16 December 2015

Hits and Misses - Did I make the right financial choices?

Thinking back to the financial decisions that I had made over a span of 20 years, I wonder if I had made the right financial choices?

My very first home was a 5-room flat bought off the resale market. House hunting was quite an effort of visiting house after house. It's a pretty exhausting exercise. And by the seventh attempt, we pretty much reached a point of fatigue. It was at what would be deemed a ulu (out of the way) area known at Yishun. Whenever I mentioned that I lived in Yishun, the look from friends was one of "kampong" in a far far away land. There were actually goats along the roadside then! And to add to the kick, you get lots of helicopters flying around for novelty. The novelty wore off soon enough, and gets rejuvenated each year before National Day when the chopper with the National flag flew past. It wasn't much of a financial burden as the monthly installment payment was well within the means of a pair of newly weds. I was barely three years into the working market and didn't have much of an income for anything more anyway. So I guess this wasn't a bad decision as I did not overly burdened myself with a high level of debt.

I rate this a "hit" (right choice).

It was more than 12 years later that I decided to "upgrade" to a condominium. When I upgraded to an e-condo, it was another "ulu" out of the way kind of place - Yew Tee. "Where's that?" friends would say with an extreme look of puzzlement. It wasn't an expensive place given it's "ulu"-ness. In addition, I took whatever cash and CPF we had to pay down the principal. Now here's where I have some doubts today. While it certainly reduced the loan capital rapidly to below $100K within a year, I wonder if I should have just lived with the higher level of loan, and use that cash to invest into the market instead? Returns of 6-8% annualised would certainly have outstripped the loan interest of 3%. Plus, I could have refinanced the loan after a few years. But because I had paid down the principal to below $100K, it seems the banks weren't keen to offer refinancing.

I think this was a "miss" (bad choice).

I started investing innocently being a noob in investment. And the very first means was via insurance related means. Compared to not having any form of investment at all, it was a good start. I could rate this a "hit" compared to having no investment whatsoever. But being a bit more tuned in to options today, I would certainly say this has been a "miss". It wasn't the best of returns, though it has given positive returns. Could have done better!

Overall, a "miss".

We stayed off owning a car for several years and relied on public transportation to get around. Thank you LTA! Considering that the car is a depreciating expense, this was probably wise.

I rate this a "hit".

When my second kid was born, my wife and I decided that it was time to get a car. With a maid in tow, five person just wasn't going to fit into a taxi. Our very first car was a second hand Suzuki Swift. It was quite low cost. But you get what you pay for! The car gave us quite of bit of angst when the aircon started to behave like a heater. And one fine day, we started getting steam coming out of the bonnet. Looked like we had bought ourselves a train. Stung by this experience, we went on to buy a brand new Nissan Sunny. On hindsight, I really cannot explain why, but we changed from one Nissan Sunny to another once every three years for the next ten years. Were we crazy or what!? I guess we should plead insanity.

Definitely a "miss".

Our latest car is a Toyota Wish. A family car for a growing family. It has lasted more than six years this time. And with the price of COE in stratospheric levels, it looks like we will continue to operate it for more years to come. It has been a substantively more fuel efficient car than the Nissan Sunnys we owned previously. It has been reliable, with a few incidents of deflated tyres to spice things up. It didn't take too kindly to running over nails I guess? Notwithstanding that it is a depreciating asset, I think overall it has contributed to a certain quality of life.

So I would rate this a "hit".

Housing and cars, two VERY big cost items for Singaporeans. At $12,000 per year for car ownership, that's $184,000 that has gone to Neverland. Seems like a few hits and a few misses for me. How's yours?


Anonymous said...

Judging decisions by their outcomes. A miss for sure.

Lizardo said...

Judging. Heheh.

Sillyinvestor said...

Hi Lizardo,

I wonder what my hits are if financial/ monetary targets are concerned. The ironic is I am in the community of financial bloggers.

Granted the HDB flat I had double in value and is generating good rental income (lived with in laws), those are by circumstances rather than design.

I can easily think of a dozen misses. The biggest hit, perhaps is my increase in human capital?

Lizardo said...

Hi Sillyinvestor,

That sounds like a great hit!