throttle]

  kzone said:

bro, dont throw wet blanket ah... no advise on how to capitalize on current market conditions? I can stretch it to 10K if 5/6K too small..

 

fund value drop short term drop not a concern for me. I'm looking at min 3 yrs horizon and if I can avoid needing to touch this for the mortgage, then it will be 8 yrs before i decide to cash out or continue.

 

ok, go and buy one of high dividend stocks, Ascendas or Mapletree etc...

 

$5-6k even $10k cant do much.

just nice to buy an entry level Rolex.

 

maybe thats a good idea for you.

A Rolex does hold value quite well.

[Throttle]

by the way what bike you riding, i hardly have chance to ride.

maybe a few times a month

we can have a meet up. smoke cigars and relax.

[kzone]

riding an old phantom... sounding cranky but cant find other bike that is as cheap to maintain & as comfy to ride...

sure, let's meet up... i gave up smoking more than 5 yrs back though..

 

btw, decided to spend the 10K on my reno fund. bought 3 lots of keppel land today..

[Throttle]

  kzone said:

riding an old phantom... sounding cranky but cant find other bike that is as cheap to maintain & as comfy to ride...

sure, let's meet up... i gave up smoking more than 5 yrs back though..

 

btw, decided to spend the 10K on my reno fund. bought 3 lots of keppel land today..

 

good for you. prices are very fair

I reckon you are about 30?

and you have sounded a sensible down to earth person.

I respect that.

 

maybe towards the weekend, for the meet up.

I'm really busy and have hardly anytime for anything else other than family and work at this stage...

cheers

[kzone]

what give away on my age?! a little older though... sure, juzz give me a buzz me (will pm hp #) whenever u're free to meet up... I'm quite intrigued by ur character!

Me staying near changi village area...

[Throttle]

Intrigued by my character?

Haha, why and how so?

Been on this forum for many years

Been riding for almost 20yrs

[kzone]

20yrs? u started young?

 

 

i got into bikes very late & by necessity.. signed up for Master's course in NTU in 2007 & figured I'm going to take 2hrs travelling each way fm/to punggol not to mention being late to weekday classes fm ofc. So quickly signed up for 2b, pass the test in the morning, did the bike transfer in the afternoon & attended my 1st class in the evening!

[xXxRatedxXx]

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