Bread ends are the best!

I actually know people who don't eat bread ends and would throw them away! For me, bread ends are the best and I always look forward to when only the bread ends are left in a loaf.

Bread ends are really delicious if we apply some margarine on them and leave them in a hot frying pan for a bit so that they become warm and toasty.

Today, I included some honey baked ham and ginger in the pan:

Guess how much I paid for this non-stick frying pan?

Pan fried honey baked ham on a toasted bread end.

Then, I sprinkled the ginger strips on top.

A slice of low fat cheese.

Voila!

A stupendous home made sandwich, nicely toasted, for lunch. Soooo very good!

Coffee with Raymond Ng: 8.5% yield? Don't play play.

UPDATE (18 Jan 17):
The Singapore dollar climbed to a new record high against the Malaysian ringgit early Wednesday morning (Jan 18), reaching as high as S$1 to RM3.1474, showed Bloomberg data. Source: TODAY.
--------------------------





Raymond is a very diligent investor who regularly makes very sensible and balanced comments in ASSI and on my FB wall.

In relation to my last blog post, he made a series of comments on my FB wall with attachments that we had trouble transferring to the comments section here.





Hence, this guest blog which is a compilation of Raymond's comments on my FB wall and more:

Don't play play with Malaysia G fund..... the G is bankrupting soon.

"The more than US$11 billion (RM38 billion) debt-ridden 1MDB, claiming it has assets worth more than RM48 billion, has twice failed to settle only RM2 billion in loans? 

Common sense, what does that tell you? 

Why would potential investors want to risk their money on such a super heavy debt-ridden 1MDB?"  

(1MDB = 1Malaysia Development Berhad)
Source: http://theantdaily.com/Main/Zeti-led-BNM-to-go-after-1MDB-Don-t-joke





The 8.5% yield is not attractive if we compare to MY FD rate.

In 1990+, the FD is 7~8%, so the yield spread is less than 2% but with lots of uncertainty. 

Even for 2010+, its FD rate is ~3.5%, so the spread is slightly attractive.

MY FD Rate from 1980~2009

Another consideration is SG/MY exchange... MY ringgit is depreciating against SG. 

You will lose out if you use SG dollar to invest.

Source: Yahoo Finance.

Tony Pua spoke about the Malaysia G poor handling of Malaysian Sovereign fund. 
That's why I said MY G is bankrupting soon.
Good 40 mins. 
MY bond is not like SG AAA rating.





Raymond has certainly provided us with much food for thought.
Related post:
A steady dividend payer with yield of 8.5% since 1990.

A steady dividend payer with yield of 8.5% since 1990.

AK doesn't know everything, for sure. So, when faced with a question of whether to invest in a sovereign fund of another country even if it should be a neighbouring one, I must be honest to say that I don't have enough knowledge to even write a simple critique on it.

Here are the emails concerned:

Dear AK,

I have been a reader of your blog, since last year. Has been inspired by how you achieved the passive income from REITS!! Still in the learning curve, and paying tuition fee now.(having paper loss in Lippomall trust and Sabana)

Refer to the email subject, I think maybe it would be interesting to you on these few unit trust or fund managed by Malaysian supported investment firm? More details of this firm can be found in their official website http://www.asnb.com.my/index_e.php.

You can change to english version at the top right corner "versi english",

Just some background of these funds.

The firm was initiated by government in 1980s, they run several funds, some of them are open to all Malaysian, some of them are open only" Bumi - putera" (son of soil, a.k.a. Malays and Indigenous people from Sabah and Sarawak).

The first fund open only to Bumi-putera, has been producing dividend not less than 8.5% pa since its inception in 1990. The highest being 10~12%pa during the good years of Malaysia economy. This fund has serve well as passive income for the Bumi-putera.(long queue at the broker counter during long weekends, festive season, year end holiday etc)

In late 90s and early 2000, they have opened up few more new funds, which are open for all Malaysian, but as usual there are quota for each race. The other funds that are open to all Malaysian, generally produce return slightly less than the first fund, which are open only to Bumi-putera(OK, you know this is Malaysia).

I have attached the annual report for 1 of the funds I invested (AK did not include in this blog post), wish you to give some comment on their financial position. Report is in Malay, I have tries to put down as much as translation i could at the side for each main term in balance sheets and cash flow statement. Other comments from managers, auditor, I hope you can use google translator, if you find it important.

There are some interesting facts on these fund:- unit price is fixed at RM1, so NAV is unknown

- no sales charge, no cost for transaction(buying and selling)
- dividend are paid in new units
- upper limit of the fund is set at RM14bil(or 14bil units). It has not reach the limit yet.(Note: Some of fund has no upper limit, Ponzi Scheme??)
- payment of dividend might actually come from the fresh fund for the new units, as I found their dividend + interest + gain from selling stock, is barely enough to cover the distribution(again, it can be in the form of new units)

I am not an expert in reading financial statement(still learning), hoping you can enlightened me!

A follow up email:

Hi AK,

First of all, really appreciate your reply.

My siblings have been pouring money into these fund without knowing how actually it run. Kind of worrying me.

