Sinkie Middle Income kena squeezed

[Runifyouhaveto]

Seow liao. If sinkies are leaving in hordes, FTsh will take over the tiny red dot and all locals will be screwed.

At this moment, if you have $2m (including your residential property), i think you don't need to leave. You can retire comfortably because you are out of the rats' race.

The average yield of local banks' SGD preference shares is appx 5% (UOB issued 4.95% a year ago):-

Assuming you offload your residential property to hit $4m target
Returns for $2m = $100K a year = $8333 a month
$8333 is tax-free and that is like making $12K gross salary a month + deducting for transport to workplace, officewear, taxes, etc
Put aside $4000 a month for living expense = enough money for food, a small car or even monthly tour.
Put aside another $4000 to pay for your condo/HDB instalments. Otherwise, reinvest the money

song right? $2m is just a hypothetical figure that my friends and I arrived for a very comfortable retirement.

Really, if you have $2m now, work for what? :p

 

[frenchbriefs]

At this moment, if you have $2m (including your residential property), i think you don't need to leave. You can retire comfortably because you are out of the rats' race.

The average yield of local banks' SGD preference shares is appx 5% (UOB issued 4.95% a year ago):-

Assuming you offload your residential property to hit $4m target
Returns for $2m = $100K a year = $8333 a month
$8333 is tax-free and that is like making $12K gross salary a month + deducting for transport to workplace, officewear, taxes, etc
Put aside $4000 a month for living expense = enough money for food, a small car or even monthly tour.
Put aside another $4000 to pay for your condo/HDB instalments. Otherwise, reinvest the money

song right? $2m is just a hypothetical figure that my friends and I arrived for a very comfortable retirement.

Really, if you have $2m now, work for what? :p

We all can fantasize and hypothesize over passive income figures all day long but where are we going to get the money?clearly not on the stupid paper chasing cheaper better faster Singapore.

Anyway if u need 2 million to be happy in Singapore I reccomend just migrating to Australia.here everyone are already happy everyday and living for today.don't understand what sinkies are rushing to?to their 2 mil dollar happiness goal?

 

[johnny333]

.....Really, if you have $2m now, work for what? :p

If you decide to stay in Spore where there is high inflation expect your $ to shrink. That's why you still have to look for ways to grow your $.

 

[blindswordsman]

...The average yield of local banks' SGD preference shares is appx 5% (UOB issued 4.95% a year ago):-

Assuming you offload your residential property to hit $4m target
Returns for $2m = $100K a year = $8333 a month
$8333 is tax-free and that is like making $12K gross salary a month + deducting for transport to workplace, officewear, taxes, etc
Put aside $4000 a month for living expense = enough money for food, a small car or even monthly tour.
Put aside another $4000 to pay for your condo/HDB instalments. Otherwise, reinvest the money

Good hypothecation but unfortunately, it is beyond the reach of most sinkies to have that $2m for retirement. If they have that $2m, the sinkies would scoot off to boleh land and live like mini-sultan already. Sinkies are condemned to this island to struggle for a living against competition from FTsh for jobs, schools, etc. Why the fuck are FTsh given free education via scholarship while locals got to pay?

 

[Runifyouhaveto]

hahah, a woman told me this over the weekend, if i want a blissful and good retirement, i must try to clock at least 10000 good deeds before I retire. Think of it, it is not a lot, about 1-3 a day depending on your age. She suggested that I should have a simple journal to keep track, don't need to describe what i did but just give +1 for every good deed i do, and also -1 for every bad thing.

 

[lifeafter41]

At this moment, if you have $2m (including your residential property), i think you don't need to leave. You can retire comfortably because you are out of the rats' race.

The average yield of local banks' SGD preference shares is appx 5% (UOB issued 4.95% a year ago):-

Assuming you offload your residential property to hit $4m target
Returns for $2m = $100K a year = $8333 a month
$8333 is tax-free and that is like making $12K gross salary a month + deducting for transport to workplace, officewear, taxes, etc
Put aside $4000 a month for living expense = enough money for food, a small car or even monthly tour.
Put aside another $4000 to pay for your condo/HDB instalments. Otherwise, reinvest the money

song right? $2m is just a hypothetical figure that my friends and I arrived for a very comfortable retirement.

Really, if you have $2m now, work for what? :p

My thought is quite a number of Singaporeans, with their home, being hdb (most money tied up over there), and try to be happy upon seeing their cpf statement (lagi more money tied up there), do not even have 200k, what more, 2kk.

 

[Runifyouhaveto]

Dear blindswordsman and lifeafter41,

Thank you for reading.

