Singapore Savings Bond: Mission accomplished.

How did my recent application for Singapore Savings Bond go?

The application used the remaining $14,000 I originally earmarked for CPF voluntary contribution in 2023?

The results are out.

Fully allotted.

No need to carry forward any remaining money into the new year.

Nice!

So, money which was meant for CPF voluntary contribution in 2023 went into three Singapore Savings Bonds this year.

1. $10,000 with 10 year average yield of 3.21% p.a.

2. $14,000 with 10 year average yield of 3.47% p.a.

3. $14,000 with 10 year average yield of 3.26% p.a.

So, no voluntary contribution will be made to my CPF OA and SA in 2023.

For readers who do not know why I am doing this or if you want to refresh your memory, see:

Singapore Savings Bond or CPF?

Regular readers know that my plan was to continue with voluntary contributions to my CPF OA and SA at least till I turn 55 years old.

Although I still consider the CPF to be a risk free and volatility free investment grade bond that pays a reasonably attractive coupon, with higher yields, recent Singapore Savings Bonds were more attractive.

I plan to continue putting aside money at least until I turn 55 years old in order to add to this bond component in my portfolio.

However, the money might not go to my CPF account but the Singapore Savings Bond as long as the latter's 10 year average yield remains higher than 3% per annum.

In 2023, I will still top up my CPF Medisave Account (MA) because that pays 4% per annum.

If Singapore Savings Bond's 10 year average yield should exceed 4% per annum, then, I might not top up the MA either.

However, if such 10 year bonds should pay a coupon of more than 4%, we could see the CPF SA getting its interest rate pegged to long term bond yields and not remain at 4%.

How like that?

Cross the bridge if we come to it.

Speculating now is like "on paper discuss soldier."

I am also too lazy to think too far.

Yes, I know I think a lot but that is a bit too much even for me especially in my old age.

So, does AK mean he would continue applying for Singapore Savings Bond in 2023 with money which was supposed to be for CPF voluntary contribution?

Yes, that is the long and short of it.

Source: MAS

I might even frontload and apply for Singapore Savings Bond from 1Q 2023 with money which would have been earmarked for CPF voluntary contribution in 2024.

For example, if I should have a spare $5K on hand early in the year, I could apply for Singapore Savings Bond with that $5K in 1Q 2023.

I don't have to wait till 4Q 2023 to make applications like what happened this year.

I will have more fixed income by frontloading.

I could even do more extreme frontloading by getting more than $38K of Singapore Savings Bond in 2023 if the 10 year average yield stays relatively high.

Basically, I should have another 4 times of $38K meant for CPF voluntary contribution.

That makes a total amount of $152K which could be frontloaded into Singapore Savings Bond.

This is a clue as to the number of years left before I turn 55.

Another $152K is pretty demanding and would not happen all at once. 

It would happen gradually as and when I have some spare cash on hand.

Frontloading is something that the CPF would not allow, of course, with its annual contribution cap.

Anyway, that is the plan with regards to money meant for CPF voluntary contribution (for now.)

Next blog will be on my passive income for the full year 2022 and also what to do in 2023.

Likely to be published only in the new year.

Happy New Year!

Recently published:
4.28% yield T-bill.

3.47% 10 year average yield! SSB beats CPF again!

A short blog to say I will be diverting money set aside for voluntary contribution to my CPF account in 2023 to Singapore Savings Bond (SSB) again.

With a 10 year average yield of 3.47%, the latest round of SSB soundly beats the average return of 3% I would get from the CPF for doing voluntary contribution to my OA and SA.

If you are interested in how I arrived at this conclusion, see:

CPF or Singapore Savings Bond?

Source: MAS.

I expect this round of SSB to be oversubscribed again with its record beating 10 year average yield.

The last round of SSB was 2.44x oversubscribed and even if no new funds joined the fray, this round of SSB would be 1.44x oversubscribed if only unsuccessful funds from the last round reapplied.

So, I won't be surprised if my application is partially filled again.

$10,000 again?

Maybe.

Well, I will only be applying for $28,000 this time since I got $10,000 the last time.

If some of my money gets refunded, it might not be a bad thing as the final round of SSB in December could offer an even higher 10 year average yield.

Hmm.

Maybe, I should hedge. 

