How AK uses his SRS money and why?

Do you have to work beyond retirement age?

"Who is going to pay? Take responsibility."





For anyone who pays quite a bit of income tax, I always suggest starting a SRS account. 

See related post #1.

Since the inception of the SRS, I contributed the maximum allowed annually. 

I won't be doing it anymore since I no longer have an earned income and would not have to pay income tax. 

See related post #2.







Since I have been maxing out my SRS account annually, I must have quite a bit of money saved up. 

What do I do with all the money in my SRS account?

Some of the money in my SRS account is invested in stocks like DBS, SATS and ST Engineering. 

Why these? 

With SRS money, I am always careful to invest only in companies which are unlikely to have a rights issue. 

So, these are companies with relatively strong balance sheets. 

See related post #3.






Although this might surprise some readers, I also placed some of my SRS money in endowment funds. 

I would choose single premium endowment funds with acceptable guaranteed returns. 

I would brush off those with very high projected returns but low guaranteed returns.

More than 10 years ago, it was easy to find endowment funds which guaranteed as much as 4% return per annum. 

I also liked NTUC Income's Growth Plan and plonked down a low end 5 figure sum 10 years ago. 

Looking at the surrender value today, it has been compounding at more than 3.2% per annum. 

Not bad for an insurance cum savings product.







SRS money is money meant to supplement our CPF savings. 

It is to help with retirement adequacy. 

Hence, the name Supplementary Retirement Scheme (SRS). 

So, I have always been less adventurous with my SRS money. 

Together with my CPF money, they form my safety net in retirement.






Regular readers know that I suggest Eating Bread With Ink Slowly. 

The "S" in "slowly" stands for sizing, position sizing.  

See related post #4.

Many might not have realised this but it is probably because I have a big safety net in my investment portfolio which is made up of bond like elements (i.e. my CPF and SRS savings) that I can be more "aggressive" when I size my positions.






Swinging on the investment trapeze, if I should fall, I know I won't hit the floor. 

It is about having peace of mind as an investor.

As usual, I am just talking to myself. 

If you have picked up something useful from eavesdropping, lucky you. 






Finders, keepers.

Related posts:
1. SRS: A brief analysis.
2. I paid myself $12,750.
3. SRS and rights issues.
4. Eat bread with ink slowly.

Holistic approach to a secure financial future.

I am always happiest reading happy stories. 

I mean who wouldn't be? 

OK, if you need a reason, well, they are easier for me to reply to compared to sad stories.

It is true that happy stories are easier to reply to and that makes me happy but I am happiest with happy stories because they are an affirmation of the work I am doing here in my blog.

I am sharing here not one but two readers' stories and I hope they pump you up to do more in 2017:





READER #1: Because of your sharing AK, I made the following changes to my life in 2016.

In 2016, I paid off the remaining of my home loan in Jan 2016. Was using CPF to service loan. With that, for the whole year (2016), my CPF started growing faster and generating risk free interest at the same time.

With a portion of the remaining cash, I also started investing in the stocks Dec 2015. Very happy with Saizen, AIMS, First Reit, Ireit Global, ARA, etc.

Rest of cash in fixed D as war chest + emergency funds waiting to invest more when opportunity presents.

Yes, all along got insurance coverage for self and family.

I also made it a point to simplify life style. Conscious with spending. Eat less, exercise more, cycling a lot makes me happy. Don’t need much.

I banished my 3 children (wealth destroyer)…kidding. Some money still have to spend being responsible to children & parents. Looking forward to 2017 to optimize CPF, invest more when opportunity presents, save more, simplify further. Although much to work on and a bit late, I am very pleased with making the changes last year.

So please continue with the great work in “talking to yourself”.





READER #2: Hello AK, happy new year! As I read about how others feel you should continue blogging, I also wanna share how your blog has benefited me.

CPF continues to be 1 area my friends and I share different views on. I transferred my 3-4 years worth of OA to SA after discovering your blog, and feel excited logging into CPF today to see the interest collected.

The other area is in stock investment; I used to try to time the market and it gave me unneeded stress. Your blog brought me to believe in consistent dividends, and taught me about position sizing. I find the sharings on your purchases particularly helpful and insightful.

Not forgetting your thoughts in matters of insurance, savings etc.

Please keep blogging! With general increased interest in such matters (I think), I believe someway or another people will chance upon your blog and hopefully review their financial well-being. BIG THANKS!





What has changed for the readers? 

Although individually important, it is not just about saving money, investing in stocks for income or being adequately insured, for examples. 