The whole hypothesis is just used to prove a simple point; once you hit that target (based on today's prices), you will be autolifted or self-propelled going forward. You would agree that the above assumptions in it are quite low-risk and prudent. It is just a simplified reverse-example of the rat's race. Some richer people are doing so now.

PS: 2M is a popular industry standard for private-banking. In fact, I can bore you further by explaining how the same targets can be achieved with 1M with a small level of risk, but this will stray too much away from TS's topic.



Please allow me to share this disheartening quote:
If you are not there,
You will never be there.

At the current inflated prices, don't think of "reaching there" first.
If we really wanna "be there", please save up first and avoid leveraged-assets now.

I agree, there are still opportunities now but they are like birds.
No points shoot 100 bullets for the birds at the sky now,
when you don't even have single bullet when the big elephant appears in future

Every 10-15 years, a big opportunity will arrive like a big herd of elephants,
By then, whatever you buy will be right. Just make sure you still have bullets.



my kaypo 2 cents

 

[lifeafter41]

Dear blindswordsman and lifeafter41,

Thank you for reading.

The whole hypothesis is just used to prove a simple point; once you hit that target (based on today's prices), you will be autolifted or self-propelled going forward. You would agree that the above assumptions in it are quite low-risk and prudent. It is just a simplified reverse-example of the rat's race. Some richer people are doing so now.

PS: 2M is a popular industry standard for private-banking. In fact, I can bore you further by explaining how the same targets can be achieved with 1M with a small level or risk, but this will stray too much away from TS's topic.



Please allow me to share this disheartening quote:
If you are not there,
You will never be there.

At the current inflated prices, don't think of "reaching there" first.
If we really wanna "be there", please save up first and avoid leveraged-assets now.

I agree, there are still opportunities now but they are like birds.
No points shoot 100 bullets for the birds at the sky now,
when you don't even have single bullet when the big elephant appears in future

Every 10-15 years, a big opportunity will arrive like a big herd of elephants,
By then, whatever you buy will be right. Just make sure you still have bullets.

my kaypo 2 cents

In fact, I can bore you further by explaining how the same targets can be achieved with 1M with a small level or risk, but this will stray too much away from TS's topic.
Do share on this.

 

[Runifyouhaveto]

I apologize for two typos

"Assuming you offload your residential property to hit $4m target"
Correction "Assuming you offload your residential property to hit $2m target"

" the same targets can be achieved with 1M with a small level or risk"
" the same targets can be achieved with 1M with a small level of risk"

 

[Runifyouhaveto]

In fact, I can bore you further by explaining how the same targets can be achieved with 1M with a small level or risk, but this will stray too much away from TS's topic.
Do share on this.

Please skip if this is too long-winded or boring.

Background: Some rich people realized that the nett rental yields from their properties are less than 4% now, so they take profit on properties and switched to investment-grade (aka safer) bonds. Let's say you got $1m.

Bond Financing Terms:
- Gearing:
Banks give 70 to 80% gearing = $0.20-0.30 to own $1
- Ownership
These bonds are held in bank custodian accounts (same as share financing).
- Cost
Interest rates for Investment-grade bonds: flexi (1.2-1.3%pa), fixed (appx 2%pa for max 3 years).
- Other assumptions
Top local bank/GLC holding company bonds and Commission cost excluded.



Strategy:
Product: OCBC 4% Perceptual Securities
Exposure: You use 1M to control 4M of the bond = 3M loan. (75% financing)
Cost: 3M x 2%pa = $60K (using fixed rates to avoid SIBOR fluctuations)
Gross Yield = 4M x 4% = $160K
Nett: Yield = $160K - $60K = $100K
Return = 10% (100K for your 1M)

Then back to the old example:
$100K a year = $8333 a month
$8333 is tax-free and that is like making $12K gross salary a month + deducting for transport to workplace, officewear, taxes, etc
Put aside $4000 a month for living expense = enough money for food, a small car or even monthly tour.
Put aside another $4000 to pay for your condo/HDB instalments. Otherwise, reinvest the money


hehee, nearly the same right? of course got higher risk and you might find a bond that matures within the same period as your bond-financing fixed tenure.

Disclaimer:
- In real life, Bond financing is only for private banking customers with $2m of disposable income (excluding residential property).
- Please note that you will die pain pain if your bond defaults = bankrupt, so only consider the safest of the safest bonds.
- The 1m example is a true picture of what the richer and risk-adverse investors do, but their magnitude is larger.
- In my 2m hypothesis, my $2m example includes offloading your residential property n financing a new one.
- This is why 2m is very important benchmark based on current market prices. All the examples are just to illustrate the reverse rat-race in our society. There are many many many other factors + strategy to consider before u step into bond financing. I reiterate that all my examples are oversimplifed for our discussion and not meant to encourage bond investment.




