Ever since the CPFB introduced a colorful pie chart of our CPF savings a few years ago, I would look forward to mine every year like a teena...
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In retirement, I have become totally slothful. I go to bed late. I wake up late. I spend time getting my hands dirty in my planter and also staring into my aquarium.
Make simple meals. Do some housework. Watch some TV and do lots of online gaming. Of course, I still blog and interact with readers but everything is OTOT lah. Don't know what is OTOT? Ask anyone who has done NS. Don't know what NS is? Never mind.
Oh, did I say I also take a nap whenever I want in the day?
What about my social life? Very little because I rather prefer my own company. It should come as no surprise that I have avoided going to large gatherings for a while.
(Did someone say Singapore's doors are always open to welcome the rich in the video?)
C:
I just moved into a bigger condo recently. I am going to keep my old condo for rental income.
B:
We are thinking of upgrading too.
C:
Your condo is nice and big. Why must upgrade?
B:
You know where I stay, right? We thought of moving somewhere central.
C:
Central will cost a lot more for the same size
B:
With our combined income, we can just about make it. Now, still looking.
C:
AK, what about you?
AK:
Me? I stay in a shoebox apartment.
C:
OMG! Why such a small apartment?
B:
It is OK lah. Can always upgrade.
AK:
I cannot because no bank would lend me any money...
When I mentioned this incident to my banker, he gave me some advice. Banker:
Didn't you tell them you have retired?
AK: I usually tell people I am unemployed.
Banker:
No, no. You mustn't tell people that. They will look down on you. You must always show people you are successful.
AK: Really? How do you do that?
Banker:
They are usually impressed by how I have a luxury condo and a luxury car at such a young age. You must have visible signs of success and don't be afraid to flaunt it.
When I shared on Facebook why OCBC 360 has gone from the top to the bottom of my list of "jumping through hoops" savings accounts, a reader suggested Standard Chartered Bank's Bonus Saver as an alternative.
Coincidentally, my sister started a Bonus Saver account recently and I did look at it before junking it. Please take note that I junked it because it didn't suit me. I will share who it is good for later.
SCB announces plans to slash 15000 jobs. The headline interest rate is always attractive:
Up to 3.88% per annum! How to get this?
OK, start jumping through hoops. Base interest rate (for the first $200,000 in the account) is 0.1%. Spend $2,000 on a SCB credit card each month to get 1.78%. Alamak! Now, I am already struggling with spending $500 with the UOB One Card. How like that?
What if I spend only $500 a month? OK, I will get 0.78% per annum. A big difference.
Monthly salary crediting gets an extra 1% per annum. I don't meet this requirement, of course. Invest or insure with SCB to get an extra 0.75% per annum. What do you think I will say to this? Pay 3 bills via Giro or online banking each month to get an extra 0.25% per annum. This, I can do.
Bonus interest will apply to the first $100,000 in the account only. So, let's see. What is the interest rate from SCB Bonus Saver for me? 0.1% + 0.78% + 0.25% = 1.13%. This is after jumping through 2 hoops. OK, quite clearly, if I must jump through hoops to get higher interest rate on my savings, SCB Bonus Saver beats OCBC 360 which would give me a miserable 0.6% per annum. Read the blog on why I junked OCBC 360: https://singaporeanstocksinvestor.blogspot.sg/2017/03/ocbc-360-updated-and-downgraded-again.html
However, if your circumstances are like mine, UOB ONE account is still the number one choice. An interest rate of 2.43% beats the competition flat. Unfortunately, it is for the first $50,000 in the account only. Now, most people my age are not retired like me. So, let us see what they will get if they have a salary to credit monthly:
SCB Bonus Saver: 2.13%
OCBC 360: 1.8% UOB ONE account: 2.43%
Alamak. I am not a UOB shareholder. How like that? I am a shareholder of the giamsiap bank and, of course, another giamsiap bank which didn't even get a mention here.
Maybe, the moral of the story is to invest in giamsiap banks. Aiyoh! Bad AK! Bad AK!
For who does the SCB Bonus Saver make sense?
