- Save 15% of your salary when you start work (in addition to CPF)
- Keep your savings in a bank account (does not matter if you earn a low interest rate)
- When you have sufficient money, invest in an ETF to get a good return over the long term
- Avoid paying interest on loans and debts (except for housing loan)
- When you buy a HDB flat, keep it within 5 years of income.
These points are explained in my book on Financial Planning.
9 comments:
How to pay for HDB flat in 5 years of income. With price of HDB being so high
Sureesh, also I oftened disagree with Mr. Tan 90% of the time and I do not support his presential bid, but I am objective when it comes to dispensing advice. If he gives crap advice, I will criticise him. However, these five points he gave are really good advice.
5 years income means if you cannot afford a 5 room, then get a 4 room, cannot afford to get 4 room then get 3 room. There is sure to be a housing option available. If the combined income of the couple is $60,000 a year, then they should look at a $300,000 3 room resale, which should be available in Hougang or Sembawang/Woodlands.
Choose low floors or a little further from MRT.
If the couple's combined income is less then $30,000 a year, then sometimes, it is better to rent and keep upgrading your skillsets to qualify for more high paying jobs.
" within 5 years of income" means the cost of the HDB flat. Not the time targeted to finish paying.
If your annual salary is $30,000 ( gross ) then X 5 years = $150,000
That is what he is saying.
Yes, not enough to buy for 1 person but if you add your spouse's salary in the same manner you have a total of $300,000 to buy.
Dont forget this is the loan amount not including down payment, grants etc.
This approach is one way of protecting yourself from high debts and limits it.
It limits you to buy cheaper homes and not add to the crazy idea of owning 5 rooms when you cannot afford it.. you will get the chance later on when your earnings are more predictable & stable.
Hope this helps
Mr Tan, do you think topping up the CPFSA is a better option than leave in the bank, assuming that the money is not required till retirement?
Tell them don't ever buy whole life , endowment or anticipated endowment like those cashbacks and regular ILPs or any other variations.
Tell them to buy term ( Safra term or aviva SAF plans) and save separately .
Tell them if they see any salesmen with MDRT, COT or TOT on their name card the best protection for them is to run away. These are signs of conmen who will push nothing but products with high commission and this is how they got the rubbish titles. It is not unjustified to make this conclusion.Ask any insurance salesmen and they will agree.
Please warn them .
Say average income of a young person is $3,000x12mthsx5yrs = $180,000.
You can't get a HDB flat for this amount of money anymore. Maybe in a ulu place like Woodlands far from the Woodlands MRT?
Financial literacy has to start from primary school stage, when the child first receive pocket money for school. The art of saving from pocket money is the first critical step, then he would carry over this habit into secondary school, JC, and tertiary
U.
If we start educating them on Financial Management upon starting to earn their keep, it's too late already, being used to carefree spending on their allowance from parents. In this materialistic consumer society in Singapore, it's really difficult to teach them. Many young people care only to spend tomorrow's money first with their cards, worry about repayment later. Some live from hand to mouth, waiting for a reprieve in the next pay check.
TKL's Planning guide has good intentions though.
But not so sure of investing in the SDR ETF give good returns, at say average price of $3.15, the returns is about 1% of the purchase price. You get much more better returns on investing in high dividend yield monopolistic shares like SMRT or SPH, when you get the timing right. If timing wrong, just average down by seizing on a catastrophe happening on the world scene.
Sureesh of 0938 hrs,
You are right, but way back then, I and my wife managed to pay "almost up front" our 4 -rm HDD resale flat.
Sounds crazy but I just do not want to "owe" anyone anything !
Now, it is way impossible to "leverage", take a mortage etc. Our all-thinking, all caring one-party governments had made it so.
OIC I thought he said pay up for the HDB flat within 5 years of buying.
Delaying gratification is a powerful concept that has yielded positive results in future performance.
Delay buying a car
Delay buying a big home
Delay buying a new TV
Delay graticifcation.
instead,do this...
Invest in steady companies
Invest in family
Invest in children
Invest in education
Invest in a skill
See the marshmallow experiments
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