Cash Out Home Equity Loans or HDB Flat as Collateral? Nope.

I learnt something new today.  That it is actually possible to take a cash out or credit facility on your home by refinancing it.  People can use this additional leverage when they have largely paid up property and wish to make use of the lower home mortgage rates to pay off either existing loans or even invest in other instruments (e.g. REITs) which might give a higher returns. '

These are quite common overseas, here is a typical example
https://www.hsbc.com.au/1/2/home-loans/products/equity

But also realised that one is also not allowed to take a credit loan out of your HDB flat.  Basically:

"HDB flats can only be mortgaged to banks or financial institutions to finance the purchase. HDB owners are not allowed to use their HDB flat, which has been fully paid for, as collateral to raise credit facilities."

So unless you own a private property, you most probably cannot take a cash out home loan to tap on the low mortgage rates now.

Ways to Save Money for A Downpayment

[Guest Post By Erin Vaughan]

Saving for the downpayment on your first home can really seem intimidating. After all, to get a good interest rate on a loan, you probably need to sock away somewhere between forty to fifty thousand dollars. That’s a lot of dough!

Over at Modernize, we know that saving money is all about the little things. A few dollars here, a few dollars there—it can really start to add up. Plus, there are some psychological tricks you can use to make the process less painful. Here’s some tips to bulk up that savings account!

Via Modernize

Make a Budget

The majority of your savings is going to come from your salary, so it makes sense to start analyzing what items your purchase regularly and what you can cut out. In a spreadsheet, list out your monthly salary, minus taxes and deductions for health care and retirement. Then list all your bills. Use your bank statement from the last month as you make this list—you don’t want to forget about smaller bills like that Netflix charge, or your gym membership. Then, analyze what you spent on everything else. You may think that you’re not spending any extra money—until you see it listed out, and you realize that you are buying that extra nail polish all too often or spending too much on coffee. If you think about it, there are probably at least one or two regular expenses that you can cut that won’t drastically lower your quality of life.

Pay Yourself for Not Spending

One trick that my friend has for saving money works like this: every day she goes without spending any money outside her budget, she “pays” herself five dollars. It may seem like just a little bit, but it really adds up! Or try using this 52-week savings plan, where you pay yourself a different amount each week of the year. A little bit at a time can really add up!

Via Pinterest

Resist the Urge to Spend

Spending is largely psychological. So if you feel like you’re depriving yourself for too long you’ll likely eventually break, go on a spending tear, and undo all your efforts. But you can resist! Science tells us that the pleasure of planning something is often rated more enjoyable than actually getting that thing. So next time you feel that itch for a shopping spree looming large, use that energy to plan for your dream home. Create a Pinterest board of ideas for what you want in your house, and don’t limit yourself to what is realistic. Go window shopping online for your perfect sofa, window treatments, or washer, and add them to your wish list instead of buying. You’ll get the same thrill of shopping without the expense! But if you just can’t stop yourself, buy yourself something small and move on. Spending energy beating yourself up for one slip-up is self-defeating.

Negotiate for a Lower Credit Card Interest Rate

If you want to buy a home, you’re probably already paying your full credit card payments on time regularly. (If not, stop what you’re doing, and go make a payment!) Having a great credit score makes it easier for you to play hard to get and argue for a lower interest rate with your financial institution when sealing the deal for a loan. But if you’ve been good with your credit card payments, you may be able to convince them to give you a better rate as well. Try it! Call them up and tell them you want a lower interest rate. They may just give it to you.

Via Pinterest

Consider Borrowing from Your IRA

This should be considered somewhat of a last ditch attempt if you just can’t find the funds any other way, but the government does allow you a one-time, penalty-free deduction from your IRA for up to $10,000 towards the purchase of a home. You’re going to want to think about this carefully—it is, after all, money you’re taking from your retirement fund, so it could make things hard later on. So consult with a financial advisor before making your choice. Also, keep in mind, what kind of IRA you have should also play a part when weighing this decision: deductions from Roth IRAs are tax-free, whereas you’ll have to pay income tax on the money you borrow from a traditional IRA.

No matter how you decide to save the money, make sure to save about roughly 20 percent of the total amount of the home you want to buy. This will give you lots more leverage when you go to get your loan.

Now congratulate yourself! By reading this article, you just made the very first step in your journey to owning your own home.

Learn from a Fool: Investment Mistakes

I have made many investment mistakes in my life.  And the stock market is definitely an expensive to pay "tuition fees" with your hard earned money.  But it is inevitable.  Most investors will tell you that they lose money from time to time.  Even the best investors make mistakes.  Here I share some of my mistakes and perhaps you can learn from them and not repeat any of these mistakes I made.

Right up there on my greatest investment losses is perhaps investing in S-Chips or Chinese companies that are listed on the Singapore Stock Exchange.  Two of the shares that I own are still in the deep red with perhaps no end in sight.  Let me give you the story of one of these "darling" stocks.

There used to be an old forum called WallStraits where all the people who stand by Fundamental Analysis used to hang out.  Perhaps some of you remember that forum.  During those days, S-Chips were new and they all had such good financial records, P/E, NAV, etc that some stocks were being rated as BUY by nearly every member in the forum.  There were the darling stocks that were well-rated by all.

