Financial Planning for your future - with certainty!

How many times have you encountered meeting a financial planner who told you you need an astronomical amount of money to retire or to be financial independent? I was not impressed with their calculations. Certainly there must be a better way. I searched high and low and studied for the past 5 years. Since the financial crisis, there was no way I'm going to leave my financial future only in the hands of the mutual fund managers, CEOs of companies, savings deposit. 

I believe everyone's plans and life circumstances are different. I've developed one for a young single person who aspires to own his own home and many other homes to come. In fact, I've amassed 7 in the span of 5 years and over a few countries like Singapore, Malaysia, Thailand and Australia. 

I've developed a financial plan that would guide me to financial independence, a plan that will give me rental income of $10,000 in time to come and I would like to extend this planning expertise to you for FREE. Having paid school fees and learning through real investing over several countries, I would like to see that what I have learnt and experienced could be useful to you to help you achieve your financial goal. What I'm good in is in orchestrating and maximising the use of money to achieve financial independence. This is definitely not a get rich quick scheme but would be useful to set you on the right footing so you can rest assured how much you would get in 10 years time. If you would like me to help in anyway, do feel free to contact me and leave your email below. 

I find the following article useful, for your Sunday reading pleasure.  

Financial Planning for your future.

What to do when you have build up equity in your property?

In the blink of an eye, its been almost 5 years since I bought my 1st property. So how have they all performed? Lets take a look.

The HDB, have appreciated to ~$380k with outstanding loan of $200k. A net equity gain of $180k. Appreciation of 65k over 4 years. ~ 5% gross per annum. - About 70% ROI returns.

Seri Bukit Ceylon bought in 2012 has its valuation gone up to 1050 psf from 900 psf. Appreciation of ~ RM112k over 3 years. ~ 5.5% gross per annum. - About 100% ROI Returns. ~ 160% ROI returns.

Imperial Heritage Hotel has gone up to possibly1500psf from 1190psf. A figure to be verified. 

While 2 units of properties are in Australia waiting for settlement. 

Properties appreciates over time due to inflation or other factors. One should always manufacture equity with the passage of time. This equity gained can then be used to finance further investments to manufacture equity. 

For people buying HDB, if you can start with a private. You will earn more. For me? The HDB is a dud. There is no way I could release the equity without selling the property. One of the key reason why people should never ever buy resale Pinnacle@Duxton is however much equity your earn, it can never be released unless sold. 

In Malaysia, for me things are a little different. My properties have gained in value. There could be opportunities to release the equities. I called the banker, there is a way to release the equities, its called loan top up. In Singapore, we call it refinance. Either way, as long as it allows me to release equities, who cares?

Say, my margin of finance remains the same - 90%, I stand to release over RM100k of equity. Over time, my total investment inclusive of tax is about RM125k.

I have potential of getting RM100k back and only fork out nett - RM25k for this property at the end of 3rd year. How's that? If CG continues at the same rate, I could possibly have a no money down deal after a a few years. What is this you called? Its called printing money.

Say for Imperial heritage, with a high CG, from 1190 to 1500 - its a 25% rise. I could potentially have a no money down deal at this time. 

Well, I have to pay a higher monthly mortgage if I take out the money right? But, as long as I can service the loan, continue to take equity out and take on more leverage. 

I'm looking forward to property 8,9,10,11,12,13,14..... you get the point. 

Working Capital

As in all businesses, properties generally don't make money from day 1. What do you do? You factor in Working Capital and let time do the work. You cost of ownership will rise but it will be well covered by capital growth over time.

The efficiency is an art and a well crafted piece of engineering.

Listen to the accountant - Chris Gray

We have all been conditioned to be poor by being the same.

To be different from others and retire rich, you need to relook your lifestyle. 

Chris Gray is one guy who gave up his job, his home and purely invest. Why? The numbers worked. The accountant in him figured what most people earned in their primary residence is more than what they earned in their lifetime. That revelations was verified by other accountants as well. The house is the main source of wealth. 

