AA REIT, T-bill, SSBs, CPF, UOB, OCBC.

I have been thinking of taking another long break from social media to focus on other things in life.

Tentatively, I am thinking of coming back in June.

So, this might be my last blog until then.

1. AIMS APAC REIT

This is probably my most rewarding investment for income.

I have been holding to the relatively large investments made during the Global Financial Crisis till today, enjoying a distribution yield in excess of 10% on my cost.

The price appreciation is nothing to shout about but as an investment for income, it has been very good to me.

I would liken it to a bond that has been paying me a very good coupon.

As at 31 March 2024, the REIT has a gearing level of 32.6% which is on the low side.

However, I am mindful of the fact that it has some perpetual bonds which are due for a relook next year and those would likely increase in financing cost.

This is because interest rates and yields are significantly higher now than a few years ago.

This is a good reason to stay cautious if we are thinking of plonking more money in the REIT.

Offering a 7.4% distribution yield, it isn't much higher than what our local banks offer in dividend yields.

The REIT also has to distribute all its income in order to achieve this.

I simply will continue to hold on to my investment since it is already free of cost.

I am partial to receiving "free" money.

2. T-bill

The latest 6 months T-bill auction had a cut-off yield of 3.7% p.a. which wasn't too bad.

I made a video about why CPF OA money should go into T-bills, especially those with auctions in the first half of the month.

Someone told me it was all my fault that non-competitive bids were only 80% filled this time.

OMG!

Bad AK! Bad AK!

Well, like I mentioned recently, my plan is to simply grow my exposure to T-bills unless there is another stock market crash.

This is something I have given some thought to.

I really don't have to do too much on the investment front which is what I plan to do when I turn 55.

So, this is a taste of what's to come, maybe.

I would probably be sending dividends coming in from DBS, OCBC and UOB in Q2 and Q3 into T-bills.

3. Singapore Savings Bond and CPF

This month's SSB is tempting with a 3.33% p.a. 10 year average yield.

In a blog post many months ago, I said it would make more sense for me to buy SSBs with 10 year average yield in excess of 3% p.a. than to do voluntary contributions to my CPF account.

I have already front loaded this and bought enough SSBs to replace voluntary contributions till this year.

With the bombshell dropped by Lawrence Wong on how the CPF SA will vanish once we turn 55 years old, I took a hard look at my CPF savings.

In a recent blog post, I said I would have some $800K in my CPF OA by then and I think that should be enough for me.

I could use it to buy more T-bills if yields stay high or I could simply leave the money in the CPF OA.

Use the interest generated as spending money.

By extension, I don't think I need more SSBs now.

Well, I could change my mind if the 10 year average yield goes to 4% p.a. ;p

Right now, I would rather have a stronger T-bill ladder which means a bigger war chest while waiting for the next stock market crash.

Although it is true that we can redeem SSBs, we wouldn't be able to get the higher 10 year average yield in such a case.

So, T-bills are more attractive for my purpose.

4. UOB

In my video on DBS, I said that it was clear that DBS would continue to do reasonably well even if interest rate were to decline.

DBS does not depend solely on net interest income but has other sources of income.

The same is true of UOB.

Net interest income dipped 2%, year on year.

However, fee income increased 5%.

Other non-interest income increased 3% due to record trading and investment income.

Non performing loan ratio is at 1.5% which means asset quality remains stable.

CET-1 ratio is at 13.9% which is the lowest amongst the 3 banks.

So, little chance of a special dividend from UOB. ;p

By next year, UOB will complete the integration with Citibank's Vietnam consumer banking business.

Of course, the integration with Malaysia and Indonesia was completed last year.

The integration with Thailand completed recently.

Trading at about 9x PE and 1.2x NAV, UOB is offering a dividend yield of some 5.5%, paying out 50% of its earnings to achieve this.

It doesn't look as attractive as DBS but it is attractive enough when I remind myself that DBS pays out a higher percentage of its earnings as dividends.

5. OCBC

OCBC is my largest investment in the banking sector.

Alone, it is larger than my investments in DBS and UOB combined.

I really like OCBC because I think it offers the best value for money.

Well, more accurately, it did.

