Could we be financially free by investing in Singapore only? (PART 2)

Reader says...
Notice that you only has local sg shares for income. Any reasons why not consider overseas shares to avoid the standard "home bias" portfolio allocation?

AK says...
Singapore has ample investment opportunities for the income investor in me.

This is partly also because I am not managing a large multi-million dollar portfolio.

I am not so rich. 😉

And it helps that I am not too greedy. 😛






Reader says...
But does it mean a lack of diversification in non sg assets?


AK says...
If you want geographical diversification, you can always put money in counters which have overseas businesses or assets. 

For a while, a big chunk of my money was actually in Japan if you remember Saizen REIT and Croesus Retail Trust, for examples. 

Even today, my portfolio has exposure to overseas investments if you look at my top investments. 😉

Reader says...
I see. First reit 🙂


AK says...
Even SingTel is not a 100% Singaporean 😉
Nor ComfortDelgro 😛


Reader says...
70% overseas singtel


AK says...
I try to keep things simple for my simple brain 😛





Related post
1. Could we be financially free by investing in Singapore only? (PART 1)

CPF is all we need unless we are very rich. (Why did AK build his CPF to the significant sum it is today and still building?)

Don't trust AAA rated Singapore government bonds and trust some people who say investing in wine or paintings is better?

Oh, puh-lease lah.

Many or most Singaporeans do not realise what a good thing the CPF is.

This is the truth.

Many do not trust the CPF but are willing to put their money in alternative investments.

It just boggles my mind.

The CPF will help us secure a measure of retirement funding adequacy because we will retire with 

1. an investment grade bond (excess beyond prevailing Full Retirement Sum can be withdrawn at age 55) 

and 

2. a lifelong annuity (CPF Life) that pays us monthly from age 65.

Which part of this is hard to understand?

Whether alternative investments or more conventional forms of  investments, in my opinion, they are not risk free nor volatility free.

Risk free and volatility free CPF gives me peace of mind.

Don't let people know how much you have in your CPF hor.

If you want to share, do it anonymously like AK. 

Don't copy my disguise hor.

I don't want police investigating.

Seriously lah, some might start having designs on your CPF savings lah. 

The horror!

"CPF savings do not form part of your estate and are not covered by a Will.

"Learn why it's important to make a CPF nomination and the different types of nominations available."

https://www.moneysense.gov.sg/articles/2018/10/cpf-nominations-what-happens-to-your-cpf-when-you-pass-away

I always say that if all else fails, I would still have my CPF savings.

Why else would I build my CPF to be the relatively significant sum that it is today and still building?

Really, our CPF is also protected from creditors so that we do not run the risk of becoming old and broke!

Before you touch your CPF money or let someone else touch it, think and think again.

Haven't reached the prevailing Full Retirement Sum in your CPF account and thinking of buying a bond fund?

If you have yet to hit the Full Retirement Sum, why bother?

For most ordinary Singaporeans, if they want to hold some bonds to prepare for retirement, maxing out their CPF membership benefits is all they need.

This is the truth.

Don't believe me?

See:
$1 million in CPF by age 65?

Unless we have lots of money sloshing around and have already maxed out our CPF membership, we should focus on building our CPF savings as it should form the bond component of our investment portfolio and if we want to hold bonds, I repeat, this is all we need.





Related post:
Don't do silly things and retire smart.

Once upon a time in China, Weibo says 铁公鸡AK 还好没结婚!

A friend told me recently that I have followers in an air mile club and that my blog's outreach is quite widespread.

He went on to share a screen capture when I expressed my disbelief.

Air mile club?

I haven't clocked a single air mile in years.






When I was much younger, I enjoyed taking flights but not anymore.

I find that it is uncomfortable and inconvenient in more ways than one.

However, the catalyst for this blog was really what a reader shared with me recently and it was something that happened in a Weibo forum in China!

Forumer #1
坚决以贫困收入过中产生活本土坡人，很多挺有钱的，却总以中产收入过着贫困线的生活，不舍得吃不舍得穿，铁公鸡一毛不拔，还归因于新加坡太贵啦什么的，明明就是自己格调太低、生活无趣、好吗

Forumer #2
你说的让我想起一个非常著名的新加坡人 AK47
他的博客在这里
https://singaporeanstocksinvestor.blogspot.com/

他47岁，不工作了，住永久地契的公寓，未婚，每个月股息红利超过10,000. 新加坡股息免税， 所以他一分钱所得税也不用交。

然而他每天就吃自己做的青菜。在家看书，听音乐，打游戏。好像也不出国旅游。我估计每个月花费不超过一千。

存在即合理。他之所以这样，部分和他小时候经历有关。他的父母本来中产偏上，后来经济危机，差点破产。所以他立志不要走上父母的老路。他年轻的时候曾经一起打三份工。现在，他说他想做他想做的事情。

他经常戴面罩演讲在投资论坛， 很有名。

Forumer #1
还好没结婚
不然我该同情他老婆或者老公了

(Use Google Translate. I did.)