It is much more than these.

Remember, all the things I do and blog about come in a package. 

Yes, it is a package deal.

Paying attention to only one area while ignoring other areas does not strike me as a good idea.







It is like some guy in a Chinese kung fu period drama stumbling upon a kung fu manual 亚西(ASSI)神功 which had 10 chapters and he decided to skip to chapter 10, ignoring the foundation chapters and everything else. 

Pouring all his energy into that one chapter alone, he 走火入魔 (a Chinese term traditionally used to indicate that something has gone wrong in spiritual or martial arts training... Source: Wikipedia).

I am glad it did not happen to the readers here. 

What the readers did was a major rethink of what they were doing or not doing. 

What followed was a major revamp as they took action to make changes.

If we want a more secure financial future, we would do well to take a holistic approach.

My philosophy in wealth building might be boring and it probably isn't suitable for everybody. 

Some are happy adopting it and it is only normal that some will brush it off.





I will say that it has worked for me and I am glad to know that it is helping these readers towards greater financial well being too.

To anyone who is walking the same path, I agree that it could be a long walk but, to succeed, we have to believe that patience will be rewarded!


(Decide how much income you will get from an asset and pay a fair price for that.)



Related posts:
1. Power to be financially stronger!
2. Make $1 million investing for income?
3. CPF a cornerstone in retirement funding.

Tea with LS: Withdraw CPF MSTU and interest at 55?

Very well researched and put together. Hats off to LS who originally placed this in the comments section.
Hi AK,

I guess this withdrawal regarding top-up money and its interest is causing a lot of confusion. This is due to the frequent changes in CPF policies/withdrawal rules. What is making it worse is that some of our CPF officers are also not as well-versed and providing wrong information (anecdotes from my friends and some comments in forums. Please disregard this if its offensive to you) and also the CPF website is poorly designed with incomplete information all over the place. 

I had trawled through the website for more than 1 hour in order to post the information below. (Maybe I am just lousy at searching for information at the CPF website, lol)

Firstly, what is causing the confusion? It is because of this particular rule...

"After setting aside your Full Retirement Sum or Basic Retirement Sum with sufficient property charge/pledge, you can choose to withdraw the remaining CPF balances (excluding top-up monies, government grants, and interest earned in your Retirement Account)"

https://www.cpf.gov.sg/Members//Faq/schemes/retirement/retirement-sum-scheme#faq17406

But in the same webpage, this is we can also see this;

"​Your Ordinary and Special Account savings after setting aside the applicable Full Retirement Sum (FRS) or Basic Retirement Sum (BRS) with sufficient property charge/pledge."

Does this means you can withdraw all remaining funds in OA/SA after you set aside the amount for FRS/BRS? Or will the first statement take priority and takes effect (resulting in unable to withdraw the top-up money and its interest) even after we set aside enough for FRS/BRS? This is what is causing the confusion.


After searching the CPF website for over an hour, I finally found this;

"If you had received top-ups before age 55, the top-ups and accrued interest in your Special Account (SA) will be transferred to your Retirement Account (RA) when you turn 55. Any excess, above the Full Retirement Sum applicable to you, can be withdrawn when you apply for withdrawal at age 55."

https://www.cpf.gov.sg/Members//Faq/schemes/retirement/retirement-sum-scheme#faq17406

What is interesting and yet confusing is this (also in the same webpage);

"In addition, top-up monies cannot be used to form part of the Basic Retirement Sum (BRS) in computing how much RA savings above their BRS that can be withdrawn through sufficient CPF property charge or pledge"

Which actually means that even if your BRS is $83,000, and you have $123,000 in your RA ($100,000 is from top-up and its interest), you will not be able to withdraw anything. That is due to after deducting your top-up money ($100,000) from your RA ($123,000), you got only $23,000 left which is less than the BRS ($83,000). You can read in detail of the example provide at the webpage.

So let us summarize :

1) If it is about FRS, you can withdraw all the remaining funds that exceeds the FRS amount,

2) if it is about BRS, the rule applies and you cannot withdraw the top-up money and its interest. You can only withdraw remaining funds if your RA still exceed BRS after deducting the top-up and its interest.

Sorry for the exceedingly long post but I hope it clears up the doubts.

P.S. actually I may be wasting my time here trying to clear things up since the withdrawal might change again 1-2 years down the road. I still have almost 2 decades before I hit the withdrawal age...
P.P.S hopefully this is useful for people who is near to the withdrawal age (55 years old)...

Related post:
Did CPF Top Ups but denied lump sum withdrawal?