If we have much more than $50,000 in savings and if we have a monthly salary to credit, it could make sense to migrate to SCB Bonus Saver because of the much higher cap at $100,000.
Reader: Hi ak, I like to hear your view on SPH. I have hold the stocks which I bought few years ago avg price 4.1. With this recent big drop, do u think it make sense to buy more to avg down the cost? The business seems to cutting more div in coming future 😟
AK: Whenever you are thinking of investing more, ask yourself if you were not already an investor, would you invest now. You will have your answer. Quite simple. 😉 Reader: My feeling is telling me not to buy if I do not have any.. thanks
Regular readers might remember my blogs on QAF Limited and why a higher share price might not mean that the stock is more expensive. In actual fact, QAF Limited's stock could actually be cheaper even though the price was higher.
Along the same line of thought, a lower share price might not mean that a stock is cheaper. The stock could actually be more expensive. It has to do with earnings.
And he asked me: "Shocking or expected?" What did I tell him? "If people don't make good use of the CPF to help plan for retirement, well, they won't get much out of it. 😉" If AK says so, it must be so.
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Ronnie Wan says... Any advice or comments on the forum article above? AK says... I don't bother calling CPFB for things like that because I use the CPF LIFE Payout Estimator online. Notice that the payout estimated falls in a range. It is just an estimate. The sky is not falling.
Reader: I would like to ask you about transferring from OA to SA. Currently my mother is under CPF life. According to CPF board, I am able to withdraw the OA and SA. Is there anything I should look at before transferring OA to SA? Thanks!
AK: OA to SA transfer is not allowed for those 55 years and older.
You qualify for CPF Life if:
Reader: oh damnnn XD ok the RA amount that is not deducted for CPF life, what can we do with that balance? AK: RA is meant to fund our retirement. Cannot be withdrawn unless the member passes on.
That is if there is anything left.
Reader: but how does it fund our retirement? Since the CPF life's premium is alr deducted and the payout wont touch the remaining balance AK: All the RA money will be depleted by age 85 (under the LIFE Standard Plan).
UPDATED on 11 JAN 2022.
Use CPF LIFE Payout Estimator: HERE Find out more: CPF LIFE.
Reader: may I ask how will it be depleted? AK: It is used to fund the payouts. Even after all the funds have been depleted at 85, CPF LIFE continues to pay until the day we die.
Reader: I got another qn say the FRS is 166k A has 166k in RA and B has 180k in RA they will deduct 166k to buy CPF life right AK: Will not have more than FRS in RA Unless u opt for ERS So, A and B will have FRS $166K in RA. Same same.
UPDATED on 11 JAN 2022.
Use CPF LIFE Payout Estimator: HERE Find out more: CPF LIFE.
I blog about the CPF quite a bit and although some might think I have all the answers, I don't. Reader: are you familiar with CPF LIFE? i am worried that my dad who is 63 wondering if there is any chance i could do a VC to his account to qualify for CPF LIFE and get annuity payout? AK: Of course, you can top up his CPF account so that he can take part. 🙂 Give CPF Board a call and ask them how much to top up. If you stay in Choa Chu Kang or nearby, you want to take advantage of the CPF Mobile Service Centre which is at Keat Hong CC till 31 August. The best people to answer your questions on the CPF are from the CPF Board.
Make the CPF a cornerstone in your retirement funding strategy.
