Why retirement is not an option for some people?

Ever since I went on a low carbohydrate diet, I have been consuming more protein and fats. 

One of the things I do eat from time to time is fish and I enjoy Batang fish quite a bit.

This evening, I paid almost $5 for my fish dinner:

150 grams of Batang fish. 

Just nice for a grown man or at least for me.

A dusting of turmeric powder, a sprinkling of garlic salt and some butter. 

1 minute in the microwave oven at 800 watts, followed by a drizzle of extra virgin olive oil and it is good to eat.

Yummy.

Anyway, as I was walking home from the supermarket, I tossed some numbers in my head.




$5 doesn't seem like a lot of money but to someone who makes $100 a day, that is 5% of his daily pay. 

(Once upon a time, that was my daily pay too.)

Considering the fact that $20 goes to his CPF, $5 is actually 6.25% of his take home pay. 

This is quite a big percentage.





Let us say this person depends solely on his CPF savings to fund his retirement and let us say he hit the FRS 10 years ago and CPF Life pays him $1,380 a month from today for life, he would get $46 in pocket money a day. 

In such a case, $5 is going to be almost 11% if his daily allowance!

The price of Batang fish would probably increase over time too.

Of course, he probably won't be eating Batang fish everyday but it is just an example to show how our CPF savings are probably not going to be enough to retire on.

If we depend solely on our CPF savings for retirement funding, it is quite possible that we would have to continue working beyond age 65.




This is for CPF members who have the FRS at age 55 too as this fishy example shows. 

For CPF members who do not have the FRS or even the BRS at age 55 and if their CPF is the only source of retirement funding, the chance of them ever being able to stop working is almost non-existent.





To people who are still unhappy with having money locked up in their CPF accounts and who want their CPF money returned to them because they have no savings to retire on, you have to wake up. 

You cannot retire. 

You have to continue working.





Related post:
CPF Life payout estimator.

Exploit the CPF-RA for a lump sum payout? (And HardwareZone Money Mind on how to hack the CPF-SA?)

Reader:
Need your advise, my SA is able to meet the MS (FRS), was thinking of opting for the enhanced option (ERS) for CPF life at 55 which is next year. 

There after, at age 65 think of pledging my HDB for the 85K to get back the money. In that way, i am able to earn the 4% interest for the $85K for 10 years, your kind advise please thanks.

AK:
You have to decide at 55 if you want BRS, FRS or ERS. You cannot change your mind at age 65.




Reader:
In a way i am not, but getting back the money of $85K at 65 after pledging. thanks.

AK:
The transfer to the CPF-RA is irreversible. So, think carefully what you want.

The money in the CPF-RA will fund CPF Life which will give you a monthly income for life. You won't be allowed a lump sum withdrawal from the CPF-RA.

Reader:
But spoken to CPF on this and they said its possible to get the $85K with pledging? thanks.

AK:
Yes, at age 55, if you opt for BRS, you can take out all the money in excess. This is probably what they meant.








"On your 55th birthday, we will create a Retirement Account for you. Savings from your Special Account and Ordinary Account, up to the Full Retirement Sum, will be transferred to your Retirement Account to form your retirement sum which will provide you with monthly payouts. For higher monthly payouts, you may also top up your Retirement Account up to the Enhanced Retirement Sum." (Source: CPF)


"Top-ups under the RSTU Scheme are irreversible and irrevocable." (Source: CPF)

---------------------



From my Facebook wall.

Kelvin Tan:
What do you think of this plan as a form of hack, which might make sense if you have most of the FRS sum in your OA.

-At age 54, before your birthday, invest all your SA, after leaving aside 40k, into a government T-bill.

-Let your RA formed largely out of your OA.

-Redeem T bills and have the money return back to your SA.

-Profit!

AK:
Unfortunately, I don't think it works that way. At 55 years old, once we have put aside the FRS or BRS in our CPF-RA, (if) we will have to close our CPFIS-OA and CPFIS-SA (if any), we can continue to hold these investments in our name directly or if we choose to liquidate our investments, the money will be paid to us directly and won't go back into our CPF accounts.




------------------

Lee Keh Yi: 
CPF FAQ says: 
"You can continue to invest even after age 55, as long as you have set aside the Full Retirement Sum or Basic Retirement Sum with sufficient property charge/pledge in the Retirement Account."
CPFIS is not auto-close at 55. 