I should apply for $14,000 this time and apply for $14,000 in December.

OK.

Sounds like a plan to me. 

Good luck to us all.

Recently published:
Is there hope for Chinese tech?

Related post:
Singapore Savings Bond 2.44x oversubscribed.

Growing passive income: Equities, CPF and bonds.

I have been blogging about the passive income generated by my investment portfolio every quarter for many years now.

I have also shared how much interest income my CPF account makes every year.

Some readers asked if my quarterly passive income reports included the interest income from my CPF account?

The answer is "no."

I blog about passive income from my investment portfolio and interest income from my CPF account separately.

If we were to add the two streams of income which is something I have not done before, then, my annual passive income would be a larger amount.

It would be quite easy for anyone who might be interested in knowing what the larger amount might be to find the relevant blogs and add the numbers.

I won't bother doing it because unlike my quarterly passive income reports and my annual CPF interest income reports which share my thought processes as well, I feel that simply putting the two together in a single blog to show a larger number isn't helpful in any way to anyone.

Well, it could generate some interest like some tabloid newspaper article would sensationalize some event but it would have no value otherwise.

A bigger number is simply the logical conclusion and it might even give people the impression that I am bragging.

Anyway, to continue, with interest rates rising, interest income from my savings accounts and fixed deposits will become more meaningful but I am too lazy to start a new series of blogs on interest income generated this way.

I have blogged about the importance of saving money often enough in the past and also why having a meaningful percentage of our portfolio in cash or fixed income isn't a bad thing.

Think emergency fund and war chest.

Think survivability and opportunity in times of distress and if you are new to my blog, I have an "e-book" on this: HERE.

As interest rates have risen significantly, I will be diverting funds from my fixed deposits which are maturing into Singapore T-bills  (i.e. zero coupon bonds issued by the Singapore government) as these have much higher interest rates than fixed deposits of equivalent durations (i.e. 6 months and 12 months.)

Treasury Bills Statistics.
Source: MAS

As these T-bills will be held in my CDP account, the interest income earned will show up in my quarterly passive income reports.

Similarly, as I am diverting funds which I originally earmarked for my CPF account to Singapore Savings Bonds which now offer an average 10 year return of more than 3% per year, the returns will add to my quarterly passive income as these bonds are also held in my CDP account.

These developments will have an impact in the accounting of my passive income in the future but the impact is probably a relatively small one.

The change is still noteworthy especially if I continue to divert funds from existing fixed deposits to T-bills. 

This is more so if funds originally meant for my CPF account is diverted into Singapore Savings Bonds at the same time.

So, what can we expect in a nutshell?

Higher passive income numbers in my quarterly updates and slower growing interest income in my yearly CPF updates, everything else being equal.

If T-bills continue to see increasing yields, I might have to stop being lazy and make a trip to DBS to move funds from my CPF account into T-bills.

They should really allow us to do this on their banking app just like applications for T-bills using cash or SRS money.

Anyway, I am glad fixed income in Singapore is once again a financially more rewarding option for income investors.

It is definitely good news for those of us who are more risk averse.

Cash is not trash at least it isn't if we are referring to the Singapore Dollar.

I want to end the blog by saying that things aren't all doom and gloom for most of us.

We can continue to grow our passive income whether we are preparing for retirement or in retirement as long as we stay financially prudent.

Gambatte!

Recently published:
DBS, OCBC & UOB at 40% of portfolio?

References:
1. CPF or SSB?

2. 3Q 2022 passive income.

3. My CPF interest income.

For those who are interested in Treasury Bills, this is a good resource by DBS: Apply for T-Bills.

CPF or Singapore Savings Bond? It is a no brainer.

Regular readers know that I have been doing voluntary contributions to my CPF account every year.

I consider the CPF a special investment grade bond that is risk free and volatility free while paying relatively attractive coupons of 2.5% and 4%.

The plan was to continue doing maximum voluntary contributions till I turn 55.

In my age bracket, a bigger percentage of my voluntary contribution would go to my SA which enjoys a 4% interest rate.

Approximately, 31% of my voluntary contribution would go into the SA while the rest goes into my OA.

What about the MA?

My MA is usually maxed out while my SA has already exceeded the Full Retirement Sum (FRS) and, so, what is supposed to go into my MA would flow into my OA instead.

