We had two and a half week to work on our projects. People got to choose a project which they would like to do. One was Car Cost Over 5 Years, other was Real Estate for Cash Flow, and the last one was about IRAS. Our class took 3 weeks to get all our presentations present.
As I mentioned in my previous blog, I chose the Real Estate for Cash Flow because it is something that close and related to me and my future, it's also kinda interesting. This project helps me find out which house should I invest in and which ones i should not. This project really get me on searching for real estates which are currently promoting on the internet. This project is to shoot an aim for an at least 9% gross rental yield. Plus, we need to figure it out how much is the down payment, how much the the loan, how long you will save up enough for the down payment based on your expected after tax salary + expenses, and how long you will pay off all of the mortgage.
The car project is to figure out which car is best to buy in a 5 year term. This would be included every single cost when you actually own a car. I was blur by how many things we actually have to pay when owning a car in the presentations presented, eg: brakes change, insurance, tires, windshields, oil, gas, maintenance,... and lots more tiny little things. This project would aim for buying a car with a good, convince price, and selling them after 5 years with not so bad price. To find for the selling price, we can compare and figure it out with a similar car 5 year older and similar travel distance.
IRAS which is i found really interesting. So basically it was a saving plan with restrictions. There were few types of IRA, but the 2 most commons would be "Traditional IRA" and "Roth IRA". So what are the differences between these two?
From what I know from the awesome presentations, with a traditional IRA, you will get tax deduction for the savings you put into your account. The deduction reduces your taxable income. But when you withdraw the money, this money will be considered as an "income" so the government will charge you with a taxable income. And there's a penalty that if you withdraw the money before the mature age, there will be an additional 10% tax on that early distribution. There also are restriction whether you can get the deduction from the IRA. You must begin withdrawing money from a traditional IRA beginning with the year when you turn age 70.5 years old. With Roth IRA, provides potentially tax-free savings and distributions. You don't get a deduction in Roth IRA but distributions from a Roth IRA are completely tax-free. Roth IRA do have income limitations.
Refect: So, I was talking with my dad about the project that i did, which is the real estate one. I was telling him that I am so going to buy a house in Malaysia and put it on rent with a good price and going to sit on my butt collecting money from the tenants. He was much really excited and thought that it was really cool because he would never thought i would know something about these kinds of stuff. My parents are looking for a for sale condo to stay. So I advised them to look for a good gross rental yield, even though i know that we can't get a 9% yield in Singapore. But if it has a pretty good gross rental yield, so even if we don't want to stay in that condo, we can actually put it on rent and get a quite good money.
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