Plans for 2025. Hoarding cash for a crash?

It has been almost a month since my last blog post.

I am serious about becoming more laid back and being less active in social media.

The garden which I used to enjoy taking strolls in has become a minefield.

What to say?

What not to say?

How to say what I want to say?

Talking to myself has never been more stressful.

I have enough stress to deal with in my life.

Don't want to have to deal with more stress especially when I am not being paid to do so.

Yeah, at least we are paid to deal with stress at work, right?

I believe that many local financial influencers will have to be licensed and regulated because they are being paid for promoting financial products and services constantly.

From an interview conducted by CNA, I believe that it was one of the tests set out by MAS.

In case you are you interested, here is the video by CNA:  

Not the best interviewer nor interviewee but just focus on the substance, I guess.

I think the blogger they interviewed is probably one of those who would have to be licensed and regulated as her content is heavily monetized.

Well, since she and other financial influencers like her make money constantly from doing what they do in social media, they shouldn't mind being licensed and regulated.

As for me, I rather not have to deal with the hassle.

So, I will restrict the frequency of sharing and also the things which I do share in my blog and YouTube channel.

For example, in this blog, I am also going to talk to myself about why I am hoarding cash.

2024, just like 2023, has been kind to me when it comes to my investment portfolio.

Well, there are still a couple of weeks left to 2024 but I guess I can close my books for the year early.

Unlike 2023, I have not put any money to work in equities in 2024.

Most of the passive income I received in 2024 has been put to work in SSBs and T-bills.

I also made a smallish voluntary contribution of $8,000 to my CPF account.

CPF money for me will become cash in another 2 years from now.

Well, the money in the CPF OA, anyway.

Being paid an average of 3.0% p.a. risk free and volatility free is not bad.

So, my cash position has grown in 2024 and looks set to grow in 2025 too.

It will grow even more in 2026 when I have access to my CPF OA money.

In the meantime, I get paid reasonably well for holding more cash.

The UOB ONE Account has been good to me.

Fixed deposits in CIMB have been decent in generating some interest income too.

Just to be sure, these are not investments and I do not include them in my quarterly passive income updates which are about passive income generated by my investment portfolio.

6 months T-bills are still paying 3.0% p.a. or so.

Singapore Savings Bonds I bought in the middle of this year had 10 years average yields of 3.2 to 3.3% p.a. or so.

I am already substantially invested in the stock market and do not feel any urgency to put more money to work there.

Does this mean that I feel that the stock market is going to crash soon?

I know that some financial influencers like to make predictions as to where stock prices are going but like I always say, we cannot predict but we can most certainly prepare.

So, people can think of what I am doing as preparing for a stock market crash.

I just don't know when it is going to happen.

Of course, I also say never to be overly optimistic nor overly pessimistic.

It is important to stay invested in bona fide income generating assets and be paid while we wait.

Someone who kept saying that the common stocks of Singapore banks were very overvalued in the last 12 to 18 months and said he would wait for a crash before buying might want to do a rethink.

The fact that I have been hoarding cash does not mean that I think the stocks were very overvalued.

In fact, I have been quite consistent in saying that if we were not invested yet, we could buy some.

However, it is certainly harder to say that now.

When we look at PE ratios, it is mind boggling how the multiples have expanded for so many companies.

Earnings really have to come in much stronger in 2025 to justify these multiples.

For DBS, OCBC and UOB, their PE ratios have also risen pretty significantly.

They are now around 11x to 12x which is slightly higher than the 5 year average.

If we had a working crystal ball and if we could tell for sure if the earnings would grow enough to ensure these numbers are justifiable, then, we could buy more now.

Since I only have a bowling ball that thinks it is a crystal ball, I would rather err on the side of caution.

This is why I said earlier that my cash position is likely to grow in 2025 as well, all else being equal.

Well, it would probably grow more slowly as I am going to have higher expenses in 2025 with more money set aside for parental support.

That is another topic for maybe another day.

This is probably the last blog post before the year ends and maybe even before "Evening with AK and friends 2025" takes place on 15 January 2025.