Average income workers have a choice to be rich!

I went out to lunch with my mom before sending her to the hospital. 

I went to a supermarket nearby to buy some chocolate which was on special offer before going to a bank to enjoy a cup of tea while waiting for her to call when she was done.

I like buying things at knocked down prices (i.e. the chocolate) and I like free (i.e. the tea). 

Anyway, there was a big screen TV right in front of me with ads flashing. 

One ad asked:

"When you have to stop working, can you afford to?"

It is a straight forward question that is also depressing because it suggests we don't have a choice as to when we stop working. 

We stop working when we have to. 

We stop working when we are told to. 

Wait a minute, that sounds like a prisoner in a labor camp serving time. Alamak!

Don't you hate the feeling of working because you don't have a choice? 

Yes, of course, you do. 

I would be surprised if you don't.

This is probably why you are reading my blog and others like it. 




You want to be financially free so that you do not have to exchange the most precious resource you have (i.e. time) for money anymore. 

You don't want to serve time. 

Time serves you.

So, instead, I would ask:

"If you want to stop working, can you afford to?"

I am going to be brutally honest. 

Not many people can. 

This is something only the rich can do. 

If you are not rich, continue to serve time. Ouch!

AK, you are terrible! 

Bad AK! Bad AK!

The truth hurts. 

So, what to do? 

Become rich lah!

I believe that even average income workers can become rich and I am not talking about "striking millions at TOTO" kind of rich. 




I am talking about "not having to exchange time for money anymore" kind of rich.

Why do many average income workers find this 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 get them in a heartbeat. 

This is why they cannot afford to stop working.

This is based on a true story:

Guy: "I think we should go to Europe on a vacation. The Euro is so cheap now."

Gal: "Wow! Good idea! I can buy all the branded goods there! So much cheaper than in Singapore!"

Guy: "I have $10,000 saved up this year. We can have a good time there."

Gal: "I am so happy! I think we deserve it."

Oh, they definitely deserve it! 

If this is the way they are going to live, year after year, they deserve to be destitute and get VIP (i.e. Very Impoverished Person) seats at Roy's next "RETURN OUR CPF" rally in Hong Lim Park.

This is based on a reality show I watched:

Guy: "I prefer Hawaii for our honeymoon. I don't want to go to Phuket."

Gal: "But we cannot afford it. We have a budget, remember?"

Guy: "I know we cannot afford it but I think we deserve it. We can take a loan."

OMG! That guy is an IDIOT! 

I probably exclaimed so loudly that my neighbors got a fright.

Hey, woman! Financial freedom gives us options but you don't need financial freedom to opt out of this relationship. 

I think you can afford to dump that fellow. 

Do it before your finances end up in the dumps and you cannot afford anything else!

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

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

Don't let people ask you (and not at the bank):

"When you have to stop working, can you afford to?"

Ask instead:

"If you want to stop working, can you afford to?"




The difference between the two questions is one of choice. 

We have choices in life and if we want to continue having choices in life, choose carefully.

Yes, even average income workers have a choice to be rich!

Related posts:
1. Avoid financial ruin.

2. Save 100% of your pay.

3. Recession proof your life.

4. How much can you save?

5. Prepared for retrenchment.

Do online contribution to Medisave and get $88 Ang Bao.

"For those under 65, the Basic Healthcare Sum next year will be S$54,500, up from S$52,000 previously, the authorities said."
Source:
CNA, 16 November 2017





The Basic Healthcare Sum (BHS) which was known as the Medisave Contribution Ceiling (MCC) in the past has been raised from $49,800 to $52,000 in 2017. 

This means that we can voluntarily contribute $2,200 now. 

Of course, for those who are gainfully employed, this contribution will enjoy income tax relief.

For people like me whose CPF-SA has already hit or exceeded the prevailing Minimum Sum or Full Retirement Sum, this is about the only avenue we have to pump more money into our CPF to earn a 4% interest. 




Of course, for those of us whose mandatory contributions (MC or contributions from earned income) are lower than the CPF Annual Limit ($37,740), we can also do regular voluntary contributions for the difference, maxing out the CPF Annual Limit. 

The CPFB will apportion the contribution to our OA, SA and MA. 

How much goes into each account will depend on our age group.

I am so glad to be promoted to the next age bracket which means more of my regular voluntary contributions will go to my CPF-SA which is paid a higher interest. 

One of the reasons for me to be happy with ageing.





We can do a contribution to our CPF-MA online.

Here is how to do it:

Go to CPF e-Cashier homepage.

