Breaking Radio Silence

It’s the week of mourning for the foremost of our founding fathers, Mr Lee Kuan Yew. Although I had previously expected to be quite unemotional when the time came, I surprised myself by being rather teary-eyed for most of this week.

I’m not going to attempt a tribute post here, because I think what needs to be said has already been said by many others, and in a far better way then I ever could. I admire his genius immensely, and my political views run along very similar lines. While I don’t agree with everything he has ever done, I do respect his “make-no-apology” attitude.

When it comes to the building of my beloved country, however, I am always cognizant of the fact that it was a team effort, and there were some really talented and upstanding men in the founding group. I don’t think Singapore would have been what she is today without any of them (In fact, my sympathies have always lain with Dr Goh Keng Swee, all-rounder superman). I think most of my emotions this week were more to do with the fact that Mr Lee was the last of them, rather than any feeling of gratitude to Mr Lee personally.

Anyway, rest in peace, sir. And I wouldn’t mind if you would keep your promise to rise again if you see anything going wrong with Singapore.


And Going Forward…

One consequence I didn’t really foresee when I took my long break from work was that I would have no income history for 2014.

How is that important?

Well, it just so happens that I may need to look into refinancing for the condo this year.

I am in a bit of a dilemma here, because I cannot really predict the rates of increase. At the moment, I am paying about 1.2% interest, and fixed rates are at around 2+% if I am not wrong (haven’t done my due diligence yet).

The rest of the world is printing money like crazy, but the US has eased off its QE, so I can’t really predict the way interest rates are going to go.

However, the whole thing might be moot if I can’t show a healthy income sheet for 2014. And that is just one headache I have come back to.

My condo lease is up again this coming April, and the rental market is pretty soft right now, so I am not optimistic for the coming year. It is also not a great time to sell, so I have to hang in there for a couple of years more.

I have a small idea though. The condo layout is such that I can cordon off a small part of the place and make it my own tiny studio with my own entrance, while continuing to rent out the rest of the place. If my current tenant decides not to continue the lease, I might just take a couple of months and turn this into reality. The condo is much nearer to my place of work and I would finally be done with the 5.30 am wake up calls and daily 3 hr commutes. And I would finally have a place of my own.

The next most urgent thing is to just work, replenish my coffers, and throw the excess into stocks. This is the year for stocks, I think, given all the liquidity floating around the globe. However, I have to confess that it has been a little hard to adjust to working life after bumming around for so long; I must be really suited to the life of a wastrel. I miss not having to get up to the sound of the alarm clock. Oh well, it’s just nine more years…

Oh, and more money saving! The new company gym had been completed in my absence, and now I can go cancel my gym membership. There is even a free personal trainer at the company gym, and I don’t have to travel anywhere! There is also now a massage service at the company, at the cheap, cheap price of $38 an hour, so that’s probably where some of those saving’s going to go. They certainly are making it hard for me to think about resigning…

And that is the plan for this year. Earn as much as I can, save as much as I can and lose some weight in the process. Let’s just hope the doing is as simple as the planning.

Just A Note

Just a note to say – I’m alive and kicking. Well, trying to kick at least. I have a bad habit of going offline and uncontactable when I’m in a bad place in life, and that goes for real life too. My real life friends have heard just as little (ok, nothing) from me as have all of you on the internet.

Thanks to all of you who wrote me emails expressing your concern at my going MIA and those who left messages asking after me. I was really surprised and touched to receive them. I apologise for not responding directly to them, but I was not exactly in the right position to do so then.

I have done a lot, a lot, a lot of relaxing and thinking in the last few months. I actually took most of 2014 from work, almost 8 months worth of sabbatical. During the entire period of rest, I have…done nothing. Except a lot of thinking and quite a bit of crying , and played a lot of video games (haha), and on the surface of it, I seem to have gone nowhere. No great revelations. No eureka moment.

Seems rather wasteful huh. But it was a good rest and I needed that. I get back to work coming Monday, and I can say, for the first time in a long, long while, that I’m actually looking forward to work again.

Financially speaking, I did not exactly suffer. While I didn’t have income for almost a year, my living costs were very, very low. The condo was self sufficient during this period (not sure whether this will continue to be the case). So the only consequence I suffered was opportunity cost of having a big annual income, which may put my retirement plan back by a year or two. $120K for a year of rest – whether it was worth it or not, it is done anyway.

So, thanks again to all of you. Have a happy Chinese New Year in two weeks time.

Tenancy Lease Ending And Other Property Related Ruminations

My current condo tenancy lease is coming to an end in April, so I asked my agent to inquire about a re-contract. Just last week, my tenant agreed to continue the lease for another year, but has negotiated down the rental by over a thousand bucks. With the reduction in rent, and increased property taxes, and slowly increasing interest rates, I will just about break even this year after doing a little maintenance work.