If you are interested in the event, there are a few tickets still available and I blogged about it last month: HERE.https://singaporeanstocksinvestor.blogspot.com/2024/11/dbs-ocbc-and-uob-evening-with-ak-2025.html?m=1

Merry Christmas and Happy New Year!

What happened to $384 in 2015?

Almost 9 years ago, I blogged about how I saved $384 on solar powered lights for my planter.

Then, quite unexpectedly, someone asked me on YouTube how were those lights doing?

Well, they are still working!

I took a photo of them last night and here it is:

I used to blog about saving money very frequently back in those days.

These days, I am taking it easy.

I am less tight fisted with money now.

However, this does not mean that I am frivolous with money.

I would still wonder if something is worth buying, if it is value for money?

Hard to unlearn some things.

However, if it isn't an amount that would break the piggy bank, like a few dollars, I would just close an eye.

Anyway, if you are new to my blog, this was the blog post back in 2015:
Saving $384 on solar powered lights is $384 earned!

I remember reading an article about Jim Rogers persuading his wife not to buy a new sofa in his younger days and to invest the money instead.

They later bought a new sofa with money made from the money they didn't spend on a new sofa earlier.

Interesting!

If AK can do it, so can you!

3.16% p.a. SSB, T-bills, CPF, fixed deposits! My plan!

I have been doing yearly voluntary contributions (VC) to my CPF account even though I retired from work 8 years ago.

I simply took some of the passive income I got from my investments and maxed out the yearly VC.

However, I did not do VC this year and I won't be doing VC next year either although the original plan was to do this until I hit 55 years of age.

Why?

I treat the CPF as the risk free and volatility free investment grade bond component of my portfolio.

So, I don't use it to invest in equities or to buy properties, for that matter.

This is my ultimate safety net for if everything else goes horribly wrong.

However, I did use the CPF OA funds to buy T-bills as they belong to the same basket of investments.

Risk free and volatility free.

So, I bought T-bills which paid more than the 2.5% p.a. paid by CPF OA in the last one year or so.

In fact, I have a T-bill bought with CPF OA funds maturing this week.

Must remember to transfer the money from CPF IA back into the CPF OA.

The Singapore Savings Bond (SSB) is another risk free and volatility free investment available to me.

In an earlier blog, I said that if the SSB is able to offer a higher than 3% p.a. coupon, I would buy SSB instead of doing VC to my CPF account.

This is because the average yield for VC I do is about 3% per annum.

Take note that this is for my age bracket and also the fact that my MA has already hit the Basic Healthcare Sum which means my VC goes only to my OA and SA.

I have already bought SSBs using funds which would otherwise have been used to do VC to my CPF account this year and in the next year.

That means no VC to my CPF account in my 52nd and 53rd year on planet Earth.

Now, with the latest SSB offering a 3.16% p.a 10 year average yield, I am thinking of "borrowing" money to buy some.

Borrowing?

Has AK gone to the dark side?

Well, if I were to buy this SSB, I would be using funds which would otherwise have been used to do VC to my CPF account in 2025!

That is 2 years away!

That would be the year I turn 54 years old.

As I have locked up quite a bit of cash in 8 months fixed deposits back in January when OCBC was offering 4.08% p.a. interest, I will have the funds to do this.

Some might think that continuing to do VC to my CPF account is a better idea as I could use the CPF OA funds to buy T-bills in the meantime.

Well,  if interest rates are really going down sometime in 2024 or 2025, reinvestment risk is very real for short term fixed income instruments like T-bills and fixed deposits.

So, locking in a higher 10 year average yield now doesn't seem like a horrible idea.

Buying $38,000 of SSBs yearly might seem excessive to some but, for me, it really is just moving money meant for my CPF account.

It is something in my yearly budget.

What might be considered "excessive" is "borrowing" funds from next year which would have been earmarked for CPF VC in 2025 to buy the SSB now.

I might just do it.

Reference:
CPF or SSB?

6 months T-bill cut-off yield 3.85% p.a. not good enough?

For readers who who are not subscribed to my YouTube channel or who simply prefer reading blogs to watching videos, this is the transcript of the video I produced yesterday.
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Not too long ago, I said that a cut-off yield of 3.78% per annum for 6 months T-bill was decent enough.