Another FAQ says 
"You may apply to close your CPF Investment Account and transfer your shares to your own Central Depository account after you have reached 55 years old and have set aside the Full Retirement Sum or the Basic Retirement Sum with sufficient property pledge in the Retirement Account." 

Note -> *may*, not *must*

AK:
Ah, I see. 
But if the CPFIS account is closed, the investment is held directly under our name or if liquidated, the money is paid to us and does not go into our CPF accounts.




Lee Keh Yi: 
The "hack" that Kevin described was discussed on HWZ Money Mind forum. 

The conclusion was that it would probably work: 

there is nothing in *current* CPF regulations that stops it from working. 

Some of the participants in the discussion will reach 55 within a year. 

If they try it out and report back like they said they would, we'll know for sure :)

AK: 
I read from the CPF After 55 booklet that if we terminate the CPFIS and liquidate the investments, the money will be paid to us directly. 

I doubt it goes to our CPF accounts. 

It is on page 15. 

Quite clear on this unless I have misread again.

Lee Keh Yi:
the "hack" is intended to make CPF draw the RA-FRS from our OA rather than our SA at 55 (by investing the max SA that we can). 

After RA-FRS is formed (ie 55yo), liquidate the SA investment and return the funds to SA. 

Thereafter we can enjoy the 4% interest from SA. 

All this should work, provided we are able to meet FRS via OA

AK:
Yes, I understand the strategy. 

Well, nothing beats actual field test especially when others are going to be the lab mice. ;p




Lee Keh Yi:
HWZ money mind had examined this very closely, looking for pitfalls in the theory, but we couldn't find anything in the *current* CPF regulations that stops it. 

Yup, it remains a theory, until someone tries it, crosses the 55 mark and can either confirm or refute the theory with their own experience ;)

AK:
I am always ready to learn from someone else's experience. 

It is less troublesome and sometimes less painful. :p



Related post:
BRS, FRS and ERS.

Don't be the 1 in 9 Singaporeans who has diabetes.

From time to time, ASSI would have a public service blog.

What? Don't bluff?

I am always blogging about the CPF? That is public service. 

Orh.

Anyway, since PM Lee talked about the dangers of diabetes, I decided to kay poh a bit too.





AK was overweight and being overweight is a risk factor. Fat people have a higher chance of getting diabetes.

Change our diet. 

For a start, consume less sugar.

Change our lifestyle. 

For a start, become less sedentary.

Yes, go out more but not like this:

Or this could become the reality:

Overweight? Lose weight.




Instead of frozen yogurt or ice cream, try something healthier.

Granny Smiths.

Carrots, broccoli & cauliflower.

Vitagen or Yakult for pro-biotics.

Blend everything together!
Yummy and healthy dessert!

Don't be the 1 in 9 Singaporeans who has diabetes.

If AK can do it, so can you!

Related post:
My weight reduced!

See also:
http://www.straitstimes.com/singapore/beating-diabetes-starts-with-small-steps-pm-lee

Guocoland declared 7c DPS and is AK selling?

Reader:
Guocoland declared a 7cts dividend. The share price also up a lot since I followed your call in Mar. Are you keeping your investment for dividend or selling? I am sure you know a famos investment blogger sold all his shares in Guocoland already...

AK:
1. AK does not issue BUY, SELL or HOLD calls. AK is just talking to himself here in ASSI.

2. Whether AK is keeping for dividend or selling his investment should have no bearing on your decision to keep or to sell or, indeed, to buy more. Ask yourself why did you invest in Guocoland in the first instance?

3. Similarly, the fact that another blogger has sold his investment in Guocoland should not mean that you should sell too. He probably had a plan. What is yours?





-----------------

I believe that Guocoland will have the ability to pay better dividends as its flagship property in Singapore, Tanjong Pagar Centre, matures.

The fact that Guocoland has declared a DPS of 7c which is higher than the year before shows their willingness to reward shareholders better in tandem with a growing ability to do so.

To an investor for income, the ability and the willingness of a business entity to pay meaningful dividends is a key consideration in the decision making process.

Why did I invest in Guocoland at the price which I did earlier in March this year? Please see related post below.

Related post:
Invested in Guocoland.

A replacement for Croesus Retail Trust.

Reader:
Just wanna seek ur views with regards to Croesus retail trust as it's most likely soon going to be delisted.

Thereafter, I'm thinking of recycling funds into AimsAMP cap Reit to replace CRT to generate high dividend.