However, with interest rates rising, I have been keeping an eye on the Singapore Savings Bond.

The effective interest rate for my voluntary contributions to my CPF account for the next few years is about 3% per annum which is an averaging of the interest rate for the OA and SA by contribution proportion.

It is a no brainer that if I am able to get more than 3% from another risk free and volatility free instrument, it would trump the CPF even for my age bracket.

SSB is now offering 3.21% per year.

Even if we were to hold for only 1 year, it will pay 3.08%

Source: MAS.

So, I will be applying for the SSB closing on 26 Oct for a sum of $38,000 or a rounding up of $37,740  (i.e. the CPF annual contribution limit) which has been earmarked for voluntary contribution to my CPF account in the new year.

As I expect the level of interest in this SSB to be rather high, my application is probably only going to be partially filled.

In such an instance, I will use the refunded money for future SSB applications if the coupons remain higher than 3%.

Again, what about the MA?

The plan is still to do a top up to my MA in the new year to hit the new Basic Healthcare Sum (BHS) as that enjoys a 4% interest rate.

However, if the SSB coupon should exceed 4% before then, I will channel the money earmarked for my MA to the SSB instead.

So, it seems that I will either be making a smaller contribution to my CPF account in 2023 or not at all.

The big picture really has not changed.

I am still growing the risk free and volatility free investment grade bond component of my portfolio.

However, the interest earned in the SSB is not retained and compounded unlike the CPF.

I must be prudent and put the interest earned to work and not consume it.

So, CPF or Singapore Savings Bond?

Same, same but different.

References:
1. 2022 CPF contribution and top up.
2. $1.1m in CPF savings!

Chinese tech, IREIT Global and CPF.

On 7 June, I blogged about trading Chinese tech stocks for pocket money.

Back then, Chinese tech stocks experienced uplifts in their prices and I sold some of my units in Lion-OCBC Hang Seng Tech ETF.

What?

AK invests in tech stocks?

Alamak, this must be AK's long lost evil twin blogging!

Anyway, in case you don't know, read:

Investing in Alibaba and Tencent.

I added to my position twice in the ETF in the months leading to 7 June.

The ETF does not pay a dividend and it is not a good fit for the purist income investor.

So, for me to make some money from the ETF, I have to trade which was what happened on 7 June.

See:

Trading Chinese tech stocks.

Pretty decent capital gains.

With the ETF's unit price having declined rather significantly, I decided to add to my reduced position.

I placed an overnight BUY order at a price lower than my average price and it was filled early this morning.

It was slightly lower than the price which marked the lowest point of the double bottom pattern which formed in April and May.

Technically, the ETF is oversold but it could, of course, stay oversold for a while.

I do not see a positive divergence as the MACD has not formed a higher low.

So, the ETF could see its unit price drifting lower or going sideways for a bit.

Could we see the low of 15 March retested?

If that should happen, I hope I would be brave enough to buy some.

Apart from this purchase, I also added to my investment in IREIT Global at close to 50c a unit earlier in the week.

Mr. Market seems to have taken some medication and depression has stabilized.

Still, Mr. Market could get another bout of anxiety and, everything else being equal, I will most probably get more IREIT Global on the cheap then.

The only thing holding me back now is the fact that the new year is coming in about 3 months.

I need to set aside $40,000 to make voluntary contribution and top up to my CPF account.

It might sound like I am complaining but I really am not because, to me, the CPF is a risk free and volatility free investment grade bond.

At my age, having a meaningful investment grade bond component in my investment portfolio is sensible.

My significant CPF savings provides certainty and peace of mind.

I know things are looking pretty bad in more ways than one and on many fronts.

However, we have to soldier on as even the darkest night will eventually pass.

If AK says so, it must be so. ;p

Gambatte!

Recently published:
IREIT Global is a bargain.

References:
1. Inflation, passive income and budget.
2. CPF money is not our money?
3. $1.1 million in CPF savings.

Digital banks, money in CPF or stocks etc.

This is going to be a short blog to touch base with readers.

Quick update, basically, to let folks know I am alive and kicking (butts in virtual worlds.)

I have been busy gaming in Neverwinter and Genshin Impact but, mostly, I am spending time playing RISK Global Domination now.

That is the ultimate time killing game as one game could go on for hours just like the board version of the game!

