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Showing posts with label JK. Show all posts
Showing posts with label JK. Show all posts

Singapore properties will surely make money in the long run. There is no need to time the market.

Monday, November 10, 2014

JK sent me a link to his latest blog post and has graciously allowed me to extract a portion of it to share with readers here. See what JK has to say:

I have some doubts on the claim that Singapore properties are sure to make money in the long run and we should not time the market. 

(AK says: This reminds me of what a friend told me that there is never a bad time to buy a home...)

I witnessed my siblings purchasing properties in Singapore when there was an economic revival. It was year 2007 (when COSCO was at S$8 a share, remember?). Then, crisis struck in year 2008.
I think timing of the market is important. I know you guys are searching for the below market value property, but how much bargain is that under such good economic environment? I take Caspian as an example, if owner bought in year 2009 at S$600K, and they are able to sell it last year at S$1.2 million and now the selling price dropped to S$1 million, is this a good buy now? Take note, Lake Point condo also dropped heavily to S$300K before it shot back to S$900K, and with current market of S$800K, is that a good buy?

Bought a condo at a sky high price?


My advice is, unless you have a lot of cash, you can afford to have multiple properties, that's different. If I have only enough to shoot for one, my advice is, keep your money, build up your war chest because there will be a better time to buy.


I am sorry to say that the real estate price is following "closely" 6 months after the stock market performance for the entire history except for year 2009. In year 2009, the real estate price following exactly the same as stock market. Both index rebounded together in March 2009 , starting with Caspian new launch, then Mi Casa, etc. then, Interlace come in September 2009.

 
So, does that mean these two prices index will be decouple ? It will not.

 
Look at Dow Jones right now, it is at history high . Look at STI, it does not even challenge the new height just yet. We are all in good party mood. Will the stock  market come down? It has to come down.


If you don't like market crash, perhaps a meaningful correction of 30% is needed. If so, why can't you use the time now to prepare all the cash tightly and wait for the time and shoot once BIG TIME. Guess what, there are many people waiting out there as well, that is why when the price dip for 10%, 20%, people start to enter and support the price and the price stable or stagnant. But then, as I said, timing is still relatively important. Why did we not buy in year 2009?


Why?

It is because we didn't have enough cash at that time? (That is why I emphasize to build up the war chest) Or you fear that it will go down further? (If you fear the property price will go down further in year 2009 BUT NOT in year 2014, I think we have a problem here) Or you fear that you are next to be retrenched when you see DBS was slashing so many jobs away in year 2008 , 2009?


I know we must have positive mindset. I fully agree. But, for big investment with a fees of ABSD, I don't think it is attractive at all at this moment. Anyway, I am building my cash pile now slowly and I am all ready to shoot a big one when time is right. I sincerely wish all the investors winning big time!


Read JK's full blog post: here.


Discounting is the new trend.

I agree with JK. I have always said that entry prices are important. We don't want to overpay for any investment.

More than 2 years ago, I also cautioned that the government is engineering property prices to be significantly lower. At the time, I had some readers telling me that it won't happen because it is not in Singapore's interests as so many people have their wealth tied in properties.

Well, I always say don't underestimate the political and social motivations that power our government.

"I would caution that there are reasons for why the cooling measures are here. Whether the reasons are good or not would depend on where we stand. However, it is obvious to me that the government is sending a clear message that they want property prices in Singapore to lower in the next couple of years, not that they need to do much more to achieve this."
From: Leverage up and buy investment properties now?

Remember, we should never ask a barber if we need a hair cut, especially not the ones who are bald.

Related posts:
1. Affordability and value for money.
2. Never lose money in real estate?
3. Buying an apartment: Some considerations.

8 pragmatic reasons to be Singaporeans.

Saturday, August 23, 2014

A reader, JK, shared his perspective and he has graciously allowed me to publish it here after some editing.




Why a Singapore citizenship?

1. Pay less in HDB Service & Conservancy Charges (S&CC)
 Most of the town councils have increased the rates for S&CC. Singaporeans don't have to pay the higher rates. Our 4-room HDB flat pays a monthly rate of S$51.60 instead of S$61.50 which means an annual savings of S$118.80.

2. Plan to have children? You will get a cash gift called Baby Bonus from the Singapore government. You get S$4,000 for your 1st child. It is free money for you to use as you like. It was raised to S$6,000 for the 1st child starting from end of August 2012.



3. More money for your child? Sure, you could get an additional $6,000 from the Singapore government if you save $6,000 in a Child Development Account (CDA). It is a dollar for dollar matching program by the government.  There are only two banks offering the CDA, Standard Chartered Bank and OCBC Bank.

OCBC CDA gives 0.5% interest, if you keep a $20,000 balance in the CDA account, the interest rate is 0.8%. I upgraded my OCBC CDA to OCBC CDA Extra, agreeing to a contribution by GIRO of S$50 per month. This option will pay an interest rate of 0.8% per annum too. 



Money in the CDA may be used by all your children for fees at Approved Institutions (AIs) which have registered with MCYS under the Baby Bonus Scheme. These include child care centres, kindergartens, medical clinics, licensed pharmacies and optical shops.

4.  Parenthood Tax Rebate. Get a one time tax rebate of S$5,000 for your first child. Second child?  S$10,000. 3rd child? S$20,000. For some, it is like not having to pay any income tax for the next 20 years. Why don't Singaporeans want to have more kids ?

5.  Working Mother's Child Relief (WMCR). For the first child, a mother can claim 15% of her earned income. There is a lot of savings come from here. Do the maths and you would be shocked too. For those who have 3 children or more, they could claim up to 25% of the mother's earned income which translates to huge savings!


6. Qualifying Child Relief (QCR). Either the father or mother of a child can claim QCR which is S$4,000 per child. With WMCR and QCR, there will be huge savings in taxes paid per year. 


7. Only Singaporean households can keep their HDB flats if they should purchase private residential properties. Singapore PR households MUST sell their HDB flats 6 months after the purchase of private residential properties or 6 months after the T.O.P. date of the private residential properties.

8. Singaporean households are also allowed to rent out their entire HDB flats after obtaining the relevant approvals. Singapore PR households are NOT allowed to rent out their HDB flats.


For the pre-edited articles, follow the links below:
"Singaporean Benefits (Part 1) and (Part 2)."

In the past, I would wonder why some people want to be Singaporeans. After all, our homes and cars are notoriously expensive. However, I do know that the Singapore passport is well respected and that we have a good and safe environment to bring up children.

Now, after this blog post, I have a better appreciation of why some PRs would like to become Singaporeans. For sure, there are many benefits which are for Singaporeans and Singaporeans only which I did not appreciate before.

Related posts:
1. Why I don't feel proud to be Singaporean?
2. CPF-HDB scheme to trick Singaporeans!
3. Take the good with the bad retiring to Malaysia.
4. Something only Singaporean males know.


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