CPF interest earned in 2019. (Make money while you sleep.)

There are people who think that CPF is not real money.

Therefore, the interest earned by CPF savings is just a lot of smoke.

Well, I think the people saying that are the ones who are producing lots of smoke.

Cough, cough.

Don't stand too close to these people.

Breathing in second hand smoke is more hazardous to our health than smoking ourselves.






If these people stop being emotional and think rationally instead, they will stop misleading themselves.

What is worse than being misled by others?

Yes, it is misleading ourselves.

If our CPF savings is not real money, would we be able to use the money to pay for H&S insurance?

Are insurance companies stupid?

If our CPF savings is not real money, would we be able to use the money to pay for our homes.

Are property developers stupid?






Now, interest income is not only income, it is passive income!

Passive income is money we make even while we are sleeping!

How to have a meaningful amount of passive income with a high level of certainty from a risk free and volatility free instrument?

Read this recent blog:

CPF can be our best friend.

Nurture or reject friendship with CPF?

Unless we are very rich, the wise choice is to nurture and not to reject.

The very rich have options which we average people don't.






To me, the CPF is a low hanging fruit.

Why do I love to pluck low hanging fruits?

They require very little effort to pluck, of course.

Perfect for a lazy person like me.

Bad AK! Bad AK!

So, how much low hanging fruit did AK harvest in 2019?

OA interest:

$14,114.21

SA interest:

$10,903.37

MA interest:

$2,269.11

Total interest earned by my CPF savings in 2019:

$27,286.69

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.

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

Seriously.

If AK can do it, so can you!

Yes, all of us can make money even while we sleep!

Let our sleep be rewarding in more ways than one!

Hug our CPF savings tight and don't let the bed bugs bite!

You might also be interested in this blog:
An unbeatable level of certainty in wealth building.

Recently published:
Made $1.5 million investing for income.

Made $1.5 million investing for income. (4Q 2019 and FY 2019 passive income.)

Once every three months, my calculator gets more work than usual.

Yes, another three months have gone by and this is another quarterly passive income update.

As usual, I will share some of my thoughts on some of my investments before I share my passive income numbers.

So, please bear with me as I talk to myself.

Of course, I know some readers will just scroll down to see the numbers right off the bat anyway.

Go ahead if that is what you came here for.

You happy can already lah.

HAPPY NEW YEAR! :D






4Q 2019 turned out to be a good quarter in terms of passive income received from my investments.

Accordia Golf Trust scored a hole in one and came in strong.

I received a larger income distribution from Accordia Golf Trust compared to the same quarter last year partially because I increased my investment in the Trust but mostly because the Trust performed better.

Whether Accordia Golf Trust will continue to deliver in such a manner is uncertain partially because of an offer to buy all golf courses held by the Trust.

If this sounds new to you, you might want to read the following blogs:

Accordia Golf Trust: Reasonable or realistic?

Accordia Golf Trust: Cheap and cheaper.

Crossing fingers here.






Regular readers might remember that I sold a large chunk of my investment in Wilmar in 3Q 2019 to lock in gains.

It was a very significant divestment as Wilmar dropped from my list of largest investments after that.

In 4Q 2019, making use of technical analysis (TA), I increased my investment in Wilmar so that it became one of my largest investments again.

So far, it looks like I made the right move.

Wilmar's planned listing of its Chinese subsidiary will unlock value for investors.

Mr. Kuok has also promised to declare an attractive special dividend thereafter.

Based on TA, I have a target price of $4.50 or $5.00 a share here.

If you don't know what I am talking about here, read this blog:

Wilmar: Target prices.

Beware!

I am doing some prediction here which I have always said I cannot do.

Remember, we cannot predict but we can always prepare.

Note that my entry prices for Wilmar are much lower than the share price today.






So, how much passive income did AK receive in 4Q 2019?

$46,504.96

This is quite a bit more than the same quarter in 2018.

4Q 2018 saw a large contribution from APTT as I increased my investment in the Trust significantly as its unit price plunged.

