The best way to prepare for retirement is to use less CPF $$

[Enye]

OK, as promised, some calculations for bro @Wind30 assuming one takes advantage of the low interest rate now (say 1.8%)

+

Interest rates go up to 3% 3 years later (may not happen).

+

2% increase in rent per year (consider * below if rent does not increase but the efficiency of rent collection increases)

+

0% increase in housing price 7 years later (very very improbable plus unlikely)

+

No ABSD hit (important disclaimer)

+

3K rent counting only 10 months tenancy per year (except for * below).

 

Note: * Getting the full 36K rent per year is fully possible (12 X $3,000) if one manages to get a good tenant who renews with or without agent.

 

The computations tell us that it will be fully above water all the time even if interest rates reach 3% a few years later.

 

This situation tells us that use of CPF OA might not be warranted from years 4-6 (when yields are lower than 2.5%). But the yields will continue to rise as the interest dips and reach 2.5% once again as the mortgage is paid down by the seventh year, and continue to exceed CPF OA rates.

 

I haven't calculated what happens if interest rates do not exceed 2.6% (as what was promised), or if rent increases at a higher rate, or if prices go up in the seven year window.

 

Unless you move the goalpost and say, now let's think about 4% interest! 

 

this one does not look like a standard DCF model

 

what model is this known as?

 

your yield is what divided by what har?

 

[Showster]

Haha you are right...

 

I forgot to add on the yield each year into the denominator as accumulated total capital considered. But still won't be negative yield.

 

This model is known as the "SHOW me the money!" model.

 

But anyhow, it is just some scenario play to show that 3% interest in a flat price environment will still be sustainable, and will still beat CPF OA of 2.5% given time. Should reach 2.5% by 8th year.

 

Refer with caution, and all assumptions can be challenged.

 

Please see revised version. As can be seen, the total out is the base (denominator) for the yields.

 

this one does not look like a standard DCF model

 

what model is this known as?

 

your yield is what divided by what har?

 

 

Edited April 12, 2017 by Showster

[Showster]

People like yourself don't usually buy GCB for yield.

 

The yield is worse than pathetic without considering the potential for land appreciation.

 

[Throttle2]

People like yourself don't usually buy GCB for yield.

 

The yield is worse than pathetic without considering the potential for land appreciation.

Who is talking yield?

Its about absolute total return.

[Showster]

People who buy GCB (I guess only, not me) may not really consider returns.

 

They may get it for:

 

1. Inheritance and value preservation

 

2. Business purposes (to entertain and wow guests)

 

3. Own stay 

 

Their returns come from other sources (by many times) and they are very unlikely to want to use their time to exchange for housing based returns, yields or appreciation wise.

 

 

Who is talking yield?
Its about absolute total return.

 

Edited April 12, 2017 by Showster

[Throttle2]

this one does not look like a standard DCF model

 

what model is this known as?

 

your yield is what divided by what har?

 

Plse lah, his is japalang model.

So messy.

Can downpay means can go liao model

 

Its the kind that low end agents keep showing their goodu prospects

[Enye]

Haha you are right...

 

I forgot to add on the yield each year into the denominator as accumulated total capital considered. But still won't be negative yield.

 

This model is known as the "SHOW me the money!" model.

 

But anyhow, it is just some scenario play to show that 3% interest in a flat price environment will still be sustainable, and will still beat CPF OA of 2.5% given time. Should reach 2.5% by 8th year.

 

Refer with caution, and all assumptions can be challenged.

 

Please see revised version. As can be seen, the total out is the base (denominator) for the yields.

 

seriously i hope you are just trolling....

 

please show a proper investment case if you are really trying to convince people of the potential

 

from your previous posts, you seem like quite a numbers guy but the spreadsheet you show is really not doing yourself justice

 

at least do a proper base case scenario lah

 

end of serious post

 

Edited April 12, 2017 by Enye

[Showster]

I am not putting investment case, just showing that CPF used for housing is not a bad deal as well. I did not use extreme values and these are very conservative estimates. We also have no idea how long and whether interest rates can reach 3%, price can remain flat when it is already going up so all these are contingent only.

Edited April 12, 2017 by Showster

[Enye]

I am not putting investment case, just showing that CPF used for housing is not a bad deal as well. I did not use extreme values and these are very conservative estimates. We also have no idea how long and whether interest rates can reach 3%, price can remain flat when it is already going up so all these are contingent only.

