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This tutorial might be interesting to you "Leveraged Annuity Plans 🤔 How it Works And What Are The RISK To Watch Out For!" ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-TOZqqrMXWCA.html
@@joshconsultancy Thanks. Based on your experience, do most annuity plans increase their guaranteed payout when interest rates rises? I do understand you cannot recommend any insurer though. :)
What if Nguyen is in his late 30s, single, has over 2yrs of expenses saved, over $1mn invested getting slightly under 5% p.a. in dividends, has a fully paid 4rm HDB, and met CPF ERS? Can he finally quit his job? 😢
Finally quit job part depends on retirement expectation. If its single and frugal hey maybe $1500 enough. On rough count $1m and fully paid house seems enough. But as a friend, Id say with this level of savings and dont like job, its clear - time to leave. Wish everyone happiness
Josh, your advice in this video is very sound. I have one comment about unit trust though. I am not a fan at all.... Especially when there is a upfront sales charge of 1.5 to 2% to buy into the fund. This eats into the dividend payout. The annual management fees built into the NAV of the funds further erodes the profitability of investing into these unit trusts. I find that unless the unit trust is a high yield of say 3 to 5% (also high risk) unit trust, it is otherwise not very profitable to buy into unit trust. So far my OVERALL experience with unit trust is not great. I made some and I lose more. I wonder if my experience is "unique" ?
Hi Hazel, I wouldn't want to justify that unit trust is superior. Ultimately it's just a vehicle to get returns. Annual fees are reflected already in performance. The reason for fees is active management. Hence I curate those who give superior value to the fees charged to build into portfolios of clients
Keep in mind if you leave the work force, coming back in at the same rate or level will be very difficult. You can become out dated in just a few years depending on your occupation.
Hi Josh, don't have $1.2m, do have some saving of $300K + $240K CPF (everything) , a 4 room HDB , with 50k mortgage, single at 47 and still working ... i'm doing good or far from retirement comfortably ?
Hi James, the savings can be deployed towards assets. In retirement, cashflow is more important than cash on hand. Hope it inspires you to search for more answers =)
Thanks for the case study Josh. As usual, value-added insights of the case study. You initially mentioned about putting back monies into CPF OA (via cash top up if monies from CPF were used to pay of the HDB flat). However, towards to the end of the video, you mention to take out additional CPF monies for annuities, cash and/or 60/40 investments. Would it make more sense to top up CPF OA vs holding cash and/or annuities since CPF is like an ATM after 55 and CPF OA provides 2.5% interest ? Appreciate your feedback and keep these thoughtful and thought provoking videos going.
Thanks sivadas. I’d clarify. Top up back to cpf if there is spare cash. NOT likely a good idea to take out cpfoa at age55 to buy annuities. Buy annuities with extra cash to build guaranteed additional cash flows for retirement.
One thing to consider also is the children are young . The expenses may increase when they go to poly or Uni. Good case study pls do more of this! I think it’s very useful but you speak a bit fast 😀
Title should be $1.7m and barely enough = $1.2m plus 500k CPF. The unknown future kids' education expenses. If set aside ERS, with $1.4m plus CPF life will contribute $2000 at 65.
$1.2 m with a HDB? Chiong 2 sure 'huat kway' condo , sells just after SSD and recycle. Cash gained by this condo sale at least $500k! Not to mention the 3 yrs rental gained from these 2 condo ! Huat ah!😆😆😆😆
Bonds had risk and investments had risk also. I prefer to buy stocks with Temasek being vested e.g Capitaland brand stocks or Reits. My top holding is Keppel Infrastructure Trust (KIT) which is a business trusts and Temasek owned 29% of this turst. The trust deals with essential services and during this pandemic, KIT still can increase it's distributable cash. However, KIT is not increasing in the dividends as the CEO is looking at using the cash to buy resilient businesses. I also agreed that penny stock is very risky as I've owned a number of penny stocks and their value is now close to zero. Now I mostly buy stocks with had Temasek linked or blue chips as I feel that penny stocks and those smaller companies had very high growth but also high risk.
Great video as always. I would think with 1.2M with fully paid home, he is already in a very good position to retire anytime, given he is so prudent with spending. Maybe Ngyuen didn't want to provide too much details; I would want to know if there are other big spending/earnings that will come along the way from 53 to 65. E.g. does he need to support uni fees for his 2 kids, if he intends to downgrade the size of his home when the kids have their own place.
