Filial son working towards financial security (Part 2).

Our conversation continues:

Hi AK,

Firstly would like to say Happy New Year. Even thought its already mid of Jan. i writing this to you to update and share with you. I have transfer
my prudshield to NTUC enhance income shield advantage with assist rider. Then i have signed iterm for $200k term and $100k living rider(for CI) for 35years.

The Premium is $66.60/mth and till i reach 62 years old. Which is long enough. i know i may choose too little but its afforable and i feel much for comfortable in the long run. I also signed enhance income shield with basic assist rider for
both my dad and mum. So in any case, if my parents are warded, $30,000 bill just require to pay 10 percent which can be use by medisave
as well. i think its okay. i am paying giro and using my medisave to pay for both my parents. There is 25 percent premium subsides by gov. So its still within my afforable range.

At least if i get hospitalise, myself is full covered. But if my parents are warded, i use need to deduct 10 percent from my medisave. i know you
did advise me but i thinks and plan well before i done all these. if i earn more money, i will volunteer top up 7k to my MA in the future to deduct my income tax.

Secondly, i tried to share with alot of my frens all from different age, most of them earn alot but still think that OA is impt than SA because need to buy house. And they urge me to stop what im doing because they say i may face problem if im
buying house. But i know what im doing and i have still transfer full from my OA to SA for the next 3 to 5 years. i attached the interest i earn from OA and SA.

i only transfer all my OA to SA in Dec 2015. And i dont even have a gf now, so i just focus on funding SA first, so it will roll more interest through the years till my retire age.

Third, i also stop spending unnecessary money. i always think about what is the need and wants. And do i spend more money to buy smth just because of convenient. Just like what you shared. buying a can drinks in outside cost 1.50 where you go NTUC its only cost 70 cents. Start saving money and doing my best to focus on my studies and work.

Currently plan to save up $20k then go for 9 to 12 month FD. Meanwhile wait till i read enough before i start any investment such as S-reits etc.

you can use my screenshot and share on your blog. im okay with it.

sorry AK. i signed $200k term and $150k living rider(for CI) for 35years. The Premium is $75/mth and till i reach 62 years old. just to provide you in case people wish to find out

Lastly, thank you for the effort of keep posting and giving guidance. I still keep reading and following your blog and FB. All the best AK in your investment.


Warmest Regards
S

My reply:

Thank you so much for taking the time and effort to share with me your progress. I am very happy for you. I am sure you feel a deep sense of satisfaction and also a higher level of security now. Good job!

From S:

Yes AK, I'm feeling so much ease now. Hope you can continue to spread more knowledge to us. But I must admit it's hard to convince others about investment or transferring of oa to sa. But it's okay. As long as we know what we are doing and believe in managing ourself and the interest will prove through the years.

Related posts:
1. Filial son working towards financial security in 2016.
2. Beyond needs and wants is the price of convenience.
3. Do you know if your parents have H&S coverage?
4. A lot of money in my CPF SA...
5. AK is showing off his CPF OA and MA.

AK answers 3 questions on early retirement.

Dear AK

I have been faithfully following your posts for the past year and have benefitted much in terms of my own early retirement planning.

What I applaud you on is not only having wisdom in value and passive income investing but also the willingness in imparting this knowledge to other investors aspiring to financial independence. Well done!

I figured from your posts that you have recently retired from full time work and are now financially independent reaping the benefits of your most commendable and lucrative passive income.

If you may and don't mind sharing, can I tap your experience on the following:

1) at what point or level of passive income returns did you make the decision that you had sufficient safety buffer to leave your full-time work? It's always nice to have the safety net of a monthly pay-check and medical coverage and it is not easy to let this go in return for more free time;

2) even after achieving financial independence and leaving full time work, are you able to occupy your time fully and meaningfully? I struggle with this aspect as I fear boredom and a meaningless daily existence wondering how to occupy my time.

3) how do you keep yourself up to date on your work related skills in case you decide to return to full time work?

Thank you in advance and appreciate your guidance and sharing from your personal experiences.

Regards
A Kindred Spirit

My reply:

Hi AKS,

Welcome to my blog. :)

#1. When my passive income was as much as my earned income, I was basically in a position when I worked because I wanted to and not because I had to.

However, I am Singaporean and KS. So, still worrying, I waited for my passive income to be a bit more than my earned income. How much more? Maybe 30% more?

As for medical coverage, I recognised a long time ago that I must have good H&S coverage and not depend on the coverage provided by my employer. Visits to the clinics don't cost much since I am a Singaporean and I go to Polyclinics when I am ill.

#2. Initially, retirement could be boring but I am hardly bored. Blogging and related activities took up quite a bit of my spare time. That kept me from being bored but I blog less now. I am also slower to reply to comments and emails.

Then, what am I doing to occupy my time? I am spending more time learning about health matters, especially matters related to nutrition, weight loss and exercise. I am doing Yoga again and I spend quite a bit of time in my planter gardening. I also read up a bit on the subjects.

I am always learning something new. I am not bored.

#3. For me, I have no intention to go back to active employment. So, this is not a burning question for me. I have an academic degree and not a professional degree. So, I guess this is another reason why this question is not really important for me.

I was teaching for a while and I could always do some relief teaching if I really want to, I guess.

I do know of people who say they don't ever want to retire. As long as they are happy and healthy, there isn't anything wrong with having no desire to retire.

