Someone asked me about my recent interest in HDB flat. This is part of my research for my financial planning book.
In my book, I advised that a person should set aside up to 25% of their family income towards the purchase of a home. They should not exceed 25%.
I decided to carry out some research into the price of HDB flat, as it affects 85% of the people in Singapore. If they are able to keep their purchase commitment to an affordable level (i.e. 25% of their family income), they would be able to have sufficient savings for other purposes. This is explained in my financial planning book.
My book will be sent for printing in January and will be available in the bookstores in March 2010.
Thursday, January 7, 2010
Are home buyers prudent?
I carried out a survey in my blog about the price of HDB flats. 50 people replied. 47% replied that their monthly repayment to the housing loan (including CPF withdrawals) is within 20% of their family income. I consider this to be prudent, as it is within 25% (which is my benchmark).
Another 38% said that the repayment is 30% of their family income. 15% said that the repayment is 40% to 50% of their family income. The commitment is clearly excessive for this 15%.
I would consider that two thirds or 66% (i.e. 47% plus half of 38%) are prudent and that the remaining one third is over-stretching their finances towards their HDB flat.
Another 38% said that the repayment is 30% of their family income. 15% said that the repayment is 40% to 50% of their family income. The commitment is clearly excessive for this 15%.
I would consider that two thirds or 66% (i.e. 47% plus half of 38%) are prudent and that the remaining one third is over-stretching their finances towards their HDB flat.
Financial planning for a child
I wish to write an article on financial planning for a child. The key features are:
a) annual expenses for a child's education
b) savings for tertiary education of a child, especially if the child wishes to go overseas
c) insurance for the child's medical expenses arising from accidents and illnesses.
Are there any other special needs? What are the key concerns of a parent?
The annual expenses should be met out of current income. The parent should consider the need to spend money on enrichment programs and tuition, which seem to take a significant monthly budget. The best way to save for tertiary education is to have a savings plan that gives a good yield. The child can be insured for Medishield or private Shield, but the expense should be kept low.
Any views?
a) annual expenses for a child's education
b) savings for tertiary education of a child, especially if the child wishes to go overseas
c) insurance for the child's medical expenses arising from accidents and illnesses.
Are there any other special needs? What are the key concerns of a parent?
The annual expenses should be met out of current income. The parent should consider the need to spend money on enrichment programs and tuition, which seem to take a significant monthly budget. The best way to save for tertiary education is to have a savings plan that gives a good yield. The child can be insured for Medishield or private Shield, but the expense should be kept low.
Any views?
Subscribe to:
Posts (Atom)