My Life In 2015 And New Year Resolutions for 2016

This is the last week before the year 2015 comes to an end. Another year went pass just like that again. I wrote some reflections for the year 2015 at the beginning of this month. You can read the post here if you've missed it out.

I did not write much about my investments and also my financial journey in that previous post so I will put it in this post.

Stocks Investment for 2015

This year was not really a good year for investments. A couple of the stocks which I invest in were down quite badly with a few others gaining such as the biggest holding in my portfolio, Saizen Reit, which was acquired by another company. This helped to offset the losses on the other stocks in my portfolio. Overall, the STI is down about -15% for the whole of 2015.

To date, my portfolio is close to $40K now which is about 50% of my investment capital. I have added in some counters such as the banks (DBS and OCBC) and the STI ETF when the market went down badly. All these which I added recently are all in positive territory at the moment. Overall, the portfolio is only up by about 3%. In total I have 14 stocks in my portfolio now. The returns are not that fantastic but I should be happy that my portfolio is not as bad as a -15% loss as that of the STI. 

Income and Expenditure for the year 2015

Having a financial blog is incomplete without writing on my financial journey. This blog is about my financial journey and how I strive to achieve financial independence. Although money is not the most important thing in life, it is still necessary to provide for our families and for our livelihood. 

Since I started this blog, I learned to create more income including passive income. The main purpose of this is to not rely just on my main job for income but to create contingency plans. I have seen people, both young and old, being retrenched by their company and its not a good feeling to have. 

My income now comes from these sources: Salary from job, income from blog, dividends from stocks and commissions from freelance consultancy work. 

Here's the chart which shows my financial journey:

My expenses has increased which is what I also wanted. I am going to focus on creating more income instead of just saving for the sake of saving money. I want to live a more fulfilling life where there is certain enjoyment and spending more on my love ones.

Passive income and other income has been rather consistent this year and adds up to about $9K for the whole year of 2015.


New Year Resolutions for 2016

2015 has been a year of experiences for me again. I felt like there were a lot of things happening and felt tired for the year. I haven't took much leave this year and no MC as well. In fact, I only took 2 days of leave so far for the whole year.

Nevertheless, it was a fulfilling year. The people I met, the new things I embark on and starting a new relationship was the summary for 2015. Now, its time to look forward to a new year 2016. This is what I hope to achieve or do next:

1) Advancing in my career

I've been in the same job for the past 5 years plus. Its a long long time especially for young people nowadays who change jobs every few years in order to advance and climb to a higher level. It seems like in most companies, employees who stay long do not advance as fast as people who change jobs.

I have been looking for more opportunities and will continue to look for more opportunities to advance in my career. I hope to at least get to the management level where I can do more and learn more. This will also greatly increase my income. I will be looking into policy or research related jobs which has been my interest all these while.

2) Eating Healthily and exercising

I have been eating more vegetable and more salads and will continue to do so next year. I have also been going to the gym every week and will continue this habit that I build into the new year. All these were a result of motivation of my girlfriend who is health conscious. I am happy to live more healthily. Health is wealth.

3) Having a more balanced life   

As mentioned earlier, I will be less tight on money and will spend when necessary. For example, I seldom took taxi in the past but am taking more now to save time. I am increasing my expenses but will still keep it in check. I have almost doubled my expenses as compared to the beginning of this year. Its not so scary to spend a little bit more money on people and things that matter to us.

4) The 100K savings challenge

I set a financial target of $100K to reach by year 2016 since I started this blog 2 years ago. Next year is the year already. I am on track to reach that target by mid of 2016. The focus will still be on increasing my income. Its not just about earning money but about believing that I have the potential do more and achieve more.

5)  Loving people in my life 

Life is all about relationships. I've been meeting many people since I started blogging. In the midst of busyness, I will constantly remind myself to set aside time and love the people who are in my life. In the new year, I will make more effort to keep in touch with old friends and continue to spend time with my family and also continue to put in effort for my new relationship with my girlfriend. I am looking forward to the new life I will embark on with her.



Its the new year in a few days time. I will be going for a short overseas trip over the new year to recharge and relax to prepare for a better 2016. Thank you all readers who have been supporting and reading my blog all these while.