Cost of education for the kids is my main concern that keep me thinking if I should retire earlier. Just have to pray hard that they can get a place in a local university. Don't drive, no mortgage and we actually live very comfortable with $3.5K per month at the moment. Could be because I came from a very poor family and already get used to the frugal lifestyle. HDB just hit mop last year, no plan to downgrade or upgrade. Did considered selling the HDB and buy two smaller private properties, but gave up the idea as rental from the property will not generate enough cash flow to support an early retirement.
@@nguyenquetran2413 thanks for your additional input. If I have not missed out other parts (e.g. insurances, supporting parents and other commitments, etc), and given your savviness and how you grow your money, I am inclined to think you are in very good financial health to retire early. With regards to uni fees in Singapore, there are many ways to go around it (e.g. scholarships, bank loans, cpf). Using myself as an example, my working class parents could not afford my local uni fees and I was not smart enough to get a scholarship; so I chose the route of bank loan as there are no interest charged during schooling years and the loan only requires a guarantor. It is probably easier to get a study loan now and go to local uni compared than 10-20 ago; in short, I believe funding uni fees is unlikely to be an issue for you as there are many ways around it even if there is a slight chance you may fall short of a little. Good luck and all the best!
There are 2 potential expenses in the future that are not discussed: education fees for Nguyen's 2 children and his future medical expenses. I always consider the possibility that the children may need to go overseas for studies and that require an additional sum of money. Also, Nguyen may be healthy now but we won't know what may happen in the future so it is wiser to set aside a sum of money for future medical expenses (besides what he has in his Medisave).
Hi @@alicetan3490 medishield covers only inpatient bills. Some portions only to be exact. Speak to a qualified adviser to plan out insurance needs comprehensively which should include long term care
$750k invested in single line bonds?? 4% pa?? Crazy concentration for silly yield. All it takes is one of his bonds to default, and he will face problems. My advice is diversify more and secondly work longer. He is not ready for retirement. Way way not ready
Yes he is near if he decides to retire and just sip $1.20 kopiO, with no buffer if anything just goes wrong and you already rightfully point out those things that could go wrong. His portfolio is pretty crappy from both a risk and return perspective. Almost asking for it. Being ready for retirement means not just hitting the number to survive, it means having the right buffer so that you dont find yourself in a situation where you realise you dont hv enough and need to get out of retirement. Again to everyone, retirement may be a different thing, it’s always debatable. Some people provide more for their children, others dont care cant care. You are 10 yrs younger than me, dual income, have 2 kids as well? When do you think you and your wife can retire and what is your monthly expenses upon retirement?
Hi DY let’s be friendly in this community, the harsh tone is not needed. For myself? I have in mind what it may look like especially when I’m pioneering this semi retirement phase idea. Will share more along the journey as it comes, stay tuned
@@DonYang73 thank you. Nguyen is here too. Criticism of the portfolio, we dunno the full picture, may not be fair. But constructive points and alternatives no ones feelings will be hurt
Hi tannery, based on professional guidelines I can’t provide advice without basis as I’m a licensed adviser. Do check this tutorial ru-vid.com/video/%D0%B2%D0%B8%D0%B4%D0%B5%D0%BE-Sw4aPiypY_U.html hope it helps
NIO was a penny stock in the US market; $1.20. If it’s a good company with great fundamentals, the stock price will recover. Many factors to consider while investing. All the best! Great video!
Hi Josh, I always enjoy watching your channel. I do have another alternative to buying the $2k annuity using the cash. What if we used 600k (of the $1.2 m) to buy STI ETF which gives about 4% return which still gives about $2k/month? Morever, STI ETF has been giving consistent return + appreciation over the last 20 years? I like to hear your view on this.
I like the STI ETF idea. Beside of getting 2K / month dividend, your principle is likely to appreciate over time due to inflation. This might goes with gradual increase in DPU, and might get higher than 2K/month. On the annuity part, the pro is guarantee cashflow, but your principle is depleted till zero.
Having a single bond @ $250k per pop is too risky. One more thing to note, LTV is not guaranteed, during the COVID-19, top notch hotels and airlines LTV were removed and cause a lot of margin calls. Your recommendations on bond funds are very wise and prudent. Questions... what’s your thoughts of leveraging using IG bond funds?
