The head of a typical HDB flat household speaks.

I enjoyed the following email because it seems to be from a guy who is the head of a typical HDB flat household in Singapore. Married with 2 young children, he is trying his best to make sure he is financially secure in his golden years.

From what he has shared in his email and with certain assumptions I am willing to make, I feel that he will be quite comfortable in his retirement. I am sharing our correspondence here:
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Hello AK

Greetings. 

I have been reading your blog for about one year now. Truthfully I think you have been doing a good job in sharing your money saving and investing experience. 

I am 39, married with 2 young children. We just paid off our HDB flat and happily debt free, for now. We are not high income but live simple life. We take public transport to work and our friends (who stay in EC condo & drives a luxury car) make fun of us for staying in a dilapidated flat, but your blog keeps me motivated to achieve Financial Independence (FI) soonest I can. Nothing matters, except to achieve FI for us.

You inspired me to use cash and transfer from OA to max out my CPF - SA, which is on track to hit $161,000 by Dec of 2015 based on my monthly income contribution. 

Judging by our incomes, we'll be lucky to each have about $500,000 in cash savings (not counting the flat)  by the time we turn 55.

I know you a big believer in buying S-REITS and stocks and I agree with you too. The only small issue here is that I have to spend quite a bit of time studying and hanging out with my family, so with limited time to study and select stocks, would you recommend that I just dollar averaging into STI ETF from now until I am 55 years old? Do you know people who have successfully build up a retirement nest egg with this ETF strategy ? The other issue is that ETF does not give out much dividend as compared to REITS.. 

Grateful if I can hear from you, thank you very much

Sincerely,

C

When our home is fully paid, we have control AND ownership.
Before it is fully paid, we have control but NOT ownership.
We cannot say we own our apartment until it is fully paid for.

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My reply to C:

Hi C,

Welcome to my blog and I am glad you have found it useful. :)

Next, congratulations on being debt free! It is a good feeling, isn't it? I don't think your friends staying in an EC and driving a luxury car are debt free. They could be, of course, but if they belong to the same cohort and have similar level of earned income as you, the probability is lower.

If your friends are still servicing a mortgage and car loan, you are being very nice not to laugh at them for being still in debt. OK, AK is being naughty here. Bad AK! Bad AK! ;p

Now, let me say that having $161,000 in your CPF-SA by end of 2015 is an accomplishment at age 40. By age 50, you would have $241,500 and by age 60, if you were to leave your funds in the CPF-SA and, of course, the mandatory CPF-RA, you would have $362,250. This is assuming that there is no more mandatory contribution from 2016 and this is also not taking into consideration the extra 1% paid on the first $40,000 in the CPF-SA. $500,000? I think you have nailed it with this strategy.

Oops, I forgot about your savings in the CPF-OA which will build up from age 40 to 55 (or 62 if you choose to retire later). ;)

As for investing in the STI, you want to read the guest blogs by Matthew Seah. Just go to my blog's left side bar and look for his name under the section that says "Guest Bloggers". Matthew wrote about options provided by POSB and OCBC.

For people who do not have the inclination nor the time to actively monitor their investments in the stock market, index investing is a pretty good choice. However, do take note that the stock market goes through bullish and bearish phases too. So, it is important that you are able to sit out bearish phases and not break into a sweat.

The trick is only to invest with money you can afford to lose and not to use money earmarked as emergency funds or for any other purposes. You do not want to have to liquidate at the depths of a bear market.

Investing will always have an element of risk. Look at the Japanese and the Americans and how their countries' economies went into a tailspin in the past. Investors saw years of gains wiped out. This is why I think that the CPF is an important cornerstone of retirement funding adequacy. It is not only risk free, it is free of volatility.

Continue with a financially prudent lifestyle. Make more money. Spend less. Keep a big enough emergency fund (and I think this should grow in size as we grow older). Invest the rest but always keep a war chest ready to buy more during bear markets. Quite simple. :)

Best wishes,
AK
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We should never laugh at people just because they are staying in homes less "prestigious" or if their mode of transportation is not as flashy. 

There are many HNW individuals in Singapore who stay in HDB flats and take the public transport.

Don't judge a book by its cover. Better still, don't judge. Just a reminder to myself, of course.