LOL!

I fell off my chair!

ROFL!

See? I am doing all the ladies a favor by staying single.

AK hero!

Yes, I know.

Bad AK! Bad AK!





Actually, I like this more:

Why changed topic? I blur.

Related post:
How AK created a 6 digits passive income?

Use CPF OA or cash to pay for HDB flat?

This is something I have blogged about many times before but I want to remind readers that I am not telling them what they should do.

It is really up to them.

Take into consideration our circumstances and our beliefs before making a decision.

Your flat.

Your CPF.

Your cash.

There are many questions we must ask but, ultimately, there is one question that would determine if we would have peace of mind and it has to be asked.






Reader says...
I would tink paying for my hdb with oa would free up my cashflow for taking on more risk, ie expanding or going into new biz venture, or picking up financial assets and increasing cashflow.

U share that everyone shld do it within their ability and we do not need to copy their own plans.

My question to is shld i do so? 

As i am at the start of paying for my resale hdb.

Ur advise will be greatly appreciated so i can review my position.






AK says...
Ask yourself if you want more stability or are you ready to stomach more volatility and you will have your answer. 😉


Reader says...
Thanks ak. Always happy to have a small conversation as it was short n simple and not overcomplicating.








Watch the video.







"Rule of 72 is a simplified way to determine how long an investment will take to double, given a fixed annual rate of interest.

"By dividing 72 by the annual rate of return, investors can get a rough estimate of how many years it will take for the initial investment to duplicate itself." 

Source: Investopedia.




AK is just lazy lah. Shh. :p

Related posts:
1. Pay home loan and hit MS ASAP.
2. Pay home loan and grant fast.

Topping up our CPF savings can wait for some.

Reader says...
Thank you for providing clarity on my current situation.

I will stop using my CPF OA for my mortgage payment, since my rental is able to cover this obligation.

To date, I have used about $87K of CPF for my property purchase ($85 plus K for principal and $1 plus K for accrued interest).






If I have limited cash at my disposal, am I correct to say that I should first prioritize repaying CPF the amount of money used for my property purchase, so as to reduce the amount of accrued interest which continues to grow as long as the amount of money remains unpaid?

In other words, voluntary contribution and retirement sum top would have to wait while I repay CPF the amount used for property purchase.

I am not sure if my above understanding is correct. Hope to hear from you on this. Thanks!

AK says...
OA savings can be used for other purposes if the need arises.

SA savings is strictly for retirement funding.

For those who want some flexibility because cash is tight, growing SA savings might have to take a back seat in the meantime.






It is like not stretching our finances to buy a condo or to invest in stocks.

It is only sensible not to top up the SA even more so because it is a one way street.

When you become financially stronger, you can build your SA.

Of course, make sure to do everything we can to become financially stronger.






Do you want?
More passive income than richer friends.

Remember,
If we are not rich, don't act rich.

Rich Dad, Poor Dad? 
2 are better than 1.

All in good time.






AK's closing words:
Remember, all of us have different circumstances and it is rarely a good idea to simply copy what someone else is doing.

What is suitable for one person might not be suitable for another.

We must have the ability and the will to see things through.





Although I like to think where there is a will, there is a way, sometimes, we have to be realistic and do what is within our ability to do.

The will must be strong but the ability must be present too.





Related posts:
1. Stop CPF accrued interest growing.
2. Know how to grow our CPF savings.
3. 4 ways to boost our CPF savings.

Nominated to be CPF's ambassador?

Reader says...
I wanted to let you know how inspirational your blog has been. 

I have been a quiet reader of your articles and have learnt so much from you regarding the benefits of using CPF as a cornerstone of my investment portfolio.





I was recently called by CPF to share my experiences as a regular user of CPF top up and the mobile app. 

The officers were very impressed at how savvy I was in using the top up schemes for myself and loved ones like my spouse and parents. 





I shared my own experience of topping up Medisave and repaying my OA monies used for down payment.

I credited all of this to your blog and recommended that they should contact you for a chat and be their ambassador. 





