Gainfully unemployed! Government is disgusted! SMLJ! Evening with AK and friends 2023 update.

A quick update on "Evening with AK and friends 2023" before I start the blog proper.

Don't worry, it is not being postponed or cancelled.

The event will still be taking place in the evening of 10 May as promised.

In case there are readers who decided to wait closer to the date before purchasing a ticket, there are about 30 tickets left.

To everyone coming to the event, see you on 10 May!

Ticketing link in this blog:

Evening with AK and friends 2023.

-------

Recent headline in The Straits Times.

"Jobs will soon become a national security issue! Automation and AI will pose the biggest risk to the most sought after jobs for youth."

I so stunned like vegetable!

How like that?

More people to become displaced and jobless?

Regular reader are probably familiar with a phrase I use in my blogs rather often.

"Gainfully employed."

This phrase refers to productive members of society.

They are employed and they are rewarded with financial gains.

Then, what is the word I use for myself?

"Unemployed."

This is probably the correct description of AK to most people which is also why they are usually dumbfounded at least for a while before they make some polite noises.

On my part, I also like this phrase to describe myself because of its economy since I am too lazy to provide any explanation to anyone who might be curious enough to probe further.

Of course, our government knows the truth about AK.

"Unemployed" refers to someone who is actively looking for employment but has been unsuccessful.

AK isn't looking for employment and has not been looking for employment for almost 8 years now.

So, the government has a phrase for people like AK.

"Economically inactive."

If we are somewhat sensitive to the choice of words, we might feel that there is a little bit of negative undertone in the word "inactive."

It is like the word "lazy" but just a little better. 

"Economically lazy?"

To be honest, I rather like that.

Recently, I have been thinking of telling people that I am "gainfully unemployed."

If you think there is a perverse streak in me, you are probably correct.

Telling people I am "gainfully unemployed" should confuse some people, especially those who have been institutionalized by the hamster wheel that is employment.

"You unemployed?"

"What you gain?"

"You crazy or what?"

OK, can I choose not to answer that question?

I mean, being an IMH patient, there is a very easy way to answer that question, after all.

In my more lucid moments, I might deign to give a socially acceptable answer which might go like this.

"By being unemployed, I gain a lot of free time and the freedom to do whatever I want, answering to nobody but myself."

Wow!

Applause please.

That sounds very learned, if I do say so myself.

OK, end of blog.

Oh, you didn't know what SMLJ in the blog title stands for?

SMLJ = Stupidly Motley Local Jokes.

Oh, you thought you knew what SMLJ stood for but now you are confused?

What?

Your friend from China told you something else?

SMLJ = shen me la jiao?

Wow, chili so hot!

Alamak!

Don't be confused about this!

If AK can do it, so can you!

Government is disgusted with AK:
Income tax payable in 2019.

Related post:
Stop saying I am a "retiree."

Recently published:
Passive income as much as earned income.

Reminder to myself:
1. Recession could hit Singapore!
2. DBS, OCBC & UOB: Tailwind +1!

DBS: 43% jump in earnings! Be a millionaire!

In a video I produced recently, I made some points on why Warren Buffett and Charlie Munger are not investing in banks now.

Then, in a video I produced in response to record earnings reported by DBS, I also made note of a few points.

For the benefit of readers who do not follow my YouTube channel, here are the videos.

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.

Do you know that millionaires' effective income tax rate might actually be lower? 

This is true in the USA and it is also true in Singapore. 

Remember how much income tax I had to pay? 

Regular long time readers might remember. 

Yes, nothing. 

I didn't have to pay any income tax. 

This is because my passive income does not attract any income tax. 

No one would have guessed that I am a millionaire just by looking at me. 

Contrary to popularized images of millionaires, actually, most millionaires are very low key people who avoid ostentatious behavior. 

Most millionaires are people who live within their means, budget and spend wisely. 

They are mostly focused on ensuring their financial independence first. 

These are habits that take discipline, but ones we can all adopt to begin growing wealth. 

If these facts prove anything, it's that every one of us can strive to become a millionaire. 

And many of us can become millionaires. 

From 2012 to 2022, the number of millionaires in Singapore grew 40% to 240,100. 