I was quite happy that the cut-off yield was still much higher than what DBS, OCBC and UOB offered for 6 months fixed deposit at the time.

I still feel the same way now.

Of course, if we are using CPF funds to buy T-bills, the sensible thing to do would be to benchmark the cut-off yield against interest rate offered by OCBC for fixed deposits placed using CPF OA money.

With a promotional rate of 3.3% per annum offered by OCBC for such fixed deposit placements, it boggled my mind that there were people placing competitive bids lower than that.

With T-bills yielding much more in the USA, it is strange that T-bills in Singapore should have much lower yields.

This suggests to me that Mr. Market feels that the Singapore Dollar is stronger and safer than the US Dollar.

It is just an impression as I don't know enough to tell if this is true, especially when it seems counter intuitive.

Anyway, with the debt ceiling issue in the USA, T-bill yields have been going higher recently.

In Singapore, I also noticed this.

In case you are wondering, I visit Monetary Authority of Singapore's website to look at the Treasury Bill Original Maturity table regularly.

This gives me a feel of where T-bill yields are going in Singapore.

A higher proportion of fixed income will help to reduce portfolio risk and volatility.

Constructing a T-bill ladder to create another source of passive income is also viable with interest rates being much higher.

We will see T-bills maturing every 2 weeks or so and receive some income when we recycle the returned capital into new T-bills.



If you are interested to look at the Treasury Bill Original Maturity table, see link to the website and table I have provided below.

Of course, I remind myself that the yields we see in the table are only suggestive because it assumes that participants will be rational in upcoming auctions.

With more retail participation, and with quite a few bloggers recommending their readers to place competitive bids way below average in order to secure their T-bills, the cut-off yields for future T-bill auctions could still surprise on the downside.

This is especially for T-bill auctions happening in the first half of any calendar month.

This is because we are likely to see lower participation from retail investors using their CPF OA money for auctions taking place towards the end of any month.

They run the risk of losing 2 months' worth of CPF OA interest instead of 1 month for auctions happening towards the end of a month.

I might complain about low balls, but I have to accept this uniquely Singaporean reality if I want T-bills to be a part of my portfolio.

Anyway, I am mostly recycling money from maturing T-bills into new T-bills as my T-bill ladder is complete.

The front end of the yield curve is likely to stay elevated for some time.

So, I continue to expect 6 months T-bills to remain relatively rewarding in the near future, especially when taking into consideration that it is risk free and volatility free just like the CPF.

I am quite pleased with today's T-bill auction's cut-off yield of 3.85% per annum.

I know that some people look down on T-bills or anything that provides a return that is lower than the inflation rate.

If these people are very rich and have a lot of spare cash sloshing around, they can look down on T-bills, if they like.

The very rich can afford many things and snobbery is one of these.

However, for most of us, accumulating a meaningful amount of cash and cash equivalents is more a need than a want.

Warren Buffett said unless we are very rich, don't go around spouting nonsense like "cash is trash".

People who look down on T-bills and the returns should remember that T-bills are volatility free and offer risk free returns.

We should not compare them with potential returns from investing in stocks, for example.

I still say that before we start investing, we should learn to be better savers.

I am glad to save for passive income even as I invest for passive income.

If AK can do it, so can you!

Reference:
Treasury Bill Original Maturity.

Related post:
Fixed income update. 3.78% p.a.

Surprise! Passive income I received from T-bills. Reminders! "Buy and forget" assets! Why am I building my cash pile?

For readers who prefer reading, here is the transcript of a video I made recently on "buy and forget" assets, how important T-bills are in my strategy and why it isn't a bad idea to have more cash and cash equivalents?

There were a couple of mistakes I made in the video which I have corrected for this blog.

Not all that important but my OCD wouldn't let me get away with it.

"Old Change Kee" corrected to "Old Chang Kee".

"Q1 2023" corrected to "Q2 2023".

---------------

I mentioned in a few blogs in the past that I would sometimes check my savings account and get a pleasant "surprise."

The "surprises" are dividends from investments that I have not done anything to for so long that I almost forget I have them.