With its stock price having risen quite a bit, it now trades at about 9x PE, 1.2x NAV while offering a dividend yield of some 6%.

It isn't as cheap as it was, for sure.

Paying out about 50% of its earnings as dividends, it offers a dividend yield of 6%.

So, like DBS and UOB, OCBC grows in value as an investment over time.

Like I said several times recently, there is no need to worry about OCBC's exposure to the Chinese property sector.

Non performing loan ratio is at 1.0% which is even lower than UOB's 1.5%.

Like DBS and UOB, OCBC has demonstrated its ability to generate higher non-interest income.

Net fee income increased 4% while net trading income increased 67% to a new high.

With a very high CET-1 ratio of 15.9%, I am still crossing fingers that we might see a special dividend in future.

As OCBC is the largest investment in my portfolio, it would be something to celebrate if it should happen.

This is a pretty long blog post which I hope it enough to satisfy anyone who is eavesdropping until my proposed return in June.

Until then, if AK can do it, so can you!

AK is on YouTube too:
AK71SG

How much cash am I holding?

I have been asked this question in various forms by various people over the years.

"How much cash are you holding now?"

However, like how I have always sidestepped questions regarding my net worth and the size of my investment portfolio, I have habitually sidestepped the question.

I have published a blog post in the past to explain why.

See:

My investment philosophy or my investment portfolio?

So, this blog post is going to be the first time since I started blogging in 2009 where I share some specific numbers.

Why the change of heart?

This is because of what someone told me not too long ago.

It would help readers have some kind of yardstick for themselves in their decision making process.

I am always mindful of the fact that all our circumstances are different.

So, there is nothing sacrosanct about what I am about to reveal.

We do what our circumstances allow.

Of course, we could push ourselves to do more and we should but how much to push, that depends on our threshold for pain.

1. War Chest

I have said again and again that is it important to have a war chest.

When opportunity knocks, we want to have the resources to take advantage of the opportunity.

For me, such an opportunity usually takes the form of market pessimism.

Like Buffett said before, be greedy when others are fearful.

It is harder to do well when everyone is feeling optimistic and chasing prices higher.

Then, how much should we have in our war chest?

I get asked this so often.

There really is no magic number or percentage.

It depends on Mr. Market.

When Mr. Market is feeling optimistic, my war chest continues to grow in size.

When Mr. Market feels pessimistic, my war chest could be totally empty.

During the Global Financial Crisis, I emptied my war chest and I have blogged about this before.

What about now?

At the moment, I have about $200K in my war chest.

As I do not have a lavish lifestyle and because my passive income exceeds my expenses, this sum is likely to grow.

The money is stored stored in my T-bill ladder.

See:

So, how to grow our war chest? 

Basically, just spend less than we make, either actively or passively.

Want to grow it faster?

Become a better saver.

2. Emergency Fund

Of course, when we talk about cash on hand, we have to talk about emergency fund.

How much do I have in my emergency fund now?

About $250K.

This amount has stayed the same for a while now.

It gets adjusted upwards from time to time to account for inflation and other changes in life.

An emergency fund is important because if all else fails, we have near money we can rely on.

The last time I made an adjustment to my emergency fund was when I decided that I needed $48,000 a year myself and I should give my parents $48,000 a year too, directly or indirectly.

That's a total of about $100,000 in expenses.

I like to keep an emergency fund that would cover at least 24 months of expenses.

So, I have overcompensated. 

The good thing is that I have a good size safety net and I wouldn't have to tinker with it for many years to come.

See:
Passive income and updating my budget.

At this point, I must say that it is important to build a meaningful emergency fund first before ever investing any money in risk assets which includes stocks and properties.

I made a related video on this topic:

Of course, while building an emergency fund, our war chest would go hungry but only in the meantime.

If you are wondering how large your emergency fund should be, you might want to eavesdrop on AK here:

How large should an emergency fund be?

Where do I store my emergency fund?

In fixed deposits.

This is because fixed deposits pay higher interest and they are easier to break than T-bills.

At the moment, $100K of my emergency fund is in the UOB ONE Account because that is really near money and makes 5% p.a.