This is according to a list published by investment migration company, Henley and Partners, together with global wealth intelligence firm, New World Wealth. 

In the World's Wealthiest Cities report, Singapore is now in the fifth spot. 

Millionaires are high net worth individuals with investable wealth of one million US dollars or more. 

So, it excludes the value of our home. 

Don't be envious of millionaires. 

Unless severely disadvantaged, all of us can be millionaires. 

There are many millionaires in our HDB estates and they lead simple lives. 

We might not know much about them because they are not very talkative. 

They are not crazy like AK who talks to himself regularly. 

Millionaires in our HDB estates are more common than you might think. 

People who have above average income would often tell me that it is difficult to build wealth in Singapore. 

However, if they were to examine their lifestyles, they might be surprised at how much money they could actually save if they were to make thriftier consumption choices. 

From experience, I know it is possible to build wealth more rapidly in Singapore simply by avoiding extravagance and excesses. 

Some readers who decided to make changes to their consumption choices with an eye on wealth building wrote to me, happy with their progress. 

Get the whole family in on the project and the success rate would be even higher. 

Remember, it is always the toughest in the beginning but if we are determined and disciplined, we can become wealthier. 

For most of us, the road to becoming a millionaire will have to start with baby steps. 

"The Millionaire Next Door" is a book which is a must read for many people. 

In fact, I would go as far as to say that the majority of the population should read it. 

So, do you want to be a millionaire? 

If AK can do it, so can you! 

Related posts: 

1. Income tax payable? 

2. STE: The millionaire next door.

Investing or speculating in SG properties. ABSD nightmare!

Over the years, I have talked to myself about real estate and my philosophy.

With the Additional Buyer Stamp Duties (ABSDs) increased by quite a bit, a reader asked for my thoughts on the property market in Singapore now.

Regular eavesdroppers on AK would be able to guess the response.

My philosophy has not changed.

If we are investing in real estate, just like investing in stocks, we want to invest in an asset that, after expenses, will generate a meaningful income for us.

If we buy real estate thinking that the price of the asset will rise in the next few years and that we would be able to flip it for a profit, that is not investing.

That is speculating.

Usually, I would stop here.

However, for quite a few years now and it has gotten a lot worse, we have people buying real estate in Singapore not to generate any income nor to flip for a profit.

They simply want Singapore properties as a store of wealth because of the strong Singapore Dollar and the politically stable environment.

They are mostly foreigners.

Wow! 

So many ultra rich foreigners!

From which countries?

You ask, you answer.

I am not going there.

I have said before that when we buy a property, we want to ask 2 questions.

1. It is not just a question of affordability but we should also ask if it is value for money.

2. Do we have deep pockets for if things go wrong and many things could go wrong.

However, to these very rich people, these two questions are most probably irrelevant.

So what if the properties don't make money or if they should even lose money?

If the ultra rich are able to protect a big fraction of their wealth, they would still be very rich and that could be more than enough for them.

For the rest of us, we really have to stay grounded and not be swept away by barbers telling us we need to have more frequent haircuts even if we are  going bald.

Now, for those who bought properties in Singapore recently thinking they could flip them a few years later at higher prices, the much higher ABSDs announced might have turned those dreams into nightmares.

The government of Singapore wants properties to be sold mostly to genuine owner occupiers because housing affordability is a big issue.

Singapore welcomes foreign direct investment but we do not want foreign direct speculation.

Hence, the recent strengthening of property cooling measures.

For those of us who are still thinking of investing in properties for passive income in Singapore in spite of the ABSDs, I would go back to those 2 questions I said we should be asking.

Cannot remember?

Scroll up and take a screenshot.

Nightmares do not discriminate between speculators and investors.

This is a fact.

Pay a price too high and we could have a high price to pay in future.

Anyone who is not ultra rich but wants to be a real estate investor in Singapore might want to read the related posts below.

Related posts:
1. Condo investment has been a drag.
2. This condo has also been a drag.
3. Investment philosophy and properties.
4. Two questions we should ask.
5. Affordability and value for money.

Income tax payable in 2019?

Readers know that I have been spending a lot of time in Neverwinter and it will continue to be so as Neverwinter is launching Mod 16 a few weeks from now.