Super side-track: you are based in overseas, even more choices:-
Many aust state govt/bank debts give >4-5%
Even OCBC Indonesia issues bond at 11%pa. (you hold and reinvest for 7-8 years = 100% gain. Rupiah wun drop 100% right?)
The drawback is tax, Indonesia takes appx 20% on bond incomes if i remember correctly.

 

[Asterix]

Product: OCBC 4% Perceptual Securities

Perpetual bonds have been around for a long time
On other hand no such thing as perceptual securities
If want to sound upper class refer to them as consols

http://www.investopedia.com/terms/p/perpetualbond.asp

 

[Runifyouhaveto]

Perpetual bonds have been around for a long time
On other hand no such thing as perceptual securities
If want to sound upper class refer to them as consols

http://www.investopedia.com/terms/p/perpetualbond.asp

well said sir,


The reason why local banks issue perpetual bonds is not so much about fanciful classifications but for BASEL III Accord which requires banks to have larger capital base to do bigger business. The ordinary shareholders do not wish to see their holdings diluted, so they issue this kind of debts.

Actually if issuers (company or banks) don't redeem back forever then it is dangerous. Perpetual securities are not supposed to have redemption dates but to hint to investors that they will redeem back, the banks have very strong self-imposed penalty clauses if their don't redeem these preference shares by certain date (good for investors).

Please note that not all bonds are the same, only choose the ultra-safest type or else if you wanna play safe.

 

[Runifyouhaveto]

Let's go back to our chat on the middle-class squeeze. :p

 

[lifeafter41]

Please skip if this is too long-winded or boring.

Background: Some rich people realized that the nett rental yields from their properties are less than 4% now, so they take profit on properties and switched to investment-grade (aka safer) bonds. Let's say you got $1m.

Bond Financing Terms:
- Gearing:
Banks give 70 to 80% gearing = $0.20-0.30 to own $1
- Ownership
These bonds are held in bank custodian accounts (same as share financing).
- Cost
Interest rates for Investment-grade bonds: flexi (1.2-1.3%pa), fixed (appx 2%pa for max 3 years).
- Other assumptions
Top local bank/GLC holding company bonds and Commission cost excluded.



Strategy:
Product: OCBC 4% Perceptual Securities
Exposure: You use 1M to control 4M of the bond = 3M loan. (75% financing)
Cost: 3M x 2%pa = $60K (using fixed rates to avoid SIBOR fluctuations)
Gross Yield = 4M x 4% = $160K
Nett: Yield = $160K - $60K = $100K
Return = 10% (100K for your 1M)

Then back to the old example:
$100K a year = $8333 a month
$8333 is tax-free and that is like making $12K gross salary a month + deducting for transport to workplace, officewear, taxes, etc
Put aside $4000 a month for living expense = enough money for food, a small car or even monthly tour.
Put aside another $4000 to pay for your condo/HDB instalments. Otherwise, reinvest the money


hehee, nearly the same right? of course got higher risk and you might find a bond that matures within the same period as your bond-financing fixed tenure.

Disclaimer:
- In real life, Bond financing is only for private banking customers with $2m of disposable income (excluding residential property).
- Please note that you will die pain pain if your bond defaults = bankrupt, so only consider the safest of the safest bonds.
- The 1m example is a true picture of what the richer and risk-adverse investors do, but their magnitude is larger.
- In my 2m hypothesis, my $2m example includes offloading your residential property n financing a new one.
- This is why 2m is very important benchmark based on current market prices. All the examples are just to illustrate the reverse rat-race in our society. There are many many many other factors + strategy to consider before u step into bond financing. I reiterate that all my examples are oversimplifed for our discussion and not meant to encourage bond investment.




Super side-track: you are based in overseas, even more choices:-
Many aust state govt/bank debts give >4-5%
Even OCBC Indonesia issues bond at 11%pa. (you hold and reinvest for 7-8 years = 100% gain. Rupiah wun drop 100% right?)
The drawback is tax, Indonesia takes appx 20% on bond incomes if i remember correctly.

