Liquidate or not???

[sgd]

trouble brewing in Mr Stanley household, I think the moment he gone the fighting will start such are the problems with having extended families

http://www.asgam.com/features/item/1354-...women.html

[lanoitar]

Essentially, you're comparing the investment merit of 2 asset classes (HDB vs stocks). You need to be well-versed in the alternative asset (stocks) before u even consider switching to it, or you'll be courting danger. The market is not forgiving.

Assuming u are, having a sense of the expected returns (vs the risk taken) would help you decide. Your job is to maximize your risk-adjusted returns.

Your HDB is a gov-backed cyclical low yielding asset. Using the rule-of-thumb of using 10 mths rental as the net yield, you're getting about 3.6%. Some points to consider:

1. Is this yield (rental) sustainable? What is the supply situation in your area?
2. HDB is a leasehold asset. If your HDB is old, would the market eventually not ignore the shorter lease?
3. Downside: The gov will not let the value of HDB collapse overnight. However, it is still a cyclical asset. Looking at the Resale Price Index from 1994, the maximum fall is about 28.5% (Source: http://sg.sg/ThmbB1 ).
4. Upside: The gov is determined to cool the market, and curr price is already at a high multiple of many newly weds' income. Coupled with the impending supply, the upside doesn't look bright.

Now, let's look @ stocks. 3.6% is not hard to beat, at least in the long run. You can buy STI ETF and be done with it, collecting a div slightly below 3%. The downside, however, can be huge. Looking at STI since 2002, the maximum downside from the peak is almost 60% (Source: http://bit.ly/ThrmRe). It could be more if you choose to pick stocks.

It takes experience in the market to be able to stomach the volatility, and not run like chickens when everyone else is. Without the emotional control, you'll end up suffering huge losses.

Be honest with yourself, and I think you'll be able to find the answer.

[Temperament]

trouble brewing in Mr Stanley household, I think the moment he gone the fighting will start such are the problems with having extended families

http://www.asgam.com/features/item/1354-...women.html

No! Not before he is gone. Almost 100% of the time, the richer the man the more fighting/political maneuver over his wealth during his lifetime until his death.
But i am not surprised it happens in ordinary normal households too.
"Every household has a difficult to read 'bible'", says the Chinese.
After all, human beings are political animals.

May he (Stanley) has some honest relationship (with no strings attached) with his next of kin/kins, now that he is on wheelchair.
Amen.

[etan]

...seeking your views as at the crossroad of a decision...whether t o sell off my hdb unit or not?

bkgrd info:
...54 y.o...3 local univ(2013) kids + 1 poly/jc (next yr)...
...stay pte apt...250k 15 yr-loan...using cpf for mthly repayment...aim to retire at 62 as the 3 kids would be abt 3/4 years in their job already...
...5-R hdb, rental 2.5k...
...zero stocks/shares...have been lurking in forum(s) but no spare cash to invest in shares...

1) thinking of selling the hdb @ 680k/700k...but once sold, no more chance of hdb, unless eventually sell pte apt...
2) then investing 280k/300k in dividend stocks @ 6% to get 1.4k/1.5k p.m...
3) not clearing 250k loan as low interest, also apt has mortgage insurance cover...
4) remainder 400k....not sure how best to use it??? what would you do?

instead of selling the hdb is to keep it & use it for rental income...
...i feel that housing has gone up too much & very little upside left...if i continue to keep the hdb, i am heavy in property & no asset diversification at all...this is the reason why i am keen to sell off the hdb...and to allocate some funds into stocks...

like to hear your views....

My take:

1. Unless you really need a big sum of money anytime soon, if not, why not stay status quo. Afterall, the big expenses (meaning children’s education) are over, maybe only 1 more to go. This is not a problem, as the 3 elder children will be able to chip in if there is any need to.
2. The other main expense outstanding is the monthly condo loan.
3. Actually, rental from flat can go towards payment of housing loan. But if condo loan is paid using cpf, all the more you should be happy, collecting the cash and keeping it in your pockets.
4. Since you are aware that once you sell off your HDB, it is unlikely that you will be able to buy back in future, unless HDB tweak its ruling.
5. The flat can be used for some kind of temporary housing for your children while waiting for their new flat/condo to be ready.
6. Rental collected can also be used to fund your retirement needs.
7. To jump directly into stocks without investing in knowledge is actually very risky, if you had read my case. But of course, your situation may be different. Suggest you start off with a very very small capital first if you really want to venture into it, to get a feel.
8. Yes, it’s better to keep the spacious condo, extra space is always a luxury.
9. I fully agree with you on the en bloc potential which may come one day; you will get a windfall. By then, you could probably downgrade to a smaller unit.
10. May I ask if you dun mind: you mentioned family member of ‘5’, 4 kids plus yourself. What about your spouse?
11. Unless you have other specific reasons for needing the cash, if not, just hold on as long as you can. Bricks turn into cash is easy, cash turn into bricks is a lot harder. Ahaha!
12. You mentioned you will work until 62, but when we are older, we are at the mercy of employers!
13. It appears that financially, you are well taken care of at this moment.