Recently, the share price of AimsAMP went down quite a bit and make it rather attractive to purchase. This dividend income is important to me as I use it to pay for the living expenses n accommodation for my child's overseas uni education for 2 more years. Hope u can talk to yourself

AK:
Er... See my latest blog post





Reader:
Thanks, noted n seen. Due to my needs to find dividend income replacement after CRT, do u think AimsAMP at current P/B at 1.0 and it's NAV is equivalent to current trading price at $1.385/unit provides a fare price to buy in? I'm rather attracted to 7.8% annually and hopefully this is sustainable for the next few years at least.


AK:
Actually, do you really need to hunt for replacement dividend income? The capital gain from the sale of CRT would provide more than 2 years of "dividends" in advance, more than enough to fund your child's expenses. That is the point I am trying to make in my blog.

I don't know if it is a good idea to buy more of AA REIT especially if AA REIT is already a big investment in your portfolio.

Apart from concentration risk, being hasty to deploy the funds might not be a good idea.



Croesus Retail Trust is quite different from AA REIT. So, when we are thinking of replacing one with the other, it shouldn't just be because their yields are comparable.

When I got into Croesus Retail Trust, partly, it was because I was looking to reduce concentration in industrial S-REITs which have most of their assets in Singapore. So, it was to reduce sectoral and also geographical concentration risk.

So, it wasn't a simple case of getting a comparable or higher yield.

Of course, it is about what gives me peace of mind. It could be that I think too much.



Reader:
Wow, AK..very thankful for your fast reply and details 🙏🙏🙏
Noted your pointers and I'll keep them in mind.
Currently my AA REIT is not as large as my CRT investment ( really thank u very much as I read n focus in this Reit). Hopefully if AA REIT price weaken further, then I'll look into it.

AK:
I am sure you will do what is right for you. 🙂
Take your time. I think there is no hurry to redeploy the funds from CRT.

That is the beauty of buying into an income generating asset at below fair value. We could see its value unlocked and while waiting, we get paid. That was the case with Saizen REIT too 😉



Reader:
No lal, AK... definitely u r not thinking too much, 小心驶得万年船!
u r definitely doing the right thing n doing things right 💪🏼👍🏼
It's really great to know you since 7 yrs ago 👍🏼
Even though I missed the Saizen REIT, but there will always be more of other good dividend income stocks along the way, I'm sure 😊 Just continue to read ur blog ✌🏼

Related post:
How to deploy Croesus Retail Trust money?

How to deploy the Croesus Retail Trust money?

Reader:
I understand u have pretty huge stake in CRT so I thought I can eavesdrop how you intend to redistribute the funds. If u could talk to yourself on that, I will be just eavesdropping.

AK:
I am quite happy to hold on to more cash for a while. No hurry. ;)

I do have a relatively large investment in Croesus Retail Trust but I had an even larger investment in Saizen REIT.

I am mostly an investor for income and I view the huge capital gains as having received many years of income in advance.

It means that I could wait for many years without deploying the funds and I would still be quite comfortable. I don't need to grow my wealth constantly.

Now, if you must see positive growth year after year, what I have just said will not sit well with you. You will constantly have to look for ways to make sure you do not "fall behind".

So stressful.




You are hardworking. I am lazy.

For me, well fed, I am quite happy to sit on more money while waiting for new investment opportunities to come along.

Related posts:
1. How much did AK make from Saizen REIT?
2. Croesus Retail Trust, HPH Trust, NBN Trust and SingTel.

Croesus Retail Trust, HPH Trust, NBN Trust and SingTel.

Reader on HPH Trust, its decreasing NAV and distributions:
Thanks for your reply. I knew a lot of readers were asking you to talk to yourself on may things so definitely appreciate your time on this topic.

AK:
HPH Trust's land leases are decaying rapidly. I blogged about the Trust a few times before and why I avoided it.
(They were holding back much needed CAPEX to maintain DPU for a while but CAPEX could not be held back indefinitely.)

Reader:
As u know, we received the CRT scheme document and the suggestion is for us to accept.
At current price, we are looking at yield of 6.6% or slightly higher if the scheme went through. But there isn't any obvious choices (trots or trust) in the market that would match or beat that. Would like to understand what are the top few choices you would have redeploy the capital return.

