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Hope to seek all the gurus brother out there for some resounding advice. Purchased an EC and paid the 20% down payment. Took a 25 years loan of 600k plus with floating rate sibor+0.8 for first 3 years. Currently is holding cash of $200k and cpf of $300k. With the expected increase in interest rate in the foreseeable future, Should I down more to reduce the loan or look for better investment vehicles to churn better returns for my fund. I am thinking that I should leave my cpf fund untouch to provide some buffers in case I am out of job or meet with any unforeseen circumstances. Any advice, please. :)
Hope to seek all the gurus brother out there for some resounding advice. Purchased an EC and paid the 20% down payment. Took a 25 years loan of 600k plus with floating rate sibor+0.8 for first 3 years. Currently is holding cash of $200k and cpf of $300k. With the expected increase in interest rate in the foreseeable future, Should I down more to reduce the loan or look for better investment vehicles to churn better returns for my fund. I am thinking that I should leave my cpf fund untouch to provide some buffers in case I am out of job or meet with any unforeseen circumstances. Any advice, please. :)
Invest up to 33% of ur OA in high yields blue chips. As for your $200k cash, use it to pay for your next car purchase in full. Otherwise, invest your cash in high yields blue chips as well.
princess_morbucks
19-12-13, 15:52
Invest up to 33% of ur OA in high yields blue chips. As for your $200k cash, use it to pay for your next car purchase in full. Otherwise, invest your cash in high yields blue chips as well.
Why invest the OA for ?
It can yield up to 3.5 % for the 1st $20k , and 2.5% for the rest.
@Triszavi, you may wanna do a lumpsum payment of $100k (cash) for your loan. Keep the other $100k for rainy days.
As for the CPF, you may wanna leave it untouched to earn the relatively good interest.
Later on, when the loan interest rate increases, then you may consider moving your CPF OA to do another lumpsum payment.
Personally, I will use the CPF money to pay as much as possible, cos otherwise it will be left untouched and what I see is just on paper and can't enjoy it.
Why invest the OA for ?
It can yield up to 3.5 % for the 1st $20k , and 2.5% for the rest.
@Triszavi, you may wanna do a lumpsum payment of $100k (cash) for your loan. Keep the other $100k for rainy days.
As for the CPF, you may wanna leave it untouched to earn the relatively good interest.
Later on, when the loan interest rate increases, then you may consider moving your CPF OA to do another lumpsum payment.
Personally, I will use the CPF money to pay as much as possible, cos otherwise it will be left untouched and what I see is just on paper and can't enjoy it.
U are only trying to beat the 2.5%. The uninvested CPF OA already has the 1st $20k. Anyway, this is personal portfolio management. For me, I will take the risk to beat that 2.5% yield. As for loan repayment using cash, always pay the debt with the highest interest rates (normally, it will be the car loan). Only when I do not have a car loan (about 4%/5% interest rates?), I will consider investing the cash.
Loan 600k, liquid total 500k. Like that also scared?
Of what use is cpf when one is jobless??
Pay installments when jobless
Pay installments when jobless
Even when drawing good salary, it is prudent to use cpf to service loans. Albeit probably not in these low interest rate times.
propertyhans
19-12-13, 22:16
Hope to seek all the gurus brother out there for some resounding advice. Purchased an EC and paid the 20% down payment. Took a 25 years loan of 600k plus with floating rate sibor+0.8 for first 3 years. Currently is holding cash of $200k and cpf of $300k. With the expected increase in interest rate in the foreseeable future, Should I down more to reduce the loan or look for better investment vehicles to churn better returns for my fund. I am thinking that I should leave my cpf fund untouch to provide some buffers in case I am out of job or meet with any unforeseen circumstances. Any advice, please. :)
It will be great if you can tell us your age as well as what kind of occupation? As in...metal rice bowl or self employed?
Thanks for all the comments. I am in my late 30s and holding a stable job. Belong to the middle income bracket. What is the recommended buffer fund whether in cash or cpf should one have if one become jobless or unemploy? Should I hold more cpf than cash since cpf is giving 2.5% interest rate at the moment?
match your liquidities.
property is illiquid.
cpf is illiquid.
so using cpf to pay for property doesnt change your liquidities.
(property is illiquid not because you cannot find buyer. you can sell your property today, but the money still doesnt come in a few weeks later.)
converting liquid asset (cash) to an illiquid asset (property), will make you slow in reacting.
Personally, I am borrowing as much as possible, and paying the mortgage using cash (do not know how to invest, my SG shares are giving me negatative return this year). I am planning to dump my cpf in when interest rate of my mortgage is higher than 2.5%.
Personally, I am borrowing as much as possible, and paying the mortgage using cash (do not know how to invest, my SG shares are giving me negatative return this year). I am planning to dump my cpf in when interest rate of my mortgage is higher than 2.5%.
I am thinking along that line also. Keep the cpf to earn the extra interest and make partial repayment when interest rate goes up further than 2.5%. The recent news on FED tapering the buying of bonds and fund but will keep interest rate as low as possible would ease some tensions on dramatic rise in interst rate
in the near term.