Of course, come 1 May, I would have to try and bump this number up to $150K as UOB ONE would be cutting the maximum interest rate to 4% p.a. on the first $150K.

3. Float

What is a float.

Well, it is just money floating in my savings accounts which I can use on a daily basis.

I try to have about $20,000 floating at any one time.

This is not because I need all the money on a daily basis but really because I am just mental.

There is no rational reason for this apart from the fact that I feel safe having at least this much which I can use to pay anyone or for anything while leaving my emergency fund intact.

Any excess money, I should be using to strengthen my T-bill ladder.

However, by now, it is obvious that AK cares more about having peace of mind and feeling comfortable than maximizing returns.

Like I always say, I am fine being approximately right.

What I want to avoid is being absolutely wrong.

My float is currently closer to $50,000 than $20,000.

Bad AK! Bad AK!

4. CPF

I know some will remind me about my CPF savings which is, of course, pretty substantial.

See:
$1.1m in CPF savings.

Most of the money in my CPF account will become cash when I turn 55 in another couple of years.

That would be when my CPF account becomes a savings account because I would be able to withdraw the money whenever I want.

I can see my war chest becoming much larger because of this.

Of course, I could also continue to treat my CPF savings as the bond component of my portfolio which can be used to invest in other risk free and volatility free instruments like T-bills.

Thus, the bond component of my investment portfolio would remain intact.

I will decide what to do when the time comes.

OK, I am feeling a bit breathless now.

Time to stop talking to myself.

So, how much cash am I holding?

If AK can do it, so can you!

DBS, T-bill and CPF. Dragon shatters shield!

Hope everybody is having a great start to the Year of the Dragon!

I am enjoying myself.

Maybe, I am enjoying myself a bit too much.

Too much Chinese New Year goodies.

Sore throat!

Ouch!

My investments are mostly doing well and I am contented.

DBS is making me smile a lot more than usual, of course.

The latest 6 months T-bill had a cut-off yield of 3.66% p.a.

My application using $675K of CPF OA money is probably filled since I placed a competitive bid of 3.5% p.a. like I said I would.

This means I would get paid some $2.5K more than what the CPF OA would have paid me.

Anyway, this is the latest from Budget 2024:

1. Members who are 55 years old and older will longer have a CPF SA from 2025.

2. Money in CPF SA will be transferred to the CPF OA once the newly created RA gets filled to the FRS.

So, CPF SA shielding strategy is down the drain.

Remember, back in 2021, I blogged about how it would probably be a matter of time before CPFB did something about the loophole.

It has finally happened.

See:
No more "shielding" of CPF SA."

It was never intended for the CPF to work that way.

It was a loophole that benefitted the financially more able while the financially less able would never be able to exploit it.

The CPF system is meant to help the masses and not the rich.

I have said this often enough and this latest move is further confirmation.

Those who are financially more able would have to find other ways to put excess funds to work.

We should pull our own weight and not rely on the government too much.

I like the idea that help is targeted and people who need it more should have more help.

Well, that's all for now.

If AK can talk to himself, so can you!

Reference:
A river called "CPF" and the horses.

DBS and CPF miracle! Happiness!

I don't usually blog at night but this is so exciting that I just have to talk to myself.

Yesterday, I talked about my 1 year T-bill which I purchased with CPF OA money maturing.

This was the available balance in my CPF IA then:

I also said that I transferred the funds from CPF IA back to CPF OA upon seeing the money credited at 5pm.

This was my CPF OA balance yesterday:

DBS online portal said it would take up to 3 business days for the transfer to be done.

That would mean losing another month of CPF OA interest if the money went back to the CPF OA in February.

It is what it is, I guess.

However, I decided to check my CPF account just now just to see if a miracle took place.

Well, a miracle did happen!

The money is back in my CPF OA which means I would not lose another month of CPF OA interest!

My faith in DBS bank is restored!

Yes, I know.

AK is so shallow.

Bad AK! Bad AK!

I am so happy now.

Losing an extra month of CPF OA interest is a big deal in this instance because the sum is so big.

We are looking at about $1,400 of interest income.

Huat ah!

If AK can be shallow, so can you!

Reference:
CPF account recovery: Thoughts and plan!