I have agreed and we will be signing the new lease end of April. I can’t complain about the rent reduction though. I have had it good for the last two years, charging 25% over market rate. However, the rental market is now a lot quieter and plenty of other units in the development are on offer. According to my agent, there are about 40 other listings still pending for this development, and some have been on the market to rent for almost two months without any nibbles. My tenant has been really quite easy to deal with, so I just want to keep him. In fact, I intend to bend over backwards to accommodate his every request. J

I have also been thinking about what to do about the property investment once this newest lease is up. I will probably want to go for another one year lease if possible and then look to sell in 2016. Previously I have discussed about acquiring a HDB flat, but now I am hesitant again, due to

1) the new cap on rental to foreigners, and

2) the creation of the BTO scheme for singles reducing demand for local HDB rental, and lastly,

3) the restrictions on minimum occupancy period, and waiting time of 2-1/2 years between disposing of a private property and buying a HDB.

Also, the idea of two properties is fast fading away in my mind because of all extra costs involved – additional 7% buyer stamp duty, higher downpayment, the low LTV (loan-to-valuation limit) for financing a mortgage (though the last two are not really problems if I am able swing a cash purchase).

I could keep the current condo, but it’s not ideal as a rental property because it’s really too big, not that well located, quite old and not that well built (starting to need $$ for continual maintenance).

I was cracking my head, then Mr. C suggested – sell the current place, and get a dual key apartment. Prior to my current condo, I was looking at one such place in the east of Singapore. The layout was split into a studio (complete with kitchen area and bathroom) of about 400 sq ft, and a two bedroom of about 900 sq ft, with separate entries, but sharing a common foyer area. The studio will be mine to live in, while the 2 bedder can be rented. It would effectively be one property purchase but would act like two separate properties. I would have to install extra meters to keep track of the utilities usage, but it could work. And the idea of not having to travel across the island to carry out any landlord duties has its attractions.

At the time I was looking, the dual key place and my current condo (both freehold) had similar prices. So it probably would not lower my mortgage any, but it would be a much better layout in terms of flexibility.

I am still talking to Mr. C about alternatives, and would probably start shopping around later part of the year to see what’s available and have an idea of the price levels. I do feel like I keep going around in circles on the whole property and rental income issues, so I apologise if readers feel dizzy from all the ruminating I keep doing.

Meeting with the Financial Planner – Some Conclusions

I have a lot to update. So there will probably be a few posts from here out, if I can get off my lazy ass to write.

I had a meeting with the financial planner again last week to go through the completed financial plan to meet my goal of retirement in ten years’ time.

The main conclusions of the meeting were:

–          Retirement at 45 is possible, but it would be very, very tough.

–          I will have very little margin for error if I really retire fully based on this plan at the end of ten years, hence the planner does              not advice that. However, taking up a lower paying job is definitely possible after 45.

The main thrust of the plan is to retire the bulk of my 1-million-plus mortgage on my condo in ten years instead of the original forty years tenure. The plan calls for additional mortgage payments of close to half a million on top of my normal mortgage payments in the next ten years. At the end of those ten years, I will have some existing savings endowments mature, which will take care of the balance. Once the mortgage is fully paid off, I will have access to the full rental income for my living expenses and hence can retire if I want.

The case remains even if I change properties midway, provided that the value of the properties remain the same. It also means I can say goodbye to any plans of moving out of my parents’ house for the next ten years.

I will also have pretty much nothing else in other savings and investments at the end of ten years since I will be throwing every cent available at the mortgage during the ten years. This is the reason why the advisor advised me to continue working and investing for at least five to ten years after 45 to build up my non-real estate investment portfolio. However, I can achieve this with a much lower paying (and less stressful) job.

I won’t go into the numbers in detail but it essentially means that I have to find about $50K to invest every year on top of my various existing savings vehicle. Bonuses and share options will contribute most of that. I’ll have to find the rest of it somewhere, somehow.

I had some reservations that I’ll be extremely undiversified at the end of ten years, with everything in the property, but unfortunately my pie is not large enough to try and distribute otherwise if I insist on so ambitious a plan. It will be somewhat scary for a year or two until I build up my reserves after paying off the large mortgage.

There is some buffer built into the plan though, since the planner used very conservative mortgage interest rates and investment returns to do the calculations.

The $50K a year will be invested in a short term portfolio of a mix of equity and bond funds as well as money market deposits. The portfolio will be liquidated every three years to pay off the mortgage.

The issue with investing the money myself is that I failed the CKA (Customer Knowledge Assessment) so I cannot invest in most ETFs on the stock exchange. I think the whole demarcation is a little stupid (I can buy individual stocks but not most index funds?), but it is what it is. So I’ll have to do my investment through others, and pay for the privilege as well.

I also found out that a number of good financial products that are available to laymen in other countries have limited accessibility in Singapore. Some of them of only available to high net worth individuals (e.g. min $250K investment) or are only available through certain companies. In such cases, it does help to have the advice of fee-based financial planners who are not commission based.

We didn’t spend any time on cash flow and expenditure management, because he said he didn’t have any advice for me on that front. He couldn’t find anything to cut further. J I take that as a back-handed compliment. We also discussed tax planning and estate planning etc, and I had a lot of different thoughts on the property front. I will share some more in my upcoming posts.