Wah! Such a long queue of people waiting to buy Old Chang Kee curry puffs or maybe waiting to get into Din Tai Fung? Nah! Mr Andy Koh, spent $5,900 on four items, including aT-shirt and bag. He held ticket No. 3. Says the NS-man, 23: "I didn't look at the price, I just grabbed the items." Read full article: HERE. NS man so rich!!! Reader WYK: "...don't understand the mentality of teens nowadays or maybe I'm just poor😖" Alamak. I also don't understand! These shoppers are so stupid! So expensive lah. Most learn how to save money lah. Like that how can? Let me tell you a secret. Ready? Must fly to Europe and buy lah. Will save more money. Even AK knows this. These shoppers so stupid. Don't believe me? Read this: http://singaporeanstocksinvestor.blogspot.sg/2016/05/ak-learns-to-embrace-yolo.html
Dave Lim, a reader who seems to be to be quite the expert on car ownership in Singapore, weighs in on my last blog on the subject:
Dear AK, Appreciate your post on car ownership and bringing up some noteworthy points of consideration before one buys a car. You never fail to be honest and wise. However, being a former hardcore car enthusiast (well, a folly of my younger days – a story for another day), I find that I’m “morally obligated” to call out the glaring factual inaccuracies as evinced in the blogpost by Bullythebear (http://bullythebear.blogspot.sg/2014/03/whats-good-about-owning-car.html#.WWpZFIiGPIV), who doesn’t seem to be too well-versed about cars. - In order to give decent meaning to numbers, a proper calculation of annual car expenses should take into consideration the depreciation of the car, and not merely the sum of instalments one chooses to pay. It is absolutely futile to discuss car expenses without delving into the interplay of depreciation, COE, OMV and ARF – concepts which the blogger himself were probably unfamiliar with. To add insult to injury, the foregoing discussion was, ironically, featured in a financial blog educating readers about numerical fluency. - The blogger had grossly oversimplified the types of car expenses. His monthly “running costs” had conveniently left out items like ERP expenses, road tax, car grooming, car inspections, provision for traffic summons and accidents/repairs, and regular wear-and-tear items like tyres, brake discs/pads, mounts, bushings, etc. A total “running cost” of just $500/month ($6,000/yr) is unbelievably optimistic, especially when the estimate is made by a supposedly prudent financial blogger. - Do we really believe that the total cost of owning a bread-and-butter ride is merely $860 a month? And that of a “flashy car” is just $1,200 a month “all in” as asserted by the blogger? Based on the numbers provided by the blogger, the depreciation cost of his Mazda 2 is already about $6,000/yr ! (*total purchase price of $34,000 incl. interest paid, for 4.8 yrs, assuming a PARF rebate of $6,000) - I noted that the blogger purchased his ride sometime in early 2012, back when car prices (specifically that in the second-hand market) were still somewhat palatable (https://bullythebear.blogspot.sg/2013/05/reflections-on-owning-car-for-1-yr.html#.WWtU64iGPIU). As we know, the environment has changed radically ever since. It first began with the drastic cooling measures on vehicle financing introduced by MAS in Feb 2013, which changed the entire playing field. Next, in Feb 2014, the new COE categories turned the market topsy turvy. Second hand dealers called the shots in the market, and in 2014, countless numbers of Toyota Vios and Honda Fits started changing hands at $11,000 to $12,000 depreciation. Given the high COE (hovering at $70,000 in year 2014), most brand new Korean/Jap models were priced above $11,000 depreciation, excluding interest payable. Was anyone still able to purchase a Mazda 2 at $6,000 depreciation in the year 2014? – the odds are almost next to nought, unless we are talking about a lemon sale. Given the foregoing context, I question the blogger’s intention in writing an article in 2014 to recount his purchase in 2012, and to use it as a premise for telling his readers that he “really think it's affordable for people who wants to get a car.” For the avoidance of doubt, the blogger was silent about the cooling measures and changes in COE in his article. At the time of writing his article (Mar 2014), the COE was also at a high of $78,602. (http://www.sgcarmart.com/news/COE_past.php?YR=2014&CAT=a). While it is arguably forgivable for him to miss the news about the cooling measures/COE changes, I find it inexcusable and morally irresponsible for him not to check up market prices before telling his readers that is “affordable” to buy cars. However, to think on the flip side, I could well be wrong about the blogger. He could be a car expert himself, completely au fait with the MAS cooling measures, the COE system and the market prices. The article might then have been written blindly, to reassure and rationalise his buying decision retrospectively. Whatever the reasons behind penning the article, and regardless of how uninspiring his reasons for buying a car might be, it is imperative to highlight the perilously inaccurate and irrelevant contents in his article to avoid misguiding the masses. I do not have any personal issues against the blogger and neither do I know who he is or follow his blog actively. Fast forward to today, the average depreciation of an entry-level bread-and-butter car, old or new, is still $10,000 or more. Followers of the car market would recall that this same amount could get you a Mitsubishi Evo or an entry continental sedan just a few years ago. Ever since the blogger wrote his article, petrol duty has risen (an increase of around 20% in fuel price), parking rate has increased by 20%, and as most of us would know, emission taxes will be implemented over the next two years. Further and significantly, the financially savvy consumers would know that interest rates have risen – the average car loan interest rate is now at an obscene 3%, equivalent to about 5 or 6 % EIR!* I will not dwell on details, but the current annual expenses for an entry level ride is about $20,000 to $24,000. Such information is everywhere on the web, in the online forums, and even on the government website – https://www.gov.sg/microsites/whatsyourplan/finances/can-you-truly-afford-a-car-in-singapore )
Guy A:
I want to buy a car but my elder brother keeps telling me how expensive it is. He even worked out the depreciation. All in, about $12K a year. I think that is OK.