Hi Christopher, leveraging in IG bonds as long as can repay principle if interest rises? Be very familiar with the bond itself, usually the investor only sees the leveraged yield presented
Hi Josh, when leverage you have an option just to pay interest only. I guess as long as the the interest is lower than the coupon, then it’s good. If interest perceive it’s going up, short duration IG and HY will be good.
I'doke to share my experience. Purchased Shroeder Asia high yielding bond fund many years back. Paid 4% yearly for like 10 years and the last 3 or so years before I finally sold it... it paid out only 3%. And every year, the principle falls by 4%. What this means is that one basically gets nothing and merely have our investments returnes in small proportions. From then, I've not touched another bond fund. Simply put.... there is no visibility of what is happening. There is no control over it except to just buy, hold or sell. Now for leveraged bonds, I see you're not new to them and have experience on it. I too do leverage on them. I however choose IG issues to lessen the risk. (Preferably company rated as A- and above and bond at least BBB). Unrated ones need to be careful and a good indication is from the LTV the banks can offer. Normally lesser risk issues have higher LTV. For unrated local issues, I go for conglomerates that our gov has high amount of holdings. Tactics I put in place to mitigate margin calls or reduction of LTV is first of all, not to use up the full amount offered. I leave a 10% buffer to cater for price fluctuations. Have sufficient funds that can be liquidated for return of the loan if necessary (from reits, business trusts, equities). If you're 55 and have shielded SA, that can be a backup plan for emergency use. Or half FRS with property pledge also a potential backup. But hopefully with proper selection... should not come to that. (Survived the Mar2020 selldown)
Good stuff, as usual, Josh Curious, at 200K cpf @55 that means he's probably not at frs yet if he has OA Balance. Wouldn't VHR plus sa shield be better than annuity at 65 and just complement CFPL with cpf sa/OA withdrawals
Wow, it’s not even $1.2M net worth... is investible amount!! I like your approach to get annuity to guarantee the cashflow he needs first.... I was expecting some comments (from u) investing from reits/banks/great dividend company to invest in (to enjoy the dividend/yield and capital gain on the current t road to the economic recovery) 😅
Thanks for the great video. The advises on penny stocks and corporate bonds are great and I actually learnt that thought the hard way. Next will plan to divest them and move to diversified funds with good liquidity to better prepare for retirement.
At 55 if Nguyen has 230K in CPFSA from shielding, he will have 340K at 65. That will be another 2K for the next 20 yrs. So both SA and CPF Life of 4K will be the retirement base purely from CPF.
Nguyen, just a personal opinion which you may take into consideration. Maybe you can diversify some funds into lifetime income insurance policies which premium financing can be done. Receive regular income from there, it may even cover you in the case of longevity. Or even passing the policy to your children to continue receiving the regular income.
$3500 per mth for kids 12&14 today is already tight. His kids will spend more as they grow older. $1.2mil only and thinking of retirement? Not enough lah.
agree. I too think $3.5k is quite low in modern day SG for a HH of 4 pax. I wonder whether the lumpy annual expenses are captured.. Just insurance alone, even just medishield life alone, for 2 pax in 50s and 2 pax at 14 & 11is about $2k pa. that is $160 pm. group tuition,even for just 1 subject at 2hr once/week sets one back by $200 pm at least. and there are 2 kids.... But of course, i am just speculating... it is possible to live on even less per mth but it is a no frills lifestyle..
Nice video Josh. I think you have covered most angles and also showed the effect of inflation on how the withdrawal period... maybe just an additional idea for nguyen. if his spouse is a housewife with low cpf balances, he can transfer some of his OA to her OA and then she move her OA to SA.... 2 Engines on 4% is better than single engine on 4%...
Hi Ocs, think it might be to her SA only. Cant be oa to oa. But good suggestion. Cons are 1)if she is younger it will take more years to 55 2) if her CPF is below FRS, the money will be stuck to CPF Life
I think retirement plans should also include property considerations. Unless one is living on 999 yrs or freehold, chances are at the age of 50, he could be moving to a 2nd property as his retirement nest assuming he got a bto or 99 yr lease property in his middle or late thirties. That said, if he is able to get a property of equivalent value to his currrent, then it isn't too much of a problem then.
@@joshconsultancy I did and personally factor this in my retirement plans. The thing with planning for the future involves too many moving parts and assumptions so just thought that we need to capitalise on whatever information to make our retirement plans as close to reality as possible.
