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Do not make difficult times more difficult for ourselves.

Monday, July 12, 2021

When I was blogging more actively, advocating prudence and reminding readers to be careful of overleveraging financially was something I did on a pretty regular basis.

I also said that we should always have an adequate emergency fund and do not think that we can always depend on lenders to extend a helping hand.

We should develop a crisis mentality and do not think that we are invincible.

Remember that bad things do happen and when they happen, it is often without warning.

See this blog and the related posts:
Husband lost his job and my savings is zero!

The COVID-19 crisis is not just a bad thing happening as it is probably the worst thing to happen in many decades.

We are probably familiar with the saying "spare the cane and spoil the child."

Sounds heartless but it works.

I am one such beneficiary or victim. ;)

I believe that people do learn better after a painful lesson or a few and the COVID-19 crisis has probably left some cane marks on most of us.

Unless we are very rich, we cannot afford to feel invincible.

Just because some people we know are buying a second home or an investment property, it does not mean we should too, especially if it means having to borrow large sums of money and having a harder time to make ends meet.

Why risk so much for something we don't really need but maybe want?

So, when do we know we are overleveraged?

Do some stress testing and imagine losing our jobs or our business doing badly resulting in income going to zero.

How long would we be able to last financially in such a situation?

Ah, I have passive income!

Some wonder why I have such a big emergency fund even though my passive income seems more than adequate. 

The COVID-19 crisis is probably eloquent enough to provide the answer.

Dividends can be suspended or reduced and that's what happened during this crisis.

See this blog: An unbeatable level of certainty...

So, what triggered this blog?

An article on investing in properties in Iskandar, Johor and how difficult things are for some.

This is a topic I blogged about before as well.

"The Johor skyline is now dotted with empty condominium units, due to an oversupply in the market and lack of foreign buyers.

"When Singapore business owner Jonathan Gan purchased a four-room condominium at Lovell Country Garden in 2018, he thought he had clinched his dream retirement home.

"The freehold apartment located near Johor Bahru’s city centre was twice the size of his three-room HDB flat in Singapore, but the cost was only half of the latter when he bought it directly from the developers.

"Just three years after he purchased it, Gan, who bought the unit at around RM1 million (US$242,000), is having a hard time trying to sell it, even though the asking price is a fraction of what he paid for it.

"Property analyst Debbie Choy, who is director of Knight Frank Malaysia’s Johor branch, said the situation is particularly bad for condominiums and serviced apartments, of which there is an oversupply in the Iskandar region.

"Even owners of the more premium, newer developments in Johor Bahru are having problems trying to attract tenants.

"In its report, Henry Butcher Malaysia highlighted that Johor was the state with the highest proportion of unsold residential properties in the country, even before COVID-19."

CNA, 12 June 2021. 

Remember not to ask barbers if we need a haircut.

When the tide goes out, we will find out who have been swimming naked.

In a more recent blog, I said that some people have nothing to risk but everything to gain when asking us to part with our money.

Even people we think of as friends who are not property agents might be getting a commission when they recommend that we buy a property.

Remember to be careful with our money as nobody cares more about our money than we do.

For sure, external factors are making things financially more difficult for many of us. 

If we have made the situation worse because of bad decisions we have made in the past, learn the lesson and avoid making similar decisions again in the future.

Do not make financially difficult times more difficult for ourselves. 


1. Buying property in Iskandar, Johor.

2. Two questions to ask when buying a property.

3. Use CPF savings for homes and investments.


ConsumeLess Life said...

I don't think I will be able to remain friends if that "friend" earns a commission from referring me to buy anything without declaring it upfront.

Maybe these "friends" are just acquaintances in the first place and should not be treated as friends.

Consume Less Life

Siew Mun said...