Don’t be surprised if you get a call from them! 

Oh, and I got a $20 NTUC voucher from them too!

I hope this serves as another motivation for you to keep talking to yourself.

AK says...
Ooh. $20 voucher? I like the sound of that. Haha.

I am very happy for you and for all Singaporeans making full use of their CPF membership to help ensure retirement funding adequacy.

I will wait to see if CPF Board gives me a call.

$20 voucher wor. ;p

Gambatte!




Published yesterday:
Why should AK care about your CPF?
Related post:
Make CPF a cornerstone in retirement funding!

Why should AK care about your CPF savings?

Reader says...
My colleagues have the thinking that they probably won't have chance to take out their CPF money as the govt keep shifting the goalpost.

Hence, since "cannot" take out, might as well use the money to buy another property or upgrade their property.

They don't want to do OA to SA transfer because it means even more no chance take out.

But I say can earn 4% hor.

They don listen. Hmmm...

AK says...
Like with anything in life, what we believe will determine what we do with our CPF savings.

What I have done in my blog is simply sharing my beliefs and the results which acting on my beliefs have achieved.







Some people share my beliefs and some people don't.

This is life and only natural.

We can bring a horse to water but we cannot make the horse drink the water.






If all else fails, I know I would still have the ultimate safety net which is my CPF savings.

Before using our CPF savings, we should ask if the cost and risk (if any) is worth taking.

I am feeling somewhat tired today and that is all I will say. 🙂






Please read related posts below:
1. We do better managing our CPF?
2. What to do if we don't trust the CPF?

Questions from an investor on HDB and CPF.

Reader says...
I have been following your blog for a few years and am grateful for the nuggets of wisdom that you post on your blog.

I bought a resale HDB flat that is of the same age as me and by the time I fulfill the 5 years MOP, the remaining lease would be 59 years.








In other words, I understand that there would be certain restrictions on the use of CPF for potential buyers of my flat.

(See:
Older HDB flats with remaining lease of less than 60 years are problematic.)








However, I am not intending to sell the flat as I think the lease is sufficient and the flat is big enough.

To pay for the flat, I took up a bank loan with 2 years fixed interest of 1.58% and am currently using my CPF OA to pay my monthly mortgage.






I am thinking since I don't intend to sell the flat, I might as well not repay the accrued interest and continue using CPF OA to pay the monthly mortgage. 

I could use the extra cash to do my own investments.






However, I also wonder if I should use cash to pay the monthly mortgage so that my CPF OA can grow and government can pay me 2.5% interest?

I hope you could shed some light on what would be the best way forward. 

Thank you very much 😊

AK says...
I will try to focus on what is important here if I were in your shoes.

Feel free to ignore me.

I wouldn't use my CPF OA money to pay a loan that attracts 1.58% interest.

I have lost 1% interest right away.








I would use cash to pay the loan.

Even if you do not intend to sell the flat and would not need to repay the accrued interest, it still doesn't make sense to lose that risk free interest.

This is especially if you believe that having an investment grade bond in your investment portfolio is important.






AK does well enough as an investor but he is not a very good investor.

AK needs some certainty in retirement funding and risk free, volatility free CPF helps him to sleep better at night.

If you are a very good investor, please ignore this blog. ;p







Related post:
Free money from the government is good.

"My parents are my ATM."

Reader says...
Hahaha, AK, I actually really like how you refer kids as consumption or hobby items.

Really turned on a light bulb for me.

Looking back, my kids have indeed been an expensive (underestimated the costs!) but enjoyable hobby for me.






A lot more fun when they were younger... less fun as they get bigger and sad thing is one day this hobby will have to end for me.

Though expensive, but finite, guess I just have to enjoy it as much as I can now and think of way to optimize my expenses on this hobby! :)






AK says...
I like to think that for most people this "hobby" has a finite life as a money sink.

Unfortunately, for some, this "hobby" is a money pit, a bottomless pit that lasts a lifetime.

The horror!

Choy!

Bad AK! Bad AK!






For sure, we always hope for the best in everything we do.

However, having high expectations (i.e. being overly optimistic) could set us up for disappointment.

"Mr Tan retired with a sizeable nest egg. But soon, his children started borrowing money. Money that was never returned."

Watch the video:





Related posts:
1. Regrets helping son buy condo.
2. Attitude towards having children.

Leaving Singapore and worried about leaving mom alone.

Reader says...
I met my fiancee at work but he is not Singaporean and we will be leaving for his home country next year.

