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Financial Strategy Question

Old 10-15-2016, 09:24 AM
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So here is the deal, my family and I have accepted an expat assignment in Singapore and have been living here for the last 9 months. It is supposed to be a 24 month deal but in reality it is probably going to be more like 27 months total.

Besides it being an excellent, once in a lifetime adventure, there are some perks that allow us to save a few pennies while we are here. I have a financial guy and I am pretty involved myself, we already have a loose plan in place but there are some pretty sharp people here. I thought I'd query the brain trust.

We currently own nothing material in the USA, no house, no cars, etc.. Upon our return, we will have to purchase 2 vehicles, a house, and of course a boat. A small boat first then something larger in 5 years or so. That is one of my biggest concern is that we will have to spend a lot of $$$ when we get back. I want to ensure that we navigate that mine field well.

What would be your overall investment strategy to maximize return and minimize risk during the time remaining here in Singapore? How would you go about the cars? Cash? Finance? The house 15 yr mortgage? 30 yrs? 30 then refi? 20% down no matter what? With a 16-18 month window we have been focusing on minimizing risk but that is possibly minimizing reward.

Keep in mind this will be spring of 2018 by the time all of this is happening...Here is the very loose plan so far;

We have taken our savings from before our departure and put it into the money market and are splitting savings from Singapore between the portfolio (60%) and money market (40%)

A medium risk portfolio of mostly ETFs, Bonds, with a few select Stocks that is doing well. (fingers and toes crossed that it stays that way!)

Also a money market with a 1% APY yep, a whole 1%

Planning to finance a newer car for wife, 2016-17 mid size SUV as long as interest rate is lower than I can make with investments

Planning cash for my vehicle that will be some sort of used truck 2014-16 1/4 ton gasser

Cash for small boat, 2010-2012 25 Contender or similar

Not sure / undecided on best strategy for house.

I thought about adding numbers but they are really irrelevant as this is strategic like a chess match. Thoughts? Thanks!

And just for reading and commenting here is a pic of the wife on a boat with our previous boat in the background.....(nevermind the wiry homely guy with a root beer in his hand)

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Last edited by dadriva; 10-15-2016 at 09:50 AM.
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Old 10-15-2016, 10:03 AM
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Move to Bermuda and keep saving/investing.
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Old 10-15-2016, 10:06 AM
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My real answer is to get a CFP to help you. But can't imagine why you would have money in a money market account (except for emergencies) with the current rate of return.
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Old 10-15-2016, 10:49 AM
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18-24 months from now isn't much of a window to grow any stockpile of money at more than 3-4% without taking some big swings and big risk.
The market is pretty high, dividend stocks are even higher, and bonds are not going to yield much for a pretty long time (more than 5 years).
I don't think your allocation is bad (even the 1% money market), and a lot depends on what you hold and what you bought it for in your portfolio.
It seems like you plan to spend most of this savings acquiring things in the near term, so long term growth shouldn't be the plan - just eeking out a reasonable 3-6% return with little risk.
As for future purchases, a lot will depend upon how aggressive the fed gets with interest rates - Yellen things she needs to move them up to 1.5-2% to give the Fed tools when the economy sours again, even if that means giving us another recession sooner than the current policy will - if the rates go up, borrowing costs go up and how to deal with that changes.
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Old 10-15-2016, 11:03 AM
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Right now rates are cheap, but who knows what things will be like in 2018? At the current rates I would finance as much as possible and go with a 30 yr mortgage and just pay extra on it every month. That gives you a buffer in case things go south so you don't have a huge monthly payment like you would on a 10 or 15 year note. I would reduce the money market savings to what you would need to barely survive in a worst case scenario and put the rest into mutual funds and stocks in large, stable companies that pay a good dividend.


P.S. I love what you consider a "small" boat. In my world, a small boat would be a 14' jon, but this is THT where everyone who's anyone is running around in 40+' Fountains and Hatteras'.
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Old 10-15-2016, 11:09 AM
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Originally Posted by dadriva View Post
So here is the deal, my family and I have accepted an expat assignment in Singapore and have been living here for the last 9 months. It is supposed to be a 24 month deal but in reality it is probably going to be more like 27 months total.