You know what they say about buying and forgetting?

Some people would look down on people like that.

However, for me, it has not always been a bad thing.

These are stocks which are usually free of cost for me but are still generating income.

During "Evening with AK and friends 2023", I mentioned Old Chang Kee and Hock Lian Seng as two of such investments for me.

They are not the only two either but I cannot recall the others now.

I will remember when I see their dividends come in, I am sure.

My memory is getting quite terrible.

Anyway, why am I talking to myself about this?

Well, quite recently, there is a new addition to these "surprises".

T-bills.

As my 6 months T-bill ladder is complete, I have money coming back to me every 2 weeks.

However, as it is a relatively recent development, I am still not used to it.

This is especially when the amount is relatively big compared to "dividends" received from investments I sometimes forget I have.

Of course, I also have to remind myself that I am not receiving money that I can spend here.

It is a return of my capital.

I have quite a bit of money coming in this month as the month of May is usually a good month for dividends.

Mixed together with this is money coming back from T-bills bought in October and November last year.

Already bought some 6 months T-bills in the last round of auction which saw a cut-off yield of 3.78% p.a.

Will be putting in a non-competitive bid for the upcoming 6 months T-bill auction next week.

I would be quite happy to get a cut-off yield of 3.78% p.a. again or thereabout.

Basically, anything higher than the 6 months fixed deposit rates offered by DBS, OCBC or UOB would be good enough for me.

I remind myself that T-bills pay us at the beginning of the 6 months duration which means the "interest rate" is actually higher than what the cut-off yield indicates.

I also remind myself that this is not my main source of passive income and it should not be my main source of passive income.

To illustrate this, in Q2 2023 so far, I have bought three T-bills which have generated about $500 in passive income for me.

This is really pocket money compared to dividends I have received so far.

However, I never look down on pocket money especially if it flows into my pocket regularly.

Also, this is money which I didn't have before.

This is all thanks to higher interest rates.

(I am also very thankful for a strong Singapore Dollar. Even foreigners want to get Singapore T-bills.)

As an investor for income, I am a creature of comfort and I also said during "Evening with AK and friends 2023" that investing for income is very comforting.

I find T-bills more comforting now that they pay better than they did in a long time.

"The front end of the yield curve is still elevated even as the Fed has signaled a pause in rate hikes.

"I know there is talk of a Fed pivot by end of the year and it could well happen but worrying about whether it will happen or not does nothing to generate income for me.

"I would rather make hay while the sun shines.

"Anyway, my expectation is for 6 months T-bills to remain relatively rewarding in the near future, taking into consideration that it is risk free and volatility free just like the CPF."

Source: 

See related post at the end of this blog.

(My YouTube video on this topic.)

There is nothing wrong with having more cash and cash equivalents in our financial pyramid especially in an environment when cash is no longer trash.

If things should go terribly wrong like they do from time to time, with a stronger footing, we should have less to fear and greater ability to take advantage of investment opportunities.

AK is lazy and a creature of comfort.

Don't do what I do unless you meet those requirements.

Jokes aside, it is never my way or the highway.

We should all have a plan, our own plan.

If AK can do it, so can you!

Related post:

Fixed income update.

Fixed income update. 3.78% p.a. 6 months T-bill. SSB?

The latest 6 months T-bill auction gave us a cut-off yield of 3.78% p.a. which was decent enough.

Some crazy kiasu people put in very low competitive bids which drove down the cut-off yield.

This is evident when we look at what the average yield was.

Why would anyone place a bid of below 3.26% p.a. is beyond my comprehension?

Even if we were to place a 6 months fixed deposit with OCBC using CPF OA money, we would get 3.3% p.a.

This is why I say many people are selfish and this is actually worse because it harms themselves and others at the same time with a lower cut-off yield for everybody being the result.

Simply inane.

I am not doing any shameless promotion for OCBC because it is my largest investment but take a look at their promotional interest rates: HERE.

Anyway, by now, we shouldn't be surprised anymore.

I am just happy that the cut-off yield is still much higher than what DBS, OCBC and UOB would offer for 6 months fixed deposit at this point.