CPF account is recovering almost $700K. Thoughts.

Regular readers know that I strongly believe in the CPF system.

I believe that it is a good habit to sock away some money consistently.

In other words, I believe in saving money.

We never know what could go wrong in life and having some savings, substantial savings, is really comforting.

Of course, I also say that we should put our money to work.

We don't want to spend our life working for money.

We want our money to work so that we can enjoy our life more.

So, parking our money in the CPF in an environment of lower interest made good sense as it paid much higher interest rates.

However, in an environment of higher interest rates, to be fair, 2.5% p.a. is pretty decent too.

Still, we would like to have higher returns where possible from instruments with the same risk profile.

This was why I bought a 1 year T-bill with CPF OA funds about one year ago.

Well, the T-bill is maturing today and the money is coming back.

I will perform a transfer from CPF IA to CPF OA when it happens.

Unfortunately, it would not make it back into my CPF OA before the end of the month.

So, I will lose 2 months of additional interest from the CPF OA instead of 1 month.

The breakeven cut-off yield for that T-bill is 2.92% p.a.

For those who are interested in finding out the breakeven cut-off yields, here is a link to a blog that does it: https://growbeansprout.com/cpf-t-bill-sgs-bond-interest-rate

Since that 1 year T-bill had a cut-off yield of 3.87% p.a., I received additional interest of more than $6K.

The funds deployed was almost $700K which explains that more meaningful difference.

Better than leaving the funds inside my CPF OA.

Since I received it as a discount immediately upon the commencement of the T-bill, the interest rate really was higher than 3.87% p.a. compared to a fixed deposit where interest earned is received at the end of the tenure.

I also bought another T-bill with CPF OA funds, leaving only $20K in the CPF OA, and that is maturing in March.

That was a much smaller sum.

Like I said in an earlier blog post, I would place competitive bids using CPF OA funds to buy T-bills.

Non-competitive bids run the risk of getting a cut-off yield that is lower than the breakeven using CPF OA funds.

Since the highest breakeven cut-off yield is 3.33% p.a. which is for 6 months T-bills possibly losing 2 months of additional interest from CPF OA, a sensible competitive bid is 3.5% p.a.

So, that is the plan.

When I turn 55 years old in 2026, after setting aside the Full Retirement Sum in the newly created RA and locking up the Basic Healthcare Sum in the MA, the rest of my CPF savings becomes my emergency fund since I could withdraw the money anytime I want.

That would free up my existing emergency fund which would become part of my war chest.

That would be quite a substantial boost since my current emergency fund is able to cover 24 months of expenses for my parents and myself.

Years of careful planning and patient execution is paying off.

If AK can do it, so can you!

My plan after 3.45% p.a. 1 year T-bill.

Massive disappointment.

Many felt that when the cut-off yield came in at 3.45% for the latest 1 year T-bill auction.

I somehow got the dates messed up and I couldn't take part in the auction.

Regular readers might remember that I bought a 1 year T-bill about a year ago using CPF-OA money.

That cut-off yield was 3.87% p.a. and would mature on 30 January 2024.

So, it would not have matured in time for the recent 1 year T-bill auction.

Somehow, I kept thinking that it would.

Anyway, no loss there.

3.45% p.a.

I would not have gotten the T-bill even if the money came back in time.

I would have placed a competitive bid of 3.5% p.a.

That is minimally acceptable to me when using CPF OA money to buy T-bills.

This is because the breakeven is 3.33% p.a.

This covers the possibility of losing 8 months of CPF OA interest and not just 7 months.

So, at 3.5%, I am only getting 0.17% more than what CPF OA would pay me.

This means that for $100,000, it is a $170 difference.

For $670,000, which is the amount from my last 1 year T-bill with CPF OA money, the difference would have been about $1,140.

Nothing to write home about but still something.

Of course, getting 3.87% the last time, the difference was more significant.

Anything lower than 3.5% p.a., I would just leave the money in the CPF-OA.

Not enough meat for me to be interested.

So, what am I doing with the CPF OA money coming back?

I will try for 6 months T-bill, bidding competitively at 3.5% p.a.

If I don't get it, no big deal.