Strategy:
Product: OCBC 4% Perceptual Securities
Exposure: You use 1M to control 4M of the bond = 3M loan. (75% financing)
Cost: 3M x 2%pa = $60K (using fixed rates to avoid SIBOR fluctuations)
Gross Yield = 4M x 4% = $160K
Nett: Yield = $160K - $60K = $100K
Return = 10% (100K for your 1M)

Understand where you are coming from on the leverage and financing.
Only contention is if you were to leverage with ocbc bank for financing at 2% and you buy their perpetual securities/bond at 4%.
The investor make the difference. Sounds a bit too easy, if you ask me.
The only thought is that they interest rate they charge do not change (fixed) than it's a bao chiak.

Correct or not??

 

[Runifyouhaveto]

Understand where you are coming from on the leverage and financing.
Only contention is if you were to leverage with ocbc bank for financing at 2% and you buy their perpetual securities/bond at 4%.
The investor make the difference. Sounds a bit too easy, if you ask me.
The only thought is that they interest rate they charge do not change (fixed) than it's a bao chiak.

Correct or not??

correct ah. This type of thing has been around for quite long.

Drawback:
If the bond default = immediate guaranteed margin-call = bankrupt
You get only a few % of returns for taking such massive risk
That's why i said only applicable for the super super safe bonds.



In the macro picture, this is fractual banking.
Eg. Bank A needs to issues 3% bond
Bank A lends customer at 1.5% (flexible rates)
Bank A client takes the loan to buy these bonds and make 1.5%pa for himself.
In the end, Bank A makes some money from customer and subsidized their bond issue cost to <3%.
I scratch your back, you scratch mine
so long we all dare to sign on the line, we create money out to thin air. shiok bo?


that's why i said earlier, if you got 2M, don't need work so hard. Just simple bond investment without financing (lower risk) will suffice.



Tell you something more ridiculous, recently HDB launched 3% bonds. HDB very safe right but 3% very low hor? Evil bankers give 90% financing. The RMs clock massive revenue points for the massive 90% financing = 9M for 1M. But if SIBOR surges, the cost of financing increases, the bank client die pain pain, even for something as safe as HDB bonds. hahahahaha this is life.

 

[blindswordsman]

hahah, a woman told me this over the weekend, if i want a blissful and good retirement, i must try to clock at least 10000 good deeds before I retire. Think of it, it is not a lot, about 1-3 a day depending on your age. She suggested that I should have a simple journal to keep track, don't need to describe what i did but just give +1 for every good deed i do, and also -1 for every bad thing.

You can't do any good deed if you are a banker. Someone said that if a banker offers you a financial product which is too good to be true, it is probably poisonous and only time will tell. Lehman Bros come to mind, leh.

 

[Runifyouhaveto]

You can't do any good deed if you are a banker. Someone said that if a banker offers you a financial product which is too good to be true, it is probably poisonous and only time will tell. Lehman Bros come to mind, leh.

hahaha, just like my hdb bond example. Something so safe, they can also make it so toxic to grow their business 900%.

Thanks for bringing our discussion back to TS's topic.
But the lady knocked some sense into me, it boils down to ultimately what we want to achieve in life. Ain't we working hard to achieve a blissful retirement? but in the process, we became greedy and evil and lost our way. But then again, if i don't do all the selfish things to give my family a better life or protect them from harm, then who will?

RUN is a confused soul.

 

[Runifyouhaveto]

 

[Runifyouhaveto]

How to know if you are stucked

1. You are working hard in a job that you don't like.
2. You spend less than 1-hr speaking to your wife/kids every day.
3. You don't appreciate that humanhood is a spiritual journey (see 10000 good deeds before retirement discussion)
4. Your main source of news is national tv channels or newspaper (even young kids are encouraged to do their own readings beyond textbooks these days)
5. You knowingly consume harmful convenient foods in the society, eg. fast food, deep-friends, aspartame (fake sugars), MSGs etc.
6. You feel safer if the society is stricter.
7. You are thankful that you receive greater approval-quantum for your car-loan, house-loan, credit-card limits, etc.
8. You feel that a quick death is better than putting up a fight against illness.

 

[lifeafter41]

How to know if you are stucked

1. You are working hard in a job that you don't like.
2. You spend less than 1-hr speaking to your wife/kids every day.
3. You don't appreciate that humanhood is a spiritual journey (see 10000 good deeds before retirement discussion)
4. Your main source of news is national tv channels or newspaper (even young kids are encouraged to do their own readings beyond textbooks these days)
5. You knowingly consume harmful convenient foods in the society, eg. fast food, deep-friends, aspartame (fake sugars), MSGs etc.
6. You feel safer if the society is stricter.
7. You are thankful that you receive greater approval-quantum for your car-loan, house-loan, credit-card limits, etc.
8. You feel that a quick death is better than putting up a fight against illness.

Your pointers above describe a good number of people in Singapore.