A quick and economical lunch. Healthier?

What did I have for breakfast? Did you guess oatmeal? You are right!

What did I have for lunch? Did you guess instant noodles? You are right, again!

OK, before anyone starts scolding me, I love instant noodles but I have been cutting down. The last time I had this was in June. Not too bad lah.

It is the same brand of instant noodles. It is the type that comes in a bowl and all I have to do is to add hot water after pouring in the seasoning and dried vegetables that come with it.

The last few times I had this, I added only half a packet of seasoning. This time, I decided not to add any at all.

I know that the packet of seasoning is just lots of MSG and I know it is bad for me. Actually, I have become less tolerant of MSG as I grow older. I really should watch it.

Anyway, I also felt like having noodles without the soup. So, I poured in 50% less hot water than usual. The end result? Not bad.

Price? $1.10.

Warm, moist, springy and still tastes quite good without any seasoning. Well, the noodles are naturally fragrant and the vegetables had some flavour.

OK, maybe, it's more acceptable to older people.
Seriously, I have found that in recent years, I like rather bland food.

So, don't take my word for it but you might want to try it. If it is too bland for you, you could always add the seasoning later.

What? You threw the packet of seasoning away already? Oops.

Related post:
Think we can't save $400,000?

In my 40s, married with kids? What would AK do?

To do better, one way is to invest for higher returns but at the same time we want to have some measure of stability. This is quite natural.

As we age and take on more responsibilities, including getting married and having children, we might start looking at things differently. 

Quite suddenly, we might not feel so carefree. 

Of course, we want to provide our loved ones with a better life too.





We fear that one wrong move on our part, we might jeopardise not only our future but the futures of those who are dependent on us. Again, it is quite natural to feel this way.

For people who have fallen along the way, it could be really difficult to get back up to continue the journey. 

I know because it happened to me before too but such is life and we simply have to soldier on. 

We only lose when we stop trying.

My way might not be your way.
However, we will find our cup of tea.

So, to someone in his 40s, married with young kids, who lost lots of money in his investments before and who is trying to find his way now, it could be quite a stressful process. 

Add multiple leveraged investment properties, some of them co-investments, and it could create a feeling of being stretched too thin, like spreading a little butter over too much bread, as Bilbo Baggins would say.

Here, I share a recent reply to a reader:

Actually, it is really a coincidence that you should be writing to me at this juncture because I have been invited to give a talk for a "recovery group" next week. 

It is for a group of people who lost a lot of money in stocks and are feeling somewhat demoralised...

... when bad things happen to anyone, there has to be closure. It is like a wound that needs to heal but it should heal properly. 

To have proper closure, we have to examine what went wrong and if there is some way we can grow to accept it and grow stronger in the process. 

Not an easy process which is why many who fell never recover.

You might remember that I have a blog post on how building an income portfolio is like building a house. 

So, if a bad thing should happen and the house was destroyed, what do we do? Go without a house? No, of course not. 

We build another house. This time, try to make sure that the foundation is stronger. Maybe, even install some earthquake proof technology. ;)

Bad things happen sometimes.

So, I would say that we want to take care of the basics first:

1. Have an emergency fund ready, enough to cover fixed expenses for 12 to 24 months. In your case, this should include the many mortgage payments for your many properties as well. 

2. Make sure you have necessary insurance in place. H&S, Critical Illnesses, Disability and Term Life. Term Life should cover the remaining mortgages of your properties and your dependents' needs till they graduate from tertiary education. Ask your insurance agent about reducing Term policies for the mortgages. Yes, they exist.





3. Plan for retirement and that is where your investment properties possibly fit in. If you feel that you are over-exposed and are uncomfortable, reduce your exposure. Losing sleep over anything is a bad idea.

4. I like the CPF-SA and I have maxed it out years ago. I do not know of any other instrument that will give me a risk free return of 4 to 5% per annum. As a tool for retirement funding, this is as easy as it gets.