Related posts:
1. In my 40s, married with kids? What to do?
2. An essential habit to becoming richer.

One of the most noble things we can do.

In recent conversations, I revealed that one of the things I have been thinking of doing is to set up a foundation to help financially disadvantaged students in future.

 

In the meantime, I have been making regular donations for many years to help fund bursaries for deserving undergraduates in National University of Singapore where I spent 4 years of my life.

I believe that helping financially disadvantaged students so that they and their families will have a brighter future is one of the most noble things we can do. So, if you can afford to do so, you might want to find out more about NUS Annual Giving and how to make a donation: here.

Related posts:
1. Counting our blessings.
2. We can help to lessen the pain.
3. The world is full of nice people.

New year's resolutions to impact your financial security.

There are two points to note in this reply I made to a reader:

"Well, in your case, with $157K in the SA, at age 53, 10 years from now, even without another contribution, the money in the SA will grow to be at least $236K. I say "at least" because I have not taken into consideration the additional 1% interest for the first $40K.

"$236K in your SA at age 53 and without any risk. Sounds good? ;)

"... Yes, it is harder for older workers (to rejoin the workforce). This is also why I said during a discussion in FB that a bigger emergency fund is necessary as we grow older."

The two points are:

1. Help the government to help us meet the CPF minimum sum. Beef up our CPF-SA as soon as possible and let time and the government do the rest for us.

2. The size of our emergency funds should not be static. Depending on our financial commitments and depending on our age, we should make adjustments to reflect new realities. The number of dependents we have and our age are important considerations.





Point 1 has worked out well for me but, of course, past results are not a guarantee of future performance, as some readers have pointed out. 

Point 2 is something I am always mindful of and I keep an emergency fund that is enough to cover 24 months of routine expenses.

With the new year just round the corner, giving some serious thought to these two points could be great new year's resolutions and greater still if some decisive action should be taken.

Related posts:
1. Get a lifetime income of >$2K a month (from age 65).
2. Emergency fund: How much is enough?

Helping more people discover a path to financial freedom.

A couple of years ago, ASSI squeezed into the ranks of the top 1,000 websites and blogs in Singapore. Today, we managed to squeeze into the top 1,000 again after dropping out for 2 years.

Yeah!

With many more websites and blogs in Singapore as time goes by, I have no doubt that being in the top 1,000 again is only possible because my blog's readers are quietly spreading the word and helping to increase readership numbers. ASSI is also very fortunate to have very good guest bloggers who contribute high quality articles which help to enrich the space.

All of you are the other half of ASSI. So, thanks very much for making ASSI the vibrant blog it is today and for spreading the word that financial freedom is not just a dream.

Traffic ranking by Alexa.

Related posts:
1. Top 1,000 websites in Singapore. (2012)
2. Be ambassadors of financial freedom.
"Even if the horse would not drink, at least try our best to bring the horse to water. We could be saving more than one life if the horse eventually drinks."

Disastrous investments in the property market: Lessons (Updated 5 July 2018).

UPDATE: 5 JULY 2018

History doesn't repeat itself but it rhymes or so they say.

Apparently, people are flocking to showflats to buy condos now and they are likely to be at it until midnight.

Many property agents are definitely enjoying a feeding frenzy as buyers panic buy.

Why the panic buying?

ABSD is going up 5% and LTV is being tightened as well.

New rules kick in at midnight.





Yes, the government has come up with another round of cooling measures.

In recent years, I have said that private real estate prices in Singapore are too high and that it does not make good financial sense to think of them as good investments for income.

Vacancy rate is still very high and in some places like Geylang, rental rates have fallen by as much as 25% due to a glut in supply.





Buying and thinking that prices can only go up is speculation and with the enormous price tags of private real estate here, it is big time speculation.

I have also blogged that unless we have deep pockets, it is best to avoid.

Still, many people are throwing caution to the winds but beware how it could get blown back as a nightmare to hit us in the face.

People rarely make money buying real estate in a market euphoria but they usually make money buying when Mr. Market is depressed.

This certainly has been my experience.





The Government has raised Additional Buyer’s Stamp Duty (ABSD) rates as well as tightened the Loan-to-Value (LTV) limits for Singapore citizens and permanent residents, in order to “cool the property market and keep prices in line with economic fundamentals”.