But it has not stop in paying dividend since its inception. Some time political will can not be measured using common financial terms.

It will be great if you can share it at ASSI. Hoping to get some answer from other readers.
Regards
K

If anyone should have any insights to share, please comment in the usual fashion. Thank you.

Tea with Matthew Seah: Lifelong income with the SRS.

Our guest blogger, Matthew Seah, has kindly obliged to elaborate on how funds in our SRS account could be used to provide us with lifelong income:





If we should have much more than $400K ($40K x 10 years) in our SRS accounts by the time we retire at 62, we would have to pay some income tax as we withdraw the funds from our SRS accounts over the next 10 years. 

(For more details on this, see related post at the end of this guest blog.)

In fact, depending on how much we have in our SRS accounts, we might even be taxed at a much higher rate. 







For example, assuming that we amassed $1 million in our SRS accounts, an annual withdrawal of $100K would mean paying $700 in income tax a year.

One way to milk more money from the SRS account is to purchase an annuity which pays us in perpetuity. 

We would withdraw less money on a per year basis but we would have a guaranteed stream of income as we enjoy our retirement.





Using $1 million balance at age 62 as an example, below is what our annual income from SRS and NTUC Classic Annuity would look like:

*Annuity payout is an estimate based on the guaranteed and non-guaranteed payout.

In this particular case, the taxable income is only $21,510 which means a tax of $30.20 per year after the SRS account has closed at age 72.

That doesn't sound so bad, does it?





Related post:
SRS: A brief analysis.

If a fresh grad can save $20,000 a year, so can you.

I recently read a story about a fresh grad who managed to save $20,000 a year. How did she do it? She has good money habits and also packs her own lunch to work. ;)

I always say that every little bit helps and savings however small do snowball into something bigger. I have experienced this myself as have many others, I am sure.

Save more money in 2015?
New year's resolutions to impact financial security.

I have shared some of my money habits before in my blog, money habits that have helped me to grow my savings tremendously over the years.

Some people laughed at me, ridiculed me and called me names. We are all social creatures, aren't we? Seriously, how did I cope?

Don't be afraid to do what is right. Don't be afraid that we might lose face.

If friends laugh at us, enlighten them. If they still laugh at us, ignore them.

The thing to be afraid of is wealth destruction.

Related posts:
1. Seven money habits of AK's.
2. Be $48K to $60K richer in 10 years.
3. Think you cannot reduce your spending?

Angry with foreign talents or with Singaporeans? Why?

Recently, there has been quite a bit of news regarding a male foreigner working as a nurse in one of our hospitals making some insensitive remarks about Singaporeans and praying for Singapore to suffer disasters. As a Singaporean, of course, I felt very unhappy about it.

However, when I thought that this misguided soul could represent a minority of foreign workers in Singapore, I calmed down. Surely, most foreign workers do not think like him, I told myself.



Maybe, only male FTs feel this way since there is reference to taking our women but not our men? Kidding! ;p

Recently, I received an email from a reader who signed off as:

" (FT follower of AK) :) "

He was quite open about his thoughts and his fears before and I once replied to him like so:

"I like to think that the Singaporean readers who have commented in my blog on the issue are level headed and generous people. In fact, I know some of them and I am sure they are. :)

"However, Singapore has this thing called National Service which PRs and new citizens do not have to perform. So, I do understand that it is something that Singaporeans feel sore about.

"For me, generally, I don't think of people as FTs, PRs, born Singaporeans or new citizens. I like to think of everyone as just people and I like to see everyone achieve financial security and freedom and be happy.

"As long as people have respect for Singapore and her people, as long as they contribute to the country in any way and do not disturb the peace, I would like to welcome them. So, no rioting, no peeing in public, no complaining about neighbors cooking curry, for examples. :)

"Thank you very much for the email but I want to encourage you to leave a comment in my blog, if possible. If it is thoughtful, considerate and courteous, I do not see why anyone should flame you. :) "

Whether you are a foreigner in our land or a Singaporean, old or new, please treat every person with courtesy and respect. Common decency is not beyond anyone's reach, I am sure.

Don't you believe this to be the right thing to do as well?

In the news:
Philippine embassy reminds TTSH nurse...

Related post:
"Sorry No Cure" for Anton Casey?

CPF: Minimum Sum Top Up and Interest Computation.

This blog post is a reply to questions posed by a reader, Vicster: here.




Hi Vicster,

1. Since your home loan is fully paid up and if you do not have any other uses for the funds in your OA now or in the future, you could consider doing an OA to SA funds transfer.





2. "You can enjoy tax relief of up to $7,000 per calendar year, for cash top-up for yourself and/or cash top-ups received from your employer. You can enjoy an additional tax relief of up to $7,000 per calendar year if you make cash top-ups for your parents, parents-in-law, grandparents, grandparents-in-law, spouse and siblings. To qualify for tax relief for cash top-ups for your spouse/sibling(s), he must not have an annual income exceeding $4,000 in the year preceding the year of top-up (e.g. salary or tax-exempt income such as bank interest, dividends, and pension) or is handicapped."