That investment is, of course, no more as I decided to lock in gains as its unit price recovered in 3Q 2019.

If you don't remember, read this blog:

Sell into the rally but stay invested.






The larger passive income number in 4Q 2019 compared to 4Q 2018 was also largely due to the marriage of Ascott Residence Trust and Ascendas Hospitality Trust (AHT).

Investors in AHT receive 5.43c in cash and 0.7942 new Ascott Reit-BT unit issued at S$1.30 a unit for every unit of AHT they hold.

The cash portion of the deal is about a year's worth of income distribution.

So, my passive income received from AHT doubled in 2019.

If you are interested in this, please read this blog:

Ascendas Hospitality Trust: A bad deal?

I am mindful of the fact that this is a one off event and that it will not be repeated.

So, everything else being the same, my passive income in 2020 should be reduced.






More recently, I blogged about how much passive income per year is enough for me.

My back of the envelope calculations told me I would need about $120,000 a year.

See this blog:

How much passive income is enough?

Well, for the whole of 2019, total passive income from my investments was:

$210,254.16

All is well.






However, I am reminded that apart from the one off from AHT in 4Q 2019, there was also a very significant one off income distribution from RHT Health Trust in 1Q 2019 which would also not be repeated.

If you don't remember, see this blog:

1Q 2019 passive income.

Missing these one offs that happened in 2019, again, I will say that everything else being the same, my passive income in 2020 should be reduced.

Hopefully, it will not be reduced too drastically as my enlarged investment in IREIT Global did not distribute income in 4Q 2019 but will do so in 1Q 2020.

Yes, the effect of my much larger investment in IREIT Global will be seen in 2020.

Of course, we can never be too sure of anything.

So, let's see what happens as 2020 progresses.

See this blog:

3Q 2019: IREIT Global.






In closing, I will say that investing for income has worked well for me and I am reasonably sure it will work well for anyone who wants a more secure financial future and, eventually, to achieve financial freedom.

Some readers might remember this blog published in September 2016:

Make a million dollars by investing for income.

Well, after a bit more than 10 years, total dividends and distributions received from my investments in the stock market crossed the $1.5 million mark in December 2019.

Don't let people tell you it is impossible.

It is only impossible if you think it is impossible.

Have a plan, your own plan.

Stick to it and, over time, you will make it.

If AK can do it, so can you!






Related posts:
1. Largest investments: 4Q 2019.
2. Have a plan, your own plan.
3. Don't be a wage slave.
4. To retire early, have a plan.

Understand CPF LIFE and make it work for us. (Size of CPF LIFE payouts depends on a few things.)

I shared in a recent blog on the possibility of withdrawing my CPF savings from age 55.

I also shared that my plan is really to let my CPF savings grow and to enjoy a monthly income from CPF LIFE from age 65.

See:
Withdrawing CPF savings: How much and how?
(Maximising CPF-SA savings and returns?)

CPF LIFE is an annuity.

What is an annuity?

"An annuity is a series of payments made at equal intervals."
Source: Wikipedia.

"Annuity holders cannot outlive their income stream, which hedges longevity risk."
Source: Investopedia.






So, the money we put in our Retirement Account (RA) which will be created for us at age 55 is used to join CPF LIFE.

CPF LIFE the annuity will pay us a monthly income from age 65 at the earliest for as long as we live.

1. How much we will receive monthly from CPF LIFE will partially depend on how much money we put in our RA at age 55.

Obviously, if we put in more money, we will be able to enjoy a larger monthly income compared to someone who puts in less money.

Think Full Retirement Sum (FRS) instead of Basic Retirement Sum (BRS), for example.








2. How much we will receive monthly from CPF LIFE will also partially depend on when we want to start receiving this stream of lifelong monthly income.

The earliest we can start receiving a monthly income from CPF LIFE is at age 65.

However, we can choose to start the payouts later in life, giving more time for the annuity to accumulate funds.

