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Holding A $3 Million Dollar Winning TOTO Ticket? Here’s What We Think You Should Do With The Money

What would you do with your money if you have a winning $3 million TOTO ticket today?

Thousands of Singaporeans had their retirement dreams shattered last weekend when the TOTO results were announced.

It was also announced that there were a total of four first prize winners. The four winners will split the first prize pot of $12 million, leaving each of them with $3 million each.

While the four anonymous individuals (please stay anonymous if you are reading this!) will be receiving a windfall of cash that other average Singaporeans can only continue dreaming of, striking the lottery is by no means a guarantee of financial security.

In fact, the National Endowment For Financial Education in the U.S. estimated that as much as 70% of people who suddenly receive a windfall of money (such as winning a lottery) would end up losing most of their cash within a few years.

While most of us would think that such a situation would never happen to us, the fact is most of us can’t claim to have manage $3 million worth of cash either.

For this article, we will put ourselves into the shoes of our TOTO winners, and to share on what we would do with our unexpected fortune had we won it.

# 1 Get A Condominium, Rent Our Their HDB Flat – $1 million

Singaporeans love owning properties and we think there is space for our winner to own a 2nd property. That’s a move we will make assuming our winner currently owns only one HDB flat.

The strategy here would be to move to a condominium unit that we buy for ourselves while renting out our HDB flat for rental income. Such a move is logical for a few reasons.

Firstly, HDB rental provides a solid yield. For example, the median price of a 4-room flat at Pasir Ris is currently $400,000. Median rental for 4-room flat in Pasir Ris for 2016 was $2,000. This translates into a gross annual return of about 6%.

This strategy makes sense if the winner currently owns a HDB flat and no private property. Such a move not only allows him to upgrade to a condominium, but also enables him to monetise his existing HDB flat.

Another way of looking at it is that our winner not only paid $1 million for a condominium to live in, but also earns a gross return of 2.4% (or $24,000 per annum) on the “investment”

Secondly, in the long run, the reason to invest in private property is to enjoy long-term appreciation while earning rental income in the short-term.

Personally, we wouldn’t jump right in to the market if we are looking for the best deals, but if you have $3 million spare and a new place you want to live in, go ahead and get the private property.

Without the stress of having to service your property loans while enjoying rental income, this is a solid bet in the long-term.

Annual Income From Rental – $24,000

# 2 Investing In Government Bonds Through A Bond ETF – $750,000

Call us conservative all you want but we like to err on the side of caution. No personal banker would be happy for us to advocate such a move (as they would preferring selling you products that gives them a sales commission) but this is what we would do.

There are two good reasons for investing in government bonds through a Bond ETF such as the ABF Singapore Bond Index Fund.

Firstly, as mentioned above, we are conservative. A Bond ETF that is invested in AAA-rated government bonds is as safe as it goes. Based on historical returns, we can expect about 2.5% per annum in coupon payment.

Secondly, the ABF Singapore Bond Index Fund tends to have an inverse relationship with the stock market. That means when the stock market performs poorly, the bond ETF tends to perform better. This acts as a way for us to reduce some of our risk from investing in the stock market, which will get to later.

As a note, this doesn’t mean we will keep all our money in the Bond ETF indefinitely. We may reduce our holdings in the future if there are other investments we want to consider. But for now, we are going to put the money in there for wealth preservations and some annual payout.

Annual Income From Bond ETF – $18,750

# 3 Top Up CPF Special Account – $100,000

Have we lost our mind? Having won $3 million for TOTO, we are now suggesting for our winners to top up their CPF Account? What on earth are we advocating?

Here’s the reason. We want to be financially secured for retirement, regardless of how badly the rest of our investment pans out.

The most cost effective way to do so would be to top up our CPF Special Account (CPFSA) to the maximum amount allowed, and to enjoy the 4% risk-free return it gives us.

The maximum amount you can have in your CPFSA is $166,000. So if we assume our winner currently has $66,000 in his SA, we will do a top-up of $100,000. This would allow us to earn an interest of about $6,640 per annum for our retirement funds.

Think of it in another way. $100,000 is only about 3% of our total payout. And we are setting it aside to ensure that if all else fails, we still have sufficient basic income in our old age. We think that’s a reasonable proposal.

Annual Income From CPF – Nil (until 65, when CPF LIFE Starts)

# 4 Investing In STI ETF – $300,000

Here at, we have always been advocators of investing in index ETF. And there is no reason for us to change our strategy just because we are talking to millionaires now.

We think putting 10% into the STI ETF is a reasonable figure. We expect that there would be short-term fluctuation but that the market would grow over the long-term. Returns are subjective, as the STI have not performed that well over the past 3 years.

That said, we still have 3 reasons to be optimistic.

Firstly, the STI does give out a respectable dividend of about 3% per annum. This means even if the STI does not perform that well, investors still can enjoy dividend payout as well. We can choose to re-invest the dividends, or to hold on to the cash.

Secondly, the gains in our Bond ETF should offset some of the losses in our STI ETF should the market perform poorly. That keeps our investment somewhat diversified. It’s not a perfect strategy, but there are some merits nevertheless.

Lastly, the index is self-renewal by itself. What that means is that poor performing stocks would automatically be removed and replaced by better performing stocks. That means we don’t have to worry (too much) about monitoring the market constantly. Unless Singapore (as an economy) tanks completely, which is unlikely but not impossible, we should do reasonably well.

Annual Income From Dividends – $9,000

Read Also: Step-By-Step Guide To Investing Into STI ETF

# 5 Investing In Real Estate Investment Trust (REITs) – $200,000

Most of our investments thus far have been relatively conservative in terms of returns. Hence, we would like to allocate some our investment into REITs in order for us to generate higher returns.

If we were to allocate $200,000 based on a targeted yield of about 7%, we can expect to receive about $14,000 in dividends each year.

We will aim to diversify our holdings across 10 different REITs.

Annual Income From Dividends – $14,000

Read Also: How Did REITS Performed In 2016?

# 6 Unit Trust For Overseas Investment – $300,000

Aside from REITs and the STI, we want to ensure our portfolio is not just focused only in Singapore. Hence, with the absence of in-depth knowledge in overseas market, we might utilise the help of fund managers to get exposure in markets particularly in Asia, U.S. and Europe.

It’s hard to estimate dividend yields from these markets. To expand our portfolio, we will re-invest dividends received. We will monitor the investments closely and may even consider re-allocating funds if we think we could invest by ourselves in the future.

Annual Income From Dividends – Not Taken Into Consideration

At A Glance – Portfolio

Investments Investment Made Annual Income Expected
Private Property $1 million $24,000
Bond ETF $750,000 $18,750
Top Up CPF Account $100,000 Nil
STI ETF $300,000 $9,000
REITS $200,000 $14,000
Unit Trusts Overseas $300,000 Not Considered
Total $2,650,000

Cash On Hand: $350,000


$5,480 per month


Based on our investment allocation, there would be about $350,000 left on hand. Some of this can be used on assets such as the Singapore Savings Bonds or fixed deposits to earn an extra $4,000 per annum, thus pushing the annual income earned to $70,000.

Aside from that, we will have a conversation with a few trusted agents to ensure we are well covered in terms of both health and life insurance. They may try to sell us some investment products but we would try to stay clear of those. Another area not to miss out on would be estate planning, since we now have a sizeable asset under our name.

Read Also: What Happens To People’s Assets When They Pass On?

Our investment allocation is not perfect and there might be ways to improve on it. How else do you think you can improve on it? Discuss your thoughts with us on Facebook.

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