WRONG MOVE #1: BUYING A HDB FLAT EARLY IN YOUR CAREER

By some chance and/or sorcery, I did not date, marry and buy a HDB flat early in my working life. I had peers who did. And most of those who did, utilised their CPF monies from the OA. 

This resulted in most of their OA savings being depleted by HDB. They were resigned to their fate: work till 65 or even beyond. 

For most of us who are not earning high enough incomes, such situations do not allow for CPF to meaningfully replenish to satisfactory levels. Or even to meet the Minimum Sum.

Even for those who have squirreled away enough savings in the CPF OA, the savings would be wiped out when you opt for the HDB loan route.

How now? There are four options to consider.

#1 Do not buy a HDB early in your life/career.
Build up both your CPF and cash savings for a good 6-10 years before committing to a home. Notwithstanding unpleasant familial relations, I reckon holding up in the parents' place might be a good idea. But do contribute meaningfully to household expenses.

#2 Lock up a portion of your CPF OA in CPF IS
If possible, and where opportune, investment into blue-chips and stable dividend paying companies may help mitigate some of that emptiness when the OA is depleted. Just don't buy at a high.

#3 Transfer a portion of your CPF OA to CPF SA
This is an irreversible process. But it works your money harder at a higher interest of 4%.

# 4 Buying at good value
Some people would just buy whatever is doled out by HDB at that point in time. Most of the time, HDB or MND would announce plans of some BTO areas ahead in the year. So, research is key. Even cheaper BTOs can be located quite ideally. For example the recent Canberra BTO which was mentioned in an earlier blog post. And just because everyone is aiming for Queenstown it does not mean you should too. Get a reality check on your ability to service loans for > 650k.

Note: There is only so much to be said for buying a HDB flat early or later in your life/career. Sometimes, some things cannot be foreseen. But do plan ahead, research and save up.

Thank you.

TURNING SHIT INTO GOLD

$200 may not mean much to a lot of people. But they do not stop to think of the possibilities of that amount when compounded.

Imagine you are 25 years old and put about $200 in your CPF-SA as part of your mandatory contribution. Then you get a $200 pay increment as part of your promotion. You up your expenses accordingly, splashing on food and what naught.

Instead of pumping that amount to food which turns into shit, how about putting it into your CPF-SA and earn some 4% interest?

Here's how it compares when things square up at age 55.

Not too shabby yea? However, not many people do it. 

Those who do, do it even better by pumping in that extra $2,400 at the beginning of the year to work that compounding effect.

NIBBLE YOUR LIFE AWAY

You will hear the common refrain from some gurus or bloggers who write about the stock market and financial issues locally, especially when markets are roiled:

The stock is undervalued, nibble some.

The stock is trading below NAV, buy some.

Dollar cost averaging/value investing is the way to go. 

Buy regularly, every month/quarter/half a year.

I do not disagree at buying. But at the rate that they are urging you, you will be eaten up. Soon enough.

The net effect is obvious. 

Keep buying. Keep churning brokerage. Keep fees coming. Keep the brokerage firms going. Keep your broker employed. 

By the time you are done nibbling at ST Engineering so many times from a recent 6-month high of $3.80 to a low of $2.80, you are all negative from the fees paid to your brokerage.

You know what to do the next time someone urge you to nibble, or tell you they have been nibbling some.

FO.