Mod 16 is Neverwinter's largest Mod (or expansion) in its 5+ years history and it is going to bring big changes to the game.

I will be spending a lot more time farming and preparing for the new Mod.

So, a longer period of absence from my blog and FB page or wall could be expected in the near future.

After this blog post, it could be quite a while before there is another one.

Please don't be worried if you do not hear from me for several weeks in a row.







Anyway, regular readers know that one of the things I try to do is to inspire.

I do this because I believe that even for average working people, our financial health can be and should be better.

The catalyst for this blog post is this:

Yes, it is that time of the year again and I am being reminded again how I am not making any financial contribution towards nation building.

Really?

Bad AK! Bad AK!

I was looking through my past blogs on the topic of income tax and I think I did not blog about this last year.

The last blog I had on the topic of "income tax" was in 2017, it seems.








I remember when I was a young working adult, a senior told me that I should be happy if I was paying more income tax because that meant that I was earning more money.

Higher income meant paying more income tax.

It seemed to make sense. 

At the same time I asked why should it make sense?

I didn't ask the senior that, of course.

Even then, I talked to myself.

Yes, I was and still am mental.






Anyway, for some time now, being unemployed or, more accurately, economically inactive, I have no income and therefore I do not have to pay income tax, right?

Well, not totally.

I am economically inactive but that doesn't mean I don't have any income.

Without any income and not being born with a spoon made of some precious metal in my mouth, I wouldn't last very long being economically inactive.

See:
AK's 2018 income.






Spend our time working for money and pay income tax?

Make more money and pay more income tax?

OR

Spend our time not working for money and don't have to pay income tax?

Make more money and pay less income tax?

For me, it is a no brainer.








Remember, it is not impossible.

If we want it bad enough, we will make it happen.

Believe me. 

Believe in yourself.


Just don't do anything illegal or unethical to achieve our goals.







Want to pay less income tax or not pay any income tax at all while having income?

See the related post at the end of this blog and also follow the hyperlinks to more related posts.

If AK can do it, so can you!




Related post:
Income tax payable (2017).

Pay less income tax in future.

It is that time of the year again.

Remember to file your income tax.

Ouch.





Taxes are a necessary evil because a country's revenue is from taxes and a country like any modern day entity needs revenue to be viable.

So, if we have to pay some taxes, we are contributing to nation building.

Not a bad thing, really.






However, if it is possible for us to pay less income tax, why not?

I am talking about doing it legally, of course.

As I don't have any significant earned income anymore, I don't pay any income tax.

When was the last time I paid income tax?

You might want to read it: HERE.


Investing for income has helped me to increase my income but not my income tax and you can do it too by creating dividend machines: HERE.





Related post:
Income tax payable.

Why join the Supplementary Retirement Scheme?

Reader says...

I just like to share one of my view on SRS account.

When I first decided to contribute to SRS, it was mainly to reduce my income tax.

However, I realize that a lot of people between 55 to 65 years old have to work because their CPF is not enough for them to stop work before the CPF life pay out at age 65. 

This is assuming that CPF is their only retirement fund.

By contributing to SRS, we will have a sum of money which we can withdraw at age 62 penalty free. 

I do realize that you can withdraw up to $40k (per year) to avoid paying income tax on them.

Hence, SRS form a safety net for us between the age of 55 to 65. 

Knowing that we have something to withdraw for our old age at 62 instead of 65 (which the earliest  CPF Life can start paying).

Maybe this might convince more people to contribute to their SRS?

AK says...
I feel the same way. I will be very happy to share your POV in my blog. Thank you. :)

Related post:
SRS e-book and analysis.

Income tax payable and donation.

We work hard to earn money and, being good citizens, those of us who earn more money give a portion of our earned income to our country.

This is why IRAS always thanked me for the contribution towards nation building but not anymore.

Many things have changed in my life. This is another change.

I like to think that I am still contributing towards nation building and although I do not get any tax breaks for donations made to National University of Singapore, I continue to make donations.

Of course, the donation is smaller in amount now.

See:
http://singaporeanstocksinvestor.blogspot.sg/2016/07/ak-gets-invited-by-national-university.html

When was the last time I paid income tax?