This is because I am just rolling money from maturing T-bills into new ones by now.

Yes, my T-bill ladder is complete and it is another source of meaningful passive income for me.

Is this going to continue?

To be sure, I do not have a crystal ball.

However, for various reasons, inflation is likely to be sticky which means interest rates will probably stay higher for longer.

The front end of the yield curve is still elevated even as the Fed has signaled a pause in rate hikes.

I know there is talk of a Fed pivot by end of the year and it could well happen but worrying about whether it will happen or not does nothing to generate income for me.

I would rather make hay while the sun shines.

Anyway, my expectation is for 6 months T-bills to remain relatively rewarding in the near future, taking into consideration that it is risk free and volatility free just like the CPF.

This helps to grow the base of my pyramid which I mentioned again recently during "Evening with AK and friends."

As for Singapore Savings Bond, like I shared last month in a blog, my mission for the year was already accomplished. 

Fortunately, that was the case too as the 10 year average yield has declined significantly in this month's offer.

A much lower 2.81% p.a. 10 year average yield doesn't cut it for me.

Better off just doing voluntary contribution to my CPF account.

Not doing shameless advertising for DBS because it is one of my largest investments but if you have a shorter duration of two years in mind, a 2 year endowment plan offering guaranteed 3.92% p.a. by DBS is a not a bad idea.

I imagine that as doing a top up to my CPF SA which I am not allowed to do anymore.

See:
Update on saving for income.

Reminder to myself.

Why am I doing what I am doing in the fixed income space?

I want to invest in strong businesses to have peace of mind but, even more than that, I want to make sure I have a portfolio which has a stable footing as that really helps to promote peace of mind.

I always say don't do a Chicken Little.

The sky is not falling.

Don't go to extremes and have, say, 90% of our portfolio in T-bills unless we are old retirees nearing the end of our lives.

Of course, I am not saying that my way is how it should be for everybody but this works for me.

We should all have a plan, our own plan.

If AK can do it, so can you!

Recently published:
Why AA REIT?

Related post:
SSB and T-bill in April 2023.

Passive income as much as earned income? Get rich slow!

This is the transcript of another video I produced recently.

Again, this is for the benefit of people who do not follow me on YouTube or prefer reading to listening.

When I started work in my mid 20s as a young graduate, my pay was $3000 a month. 

In my 30s, my pay was around $5000 a month. 

Now, if your question is whether someone who makes the median salary in Singapore can retire early, you just have to look at me. 

Apparently, the median salary of people from age 30 to 54 in Singapore is between $5000 to almost $6000 per month, according to the Ministry of Manpower. 

Then, there is CPF contribution by employers which is not included in this figure. 

If that is included, then, monthly income is actually higher. 

Putting aside the topic of CPF which is another topic I blog extensively about, is it possible to do anything with a salary of $5000 to $6000 a month over 25 years to ensure retirement funding adequacy? 

I have many blogs on how average income workers can become rich. 

Why do many average income workers find becoming rich impossible? 

Do you believe me if I were to say it is not because they make an average income? 

The truth is many of them find this impossible because they can afford so many things in life and would buy them once they can afford to. 

This is why they cannot afford to stop working. 

Spend all the money we make and we will always be poor. 

Borrow money to fund our lifestyle, we will be poorer than poor. 

Then, for average income workers, how to become rich? 

Take for example making $5000 a month and taking home $4000 after CPF deduction. 

Do you believe me that at some point in time we could actually be saving all that $4000 every month? 

This is even if our take home pay did not increase in the future. 

Start by religiously saving 50% of our take home pay. 

That would be $2000 every month. 

If we were to invest for income and if we were to get an average of 5% dividend yield per year, we should be paid approximately $1200 in dividends in the first year. 

That is like paying ourselves a bonus of $1200! 

Imagine reinvesting the dividend in addition to $2000 a month from our take home pay, it would be like saving $2100 each month instead of only $2000. 

At some point, we would be saving and investing $4000 each month.

All this because we started saving $2000 each month and investing for income. 

Like in Economics class, this example is unrealistic because we have to hold everything else constant. 