If AK can talk to himself, so can you.

Reference:
CPF account got hacked!

$3K CPF MA Top Up in 2024 to new BHS.

Like I shared in a recent blog post, the new Basic Healthcare Sum is $71,500 which is an increase of $3,000 from $68,500 in 2023.

This was what my CPF statement looked like at the start of 2024:

After doing the Top Up of $3,000 using PayNow, this is what my statement looks like now:

I decided to do the Top Up earlier than later in the month because I might forget.

Growing old and forgetful.

For those who are not forgetful like me, doing the Top Up a few days before the end of January would mean making a little more in interest income in a savings account.

If AK can do it, so can you!

However, sometimes, it is better to do it your way!

Of course, for those who are still gainfully employed, doing this will also get income tax relief.

It is a win and a win again!

Finally, a question from a reader is worth reproducing here: 

"Just wondering, if I were to also top up my MA to $71,500 in Jan, but as I am still getting monthly CPF contribution, would the top up be refunded without interest as my employer/employee contribution would also flow to MA, or would it go straight to OA/SA?" 

My reply: 

If we are doing voluntary contributions, then, we would have to be mindful of the CPF annual contribution limit. This is because mandatory contributions would count towards that limit. However, when we do Top Ups to our SA and MA, they are independent of that limit.

Reference:
Why top up CPF MA?

Recently published: 
CPF savings, SSBs and T-bills...

CPF savings, SSBs & T-bills in January 2024.

Last year, I published a blog post with a very eye catching title regarding my CPF savings.

"More than $1.1m in CPF savings!"

Well, this time, it is a whimper, in comparison, at less than half a million dollars. ;p

So, how much exactly?

Here is my CPF pie chart at the end of 2023:

Some readers might say that for the first time in a long time, my CPF savings look "normal." ;p

CPF OA savings less than CPF SA savings.

For people who use most of their CPF OA savings to fund a flat purchase, this is probably normal.

Of course, regular readers of my blog would know that most of the money in my CPF OA went to buying T-bills.

Two T-bills.

A one year T-bill is maturing end of this month.

A six months T-bill is maturing in the middle of March.

So, the money will come back.

I will transfer the money from the CPF IA to the CPF OA when it happens.

Then, if yields stay relatively high, I would probably buy T-bills again.

Of course, with CPF funds, I do competitive bidding.

3.5% p.a. is a reasonably sensible bid to place.

I produced a video on this topic before too and, in case some are interested, here it is:

Hope the video is helpful.

Of course, another reason why my CPF savings did not grow as quickly as before was because I did not do voluntary contributions last year.

The money earmarked for that went to buying Singapore Savings Bonds instead which offered higher than 3% p.a. in 10 year average yield.

For those who didn't know this, here is the link to the blog post:

"SSB: Mission accomplished."

I won't be doing voluntary contributions to my CPF account this year in 2024 either.

Why?

I front loaded the "contributions" last year, buying more Singapore Savings Bonds later in the year.

See this blog post:

"SSB: Missions update!"

All as well.

The latest Singapore Savings Bond is offering only 2.81% p.a. in 10 years average yield.

So, that is an easy skip for me.

In any case, I am in no hurry to buy more Singapore Savings Bonds since whatever I want to buy to replace voluntary contributions to my CPF account in 2024 was filled last year.

If the yield remains low for the rest of the year, I will go back to doing voluntary contributions to my CPF account in 2025.

Easy.

Till the next blog post, mask up and stay safe!

If AK can do it, so can you!

List for 2024! CPF BHS. T-bills. 2023 passive income.

Happy new year!

Brand new month and brand new year!

I have been busy the entire month of December and now I have to plan my January.

I have so much to do in different worlds.

Neverwinter, World of Warships and Black Desert Online.

12 to 14 hours of time spent in virtual worlds.

Of course, I must not forget things I must do in the real world too.

January looks like it is going to be another busy month too.

Oh dear.

I wish I had 25 hours a day instead of 24.

Maybe, 26 or 27 hours would be better.

Yeah, bad AK!

So many things to do in my retirement and so little time.

