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My plan for CPF as SSB 3.32% p.a. oversubscribed.

Saturday, October 28, 2023

I blogged about my interest in buying some Singapore Savings Bond which offered 3.32% p.a. in 10 year average yield.

It seems that many more people have the same idea.

The results are out.

The SSB was oversubscribed.

Fortunately, for smaller applications like mine, we had 100% of our applications filled.

This SSB partially replaces planned voluntary contributions to my CPF account in 2024, the year I turn 54 years of age.

If this continues, it looks like I won't be making further voluntary contributions to my CPF account.

The plan was, of course, to continue making voluntary contributions till I turn 55.

With interest rates being so low for so long, the plan was to continue making voluntary contributions to my CPF account even after I turn 55.

The idea was to use the CPF as a high interest rate savings account beyond age 55.

However, with interest rates likely to stay higher for longer now, that plan has become less attractive.

Some might even say the plan is now obsolete.

I could get higher interest rates simply by putting money in fixed deposits, for example.

The only drawback of the SSB is that it does not compound interest earned.

Still, at my age, with the resources that I have and the kind of financial obligations that I have, I think that is almost a non-issue.

This is just me talking to myself, of course.

We have to do what makes sense for us.

If AK can do it, so can you!


Siew Mun said...

Maybe you can redeem the lower ones if you have any

Camycan said...

How is SSB 3.21% better than VC?

AK71 said...

Hi Siew Mun,

If I were to do that, I would be taking a gamble that next month's SSB is going to offer a higher average yield.

I will have to sleep on this for a bit. ;p

AK71 said...

Hi Camycan,

I blogged about this more than a year ago:


You might have missed that. ;p

Siew Mun said...

u can estimate by looking at the daily yield on MAS site

zhenling said...

hi AK, has pretty good projections for upcoming SSBs. I find it useful, hope u find it useful too.

HH said...

Hi AK, I think just take advantage and lock in the higher interest rate while it lasts. Looking forward to the next tranche of SSB on 1st Nov

mysecretinvestment said...

Hi AK,

If you had continued your yearly VC3A and VCMA, you would have no problem hitting 1MOA ($1M in your OA) by or even before 55 AND hit 2M60 ($2M in your overall CPF savings by 60). Remember that the yearly interest earned in your MA will flow over to the OA to add to your OA.

I hit 1MOA at 56 and will hit 2M62 by next Jan. I have been doing the following yearly since I turned 50:

2. VC3A
3. RSTU to RA to ERS

2M60 has been attained by others, so not impossible.

I have deployed my OA funds into T-bills to further boost its growth.

Can see my sharing here :

AK71 said...

Hi Siew Mun,

Oh, I use that for estimating T-bills' cut-off yields.

I should use it for SSBs too, I guess.

Thanks for the tip. :D

AK71 said...

Hi zhenling,

I didn't know about that.

Thanks for the tip. :D

AK71 said...

Hi HH,

Well, it does seem like yields on long duration bonds are rising.

Good for savers! :D

AK71 said...


Having $1 million in my CPF-OA has never been a goal.

I mean it would happen if I continued to do VC to my CPF account as a matter of course but it wasn't an explicit goal.

Hitting FRS and BRS were more meaningful to me, especially when they offered 4% p.a. in interest.

This is why I continue to top up the CPF-MA.

I am a retiree and lack an earned income.

So, I don't have the resources that you have. ;p

Still, thank you for sharing your thoughts. :)

Yv said...

Morning AK,

I was glad that my SSB subscription this month was fully allotted too. Now that I have filled up the full 200k, one less hanging fruit to pluck for now.

The share prices of the REITs I have in my portfolio has fallen quite alot (~9%) and it's quite tempting to increase my stake in it, but I am still mulling about it.

Spare cash to continue filling up the UOB One Account, CIMB Fastsaver and Tbills.

AK71 said...

Hi Yv,

Poor retiree AK is barely halfway to $200K. (TmT)

You might want to watch some of my recent videos on REITs.

I am not going to be too adventurous. ;p

HH said...

Hi AK, now is trying to strike a right balance between equities and fixed income. Having too much in fixed income in the long run may not help us achieve the returns required to build up our retirement. Of course now, we have to be selective in the type of equities we want to hold

HH said...

Hello AK, some of the REITS have paid out their divestment gains as part of the DPU. I wondering will it be much better if they use it to pare down their debt instead? Can't help wonder if they do that to "shore" up the DPU artificially. Any thoughts AK? Thanks

ZhuKoLiang said...

Hi AK,

In the past decade for your Singapore Bank stocks, do u enroll in scrip dividend scheme to automatically reinvest dividend or do u just collect dividend as cash and then u decide your own which stocks to redeploy your dividend?

What are the pros and cons of both options and why?