My worry is my mother and I have asked her to join us but she prefers staying in Singapore which I understand but I don't want her to be alone at home.

Home is a 3 room flat my late father bought 40 years ago.





I know it would be difficult but I asked my younger brother who is married and staying in a 4 room flat if mother could move in with him but he said his flat is too small as they have children and a maid as well.

He said he will visit mother weekly but I still worry because I see her daily now...

AK says...
Reading your email has given me such conflicting feelings.

I am happy for you and worried at the same time.

I worry a lot too and, so, I understand.

What to do?

OK, someone I respect said to me before:

"You must live your life and you should not stop pursuing your own happiness."





I am sure your mom feels the same way.

She will be sad to see you go but she will feel happy at the same time.

When you are far away, contact her daily or every other day to keep in touch and to make sure she is doing well.

Come back to Singapore to spend some time with her as often as it is possible to do so.






Your mom's situation is not so bad and I do know of worse situations. 

So, cheer up or you might make your husband to be feel bad. Yes, don't forget him.

Wishing you and your family good health and happiness. :)

Related post:
Retiree regrets selling flat to help son buy a condominium.

What to do as price plunged on $100K investment?

Reader says...

I have $100K invested in XXX.

As the stock price has plunged, I am wondering if I should buy more, hold or sell?

Should I buy more or should I invest in another stock?

AK says...

Remember the importance of position sizing.

If your investment makes you worried, it might be because it is too big.

Don't bite off more than you can chew.





1. Always ask why did you invest and if it still makes sense now?

2. Ask if you did not invest back then, would you invest now?

Then, you will know what to do.







No matter how attractive an investment looks, it is rarely a good idea to throw in everything including the kitchen sink.

What? You don't know how to tell if you have thrown in the kitchen sink as well?

You would know because your home plumbing would keep you awake all night!





Related post:
Largest investments updated.

Planning for retirement early made early retirement possible.

I spent almost 20 years of my life working, focusing more on the money than on what I love doing.

Even as I made more money, my lifestyle remained more or less unchanged.

Since I did not need more money because I did not crave material upgrades in life, having more and more money didn't really make me happier.





If we are contented with what we already have, even if we make more money, we won't go and buy something frivolous.

As our income increased, if we did not upgrade our lifestyle, logically, there would be less fear of not having enough money in our old age.

I am happier now because I am spending time doing what I enjoy doing although they don't pay me a single cent or in the case of blogging not very well.

It is not about how much money I make anymore but how much joy I get from doing the stuff I do.






However, I am Gen X and I cannot help but wonder sometimes if I should stop bumming around.

Stop being economically inactive!

Hmm.

Nah.

Am I being irresponsible?

I like to think that I am being irresponsible in a responsible manner.

You blur?

I also blur.





To be honest, I have also learned to be reasonably more easy going with money because I can afford to as it makes life easier. 

No man is an island, if you know what I mean.

It is not easy to unlearn certain things but I like to think that I am making progress.

"OK, don't go overboard, AK!"

Who said that? Who? Who?

Must be the other AK.

What? You didn't know AK is mental?

Well, now, you know.






The firm belief that I must plan for retirement early has made my early retirement from employment possible.

I am just talking to myself, as usual.

I don't expect anyone to agree with me.

Remember, I am just a crazy guy.

You must be crazy to listen to a crazy guy.





However, if you are crazy like me, take heart because if AK can do it, so can you! 

100% (bonkers)!

Also published today:
No dividend because CEO was very sick!

Related posts:
1. Start with a plan!
2. Be idealistic?
3. AK should be ashamed!

No dividend because CEO was very sick!

For those who are not in the know, read the related post at the end of this blog post first.

Reader says...
It is a learning journey for me, tolerating all the drama and stories telling why the payout was delayed etc etc..





And they have the guts to make up a story like this:

"The payout was delayed because the CEO fell very sick and was hospitalized, in and out of hospital etc etc"

I was just wondering if these people thought the "investors" are school kids?





To be honest, now I believe all the investors were worst than kids and we were not kids, we were "gundus"- if you know what "gundus" meant?

My agent told me she invested more than me and does this make her a bigger "gundus"?





We are not competing who is the bigger "gundus" here and I just wish the "CEO" will not pass away because the stories will end if he passed away?

And more will follow him to the grave?

Let's pray NOT.

AK says...
Alamak!

Investors have not been paid because the CEO fell sick?

If the CEO of SingTel or ComfortDelgro fell sick, I wonder if they would stop paying dividends to shareholders. ;p






Related post:
$71,000 alternative or bogus investment?