Guy B:
$12K a year in Singapore for a car is quite normal. My car is about the same.
Guy C: Can be lesser than $12K a year lah but that is OK for most families.
Is it a good idea to lose $12K a year to own a car?
Hey, having a car definitely improves our quality of life. It is worth it!
Sure or not? Cannot find an unoccupied seat on the train or bus? What? Cannot even get on the train because too crowded? What? Train broke down? Again? Alamak. All these issues are magnified if we are on an outing with children and the elderly. Stop for a moment and imagine that. I get exhausted just by thinking about it. Shudder. Yes, we have a finite amount of energy too. Of course, like many people have pointed out, having a car also helps to save lots of time used in travelling. Time is precious. Here is a something from a fellow blogger whom I respect:
"Financial bloggers are more conservative than the general public. My advice to all financial bloggers is this: "Just live life a little."
Read his blog here: What's good about owning a car?
In my retirement, I don't need a car but I have a car too. It definitely helps to make life more comfortable.
Now, before some start building castles in the air, we really should be asking other questions before we buy a car. I will share two questions in this blog but before I ask them,
Guy A takes home an earned income of $40K a year. Guy B takes home an earned income of $40K a year and has passive income of $12K a year. Guy C has no earned income because he is unemployed but he has passive income of $120K a year.
So, what are the questions?
1. Are we using more than 10% of our total income for the car?
Why 10%? For an average young worker, spending $200 per month on transportation is pretty normal, riding mostly on mass transportation and with taxi rides on certain days. Assuming a monthly pay of about $2,000 a month, $200 is about 10%.
2. How much of our total income depends on us holding a job?
Of course, regular readers would be familiar with this line of thought. Try not to consume with our earned income. Instead, invest to have passive income and consume with our passive income.
If being jobless means we have to cut back on our consumption drastically, we might want to think twice about that car.
There are some other things I would consider and if you are interested, please read related posts at the end of this blog.
The following comments are important. Important enough to be lifted from the comments section to be shared in a blog so that it reaches more readers who are CPF members.
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Ignore the rumor mongers but if they are people we care about, we should correct them and hope that they listen.
Reader: Since reading your blog last year (if i only had done so when i first started working years ago!) i have transferred some of my OA to SA and did some cash top up to my SA. Would appreciate if you can advice on a a dilemma i am facing with regards to whether i should top up CPF for my mum.
My mum is 63 yro and has almost nothing in her CPF. I had asked CPF Board for advice but it would take a very significant top up (>$50k) to even reach BRS. i) should i top up my mum CPF's RA? I will not be able to help her reach BRS before she's 65. ii) Should i top her Medisave instead? My consideration is that this can help go towards MediShield premiums and for any possible medical bills in the future. I am thinking whether i should put the money in investment say REITs to obtain a potentially higher return than 4% (albeit with higher risks)
AK: If we do have some spare cash, topping up our elderly parents' CPF accounts (whether RA or MA) is a good idea. We can think of this as making the government help us do a better job of taking care of our parents or that the government is helping to lessen the weight on our shoulders. If you do not have ample resources to top up both the RA and MA, I would imagine that the MA has priority over the RA.