Anyway, for readers who are not just following my blog but also my blog's comments section, they would know that I am still around as I reply to comments usually within 24 hours.

For readers who are following my baby YouTube channel, they would also know that I am still around as since my last blog in middle August, I have uploaded 5 videos.

My videos are more like audio books which last a minute or so which means you don't have to watch them, only listen.

For examples:

It is pretty easy to produce such videos.

If you are interested in the other recent videos, hop over to my YouTube channel: AK's channel.

The world is in a mess now and everybody is hurting one way or another.

Just remember that no one cares more about our money than we do.

Stay prudent with money.

As long as we are invested in bona fide income generating assets and as long as we are investing more and speculating less, we should do better than most people.

Gambatte!

References:
1. CPF money not our money?

2. Lost $300K staking crypto...

Inflation, passive income and updating my budget.

I was taking my usual break from gaming and doing my 10,000 steps with some stair climbing thrown in when I decided to give some thought to how inflation is going to affect how much passive income I need.

To be honest, it isn't something I must really think about because, off the top of my head, I think I have sufficient buffer but once I think about something, I must have closure.

OCD.

Inflation is preferred to deflation which is why central banks in USA, Europe and Japan were trying so hard for so long to get inflation going.

Well, be careful what we wish for.

A cute little thing can become a monster just like that carnivorous plant in Little Shop of Horrors.

Audrey, if I remember correctly.

Anyway, now that inflation has become pretty ugly, we hear people complaining all the time.

If I had remained a wage slave, I would be crying blue murder, for sure.

What is a wage slave?

See:
Wage slavery.

We are lucky that in Singapore, higher inflation isn't as horrible as in some other countries.

Even the USA is experiencing inflation of close to 10% which is pretty bad.

So, roughly, if my portfolio is able to generate 10% more in passive income, I should do OK.

Last year, my passive income was $171,854.30.

See:
4Q 2021 passive income.

So, 10% more means that this year, I should need $189,039.73!

Alamak, very stressful like that.

Not like this lah.

Anyway, regular readers might remember that back in late 2019, I had a pretty lengthy blog in which I revealed how much passive income I needed.

It was $120,000 a year.

$40,000 for my own expenses.

$40,000 for parental support.

$40,000 for voluntary contribution to my CPF account.

See:
How much passive income?

It has been almost 3 years since that blog.

So, seems like it is overdue for an update.

Yes, AK is lazy.

Tell me something I don't know.

I will start with the easiest one which is CPF.

Inflation doesn't affect the amount I must set aside to contribute to my CPF apart from the annual increase in the BHS.

So, I think increasing the amount from $40,000 to $41,000 is probably reasonable.

As for my own expenses, I think I will be generous and I am increasing the amount from $40,000 to $48,000 or a 20% increase.

This is more than enough to offset any inflationary pressure for this year and the next, I hope.

The same will go for parental support.

This means that I will have to set aside a total of $48,000 + $48,000 + $41,000 = $137,000 per year from my passive income this year and probably the next.

1H 2022 has delivered a total of $104,678.42 in passive income.

Unless something really terrible happens, 2H 2022 should not have a hard time bringing home the bacon.

See:
2Q 2022 passive income.

Being a retiree, I don't have a kind hearted boss to give me a salary increment to help with inflation.

Have to myself help myself. 

Fortunately, consistently investing for income means I am able to do this.

Of course, putting aside more passive income means that I will have less money to invest with.

Still, I am not complaining because early retirement is my choice and I am enjoying it very much.

Hard to believe but it has been 6 years.

I know what some will say about how we must look at real income and not nominal income.

So, if inflation goes up by 10%, our nominal income must increase by 10% too or else we are losing purchasing power.

Like I said earlier, it is so stressful to think like this but it is unfortunately true.

Those who are marginally financially free could fall off the cliff and might have to go back to work.

I am fortunate that 1H 2022 passive income increased 28% year on year which means that my purchasing power has not been compromised.

Hopefully, the inflationary storm does not worsen from here but even so, if I remain prudent financially, I shouldn't have to worry (too much.)

In my retirement, without an earned income, if I am able to meet all my financial obligations with my passive income and still be able grow my wealth even by just a little every year, I am happy enough.

