Late showing off CPF OA, SA and MA in 2018.

Reader says...

Thanks for sharing your CPF details but those are for 2017.

I looked for your 2018 numbers but without success.

Could you show me the link?

I am a new believer and it is all thanks to your blog!

AK says...

I thought I shared but I can't find the blog.

Aiyoh, if AK cannot navigate ASSI, no one can. :p

So, here are the numbers:

If you are comparing the numbers with those from 2017 (here), please note that I did a voluntary contribution in January 2018, maxing the annual CPF contribution limit.

This is why the OA has crossed the half million dollars mark.

I intend to continue making voluntary contributions yearly till I turn 55 as I build a bigger position in dollar terms in an investment grade sovereign bond, our country's very own.






I will have the option to withdraw some, most or all of the money in my OA when I turn 55 since my SA has already exceeded the prevailing Full Retirement Sum (FRS).


And I expect the SA to exceed the FRS year after year if the SA continues to earn a minimum interest of 4% a year while the FRS grows at 3% a year.






In such a case, although I probably won't do it, I would also have the option of withdrawing money from the SA when I turn 55.

Of course, when I turn 55, there will be a newly created RA where the FRS will be housed and CPF Life will start paying me a monthly income for life when I turn 65.

CPF Life will automatically start paying out when we reach age 70 if we do not wish for payouts to start earlier.







Here are the links to the two other blogs on my CPF in 2018 which I could find:

1. CPF savings grew almost $200K!

2. CPF interest earned (end 2017).

If AK can do it, so can you!

Investing or speculating in real estate?

Reader says...
My friend bought 2 units private condo (District 9-10) last year and early of this year.

One for own use and one for investment purposes (still vacant as at to-date).






As recently all banks increase the loan interest.

Thus, I asked him whether it is stressful to service the two condos.

He told me...

AIM FOR THE CAPITAL GAIN. WHY WORRY IF YOU KNOW THAT YOU CAN MAKE 300K IN THREE YEARS TIME?






Any idea whether Singapore property sure will increase price?

See so many en bloc recently, I believe developer here won't anyhow dump their money.

Isn't it?

AK says...

Your friend knows for sure his recent D9 purchase can make $300K three years from now?

After all the costs that comes from holding it vacant for three years?

Power!

He probably knows something I don't.





As for property developers, they have tons more money than we have and they probably have easier access to credit than us too.

When we owe a few hundred thousand dollars to the banks, we are at their mercy but when we owe  hundreds of million of dollars to the banks, they are at our mercy.

If things should go downhill from here, (most) property developers probably can weather the storm but can we?

It is only too easy to feel invincible during good times but we should stress test our finances to see if we are really invincible or is it all in our mind?





I know some people think I am against property speculation but, really, I am not.

It isn't something I would do but I am not against other people doing it.

As long as the people who do it know that they are speculating and if they have more than sufficient ability to do so, go ahead.

The problem I have is with people who

1. are speculating but think that they are investing

and

2. are really not financially strong but have only enough spare cash to follow the herd.

Anecdotal evidence shows that these people are more common than not.





Those who expect property prices to double in the next 10 years like it did from the Global Financial Crisis a decade ago are more likely than not going to be disappointed.

We should not let the fear of losing out force us into following the herd.

Ask what are we really losing out on anyway?

What do we gain by doing this?

What do we lose by not doing it?








My experience has been that if we buy a property that is a decent investment (see related posts at the end of this blog), its value will likely hold and over time it could enjoy capital gains.

Of course, it is never my way or the highway.

I just don't have much confidence in my power in speculation.





A blog published earlier today:
Condo investment has been a drag.


My own experience:
1. Property investment philosophy.
2. Affordability and value for money.

This condo investment has also been a drag.

Reader says...

A lot of people like to buy property for investment only.

I don understand.

To get 4% yield is hard on properties





AK says...

I dun understand also. 😛

4% is a dream... 3% (gross yield) is already very good. 😉

And if cannot rent out, it is not 0% but negative because still must maintain. (Vacancy rate is so high now) 😛

Ask these people to buy Martin Modern by Guocoland, OK? 😛

http://www.martinmoderncondo.sg/

(Yes, I know. Bad AK! Bad AK!)







Reader says...
My mom 5 years ago bought a condo on impulse. 

The rental from initial $2,750 drop to current $2,200. 

Still must pay maintenance, property tax, tax on the rental income etc. 

Negative return.





AK says...

Aiyoh. 

Older folks even more so should be more conservative... 😞

(See related post #1 below.)






Related posts:
1. Condo investment is a drag.
2. Buy 2nd property and pay ABSD?
3. Bought multiple properties and...

https://singaporeanstocksinvestor.blogspot.com/2016/05/how-much-money-can-you-save.html

Time is precious and time will tell.

Reader says...
I just read about your post on ST engineering and how it funded your trips etc.

See:
Mystical art of wealth accumulation.

The importance of delaying gratification





When I tell people, sometimes they will say

"But what if the investment turn out bad how? 

"Might as well spend the money enjoy now?"





What will you say to them ah?

It happens to me quite often cos I don go travelling and save the money top up CPF, buy reits etc

Thank you as always. 🙂

AK says...
Someone on my FB wall just said CPF is PONZI again.

Let people say and do what they want.

We do what we feel is right and they do what they feel is right.

Time will tell and it certainly has been the case for me. 😉

Time is also precious (especially now that I need more time than ever for Neverwinter).

Don't spend it on people who do not wish to listen.

Yes, I know.

Bad AK! Bad AK!

I am scolding AK of ASSI hor. ;p




...


...





Related post:
1. Building an income portfolio.
2. CPF is really a PONZI scheme.
3. Getting the stuff we want for free.

"My wife says I should have balls of steel like AK."

Reader says...
I invested in Comfort before you but sold when stock price dropped so much because I thought would drop more.

Then, I could buy back at a lower price.

Till now, I am still waiting to buy back.

My wife told me I should have balls of steel like AK.

Haiz. How you do it?

AK says...
Alamak.

Balls of steel?

Sounds heavy and probably painful to walk around with too.

They might also rust and would need polishing.

Aiyoh, sounds like work.






I don't like pain and I don't like work even more.

Don't curse me leh.

Seriously, know what we are investing in and if we are sure it will pay dividends, all we have to do is to sit back and wait.





AK is super lazy and doesn't like moving around too much lah.

OK, if you are not too lazy, you might want to read the related posts at the end of this blog.

Ouch. Ouch! OUCH!





Related posts:
1. Mystical art of wealth accumulation.
2. Incomplete analysis of ComfortDelgro.
3. Patience is the hardest thing.

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?