Hi AK, this message is poignant especially for those who are transitioning into retirement in the next 5 yrs+. As you know, I am 56, since last year, I have been topping up my wife's CPF regularly. Just last week, I was staring at an integrated health shield bill of about $4,300 deducted from CPF MA for a family of 6. Fortunately, both my MA and wife's MA reached prevailing BHS of $63,000 each. I have decided, its about time, to start building my children CPF MA so that their interest generated can pay for their integrated healthshield premiums. The reasons, are selfish, I want my children to lighten my load and at the same time I want to them to carry their load in a way that is self-sustaining, and they don't need to pay out of pocket. For example, my #3 daughter, started working 3 months ago, I persuaded her to top up $5,000 to her MA, while I top up another $5,000. A total of $10,000 with 4% - $400 generated should be able to cover her premiums. I will do that for #1, #2 daughters and my #4 15 year old son. When I retire, my children can take over the payment of the premiums that is self-sustaining. While my wife and my premiums are covered by interest from our individual MA . I want to avoid being the children backstop to pay for large medical bills. if they give up their healthshield insurance premiums. I think the ability to pay for healthcare is pre-requisite before investments. Thereafter, one can consider to invest in stock, bonds or property

AK71 said...

Hi ConsumeLess,

I know people like that and they are pretty common too.

It is very unfortunate but our modern society is very much money driven.

AK71 said...

Hi Siew Mun,

I keep saying you are a good husband but you are a good father too!

I don't think you are being selfish at all and if you are, it is in a very good way. :)

I have only blogged about how children should check to see if their parents have sufficient H&S coverage.

For example:
Do you know if your parents have enough H&S coverage?

So, thank you for sharing your story as I am sure it would give some readers food for thought. :)

Yes, as we grow older, our private H&S shield plans will get more expensive.

My elderly mother's plan now costs more than $8000 a year which is why she has been thinking of doing away with it for some time but I told her a few years ago I would pay for it.

I saw how my late paternal grandmother's bills ballooned to $100,000 or more per year for many years running and her children decided to put her in a Class C ward to lower the cost.

Don't want that to happen to my mom if such a day should come.

Indeed, all of us should have have the basics covered before thinking of investing!

Newer readers might be interested in these blogs:
1.Financial security: 5 points you ignore at your own risk.
2.Investors eat crusty bread with ink slowly...

AK71 said...

With reference to Siew Mun's comment and my reply, newer readers might want to read the following blogs too:
1. How to get free medical insurance in Singapore?
2. Free medical insurance in our old age?

SnOOpy168 said...

had shared with friends who are new papa about topping up CPF account for the new born. In small steps of (example) $500 a month - which one of them easily can afford and the other finds it a stretch (he was driving Grab then). Somewhere during that full moon party, i showed them that by the time the kid is 16 years old and unless there was a change in Education use of CPF fund, i think the kid can self finance her poly or uni education. Just feed & house them plus some pocket $ will do until they started working. PLUS, anything unsure with this theory of mine, call CPFB hotline for clarification. I got nothing to gain or loose. Yeah, i had a few extra beers for my time telling this. heheheh

If looks can kill, i will be long dead with a bee hive body - as those insurance agent friends of theirs were eavesdropping like a hawk. Hey, your rice bowl isn't my concern. Really, dunno you stranger & nothing personal here. it is public info.

"If AK can do it, so can you"

SnOOpy168 said...

AK. What is your opinion & approach on the CPF shielding that some bloggers are harping on ?

Jason said...

Hi AK,

I’m a new reader! Is there a page for your updated portfolio? I’m 22 this year would like to start a passive income portfolio as well. Have about 120k which I made from cryptocurrency and GME…Decided that I no longer wish to gamble on uncertain things. Most of the cash has been moved to the SPY SNP500 ETF now. Thoughts on having both US and SG portfolio? Thanks and I really am learning a lot from your blog


AK71 said...

Hi SnOOpy168,

I face palm each time I hear people buying insurance products designed to help them with retirement funding when they have yet to max out their CPF accounts.

There isn't any insurance product that can beat the CPF SA's guaranteed 4% interest rate and topping up the SA gives us income tax relief too.

I hope your friends listen to you carefully and start early. :)

1. Monetary legacy for children.
2. Insure against longevity risk but not like this.

AK71 said...

Hi SnOOpy168,

The last time I blogged about CPF SA shielding was in December 2019.

Maximising CPF SA savings and returns?

If we are thinking of doing this, we have to hope that the CPF rules don't change before we do so. ;)

For people less financially savvy, it is probably worth considering as an additional 1.5% interest is a big deal if we expect the low interest rate environment to continue forever.