Source: Application to Make Top-Ups Under the Minimum Sum Topping-Up Scheme (For Members)

3. That is a good idea but you could also do an estimate of what your mandatory contributions (MC) for the year might be and do a voluntary contribution (VC) earlier in the year to receive more in interest payments.


4. "CPF interest is computed monthly, then compounded and credited annually to your respective accounts."




Source: CPF Interest Rates: FAQs.

Related post:
How to upsize $100K to $225K in 20 years?

McDonald's Surprise Alarm.

Arranged to meet a friend for lunch after work at McDonald's.

Here's why:

Thanks to McDonald's Surprise Alarm, I have redeemed 2 free Iced Milo, 1 free Coke, 1 free French Fries and had a 1 for 1 offer for 6 piece McNuggets so far. Oh, it also saved me from oversleeping in the mornings twice so far.

Not an advertorial. I just simply like it. Brilliant!

Related post:
A meal for $2.00 from McDonald's.

Waste not, want not, save lots!

After some rather heavy subject matter in recent blog posts, for a change, here is something rather more light hearted: my dinner! (OK, honestly, this is just part of my dinner.)

This is actually a product of another activity, boiling barley water. I boiled plenty of barley water recently as I wasn't feeling well. From just a handful of barley, I got about 10 litres of wholesome barley water.

Buying barley water from the F&N Nutritea label would have easily cost much more.

How much more?

Source: NTUC Fairprice.

According to the above ad, 10 litres would have cost me $18.25! Usual price is S$2.05 a litre.

I bought a 500 grams bag of barley for $1.25 and there is still plenty left.

From NTUC Fairprice too.

Don't throw away the barley after boiling them. They are good for health but I have to say that it is an acquired taste.

Related post:
A simple meal.

Retirement: AK is buying a 12 year tenor AAA rated bond.

Reader:Hi AK, can i do volunteer top up to OA and SA if i hit the 170k ?

AK:If you are talking about doing voluntary contributions to OA, SA and MA when your SA has already hit the prevailing FRS, you can if your yearly mandatory contributions do not hit the annual contribution cap. I know because this is something I do. 
----------



It is the first Sunday of a brand new year and there are only 12 years left (including this year) before I turn 55 in 2026. 

I will soon be considered a senior citizen and I am rather looking forward to it. 

I have no fear of retiring because planning for retirement is something I have been doing for years.




I am going to do something else that will help to make my retirement 12 years later more comfortable. 

I am going to buy a 12 year term AAA rated bond with an attractive coupon tomorrow. 

Which bond am I going to talk about? 

I think some of you can tell what I am going to say next but it is going to be delivered with a twist.

Before I reveal what I am going to "buy", I think I won't be wrong to say that one of the biggest complaints people have about the CPF is that their money is stuck and they cannot touch it when they turn 55.

Of course, they should know that this is only the case when they cannot hit the minimum sum by then and I have blogged (many times) about how we could let the government and time help us hit the minimum sum required by age 55. 

So, I am not going to talk about that again in this blog post.




In this blog post, I am going to talk about people who have hit the minimum sum required or who are planning to hit the minimum sum pretty soon and are in their 40s like I am. 

For us, planning for retirement doesn't stop once we have hit the minimum sum. 

The retirement tool that is the CPF should not be stored away once we have hit the minimum sum. 

The tool is still useful and for people in their 40s (and early 50s), it is even more attractive than ever.

Do you feel the twist coming? Here it comes:

As we have hit the minimum sum and because we are closer to 55, we can consider voluntary contributions to our CPF to be purchases of government bonds with maturity dates. 

They will "mature" when we are 55. 

As with regular bonds, upon maturity, we are returned our money and, in this case, with interest accumulated over the years.





So, if you are my age, these "bonds" will "mature" 12 years from now. 

If you are 49, they will "mature" 6 years from now. 53? 2 years from now. 

The closer you are to 55, the shorter the time to maturity and the better the deal because we are all getting the same "coupons".

The idea is to max out the contribution limit of $31,450 in 2015 and the contribution limits in all the following years until we reach 54. 




So, if our mandatory contributions for 2015 is estimated to be $20,000, for example, we can make a voluntary contribution of $11,450 this year.

This voluntary contribution is like buying a AAA rated sovereign bond with a tenor of 1 to 12 years (depending on whether we are 54 or 43 years of age at the time of "purchase") that pays a coupon of 2.5% to 4% as some of the money goes into the OA while the rest goes into the SA and maybe the MA.

Print form: here.

Some have described the CPF as a cake that we can see but cannot eat. Well, it is possible to have our cake and eat it too. 

In fact, the twist in this blog post shows how the CPF can be like a high quality durian. 

It too can be "bao jiak" (Hokkien for "definitely good to eat").

Reference:
CPF Contribution and Allocation Rates.

-----------------
"From 2016, the CPF Annual Limit will be increased correspondingly from $31,450 to $37,740 (equivalent to 17 months x CPF salary ceiling of $6,000 x 37%)."
Updated blog post on changes to CPF: here.
Related posts:
1. A lot of money in my CPF-SA is ...
2. Buy a bond fund that pays 7% a year?
3. Nobody cares more about our money than we do.