In this recap series of The Future Is Female conference 2017, we dive into one of the panels, A Look At How Millennials View Investing, Marriage & Housing
“Sometimes, we think it is a must to move out once we get married, but it can work out beautifully if you don’t.”-Violet Lim, CEO of Lunch Actually Group
Unlike most couples, Violet and her partner have lived with her in-laws for more than a decade. The arrangement complements her work schedule, especially in the first few years of her business. She reasoned that purchasing a BTO requires time to assess and it was not the best choice at the time when she was married.
“Staying with your parents may lead to a lack of privacy, but it may also save you time and decrease your stress as your parents or in-laws can help you manage your crazy schedule!” she shared.
On the other hand, home ownership allows more flexibility in your lifestyle and the way you raise your children.
“When you’re a newly married couple, sometimes the context and environment matters. You will want your own place to create your own memories, sink your roots in. There is also the relationship with in-laws, children, and so on, so there is no right and wrong answer to whether you should buy a BTO or stay with your family,” Lionel Yeo, Founder of Cheerfulegg.com, pointed out.
Purchasing Your First Property as an Investment
When it comes to buying a first property, the panel had mixed opinions on whether this purchase is an investment. Lionel revealed that he veered away from the typical Singaporean way of applying for a BTO before officially proposing. Instead, he proposed before any discussion on BTO. He does not think that his first house is an investment. However, he values it as a necessity for various reasons.
For example, a condominium is not the best option as the first property. It is more expensive and couples may find it challenging to adjust if they wish to move to a HDB flat in future. Therefore, he views the first home more as an expenditure and a necessity.
Benjamin Loh, Public Speaking Coach and TEDx Speaker was careful about defining the baseline of an investment.
“If you define investment in a very narrow sense, then yes, in some way, you could say that your first BTO is an investment as you could eventually sell it after five years and move into a condominium with the profit you make. However, I feel that a BTO is a very significant commitment milestone for young couples and in this perspectives, with putting resources into the property, it is an input. The output is to create a home out of your house through tangible and intangible things, and thus this could be seen as an investment, but not a financial one.”
Citing a research report by CBRE on home ownership in Asia, Benjamin shared that 65% of millennials wanted a home of their own, but 63% still live with their parents. External factors such as affordability of public housing and the couple’s purchasing power are also important when considering home ownership.
Jenny Tay, Managing Director of Direct Funeral Services, explained the costs involved in purchasing a property straight after marrying. Prioritising the couple’s business, Jenny and her husband were very careful on their expenditure and investments. She thinks that the first house is a necessity but she could start to think about investment when she made her second purchase. Echoing Benjamin’s thoughts, Jenny felt that the objective to purchase the first flat is dependent on the couple’s financial goals.
“You need to understand your circumstance, how much cash flow you need and whether you can afford to be bogged down financially for about a decade. This includes purchase, waiting for the flat to be ready, moving in and the minimum five years of staying in the BTO before selling to purchase a better property. The real estate market is very volatile and you need to be very clear on your objectives.” -Jenny Tay
Melissa Lim, Co-Founder and Marketing Director of Ladyboss Asia, BiTS and moderator for the panel discussion, questioned if technology affects property investments.
“It really depends on what kind of investments you’re looking at,” Lionel divulged, ‘Let me share some hacks that I use. One really great site that I used when I purchased my home is propertysoul.com. The site offers a really great way to evaluate if you’re paying too much for your house based on a 3-3-5 rule.
3-3-5 Rule in Property Purchase
“You should be able to pay 30% of the overall price, the mortgage shouldn’t take 30% of your income, and it shouldn’t be more than 5 times your annual income. Is that a rule that you should definitely follow? No, but it’s a great guideline and it helped my wife and me decide on a property faster. Getting that perspective from different blogs and websites is great – the internet has made it so easy to find all these information!”
When it comes to other investments, there are many investment calculators available online. These tools can help you calculate your capital gains, and there are many videos and sites that will teach you all about investments. Lionel also highlighted that all SGX and savings plans can be automated easily. Technology can help to cut down on the effort needed for investment research.
Jenny also suggested to the audience that they can hire a trusted agent when they are selecting their property. At the end of the day, a second or third opinion is always useful. Property purchase can be an emotional journey and a good advisor can help you make a better decision.
Quoting a Chinese idiom, Jenny emphasised the need to be calm and patient so that the buyer can negotiate for a better deal. Violet also shared from her experience that it is not wise to rush into a deal. Despite her years in investing, Violet chooses to be diligent in her analysis whenever she decides to purchase a new property.
Managing Finances as a Couple
Melissa asked if the panellists would recommend a joint account for couples. Violet shared some of her insights with the audience from her matchmaking work at Lunch Actually Group.
“One of the biggest values that we look at is the finances of our individuals before we match them. Unfortunately one of the key reason for divorce in Singapore is money. I always tell my couples that one of the most important talks you must have before marriage is to discuss how to manage your finances. While most couples affiliated to religions go for pre-marriage classes and counselling, I always encourage everyone and anyone to attend these classes so that they will remember to enter the marriage with both eyes open. Marriage is a lifetime, don’t live in a wedding bubble and spend too much on it.”
Growing up in a family where her parents had a joint account, she brought up the topic of shared accounts with her husband early in her relationship.
“Somehow he was convinced when he saw how my parents were and how it had worked. It is straightforward for us too, because we just pay for expenses from one joint account and there was no need to discuss who pays for what and how much. Also, as we’re in the business together, whatever we make is out of both our efforts so it makes sense to have a joint account. However, this may be unique to our circumstance and acknowledge that it might not be applicable to other couples with separate careers.”
The Secret to a Successful Marriage
Lionel opined that it is important to start a marriage with no secrets. He made a point to be open with his wife of the amount in their individual accounts. Additionally, they have a joint account where they set up automated transfers from their salaries to pay for their household expenses. When it comes to personal expenses like a dinner out with friends or gadget purchases, they would expense the cost to their personal accounts so that it would not be a burden to their partner.
Jenny concluded the discussion with the age old sentiment that women often quote. “Your money is my money, and my money is my money,” she joked, noting that it is still an outlook that many women adopt today. She supported Lionel’s point on open communication about personal finances as it is cumbersome for a couple to have secrets from each other. She recommended transparency as the best way to ensure a successful marriage.
Edited by Joanne Ng
She was nominated and selected for FORTUNE Most Powerful Women conference in 2016 (Asia) and 2015 (San Francisco, Next Gen).
Anna has 10 years of experience in the financial sector and is currently a Director in Tera Capital. Her previous work experience includes positions at Citigroup, United Overseas Bank, a regional role in Business Monitor and a boutique private equity firm based in Shanghai. She graduated from Singapore Management University (Finance and Quantitative Finance).