Besides it being an excellent, once in a lifetime adventure, there are some perks that allow us to save a few pennies while we are here. I have a financial guy and I am pretty involved myself, we already have a loose plan in place but there are some pretty sharp people here. I thought I'd query the brain trust.

We currently own nothing material in the USA, no house, no cars, etc.. Upon our return, we will have to purchase 2 vehicles, a house, and of course a boat. A small boat first then something larger in 5 years or so. That is one of my biggest concern is that we will have to spend a lot of $$$ when we get back. I want to ensure that we navigate that mine field well.

What would be your overall investment strategy to maximize return and minimize risk during the time remaining here in Singapore? How would you go about the cars? Cash? Finance? The house 15 yr mortgage? 30 yrs? 30 then refi? 20% down no matter what? With a 16-18 month window we have been focusing on minimizing risk but that is possibly minimizing reward.

Keep in mind this will be spring of 2018 by the time all of this is happening...Here is the very loose plan so far;

We have taken our savings from before our departure and put it into the money market and are splitting savings from Singapore between the portfolio (60%) and money market (40%)

A medium risk portfolio of mostly ETFs, Bonds, with a few select Stocks that is doing well. (fingers and toes crossed that it stays that way!)

Also a money market with a 1% APY yep, a whole 1%

Planning to finance a newer car for wife, 2016-17 mid size SUV as long as interest rate is lower than I can make with investments

Planning cash for my vehicle that will be some sort of used truck 2014-16 1/4 ton gasser

Cash for small boat, 2010-2012 25 Contender or similar

Not sure / undecided on best strategy for house.

I thought about adding numbers but they are really irrelevant as this is strategic like a chess match. Thoughts? Thanks!

And just for reading and commenting here is a pic of the wife on a boat with our previous boat in the background.....(nevermind the wiry homely guy with a root beer in his hand)


One percent is pretty good for money market. I was pleasantly surprised when my Vanguard Tax Exempt Money market reported .7 percent recently.

I would pay cash for cars.

If the 30 year mortgage is similar in fees and rate to the 15 year on the house I might consider 30 years and then if you have the cash consider paying it down when I could.

The standard advice is that if you need the money as soon as you need it you maybe should be careful about the stock market. As you know, every so often those dreaded bears take over and there is a 10 to 50 percent drop. It has come back relatively quickly in the past but you might need the cash and have to deal with a major bear market at the same time.

I have had good success with Vanguard's long term Bond ETF, the one I have currently yields about 3.3 percent. I like their Long Term Corporate Bond fund yielding 4 percent as of today. Anyone on here with even only basic knowledge will tell you that if the Fed for some reason got aggressive about raising the rates your investment will drop significantly. I am betting that the Feds will not raise the rates a lot. We shall see.

So the smart advice would be to put all your investments in either a CD maturing when you need the money, a short term government bond also maturing when you need the money, or the 1 percent money market.

If you can afford to take a little risk keep up your ETFs and stocks.
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Old 10-15-2016, 12:25 PM
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Are you planning to have kids? Will you both continue to work after this gig is up? Does your job offer a defined pension plan?

Without knowing a lot I would say 70/30 betterment or vanguard or some other low cost portfolio for non-cash future needs. For the cash I would use something like SAMBX or a short term bond funds. Rates finally appear to be rising which is why I like SAMBX now.

Cash for cars and boat and 20% down on a 15 year mortgage. I am assuming you are maxing out your 401K. Also keep a years worth of cash as an emergency fund.

Live frugally and save all you can for 15 years and then start having a lot of fun.
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Old 10-15-2016, 12:30 PM
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Everyone saying to pay off debts early is insane IMO. Don't take debt that you don't need (IE don't go get a corvette because you get 2% interest), but also don't pay down low interest debt that doesn't beat the average year in the stock market.

