Jan 20, 2013

$1M Home Goal

Over this weekend, i have decided $1M (Today Price) home features will be the goal i hope to achieve. So this is what i want.

- Private Condo
- More than 1K sqf (abt $850psf)
- Retirement and Recreational facilities
- Low Pollution and Traffics will be ideal
- Close to ammenties
- Reasonable rental income is a nice option

Next is can i afford ?
- 20 Years Loan (Using 20 for this example. There is a constraint on age: 65. So if you are 45, only 20 years)
- 1.5% Interests Rate

With 20% Cash and CPF, i will need $800K loan to be re-paid in 20 years with interests.
And about 3% stamp duty with cash. Assuming i have no problem with cash and cpf on the 20% and fees.
At 1.5% rate, monthly payment : $3,860
At 3% rate, monthly payment : $4,437 (up 14.9%)
At 5% rate, monthly payment : $5,280 (up 32%)

Total Cost excluding stamp duty, renovation and lawyer fees.
At 1.5% rate, $926,400. Total interests paid = $126,400.
Effective compound rate : 0.74%

At 3% rate, total interests paid = $264,880.

Effective compound rate : 1.26%

At 5% rate, total interests paid = $467,200. Almost half my condo price. I love Banks. :)
Effective compound rate : 2.33%

Investment Return
If I can achieve 3% on average annual property appreciation long term and with rental support bonus, this deal may makes sense. Anything more, else what am i waiting for ?

20th Jan 2013

Jan 8, 2013

Common Sense in Investment Maths

Portfolio Size Matters

Everyone has a mouth, a pair of ears and eyes. And each of us need a basic amount of water, food and air to breath. When come to basic necessity to survive the minimum sum tends to converge.

A 500K of 10% return gives 50K annually. A Million dollar portfolio gives 100K.
If the minimal cost to survive cost 50K, for same investment performance, portfolio size can give you a life of luxury or lives like a beggar.

50K more can allow me to pay a 2 room OCR Condo monthly instalment at current high price, a nice holiday annually, a Car and a Happy Family.

Life Span

When comes to financial planning, a long life may not be a good thing. Escalating medical cost and Inflation can extend your misery.

If the median age is 85 years old, you need to plan probably 90 at least. And this 5 more years can be one of your highest cost in life after you retired due to inflation and expensive medical care.

A dinner that cost $10 after 30 years of inflation at 5% will cost 4 times.

Monthly Insurance Premium

If we pay $200 monthly or $2400 annually for your insurance premium.
After 20 years, termination at 4% compound return is $74 326.

If you can achieve just 7% through investment, for the same period is $118 615.
That's 60% more ! Ofcourse that's provided you can achieve 7% consistently :)


A number of folks believe in teaching their kids on financial literacy early. Rather I feel to teach them importance of money but not investment. Reason being temptation can be high for them to earn quick money that they may not focus in their study and work.

Unless we have sugar daddy, saving up for the seed funds from hard work is important. What we can do as parent (if you are savvy enough) is to help your children to invest their money while they are climbing the corporate ladder instead.


To retire, we must invest because starting the first day of your retirement, absolute inflation cost facing you is at it largest at peak of your net worth. We need to break this inflection point.

A million dollar retirement fund at 3% inflation is $30k cost annually.
A 100K dollar retirement fund at 3% inflation is only 3k.

Is a good problem to have to retire with one million dollar but is a big problem if you fail to invest enough and safely.

8th Jan 2013

Jan 1, 2013

XIRR Introduction

This is meant to give a brief instruction and I mean it. After which do some homework and using logics you should be able to figure out. If you have questions on the way, I will try my best to answer.

Is a measure where we can bring people nearer for performance comparison. This allow us to understand how we do among our peers and against STI benchmark as well, and where we go right or wrong.

XIRR also allows for investment in/out on discontinue and unequal periods. Which make comparison even more accurate say 2012 annualized results can be compared between individuals.

XIRR is a function in EXCEL so it is easily accessible to use.

Here's a Picture sample of a counter. In practise, you can combine all the different counters together if you like.

In this example, Annualized XIRR is 11.3% for the measured periods.

Note: Balance is the remaining shares unsold and valued per current price.

1st Jan 2013