However, if they say they can't retire or if they are unhappy and suffer in their jobs, that is a big problem. They should really have exit plans then.

Related post:
Retiring before 60 is not a dream!

New money habits led to saving $100K in 18 months - Part Two.

Updated (27 Dec 16):

I am such a kaypoh (i.e. busy body), I know. I told myself many times before that I should change. I should not talk to myself but it is very difficult for me not to.

Although I left the profession donkey years ago, I guess I am still a teacher at heart.

Source: Wife becomes tai tai...

If every day should see one person becoming financially more secure from reading my blog, I would be very happy.
----------------------




This is a continuation of an earlier conversation which generated quite a lot of discussion on my FB wall:

Hi AK,

Thank you for your reply!

Saw your recent post where you share my email and wow - it drew quite a few strong comments from your facebook readers. Haha.

 Anyway, im not sure why there are such strong comments about the S$100K but no one commented on the $50K loan. All I wanted to say was it is really possible for a couple to save $100K if we put aside 4K monthly and save up all the bonuses within that 18 months. =)

 Others may not believe it but its really not our incentive to convince them. As long as we continue to do the right things to help ourselves and achieve the results that we wanted, why bother about what others say. Right? =)

 My hubby and I had some discussion and decided that we will keep the funds as our emergency funds instead of paying down our loans. 

The purpose of the emergency funds are meant to cover our monthly routine expenses in order to maintain our current lifestyle.



Sleep tight. Sweet dreams.

 In the event if we are retrenched suddenly, with just a $50K cash on hand, this will shorten the period which will allow us to go on a "no pay leave" scheme and we are not quite comfortable with it. Given the current economic climate, perhaps its better to hold cash.

 Meanwhile, its time to build up our war chest. Hopefully the market will not crash so soon so as to allow us to build on our war chest.

Taking very sensible steps. I am glad.

Gambatte!


Related post:
New money habits led to saving $100K in 18 months (Part One).

AIMS AMP Capital Industrial REIT: A private tour..

I was given an opportunity to take a tour of 4 of AA REIT's properties in the western part of Singapore and since the REIT is the largest investment in my portfolio, I accepted the offer right away after confirming that the tour is a private one. (Yes, I am still very shy.)

Everything tells me that my opinion of the management is right as they put investors' interests right at the front. 

Being AK, in jest, I said they must do that since Mr. George Wang has such a big personal stake in the REIT. 

Bad AK, bad AK!

Appointment time: 10AM.

Shuttling between properties, we had a good conversation going:

1. With the oversupply of industrial properties in Singapore, I am worried about the vacancy rate for warehouses the most. 

Apparently, the REIT is spending a lot of resources on as it is rather challenging and could get more so. 

I reckon the REIT is doing quite well, otherwise.





2. Of course, we have heard stories of how some local companies move across the Causeway to take advantage of the cheaper land in Johor. 

The biggest challenge is in finding labour and also the right type of labour for companies in the Iskandar region. 

There is plenty of land there but not enough labour. 

So, for many years to come, Singapore industrial properties will still be in demand.





3. Asset quality is a pertinent concern when we invest in REITs. 

The REIT is picky not only when it comes to buying and divesting properties, they are also picky when it comes to which existing properties to benefit from AEIs. 

Active portfolio management is something the REIT does well, I agree.





4. In a rising interest rate environment and also softening rentals, is there any plan to hold back a percentage of distributable income to lower the gearing level? 

To be fair, the REIT's gearing level is not very high at about 32% but expecting property values to decline, gearing level could bump up. 

The answer seems to be that the REIT rather distributes 100% of the available distributable income because they would have to pay corporate tax on whatever income they decide to retain even if it was just 5% or 10%.





5. Is there any possibility to refinance, locking in the still relatively low interest rates for a longer term? 

There is a MTN maturing later this year and the interest on that is 4.9%. 

They explained that a longer term loan could mean a higher interest and that a shorter term loan would mean a lower interest. So, there will be a trade off. 

Well, I am hoping for a new 7 years MTN with interest meaningfully lower than 4.9%.





OK, here are some other photos:

8 and 10 Pandan Crescent

20 Gul Way.

30 & 32 Tuas West Road being redeveloped.

Another 20 Gul Way in the making!

1A, International Business Park.

Oh, I also want to share these photos taken during the tour of the award winning (Green Mark Gold) 1A, International Business Park:

Definitely a beautiful working environment.

I cannot share everything that was discussed mostly because my memory is not what it used to be but I was very impressed by what I saw and what I heard.





Real estate can be a very good income generator. 

However, not all of us have the ability to invest directly in a piece of real estate. 

Even if we have a million dollars or two, we would be hard pressed to invest in a portfolio of real estate to reduce concentration risk. 

Investing in well managed REITs solves this problem.

Although I have never attended a single AGM by AA REIT, just by taking note of what they did over time, I could tell that AA REIT is a well managed REIT where investors' interests are not neglected. 

I am glad to have affirmation on this tour.





UPDATE (28 DEC 16)
AIMS AMP Capital Industrial REIT received Temporary Occupation Permit for its redevelopment at 

30 & 32 Tuas West Road which is valued at S$60.7m, up more than 4 times from its former value S$14.1m. 

It will deliver S$4.15m in rental income annually in year one with fixed annual rent escalations over the term of the lease – up from S$0.82m.






This is NOT a paid advertorial.

Related post:
2015 full year income from S-REITs.