Here's wishing all of you Happy New Year and a greater year ahead!

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Why young Singaporeans don’t need to worry about buying their first HDB Home in Singapore?

Almost 2 years ago in February 2014, I wrote an article on "How much money does a couple need to earn in order to afford a $300,000 HDB flat?" and it went viral. Buying their first home seems to be a concern among young people in Singapore. Is it really that scary to own a house as a young person living in Singapore? It is actually not so scary if we know what to do and how to buy a house which we can afford comfortably. Owning a house should be an enjoyable process and not a stressful situation which we put ourselves into. So what can we do to make owning a house in this high housing price era more enjoyable? Let me show you how it can be.

Paying For the Down Payment of A New Home

All of us would know that we can use our CPF to buy a house. The down payment for a house is 10% for HDB which means any of us who buy a $300,000 HDB flat would need to come up with $30,000. This is certainly quite a huge sum of money for young couples who want to own their own home. For couples, saving up for their wedding, the renovation works and the honeymoon is already stressful enough. Thankfully, we do not have to save up additionally for the down payment of a house because CPF has automatically saved it for us.

A young person, age 35 and below, earning about $2,500 a month in Singapore would have about $20,000 in his CPF OA account within 3 years of working. 23% of his/her salary is contributed to the CPF OA every month by himself and by his/her employer.  The money in CPF OA can be used for housing which can be used to pay the down payment of a house. Together with his or her spouse, one can safely afford the down payment of a house within 3 years of working.

I started working early in my life right after my National Service. After working for 5 years, I already had more than $60,000 in my CPF accounts in total. I did not start out with a high salary, only $1,700 per month when I just started working and CPF actually helped me accumulate quite a good sum of money. Now, I don't have to worry about housing cost. The savings which I have accumulated can be used for other stuffs such as wedding and renovation costs.

Paying For the Monthly Instalment of A New Home

Besides using CPF for the down payment of a new home, young couples can also use CPF to pay for the monthly instalment of their home. A couple earning $2,500 will have $575 contributed to their CPF OA each. Together, they have $1,150 every month from their CPF OA to pay for the monthly instalment of their new home. If they buy a home within their means, they don't even have to fork out extra cash to pay for the housing loan.

If we buy a home at $300,000, after 10% down payment, we'll need to take a loan of $270,000. The monthly instalment for a $270,000 loan with HDB at 2.6% for 25 years will be $1255 per month. Now, this is still about $100 more than what a couple with combined income of $5000 would have in their CPF Ordinary account.

However, if we and our spouse have a combine income of $5500, the monthly contribution to our OA would be more than sufficient to pay for the housing loan instalment for a $300,000 HDB flat. The instalment will still be $1255 while this couple their combine CPF contribution in their OA is $1265. This is more than enough to pay their housing loans fully by CPF without the need to come out any cash.

Furthermore, there are additional measures to help young Singaporeans in owning their first HDB home a more fuss free experience. Let's take a look at the last part below on the subsidies which we'll be able to get.

CPF Housing Grants for a New Home

For BTO HDB Flats

I've researched and summarised the grants available for a new HDB home. This is for first time applicants only. The special housing grant only applies to 2 room, 3 room and 4 room flats in non-mature estates only. 

Average Monthly Household Income Over 12 Months	Additional CPF Housing Grant	Special CPF Housing Grant (Not applicable for 5 room HDB)	Total Grants
Up to $1500	$40,000	$40,000	$80,000
$1,501 to 2,000	$35,000	$40,000	$75,000
$2,001 to 2,500	$30,000	$40,000	$70,000
$2,501 to 3,000	$25,000	$40,000	$65,000
$3,001 to 3,500	$20,000	$40,000	$60,000
$3,501 to 4,000	$15,000	$40,000	$55,000
$4,001 to 4,500	$10,000	$40,000	$50,000
$4,501 to 5,000	$5,000	$40,000	$45,000
$5001-$5500	Nil	$35,000	$35,000
$5501-$6000	Nil	$30,000	$30,000
$6001-$6500	Nil	$25,000	$25,000
$6501-$7000	Nil	$20,000	$20,000
$7001-$7500	Nil	$15,000	$15,000
$7501-$8000	Nil	$10,000	$10,000
$8001-$8500	Nil	$5,000	$5,000

The CPF Housing Grants will be fully credited into the CPF Ordinary Account of the Singapore Citizen (SC) first-timer applicant, who must be listed as a co-applicant. No cash is disbursed. For a couple applying for the HDB together. each applicant will receive half of the full grant amount.