Enter details and choice.

Check allowable contribution

$2,200 this time of year.

Contribute online using eNETS

It is done!

I contributed only $2,000 because that is the daily limit for me.

How much interest will $2,200 earn in a year? 




At 4%, that is $88.

Some people might say $88 is not a lot of money. 

What will AK say? 

It is still money and good money from the government too.




How do we build wealth through saving money? 

Slowly and steadily, every dollar adds up.

From my FB wall.

Don't underestimate the power of saving a few dollars a day, every day. Don't underestimate the power of compound interest.

What? Don't have $2,200 to contribute to your CPF-MA? 

Oh, you need the money buy your daily cup of Starbucks coffee? 

OK lor. You are free to choose.




I choose to have free medical insurance. 

It is such a no brainer.

I forgot to mention that 88 is such an auspicious number too. 

Huat, huat ah!




Related post:
How to get free medical insurance?

Mr. Lee Kuan Yew said China could become pushy.

"I don't want to sound apocalyptic but I don't see Taiwan as being able to resist the pull of the mainland. There will come a time when the 7th fleet cannot intervene." Mr. Lee Kuan Yew.

A long time ago in ancient China, there was a big village that sat on both banks of a river. One day, there was a big fight in the village and villagers living on the left bank said they wanted to have nothing to do with the villagers on the right bank. 

The village chief who was living on the right bank rejected this and called the newly appointed village chief on the left bank a traitor.

Then, there was a small village farther inland on the right bank that was friendly with the big village. Although the big village was broken into two and continued to quarrel, it had nothing to do with the small village. 

A case of domestic conflict, chief of the small village thought.

The small village was quite good at doing certain things and designing war chariots was one of them. Being small, the village didn't have room to test them and would send them to the left bank of the big village for testing. The chariots had to pass through the right bank of the big village to do so and for years that went on without incident.

Then, one day, the quarrel in the big village escalated. On that fateful day, the chariots being tested on the left bank were on their way back to the small village. 

It didn't matter that the late chief of the small village helped them before, the right bank which sought to isolate the left bank took hold of the chariots. The small village which needed the big village in more ways than one was helpless.

The small village then understood the saying:

穷不与富斗，富不与官斗。

In ancient China, the rich would pay money just to get a position in government. Being rich was good but being rich and powerful was better.

Got power, can be pushy. 

Got power, can be assertive.

Of course, it was not the first time our country's first Prime Minister, the late Mr. Lee Kuan Yew, got it right.

Related post:
Mr Lee Kuan Yew on the Eurozone crisis.

“As the case is still under investigation, no further information is available. The suspected controlled items are still kept at a customs storage place in Tuen Mun. They have been stored indoors since December 6,” a spokesman said.

At a daily press briefing, Chinese foreign ministry spokesman Geng Shuang would only say that the Hong Kong government is handling the incident in accordance with relevant laws.

Beijing has always known about the arrangements between Taiwan and Singapore and remained silent on the issue until now, seizure of the armoured vehicles provides it with an excellent opportunity. Whether this occasion is orchestrated or opportunistic is of secondary importance. The affair gives China floor to push back against the undesirable activity, drive a wedge between Singapore and Taiwan and give a lesson to Singapore for recent statements on the South China Sea and China’s role in the dispute.

AK showing off his CPF-OA and MA (2017).

I thought that only my CPF-SA numbers garnered a following but it seems that my CPF-OA numbers have a following too. 

So, I agreed to share more of my CPF numbers here. 





Latest CPF numbers, OA, SA and MA:

If we add all the three accounts together, the total amount of savings I have in the CPF is:

S$723,088.16

At the ripe old age of 45 too.





I know this is impressive to many people and although it is achievable, please don't think that this should be a benchmark for you to latch on to. 

Remember, we have to be realistic. 

Not many of us who want to buy our first property can leave our CPF-OA money untouched. 






Indeed, regular readers know my story. 

My CPF-OA savings was not always untouched.

See: 
How did AK amass so much money in his CPF-OA?





For most of us, what is more achievable and more rewarding is to top up our CPF-SA and CPF-MA. 

These accounts pay higher interest and they will help with our retirement and hospitalisation funding. 

Be pragmatic. 

These accounts should have priority.

See: 
1. How to upsize $100K to $225K?
2. How to get free medical insurance with CPF-MA?





Interest earned in the CPF-MA will flow to the CPF-OA if both the CPF-SA and CPF-MA have hit their ceilings. 

That interest will help the CPF-OA grow. 

I know because this is what happens to me.