We can also choose to do nothing and in such an instance, CPF LIFE will start paying us a monthly income when we turn 70.

It follows that CPF LIFE, having five more years to accumulate funds, would be able to pay a higher monthly income to us then from age 70.






3. How much we will receive monthly from CPF LIFE will also depend on the CPF LIFE plan we choose to go with.

We will only have to choose which CPF LIFE plan we want a few months before we start receiving the monthly payout.

Although I already know which CPF LIFE plan I want, things could change later on in life, of course.

I have blogged about the different CPF LIFE plans before and if you are interested in finding out more, go to the related posts at the end of this blog.





For most regular Singaporeans, an annuity is probably the best way to help ensure retirement funding adequacy. 

We should understand what CPF LIFE can do for us and we should make it work for us.

It is really that simple.

If AK can do it, so can you!

Believe it!






Related posts:
1. CPF LIFE Escalating Plan.
2. Which CPF LIFE plan is for me?
3. CPF LIFE payout estimator.

Withdrawing CPF savings: How much and how? (Maximising CPF-SA savings and returns?)

Although I hope I wouldn't have to do it, if things should go terribly wrong, I might have to withdraw some savings from my CPF account in future.

So, I will have a newly created Retirement Account (RA) at age 55.

Funds will be taken from from my Special Account (SA) to make up the Full Retirement Sum (FRS).

For those who do not have sufficient funds in their SA, funds will be taken from the Ordinary Account (OA) to make up the shortfall.





Of course, we can also intentionally make it so that we have insufficient funds in our SA so that funds from the OA will make up the bulk of the funds to be transferred to our RA.

This might or might not change in future but, as of now, this hack is still possible. 

If you are interested in finding out more, you could read the following blog and newspaper article.

See the blog conversation here:
Exploit CPF-RA. (Hacking CPF-SA.)

Read the article in The Straits Times on:
Maximising Special Account Savings.





As I am planning on having the FRS in the RA, I will be able to withdraw up to 100% of my remaining CPF savings with the exception of the funds in the Medisave Account (MA).

In the event that I choose to make such a withdrawal, savings in the SA has to be withdrawn first before savings in the OA.

Alternatively, I could choose to have the Basic Retirement Sum (BRS) in the RA by pledging my home which I own.

This would allow me to withdraw more of my CPF savings.

However, that is not what I am planning to do.

So, what is the plan again?





If nothing terrible happens, the plan is really to leave the savings in my CPF untouched to earn 4% to 6% interest yearly till I am age 65.

Age 65 is the earliest I can have CPF LIFE start paying me a monthly income for life.

Of course, I can also wait till age 70 before having CPF LIFE pay me.

Waiting for another five years before receiving payouts would mean a bigger monthly income for the rest of my life.

Not going to lose sleep over this, I will cross that bridge when I come to it.

OK, I might have to talk to myself about CPF LIFE in the near future as a reminder to myself.







Related post:
CPF can be our best friend in our golden years.

Recently published:
ASSI celebrates 10 years of blogging!

ASSI celebrates 10 years of blogging! Merry Christmas!

ASSI is 10 years old.

Time flies, doesn't it?

If someone had told me 10 years ago what ASSI would become today, I would not have believed him.

Worse, I would imagine that he was from some SEO outfit trying to sell me some package of services. :p

Yes, I know.

Bad AK! Bad AK!

"Giamsiap" AK is so terrible.






Last year, when ASSI turned 9, I said:

"To be quite realistic, one day, I will stop blogging but that day is not today."

I also said:

"However, I will probably be blogging less often from now."

Well, this year so far, I have published only around 50 articles in ASSI.

See?

AK was being honest.

I remember a period of time when I was publishing articles daily and sometimes even twice a day.

That was many years ago.

The current pace is better for lazy AK.

In fact, 50 a year is still many times more than the once a quarter update I was thinking of doing before.

Anyway, less likely to burn out now as a blogger, I will probably continue blogging for some time to come.

Slow and easy is the way.