With immediate effect, the ABSD rates will be raised by 5 percentage points for all individuals, and 10 percentage points for entities, said a joint statement issued on Thursday (July 5) from the Ministry of Finance, the Ministry of National Development and the Monetary Authority of Singapore.

There will be no change in ABSD rates for Singapore citizens or permanent residents buying their first property.






Previously, the LTV limit for a buyer’s first housing loan is 80 per cent, or 60 per cent if the loan tenure is more than 30 years or extends past age 65. This will be cut to 75 per cent, or 55 per cent respectively. 

Similarly, the limit for a second housing loan will be reduced from 50 per cent to 45 per cent, or 30 per cent to 25 per cent if the loan tenure is more than 30 years or extends past age 65.

Read full article here:
https://www.todayonline.com/singapore/government-introduces-new-round-cooling-measures






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I read in The EDGE that there will most likely be "a new level of pain" for landlords of residential properties in Singapore next year because rents and prices of properties are sinking while vacancy rate continues to rise.

Regular readers would remember that I said that the writing was on the wall in 2011 and that there was too much euphoria in the air as people just kept flocking to condominium showflats and buying into every new launch there was until a year and a half ago when the 8th round of cooling measures with stringent TDSR was introduced.

Some of us might remember this report in The Straits Times:

Some home buyers rushed to submit mortgage applications to banks last Friday night before tougher rules on home loan financing kicked in at midnight.

But a day after the Government's move to tighten home loan financing, the overall effect was muted as only a small segment of buyers are likely to be affected, agents and mortgage consultants told The Sunday Times yesterday.

Developers said it was business as usual at show-flats and they still managed to sell a few units yesterday.

The Monetary Authority of Singapore (MAS) said on Friday that banks have to use a standardised set of guidelines to assess property buyers' ability to borrow. It also plugged a loophole that let buyers dodge tighter loan-to-valuation limits on their second and subsequent properties.

The restrictions apply to loans with an application date on or after June 29.

As a result, some buyers hurried to submit loan applications before the Friday midnight deadline. A significant number of these were buyers at J Gateway, which reportedly sold all 738 units at its Friday launch.The Sunday Times understands that OCBC received a surge in loan applications on Friday night after the MAS announcement. 

(Source: The Straits Times, 30 Jun 13)

These buyers probably would not have been able to obtain bank loans with the new measures which are there to encourage financial prudence. 

I won't be surprised that some of these buyers had bought multiple properties too. 

This "kiasu" mentality that is born from greed is likely to be the downfall of more than a handful of such "investors".






In the last few years, I continually warned that we must be cautious about buying residential properties in Singapore in order to avoid wealth destruction unless it is a BTO flat or an EC or we have spotted a great value buy.

New launches usually have priced in future price appreciation. 

Have you wondered why a new project is almost always much more expensive than the surrounding condominiums? 

Is it only because the land cost is higher? 

So, it is difficult for buyers to make money from these purchases in a short time of a few years unless the euphoria continues. 

It is a game of musical chairs and the music (i.e. euphoria) will stop.

J Gateway

484 sq ft shoebox units in J Gateway sold for as high as $1,774 psf in July 2013. That is a price tag of $858,616! 

Freehold? 

Nope. 99 years leasehold. 

Yes, we know that Jurong is a promising location as our government has plans to develop it into a more robust regional centre but it just doesn't make much sense to me to pay so much for the place now. 

If that is not pricing in future price appreciation (the price would probably only make sense many years down the road), I don't know what is.






So, in the next few years, these buyers would have to service their housing loans (in an environment of increasing interest rates) and hope for the best, bearing in mind that there will be no rental income as the condominium is being built.

Now, with mortgagee sales (i.e. properties foreclosed by banks) rising and some expecting them to rise to 2008-09 levels as distress spreads from luxury condominiums to outlying areas, people who have been waiting for a meaningful correction in prices before making a purchase are going to be amply rewarded for their patience. 

Things are likely to get worse.