See:
http://singaporeanstocksinvestor.blogspot.sg/2015/03/the-lowest-income-tax-payable-in-many.html


Related post:
Double our income but not our tax.

Understand the function of each tool in personal finance.

People get confused sometimes what the CPF is supposed to do. We should be clear what each tool in personal finance is supposed to do for us. Don't be confused.

C

... May I know how much should I top up my SA cpf by cash if I want to avoid paying tax?

Assi AK

You could do MS Top Up to your SA. Tax relief will be given for the first $7K of top up per year.

C

Thanks. Tax relief meaning the entire tax payment is waived or only partially waived?

Assi AK

Well, if you taxable income is $20K and you do MS Top Up of $7K, your taxable income becomes $13K.

C

Alright thanks. Most ordinary folks will not be taxed so much so I think there is no point in topping up. I would also like to learn investment. Where can I start? I am risk averse though.

Assi AK

Risk free? CPF. ;)

Tax savings from CPF MS Top Up is just a sweetener. It should not be the primary motivation.

Learn how to invest? You can start by reading some books. Go to my blog's right side bar and look for the box with the heading "Food for thought".

C

Thanks AK. Am I right to say that if if I hold the stocks long term e,g. More than 10 years, I will not be making losses?

Assi AK

I don't think anyone can guarantee that...

Related post:
Build a cornerstone in retirement funding.

The lowest income tax payable in many years (YA 2015).

I just did my income tax filing for Year of Assessment 2015. 

Yes, I am always quite early, preferring to get it out of the way ASAP.

My estimated income tax payable has reached a new low.

I have shared some ways which could help us pay less income tax before and I have included the links at the end of this blog.

This year, the government, to celebrate SG50, is allowing all qualifying donations a tax deduction of 300% of the donation amounts in 2015. 

This is up from 250% in recent years.





As we journey towards financial freedom, let us not forget the less fortunate. 

Do good and pay less income tax? Why not? 

I am sure all of us can find a charitable cause that we support in 2015.

Reference:
What type of donation is tax deductible?





So, how much is my estimated income tax payable for YA 2015?

Estimated income tax payable is $772.14.

Related posts:
1. Ways to reduce income tax. (YA 2013)
2. Double your income but not your tax. (YA 2014)
3. One of the most noble things we can do.

8 pragmatic reasons to be Singaporeans.

A reader, JK, shared his perspective and he has graciously allowed me to publish it here after some editing.

Why a Singapore citizenship?

1. Pay less in HDB Service & Conservancy Charges (S&CC)
 Most of the town councils have increased the rates for S&CC. Singaporeans don't have to pay the higher rates. Our 4-room HDB flat pays a monthly rate of S$51.60 instead of S$61.50 which means an annual savings of S$118.80.

2. Plan to have children? You will get a cash gift called Baby Bonus from the Singapore government. You get S$4,000 for your 1st child. It is free money for you to use as you like. It was raised to S$6,000 for the 1st child starting from end of August 2012.

3. More money for your child? Sure, you could get an additional $6,000 from the Singapore government if you save $6,000 in a Child Development Account (CDA). It is a dollar for dollar matching program by the government.  There are only two banks offering the CDA, Standard Chartered Bank and OCBC Bank.

OCBC CDA gives 0.5% interest, if you keep a $20,000 balance in the CDA account, the interest rate is 0.8%. I upgraded my OCBC CDA to OCBC CDA Extra, agreeing to a contribution by GIRO of S$50 per month. This option will pay an interest rate of 0.8% per annum too. 

Money in the CDA may be used by all your children for fees at Approved Institutions (AIs) which have registered with MCYS under the Baby Bonus Scheme. These include child care centres, kindergartens, medical clinics, licensed pharmacies and optical shops.

4.  Parenthood Tax Rebate. Get a one time tax rebate of S$5,000 for your first child. Second child?  S$10,000. 3rd child? S$20,000. For some, it is like not having to pay any income tax for the next 20 years. Why don't Singaporeans want to have more kids ?

5.  Working Mother's Child Relief (WMCR). For the first child, a mother can claim 15% of her earned income. There is a lot of savings come from here. Do the maths and you would be shocked too. For those who have 3 children or more, they could claim up to 25% of the mother's earned income which translates to huge savings!