Recently published:

1. Our CPF money is not our money...
2. Lost $300K in cryptocurrencies...

References:
1. Largest investments updated.
2. CPF savings in 2022.

Our CPF money is not our money?

This post is going to be short but maybe not so sweet.

I was out doing my 10,000 steps last evening and took a break at a public exercise station.  

We are so lucky that HDB estates have exercise stations and not just playgrounds for noisy kids.

There was a group of old men on a couple of benches nearby.

Guess what?

They were even noisier than the noisy kids on the playground. 

"CPF money cannot take out one lah."

"PAP wants to control our money till we die mah."

"What control? They take and use liao!"

"Our CPF money machiam their money like that lor."

"Cham liao lor. No wonder cannot take out all at 55."

They looked like people in their 70s to me.

Blessed with longevity but not wisdom.

Anyway, it is a fact that we are all living longer and we are fortunate that our government is not only aware of this but decided to act by coming up with CPF LIFE. 

See:
Understanding CPF LIFE and making it work for us.

Not allowing CPF members to withdraw all their CPF savings at age 55 is the right thing to do because when that withdrawal age was set so many decades ago, longevity was not what it is today. 

 "When the CPF system was introduced in 1955, the retirement age was 55. 

"Life expectancy then, was between 60 and 62. 

"Today, for those turning 65, one in two will live beyond 85, and one in three will live beyond 90." 

Source: IPS Forum on CPF. 

Even those of us who are savvy when it comes to investing for income should consider taking full advantage of our CPF membership if we can. 

While the CPF is not an equity and isn't a bond in the purest form, I do consider it an essential part of my retirement funding plan.

I cannot see how something that gives me peace of mind is giving so many people grief.

If the reason is because they have no money apart from what they have in their CPF accounts, then, they must have bungled pretty badly financially.

If their dire situation is not due to any bad decision on their part, then, there is room for sympathy and help is available if they should seek it.

Gambatte!

Recently published:

Scammers and $18K victim.

References:

1. CPF is our best friend.

2. Want to withdraw $500K from CPF?

3. CPF: So near and yet so far?

Retirement drawdown strategy? Passive income and CPF?

This started out as a reply to a reader's comment and it got so long that I decided to publish it as a blog.

My reply:

I think I am a bit like that too. 

I am comforted by a high level of savings. 

See: Save 100% of your take home pay! 

Mentally scarred. (TmT) 

See: Life was difficult... 

However, I have been less tight fisted in recent years with money. 

There are more important things in life than money, after all. 

For example: My passive income from 2015 all gone! 

Bad AK! Bad AK! 

As for your question on retirement drawdown cases, this is something other readers have asked me before. 

There is no shortage of advice on the internet on this topic. 

However, this is a difficult topic for me to blog about because all of us have different circumstances, varying needs and wants. 

We are also wired differently and will find comfort in different approaches. 

I can only talk to myself about what works for me. 

In my retirement, I do not want to worry about outliving my savings. 

My focus is on passive income generation so that I would not have to draw down from savings. 

I do feel that this is a valid and even important idea to consider but like I said, we are all wired differently. 

If I keep my needs simple and wants few, I might never have to draw down from savings and I might even be able to grow my savings in my retirement. 

Of course, regular readers know it all started with a spark. 

See: To retire by 45, start with a plan. 

So, the focus for many years leading to my early retirement a few months before I turned 45 was to invest in bona fide income producing assets. 

Of course, we must always hold some cash and this, of course, includes our emergency fund and war chest or opportunity fund. 

See: How much should we have? 

It is good that you mentioned CPF because my CPF savings, apart from yearly voluntary contributions and top ups, is really on autopilot. 

Conventional wisdom tells us that investment grade bonds should be a significant proportion of our portfolio in retirement and the CPF works for me.

See: Unless we are very rich, CPF is all we need.

If I ever need to, I will be able to make withdrawals from my OA and SA in a few years from now when I turn 55 years of age. 

See: Withdrawing CPF savings. 

I do not see that happening unless my passive income is severely curtailed or if I suddenly need more spending money. 

Money in the RA will automatically be drawn upon once I turn 70 and, of course, that is CPF LIFE which is a lifelong annuity. 

See: Make CPF LIFE work for us! 

I know this is a tangential answer to your question. 

However, like I said, we are all different and there are just too many possible draw down cases. 

