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Funding a house using CPF

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  • Funding a house using CPF

    Removed
    Last edited by trailblazer; 03-08-2004, 09:50 AM.

  • #2
    interesting...
    are u a financial planner?

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    • #3
      ...
      Last edited by trailblazer; 03-08-2004, 09:50 AM.

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      • #4
        Thanks for sharing your thoughts!

        Nat, I agree.
        Last edited by dolphin; 06-05-2004, 03:55 PM.

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        • #5
          Originally posted by trailblazer
          Please read through and ponder. There are solutions for everything. The best solutions are those taken up and done before committing to the house.

          Thanks Trailblazer for the advice. They are indeed useful.

          So...what's the solution? I don't really get what u mean in the sentence in bold.


          Originally posted by trailblazer
          I've already taken out some other concerns so that it doesn't overwhelm you with worries.[/b]
          What other concerns that u left out. Can u do us a favour of listing them out? I reckon it's okay to be overwhelmed since buying a house is a BIG expense like what u said.

          Are u in fiancial planning or something?
          Last edited by raebelasian; 06-05-2004, 04:24 PM.

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          • #6
            ...
            Last edited by trailblazer; 03-08-2004, 09:51 AM.

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            • #7
              Hi trailblazer!

              Thanks for sharing. Those are some very valid points that you have pointed out. My boyfriend is a financial planner as well and one thing that I've learnt from him is not to put my money in an endowment policy.

              With buying a house, the most important thing is to ensure that you are able to pay for the monthly instalments. I'm not entirely convinced that an endowment plan will come in helpful in this respect. You mentioned surrendering the policy as an emergency -fund. However, to the best of my knowledge (and I must confess I only know the rudimentary aspects, and may not use the correct industry terms), surrendering the policy before it reaches maturity usually entails making a "loss" on the policy.. ie, the amount you have paid in premiums is more than the surrender value of your policy. This has something to do with the fact that amounts are deducted from the policy, especially at the start, for administrative and other purposes (the bulk of which is agent commission). The younger the policy, the more likely it is that you will be making a loss when you surrender it.

              Even using an endowment plan as a means of savings/investment may not be an entirely practical solution. I am under the impression that bonuses given out by the insurance company affect the value of the policy and "bonus cuts" during times of recession means that your policy grows more slowly. Thus, while you may be promised growth rates of 5% when you first purchase a policy, bonus cuts may eventually reduce these rates significantly, and you may find that your policy takes a much longer time to break even, not to mention profit.

              Hence I would think that endowment plans are not a good idea if you see yourself having to surrender the policy in its early stages (even at 10 years the policy might not have broken even). There are better ways of saving money and setting aside emergency funds.

              Just my two cents' worth.

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              • #8
                that's what's happening in my family! bloody CPF changes results in us having insufficient funds in our CPF so we had to top up with cash. Money got reallyyyy tight for us. And this is after paying for at least a decade! worst of all, we bought at the 'peak' of the property market and now we'll be lucky to get 2/3s of our original value.

                Furthermore, I think it's dangerous for people to invest their CPF so much. the most purpose of a CPF is for retirement... quite risky business if everyone starts diversifying our funds, into shares and what-not.

                To be frank, I haven't started saving yet. can barely save enough to fulfill my lemmings, can't even think about saving for a home!

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                • #9
                  xue: i know! it's so hard to save. my scholarship money ran out months before i'm due to receive the next annual stipend and i had to survive on my monthly tuition money. i've been shopping around for a savings plan so the same thing doesn't happen again, but haven't found anything desirable.

                  i did buy an investment linked policy from ter though, for long-term savings. i'm putting my faith in good old economics -- that in the long run, economic cycles follow an upward trend.

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                  • #10
                    yeah! thankfully, i still have enough from my scholarship money. been trying to save... but really difficult! my parents 'topup' a little while i'm back in singapore, so i get to save my allowance during my hols. *phew*

                    go you for thinking longterm! the only thing i do is have a separate 'savings' account which i don't touch. so whenever i get cash presents, i just put half there and forget about it. managed to save nearly S$2000 in a year so I'm pleased! but it's nowhere in the league of the amount needed for 'practical' things.

                    my only worry is, remember the wavy graph Mr. R drew once? Economies improve over time, but in a wavy/wiggly line. so even if the general trend is an upward one, if you bought at the peak of one and sold at the other, you'd end up making a loss. happened to my parents! :piss: got 'conned' by those policies and ended up not only NOT profitting but also making a HUGE (nearly 50%) loss on their capital :piss:

                    so i'm damn scared now. still trust the normal old savings bank, which is extremely embarrassing for an economist.

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                    • #11
                      ...
                      Last edited by trailblazer; 03-08-2004, 09:51 AM.

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                      • #12
                        wow, maintaining a separate savings account takes even more willpower! it's something i'd never be able to do -- all that money sitting there begging to be spent!

                        and yes, i do remember that graph! i'm lucky because I got my ILP at a low -- recession time. and things can only get better... hopefully. good thing with my policy is i can choose when i want to cash out... so i'll wait for a nice little peak! hopefully i'll recognise it when it comes though.

                        stable stocks are a good bet too though. ter and i are going to try our luck when starhub launches its ipo!

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                        • #13
                          Hi trailblazer!

                          Heh thanks for correcting me -- I mistook the conventional -endowment policy for the cpt endowment policy you mentioned.

                          Please do share which company it is that you are referring to! My boyfriend has yet to meet a client whose policies have not been affected by bonus cuts.

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                          • #14
                            good luck then girl! for the other account, it's really out of sight, out of mind. most of the time, i forget i have it. but i really hope your plans work out for you! then i'd also ask ter for help

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                            • #15
                              putting in my $0.02 here

                              i think another important thing to note is that you should be realistic when buying a house. i find that many couples here aim for a 5 room flat or condo for their first house. how realistic is that? after the wedding and everything do you really think you can afford that? and some people even want a car to go along with that, just think of all the interest you have to pay?

                              i know of a colleague who only earns about $1300 per month who has a 5 room flat and car to support :huh: i dont even know how he gets money to eat

                              anyway the point i want to stress is that we should live within our means and not try to keep up with the lims, tans, mohds etc

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