AK71 said...

Hi Jason,

Welcome to ASSI. :)

We can trade currencies but not invest in currencies and bloggers who say they invest in Bitcoin and try to get their readers to do the same are either confused or out to confuse their readers.

My final word on Bitcoin and friends.

If we are investing for income, Singapore has ample opportunities and we also don't have to worry about withholding tax which would be imposed on us in the USA.

What we do depends on our motivation, of course. :)

As for sharing my portfolio, I haven't done it in a while but if you are interested, the latest was in April 2020 and it wasn't complete either:
Largest REIT investments updated.
and maybe
Largest investments updated (4Q 2019).

You can read my quarterly passive income updates on what I have done since. :)

foolish chameleon said...

hi AK,

"I face palm each time I hear people buying insurance products designed to help them with retirement funding when they have yet to max out their CPF accounts.

There isn't any insurance product that can beat the CPF SA's guaranteed 4% interest rate and topping up the SA gives us income tax relief too."

i recently came across an insurance product that allows a majority part of the premium to be financed at a very low rate ~1%. the guaranteed portion appears to cover cover the interest incurred on the loan part. and the payout is perpetual, as long as the premiums are paid. do you know whats the catch on such product? (btw, reach FRS+BHS already)

SgFire said...

thank you Siew Mun and Ak for sharing. right now i am thinking of topping up kids cpf

laurence said...

Remember not to ask barbers if we need a haircut.

Savvy AK will instead ask barbers whether they need haircut !!!! ;) :0 :)

sleepydevil said...

Hi AK,

Long time no see, master.
There's a saying in Chinese 富贵险中求. A greater risk would naturally expose the one who undertakes it with a more rewarding outcome, of course, if the risk doesn't go against the heavy end :)

Being exposed to this situation, once or twice, it comes eventually to a person at decision making points to take particular note if the risk is worthwhile to stomach and if there is any backups available when there's a hiccup.

I love a point illustrated particularly much in the post.
It's better to have a tap and a few small pails filled than a tap that's filling fast, but with empty buckets all around. Because it would be a disaster when the tap is faulty ;p

Congratulations on your 1M50 as well :)
Wishing you with many wealthy and healthy years ahead!

AK71 said...

Hi fc,

I don't have access to the prospectus of the insurance product you mentioned.

So, I cannot say what the catch is but it sounds to me that the buyer is being made to carry the risk of borrowing money to finance the purchase.

The guaranteed returns might be enough to cover the interest cost right now but is this something that will last forever?

It is almost like borrowing money to invest in REITs which is something I will never do.

There is no free lunch in this world. :)

CPF-SA is not a free lunch but it is not a myth.

AK71 said...

Hi SgFire,

If your children have savings accounts, you can start by putting some of that money in their CPF accounts.

This is quick and easy.

Later on, you can can top up their CPF accounts whenever you have spare cash. :)

AK71 said...

Hi Laurence,

I would give myself a haircut if I could, to be honest. LOL.

AK71 said...

Hi sleepydevil,

Good to hear from you. :)

For sure, we have to weigh the risks of an investment carefully and whether we are able to stomach the risk.

Too often, people focus on the potential returns and forget about the risks.

Bite off more than we can chew and we might choke.

Eagle Hospitality Trust was one such example.

Many prominent bloggers also bought into the Trust and said it was well worth the risk.

Then, there is Bitcoin which isn't even an investment.

I have made mistakes as well in the past, of course. ;)

It is important that we know the difference between investment and speculation.

Some of us should avoid speculation at all cost and in my retirement, I have become conservative.

1. 1M50 Millionaire in 2021.
2. Investing or speculating?
3. Eagle Hospitality Trust: His plight and my philosophy.

Rellangis said...

The STI seems to be humming along and not spiking or plummeting. My equities portfolio is mostly in blue chips and is earning either in scrips or dividends.. so the plan is to put it on auto-pilot mode for now.

I am doing some speculation on cryptocurrency in the hope it will pay off in the long run..

AK71 said...

Hi Rellangis,

As long as you know Cryto is not for investing but for speculating and if you have a sound trading strategy, you should be OK. :)

My final word on Bitcoin and friends.

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