5. Any excess money then can go into a war chest to wait for opportunities.




Like with anything, start from the ground up. 

Financial planning and investing for a better future? 

Much of it is about staying grounded and having a peace of mind. :)

I hope that this blog post has provided food for thought and if you should have opinions which you would like to share, please feel free to do so in the comments section.

Related posts:
1. Building an income portfolio is like building a house.
2. The best insurance to have in life.
3. Achieving financial freedom is a family affair.
4. How to upsize $100K to $225K in 20 years?
5. Thoughts on financial security for Singaporeans.

Eldershield: Is it really necessary?

What is the correct answer to the question?

This was a recent email exchange I had with a reader:

Reader's email:

Hi AK,  
Did you get any private insurance to complement your eldershield?

Thanks.







My reply:

Nope, I didn't. 

I don't need Eldershield but I gave in to a friend's persuasion to do collective risk sharing. :)

Reader's reply:

Thank you.

I'm a short time away from getting on eldershield. And i'm still trying to decide if i should stay in or hop outa the pool. 

My reply:

Well, insurance should be bought on a need basis.

If we are reasonably sure that we will have enough resources to see us through years of reduced physical capacity, we don't need Eldershield. 

This is true for me but I decided to help lower the cost of risk pooling for others who might need Eldershield. ;)





First, we should understand what is Eldershield:

"ElderShield is an affordable severe disability insurance scheme which provides basic financial protection to those who need long-term care, especially during old age. 

"It provides a monthly cash payout to help pay the out-of-pocket expenses for the care of a severely-disabled person."
Source: Ministry of Health

So, it is a disability insurance scheme and I know friends who bought such insurance to give themselves an income in case of disability, permanent or temporary. 





However, not everyone needs disability insurance.

Why? 

We don't need disability insurance because we are Superman (and just have to cross our fingers that we do not come into contact with Kryptonite)?

Source: NTUC Income.

Logically, if we own income generating assets which are able to provide meaningful and regular income streams, we do not need disability insurance. 

Hence, we do not need Eldershield.





This was what I meant by having "enough resources" in my email reply to the reader.

So, is Eldershield necessary? 

It might not be necessary for some of us but we might want to have it.





Related posts:
1. Tea with AK: Eldershield. 
(Read the comments too.)
2. Get free medical insurance in Singapore.
3. What is the best insurance to have in life?

CPF Annual Limit and voluntary contributions.

2016 Update:

CPF Annual Limit is now $37,740, up from $31,450 in 2015.
----------------------
An exchange of comments with readers on my FB wall highlighted something that could be overlooked by some. 






In March this year, I shared a screen shot in my blog:

Why did I voluntarily contribute $4,000 and not much more?

Reason:

The maximum amount of CPF contributions, including mandatory contributions your employer pays on your behalf, is $26,393.
 
The maximum amount of voluntary contributions a person (employee or self-employed) can make in one calendar year is subject to the CPF Annual Limit. 




All CPF contributions, whether mandatory or voluntary, will form part of the CPF Annual Limit.

From 2011, the CPF Annual Limit is $30,600.

No further voluntary contributions can be made if the mandatory and voluntary contributions have already reached the CPF Annual Limit of $30,600. (From 2015, the limit is $31,450.)

Source: CPF



Latest on CPFB's website:

The maximum amount of mandatory and voluntary contributions that a person (employee or self-employed person) can make in a calendar year is subject to the CPF Annual Limit. 

From 2016, the CPF Annual Limit is $37,740.







So, from 2016, maximum amount of VC = $37,740 – Mandatory Contributions

Mandatory contributions are compulsory contributions required under the CPF Act and include our own monthly contributions from earned income.

Use this calculator for VC:
https://www.cpf.gov.sg/eSvc/Web/Miscellaneous/ContributionAllocation/ContributionAllocationCalculator







Related posts:
1. Securing risk free returns early for retirement.
2. National Day Rally 2014: Retirement adequacy.