A chat on FDs, SSBs, OCBC 360 and CPF Top Ups.

Solace is a regular guest blogger here at ASSI and he has shared generously, without any agenda, his thoughts on personal finance and investment matters. He is sharing with us a conversation he had with a friend recently:

I had a conversation with a friend recently about FD, Singapore Saving Bonds (SSB), OCBC 360 and CPF.

Friend: u know hor, now got SSB, very good, very stupid to put money in FD.

Me: if u aim 10yrs, then it is better than FD, but if gt saving targets of 1-4 yrs, yearly renewal in FD for 1.X% is higher.

Friend: Then like that, isn't OCBC 360 better than FD. But I think I looking for long term risk free like 10 yrs.

Me: ocbc 360 can be better than FD only if u meet all their criteria plus they could change their terms and conditions anytime. since u want to look at risk free rate for long term time frame, why not consider your CPF SA risk free rate 4%?

Friend: erm, I don't trust or like CPF system, I might not even get my money back. I think Singapore bonds more "Reliable" than CPF

 

Me (internal thoughts): wah Lao aey, Singapore bonds more reliable than CPF? CPF is used mainly to buy govt bonds. Their nature is the same......

 

I gave up without speaking further. Cos need to spend too much time to explain further. Plus my friend might not listen to it as I sense that he is fixed in his views......

We need to do a very common sense when treating topping up SA

U know ppl in their 30s and 40s easily earn mid 4 figure pay. I am sure they hit the 7% tax bracket one of the year. U know what I talking abt right.

A 7% tax saving and a 4% interest, combine together, isn't it like 11% return in a year!

Sth we can't even get in equities market!

Or I shld say, majority cannot achieve 11% return in a yr....

Count it as my short version of guest blog haha

This is my version of "common sense investing" LOL

"Starting 2016, members 55 and above will enjoy an additional 1% extra interest on the first $30,000 of their combined balances. This is on top of the current 1% extra interest earned on the first $60,000 of their combined balances." CPF Board.

It seems that many more CPF members are warming up to the idea of topping up their CPF-SA and RA. This, I believe, is a good thing.

We should make full use of the CPF and make it a cornerstone in our plan for retirement adequacy. It is, quite simply, the sensible thing to do.

In investments, we go for low hanging fruits first. Why should it be different when it comes to planning for retirement adequacy?

Some blog posts in which CPF-SA was discussed:
1. Do you want to be richer? (2010)
2. Build a bigger retirement fund with CPF-SA. (2012)
3. Don't see money, won't spend money. (2013)
4. Upsize $100K to $225K in 20 years. (2014)
5. AK reveals his CPF-SA numbers. (2015)

Related posts:
1. Singapore Savings Bonds: Good or not?
2. Why fixed deposits over structured deposits?
3. UOB ONE Account or OCBC 360 Account?

Get ready for investment with Solace: here.

Happiness and slavery: A story about a lady in my life.

In replying to a comment here in my blog, I was inspired to share this story about someone I know. 

I know I have not been very good when it comes to giving protagonists in my stories a name. 

It is either no name or just a letter from the alphabet.

OK, for this blog post, let's see. 

What about "Posh"? 

I don't think I know anyone who has that name and it seems appropriate for the story I am going to tell.

Right, "Posh" it is.





I knew Posh for maybe a year or two but we have not been in touch for a while now. 

I remember she told me before that friends who don't bother to keep in touch will become strangers to her after a while. 

So, I could be in her list of "strangers to be" by now.

Anyway, Posh had a good career and made very good money. 







She knew how to have the good life too or so she said. A meal at a posh Japanese restaurant could cost $500 for two and she wouldn't bat an eyelid. 

An overseas holiday must be to countries where she could shop for branded goods at the same time. 

So, spending $20,000 on a 2 weeks trip to Italy? That was not extravagant to her.

So, it is not hard to imagine that for a person like AK who thinks that posh Japanese restaurants are the likes of Ichiban Boshi (and I recently paid $140 for dinner with 4 friends at one of their outlets) and that overseas holidays are meaningful if they are spent appreciating nature, trying street food, visiting cultural sites and museums, to feel very differently.

Posh eagerly anticipated social events, especially those which would allow her to rub shoulders with members of the high society. 

I was told that she built her contacts and made quite a bit of money because of the rich people she got to know. 

I actually appreciate that but not everyone is good at that. I felt like a fish out of water.

I still remember one incident when a wealthy gentleman told me, "If you help me to do this, I will let you drive my Jaguar." 

I wanted to ask, "Why would I want to drive your Jaguar?" 

Something stopped me and I managed a smile. 

The very rich are just different, maybe.





Whenever Posh closed a deal, she would go shopping and she would be happy. It could be LV, Gucci, Prada, Aigner or Salvatore. 

For the record, it took me a while to remember these names and if many of my grey cells died in the process, I wouldn't be surprised.

Now, don't get me wrong, I know what retail therapy is about. 

However, for AK, if he needs retail therapy, he goes to a supermarket. 

I could end up buying some atas grocery. I might buy strawberries instead of apples, for example. 

Actually, yesterday, I bought some dried figs which cost about $7.00 for 200 grams. Atas!

What led to the ice age in my friendship with Posh was when I told her that she was a slave. 

She was offended. 

The more I talked, the more offended she was.

Posh made good money, like I said. She was happy when she spent money on expensive goods and services. 

Was there a problem? 

The problem, to me, was that the happiness was bought with money and that it was temporal. 





Could there come a day when she ran out of money and she couldn't buy happiness anymore?

Running out of money? 

Posh couldn't imagine that. 

I felt that it was more likely that she could not accept that. 

Posh was no bimbo. 

She was very intelligent. 

She knew.





We might understand something but for reasons only known to us, we might or might not accept it.

Specifically, I told Posh she was a slave to materialism. 

She said slaves were unhappy people but she was happy. It was wrong to call her a slave. It was a matter of perspective. 

I couldn't disagree with that.





So, I said she was a happy slave and that I was sure there were many other happy slaves like her in the world.

Rather abruptly, Posh left the conversation.

Alamak, I forgot to mention how much money she regularly spent on atas cosmetics and facial sessions too. 

Oh, never mind.




Related posts:
1. Wage slaves should be fearful.
2. Buy a $500,000 watch.
3. How to retire comfortably?