Listen to the accountant and see if it makes sense for you. It certainly did for me.

What event make you change?

http://www.investmentpropertyexpert.com.au/

https://youtu.be/bEuN-ee9xXs

All that glitters is not Gold...

I just emerged from Gerry Robert's talk on entrepreneurship book publishing, publish a book and grow rich. He revealed many secrets / strategies that you can start to sell your book even before it is published. These are common strategies used by marketing teams to achieve results. Mind you, he is not frauding but creating confidence and desire to kick your own butt to get moving. You may not have the contents, but once you collected people's trust in you to put money in your hands, you WILL WRITE it and Deliver it.

This is not my biggest takeaway from the talk. The biggest take away is your mind is only as small or as big as you want it. If someone shares a big idea with you, don't fight it, internalise it and make it happen. I'm glad he opened my mind bigger in this 2 hours.

Well, he did offered his bootcamp for FREE and this is good. I have paid my dues with other gurus already and will not in the near future pay another one. I walked away. 

Thanks Gerry Roberts. I confirmed that books authors are no authority now. All that glitters is not gold but just a marketing tool for them.

Taking a Mortgage for Australian Properties, SGD or AUD?

In the next few months, I'll be making a decision to go AUD or SGD. Especially in rising SIBOR Rates and decreasing fixed rates in AUD. Lets first analyse the situation. 

Rule of taking loan in the country of origin.
1. Always take loan in the home country's currency as much as possible. 
- AUD win

Leverage power
2. AUD - 80%, SGD 75%
- AUD win

TDSR
3. In Singapore, all loans originating from SGP will be subjected to TDSR, which means, there could be no more loan. SGD loans are still one of the cheapest loans around. Whilst, AUD is not subjected to TDSR. This secondary source of funds is very important to continued leverage and Capital growth.
- AUD win

Interest Rate
4. 2.5% - Sibor plus 1.4% spread. This is a variable rate which can rise to 5%. Whilst AUD gives a interest only 3.99% lowest spread now for a fixed 3 years. (AUD interest rates can go 9%). A 1.5% spread is good for insurance against rates rise. I'll take that.
- AUD win

Switch of funds
5. AUD is at all time low vs SGD, hence it would be a good opportunity to take advantage of the low exchange rate and switch funds when the time comes. If the rate changes 10% in the borrowers favour, based on 70% loan, the borrower earned 7% by switching. 
- SGD win

Given $200,000 start point and assuming all properties being $500,000. The AUD loan can buy 2 and the SGD loan can buy 1. Assuming Cap Growth to be the same - 5%, AUD borrower makes 2 x 5% of $500,000 - $50,000 and the SGD Borrower makes 5% of $500,000 - $25,000 per year.

Assuming forex moves 10%, the SGD borrower makes a nett 12% vs the 10% of the AUD borrower.

Assuming they both hold long... 5 years and each year the properties increase by 5% and for simplicity sake, they did not acquire more properties.

The AUD borrower would get (5x $50,000 per year) $250,000 and the SGD borrower assuming he makes the right decision and the exchange rate went back to normal. - he makes 30% on forex gains 30% * $105000 and (5 x $25,000) - $125,000 on cap growth, total of $230,000. The SGD borrower will probably have a greater cashflow of about (1.5% spread) ~$6000 (includes principal repayment) per year and for 5 years - $30,000. The total nett for the SGD borrower would come up to $260,000.

Thats a $10,000 difference in favour of the SGD borrower. - $2000 per year. Would that be good enough to offset forex risk and exposure to TDSR to take loan in SGD?

What do you say? 

Choosing to be poor... your choice.

With regards to the subject of money, people still view it with despise and taboo. I had a conversation with my colleague. I asked her if she could be retired if she gave up her car and then she could have $3k less to spend. She could be frugal and be retired and time rich!

She gave excuses, like she have 3 kids to provide, car is a necessity and blah blah blah... UNLIKE me who is single, blah blah blah. As I calculated for her, she simply shut down and refuse to engage anymore. 

Well... what can I say.