Thanks for all the comments. I am in my late 30s and holding a stable job. Belong to the middle income bracket. What is the recommended buffer fund whether in cash or cpf should one have if one become jobless or unemploy? Should I hold more cpf than cash since cpf is giving 2.5% interest rate at the moment?
Are u staying in your EC already or waiting for the keys? keeping cash is good, not advisable to throw cash into the condo....can't take back unless u sell your EC.... your 200k cash is not enough, need to save more. Not advisable to dump cpf now yet, in case no job, then u have cpf to pay the instalment.. don't need invest if you don't know...don't need take extra risk
Are u staying in your EC already or waiting for the keys? keeping cash is good, not advisable to throw cash into the condo....can't take back unless u sell your EC.... your 200k cash is not enough, need to save more. Not advisable to dump cpf now yet, in case no job, then u have cpf to pay the instalment.. don't need invest if you don't know...don't need take extra risk
I am still waiting for the completion of the EC. Met up with my banker today and suggested I should keep the cpf monies untouch and protect myself against job loss, price correction or rise in interest rate. It will be put to good use should any of these unfortunate events occur. At least I can sleep in peace at night.
I am still waiting for the completion of the EC. Met up with my banker today and suggested I should keep the cpf monies untouch and protect myself against job loss, price correction or rise in interest rate. It will be put to good use should any of these unfortunate events occur. At least I can sleep in peace at night.
cos your banker will earn lesser commission on lower loan amount? :D
Allthepies
24-12-13, 06:34
I am still waiting for the completion of the EC. Met up with my banker today and suggested I should keep the cpf monies untouch and protect myself against job loss, price correction or rise in interest rate. It will be put to good use should any of these unfortunate events occur. At least I can sleep in peace at night.
You should use up all your CPF first and keep $20K to earn the extra 1%. Never use cash unless absolutely necessary even if you don't know how to invest... Cash is very liquid, keep it... You cannot use your CPF to do anything except to buy house...
bargain hunter
24-12-13, 07:37
normally, that's what most of us do.
however, i have a property investor friend and his wife who own 2 huge landed and 1 apartment. the total worth of the ppties are around 12m and he took about 7m loan. he said he has never spent a single cent from cpf to purchase his properties and will use it as his emergency fund to pay monthly installments should he decide to take a break from work.
You should use up all your CPF first and keep $20K to earn the extra 1%. Never use cash unless absolutely necessary even if you don't know how to invest... Cash is very liquid, keep it... You cannot use your CPF to do anything except to buy house...
Allthepies
24-12-13, 07:51
normally, that's what most of us do.
however, i have a property investor friend and his wife who own 2 huge landed and 1 apartment. the total worth of the ppties are around 12m and he took about 7m loan. he said he has never spent a single cent from cpf to purchase his properties and will use it as his emergency fund to pay monthly installments should he decide to take a break from work.
hmmm this I dont really understand: your emergency fund can be in cash or CPF.... leaving it in cash give you the greatest liquidity...
eg in an unfortunate event that he needs cash for medical emergency or to bail out his business, can he use CPF?
In an unfortunate event where you become a declared bankrupt, then having cash-in-hand will not go in handy to service mortgage loans as these will be frozen / seized by your creditors. However believe the money in the CPF can still go on to service your housing mortgage
bargain hunter
24-12-13, 08:40
he and his wife are both highly paid salaried workers in the private sector (get the feeling that they feel that they are very marketable in the job market).
he feels that its good discipline that the emergency fund is cpf, hence will not be anyhow otherwise spent! and also earning 2.5% vs the pathetic cash interest rate. that's his view.
hmmm this I dont really understand: your emergency fund can be in cash or CPF.... leaving it in cash give you the greatest liquidity...
eg in an unfortunate event that he needs cash for medical emergency or to bail out his business, can he use CPF?
he and his wife are both highly paid salaried workers in the private sector (get the feeling that they feel that they are very marketable in the job market).
he feels that its good discipline that the emergency fund is cpf, hence will not be anyhow otherwise spent! and also earning 2.5% vs the pathetic cash interest rate. that's his view.
Bro, different strokes for different people ...
In today's climate of low mortgage rate
Scenario 1 - non savvy investor
Keep money in CPF to earn the 2.5%...
Use cash to pay monthly installment....
Mortgage rate is only 1.x%... still lower than cpf....
Better choice
Scenario 2 - savvy investor
Use cpf to pay monthly installment...
use cash whereby you can get returns exceeding 2.5%...
if your cash can only generate 3%, you make net - 0.5%.. Of course with cash, you can dabble into many other instruments... which CPF you cannot... hahahaha
in scenario 1, you make net>1%...
So really depends...
Me, i prefer to keep my money in cpf and use cash... but saying all that, make sure you have enough cash stashed away for emergency... hahahahaha:D
bargain hunter
24-12-13, 08:53
yes, i agree.
however, the couple is not non savvy investor, they are just firm believers in singapore property, especially landed property. hence, they do not intend to invest in anything else and has already leveraged all they could to purchase these properties. thus, keeping cpf is suitable for them.
Bro, different strokes for different people ...
