Finance Smiths

Personal finance apprentices-in-training

Potential sale of our current property

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We are moving out from our current 2 bedroom apartment into a rental 3 bedroom apartment this week. It’s an older development but is more conveniently located in terms of access to amenities, transport and school. The main reason for choosing to rent instead of buy a bigger property is to give ourselves more time to consider where we would like to stay and what kind of property we want to buy next. At that time, my wife’s bank was undergoing a major restructuring and we were not sure whether she would still have a job at the end of it. Luckily for us, she did secure a role.

We didn’t want to get trapped into a timing issue where we can’t sell our 2 bedroom apartment fast enough before buying a bigger property. We have outgrown the smaller property and need more space now. Any complications with the 2 separate sale and purchase legs of the transactions may have caused us to incur Additional Buyer’s Stamp Duty (ABSD). Or worse, cause our family to move out with no place to stay in. While I’m sure my parents-in-law would be happy to host us at their place, it would not be an ideal living situation.

It doesn’t help that our 2 bedroom apartment is not easy to sell in the current market. We renovated the property before moving in so it’s a nice place to stay in. But the location is not the best. It’s near a feeder bus-stop that gets you to the train station. But it’s not readily accessible to amenities and schools. You may need a car to get around more easily. We went through a number of viewings over the past 3 months but could only get 1 offer. It’s not much higher than our original purchase price and will not cover our stamp duty, conveyancing, interest and renovation costs. If we try to hold out for a higher offer, we will incur both mortgage and rental expenses for some time. With no certainty that we can actually secure a higher offer.

We considering renting out the 2 bedroom apartment but decided against it. We are not keen on being landlords (even in Singapore) and just don’t want to deal with the hassle of managing tenants. Anyway, we will most likely proceed to accept the offer. It was already a stressful time negotiating the sale price and terms of the sale. Not something we would want to repeat if we can help it. If we can successfully sell our current property, it would better position us for the purchase of our next property. Since we are renting for 2 years, we have more time to work out where we would like to stay and what kind we property we want to buy. It’s important not to rush this and take our time with such a major financial and life decision.

Congratulations to StashAway for hitting a big milestone

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My wife and I are both StashAway clients and have always been a big supporter of this robo-advisor since the beginning. We received an email about this and saw/read it on the news as well. StashAway has recently hit a big milestone and is now managing more than US$1 billion (i.e. more than S$1.3 billion). Congratulations to StashAway!

StashAway has improved every step of the way in terms of product offering, user interface & experience, financial education, etc. Fully deserved to be recognised as more clients sign up and entrust their wealth building with them. I’m happy for them and it must have been quite the journey since 2016. Anyway, we shall continue to invest more of our cash with them as a vote of confidence and wish them all the best!

2021 goal for cash position

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I set up my OCBC RoboInvest Future World Portfolio last week with the minimum investment amount of US$1,000. I’m going to hold off on setting up the OCBC RoboInvest Gen-Z Winners and China Growth Portfolios until next month just to spread out my investments more over time. Just because I had already met my monthly Dollar-Cost Averaging (DCA) investment amount target for OCBC RoboInvest this month just by setting up the Future World Portfolio.

The user interface is simple and the top-up (additional investment with minimum amount of US$100) process seems straightforward. I noticed that OCBC RoboInvest allows for fractional ownership of the units in the ETFs the Future World Portfolio is invested in. This is important for a DCA investing strategy since it allows for a low minimum top-up amount of US$100 while ensuring it can be used to buy fractional units across all the ETFs in the portfolio if necessary. Fractional ownership is something I cannot achieve myself if I had invested in these ETFs manually via the online trading platform I use. And I would have to commit a bigger capital outflow each time I made an investment.

Anyway, back to my goal setting for 2021. I have already written about my 2021 goal for our investment portfolio, which includes ETFs, individual stocks, bonds, robo-advisors and cryptos. Next up for this post, I’m writing about my 2021 goal for cash. As of end Dec 2020, our cash position is S$480,000. It was much higher at the start of 2020 and went down significantly due to an aggressive capital deployment strategy to invest in the bear market and subsequent recovery. I don’t foresee us investing as aggressively this year unless there’s a market crash. But we would still be investing more than compared to previous years as we look to increase the returns from our investment portfolio.

I would be setting another stretch 2021 goal for our cash position to grow it by S$70,000 to S$550,000 by end Dec 2021. This would require a high savings rate along with the high investing rate. Difficult to achieve when our salary income is fixed every month and the household spending is going up with the upcoming rent and childcare expenses. I may receive a small salary increase and annual performance bonus in Mar as well as higher investment income this year. But I’m not sure how much this will help so we just have to keep trying.