AK71 said...

Hi HH,

Of course, the right mix of fixed income and equities will be different for different people based on our circumstances and our beliefs.

As for REITs paying out divestment gains, it isn't a bad thing per se but you are right to point out that they could use the money to pare down their debt. Unfortunately, we cannot influence the operational decisions of the managers. ;p

AK71 said...

Hi ZhuKoLiang,

I invest for income primarily.

So, I mostly receive dividends in cash.

However, I did opt for scrip during the COVID 19 pandemic because it was so cheap.

I remember OCBC priced their scrip dividend at under $8 per share.

Of course, must take. ;p

ZhuKoLiang said...

Thanks AK for the reply. i would like to ask:

1) for your largest holding (i cannot remmember either is DBS or OCBC), how many % is it out of overall portfolio? if unable to share no worries do say so. The reason i am asking is because: do u think it is important to do 'rebalancing' periodically? for example, if say if your top holding chionged up way too fast up to the mamamia until it becomes 50% of your portfolio, will u trim it to sell to maybe become say 20% of entire? or will u just leave it chionging up?

Also, what is a comfortable max % of each holding? i heard that a proper diversification is each holding should not be more than 5% of overall?

thanks for the wisdom.

AK71 said...

Hi ZhuKoLiang,

To be honest, I don't know how big a percentage is each of my investment.

However, I don't think OCBC takes up more than 20% of my portfolio.

I don't really do portfolio rebalancing.

I always thought that's something professionals thought up of to get more fees. ;p

Warren Buffett's largest position is in Apple and that takes up 50% of his portfolio. Hmm.

HH said...

Hello AK, you mentioned before you started to buy more of our local banks shares when the fed started raising interest rates. U also seem to have a knack for knowing what type of shares to focus on when the investing environment changes. May I know how u have the foresight or anyway to build this skill? Thank you

AK71 said...

Hi HH,

I don't have a working crystal ball and can't tell what's going to happen in future. ;p

What I do have is some knowledge of economics and common sense.

I started buying shares of DBS back in 2016 because although interest rates were very low, I decided they couldn't stay low forever.

Soon after, I bought shares of OCBC bank.

During the pandemic, I decided to take advantage of Mr. Market's depression to buy shares of UOB bank so as to have exposure to all three local lenders.

What I didn't see coming was the very rapid rate hikes, the fastest in history.

This has dealt a blow to the REITs.

I guess what we can take away from my experience is that being diversified and investing for income helps to lessen the pain. (TmT)

HH said...

Hello AK, thanks for the insight. My portfolio 75 percent is in REITS. So feeling the pain as passive income drop. The only thing now is going forward will REITS still do as well as past 10 years when interest rate was low. Anyway I should be diversifying away from REITs :p

AK71 said...

Hi HH,

You probably know my portfolio still has exposure to many REITs.

So, the reduction in income from REITs has affected my portfolio too.

Yes, diversification will help to mitigate this.

I don't know if you have watched this video yet:
REITs are CRASHING! Passive income also CRASHING?

HH said...

Hi AK, yup watched. Thank u. Learn so much. Lesson learnt. Too concentrated portfolio subject to higher risk. DPU drop about 5%. No need sell. Just hold and collect dividend

AK71 said...

Hi HH,

As long as a business has a strong balance sheet and is still generating income for us, it is not bad in the current environment.

I am still learning too. :)

HH said...

Thank u AK ☺️

Learner said...

Hi AK,

May I pls know whether if US have a recession and the Federal Reserve cuts their interest rate, will S-REITs' prices go up?

AK71 said...

Hi Learner,

All else being equal, if interest rates drop, REITs would do better.

Learner said...

Thanks for your clarification, AK.

I've watched all your YouTube videos too, and I'm puzzled why you think that S-REITs' prices may possibly fall further soon. Is it because you think 1 or more of the following other factors may come into play:
1) Japan's interest rate increases;
2) US inflation rate increases such that Fed Reserve interest rate increases;
3) US' economy worsens;
4) China's economy worsens;
5) Singapore's economy worsens?
(Do feel free to let me know pls which of the abovementioned points are valid, or add in any that I've missed out, so that I can learn from you. :-) )

AK71 said...

Hi Learner,

Well, all the videos have a couple of things in common.

Funding cost and the business environment.

If funding cost goes up, it is bad for leveraged entities.

If the business environment worsens, it is bad for businesses.

It seems like "higher for longer" is the new reality when it comes to funding costs.

It also seems like we are headed for a recession in 2024.

So, I like to keep more dry powder, given all these considerations, as Mr. Market could possibly go into a depression.

Learner said...

Thanks for your detailed reply, AK. I understand better now. :-)

AK71 said...

Hi Learner,

Just talking to myself, of course, as I am still learning. ;)

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