Well, make an informed decision…becos we are not you, we can’t fully understand your needs at this stage, or why you need a change…

[changwk]

hi,

my take on this.
1. if you sell your HDB, dont forget you will not get all the proceeds in cash.
you need to return to your CPF ordinary the total amount used to pay the flat plus interests.
so, your availability of cash is less after factoring into that.

No doubt you can still invest with your "cash" using your CPF investment account.

2. if you are new to stock investment, i would advise you to go slow.
do lots of reading up on investment strategies on value investment. lots of good books at the local library.
The Edge magazine is a good one for companies write up.

then formulate a strategy for yourself that you are comfortable with.
next, you look for companies that fit that strategy.
invest small amounts in each to start off with, of course not too small to make your commission % high.
then monitor the companies you have invested in for their quarterly results.

my personal journey has been filled with mistakes but i have learnt from them and still learning from them.
it has taken my probably 5-8 years of investing and learning before i the hang of it.
i get my sense of success when my invested companies go private for a higher price.
i get the joy of receiving good dividend from companies.
i know i'm on the right track when i'm able to beat the STI index.

[wsreader]

Without going into the details, a person who brings up 4 tertiary educated kids and owns 2 properties is not doing too badly financially, imho.
By maintaining status quo, life will gets much better automatically within 4 years max, when all the kids graduates.
Headache comes when the wish is to give one condo to each of the 4 kids, so the slog must go on. Every parent can understand that.

[money]

Hi uncle tangoandrew, sometimes status quo may be the best option. It depends on individuals, being in a stock forum doesnt mean that you have to invest in stocks like most of us

[brattzz]

Just to be safe,

Collect rental from HDB lah.
Build up the $ slowly while reading up investments.

[HitandRun]

Hi Tangoandrew

I believe Kopikat gives very good advice.

If you have not really participated in the stock market, you should go slow. There is a huge difference between paper trading and trading with real money.

[tangoandrew]

I can understand your reason for wanting to keep the larger house for the space. Whatever decision you end up taking will have to consider your full financial circumstances not just what you write here. If you continue working it should be ok and you can make a decision by 62 I suppose. Less important to sell now. Also if the HDB market is 20% lower when you sell - so what. The absolute difference is not massive, at least not compared to your private property.

(as an aside, if your development is very large, the odds of an enbloc over the next few years is very low as developers have to buy, re-develop and sell within five years, with huge exposure to a market still open to further to policy actions plus its very hard to get consensus across a large number of households, whatever the market prices may imply)

having thought thru...can agree with you that i may not need to rush to sell now...as i intend to work until at least 62...

...the dvpmt is large...not expecting any en-bloc in short or mid-term...quite happy for own stay as sufficient space for the family..

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hi kopikat,
....good advice but part of the rental is needed to cover monthly expenses...salary not enough to cover....so monthly saving not that much....but sensible advice to start with small amt into shares & then to grow it over 5/8 years...

hi cfa,
....agreed that family is the greatest asset but for the next generation, it will be pretty tough for them....that's why my philosophy with respect to my kids is...be responsible for their own financial future...as i aim to be financially independent when i retire...

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hi etan,
thanks for your detailed take....
3. condo loan is using cpf....after 62, then maybe cash...
10. sadly spouse has passed on 7 yrs ago...that's why the hdb rental is impt to support the family as salary not enough...
11. impt reminder...bricks to cash easy, cash to bricks harder...
13. as long as i work, still ok...the 2nd property is a tremendous help in my situation...at least 3 of my kids will be working in 5 years time, so retirement target of 62 is realistic...

...being a solo parent is tough but fortunately for me....i was not burdened financially...still able to provide but not much savings to show...always count our blessings....and treasure what we have instead of complaining what we don't have...

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Without going into the details, a person who brings up 4 tertiary educated kids and owns 2 properties is not doing too badly financially, imho.
By maintaining status quo, life will gets much better automatically within 4 years max, when all the kids graduates.
Headache comes when the wish is to give one condo to each of the 4 kids, so the slog must go on. Every parent can understand that.

hi wsr,
...3 gg to univ in 2013 so not yet tertiary educated....1 poly/jc in 2013...no headache as it is a settled issue that it is impossible to give each kid 1...
...cannot complain financially...not loaded but sufficient to provide their needs without the excesses....the kids know...and i drum into them that they need not give me money when they start working but they need to contribute to the expenses of the home...otherwise, how am i gg to retire....