For 2 years and knowing you NEED the money for a car and housing when you get back, I'd stick with money markets. Stocks are great for 5-10 year investments or big purchases that can be delayed if the market is down (IE a boat), but for transportation and housing I personally wouldn't risk it.
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Old 10-15-2016, 12:38 PM
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an advise wanted post with a pic of the wife..........well played sir
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Old 10-15-2016, 12:44 PM
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Originally Posted by jj1987 View Post
Everyone saying to pay off debts early is insane IMO. Don't take debt that you don't need (IE don't go get a corvette because you get 2% interest), but also don't pay down low interest debt that doesn't beat the average year in the stock market.

Agree with this. For those advocating paying cash for the cars, would you still do the same if the interest rate was 0%? As long as you are disciplined enough to stay within your means, a little debt can actually be a good thing and give you some leverage. Kinda like charging everything on a CC that gives you cash back and then paying it off every month. It's free money.
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Old 10-15-2016, 07:11 PM
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Wow, I am not disappointed. Lots of great advice here. Thanks for all of the responses.

Originally Posted by mikefloyd View Post
My real answer is to get a CFP to help you. But can't imagine why you would have money in a money market account (except for emergencies) with the current rate of return.
I did mention that I have a 'financial guy' but did not specifically say that he is also a CFP. He is also a CFP. The ultimate goal for the money market is to be 6-12 months of emergency expenses. I am planning to grow the principal elsewhere then make some final adjustments around the time when we return. I am still not convinced that 50-100k sitting in a money market upon our return is the best place for that. Of course, any other place I would put it is non FDIC meaning risk.....

Originally Posted by Lobstercatcher229 View Post
If the 30 year mortgage is similar in fees and rate to the 15 year on the house I might consider 30 years and then if you have the cash consider paying it down when I could.

The standard advice is that if you need the money as soon as you need it you maybe should be careful about the stock market. As you know, every so often those dreaded bears take over and there is a 10 to 50 percent drop. It has come back relatively quickly in the past but you might need the cash and have to deal with a major bear market at the same time.

I have had good success with Vanguard's long term Bond ETF, the one I have currently yields about 3.3 percent. I like their Long Term Corporate Bond fund yielding 4 percent as of today. Anyone on here with even only basic knowledge will tell you that if the Fed for some reason got aggressive about raising the rates your investment will drop significantly. I am betting that the Feds will not raise the rates a lot. We shall see.

So the smart advice would be to put all your investments in either a CD maturing when you need the money, a short term government bond also maturing when you need the money, or the 1 percent money market.

If you can afford to take a little risk keep up your ETFs and stocks.
Great advice on the mortgage, I had considered a 30 yr and paying it down / off earlier but simply forgot.

You hit the nail on the head, my biggest fear is the big bad bear. Everything is stop-lossed so I won't lose much principal and I could always buy again but then I'd lose any gains...which, in all honesty will be modest given the short timeframe anyways.

I am keenly watching the fed rates as well. We shall see.....

Originally Posted by joe.giuliano View Post
Are you planning to have kids? Will you both continue to work after this gig is up? Does your job offer a defined pension plan?

Without knowing a lot I would say 70/30 betterment or vanguard or some other low cost portfolio for non-cash future needs. For the cash I would use something like SAMBX or a short term bond funds. Rates finally appear to be rising which is why I like SAMBX now.

Cash for cars and boat and 20% down on a 15 year mortgage. I am assuming you are maxing out your 401K. Also keep a years worth of cash as an emergency fund.

Live frugally and save all you can for 15 years and then start having a lot of fun.
I am glad you commented. I have seen some of your financial advice here on THT before and you seem to have your sh!t together.

We do have 1 daughter and practice all the time for a second...Practice makes perfect you know! We are both working now and both of us will continue to work upon our return. Her job has a phenomenal retirement package... what can I say? I am a trophy husband! <insert major sarcasm!> As for me, I entered the 401k game a little late at 32 yrs old but have been maxing it out for 6 years and have been overmaxing it since we have been in Singapore.

I have never heard of SAMBX but will look into it.


