Needless to say, property and stock markets are the most unlikely places you want your money to be right now. But the question is, given that you have $300,000 to invest now, do you buy a private residential property beside a MRT or a blue chip like DBS for passive income?
Many would argue that in Singapore, buying property would never go wrong. Well, perhaps it is because you have not seen people who have got their hands burnt in property market to live and tell their stories?
Which one offers a higher return and lower risk?
Some parameters of comparison:
DBS: $6.80/share
Assuming you purchased 44 lots.
Dividend per quarter: 10 cents (conservative guesstimate, could be higher or lower)
Income per annum: $17,600
Probability of losing 40% of your $300,000 in 6 months time: 30% (my conservative guess)
Income tax payable: None, as it has already been taxed at source
Yield: 5.89%
Probability of selling and earning a profit in 20 years time: 90% (guesstimate)
Net dividend income at the end of 20 years: $352,000
Assuming a conservative adjustment of 30% error, net dividend income would be: $246,400.
The argument here is that even the best banks in the world can fail, can we even trust to put our money with Singapore blue chips?
There is still a fair chance to lose 100% of our money in stocks.
Next
99 year leasehold Property: E.g: Kovan Melody/Compass heights
Cost: 1000 sq feet, 2 room property purchase @ $580/sq foot, costing $600,000 after stamp duties and other transaction fees. Minor renovations and fixtures have also been accounted.
Loan amount: $300,000 @ 2.5% for 20 years (interest is more likely to be 3.5% on average)
Monthly installment: $1500 (conservatively speaking)
Income from rent: $2100 (conservative estimate)x12= $25,200
Property tax: 10% of $25,000= $2,500
Agent expenses: $1,100
Wear and tear yearly maintenance: $600
Net rental yearly income: $3,000
Yield: 5,400/300,000= 1.0%
Probability of losing 40% of your $300,000 in 6 months time: 30% (my conservative guess)
(Should the property market falls another 20%, the fall in your property price will be $120,000, or 40%.)
Net rental income at the end of 20 years: $60,000
Probability of selling and earning a profit in 20 years time: 99% (based on historical records) Read more...Needless to say, property and stock markets are the most unlikely places you want your money to be right now. But the question is, given that you have $300,000 to invest now, do you buy a private residential property beside a MRT or a blue chip like DBS for passive income?
Many would argue that in Singapore, buying property would never go wrong. Well, perhaps it is because you have not seen people who have got their hands burnt in property market to live and tell their stories?
Which one offers a higher return and lower risk?
Some parameters of comparison:
DBS: $6.80/share
Assuming you purchased 44 lots.
Dividend per quarter: 10 cents (conservative guesstimate, could be higher or lower)
Income per annum: $17,600
Probability of losing 40% of your $300,000 in 6 months time: 30% (my conservative guess)
Income tax payable: None, as it has already been taxed at source
Yield: 5.89%
Probability of selling and earning a profit in 20 years time: 90% (guesstimate)
Net dividend income at the end of 20 years: $352,000
Assuming a conservative adjustment of 30% error, net dividend income would be: $246,400.
The argument here is that even the best banks in the world can fail, can we even trust to put our money with Singapore blue chips?
There is still a fair chance to lose 100% of our money in stocks.
Next
99 year leasehold Property: E.g: Kovan Melody/Compass heights
Cost: 1000 sq feet, 2 room property purchase @ $580/sq foot, costing $600,000 after stamp duties and other transaction fees. Minor renovations and fixtures have also been accounted.
Loan amount: $300,000 @ 2.5% for 20 years (interest is more likely to be 3.5% on average)
Monthly installment: $1500 (conservatively speaking)
Income from rent: $2100 (conservative estimate)x12= $25,200
Property tax: 10% of $25,000= $2,500
Agent expenses: $1,100
Wear and tear yearly maintenance: $600
Net rental yearly income: $3,000
Yield: 5,400/300,000= 1.0%
Probability of losing 40% of your $300,000 in 6 months time: 30% (my conservative guess)
(Should the property market falls another 20%, the fall in your property price will be $120,000, or 40%.)
Net rental income at the end of 20 years: $60,000
Probability of selling and earning a profit in 20 years time: 99% (based on historical records) Read more...
