When Prime Minister Lee Hsien Loong listed the various ways in which a “cash poor” senior can get extra income from his/her home in retirement, he said, “It is better if you keep your property. Even if you rent out the whole flat, it does not matter, it is yours, and you can fall back on it for your old age, just in case anything happens.” I disagree, though I understand and appreciate where he’s coming from. He’s worried that many people who end up selling and cashing out their property would not be able to appropriately ration the lump sum earnings and make their windfall last throughout the remainder of their lifetime. This is why he put constraints on taking lump sum withdrawals of one’s CPF. Additionally, owning a home provides some assurance that you will have shelter, which is a basic need. But in the case of selling your own property, I believe if you are prudent with your money (perhaps you can buy an annuity with the proceeds, or just keep it liquid in an account), the option to cash out your property should be a viable consideration for seniors.
Although I own properties overseas, I am a renter here in Singapore. People keep telling me that “renting is just like flushing your money down a toilet”. When I ask these people whether they rent or own, they proudly proclaim “own, of course!” But do they really own their home? Most people who purchase a home, do so with a mortgage, a word that originates from Latin meaning “death pledge” because it often took the entire life of a person to fulfill the pledge. Until recently, a person in Singapore could buy a home with 5% of its value in cash, 15% in CPF funds, while the rest (80%) is lent by a bank. For a BTO, the rules used to allow for 10% down and while the other 90% was financed. The amount financed, of course, comes with interest. So let’s dissect what is actually owned. (more…)
In a few hours, it will be Chinese New Year, and many people hope this new year will bring to them luck and wealth. That’s why I want to share with you the biggest investment that I am banking on.
First, let me say that there’s no shortage of investment advice out there. There’s always a new algorithm or new formula for finding the best investments your money can buy. Personally, I’ve been to a handful of investment talks – from property to forex to overseas projects – and all proclaim that their method and investments are safe, low risk, high yield, and you’d be a fool not to buy them or use their strategies. But there is one outstanding and smart investment that finance folks and savvy investors rarely speak of, let alone invest in, and you will find this not in a get-rich-quick book, not with your broker/financial planner, and not in a seminar. You’ll find this by…. (more…)