"Newly completed condos, including shoebox apartments in the suburbs and on the city fringe, have also popped up at auctions as mortgagee sales in recent months.... some investors holding on to multiple units may have difficulty servicing their mortgage or unable to secure tenants in their newly completed units. Collier's Ng believes, however, that mortgagee sales of upscale apartments in the prime districts will continue to dominate the auction scene. " Source: The EDGE, 29 Dec, page CC9.

Evidently, there are areas which are going to be worse off than others and if you are thinking of buying an investment property for rental income, I have said before that properties in the RCR would be more resilient and the data has supported this but, remember, if you overpay, you won't do much better at all. 

"... the leasing market is going to be more challenging in OCR and CCR, notes JLL's Ong. He sees condo units in the city fringe or RCR faring better. The city fringe is close to the city and yet more affordable. Rental decline in RCR so far has been the mildest." Source: The EDGE, 29 Dec, page CC2.







When I said that the government is determined to bring down the prices of residential properties in Singapore and warned that we should not underestimate the political will of the country's leadership, there were still many optimists out there saying that demand would stay strong enough to prop up prices. 

Recent speeches by Minister Khaw Boon Wan and DPM Tharman Shanmugaratnam indicated that prices are still too high. 

The cooling measures are staying in place.

Some might remember this from October 2013:


Alan Cheong, head of research and consultancy at Savills Singapore, made his case last Friday at Carlton Hotel marking Singapore Management University's (SMU) homecoming celebrations for its Master of Science in Applied Finance programme.

"I think barring external shocks, property prices, residential prices will stay elevated," he said.

Mr Cheong argued that a fundamental concern that there will be an oversupply of homes come 2015 is not the case at all.

"The reason is in Singapore; it is a situation of undersupply."

Source: ST Property






There are many lessons in this blog post and not to ask barbers if we need a haircut is only one of them. 

It is good to refresh my memory from time to time.

Related posts:

1. Selling a private property just got harder. (2011)
"This development is likely to hasten the weakening of private residential real estate prices which is something I expect to become really evident in 2014 or 2015.  "

2. Leverage up and buy investment properties? (2012)
"... it is obvious to me that the government is sending a clear message that they want property prices in Singapore to lower in the next couple of years.."

3. To rent or to buy: Rule of 15. (2013)
"For a while now, we see people buying real estate in Singapore and being quite happy with rental yields of 2+% to 3+%. This is acceptable really only because of the abnormally low interest rate environment. It won't last."

4. Ask these questions when buying properties. (2014)
"... for the more adventurous ones in our midst, please think again and again before handing over that cheque when temptations find their way into our mailbox."

5. Affordability and value for money.
"... we should remember that it is not about "affordability", it should always be about "value for money".

HOW IS SHOEBOX APARTMENT LIVING IN SINGAPORE? (AK's home is a hut in the sky and it makes sense.)

UPDATED:
Seeing how some people in Hong Kong are living in apartments ranging from 150 square feet to 200 square feet in size makes me feel like I am living in luxury!
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I keep telling people that my home is a hut in the sky. 

It is a tongue in cheek way of saying I live in a high floor shoebox apartment. 

Yup, it is one of those apartments smaller than 50 sq m (538 sq ft) in size described by the ex CEO of CapitaLand as "inhuman". 

Of course, he was not the only one who had something negative to say about shoebox apartments.




To be quite honest, I was a sceptic too. 

My old place was almost 1,000 sq ft in size, had two bedrooms, two bathrooms, a big kitchen, a big living area and a balcony. 

Almost everyone who visited told me then that it was a perfect size bachelor pad.

At the time, I already had friends staying in shoebox apartments and I knew what a 463 sq ft apartment looked like. 

The first word that came to mind when I visited the place was "tiny". 

Space was tight. 

In between furniture and fixtures, there was only enough space for one person to walk around. 

Well, maybe two if the people were smaller in size.

Tiny!

So, it was a leap of faith for me to buy a shoebox apartment more than two years ago and, to be quite honest, I was somewhat worried about the space issue after the whole deal went through. 

I made copies of the floor plan of the apartment and made scaled measurements of furniture, exploring different ways of making everything fit while still having enough room to move around.

Now, having lived in a shoebox apartment for a while, I find that they are, actually, very livable. 

The trick is not to clutter up the apartment with stuff. 