We do fall sick and this is likely to get more serious with age. Having the cost of insurance covered and then some will give peace of mind. For the elderly with limited financial resources, it should not be about what they could potentially gain. It should be about securing returns which are guaranteed. Peace of mind is priceless and more so for them.
Reader: I have been thinking of getting a shoebox apartment for a while and your blogs on tiny living resonate with me. I have been looking around and I have two options now. Both are about the same size but one of them have a planter that is about 3 meters long by 1 meter wide while the other one does not have a planter nor balcony. I know you have a planter in your apartment and wonder if you would have preferred more indoor space instead.
AK: Welcome to tiny living! To be honest, before I bought this place, I thought planters and balconies were a waste of space, especially in a tiny apartment. Hey, less than 500 square feet of space and almost 10% of that that is outside (and the percentage could be even higher for some other projects which is just the developers taking buyers for a ride, I feel)? Alamak. Singapore so hot and humid. I rather switch on the AC and stay indoors, right? Anyway, that was before I actually moved in. After moving in, I realised just how important that outdoor space is. From a pragmatic angle, it gives me a space to dry my laundry. I get a folding rack and place it in the planter when I need it. After use, rack gets folded flat and stored indoors.
I could use the dryer function in my washer/dryer but that consumes a lot of electricity and it feels like evaporating money together with the moisture. Don't like that. From a recreational angle, having some outdoor space is a good idea especially if you are at home a lot like I am. My planter gives me a place to do some gardening and to spend some time outside without leaving home especially on breezier and cooler evenings. I have to say that it helps that I am on a high floor and unblocked from all angles. If I could clearly look into my neighbour's home from my outdoor space, I am less likely to use the space. If we can see other people means other people can see us too.
OMG!
You have to remember what a planter in a condo means here. URA wants us to help green Singapore vertically and that is what planters are for. Installing some decking over the planter that makes it the same height as the floor of the indoor space is illegal. I know many do it but I don't want to do anything illegal. My solution?
I got these from IKEA and lay them on the floor of the planter. It probably costs 5% of what an illegal decking job would have cost too. Cheap and practical just like me. Bad AK! Bad AK! Anyway, whether having a planter makes sense or not for a tiny apartment probably depends on your lifestyle. If you go out a lot and are hardly home, maybe, it is not as essential. Related posts: 1. Shoebox apartment living. 2. Saving on outdoor lights.
Recently, I met up with a friend whom I have not been in touch with for a few years and, inevitably, we also talked about money matters.
Mania over Chinese art. Huh? I blur. Friend: So, how is your investment in Japanese apartments now?
Me:
Oh, you mean Saizen REIT? Friend:
Ya, you asked me to invest in this that time because it pays good dividends. Me:
Gone already. Friend:
Gone? Me:
Ya, they sold all their assets to an institutional investor. Friend: Sounds like you made money! Me:
OK lah. Friend: So lucky. That time I should have listened to you. Shouldn't have listened to my brother's insurance agent and bought the investment from him. Me:
That was many years ago. How is it?
Friend: I got fed up with it and sold it at a big loss. Me:
But you said that guy is very smart and can help you with your money, right?
Friend: My brother say one, not me. Ya, very smart but not to help me with my money. Smart to help himself to my money.He left his job liao. Me:
.................. Friend:
Now, you got any other money making lobang? Me:
I have some investment in Japanese shopping malls. Friend:
This time, I am going to invest. Me:
But it is being sold to another institutional investor too. Not confirmed but it could happen in the next few months and the share price has shot up quite a bit by now. Friend:
...................
The mood was gradually getting a little bit too heavy for my liking. So, I changed the topic. My friend regrets investing in something and not investing in something else but is he really an investor? I wonder. Related posts: 1. How many $29,000 do we have? "Every year put in money. 20 years..." 2. Bought ILP from a friend. '...if I cancel the plan now, I (lose) the money...' 3. Saizen REIT. The investment was a good fit for my motivation. 4. Croesus Retail Trust. Of course, being paid while waiting is not a bad deal.
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