I read posting after posting during my spare time.  And when I finally made the decision to invest, I threw in a whole lot of money (in fact all of my spare cash) into one stock.  As the mantra went:  "Put all your eggs into one basket and watch that basket closely".  What could go wrong?  There were people who had lots more of experience then me and who had also put their money where their mouth was.  The stock was supposed to be one of those stocks that Warren Buffet would buy (if he lived in Singapore).

Well, the stock price went up a little and then it went downhill from then.  I averaged down my position thinking that it was undervalued.  Everyone was crying out that it was undervalued and that they were targeting it to hit a two or three fold return in a few months time when the stock market recovered.

To cut a long story short.  The stock market recovered.  Almost every stock rose back to their original price or even higher.  This stock however languished and truly became a penny stock.  I won't reveal how much I lost on that stock but it made me a lot more skeptical about the wisdom of crowds. Just because everyone is shouting that a stock is a "BUY" does not mean that it is one.  Everyone could be sincerely wrong.

My failure to cut my losses when I should also worsened the situation and I was so stuck into the stock that I  could not bring myself to sell it.  Today, that stock still sits in my portfolio.  It is the first stock that I bought and it sits in my portfolio worth a lot less than what I bought it for.  It is there as a reminder to myself that hours of research and being very certain about something does not mean it is a SURE BUY.

One of the lessons I learnt through this was also about asset allocation (Read about Yale Endowment Asset Allocation here).  Putting all your eggs into one basket is really risky risky business.  I was so certain that the stock was undervalued.  But it turned out the other way.  I hope people will learn from my mistakes.

Singapore Civil Service Pay Scale

Trying to compile the salary pay scale for the Singapore civil service.  Somehow, I only managed to find the figures for 2011.  There are probably updated figures for 2015 so I will post it in due time.  Do bookmark this post. Or if anyone has the latest figures, do drop a comment and let me know.


These are the figures for 2011 Civil Service Salary Range

Job grade: MX9 (Superscale)
Job title: Deputy Director, Director
Pay scale: S$10,580 – S$14,550 / S$14,551 – S$16,540

Job grade: MX10
Job title: Assistant Director, Deputy Director
Pay scale: S$6,350 – S$9,050 / S$9,051 – S$10,400

Job grade: MX11
Job title: Manager, Assistant Director
Pay scale: S$4,100 – S$6,160 / S$6,161 – S$7,190

Job grade: MX12
Job title: Assistant Manager, Manager
Pay scale: S$2,550 – S$5,130

Job grade: MX13
Job title: Management Executive
Pay scale: up to S$2,800 for fresh graduates

The salary ranges indicate the basic monthly wages that a civil servant may earn, and the figures exclude the potential value of civil service bonuses. Based on past newspaper reports, bonuses for an average civil servant could range from more than 2 months to 4 months inclusive of AWS (annual wage supplement), depending on the performance of the economy and individual performance.

In 2012, there was a pay revision of around 10% for MX12 and MX13, and 5% for MX10 and MX11.

In August 2014, it was announced that most civil servants would get a pay raise of around 5%.

In 2015 (Singapore's jubilee year), civil servants also received a once off SG50 bonus of $500.

Mid-Year Bonus as announced by PSD
2016 - 0.45 months
2015 - 0.5 months
2014 - 0.5 months

Career Progression (non-scholars)
Promotion is based on both performance as well as potential. During every annual appraisal, supervisors would grade their employees based on both performance as well as potential. Word on the street is that performance ranking is according to certain bands and one would usually need two "Bs" to get promoted.  Performance grade also determines the performance bonus one gets.  A higher performance grade gives you a higher performance bonus.

A fresh graduate usually enters in at MX13 pay scale.

Promotion from a MX13 to MX12 is usually after one year of service. A typical officer can then be expected to be promoted to MX11 after two years (though some might take a little longer).

There are usually no managerial responsibilities for a MX11 officer. Promotion to MX10 is slightly more difficult and is dependent on performance as well as potential.  A MX10 officer will usually have managerial responsibilities.

Most non-scholar civil servants can expect to end their careers at the MX10 or even MX9 pay scale.

Video below by Lim Swee Say on why Civil Servants need not be ashamed of drawing a high salary:

 

Check out other posts related to the civil service:

1. Civil Service Bonus for 2020

2. Civil Service Declaration of Indebtedness

New IPPT Format

MINDEF has adopted a new IPPT format. Under the new IPPT format, there are only 3 stations, namely push-ups, sit-ups and a 2.4km run (see image below).  To pass, you will need 51 points or more and a minimum of 1 point from each of the 3 stations.

You can find the detailed scoring tables here on Mindef's website:

Jim Cramer on Greek default and buying opportunities

Free 4 Weeks New York Times Subscription

Update (20 June 2015) : Realised that the access code is not limited to one person. So basically, everyone can download it! Please share with all.

Giving away a free 4 week New York Times online subscription to the first person who reads this and uses the access code in the picture below. Limited to the first person who redeems it.