Staying in a shoebox apartment makes people think more carefully about what they buy for their home. 

The question "Is this necessary?" takes on another layer of importance.


Kitchen is in the living room? Yup!

For me, the necessary furniture to buy in a shoebox apartment would be:

1. A bed.
2. A wardrobe.
3. A sofa.
4. A desk and two chairs.
5. A TV console.

Depending on the size and layout of the shoebox apartment, smaller size furniture might have to be considered. 

However, if the apartment is not smaller than, say, 441 sq ft, and the format is not oddly shaped, pretty decent size furniture, including a queen size bed and a two seater sofa should be able to fit quite comfortably.

I have learned to appreciate that living in a shoebox apartment has many advantages and, strangely, although I had much more space in my old place, I do not feel that my current home is less livable. 

Let me see if I can rattle off a list of things.

Tiny apartments are the norm in Japan.

1. The first thing that comes to mind is that there is less underutilised or wasted space. 

I had lots of space in my old place but most of it was underutilised.

I paid for space I was not using.

When I sold my old place after staying there for more than 4 years, I remember that the kitchen was in an almost pristine condition.




2. There is less cleaning to do in a shoebox apartment which saves me a lot of time. 

I remember that a thorough cleaning of my old place, including the underutilised kitchen, took me almost 6 hours! 

The shoebox apartment takes me less than 2 hours to clean.




3. Financially, the shoebox apartment is less burdensome as it was much cheaper to buy and I also pay less in property tax. 

We always hear people saying Singaporeans are asset rich but cash poor. 

Although not always the case, many people "over consume" when it comes to their homes. 

Real estate can be good investments for income but, unless we have and are willing to rent out spare rooms, our homes are consumption items.

Paying less for my home means that I have more money to invest for income.




4. I enjoy equal access to the facilities in the condominium which includes the car park but I pay much lesser in monthly maintenance fee compared to my neighbours who bought the larger units in the condominium. 

Of all the facilities available, why did I mention the car park? 

Isn't that the most boring thing on the list?





Well, I remember telling some friends that considering the fact that a car park lot is about 100 sq ft in area, I got a pretty good deal since bigger units are also entitled to only one car park lot each. 

Proportionally, a 441 sq ft apartment would gain 22.6% more space while a 1,034 sq ft apartment would gain only 9.7% more space, for example. 

Interesting, isn't it?



I thought this was somewhat extreme.

Anyway, although we might feel unhappy with the rising costs of living, as long as Singapore's economy chugs along nicely, things will only become more expensive over time. 

So, apartments will become more expensive too. 

Smaller formats are more affordable, for sure, but beyond affordability, many are concerned about whether they would compromise on the quality of life.

If we believe that a HDB 4 room flat, 970 sq ft in size and has 3 bedrooms, is about right for a family of 4 or 5, then, each person in the family would have 242.5 or 194 sq ft of space, proportionally. 

A shoebox apartment that is 441 sq ft in size would, therefore, provide plenty of room for a single person or even a couple. 

It is all relative, isn't it?





Finally, I have been watching a program called "Tiny House Nation" recently. 

This is a movement in the USA and we all know how the Americans love their big houses. 

I remember a friend from the USA told me that a 1,300 sq ft apartment was tiny for a family of 5 when I was staying with my parents in an apartment which was about that size.

Anyway, I really enjoy watching "Tiny House Nation" and to learn that more Americans are downsizing, being less wasteful and more environmentally conscious.

Images from "Tiny House Nation."

"In “Tiny House Nation,” renovation experts and hosts, John Weisbarth and Zack Giffin, travel across America to show off ingenious small spaces and the inventive people who live in them, as well as help new families design and construct their own mini-dream home in a space no larger than 500 square feet."

If you want to find out more about "Tiny House Nation", here is the link:
http://www.fyi.tv/shows/tiny-house-nation/videos

Shoebox apartments might not be right for everyone but they could be right for some. 

Definitely, we could live large in a tiny home.




Related posts:
1. Housing and the CPF.
2. Slaving to stay in a condominium.
3. Affordability of housing in Singapore.
4. How big is a 452 sq feet apartment?
5. Smaller apartments' prices more resilient.

AK's birthday wish is for everyone to be wealthier.