We can get as high as $80,000 in CPF housing grants. That to me is quite a substantial sum of money. Even if you and your spouse have a combined income of $8000, you would still be eligible for the Special CPF Housing Grant if you are not purchasing a 5-room HDB.

*For more information on the CPF housing grants for first timer applicants, please refer to HDB website here. 

For Resale HDB Flats

If you don't have time to wait for a BTO flat, you can also apply for a resale flat. Resale flats are known to be more expensive than HDB flats but not to worry, there are some other grants to help in this cost.

Family Grant

The grant available for this scheme is $30,000. To be eligible, your household income must not exceed $12,000 (revised from $10,000 before 24 August 2015). You must be a Singaporean and form a family nucleus with another Singaporean or PR. This grant is only available for first time home buyers.

Additional CPF housing Grants

The additional CPF housing grants is similar to that for the BTO applicants as below:

Average Monthly Household Income Over 12 Months	Additional CPF Housing Grant
Up to $1500	$40,000
$1,501 to 2,000	$35,000
$2,001 to 2,500	$30,000
$2,501 to 3,000	$25,000
$3,001 to 3,500	$20,000
$3,501 to 4,000	$15,000
$4,001 to 4,500	$10,000
$4,501 to 5,000	$5,000

Proximity Housing Grant (New from 24 August 2015 onwards)

*Proximity housing grant has been enhanced as announced in Budget 2018. Changes have been made as below.

Under this scheme, you can receive up to $30,000 in grant.

The eligibility criteria is:

Your parents/ married child are:

• living with you in the resale flat
• living in an HDB flat in the same town or within 4km
• owner-occupants of private property in the same town or within 4km

If you live near your parents within 4km, you can receive $20,000 in grants. If you purchase a flat to live together with your parents, you can receive $30,000 in grants.

The above grants definitely come in handy to help subsidise the housing cost for first time home buyers. Grants are disbursed into our CPF accounts for our housing needs.

Should I Buy The Biggest HDB Available?

More often than not, I've heard suggestions to buy the biggest HDB flat as early as possible or even on their first home. But, is this a wise advice for young couples? For a fuss free home ownership experience, I strongly believe we should buy a HDB flat within our means.

In Singapore, loans for HDB flats are limited to 30% of our gross monthly income. This is the mortgage serving ratio (MSR) set by the MAS to make sure home owners do not over stretch their finances. If we lose our jobs or should interest rates increase, the MSR of 30% will make sure we can still service our loans.

CPF also has a First Home Calculator to help home owners calculate and make sure they do not overstretch their finances. If you're planning to buy your First Home, you can check out the calculator here.

Another point to consider is that our first home is actually not an investment but a liability. This is because even if you sell the house you're staying in, you still need to buy another house to live in. If you're planning to buy a property for investment, your first home should be bought conservatively so as to save up capital for a second investment home.

Do young people have to worry about buying their first HDB home in Singapore? For me, I can say that when the time comes for me to apply for my first home, I do not have to worry much at all. The money in my CPF account is more than enough to cover all the necessary cost for my first home. Furthermore, with the CPF housing grants, the experience of owning a home will be much better.

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Related Posts:
1. Should Couples Buy A 5 Room HDB Flat For Their First BTO Application?
2. The 3 Big Decisions in Life - Marriage, Buying a House and Retirement

Your HDB Flat Is Not Really An Investment

It is very hard to make money on your HDB flat. By this, I'm saying about the first HDB flat you buy. Many people treat the home they are staying in as an investment where they are willing to put in money and pay a lot for the mortgage every month.

Is it really worth it to buy the largest HDB flat and think we could make money from this in the future? Let me show you why your HDB flat is not really an investment.

Why Buying The Largest HDB Flat May Not Make Sense?

More expensive and lesser grants

Your first home is for you to stay. Spending more money to pay for housing loans means you will have lesser for retirement or for your expenses.

