REIT is a popular choice for investors because it can be used for long-term investment, as well as short-term trading.
REIT FOR LONG-TERM INVESTING
The reason why REIT is suitable for long-term investment is because by law, 90% of the net income from a REIT must be re-distributed back to shareholders as dividends.
A REIT may distribute dividends up to 4 times per year. If investors build a portfolio of REITs with strong performance, they can potentially generate a predictable stream of dividends every quarter or even every month.
Furthermore, Singapore REITs can distribute more dividends than overseas REITs because of tax exemption, and may also benefit from capital gains like a regular stock.
Most local REITs investors aim for 5-10% dividend yield annually. In recent years, REITs like the iEdge S-Reit Index have outperformed that expectation.
Unlike long-term investors, short-term traders usually aim to profit from capital gains within a few weeks or months. This is usually done with a Buy Low Sell High or Buy High Sell Higher strategy (for bullish market) using technical analysis.
However, these strategies usually involve higher risk. If the price trend unexpectedly reverse from uptrend to downtrend, the trader must be prepared to sell to cut loss if necessary.
CONCLUSION
It is also important to understand the difference between investing and trading, and picking the strategy which suit your risk tolerance.
Having a good knowledge of Fundamental Analysis, and Technical Analysis also helps.
REITs is one of financial instruments you can consider adding to your investment portfolio.
https://sgadviser.com/wp-content/uploads/2021/09/asia-female-businessmen-are-using-the-tablet-durin-ZS8UNE7.jpg53737921ryanhttp://sgadviser.com/wp-content/uploads/2017/06/logo-300x138.pngryan2021-04-01 23:43:182021-09-30 00:06:24Should You Invest In REITS
If you own a HDB flat, you can consider the Lease Buyback Scheme (LBS) as part of your retirement plan.
What is the Lease Buyback Scheme?
Lease Buyback Scheme is a government scheme which gives elderly Singaporean households the option to monetise their flats to receive a stream of income in their retirement years, while continuing to live in it.
Eligibility Conditions of the Lease Buyback Scheme
In order for your household to qualify for the LBS, the following conditions must be met:
1. Through the Lease Buyback Scheme, you can sell part of your flat’s lease to HDB and receive up to $20,000 or $10,000, or $5,000 of LBS bonus, respectively.
2. Your household will have the flexibility to choose the length of lease to be retained, based on the age of the youngest owner. The duration of the lease retained determines the amount of net proceeds unlocked.
3. The net proceeds from selling part of your flat’s lease will be used to top up your CPF Retirement Account (RA), to the specified requirements which depends on whether your flat is under single or joint ownership:
4. Six months before you reach your CPF LIFE payout eligibility age, you can use your CPF RA savings to participate in one of the three CPF LIFE plans and receive monthly payouts:
A couple, both 65 years old, are joint owners of a fully paid 5-room flat worth $520,000, with 65-year remaining lease. They choose to keep a 30-year lease, and sell the tail-end 35-year lease to HDB.
During the lease, you can continue to rent out your bedrooms to earn rental income. However, you are not allowed to rent out the whole HDB flat.
Are there any alternatives for Lease Buyback Scheme?
Yes, there is the Silver Housing Bonus (SHB) Scheme. If you own a bigger flat type, you can choose to right-size your flat and supplement your retirement income through the Silver Housing Bonus scheme.
The SHB and LBS are both monetisation options to help elderly Singaporeans enhance their retirement income. They cater to different preferences and needs. The SHB caters to those who wish to right-size to a smaller flat, while the LBS caters to those who wish to remain in their current flat.
Conclusion
Lease Buyback Scheme is one of the way we can utilize our HDB flats to provide part of the funding for our retirement needs.
https://sgadviser.com/wp-content/uploads/2021/09/discussing-financial-indicators-65BLKQL.jpg49127360ryanhttp://sgadviser.com/wp-content/uploads/2017/06/logo-300x138.pngryan2021-03-01 23:32:092021-09-30 00:06:14Should You Consider The HDB Lease Buyback Scheme
Many Singaporeans have heard of CPF LIFE, but don’t quite understand what it is. Today we will break it down and give you some tips on how to decide which is best CPF LIFE Plan for you.
What is CPF LIFE?
The CPF Lifelong Income For The Elderly (CPF LIFE) Scheme is a life annuity scheme that provides Singapore Citizens and Permanent Residents with a monthly payout for as long as they live.
At the end of the day, the best CPF LIFE Plan for you depends on your own retirement needs.
How much must you contribute to get a CPF LIFE payout of $2,000/month?
Most people think their expenses during retirement will be about $2,000/month.
As you can see from the example above, if I am a male guy born in 01 Jan 1960, and want CPF LIFE payout of $2,000/month starting from age 65, I must contribute about $350,000 to my CPF (Retirement Account) if I choose the CPF LIFE Basic Plan.
While the CPF LIFE Payout Estimator is a great tool for getting an estimate, there’s a problem… it doesn’t allow you to key in a date of birth that’s below 50 years old. If you’re below 50 years old and want to plan ahead for CPF LIFE, this tool will be less useful.
It is also important to note that CPF LIFE is just one scheme for retirement planning; and should not be the only thing you rely on. To get more comprehensive retirement planning, we strongly encourage you to talk to an experienced financial planner so that he/she can work out your financial numbers and help you achieve your retirement goals.
https://sgadviser.com/wp-content/uploads/2021/09/meeting-with-financial-adviser-QYFS7Q8.jpg47137062ryanhttp://sgadviser.com/wp-content/uploads/2017/06/logo-300x138.pngryan2021-02-01 23:18:462021-09-30 00:44:38Which is the Best CPF LIFE Plan for You?
Should You Invest In REITS
PropertyREIT is a popular choice for investors because it can be used for long-term investment, as well as short-term trading.