UPDATED (10 JAN 17):
People say this Oyster Omelet best.

Quite yummy. $5.00 only. We are so lucky to have good food at reasonably affordable prices in Singapore.
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I always say that packing food to work daily would save us plenty of money. 

My mom prepared a bento for me today.
Steamed rice, stewed fish and ginger.

If we want to eat out, we can also visit the many hawker centres in Singapore which I think have good and inexpensive food.

When my family asked where would I like to go to have dinner to celebrate my 43rd birthday, I suggested Whampoa Market! Surprised?
Actually, there are many millionaires in our HDB estates and they lead simple lives. 

We might not know much about them because they are not very talkative (like I am) but they are more common than we think they are.

I like fried Ngo Hiang et. al. very much.

Realised I don't have a photo showing only the food.
This is the best shot after some cropping.
The Hokkien Mee was already half eaten. -.-"

Decided not to have a birthday cake.
Just stacked 3 waffles on top of one another.
Then, just eat with ice cream! I like!

(Apologies for the photo quality. The photos are in my mobile phone. I used a digital camera to take the images from the screen of my phone and cropped them. I am such an IT dinosaur, I know.)

Good company. Good food. Good price.

We don't have to go to "atas" restaurants to be happy.

People who have above average income would often tell me that it is difficult to build wealth in Singapore but if they were to examine their lifestyles, they might be surprised at how much money they could actually save if they were to make thriftier consumption choices.

I know it is possible to build wealth more rapidly in Singapore and some readers who have decided to make changes to their consumption choices with an eye on wealth building have written to me to say that they have made good progress. 

Get the whole family in on the project (which some readers have done) and our success rate would be even higher.

Remember, it is always the toughest in the beginning but if we are determined and disciplined, my birthday wish for everyone to become wealthier will come true.

Related posts:
1. AK's free birthday cake (2010).
2. Good food at good prices (2011).
3. The Millionaire Next Door.
4. Financial freedom is a family affair.
5. If we are not rich, don't act rich.
6. Be $48,000 to $60,000 richer in 10 years.

Do we need new or is old good enough? (How to be richer? Another personal story of frugality.)

UPDATED (22 DEC 16):

Related post: Never bored in retirement.

Old game but still a fun game!

As I play the game, I am also watching the anime online. All 180 episodes! I can binge watch!

All for FREE!

Wahahaha! Bad AK! Bad AK!
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I hear friends talking about getting good ear phones so that they can enjoy music on the go many times before.

A friend actually brought me to a shop in the basement of ION Orchard to look at these super earphones before and when I saw the prices, my jaw dropped.

I don't know if you believe me but a pair of these diminutive ear plugs, yes, they look like ear plugs, could cost more than $300 or $400! 

How could something so small cost so much? It is simply mind boggling! What is more amazing is that some people actually buy the latest (expensive) ear phones as and when they become available!

When recommended to get a pair for myself, I politely declined, saying that I don't have use for earphones. Actually, that is not true. I do use earphones. I use them when I watch movies on my iPad. I use them when I travel. I use them when I go to the gym (once in a blue moon).

However, my earphones didn't cost me $300 or $400. They didn't even cost me $15, if I remember correctly.

So, what do my earphones look like?

I don't know if they still sell earphones like these. They come in a plastic case with a nifty rotating feature to reel in the cords neatly. I like the neat design very much.

I happen to leave my earphones on my desk today because I used them in the gym yesterday. A friend who was visiting remarked at the "antique".

Well, I must have had these ear phones since I was in college or when I was in National Service. I cannot remember exactly. So, they are pretty old but they still work.

I have shared in various blog posts before on the things I have and some of these things I have had for a long time and still using today. (See related posts below.) These ear phones are another example.

I don't see the need to get the latest gadgets which are usually rather expensive, anyway.

If the older stuff still work, unless there is a very good reason, we shouldn't replace them.

Waste not, want not.

Related posts:
1. Some of my stuff (Part 1).
2. Some of my stuff (Part 2).
3. Some of my stuff (Part 3).
4. How I earned $9,216 with a mug?
5. AK denied Starhub extra income!

A meal for $2.00 from McDonald's!

My Christmas Eve lunch:

A McChicken Burger and a 16oz cup of Iced Milo.