Know what we need and want in retirement. 

Look at what we have now.

Think of what we are able to do from now till our desired retirement age.

Devise a realistic plan which we are comfortable with. 

Be disciplined and march towards our goal. 

Of course, a good dose of luck helps. 

Once our goal is met, in our retirement, be cautious and stay mostly conservative when it comes to money and we should be fine.

The best retirement drawdown strategy is the one that gives us peace of mind.

Related post:

Retirement adequacy for late bloomers.

Recently published:
Cutting Alibaba and investing for income.

Why Top Up my CPF Medisave Account?

This is going to be short blog in reply to a reader's question. 

It is a question I get asked somewhat often. 

Sharing the reply as a blog is probably a good idea as it would give me a blog to point to in future.


So, the reader wants to know why Top Up my Medisave Account (MA) when the money cannot be withdrawn? 

The reader is probably referring to the Basic Healthcare Sum (BHS) which has to be maintained in the MA once we turn 65. 

Otherwise, of course, the BHS can be drawn upon for specific purposes. 

For me, the objective of the MA is to have funds for medical expenses in case of hard times. 

To be honest, I hope I don't ever have to do a withdrawal. 

If I must draw upon the money in my MA, it means that I am very sick and experiencing financial hardship.


Anyway, the next thing I am going to say is something I have blogged about before. 

Having a maxed out MA also means that I get free medical insurance.

Want to know how? 

See: 

How to get free medical insurance in Singapore? 

Since the reader's focus seems to be on CPF funds withdrawal at age 55, it should be interesting to note that any excess interest income generated by our MA will flow into our Special Account (SA) or into our Ordinary Account (OA) if our SA has hit the Full Retirement Sum (FRS.) 

For me, it flows into my OA. 

See:

 


Since the MA has the same interest rate of 4% as the SA, this mechanism makes it attractive as an additional income generator since money in the OA and SA can be withdrawn once we have set aside the FRS in our Retirement Account (RA) at age 55. 

Some readers might also be interested in this blog: 

Free medical insurance in our old age. 

If we can afford to do so, I believe that maxing out our MA is a good idea.

Max it out and let compound interest do its magic.

As usual, this is just me talking to myself, of course. 

Recently published: 

1. Almost $1.1m in CPF savings! 

2. 2022 Top Up and Voluntary Contribution done. 

3. Should I enroll in Careshield LIFE? 

4. 4Q 2021 passive income.

Almost $1.1M in CPF savings!

One year ago, at a bit more than 49 years old, my CPF savings hit $1 million or a bit more.

It was a really good way to start the year in 2021.

This year is even better.

My CPF savings made a total of $31,207.95 in interest income in 2021.

Of course, recently, I made a Top Up to my MA as well as Voluntary Contributions to my OA and SA.

See:
2022 CPF Top Up and Voluntary Contribution done!

Now, if we put everything together, I have almost $1.1M in CPF savings! 

So nice to start 2022 with an absolutely auspicious bang!

See:

I am staying the course and will continue to grow my CPF savings with some much appreciated help from the government.

As I am a retiree, I will have to grow my CPF savings voluntarily which is more demanding compared to people who are still in the workforce.

However, it is definitely worthwhile.

The volatility free and risk free nature of CPF coupled with attractive "coupons" makes it the ideal investment grade bond for me.

See:
Retire with an investment grade bond and an annuity.

The strategy really isn't difficult to understand.

However, I do understand that depending on our circumstances, we might not need to or be able to execute the strategy.

Of course, some might not even want to.

It doesn't really matter to me.

After all, ASSI is just a blog for me to talk to myself.

Eavesdrop if you like and if you like what you hear, good.

If the ideas work for you, even better.

Don't be like some people.

See:
Unhappy with CPF and angry with AK!

To everyone who is on the same rewarding CPF journey, congratulations!

Huat with CPF!

Really, time does fly.

Remember this blog from 2015?

AK is buying a 12 year tenor AAA bond.

Do the right thing.

Do it early.

Reminder:

Don't do silly things and we can retire smart too.

Of course, AK is just talking to himself again.

If you are new to ASSI, you might want to read the following blogs:

1. This guy has $800K in his CPF!

2. Investors eat crusty bread with ink slowly for peace of mind.

3. 1M50 CPF millionaire.