6. Qualifying Child Relief (QCR). Either the father or mother of a child can claim QCR which is S$4,000 per child. With WMCR and QCR, there will be huge savings in taxes paid per year. 

7. Only Singaporean households can keep their HDB flats if they should purchase private residential properties. Singapore PR households MUST sell their HDB flats 6 months after the purchase of private residential properties or 6 months after the T.O.P. date of the private residential properties.

8. Singaporean households are also allowed to rent out their entire HDB flats after obtaining the relevant approvals. Singapore PR households are NOT allowed to rent out their HDB flats.

For the pre-edited articles, follow the links below:
"Singaporean Benefits (Part 1) and (Part 2)."

In the past, I would wonder why some people want to be Singaporeans. After all, our homes and cars are notoriously expensive. However, I do know that the Singapore passport is well respected and that we have a good and safe environment to bring up children.

Now, after this blog post, I have a better appreciation of why some PRs would like to become Singaporeans. For sure, there are many benefits which are for Singaporeans and Singaporeans only which I did not appreciate before.

Related posts:
1. Why I don't feel proud to be Singaporean?
2. CPF-HDB scheme to trick Singaporeans!
3. Take the good with the bad retiring to Malaysia.
4. Something only Singaporean males know.

Free "e-book": Achieving level one financial security for Singaporeans.

When I mused on how I should perhaps start grouping blog posts together to produce "e-books", I was really kidding because it sounds like work and I am too lazy to want to have more work. However, readers responded so well to my first "e-book" that I thought maybe I should try my hand at another one.

This time, I am inspired by a conversation with a friend over dinner last night. He was complaining about the CPF and how it should be abolished. I told him that it is extremely unlikely that the CPF would be abolished and since it is here to stay, we should learn to play the game and play it well.






In a way, I told him, the CPF is like his mother-in-law. If he is not prepared to divorce his wife, he must accept his mother-in-law. Similarly, if he is not prepared to renounce his citizenship, he must accept the CPF. He laughed and asked me how to play the game and play it well?

OK, before I start, I think that I have played the game pretty well but I am almost certain that it could be played even better.

What does this show? 
Would you like to make a guess?

We must first understand that the CPF is a tool that is primarily meant to help us meet our retirement needs. So, if we can make use of the tool to help us towards this purpose, why not?

Chapter One: Do you want 2.5% to 5% risk free rates?
Often, we hear people saying that we can achieve a higher return if we invest our CPF money. Well, how many of us are savvy enough to achieve 2.5% to 5% compounded annual returns? If we are that good at investing our own money, we should have more success stories than sob stories with the CPF-IS. Unfortunately, the opposite is true. Investing in the stock market is never free of risk while the CPF's rates are risk free. Leaving money in fixed deposits to earn 1%  return a year is, in fact, a higher risk proposition for any amount above $50,000.
See: Securing risk free returns early for our retirement.
See also:
How to upsize $100K to $225K?





Chapter Two: Do you want to pay less taxes?
While saving towards retirement, we could also pay less taxes. Sounds good, does it not? We could also help our parents become financially more secure and to pay less taxes. Again, how could this be a bad thing? If our parents are financially more secure, so are we. So, how do we do this? We do this by voluntarily contributing funds to our CPF-SA (MSTU. Now known as RSTU.) and CPF-MA.
See: Build a bigger retirement fund with CPF-SA and Voluntary contributions to CPF.
See also:
Know how to grow our CPF savings.






Chapter Three: Do you want to buy an apartment?
Realise that when we use our CPF money for housing, we are giving up on pretty attractive risk free returns. So, when we want to buy as pricey an apartment as possible with our CPF money, think again. It is an opportunity cost. For people who buy BTO HDB flats, I think that it is a safer use of their CPF money because these flats are subsidised. However, for people who use their CPF money to buy resale flats or private housing, there is a higher risk of losing money on their purchases. We should not take too much risk with our CPF money.
See: Buying an apartment: Considerations.





