Posted on March 8, 2009 - by Wilfred Ling

Financial Planning (difficulty) with retired client

Photo by Bombardier

Recently I encounter a situation doing financial planning for a retired couple. Certain facts have been changed to protect the identities of those involved but the main key points remain unchanged:

This retired couple is in their late sixities/early seventies. They have about 50% of their net asset in their existing residential private property. They have no debt. The remaining 50% of their net asset is in various safe instruments such as fixed deposits and money market funds. The couple is conservative in their investments as they have no desire to invest in anything that has potential of losing money. They have two children – one boy and girl, both married with their own children and family and homes.

One day, they decided to buy a HDB flat. The flat is bigger than existing home and much more convenient. However, they also do not intent to dispose the existing residential private property so soon as they would like to “wait” for the housing market to rebound and than sell at a better price. In the meantime, they figured that they could rent out the existing private property as they were attracted to the fact that their neighbor could rent theirs at an attractive rate recently.

Here was my role: I looked at their finances and my finding is that if they would to hold two properties simultaneously, their net asset would consist of 90% in property.  I advised them against holding two properties simultaneously due to the following reasons: Read more…

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