The recent BTO launch at Bidadari (Toa Payoh) attracted quite a lot of attention. The location is good and so is the price higher. Let's take a look at the prices of the different flat sizes at Bidadari for the recent launch:

• 3 Room - $297,000 - $385,000
• 4 Room - $433,000 - $550,000
• 5 Room - $544,000 - $625,000

As we can see, the prices are definitely higher than areas like Punggol. If we buy the largest HDB which is the 5 room flat, as compared to the 4 room, we need to fork out an additional $100K for it. Furthermore, there are lesser grants for 5 room flats as compared to 4 room flats. I'll write more about the grants in another article coming up next. In general, we could lose out up to $40,000 in grants if we buy the biggest HDB flat.

The monthly instalment for a $450,000, 4 room flat and a $550,000, 5 room flat will be as below:

4 Room Flat: $1838/Month
5 Room Flat: $2246/Month

The above scenario is assuming a 90% loan and 25 years loan tenure at 2.6% interest from HDB loan. As we can see, buying a 5 room flat will set us back with $408 lesser a month. This will add up to $122,400 in total for 25 years.

Higher resale levy

I think a lot of couples buy the largest HDB flat because they think they can make more money from it when they sell it and buy another BTO. This may be true in the past but its not true currently. For a 5 room HDB flat, if you sell it either to upgrade or downgrade, the resale levy imposed is higher than that of a 3 room or 4 room flat.

Here's the resale levy payable:

First Subsidised Flat Type	Resale Levy Amount
2-room	$15,000
3-room	$30,000
4-room	$40,000
5-room	$45,000
Executive	$50,000

A resale levy is payable on these conditions as quoted from HDB website:

• You sell your subsidised flat after meeting the Minimum Occupation Period (MOP), and then buy a second subsidised flat from HDB or take over ownership of a subsidised HDB flat
• You sell your subsidised flat after meeting the MOP, and then buy an EC from a developer where the land sale was launched on or after 9 December 2013, including those where tenders were not closed, i.e. Westwood Avenue, Canberra Drive and Anchorvale Crescent

You need not pay a resale levy if you are buying any of these:

• Design, Build and Sell Scheme (DBSS) flat from a developer
• EC from a developer; where the land sale was launched before 9 December 2013
• HDB resale flat
• Private residential property

Why A HDB Flat Is Not Really An Investment?

HDB is a leasehold property for only 99 years

All of us know that HDB has a lease of 99 years. What are the implications of this? It is confirmed by the minister of national development during a 2014 parliament seating that at the end of 99 years, HDB's asset value will depreciate to zero. 

In fact, we don't really have to wait until the end of 99 years to feel the impact of it. By the time your HDB is left with 60 years or less, the banks will limit the loan tenure which one can borrow if they purchase that flat. This means, if you want to sell your HDB flat with 60 years or less lease, you will have some problems as your potential buyers may not be able to qualify for the bank loan. With additional cooling measures such as the TDSR, MSR, it makes it even harder to get the loan. 

To know more about the TDSR, MSR, read: How much money does a couple need to earn in order to afford a $300,000 HDB flat?

Your money is stuck in the HDB

All the money you pay for your HDB is stuck there until you sell it. If you sell it, you still have to buy another house to stay in and you need to pay a resale levy if you buy another subsidised flat. There is little chance where you will be able to get any extra cash out if you sell your HDB. 

If you had instead bought a smaller flat to stay in, the extra cash or CPF you have would earn interest which will compound over the years. CPF gives interest as high as 5% while your cash can generate investment returns if you invest it. 

It is better to buy a smaller flat if you're planning to stay in it and save up more for another investment property later. 

You cannot cash out of your HDB flat but you can for private property

There is no way for you to cash out of your HDB or mortgage it for any other purposes. The banks do not recognise it as an asset. For a private property, you can take an equity loan or term loan and use the cash for other uses. This is also called cashing out of your property. 