However, like in Economics class, this little exercise demonstrates how it is possible to create sufficient passive income to replace our earned income. 

The strategy needs discipline and patience to see results. 

"Someone is sitting in the shade today because someone planted a tree a long time ago." 

- Warren Buffett 

All of us have to work with what we have been given although there should be no stopping us from trying to change our circumstances for the better if we want to, unless we are severely disadvantaged. 

I actually believe that we would have a hard time finding people who save half of their take home pay consistently for even a few years. 

However, take this as an inspiration. 

If AK can do it, so can you!

Related post:

Don't depend on wages!

Singapore Savings Bond and T-bill allotment (April 2023.)

We have both Singapore Savings Bond and T-bill allotment results today.

As I increased the amount of money for both, I was crossing fingers for a full allotment in Singapore Savings Bond and also a relatively good cut-off yield for the T-bill.

Getting a full allotment in Singapore Savings Bond would not only mean mission accomplished with regards to money meant for voluntary contribution to my CPF account in 2024.

It would also mean possibly locking in a 10 year average yield of greater than 3% per annum which we might not see again from a Singapore Savings Bond for some time to come. 

This is a possibility with interest rates softening in recent months.

If I did not get a full allotment and if the 10 year average yield of Singapore Savings Bonds offered for the rest of the year should be lower than 3% per annum, then, I would have to do a voluntary contribution to my CPF account in the month of December later in the year.

Well, it seems that luck is on my side.

A total of $700 million was offered in Singapore Savings Bond but the applications within individual allotment limit totaled $697.2 million.

So, my application with a sum of $22,000 was fully allotted.

Mission to put $38,000 meant for CPF voluntary contribution in 2024 to work for a higher average yield is accomplished.

I will have one less thing on my mind and this makes me happy.

As for the 6 months T-bill, I have always placed non-competitive bids when using cash on hand since I am only a small timer.

Anyway, even a 3.65% cut-off yield would still be more attractive than fixed deposit rates offered by DBS, OCBC or UOB now.

The fact that the "interest" is paid at the start of the 6 months term means that the effective interest rate is actually higher too.

The latest auction's cut-off yield is 3.83% p.a.

This is a positive surprise as I had expected the cut-off yield to trend lower after the last 6 months T-bill's cut-off yield of 3.75% p.a.

This is doubly or triply good news for me since I had put in a non-competitive bid with a sum of $15,000 instead of $5,000 which I had originally planned to do.

My T-bill ladder is complete and the plan is to continue rolling funds from maturing T-bills into new T-bills as long as the front end of the yield curve remains elevated.

Make hay while the sun shines.

I am still on the path to preserving capital, believing that cash is not trash in the current environment.

With so many things that could go wrong in the world nowadays, it is probably not a bad idea to be slightly more defensive.

As an retiree investor for income, it gives me greater peace of mind to reduce beta or volatility in my portfolio.

This is done while ensuring that my investment portfolio continues to generate sustainable passive income for me now and in the future.

For sure, not everyone will find this path that I am on an interesting one as it is probably quite boring.

However, we can all come up with a plan to invest in bona fide income generating assets if we want to achieve financial freedom.

If AK can do it, so can you!

Related posts:
1. Update on saving for income.
2. CPF or Singapore Savings Bond?
3. Largest investments (4Q 2022.)

Update on my plan to save for income. Money I forgot I had. DBS SavvyEndowment11 and 3.92% p.a. guaranteed.

This is a quick update on my plan to save for income published in a blog at the beginning of April.

Back then, I said that I should be able to set aside $10,000 to apply for Singapore Savings Bond this month.

However, I have increased that figure to $22,000.

This is because a 5 months fixed deposit placed with DBS matured and I forgot I had it.

So, with more money at my disposal, I have decided to apply for $22,000 instead of $10,000.

Why $22,000?

If I should be successful in getting a full allotment, together with the $16,000 in Singapore Savings Bonds allotted in March, I would have hit $38,000.

$38,000 is the amount I had planned on setting aside for voluntary contribution to my CPF account in January 2024.

See:
CPF or SSB? No brainer?