Chapter Four: Do you want free medical insurance?
One of the biggest worries many of us have must surely be the rising cost of healthcare in Singapore. I am certain that by the time I am a senior citizen, healthcare costs would have become even higher. So, what do we do? Buy the best H&S policy we can find. Pay 10% of our hospitalisation bills and the insurance company pays the rest? Sounds good. Of course, this does not come free. There is always a catch. Insurance premium must be paid. However, we could help the government pay this for us. Huh? Clue: The CPF-MA pays 4% in risk free rate per annum!
See: How to get free medical insurance in Singapore?





Chapter Five: Do you want more money at retirement?
Having said all this, the money we have in our CPF will never be enough to provide for our retirement. So, make use of the SRS which will help us pay less income tax as well and be more pro-active in growing our wealth towards having a financially secure retirement. Towards this end, we need to learn how to invest our money too.
See: SRS: A brief analysis and Young working Singaporeans, you are OK?
See also:
Made $1M investing for income.






Chapter Six: Do you want to invest with your CPF money?
Do not invest for the sake of investing. Be educated and do your homework. Money in the CPF is almost sacrosanct to me. I will not utilise it unless the benefits are almost guaranteed. I will not utilise it unless I could get a much higher return. There will always be people who will make guarantees and try to make us part with our money. If you are ever in doubt, stay out. It is better not to make money than to lose money, especially our CPF money.
See: Nobody cares more about our money than we do.





Probably, the biggest advantage of the CPF is that we cannot take out any of the money including the interest earned until we are pretty old. Huh? This is an advantage? Yes, the magic of compounding will naturally work in such an instance.

Just ask people who are trying to save money whether they have ever been tempted to use their savings for something else? Or have they ever given themselves a break from saving money due to some reason. I am sure many are less disciplined than they believe themselves to be. CPF is a form of forced savings and probably the best form there is.

At a risk free rate of 4% per annum, money will grow 50% every 10 years without any additional funds injected. Of course, the more time there is, the greater the effect. So, if you have never looked at the CPF this way before, you might want to start now.

Time is required to make this work. The earlier we start, the better off we are going to be.

Related post:
Free "e-book": Retiring before 60 is not a dream.

Double your income but not double your income tax.

This new blog post has an old theme and that is how we can pay less income tax even as we increase our income.

I have received my income tax notice of assessment. 

Tax payable: 

$1,606.02.




This is much more than what I paid last year which was $1,133.23. 

About 41.7% more, in fact! 

Why is this so? 

It has to do with the missing generous income tax rebate which was given in the year before.






Well, considering that my income in 2013 was almost twice as much as my income in 2012, $1,606.02 is not too much to pay, I suppose.

How is such a low income tax possible? 

After all, someone who makes $250,000 per annum would very likely have to pay an income tax of more than $20,000, wouldn't he?




OK, regular readers can skip the following pointers but if you are new to my blog, here are a few things you can consider doing:

1. Invest to receive non-taxable income. 

(For those who have the temperament and the know-how, trading could make some good money too.)




2. Start a Supplementary Retirement Scheme (SRS) account and make annual contributions to reduce taxable earned income. 

(For those who have yet to max out their CPF-SA, consider voluntary contributions up to a maximum of $7,000 a year. To avoid confusion, this is called a Minimum Sum Top Up or MSTU.)
 



3. Donate more to charitable organisations recognised by the government and enjoy 2.5x tax deduction, if we can afford to do so.

Mystery is solved.

The tools to help us build our wealth are out there and if we are able to help the less fortunate in the process, we should do it.




Don't say we don't have enough money or are not wealthy enough to help the poor. 

If we have some spare money to invest in the stock market, we are more fortunate than many out there. 

Even a $50.00 donation can do wonders. 

Not a big sum to most of us but it could mean a lot to the needy. 





If you don't know where to start, here is a suggestion: Singapore Children's Society.

Everyone's life should be better. 

If we do the right things, everyone's life could turn out better. 

Paying less income tax even as we increase our income will certainly help.

Reference: IRAS income tax rates.




Related posts:
1. Make more money, do good, pay less tax.
2. Ways to reduce income tax.
3. Voluntary contributions to CPF.
4. SRS- A brief analysis.
5. Build a bigger retirement fund: CPF-SA.