SINGAPORE: A Singaporean man who managed to save S$1 million by age 35 is now having second thoughts about his once rock-solid housing plan.
On Saturday (Feb 1), the man took to Reddit’s ‘SG Henry’ forum to reveal that his original plan was to retire at 35, buy an HDB flat, and generate income by renting it out.
At the time, this seemed like a foolproof way to secure his financial future while enjoying an early retirement. However, as he delved deeper into the realities of property ownership, market fluctuations, and long-term financial sustainability, he began to question whether this plan was as solid as he had once believed.
He said, “The more I think about it, the more it doesn’t make sense. HDB is a depreciating asset because its lease will get shorter. For now, I can stay with my parents. I can hold off on the HDB purchase in the future. In the future, the lease will be shorter, the HDB will become cheaper or the price will most likely remain stagnant.”
The man also mentioned that rather than purchasing a flat, he is considering investing the $1 million in Exchange-Traded Funds (ETFs). “I intend to invest the entire $1m and use my business income to sustain my lifestyle till I want to draw down from this $1m,” he said.
He then sought advice from other forum members about his strategy. He wrote, “I am holding a lot of cash because I wanted to buy a house. For now I would like to invest in ETF, I would like to find out how would you invest it? Invest the entire lump sum? Or DCA like $20k per month? What do you think of my plan?”
‘Pay for financial advice’
In the comments section, several users weighed in on his investment strategy, offering advice on investing the full $1 million at once or adopting a dollar-cost averaging (DCA) approach.
One user said, “There is just too much uncertainty and runway in life at your age to accurately forecast your future expenditure. Good idea to DCA and you can always revisit your options in future if plans change.
“I prefer the idea of ‘retirement’ as a mindset to slow down your pace and better appreciate your life while continuing to engage with work/business rather than pulling the plug off work completely and jumping into a full-time unemployed status.”
Others highlighted the psychological aspect of investing such a large sum. One commented, “Realistically I think as a new investor, you will panic like mad, especially with 1mil capital, if you lump sum and next day drop 3%. So I think DCA over a period of time and keep the rest in a high-interest account.”
Some, however, felt that the man shouldn’t take financial advice from strangers on the internet and suggested that he seek expert guidance instead.
One user wrote, “If you have 1m in cash and don’t know what to do and don’t know how to do, pay for financial advice. It will be <1% of the AUM, but save you from making mistakes that lose you 10-20%, or can help you manage risks, and achieve good returns safely.
“Avoid commission based advisors, they have conflict of interest because they earn from selling you things you may not need/want.”
HDB flats depreciate slower than private properties
A 2019 National University of Singapore (NUS) study showed that housing prices for HDB flats, private freehold, and leasehold properties tend to decline as they age. However, the study noted that HDB flats aged over 30 years depreciate slower than private properties.
Associate Professor Sing Tien Foo, who was involved in the study, explained that private properties over 30 years old tend to show more ageing effects, likely due to poor maintenance of the buildings and their surroundings. In contrast, HDB flats benefit from government programmes like the Home Improvement Programme, which helps them age more slowly than private properties.
He also pointed out that leasehold private property owners face a bigger challenge when dealing with ageing buildings and lease decay.
Read more: HDB to launch 19,600 BTO flats and 5,500 SBF flats in 2025
Featured image by Depositphotos (for illustration purposes only)