A Financial Stocktake 2

Okay I am going for something possibly ludicrous for some but I’ve worked out the numbers and it seems totally possible.

And so earlier this year I blogged about my retirement plan which I decided would be derived from rental yield received from a portfolio of properties.

Based on my calculation, we would need in total fully paid up asset base of $750,000 in today’s dollar to achieve our desired retirement by hopefully age 56.

Our first investment property, excluding the flat we are currently living in, is in JB. The documentation has finally finally finally been finalised and I dare say with about 90% confidence that we are now proud owners of a cluster house in Johor. Worse come to worse, we would still be owners of a piece of freehold land. Ha ha.

Now I was just studying for my CFP module 5 today and read about using CPF for purchase of second property. As long as you are able to individually set aside the prevailing Minimum Sum cash component, you can use the balance above that to finance a second property.

As I ponder on this interesting piece of information, I checked our CPF balances and found out that by end of next year, we would be able to meet this criteria. Which means that future balances plus accrued interest can be used towards financing our second property in Singapore! Suddenly owning a second property here in my own homeland doesn’t seem such a distant dream anymore.

Adding the expected cash savings plus accumulated CPF balances, we are looking at being able to afford the downpayment of a private property worth about $1 million in 5 years’ time. Although if current trends continue as they are, $1 million would probably only buy me a shoebox apartment in a remote suburb. Then again how remote can Singapore be?

When I was doing my research for a family trip to Hong Kong, I came across this website called Wimdu. It is a website listing apartments that tourists and travelers can book as an alternative accommodation to hotels and hostels. This business model works especially in land scarce cities like Hong Kong and possibly Singapore too.

With this in mind, investing in shoebox apartments suddenly seem viable and could possibly even achieve one of my dreams of owning a B&B. However I will need to put more thought into the cash flow potential as it is unlikely that I would be able to earn enough from these short term stays to cover the monthly repayments.

Still one can dream. My husband asked me if this was really possible. That an average earning household like ours with three children to feed can afford to own multiple properties. I find it hard to believe myself because it would mean that many Singaporeans actually have the key to unlock such wealth as well.

I won’t be so confident to say that it’s a sure win plan, only time will tell. But I do know that being¬† acutely aware of our family cash flow as well as being moderately financially savvy (together with a lot of blessings from God) can make a great difference to one’s financial future.

Surely we look forward to a time when we can finally decide how best to use our time for the furthering of God’s kingdom, rather than the P&L of your employer.

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