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In this next article on personal finance, I would like to touch on the subject of debt. No doubt the news has been going on about credit card balances being rolled more often, amounts getting larger as well as people purchasing flats which are (to me) getting more expensive. The latest HDB flats which are part of the DBSS Scheme cost a cool S$720,000 for a 5-room larger unit, which is even more than the price of some mass-market condos. Yet there are people taking up these (over-priced) units. The TODAY newspaper also recently reported a jump in the number of luxury sports cars and marquees being purchased, as if Singapore was not going through its worst recession in 70 years. So what's up and can this seemingly strange phenomenon be analyzed ?
Perhaps I can start off by commenting on the general mentality of the youth I encounter these days. "Youth" in this case represents the Generation "Y", who are in their early to late 20's to early 30's. These youths have not been through the struggles which our ancestors have been through and have been living a life of economic prosperity and relative abundance compared with most of our peers in other South-East Asian countries like Indonesia and Vietnam. Some would say that this has made them spoilt and pampered and their thinking has also evolved to reflect this. Youth nowadays think nothing of splurging on fine dining, a new mobile phone or the latest gadget, all in the name of keeping up with the Joneses. In addition, most of them also have no qualms about taking up loans to finance huge purchases like cars and property, as they feel that they can sustain a steady cash inflow through their career and/or passive income which can help pay for their lifestyle. This view is inherently flawed and risky as the future is always uncertain and one should maintain a "margin of safety" (i.e. buffer) when taking up such long-term liabilities.
On to the subject of properties, there have been lots of news articles and advertisements recently in the Straits Times, Business Times and TODAY newspapers featuring mass-market condominiums and the new condo-like HDB flats. These are generally priced around $500K to $700K and the difference is that for condos, there is no salary limit while for the condo-like HDB flats there is a salary cap of S$8K combined for the married couple. Many of my peers have chosen "quality of life" by buying condominiums worth about $600K to $700K (one even bought one exceeding a million SGD !) and taking up loans as long as 30-35 years. For some, this means that they would be indebted to the bank for most of their adult life (and probably part of their retirement years as well), while for others who can afford to put down a larger downpayment, their loan tenure may be shorter but they will be more severely starved of cash once they had made the down-payment. Read more...[caption id="attachment_2262" align="alignright" width="192" caption="Photo by woodleywonderworks"][/caption]
In this next article on personal finance, I would like to touch on the subject of debt. No doubt the news has been going on about credit card balances being rolled more often, amounts getting larger as well as people purchasing flats which are (to me) getting more expensive. The latest HDB flats which are part of the DBSS Scheme cost a cool S$720,000 for a 5-room larger unit, which is even more than the price of some mass-market condos. Yet there are people taking up these (over-priced) units. The TODAY newspaper also recently reported a jump in the number of luxury sports cars and marquees being purchased, as if Singapore was not going through its worst recession in 70 years. So what's up and can this seemingly strange phenomenon be analyzed ?
Perhaps I can start off by commenting on the general mentality of the youth I encounter these days. "Youth" in this case represents the Generation "Y", who are in their early to late 20's to early 30's. These youths have not been through the struggles which our ancestors have been through and have been living a life of economic prosperity and relative abundance compared with most of our peers in other South-East Asian countries like Indonesia and Vietnam. Some would say that this has made them spoilt and pampered and their thinking has also evolved to reflect this. Youth nowadays think nothing of splurging on fine dining, a new mobile phone or the latest gadget, all in the name of keeping up with the Joneses. In addition, most of them also have no qualms about taking up loans to finance huge purchases like cars and property, as they feel that they can sustain a steady cash inflow through their career and/or passive income which can help pay for their lifestyle. This view is inherently flawed and risky as the future is always uncertain and one should maintain a "margin of safety" (i.e. buffer) when taking up such long-term liabilities.
On to the subject of properties, there have been lots of news articles and advertisements recently in the Straits Times, Business Times and TODAY newspapers featuring mass-market condominiums and the new condo-like HDB flats. These are generally priced around $500K to $700K and the difference is that for condos, there is no salary limit while for the condo-like HDB flats there is a salary cap of S$8K combined for the married couple. Many of my peers have chosen "quality of life" by buying condominiums worth about $600K to $700K (one even bought one exceeding a million SGD !) and taking up loans as long as 30-35 years. For some, this means that they would be indebted to the bank for most of their adult life (and probably part of their retirement years as well), while for others who can afford to put down a larger downpayment, their loan tenure may be shorter but they will be more severely starved of cash once they had made the down-payment. Read more...
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In this next article on personal finance, I would like to touch on the subject of debt. No doubt the news has been going on about credit card balances being rolled more often, amounts getting larger as well as people purchasing flats which are (to me) getting more expensive. The latest HDB flats which are part of the DBSS Scheme cost a cool S$720,000 for a 5-room larger unit, which is even more than the price of some mass-market condos. Yet there are people taking up these (over-priced) units. The TODAY newspaper also recently reported a jump in the number of luxury sports cars and marquees being purchased, as if Singapore was not going through its worst recession in 70 years. So what's up and can this seemingly strange phenomenon be analyzed ?
Perhaps I can start off by commenting on the general mentality of the youth I encounter these days. "Youth" in this case represents the Generation "Y", who are in their early to late 20's to early 30's. These youths have not been through the struggles which our ancestors have been through and have been living a life of economic prosperity and relative abundance compared with most of our peers in other South-East Asian countries like Indonesia and Vietnam. Some would say that this has made them spoilt and pampered and their thinking has also evolved to reflect this. Youth nowadays think nothing of splurging on fine dining, a new mobile phone or the latest gadget, all in the name of keeping up with the Joneses. In addition, most of them also have no qualms about taking up loans to finance huge purchases like cars and property, as they feel that they can sustain a steady cash inflow through their career and/or passive income which can help pay for their lifestyle. This view is inherently flawed and risky as the future is always uncertain and one should maintain a "margin of safety" (i.e. buffer) when taking up such long-term liabilities.
On to the subject of properties, there have been lots of news articles and advertisements recently in the Straits Times, Business Times and TODAY newspapers featuring mass-market condominiums and the new condo-like HDB flats. These are generally priced around $500K to $700K and the difference is that for condos, there is no salary limit while for the condo-like HDB flats there is a salary cap of S$8K combined for the married couple. Many of my peers have chosen "quality of life" by buying condominiums worth about $600K to $700K (one even bought one exceeding a million SGD !) and taking up loans as long as 30-35 years. For some, this means that they would be indebted to the bank for most of their adult life (and probably part of their retirement years as well), while for others who can afford to put down a larger downpayment, their loan tenure may be shorter but they will be more severely starved of cash once they had made the down-payment. Read more...