I also made a non-competitive bid for the T-bill  auction closing on 25 April with $15,000 instead of $5,000.

Apparently, I had mistakenly thought that I had a T-bill maturing on 24 April when it matured on 18 April.

So, instead of completing soon, my T-bill ladder is actually complete.

See:
Ladder completing soon.

Finally, with some excess cash on hand, I decided to put some money in an endowment plan suggested by DBS Digibank.

This is a 2 years endowment plan that pays a guaranteed 3.92% per annum.

This is almost as good as the CPF Special Account's 4% per annum.

Endowment plans are really savings plans with a tiny life insurance component thrown in.

I just think of this as a pseudo top up to my CPF Special Account which I am not allowed to do anymore, of course.

The product is "SavvyEndowment11" and it is available to anyone with a DBS Digibank account.

Minimum amount required is $5,000.

The application process is very easy and fast.

This is not an advertorial but here is the link for anyone who might be interested in saving money: 

DBS SavvyEndowment11.

"A spokesperson for Hong Leong Finance said that rates for fixed deposits have generally dropped slightly in the past two months. 

"Singapore Overnight Rate Average (SORA) remains relatively high and inflationary risk will take time to ease. 

"At the back of an uncertain economic outlook, rates are likely to soften later in the year. 

"A Maybank spokesperson highlighted the impact of US Federal Reserve interest rate hikes on interest rates in Singapore. 

"As Singapore dollar interest rates have a positive correlation to the US dollar, we can expect that if inflationary pressures recede, interest rates should soften if there is a recession risk."
Source: CNA.

So, for anyone with a fixed income component in their investment portfolio, it is probably not a bad idea to lock in higher interest rates now, if possible.

Recently published:
1. More in equities or fixed income?
2. Tesla's results and valuation.

Reference:
Saving for income.

Saving for income: SSB and T-bills in April 2023.

In my 1Q 2023 passive income update, I reminded myself that my portfolio was able to generate more income because I continued to put money to work.

Specifically, money was put to work in bona fide income generating assets.

I was also saving more money as it has become a more rewarding asset to hold.

Using 6 months T-bills to save money rewards me immediately as the "interest" is paid at the start of the tenure.

Although T-bills accounted for a very modest portion of passive income in 1Q 2023, this component was missing in 1Q 2022.

Having another source of meaningful passive income is not only pleasing, it makes for a more resilient portfolio.

There is also a very high degree of reliability as T-bills are not only risk free, they are volatility free if we hold them to maturity.

Indeed, we don't have to be investing for income all the time as saving for income is also a viable alternative.

Although it could not generate any income for me in 1Q 2023, I applied for Singapore Savings Bond (SSB) last month and my $16,000 application was fully allotted.

I did not apply for the latest T-bill as I had decided to prioritize the SSB towards the end of the month in March.

That T-bill had a cut-off yield of 3.85% p.a. which was higher than the cut-off yield of 3.65% p.a. in the preceding auction.

The plan is to continue applying for T-bills this month as a cut-off yield of 3.65% p.a. to 3.85% p.a. would still be relatively attractive.

The plan is also to apply for this month's SSB if it should offer a 10 year average yield of greater than 3% p.a.

I think the Monetary Authority of Singapore read my blog.

It seems like I will be applying for the SSB.

I should be able to set aside $10,000 for the SSB and also $5,000 per T-bill application this month.

Although some experts feel that interest rates have peaked, now, with OPEC cutting back on production to prop up the price of crude oil, the outlook could change.

I have been very consistent in saying that I cannot predict what might happen in the future but I know for sure I can prepare for the future.

As an investor for income, this means putting money to work in income producing assets while building a war chest for in case Mr. Market goes into a depression.

I am happy that cash is no longer trash and that there is another way for me to be paid while I wait.

Saving for income has become more rewarding and it certainly gives me peace of mind.

For a more a complete picture of how I have been generating passive income, please read the related post below, especially if you are a new reader.

Related post:
1Q 2023 passive income.

Singapore to split apart? Who to blame?

This blog was held in storage for many days because I was wondering if I should publish it. 

I haven't published anything like this in a while.