Will AK the blogger ever become prolific again?

Well, I think it is rather unlikely but I know never to say never.






The season of giving is upon us and what is AK giving to his readers?

Some words, of course.

What else? ;p

我送你几个字.

So Chinese drama, right?

"Have money must also have a heart."

We investors are a lucky bunch because if we have the money to invest with, we are better off than many people in the world.

There will always be people who need a helping hand.

Making a contribution, no matter how small, will help lift the needy out of poverty.






Readers who have been following ASSI long enough might remember that I shared from time to time charities which I support.

I like to help children because they have their whole lives ahead of them.

I like to help poor students because education is the best way to lift them and their loved ones out of poverty.

Being charitable gives the needy a better life and makes us better people.

Everyone's life can be and should be better.

If we can help to make it so, why not?

So, remember to spread some cheer and, of course, be happy.


Have a good laugh.

Ho ho ho!


Merry Christmas and Happy New Year to everyone!

Thank you very much!







Related post:
Leaving a legacy as ASSI turns 9.

Accordia Golf Trust: Buying cheap and cheaper.

Accordia Golf Trust requested for a trading halt three days ago on 18 December 2019.

I thought to myself then that it was probably too soon to release details about the offer.

Well, yesterday, they released some information along with the appointment of 

Daiwa Capital Markets Singapore 

and 

Ernst & Young Corporate Finance 

as financial advisers to look into the offer to buy all of the Trust's golf courses.

I don't know who drafted the announcement but it wasn't very clear at all what it would mean for unitholders.

The irony is that they called it "Clarifactory Announcement" and it didn't provide any meaningful clarity.

When I use a magnifying glass to read, it is so that I can see better.

It doesn't help if the magnifying glass is made of frosted glass.

Can see but cannot see.

See announcement in:
Accordia Golf Trust's Newsroom.






A reader provided a link to an article in The Business Times on this matter.

After reading the article, I wondered if the same person who wrote the "Clarifactory Announcement" for Accordia Golf Trust also moonlighted for The Business Times.

The newspaper article was simply more of the same.

It is like cleaners wiping dirty tables at a foodcourt with a dirty rag.

Alamak.

Read the article if you want to:
Accordia Golf Trust's parent weighs purchase of all its golf courses

You blur?

I also blur.






Anyway, I decided that I would simply wait and see what the financial advisers have to say.

Regular readers know that the prices I paid for my investment in Accordia Golf Trust were relatively low.

Bought at 54 cents a unit or lower, I believe that I have a pretty good margin of safety.

The last time I added to my investment was in September at 51 cents a unit.

Accordia Golf Trust was very much undervalued.

I believe the Trust is still undervalued today but not so much anymore.

To understand why I invested in Accordia Golf Trust when I did, see:
Accordia Golf Trust.






It is quite clear that I was more interested in Accordia Golf Trust as an income generator.

Don't need a "Clarifactory Announcement" to see that clearly.

Of course, being so undervalued, it could also be an asset play but it wasn't the primary motivation for me to invest in the Trust.

What this means is that I would be quite happy to hold on to my investment if the offer is a lowball one.

I am simply in no hurry to sell.

So, although disappointed and maybe even a little disgusted by the lack of clarity in the Trust's announcement and the newspaper article that followed, I am not losing sleep because of this.






Having said this, there are probably many people who were not shareholders of Accordia Golf Trust before and only bought into the Trust recently at higher prices because of the offer.

I hope they know that they are speculating.

Unlike people investing in Accordia Golf Trust for income, in case it is a lowball offer, holding on to their positions might not be a palatable option for speculators.

This is especially true if they are using money they really should not be using to invest or speculate with.

Unfortunately, from the "Clarifactory Announcement", it looks like someone thinks that Accordia Golf Trust's golf courses are cheap and they are trying to buy them cheaper.







Related posts:
1. Accordia Golf Trust: Reasonable or realistic?
2. Peace of mind as an investor.
"Eat bread with ink slowly." ----- "The letter "b" in "bread" stands for borrowed funds. Don't borrow money to invest."