$2.00 only.

A friend told me about McDonald's Surprise Alarm and now I get a surprise almost every day!

For more information, see: McDonald's Surprise Alarm.

This is not an advertorial. I just like McDonald's and I like freebies. LOL. ;p

Related post:
McDonald's Singing Bones Kitty!

An important message from AK as ASSI turns 5.

It was on Christmas Eve of 2009 that ASSI was born out of boredom and curiosity. Yes, it has been 5 years! 5 incredible years of (mostly) happy blogging!

The journey has not been all smooth sailing but we have had many more days of good weather than bad. The stormy days were made more bearable because of the kind words of encouragement from many of you and that kept me going. You know who you are. So, thank you from the bottom of my heart.

As we celebrate my blog's 5th birthday, I wish to remind everyone that most of us in Singapore will be able to find financial freedom using some common sense and following some tried and tested principles in personal finance and investment.

Regular readers will know that this is true and some have shared with me that their savings, investments and passive income have grown tremendously in the last few years. New readers who hoped to find some mysterious get rich fast method in my blog have been disappointed or so I was told but to those who have decided to become income investors, I am hopeful that all will find success.

There were also readers and guest bloggers who have contributed comments and guest blogs, respectively. They have shared their experience and shown us how they were able to achieve or work towards financial freedom as well. So, if you are among those still wondering, please remember that financial freedom is not just a dream.

As we celebrate the festive season and be charitable to those who need help most, we want to be reminded that nobody cares more about our money than we do. The blog post that received the most "Likes" this year in ASSI is one example of how we should give more thought to how we treat our money.

Which blog post am I referring to? This one:

FREE Investment Linked Policies or Term Life Policies?

Share the link to the blog post and it might be one of the best presents to give to your friends and family this festive season.

"... what makes sense for the investor is different from what makes sense for the fund manager. And, as usual in human affairs, what determines the behaviour are incentives for the decision maker." Charlie Munger

HAVE A MERRY CHRISTMAS!

Related posts:
1. ASSI turns 4.
2. Retiring before 60 is not a dream.
3. Nobody cares more about our money than we do.

Tea with EY: Get a lifetime income of >$2K a month.

I am very pleased to publish another thoughtful guest blog by EY. If you are concerned about retirement funding adequacy and if you wonder how it could be achieved in a risk free manner, you should read this:

What can we learn from squirrels?

A big part of my retirement planning revolves around optimising my CPF-SA to generate at least $2,000 of monthly cash flow at 65 years old. With this in mind, I set the target at 32 years old to meet the CPF Minimum Sum by 40.

I hit 40 more than a week ago and have managed to accumulate $161,671.23 in my CPF-SA which coincides with the CPF Minimum Sum of $161,000 effective 1 Jul 2015.

Assuming that I continue to contribute $4,800 (based on approx. 14 months of income) to CPF-SA till 55 years old, my CPF-SA balance would grow to $391,833 by then.

In 15 years’ time at 55, I would expect the CPF Minimum Sum to be adjusted to $200,000. After setting aside this amount in the CPF-RA account to participate in the CPF LIFE plan, I would have $191,833 left in my CPF-SA.

If I stop contributing to my CPF-SA at 55 years old and leave the balance to earn 4% interest, my CPF-SA would have grown to $285,991 at 65 years old.

At 4% interest, I could collect $11,652 per year or $971 per month, without touching the principal amount.

For the CPF-LIFE plan, I intend to participate in CPF LIFE Basic which allows me to leave a larger bequest for my family. With $200,000 in RA at 55 years old, the monthly payout at the draw down age (DDA), currently at 65, is $1,316 - $1,467.

This would mean I would have a life time monthly income of $2,287 - $2,438 each month.

When I kick the bucket, my family will receive the following bequest:

Now, the pertinent question – ‘Would $2,000+ of income a month be sufficient to meet my retirement needs in 25 years’ time?

I don’t know. Really. What I do know is not putting all my humpty dumpties in one basket. Besides this fixed income plan, I will be actively building up other income sources.

Related posts:
1. Level 1 financial security for Singaporeans.
2. The best insurance to have in life (is passive income).
3. Millionaire or not, plan early for retirement.