Let's compare between a $600,000 HDB and a $600,000 private condominium. For the private condo, you can take an equity loan of about 70-80% of the property value minus the outstanding mortgage you have and any CPF utilised. For the $600,000 condominium, you can cash out about $480,000 at an interest of the current property loan packages available which is less than 2%. This is the lowest you can get as compared to other loans such as car loans, business loans or personal loans. You can use this cash to start a business or even use it for investment. You cannot do this for a HDB flat at all. For a $600,000 HDB, your money is stuck inside without you being able to cash out.

*If you're planning to cash out of your private property, you can email me at sgyounginvestment@gmail.com for a complimentary consultation. I would be able to advise you on the best rates and process your application for you. 

Conclusion

The primarily purpose of HDB is to provide affordable housing to Singaporeans so that each of us have a roof over our heads. Treating HDB as an investment and wanting to make money from it may not be the wisest choice as the government will do all they can to limit speculation in the subsidized public housing market. This is to ensure public housing remains affordable for the majority of Singaporeans who want to own their own homes and start a family.

Buying a smaller flat for your first home will make owning a house a more fuss free experience so that we will have more money in the future should we want to have another investment property or use the extra money for other investment purposes.

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Related Posts:
1. Can You Afford That Million Dollar Condominium?
2. How Much Loan Can You Get For Your HDB flat?
3. Is It Necessary To Refinance Our Housing Loans?

After 2 years of blogging...

Time really flies... It's been more than 2 years since I started blogging and this blog has grown tremendously and I have also grown as a person too. I'm a person who likes to reflect and think a lot so here's this post on my thoughts for the past 2 years. Some of you may have followed my blog since the early days and I thank each and everyone of you for reading, recommending my blog to your friends and family, sharing on social media and showing your support with words of encouragement either through email or comments on my blog. This blog has officially crossed 2 Million page views and I'm deeply humbled by the readers who supported the ideas that I write.

There are ups and downs to blogging. Fortunately, the experience for me has been a more positive than negative one. I've heard of bloggers who get criticised so badly that they decided to give up. Thank God nothing of that sort happened to me. I've been quite lucky that people have mostly been quite kind to me. The past 2 years plus was an amazing journey. Being a blogger exposes me to a whole lot of things, meeting up quite a number of people as a blogger even though I'm still anonymous on my blog.

My blogging experience has expanded far beyond just the online world. Right from the start, I thought blogging was just something that I'll do at home, writing at the comfort of my bedroom and nothing else. I was completely wrong. I had so much more experience through blogging than just typing away on my keyboard.

Through my blog, I had the opportunity to experience things that I would not have been able to experience if I was just a normal salaried employee in Singapore. The best part of it was meeting new people and discussing on how to spread the importance of financial literacy better. I still believe that if we have the knowledge and build good financial habits from young, we will be much better off and avoid all the financial sufferings later. Credit, debt and retirement issues are still causing a lot of problems for many families because of a mismanagement of money.

I've met up with people who are passionate in bringing financial literacy to the next level. People from various government ministries, educators, investors, businessman, financial bloggers, finance professionals, students are part of the groups of people whom I've met so far. I am careful to meet only those people who are sincere in bringing good to the society through finance and not just about making money.

Earlier this year, I had the chance to work and interact with NTU interactive investment club all thanks to my cousin who introduced me to the club and link me up with the people there. I had the opportunity to contribute and I personalpy saw how young people's lives can be impacted in the areas of financial planning. Students as young as 13 were able to understand the importance of financial planning through games and competition.

I've been busy with lots of things in my life. Working as a freelance mortgage consultant was a role that I took up a few months ago which has given me a lot of experience working with various banks and understanding how mortgage loans work. I could help people get the best rates for their housing loans and at the same time earn some extra money also. Besides this, in July this year, I met the love of my life. Yes I've been dating and in love for the past few months. It has been an amazing journey with her, creating our own experience and memories. I want to thank my precious girlfriend for being who she is and supporting me, encouraging me all these while.

As you can see, money is not the most important thing in my life. Experiences are far more important than what money can bring. However, money is the most basic for our livelihood. I always say take care of the money and you can then pursue the more important things in life without having to worry about money.

The end of the year is coming. Its the festive season as we celebrate Christmas, the season of giving, and cross over to the new year 2016. Have your life been good for the year 2015? Even if its not, I hope all of us will look forward to a greater year in 2016. Happy holidays ahead!!