 

seems like you didn't get what i am trying to tell you

 

it's ok...never mind

 

[Throttle2]

I am not putting investment case, just showing that CPF used for housing is not a bad deal as well. I did not use extreme values and these are very conservative estimates. We also have no idea how long and whether interest rates can reach 3%, price can remain flat when it is already going up so all these are contingent only.

If thats the case, no need any calculations.

Everybody knows that if you can extract CPF to pay for anything today, its a win already ,

Edited April 12, 2017 by Throttle2

[Throttle2]

seems like you didn't get what i am trying to tell you

 

it's ok...never mind

 

Now you know why i so vomit blood when talking to him.

I forgot, i am supposd to ignore him.

Will do so now.

[Showster]

You vomit and think it's "dangerous" because you only see monthly installment and say Nay!

 

I proceed because I know monthly installment partly covers interest and partly pays down mortgage. The paid down portion is your CPF; it's your money!

 

As long as rent covers interest (to bank), and all other fees summarised in the tables, you will be above water. Can opt to use CPF or cash to pay yourself by paying down the mortgage... 

 

SA continues to grow to minimum sum as it cannot be drawn.

 

What's so bad about this proposition???

 

Do you expect to see a report counted to detailed cents and 0.0001% when all these are not cast in stone? Just examine whether these are fake and/or exaggerated figures.

Edited April 12, 2017 by Showster

[Enye]

Now you know why i so vomit blood when talking to him.

I forgot, i am supposd to ignore him.

Will do so now.

 

anyway he is ignoring me, dunno why though

 

maybe he thinks i tag team with you to discredit him but i didn't

 

i see him put in effort to do calculations, so tried to help him along for a more convincing case

 

not appreciated, never mind

 

think i go back to stirring mcfers elsewhere better

 

[Throttle2]

You vomit and think it's "dangerous" because you only see monthly installment and say Nay!

 

I proceed because I know monthly installment partly covers interest and partly pays down mortgage. The paid down portion is your CPF; it's your money!

 

As long as rent covers interest (to bank), and all other fees summarised in the tables, you will be above water. Can opt to use CPF or cash to pay yourself by paying down the mortgage...

 

SA continues to grow to minimum sum as it cannot be drawn.

 

What's so bad about this proposition???

 

Do you expect to see a report counted to detailed cents and 0.0001% when all these are not cast in stone? Just examine whether these are fake and/or exaggerated figures.

I dont know, i stupid. Too complex for me.

Usually for $1mil, i just write 1000000 on the check and give.

Easier lah, no headache.

 

Please let me off, your Highness Showstership.

 

I promise to stay far away.

Please give me chance, i beg.

 

Thank you very much.

[Throttle2]

anyway he is ignoring me, dunno why though

 

maybe he thinks i tag team with you to discredit him but i didn't

 

i see him put in effort to do calculations, so tried to help him along for a more convincing case

 

not appreciated, never mind

 

think i go back to stirring mcfers elsewhere better

 

Lets be nice and kind MCFers from today shall we?

And stop stirring!

Thats my job

[Pinobii]

anyway he is ignoring me, dunno why though

 

maybe he thinks i tag team with you to discredit him but i didn't

 

i see him put in effort to do calculations, so tried to help him along for a more convincing case

 

not appreciated, never mind

 

think i go back to stirring mcfers elsewhere better

 

Sayang sayang come come let's continue our chat on roast goose, shall we

[Showster]

anyway he is ignoring me, dunno why though

 

maybe he thinks i tag team with you to discredit him but i didn't

 

i see him put in effort to do calculations, so tried to help him along for a more convincing case

 

not appreciated, never mind

 

think i go back to stirring mcfers elsewhere better

 

No lah bro Enye. I was clearing work. I appreciate your inputs but if I were truthful, interest rate will only go to 2plus max in today's world in SG. Hard to do full calculations based on interest level I do not believe.

[Enye]

No lah bro Enye. I was clearing work. I appreciate your inputs but if I were truthful, interest rate will only go to 2plus max in today's world in SG. Hard to do full calculations based on interest level I do not believe.

don't confuse doing a proper case with judgement calls

 

totally different things

 

you can don't believe in the judgement calls but you still should do a proper case based on those and then tell people why you don't see eye to eye on those assumptions

 

then you have a basis for further discussion and which judgement calls you would like to change and how it will impact the cash flows

 

i look here and there i only see incomplete models, how to carry out a proper discussion?

 

anyway on public forums, no need to be too serious

 

my comments based on google one and for your reference only hor... actually i only now how to be a store man nia