Anyway, as I am growing forgetful in my old age, this blog will quickly outline the stuff I am going to do when it comes to money matters.

1. Top up my CPF MA to the new BHS.

The new BHS is $71,500 in 2024.

This is up from $68,500 in 2023.

Interest earned in my CPF MA will flow into my CPF OA since my CPF SA has already hit the FRS.

So, I will be able to do a $3,000 top up to my CPF MA this month in January.

I will do it earlier than later just in case I forget later.

2. Blog about my updated CPF balance.

My CPF balance will look very "weak" in 2024.

I published a blog last year where I reacted in "horror" that my CPF account was "hacked!"

The bulk of my CPF OA money is in a 1 year T-bill with a cut-off yield of 3.87% p.a. which is why my CPF OA balance is much lower.

That T-bill is maturing at the end of the month.

So, the money is coming back.

I must remember to transfer the money back into my CPF-OA.

3. 6 months T-bills.

I got both 6 months T-bills offered in the month of December 2023.

The cut-off yields were 3.74% p.a. and 3.73% p.a.

Not too bad.

The plan is to maintain my T-bill ladder in 2024.

The yields are still relatively attractive to me.

So, I have already made a non-competitive bid for the auction taking place on 4th January 2024.

If Mr. Market should go into a depression in 2024, it would be time to dismantle the ladder.

4. 2023 full year passive income.

I have been so busy in December that I have not been keeping up with things on the investment front.

I will have to spend some time looking at numbers to account for my passive income in 2023.

I am expecting a weaker Q4 2023 since UOB and OCBC pay dividends only twice a year in May and August.

Year on year, passive income could come in weaker as the REITs I hold are generating less income for me too.

There will be some income generated by T-bills in the portfolio but that won't move the needle much, I suspect.

Hmm.

I think that is all when it comes to money matters and blogging.

Lots of other stuff I have to do but I shan't clutter this blog post.

OK, maybe just this one thing.

I shared this screen-shot of the port of Velia in Black Desert Online in my YouTube community tab on Boxing Day.

You can see my ship docked in the extreme right of the picture.

I am working on upgrading it be like the taller and larger ship with the black sails in the center of the picture.

Work in progress and I should be able to get it in a few more days.

Makes me happy thinking about it.

Will be happier once it is done!

That is all for now.

Look out for upcoming blog posts on my CPF savings and 2023 passive income update.

I will be back!

If AK can talk to himself, so can you!

Full Retirement Sum is not enough to retire on!

It has been quite a while since I tinkered with the CPF website.

I remember how I used to visit the website very often back in the days when I was actively plotting how to make full use of the CPF system.

Anyway, as I close in on 55 years of age, I decided to revisit the CPF website.

That is when I get a Retirement Account set up.

I thought it would be a good idea to check on how much my Full Retirement Sum would be by then.

This was what I found:

Source: CPFB

So, it would be $220,400 for me.

My CPF-SA has more than that right now and it will continue to grow based on interest earned yearly alone.

Therefore, it isn't a worry for me.

This was how it looked at the beginning of the year:

Then, I checked how much I would get when CPF LIFE kicks in for me at age 65.

For this, I used the CPF LIFE estimator: HERE.

I had to tell the AI that I am 55 years old now in order for it to work and then input the FRS for my age group.

It is a fun calculator to use because I was able to use sliders to change the payout age and also the amount of funds involved to see how things would look like.

Anyway, if I just stuck with the FRS of $220,400 and had the payout start automatically at age 70, I would be paid $2,380 monthly.

If I should request for payouts to start at age 65 instead, I would be paid $1,760 monthly.

Back in 2014, I published a popular blog post that has received almost 50,000 pageviews by now.

It was "To retire by age 45, have a plan."

In that blog post, I said that I wanted to retire by age 45 and thought I would be quite comfortable with $2,500 a month in passive income.

I accounted for inflation and by age 65, I would need $5,081 a month in passive income.

I calculated the required monthly passive income till age 75.

If you are interested to see all the numbers at various ages, please go the blog post and I have hyperlinked the title earlier.

So, what is the point I am trying to make?

For me, at least, the Full Retirement Sum is not enough to retire comfortably on.

