How to afford a car in Singapore?

 Affording a car in Singapore can be challenging due to high costs associated with vehicle ownership, including high taxes, Certificate of Entitlement (COE) fees, and other related expenses. Here are some tips to help you manage the financial aspects of owning a car in Singapore:

1. 1. Understand the Costs:

   • Familiarize yourself with all the costs associated with owning a car in Singapore, including COE, Additional Registration Fee (ARF), Road Tax, and the Goods and Services Tax (GST). These costs can significantly impact your budget.
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2. 2. Budgeting:

   • Create a realistic budget that considers not only the upfront costs but also ongoing expenses such as fuel, maintenance, insurance, and parking. Ensure that you can comfortably cover these costs without straining your overall finances.
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3. 3. Consider Used Cars:

   • New cars in Singapore are subject to higher taxes and fees. Purchasing a used car might be a more cost-effective option, as the depreciation is often lower compared to buying a brand-new vehicle.
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4. 4. Evaluate COE Categories:

   • COE categories vary, and the cost of a COE depends on the type of vehicle you intend to purchase. For instance, the COE for small cars may be lower than for larger vehicles. Consider your needs and assess whether a different category could be more cost-efficient for you.

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6. 5. Explore Financing Options:

   • If you cannot afford to pay for the car upfront, explore financing options. Compare interest rates and terms offered by different banks or financial institutions to find the most favorable loan package.

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8. 6. Car Sharing or Rental Services:

   • Evaluate whether car sharing services or short-term rentals might be a more economical solution for your transportation needs, especially if you don't require a car on a daily basis.

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10. 7. Explore Alternative Transportation:

    • Singapore has an efficient public transportation system. Depending on your lifestyle and commuting needs, relying on public transport, taxis, or ride-sharing services might be a more cost-effective option compared to owning a car.

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12. 8. Downsize or Opt for Fuel Efficiency:

    • If you decide to purchase a car, choose a smaller and more fuel-efficient model to reduce ongoing fuel and maintenance costs or electric car.

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14. 9. Plan for Depreciation:

• Recognize that cars in Singapore depreciate rapidly. Factor in potential resale value when choosing a vehicle and plan for the impact of depreciation on your overall budget.

So if you were to ask me whether will i get a car. At this stage in my life, i will not get a car. The public transport has serve my interest well and will continue to do so in future. Considering a car is in the range of $100k+ and i can only drive for 10 years after which although i can renew the COE. The monthly cost of fuel, parking fees, road tax and insurance can be as high as $2000 per month. I would rather invest the money. Until the money invested can pay for the car itself, i will not consider to purchase a car in Singapore.

Is 4% withdrawal rule in trinity study applicable in Singapore?

 The 4% withdrawal rule, popularized by the Trinity Study, suggests that retirees can safely withdraw 4% of their initial retirement portfolio balance each year, adjusted for inflation, without running out of money over a 30-year period. While the rule has been widely discussed and used as a guideline in various contexts, it's important to note that its applicability may vary depending on individual circumstances, economic conditions, and geographic locations.

In the context of Singapore, there are a few factors to consider:

1. 1. Cost of Living:

   • Singapore has a relatively high cost of living, and property prices, in particular, can be significant. The 4% rule might need to be adjusted based on your specific retirement expenses.
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2. 2. Currency and Inflation:

   • The original Trinity Study was conducted in the United States, and the 4% rule was based on U.S. historical data. Currency exchange rates, inflation rates, and economic conditions in Singapore may differ, affecting the rule's applicability.

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4. 3. CPF (Central Provident Fund):

   • Singapore's CPF system can have an impact on retirement planning. It provides a source of retirement income for Singaporeans, and how you plan to utilize your CPF savings may influence your withdrawal strategy.

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6. 4. Longevity and Healthcare Costs:

   • Consideration should be given to potential increases in healthcare costs and life expectancy in Singapore, which may affect the sustainability of a fixed withdrawal rate over an extended retirement period.

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8. 5. Investment Environment:

• The performance of your investment portfolio in Singapore, along with prevailing interest rates and economic conditions, will also play a role in determining the effectiveness of the 4% rule.

My view is that as long as the flat is fully paid up. Take the public transport instead of a car.

The 4% withdrawal rule will definitely work in Singapore. Without a mortgage and a car, a family of 4 will only need $3,000. Effectively breaking down to $750 per person. Using $3,000 as the reference. The family would just need $900,000 in equities market (S&P 500) and will never run out of money for at least 30 years.

