As someone whose career is built on providing advisory on wealth management and retirement planning, using property to fund your retirement albeit offering good passive income especially in Singapore, is not the most optimal choice.
While there is definitely the appeal of a tangible asset to see and touch, what isn’t always highlighted are the hidden costs of owning a property – stamp duties, legal fees, maintenance fees, property tax and the list goes on. Doing the maths, you may realise that you might never actually be better off. What’s more with the constant escalation of property prices in Singapore and the uncertainty of government regulations that can throw your plans out the window anytime, knowing when to sell and buy can be very stressful.
However lately I have come to appreciate another dimension of owning properties specifically those overseas. They may not always make the best investments from a financial point of view as one can reliably earn 8% p.a. through an index fund without the messiness of property ownership. Yet they can provide a different kind of value.
Imagine with me. You have worked your whole life, accumulated your nest egg and finally you are ready to sack your boss. You send in your resignation, attend numerous retirement and farewell parties and then wake up the next morning wondering…what now?
If you are like me who live in tiny cosmopolitan Singapore, the first few months could be liberating as you explore all corners of our 735.7 km² land area with a peace of mind. Then you may extend your reach to visit Johor Bahru across the Causeway to stretch your dollar. You may decide to jet set around the world, visit all kinds of exotic countries and check off your bucket list of places to visit.
This may occupy you for a couple of years but soon the grind of constant travel will wear you out. Mind you, you would be in your 50s or 60s, hardly that youthful energetic 20-year old you left behind a long time ago. It is at this moment of my visualisation that I realised I needed a different plan – one that offered a sweet spot between staying put in tiny Singapore and constant travelling.
I needed to sink my roots somewhere other than my homeland for a longer period of time, obtaining the benefit of stability and comfort of home away from home, and the excitement of exploring a new region, culture and community 10, 20 or 100 times bigger than Singapore.
I started reviewing my retirement plan from a different lens. Not from how much I needed but rather what will I do when I retire? It seems like sometimes we flip the script to compute how much we need without knowing what it is for. Because if I am spending my retirement years basking under the sun somewhere else other than the most expensive city in the world, then perhaps the amount I need will be much lesser. Couple this with the advantage of our passport, we can visit and stay in most countries for up to 90 days without needing to apply for a special visa.
This led me to formulate a plan of living in four different countries, 3 months each until my tourist visa expires. To accomplish that I will need some form of residence (owned or rented). Firstly a property in Singapore is must. This country will always be my home and my children are here too unless they decide to seek their fortunes abroad. Size and location will however be less of a concern from this perspective.
I already own a corner terrace in Johor Bahru and it will be fully paid up soon. JB offers the combined advantage of being close to Singapore, having similar cultures but at one-third the cost. Though JB city is somewhat urbanised, rural life and rainforest nature reserves are just an hour’s drive away. Besides the state of Johor is 26 times bigger than Singapore so surely there is somewhere to explore.
The third country I want to live in is Japan! Is it any surprise? I have visited the country more often than next door Malaysia over the last 10 years. Japan also happens to be one of the top tourist destinations in the world for many reasons. Firstly, with its depreciating currency, it has now become alot more affordable to live in Japan. Secondly, the country is clean, orderly, safe and the people are largely polite despite the language barrier. The biggest threat to your life would be from either an earthquake, tsunami, volcano eruption, avalanche, blizzard, cyclone or heat wave… That said, being situated right smack in the middle of the Pacific Ring of Fire has blessed Japan with postcard perfect scenery through all four seasons. Good enough to risk my life for.
Thirdly, Japan is a country of paradoxes – cosmopolitan city living on the forefront of cutting-edge technology next to rustic countrysides where centuries old castle ruins lay; an otaku paradise where one’s wildest fantasies come to life against the backdrop of a people who has preserved traditions passed down through millenias. So no matter what rocks your boat, I am sure you can find it in Japan. Lastly, for a more personal reason, Japan is a ‘dying’ country. Its population is shrinking by close to 1 million a year and if nothing is done to turn things around, this beautiful country and its enigmatic people will disappear in the next 100 years! For everything that the Japanese culture means to me, I don’t want that to happen. I want to do a small part, whatever that may be, to preserve the country. And if more people choose to set up lives here whether temporarily or permanently, wouldn’t Japan become the next crossroads of cultures?
And so right now I am on the hunt for a property in Japan, one I can use as residence during my gap year and subsequently for the retirement lifestyle I envision. I have yet to identify the fourth country to cycle my quarters through though I half-suspect it will be somewhere in Europe. So while buying property may not make financial sense from a wealth accumulation perspective, I daresay that it offers an intangible value for a different type of retirement lifestyle that goes beyond the books.
