Asked by Anonymous
Asked on 28 Sep 2018
And how much "emergency savings" does a person typically need on hand?
Top Contributor (Nov)
Minimum to save would be 20% of your income into assets that beat inflation.
Housing price I'd keep it to 3-5 X of your household income. So if you're making 50k a year, try to not stay in a house that costs more than 250k.
If you're talking about rent, then not more than 20% if your income on rent.
Emergency savings typically has 4-6 months of your expenses to be used in case of an unforseen situation. In order to make my budget, I prefer the 40/30/20/10 rule. 40 percent of the income can be used in regular monthly expenses such as rent, food, electricity etc. Not more than 30 percent shall be used to pay off loans including mortgage, education etc. 20 percent will be used to prepare for the future like retirement in long term investments. The remaining 10 percent will be used to cover inurance needs.
In this case, since you want to buy a house in the future, you can redirect you 30 percent for loan repayment in safe investment options so that you can buy a house with it in the near future. Taking too much risk in the portion will be too risky as investments are volatile in the short term.
I work at Kristal.AI, and it's my passion to evaluate various upcoming investment opportunities.
Leverage your age and your money, use OPM to increase your wealth. Housing is not just for self stay it is also another form of investment.
If you are working and have cpf you can use most of your cpf money to pay for the house installments..get a 4rm hdb you can also rent out one room to milk for rental..how you set aside for retirement depend on much do you need to survive monthly?use an app to record all your expenses to get the exact number.
Emergency fund of 3-6mths is more than enough and you can invest the rest..if you want to retire much earlier live well below your means and save invest more than 60% mthly