AK:
If you are looking for 6.6% yield, I think it is not difficult to find but I would say yield isn't everything and it is obvious from the fact that I bought into SingTel instead of NBN Trust recently. 
See: Avoiding the instant gratification of yield.

Wondering to vote for or against the sale of Croesus Retail Trust? See related post #1 below for some of my thoughts.

Related posts:
1. Croesus Retail Trust.
2. HPH Trust.
3. SingTel or NBN Trust?

Sold DBS and want to buy back.

After re-sharing on Facebook that I was buying mostly DBS shares in 1H 2016,

Reader:
I saw your FB posts on DBS. Thanks for sharing again. I did buy some DBS shares after attending one of your talks last year. I made a bit of money. Been waiting for the price to drop. My broker told me it will go up higher. Should I buy back?





AK:
I wonder what did your broker tell you about DBS last year? Just curious.

Since you attended "Evening with AK and friends" last year, you might remember that I explained buying into DBS then was buying in at a nice discount to NAV and also at a single digit PE ratio.

Many were worried about the bank's exposure to the troubled O&G sector and I explained that only about 6% of the bank's loan book was exposed to that sector. Even if they had to write off everything, however unlikely, we would still be buying at below its NAV back then.






There was a margin of safety, I felt.

I also pointed out that the bank's CEO, Piyush Gupta, was buying more DBS shares at $13+ a share. His purchase amounted to more than $2 million. That kind of insider buying has to be a vote of confidence. I couldn't ignore that.

He is not buying more now and I believe he has, instead, cashed in not too long ago.

Why did he sell? I don't know. You have to ask him.






Looking at the numbers now, DBS is trading way above its NAV and at a double digit PE ratio. Mind you, it does not mean that its share price cannot go higher from here.

However, DBS is just no longer the bargain that it was last year.

Reader was referring to these blogs I shared on FB earlier today:
1. Wait for big crash to pick durians.
2. 2016 FY passive income (non-REITs).

Wait for a big crash to pick our durians?

Reader:
You have been through the times when you got stocks w div yield of 10+ or even 20%..

Why are you still keen to pick up stocks at 3-5% now?

Isn't it easier (and less work) to just wait out for the next crash to pick your durians again?

It shouldn't be too long from now right...?

Now, this was a CRASH!
Did anyone predict this?
This is what insurance is for.
It is for if a CRASH happens.
Our war chest is an insurance!

..




..

AK:
I cannot predict what will happen. 😞

Some people have been waiting for years for a big crash.

I will keep investing but keep a war chest ready. 

There will always be opportunities, bear market or not.

Just have to be careful so that I don't get killed by falling durians. 😛





Related post:
Make $1 million investing for income.

"I cry as I see how much the price has gone up."

Reader:
Thanks for always mumbling to yourself.
Have always been looking forward to your post daily.

Since i chosen to write to you, I really must say I appreciated your writings n enlightenment most times if not all the times 'cause sometimes I also got lost with your numbers crunching off the records.




Ok, back to your latest post on "To invest or not in Centurion Corp",

After reading the whole thing, at 54c a share n dividend yield of 3.88%( taken from your calculations), even though you mentioned ,"...on Guoccoland n Tuan Sing, a dividend yield of 2.37% is still relatively decent", I'll not bite simply due to the uncertainties in the market right now with many factors like the north korea, trump, etc

But if i"d bought at the same price like you at 38c with a dividend yield of 3.37%, I may consider adding more at 54c now since the yield has increased though my base price may have gone up after averaging, believing that it's a growth stock.






I know i may miss an opportunity but I dont have a big warchest like you :) :))

The last time I read your vested interest in the above company, I've questions about is imminent expiry of its warrants n possible dilution.
Hence, I hesitated.






Now, I cry as i see how much the price has gone up :((

May I hear you talking to yourself about market directions and your holdings.

I know that one cannot time the market but dont you want to cash out since you're sitting on very good profits.

N hope to catch the next wave again with bigger warchest?

AK:
Don't cry. There will always be other opportunities. Mr. Market is not lazy like AK and will never retire. ;)

OK, I am going to show you how lazy I am again. Read this:
http://singaporeanstocksinvestor.blogspot.sg/2014/11/sell-stocks-now-and-wait-to-buy-back.html





Related post:
To invest or not to invest?

Black market for "Evening with AK and friends"!

Although some readers suggested that reselling tickets to "Evening with AK and friends" could be a lucrative activity, I didn't take it seriously. 