My final bill for the whole process? Just over $5K ($250 per hour for 20hrs of work). I think my net worth and my ambitious goals made it borderline worth it to pay for the service, but I am not sure I will recommend it for anyone with less than a net worth of $750K, especially if there are no special circumstances to consider (estate planning, tax planning etc) and if the individual has a modicum of financial know-how.

I am pretty much fired up from the meeting and looking forward to the challenge. Even if I should fail to meet the ten year mortgage pay off challenge, I’ll definitely  be no worse off than if I had never tried -reaching for the moon and landing among the stars and all that. I just hope I can keep this optimistic frame of mind going forward.

Updates Feb 2014

Happy Chinese New Year to all.

This is the year of the horse, which happens to be my Chinese zodiac sign as well. You would think that you would have good luck in your own year, but that is not the case in Chinese geomancy. This is going to be a challenging year for me. Unfortunately I am still struggling mentally, and have just gone on medication to help with anxiety and insomnia.

Financially, it is going to be a tough year as well, with increased costs due to the therapy that I have to do, and looking at reduced income this year due to performance issues at work.

I have also gone ahead with the financial planner. The early retirement plan is tougher than I had expected. Basically, the planner does not feel that I will be able to achieve retirement at 45 in the way I wanted, or at least, not in a majorly risk-free way.

The reason for that is that most of my assets are locked in real estate and retirement funds. I have quite little in current liquidity by comparison. This is going to make investing a little more difficult in the coming couple of years. Basically I am woefully undiversified.

There are challenges in the insurance front as well. I just learnt that I have been mis-sold my hospitalization shield plan. So effectively, I am not covered on the medical front. For small claims, the insurance company might just not check, but I will be in trouble for larger claims. However, I have decided not to do anything just yet, as changes may be coming to medishield and maybe private insurance plans next year, so I’ll have some chance of coverage.

The silver lining is that I have substantial enough valid whole life insurance with critical illness coverage.

I have been trying to come to terms with all that, and modifying my various expectations for my retirement. Despite my preference for rental income forming a solid majority of my retirement income, I am rethinking my plan. With all the new limitations that has been put in place by the government on the rental of HDB flats, and the high cost of going with private property all the way, I may just have to find my passive income another way.

I also have to come to terms recently with some bad financial decisions that I made previously that have come home to roost. Whatever I may be able to save this year will probably go to pay for these decisions, and if my net worth does not decrease this year, I will be surprised.

I am definitely down now, but surprising do not feel beaten yet. Perhaps it is all the meds at work, :) or the good rest I just had during the CNY holidays. Let’s hope that I don’t have more bad news after my next meeting with the financial planner.

“The Talk” with Dad

I’m happy!

I actually had the start of “The Talk” with my father today, and for some reason, he was pretty receptive to my plans today. After an initial protest, he started to listen to me more seriously, and seemed to realise that I have a plan. And he appears to be coming around to my way of thinking.

Oh boy, I’m so glad.

It started by him asking about my work, and I decided to come clean about my feelings and how I am seriously considering a job change. And that led to a discussion of my finances. And I finally got to tell him what I planned, and where I am at the moment. And the best thing is that he shared his thoughts on their retirement needs, and that was a great help to me.

Cue sweet music and flowers.

He told me that he figured that once they retire for good, we need about $2,000 to maintain our household of four, not including their personal spending money. If I were to stay home with them instead of living by myself, my everything-in lavish lifestyle living costs would be around $950 per month, so all our costs should be coverable entirely by me (Rental + Some Dividends). But that won’t be the case, since my sister will be contributing her share too, so it’s not going to be a too spartan existence. I would probably still be doing some kind of paid work too for a while.

As for their own personal spending monies, I gathered they would either be spending down from their savings, or there is some intention for some light work after official retirement.

I believe that my parents know I am not hurting for money, but I think they didn’t really expect that I would be so well situated at this point. Heck, it took me a while to get used to the fact myself. I think my father was kind of relieved to find that my early retirement mumble was not just hot air.

We only skimmed the surface of things, but now that both parents appear to be receptive to the idea of my early retirement, I can feed them more details as and when. From here out, it is only maths. I can do maths. That is such a load of my mind.

With this breakthrough, I am not so sure if I will move out of the family home eventually. Now that my parents appear to have accepted the idea that I might end up retired early alongside them, I could hurt their feelings if I insist on moving out by myself, and I want to try and avoid that. As it is, living at home doesn’t seem like such a penance now, but I’ll wait and see. Still have plenty of time to make decisions.

In other news, I am updating my resume, but am a bit wishy washy about sending it out. I have a few public service agencies in mind whose work interests me, but I am really hesitant about making changes. That’s an ISTJ for you – I hate changes, even if they end up being better for me.

So, yeah, things are looking up. I haven’t got all the answers yet, and it’s still going to be a few years of waiting, but suddenly the dim glimmer at the end of the tunnel seem a lot brighter.