HDB Purchase Chronicles - Actual expenditure of flat purchase upfront

This article is part of a series that shares my journey to becoming a homeowner for the first time. Eventually there will be more article(s) that not only covers the actual cost on purchase upfront as in this article, but also the process of purchasing resale flat using the HDB Resale Portal, the recurring cost and renovation cost.

In a few days' time, I will finally become a homeowner! This month sees the usage of most of my CPF-OA balance as well as the cash for down-payment. Whelp, it looks like I will not be adding much (if any) position to investments for quite some time as expenses and saving a larger sum for emergency funds takes precedence - for now.



In this post, I'll share my actual expenditure of purchasing my home and compare it to my expected numbers as depicted in my older post here.

The verdict?

• For the flat purchase price itself, I expected to use a bit less CPF and a bit more Cash. I'm pleased that I did not have to put down $500 more cash upfront in this aspect.
• For the additional cost, I also spent less than expected overall. While Legal fees costed less than expected (I think this has something to do with mixing up some legal fees regarding mortgage?), Stamp Fee, Title Search Fee costed more than expected unlike as advised with the calculation using HDB's resources. I did not expect payment for the property tax to cover from the day I take ownership until the end of the year (but it makes sense).

Other interesting things to note:

• When HDB and other resources mentioned CPF-OA will be zero-ed out for flat purchase, I had expected this to be taken literally, but it looks like there will be some small change (up to a few hundred?) aside from the sum meant for Loan Repayment that will start in the month of July. Note that you can set aside more of your CPF-OA by CPF Investment Scheme as well.

Interested in the other articles for the HDB Chronicles series? You can find it here!

Reflections - My performance investing in Fraser Logistics and Industrial Trust

Recently, I sold away my (tiny) position in Fraser's Logistics and Industrial Trust to free up more cash for my new home. I had bought 1000 units at IPO in June 2016 as a way to compound my gains from dividends and distributions earned from CMT and Cache. Subsequently I sold at $1.09, earning $258.5 in capital gain and dividends after subtracting commission, for a total return of 29.22%. 

Annualised, this is a solid 16.70% per annum.

Due to the size of my purchase, commission fee has a more substantial effort on the overall gains. To show diluted effect of commission fees on the performance, I will run a simulation of the gains and comparisons against SPDR STI ETF based on if I had 10,000 units instead of just 1000. I will subsequently do similar simulation whenever I do reflections for cashing out on purchases under $4500.

Units purchased	Purchase price per unit (include comm)	Period held (years)	Yield on cost	Overall gain from distributions	Annualised Capital Gain on cost	Overall Gain from Capital Gain	Annualised Overall Gain	Total Gain
1000	0.892*	1.75	5.67%	9.92%	11.03%	19.30%	16.70%	29.22%
10000	0.894**	1.75	5.66%	9.90%	12.37%	21.64%	18.03%	31.55%

If i scale this up to a level where the effect of commission is watered down (in this case - I'll simulate having bought 10,000 units), I would have had an overall gain of 31.55%.

*The commission here only takes into account the commission charge for IPO 

**The simulation takes it that I purchased from brokerage hence nominal commission fees apply.

Comparison to STI ETF

Units purchased	Purchase price per unit (include comm)	Period held (years)	Yield on cost	Overall gain from distributions	Annualised Capital Gain on cost	Overall Gain from Capital Gain	Annualised Overall Gain	Total Gain
300	2.980	1.75	4.56%	7.99%	2.91%	5.10%	7.48%	13.09%
3000	2.892	1.75	4.70%	8.23%	10.07%	17.62%	14.77%	25.85%

In comparison to SPDR STI ETF, this is a solid win as I had outdone STI ETF in the period, even when scaled up accordingly. The Capital Gain at 300 unit is greatly reduced due to the commission fees on purchase (and there's no way I could have bought an IPO of it, can I? Haha.).

What could have been done better
I'm pretty proud of this achievement actually. There are only 2 things that can be done better:
- Buying more of it while it sits in the range of < $1 early on

- Developing stronger purchasing and holding power overall so that the position can be held and then subscribe to the non-renouncable rights even after flat purchase. :P

Challenging the market?

Altogether that makes 1 out-performance, and 2 under-performance.

Enjoyed reading my reflections? You can read the rest here!