A black market for "Evening with AK and friends"?

Who would do something like this?

I just found out that it is happening:

It is actually happening!

I will tell you right now that "Evening with AK and friends" is not worth paying $100 a ticket for. Well, at least I don't think so.





It irks me to think that black marketers are actually profiting from this when I am doing this for charity.

$65 for the black marketer and $27 for charity (after costs)? 

This is so wrong.

There will always be another "Evening with AK and friends".

So, say "NO" to black marketers.





If you have bought tickets from black marketers, please tell me. 

I don't know if it is possible to find out but I want to know who they are.

If you are a black marketer, I am appealing to you to stop doing what you are doing and return the tickets for a refund. Please.

There are many readers who are genuinely interested in attending my event and they should not have to pay more than $35 a ticket for it.





Regular readers know that ASSI is not about money, money and only money. 

It is also about decency and charity. 

I am very disturbed.

Please help to spread the message and I hope that, in the end, decency prevails.




-----------------

UPDATE (11.40pm):
We have tracked down the black marketer and will process a refund and void the ticket.

Readers who are still interested in getting a ticket should check the ticketing site often in case some tickets are refunded. 

Do not pay more than $35 for a ticket.





Related posts:
1. Evening with AK and friends 2017.
2. 2018 Evening with AK and friends.

2018 "Evenings with AK and friends" in Kallang Theatre?

This was a recent chat with a friend.

Don't read if you don't appreciate my nonsense. You have been warned.

Friend:
How many tickets were available for your event.

AK:
About 150.

Friend:
How many readers do you have?

AK:
I don't know. A few thousand?

Friend:
Let us say you have 10,000 readers, what is the probability of a reader getting a ticket?

AK:
Er... My math is bad. 1.5% chance?

Friend:
You should have booked a bigger venue like the Kallang Theatre. Use your brain lah.

AK:
Kena scolding jin jia cham.

And on FB:

Readers who are interested in getting tickets to "Evening with AK and friends" happening in October should check the ticketing site regularly. 

Tickets could become available again as some readers give up for various reasons. Refer to the related post at the end of this blog.


Related post:
Evening with AK and friends 2017.

Get fantastic dividend yield and AK is like Jay Chou.

Recently, AK was like Xiaxue and, now, AK is like Jay Chou. 

Alamak. So confusing. 

How like that?

Reader:
Hello AK! Looks like things have been good for you recently (as always). 

Unfortunately I couldn’t get a ticket to your evening session. 

Its like Jay Chou concert! 

I do appreciate your jokes among your stock market insights.

Anyway, remember many were surprised you are >80% invested now? 

Well as I reckon many of your stocks were bought at a real bargain in 2008/09 with fantastic dividend yield on cost now.




Basically, I think it’s irrelevant to ask on your holdings now. 

However, if you are willing to share, may I ask what were your %age of stock holdings (vs cash) back in 2007, when stocks were at a all time high? 

Did you somehow Eat Bread With Ink Slowly too? 

Did you think that the market was over-valued and you were expecting a crash? 

Did you prepare yourself for the crash? 





When the bad news kept coming in 2008, how were you reacting? 

I know you kept buying but didn’t you have the slightest fear? 

How did you strategise your entries?




I do appreciate eating bread with ink slowly and I have equipped myself with some value investing knowledge. 

I have also accumulated some stocks that are doing pretty well while making sure I have a good warchest. 

But should we be extra cautious since we are approaching the 10th year after the last stock crash? What’re your views?

AK:
I always eat bread with ink slowly.
(See related post #3 at the end of this blog)

Unless valuations are super cheap, I always have a war chest ready.

I emptied my war chest during the GFC. 

I bought stocks of businesses which would generate good income for me. 




Investing for income, I wasn't concerned with prices going up or down. 

I knew I was getting a bargain.

I didn't borrow money to invest with. 

It was all my own money. 

I didn't have to worry.




A stock which I bought back then which I no longer talk about was Hyflux Water Trust, for example. 

Debt free, at the price I got in, it was generating 17% yield, if I remember correctly.

I don't have all the answers to your questions because I only remember what I feel are important.

Remember that eating bread with ink slowly is a philosophy. 

How we make it work for us, if we want to make it work for us, will depend on the individual.




Related posts:
1. Hyflux Water Trust.
2. Beating our fears as investors.
3. Peace of mind as an investor.