It is bordering on being political and it is something which many people probably have very strong opinions about.

Anyway, I decided to take the plunge.

In The Straits Times on 4 March, Chua Mui Hoong wrote that Singapore was “at a juncture when the internal contradictions of its hyper-competitive system are becoming apparent, causing much angst, from the low to middle to high-income residents.” 

“They worry if they can attain the essentials of modern life, a home, job, school for their children and caregiving for frail family members. 

“Those who are wealthy, still worry about access to good schools and whether their children can do as well in a game they themselves excelled in.” 

This, plus what Pritam Singh said in Parliament about how "two Singapores" could possibly emerge, got me blogging.

There was a big discussion regarding Singapore's income inequality and the suggestion was that Singapore's income inequality issue was worsening.

However, that is probably more a popular and erroneous perception than reality.

Singapore’s income inequality has been declining. 

The Gini coefficient decreased from 0.478 in 2012 to 0.437 in 2022.

Lawrence Wong shared the results of ongoing efforts to uplift lower-wage workers. 

Lower-wage workers had seen higher income growth than those earning more than the median income in the last five years. 

What is my opinion?

There will always be income inequality.

Hard truth.

It is hard for me to accept that a cleaner should be paid as much as a doctor or even a high school teacher in a capitalist society, for example.

Of course, in a communist country, equal "pay" should be expected.

So, do we want to live in a communist country?

I know I don't.

Then, there is this concept of "essentials of modern life" which Chua Mui Hoong mentioned in the newspaper article.

I have blogged about needs and wants before many times.

We only need so much money in life.

The rest is for showing off.

If we keep our needs simple and our wants few, our life will "basically" be better, no matter how much money we make.

The problem starts when many things which are not essential get classified as "essentials of modern life."

Need a home?

What about a HDB flat or even an Executive Condominium?

Need a school?

What about a neighborhood school?

Need healthcare?

What about a government polyclinic or hospital?

In my last visit to the doctor in the polyclinic a 20 minutes walk from my home, I paid $20 when the actual cost was about $80. 

Yes, my medical bill was about 75% subsidized and I am not even a senior citizen (yet.)

There is an over-emphasis on income when it comes to measuring financial well being.

Seriously.

Must people earn a lot more money to be rich?

I have a blog that says average income workers can be rich too.

I have a blog that shares a reader's experience on how to have more passive income than "richer" friends.

If we spend as much as we make, it doesn't matter if we are high income individuals because we will always be "poor."

It isn't how much money we make that determines if we are rich or poor.

It is how much money we keep.

There was a study done in an advanced country that showed how 40% of upper middle income families were living paycheck to paycheck in that country.

Why?

They habitually spent as much money as they made or more than what they made.

How to be financially better off like that?

Then, there is the issue of assigning blame.

Really, there should be a greater emphasis on taking ownership when it comes to our financial well being or the lack of it.

 

As you can tell from the video, I am proud to be Singaporean and proud of our CPF system. 

If you haven't watched it yet, you might want to give it a chance as it shares the view of a foreigner.

I like the CPF system because it is a system where the government helps those who help themselves.

I don't like as much the way the government has been giving out free money in recent years.

However, I am very much aware that there are low income families which genuinely do need some financial relief.

Still, if the government keeps doing it, then, it might foster feelings of entitlement amongst Singaporeans who, I feel, can be pretty ungrateful at times.

Honestly, I do not think Singapore is such a terrible place when it comes to economic issues.

Don't talk about Pakistan or Sri Lanka.

I think we are even better off in Singapore than in the U.S.A. when it comes to economic issues.

Of course, Singapore is not perfect but waving a banner that suggests Singapore could split apart because of growing income inequality is just malicious.

The P.A.P. government probably would not say many of the things I have said in this blog because they must think about winning the next election.

It could cost them some swing voters, I suspect.

I don't expect this blog to do well and it could even get me flamed.

However, long time regular readers know that this is a topic that I feel strongly about and I just need to get it off my chest.

Related posts:
1. Average income workers can be rich too.
2. More passive income than richer friends.
3. Don't make difficult times more difficult.
4. Survivability and opportunity.