REIT FOR LONG-TERM INVESTING
The reason why REIT is suitable for long-term investment is because by law, 90% of the net income from a REIT must be re-distributed back to shareholders as dividends.
A REIT may distribute dividends up to 4 times per year. If investors build a portfolio of REITs with strong performance, they can potentially generate a predictable stream of dividends every quarter or even every month.
Furthermore, Singapore REITs can distribute more dividends than overseas REITs because of tax exemption, and may also benefit from capital gains like a regular stock.
Most local REITs investors aim for 5-10% dividend yield annually. In recent years, REITs like the iEdge S-Reit Index have outperformed that expectation.
Source: SGX Factsheet
REIT FOR SHORT TERM TRADING
Unlike long-term investors, short-term traders usually aim to profit from capital gains within a few weeks or months. This is usually done with a Buy Low Sell High or Buy High Sell Higher strategy (for bullish market) using technical analysis.
However, these strategies usually involve higher risk. If the price trend unexpectedly reverse from uptrend to downtrend, the trader must be prepared to sell to cut loss if necessary.
CONCLUSION
It is also important to understand the difference between investing and trading, and picking the strategy which suit your risk tolerance.
Having a good knowledge of Fundamental Analysis, and Technical Analysis also helps.
REITs is one of financial instruments you can consider adding to your investment portfolio.
Should You Consider The HDB Lease Buyback Scheme
PropertyIf you own a HDB flat, you can consider the Lease Buyback Scheme (LBS) as part of your retirement plan.
What is the Lease Buyback Scheme?
Lease Buyback Scheme is a government scheme which gives elderly Singaporean households the option to monetise their flats to receive a stream of income in their retirement years, while continuing to live in it.
Eligibility Conditions of the Lease Buyback Scheme
In order for your household to qualify for the LBS, the following conditions must be met:
Source: hdb.gov.sg
How does the Lease Buyback Scheme work?
1. Through the Lease Buyback Scheme, you can sell part of your flat’s lease to HDB and receive up to $20,000 or $10,000, or $5,000 of LBS bonus, respectively.
2. Your household will have the flexibility to choose the length of lease to be retained, based on the age of the youngest owner. The duration of the lease retained determines the amount of net proceeds unlocked.
Source: hdb.gov.sg
3. The net proceeds from selling part of your flat’s lease will be used to top up your CPF Retirement Account (RA), to the specified requirements which depends on whether your flat is under single or joint ownership:
Source: hdb.gov.sg
4. Six months before you reach your CPF LIFE payout eligibility age, you can use your CPF RA savings to participate in one of the three CPF LIFE plans and receive monthly payouts:
Source: cpf.gov.sg
Example of Lease Buyback Scheme
A couple, both 65 years old, are joint owners of a fully paid 5-room flat worth $520,000, with 65-year remaining lease. They choose to keep a 30-year lease, and sell the tail-end 35-year lease to HDB.
Source: hdb.gov.sg
Earning Rental Income
During the lease, you can continue to rent out your bedrooms to earn rental income. However, you are not allowed to rent out the whole HDB flat.
Are there any alternatives for Lease Buyback Scheme?
Yes, there is the Silver Housing Bonus (SHB) Scheme. If you own a bigger flat type, you can choose to right-size your flat and supplement your retirement income through the Silver Housing Bonus scheme.
The SHB and LBS are both monetisation options to help elderly Singaporeans enhance their retirement income. They cater to different preferences and needs. The SHB caters to those who wish to right-size to a smaller flat, while the LBS caters to those who wish to remain in their current flat.
Conclusion
Lease Buyback Scheme is one of the way we can utilize our HDB flats to provide part of the funding for our retirement needs.
Which is the Best CPF LIFE Plan for You?
Retirement PlanningMany Singaporeans have heard of CPF LIFE, but don’t quite understand what it is. Today we will break it down and give you some tips on how to decide which is best CPF LIFE Plan for you.
What is CPF LIFE?
The CPF Lifelong Income For The Elderly (CPF LIFE) Scheme is a life annuity scheme that provides Singapore Citizens and Permanent Residents with a monthly payout for as long as they live.
What are the Types of CPF LIFE Plans?
There are 3 Types of CPF LIFE Plan
Source: CPF.gov.sg
Which is the Best CPF LIFE Plan for You?
Here’s a YouTube video on what Singaporeans think of this question.
And here’s an infographic on how to choose your CPF LIFE Plan.
Source: CPF.gov.sg
At the end of the day, the best CPF LIFE Plan for you depends on your own retirement needs.
How much must you contribute to get a CPF LIFE payout of $2,000/month?
Most people think their expenses during retirement will be about $2,000/month.
To get the estimated amount you need to contribute to CPF to get CPF LIFE payout of $2,000/month, you can use the CPF LIFE Payout Estimator: https://www.cpf.gov.sg/eSvc/Web/Schemes/LifePayoutEstimator/LifePayoutEstimator
Based on my input below:
Here are my results:
As you can see from the example above, if I am a male guy born in 01 Jan 1960, and want CPF LIFE payout of $2,000/month starting from age 65, I must contribute about $350,000 to my CPF (Retirement Account) if I choose the CPF LIFE Basic Plan.
While the CPF LIFE Payout Estimator is a great tool for getting an estimate, there’s a problem… it doesn’t allow you to key in a date of birth that’s below 50 years old. If you’re below 50 years old and want to plan ahead for CPF LIFE, this tool will be less useful.
It is also important to note that CPF LIFE is just one scheme for retirement planning; and should not be the only thing you rely on. To get more comprehensive retirement planning, we strongly encourage you to talk to an experienced financial planner so that he/she can work out your financial numbers and help you achieve your retirement goals.