Sunday, March 11, 2012

A millionaire may not be able to afford to buy an executive condominium.

There are many scenarios painted where someone who makes $1,000 can afford a flat of his own. I'm going to paint a scenario that illustrates an opposing point of view.

Suppose you have $750,000 in cash assets and $250,000 in CPF making you a millionaire, your family expenses is $4,000 a month and you proceed to buy a condominium. The monthly payment for a condominium is about $2,500. ( $850,000 condo at 2% interest over 30 years )

If you can invest your $750,000 at 8% investment income a year, this means $60,000 a year or $5,000 a month in dividends.

What this means is that you have an monthly expense of $6,500 but an incoming dividend flow of only $5,000. You will need to work to make up the short-fall, otherwise you lose your millionaire status.

The illustrates the flip side of the wealth equation. While 20% of Singaporeans have a net asset base over a million dollars creating so much unhappiness over the rich-poor divide, I believe that in truth, many Singaporean millionaires have to wake up every morning and worry about how to make a living and actually do spend many years kowtowing to a boss because they bought into that Singaporean dream for condominium ownership. Of course, this can be made even worse if such a person has a car to pay off and tuition fees to pay.

So, next time someone talks about the $850 man who can afford to have a flat of his own, tell him the story of the millionaire who came to the conclusion that he actually can't afford an executive condominium from HDB.

Anyone can create any scenario to support his agenda.


  1. It's about how to sustain the "millionaire" status, isn't it? Working just could be the simple method, but it's not without its dreads. I think people who read your text should acknowledge that growing your own tree is a honest day's work. But getting others to help grow your tree is a good day's work.

  2. I think it is not important to be in a millionaire status at all. It is just 'okay' to stay in a condominium as long as you have a regular income and the mortgage won't be higher than the 30-50% of your income. You can atleast rent an affordable place like sentosa cove condo if you want.