Later on in life, to grow our CPF-OA savings faster, if we have spare cash, we can always think about doing voluntary refunds to our CPF-OA. 

Of course, when we are older, we could also sell our property and downsize.

See: 
How to stop accrued interest we owe from growing in CPF-OA?


The CPF can go a long way to providing us with a financially more secure future.





We have to help the CPF to help ourselves and the earlier we do it, the better.

Now, I wonder how much my lump sum withdrawal from CPF at age 55 could be? 

What? 

The government allow a withdrawal of $5,000 only? 

Not for me.

Related posts:
1. AK showing off SA numbers again?
2. AK showing off CPF-OA and MA (2016).







"They all say CPF is XXX... How like that?"

AK showing off his CPF-SA numbers again?

(4 things you need to know about your new CPF statement.)

I hope my blog has not caused too much trouble for the authorities.

Just like my passive income numbers, my CPF-SA numbers seem to have garnered a following as readers reminded me on Facebook that it is time. 

Even Facebook reminded me that it is time.

I guess sharing my CPF-SA numbers is inspiring to many readers and it helps them to stay the course.

Er... OK, I am not quite sure what to make of the last comment (and some say I am cryptic).

Anyway, although I thought I might skip it this year, a remark from a reader on FB gave me a nudge.

AK was old, fat and ugly. Now, AK is old, slimmer and ugly.

If by revealing my CPF numbers again, AK can be old, slimmer and handsome, OK, I do it.

What? 

You surprised AK is like that? 

Alamak, you didn't know?

I am human too!

Hey, who wants to be old, fat and ugly? 

Cannot do anything about old but if can do away with the fat and ugly, that's two out of three! 

I win!





OK, the numbers:

How much has my CPF-SA money grown from the year before? 

See related post at the end of this blog.

Worried about the projected 3% yearly increase in Minimum Sum (Full Retirement Sum)? 

Not me.

How did this "miracle" happen? 

If you have to ask, you must be a new reader. 

See related post at the end of this blog.

Ask why does having more money in our CPF-SA and as early as possible make sense? 





How to do this?

See the related post at the end of this blog. 

Then, go to the right side bar of my blog to read more of my blogs related to the CPF.

If you are a regular reader, you should be smiling now! 

Huat ah!





Truly Happy New Year!

Related post: CPF-SA outperformed.

Another undervalued investment of mine is no more?

(How much is a company worth if it ceased operation today?)
Today, a reader sent this to me:

Hi AK, is this related to AAReit har?

http://www.businesstimes.com.sg/companies-markets/property-fund-of-aims-under-attack-from-wind-up-attempt?xtor=EREC-16-1[BT_Newsletter_1]-20170102-[Property+fund+of+AIMS+under+attack+from+wind-up+attempt]&xts=538380

AK says:
This is not about AIMS AMP Capital Industrial REIT. It is about AIMS Property Securities Fund which I blogged about in November last year.

From the article:

"... Australian fund AIMS Property Securities Fund (APW), is currently under attack from minority unitholders who have convened a Jan 3 meeting to vote on a motion to wind up the fund.

"The motion was initiated by Samuel Terry Asset Management, a Sydney-based boutique investment management company, which claims to have amassed substantial support from other unitholders to go against APW's majority shareholder, AIMS Financial Group.

"However APW's executive chairman George Wang is confident of defeating the motion, pointing out in a recent interview with The Business Times that this is not the first time Samuel Terry (referring to the company) has tried to wind up APW; the previous unsuccessful attempt occurred in 2013.

"Samuel Terry's gripes with APW are similar to LIM's with AMP Capital's fund. First, APW's share price in December 2016 remains at a significant 23 per cent discount to its net tangible assets, although this is already an improvement from 72 per cent in 2009, when AIMS took over the nearly-insolvent MacarthurCook Limited.

"Another of Samuel Terry's gripes is that APW being a "fund of funds", there are extra layers of fees and costs, not all of them disclosed. Also, 71 per cent of the portfolio is now invested in other funds managed by AIMS, compared to just 18 per cent two years ago."

Now, the strange email I received last month makes sense:

Hello,

I am working with Fred Woollard to seek to wind up BVP (formerly A0P).  I see you blogged about it recently.  Might I ask how many units you own, and whether you currently intend to support Fred’s wind up proposal?

regards

Warwick Sauer

BVP. Oh, I see.

I remember telling myself I would look at the email again later but I totally forgot. 

Alamak. Growing old and forgetful.

Related post:
AIMS Property Securities Fund.