In today's climate of low mortgage rate
Scenario 1 - non savvy investor
Keep money in CPF to earn the 2.5%...
Use cash to pay monthly installment....
Mortgage rate is only 1.x%... still lower than cpf....
Better choice
Scenario 2 - savvy investor
Use cpf to pay monthly installment...
use cash whereby you can get returns exceeding 2.5%...
if your cash can only generate 3%, you make net - 0.5%.. Of course with cash, you can dabble into many other instruments... which CPF you cannot... hahahaha
in scenario 1, you make net>1%...
So really depends...
Me, i prefer to keep my money in cpf and use cash... but saying all that, make sure you have enough cash stashed away for emergency... hahahahaha:D
yes, i agree.
however, the couple is not non savvy investor, they are just firm believers in singapore property, especially landed property. hence, they do not intend to invest in anything else and has already leveraged all they could to purchase these properties. thus, keeping cpf is suitable for them.
bro, when a person has a high paying job... the job sucks up most of their time and energy... they have little/less time to dabble in stocks, etc.... monitoring is a nitemare and on top of that even doing research takes up too much time... so, the natural inclination is towards properties which allows them to have
1. recurring income.
2. tenant pays for the unit
3. a view of "safe investment"
4. they have a view they can ride the storm if any
5. handing down to kids
6. before the govt abolished estate duty, props was definitely the way to go as it was something to the tune of 10mil if i am not mistaken... (so for estate planning purposes
7. passing on to kids
8. retirement income
:D:D:D:D:D:D:D:D:D:cheers1::cheers1::cheers1::cheers1::cheers1:
bargain hunter
24-12-13, 09:03
spot on, especially the 2 kids 2 huge landed part haha.
also have option lah, sell one landed and still can subdivide the other one for the 2 kids 20 years later.
bro, when a person has a high paying job... the job sucks up most of their time and energy... they have little/less time to dabble in stocks, etc.... monitoring is a nitemare and on top of that even doing research takes up too much time... so, the natural inclination is towards properties which allows them to have
1. recurring income.
2. tenant pays for the unit
3. a view of "safe investment"
4. they have a view they can ride the storm if any
5. handing down to kids
6. before the govt abolished estate duty, props was definitely the way to go as it was something to the tune of 10mil if i am not mistaken... (so for estate planning purposes
7. passing on to kids
8. retirement income
:D:D:D:D:D:D:D:D:D:cheers1::cheers1::cheers1::cheers1::cheers1:
spot on, especially the 2 kids 2 huge landed part haha.
also have option lah, sell one landed and still can subdivide the other one for the 2 kids 20 years later.
bro, i also believe in this thing called economic cycle....
What goes up must come down and what goes down must come up....
timing is very crucial in the part of properties....
The price drop during the GFC was minimal because of QE and many failed to see that... we were "saved" by the sheer "determination" of the usa... hahahaha thats why there was a strong rebound...
but when things are bad, who dares to enter the market???? Only 2 types of people....
1. the gutsy
2. the rich
hahahahahaha
Cheers bro, and a Merry Christmas to you:D
bargain hunter
24-12-13, 09:15
Merry X'mas to u too bro!
what happened during GFC really may not happen again. now there is sheer determination by that USA AND Khaw has smoothened the property cycle, so no more big drop big gain for properties.
bro, i also believe in this thing called economic cycle....
What goes up must come down and what goes down must come up....
timing is very crucial in the part of properties....
The price drop during the GFC was minimal because of QE and many failed to see that... we were "saved" by the sheer "determination" of the usa... hahahaha thats why there was a strong rebound...
but when things are bad, who dares to enter the market???? Only 2 types of people....
1. the gutsy
2. the rich
hahahahahaha
Cheers bro, and a Merry Christmas to you:D
Merry X'mas to u too bro!
what happened during GFC really may not happen again. now there is sheer determination by that USA AND Khaw has smoothened the property cycle, so no more big drop big gain for properties.
bro, a gree with you to a certain extent.... I only believe in 1 thing...
run and hide during times of extreme exuberance... I dont see it happening as of now and I am always on the lookout for such signs....
look at the effects of qe on indonesia:confused::confused::confused:
look at thailand:confused::confused::confused:
i am very vested in properties but have moved on to other investments since 2 CMs ago .... hahahahahaha
the key is to look out for signs... and I believe you are pretty good at that... I am still learning... hahahahahahahaha:cheers1::cheers1::cheers1:
Allthepies
24-12-13, 16:35
In an unfortunate event where you become a declared bankrupt, then having cash-in-hand will not go in handy to service mortgage loans as these will be frozen / seized by your creditors. However believe the money in the CPF can still go on to service your housing mortgage
When you become a bankrupt, your properties will beseized too... no need to service loan
When you become a bankrupt, your properties will beseized too... no need to service loan
Not if the property concern is an HDB, where the loan can still be serviced through CPF in the event of a bankruptcy
Allthepies
26-12-13, 17:25
Not if the property concern is an HDB, where the loan can still be serviced through CPF in the event of a bankruptcy
Agree agree but if the person own multiple properties, the rest will be seized and sold off, he will have money to service his HDB loan....
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