At age 65, there would be an estimated shortfall of $5,081 - $1,760 = $3,321 a month.

Please don't get me wrong. 

I think that the CPF LIFE is a very good idea because many people are not very good with money and even worse at planning for retirement funding.

So, with CPF LIFE, at least there is some kind of minimum safety net.

However, that is what it is.

A minimum safety net.

In case you are wondering what triggered this blog post, it was a news article on how Singaporeans are falling behind in savings and more can only afford basic expenses.

See article in The Business Times: HERE.

"More Singaporeans can afford only basic spending, don't have enough savings, a survey by OCBC found."

"Most do not have sufficient "emergency funds" or enough savings to meet their families' needs over the next year."

We really want to take action early to help ensure retirement funding adequacy.

During good times, don't become complacent because bad times could hit us when we least expect them to.

Always have a crisis mentality.

It might not be fun but we should do better than those who don't.

If AK can do it, so can you!

Note: Numbers are based on CPF LIFE Standard Plan.

Recently published:
3.75% p.a. cut-off yield for T-bill.

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

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!

Topping up my CPF Medisave Account. Again?

So, I did a top up to my CPF Medisave Account. 

Wait a minute.

Didn't AK say his CPF MA already hit the Basic Healthcare Sum which means no top up is allowed?

Yes, I did.

However, NTUC Income does a deduction yearly to pay for my private shield plan.

I try to remember to top up my CPF MA whenever this happens.

Still, I would forget sometimes.

The CPF MA pays 4% p.a.

Risk free and volatility free, it is too good to miss.

Don't have to do the top up immediately.

Just have to do the top up a few days before the end of the month since CPF only considers the lowest balance in the month when calculating interest to be paid for the month.

Of course, by doing this, it ensures we earn more interest in the CPF MA. 

And interest earned in the CPF MA will overflow into the SA in the new year for those who have yet to hit the Full Retirement Sum.

The CPF SA also pays 4% p.a.

This will help grow our CPF savings faster.

Oops. I should have said 4.04% p.a.

Huat ah!

I am looking forward to topping up my CPF MA again in the new year if they increase the Basic Healthcare Sum.

This is probably going to be $3,000 or so, if it happens.

Don't look down on 4% or 4.04% p.a.

Even if we have yet to hit the Basic Healthcare Sum, with $50,000 in the CPF MA, we are still getting $2,000 in interest income per year, for example.

That would be enough to pay for most people's  yearly medical insurance policies.

Of course, I first blogged about this in 2013, and I have talked to myself about this from time to time since then.

If AK can do it, so can you!

References:
1. Do you want free medical insurance?
2. Free medical insurance in our old age?

Layers of financial protection that matter.

I produced a couple of videos on the CPF MA recently.

I was wondering if I should do it because people are less interested in the CPF these days.

Also, many people think CPF MA is money trapped while CPF SA is money they would get to use in retirement.

I went ahead and did it anyway because I wanted to remind myself of the importance of the CPF MA.

As expected, only a small number of viewers were interested in the videos.

However, they did get some interesting comments.

Someone asked me why didn't I talk about Careshield or Eldershield in the videos.

Well, I really don't care much for Careshield and I only got Eldershield because a friend convinced me that I would be doing my part to bring down the cost of the group insurance by taking part.

AK likes helping if it is not too costly.

I don't need Eldershield and I have blogged about this before.

Why?

Regular readers might remember that I blogged about how passive income is the best insurance in life.

Meaningful passive income.

After so many years, I believe that my passive income stream has become a river.

I should have no trouble with meeting day to day expenses even if I should become physically challenged.

However, I do worry about big financial bombs.

A constant stream of passive income is good at dealing with day to day expenses.

It isn't going to be able to cope with atomic bomb events.

This is why I keep an emergency fund.

A large emergency fund.

This is why I supplement Medishield Life with Incomeshield.

I shield myself from huge medical bills which could one shot my bank account.

When working on the blueprint for retirement adequacy, I was very much aware of my limitations.

Some things we need and some things we don't.

Must be judicious.

I want to be sure to have layers of financial protection which matter, and not anything superfluous or unnecessary through being more than enough.

If AK can do it, so can you!