How to afford a house in Singapore

 Affording a house in Singapore can be a significant financial undertaking, given the high cost of real estate in the city-state. Here are some tips to help you plan and save for a home purchase:

1. 1. Set a Budget:

   • Determine how much you can afford to spend on a home. Consider your current income, existing expenses, and potential future financial obligations.

2. 2. Save for a Down Payment:

   • Singapore has regulations in place that require homebuyers to make a substantial down payment. Currently, it's typically 5-25% of the property's purchase price. Start saving early to meet this requirement.

3. 3. CPF (Central Provident Fund) Usage:

   • Singaporeans and Permanent Residents can use their CPF savings to fund the purchase of a home. Understand the CPF rules and how much you can withdraw for this purpose.

4. 4. Explore Housing Grants:

   • The Singapore government offers various housing grants, such as the Enhanced CPF Housing Grant (EHG) and the Additional CPF Housing Grant (AHG). Check your eligibility and apply for these grants to reduce the financial burden.

5. 5. Consider HDB Flats:

   • Housing Development Board (HDB) flats are more affordable compared to private properties. Explore the various HDB options available, keeping in mind the eligibility criteria and resale restrictions.

6. 6. Financial Planning:

   • Work with a financial advisor to plan your finances and investments. This can help you maximize your savings, manage debts effectively, and make informed decisions about your property purchase.

7. 7. Explore Loan Options:

   • Research and compare mortgage loan options from different banks. Consider factors such as interest rates, loan tenure, and repayment terms to find the most suitable loan for your situation.

8. 8. Increase Income:

   • Explore opportunities to increase your income, such as career advancement, side hustles, or investments. A higher income can contribute to a faster accumulation of savings.

9. 9. Invest Wisely:

   • Consider making strategic investments to grow your wealth over time. However, be cautious and seek professional advice to ensure that your investment strategy aligns with your financial goals and risk tolerance.

10. 10. Plan for Additional Costs:

• Factor in additional costs associated with home buying, such as legal fees, stamp duties, renovation expenses, and ongoing maintenance costs. Planning for these expenses will prevent financial surprises.

Take for example myself. Myself and my wife bought a HDB 4 room flat back in Aug 2011. We got our hdb flat in Dec 2015. Around 4+ years before we got our Flat. I recall we got a mortgage from HDB at the concessionary rate of 2.6%. At that point of time i was tempted by the low interest rate of 1.0+ interest as compared to hdb loan of fixed 2.6% which is 0.1 % higher than the prevailing of Ordinary rates 2.5%. However considering that we can do top up or partial capital repayment, we did not take up any bank loan. Instead we opt for the hdb loan. We loan about $185k from HDB in year Dec 2015. Take note that HDB will empty out whatever CPF ordinary that you have before granting you the loan amount. Our monthly payment comes up to $800 per month for 27 years. After which every year from 2016, 2017, 2018, 2019, we do partial capital repayment on the excess ordinary that we accumulate. We can see the loan amount is automatically recalculated with years of interest saved. And our repayment period was also shorten drastically. We only stop the partial capital repayment when we find that we can earn more interest by transferring the ordinary to special account (the first 60k of combined balances will earn 1% extra) Fast forward in year 2024, our mortgage is 45k+ which i estimate we will be able to clear our mortgage in year 2025 as we focus on maximizing our special account for year 2024.

Although we could have save interest back in 2015 obtaining bank loan at interest rate of 1.5%+. We will lose the flexibility of partial capital repayment, as bank loans have fixed term of 3 years. And housing loan interest rate may not stay low forever. Take for example US fed rate increase interest rate in year 2022 to 2023. The loan of housing has gone up as per below table. Extracting the table from Singsaver. My recommendation will be to take the hdb loan if you are going for hdb flat. Stretch to the longest period and do partial capital repayment for every year. The first few years doing partial capital repayment will enable you to shed years of interest payment.

Bank	First year Interest rate	Lock-in period
Citibank 3M SORA	2.67% + 0.65% p.a.	2 years
Citibank 3M SORA	2.67% + 0.95% p.a.	2 years
DBS CPF Home Rate (CHR)	2.50% + 0.10% p.a.	3 years
DBS 3M SORA	2.67% + 1.00% p.a.	2 years
DBS Bridging Loan (no lock-in)	4.25% p.a.	NA
Maybank 1M SORA	3.00% + 0.80% p.a.	1 year
Maybank 3M SORA	2.67% + 0.80% p.a.	1 year
OCBC Eco-Care Home Loan (3M SORA)	2.67% + 0.98% p.a.	1 year
Standard Chartered HDB Bridging Loan (3M SIBOR)	3.92% + 2.00% p.a.	Not specified
UOB 3M SORA	2.67% + 0.70% p.a.	2 years