Originally Posted by Vitamin_Sea View Post
Agree with this. For those advocating paying cash for the cars, would you still do the same if the interest rate was 0%? As long as you are disciplined enough to stay within your means, a little debt can actually be a good thing and give you some leverage. Kinda like charging everything on a CC that gives you cash back and then paying it off every month. It's free money.
I have read a lot of great advice but the main thing I am questioning is paying cash for cars. We have excellent credit and qualify for the best rates. As long as I can beat the rate while keeping principal invested then why not finance? Especially if it is like Vitamin Sea says at 0%?

I am dead set on paying cash for a boat / toys. I've financed a few boats in the past and have learned some painful lessons.

We are already putting EVERYTHING on a cash back credit card that we pay off every month. It is nice to have 1-2k at Christmas time.

Thanks again for all of the advice. Please keep it coming...........
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Old 10-15-2016, 07:36 PM
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No one has mentioned IRAs yet. You and your wife should both be maxing out your IRA contributions every year. I would do that over the 401k if you can't do both. There's more flexibility. Go with a Roth if you aren't over the income limit and you can withdraw the principle without penalty later if you absolutely have to. There are also a ton of other advantages of Roth over Traditional which I won't get into, especially for younger people.

I also feel that a one year emergency fund is excessive if you both have steady jobs, especially if you could survive on one income for a.period of time.

Even if the dreaded bear comes around you're young and time is on your side. Don't panic and sell everything and keep the 401k and IRA contributions going. If you have to settle for cheaper transportation and housing and put off the boat purchase for a while it's not the end of the world. Things will turn around eventually and then you'll make a bundle on whatever you bought at the bottom.
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Old 10-16-2016, 05:03 AM
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Money Markets uninsured = 1% Bank of America FDIC insured = .7%
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Old 10-16-2016, 06:30 AM
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Originally Posted by kennyboy View Post
Money Markets uninsured = 1% Bank of America FDIC insured = .7%
Not sure what you mean? Are you implying that all money markets at 1% APY are non FDIC insured?

Either way, our money market is definitely FDIC insured. See below...


https://www.capitalone.com/online-money-market-account/
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Old 10-16-2016, 06:33 AM
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I don't have any advice but for some reason I always thought you were older.
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Old 10-16-2016, 07:00 AM
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Nice time. I've spent time living and working in Singapore, George Street.

Great country from which to travel to other countries. Take advantage of that opportunity while you're there.

RE: Advice - Given your time horizon is so short, you can't tolerate any risky bets, i.e. no equities.

OTH, given your stop-tossing everything (should consider a trailing stop), and if you're diligent about it, buy whatever big stable companies you want.

If it was me, and I needed the money in a year or two, I would be in safe and liquid, i.e. low/no yield only because my stop loss orders are only good for 60 days and then have to be updated.

I wouldn't want to be bothered managing them and with my luck, I am sure to miss one and that's when a market correction would happen, wiping out any gains and creating losses.

Good luck.
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Old 10-16-2016, 07:23 AM
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Originally Posted by kennyboy View Post
Money Markets uninsured = 1% Bank of America FDIC insured = .7%
Redneck bank 1.25% for the first 35K

https://redneck.bank/mega-money-market/
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Old 10-16-2016, 08:24 AM
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Even a stop loss won't help you if some big financial catastrophe happens overnight and the markets open 700 points lower. If you're dead set on paying cash for everything when you get back then yeah, money market or a CD. How about this? Figure out your budget for the boat and house and set aside the full amount for the boat with tax/title/license and 20% for the house in a money market. Money markets and CD's are FDIC insured for up to $250,000. Put the rest into blue chip equities and index funds and max out your retirement savings.


https://www.fdic.gov/deposit/covered/notinsured.html
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Old 10-16-2016, 10:40 AM
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This is going to sound crazy, but I don't know that I wouldn't start looking to purchase a home now, if you know where you are going to be, and try to rent it out.
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Old 10-16-2016, 10:46 AM
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Originally Posted by dadriva View Post
Not sure what you mean? Are you implying that all money markets at 1% APY are non FDIC insured?

Either way, our money market is definitely FDIC insured. See below...


https://www.capitalone.com/online-money-market-account/
MM accounts and MM funds are two different things. Generally, accounts are insured while funds are not. Although I don't remember either of them ever losing money.
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