CPF can be our best friend in our golden years. (CPF is a bond, an annuity and a savings account.)

In a blog published in February 2019, I said that even if I were to stop doing voluntary contributions to my CPF account then, I would have approximately $1.5 million in CPF savings when I hit 65 years of age.

If you are a new reader or if you don't remember, read the following blog.

See:
$1.5m in CPF savings by doing nothing henceforth.

Why did Albert Einstein call the power of compound interest the "8th wonder of the world?"

You tell me.







In a more recent blog, I revealed that I was doubling the amount of financial support for my parents.

I also said that I would like to continue making voluntary contributions to my CPF account, maxing out the annual contribution limit, till at least age 55, barring unforeseen circumstances.

Crossing fingers as that means another seven years of maximum voluntary contributions.

I said I might want to enjoy life a bit more and stop doing voluntary contributions to my CPF account after I have accomplished that.

Regular readers know that I have been trying to be more easy going when it comes to spending money on myself.

This is a big behavioral shift for me and something I have had some success in but, to be honest, it is something I am still working on.

See:
How much passive income is enough?







Well, nothing is set in stone, of course.

After I turn 55, there is still the possibility that I would continue to make voluntary contributions to my CPF account yearly as long as I am able to, everything else remaining equal!

Eeeeeeks!

What has happened to AK?

Mental condition got worse!

Well, some readers might remember this blog from mid 2017.

See:
CPF members above 55 should use it as a savings account!







See why I should continue to make voluntary contributions to my CPF account after I turn 55 as long as I am able to?

So, does this mean I will go nuts saving money in my old age?

Well, notice that I said I "should" and not I "must" continue to make voluntary contributions?

Also, these voluntary contributions might or might not be up to the annual contribution limit.

I did not say I would not be making withdrawals from my CPF account then either.

Post age 55, I am going to cut myself some slack.

Post age 55, I would play by ear instead of making yearly voluntary contribution to my CPF account a strict requirement.





Ah, AK's mental condition is not as bad as some might fear it seems.

Hurrah!

Of course, I don't know if my mental condition would worsen as I age.

Ahem.

Anyway, if interest rates remain what they are now, after age 55, it is probably a good thing to remind myself to think of the CPF as a savings account with higher interest rate.

The CPF is not just an investment grade bond and an annuity.

What, you don't know that is how the CPF provides us with some financial security?

See:
This guy has $800K in CPF savings.






People tell me I am worrying too much and I have an inkling that they are right.

This is especially when I have a relatively big safety net in the form of CPF savings.

We should take full advantage of our CPF membership.

That is the smart thing to do.

Yes, we want to retire smart.

Remember this blog?

See:
Don't do silly things and we can retire smart too.







CPF can be our best friend in our golden years if we nurture the friendship.

Now, that is the honest truth.


Believe in yourself.

Believe that you can do it too.

Believe that it is so and you will have the strength of a thousand men!

If AK can do it, so can you!








Recently published:
Voluntary contribution to CPF MA in 2020.

You might be interested in this:
Insure against longevity risk but not like this.

Smart money exiting US hospitality sector?

This is a blog to share some food for thought regarding the US hospitality sector.

It is going to be partly about what I picked up from someone who seems to be in the know.

It might or might not explain in part why there were two IPOs of US hospitality assets in Singapore earlier this year.

As usual, remember that it is just me talking to myself here in ASSI.

Of course, don't take everything in ASSI as the Gospel truth.

It is just my perspective most of the time.





The US hospitality sector has grown robustly for a decade but incumbents are facing increasing number of challenges and stronger ones too.

So, it is not surprising that some incumbents are letting go of their assets to lock in capital gains.

It could be that rather than deal with the challenges themselves, they are passing the risks to other investors when showing off a past robust growth trajectory is still enough to attract buyers.

It could also be the case that some of the challenges are insurmountable such as the possible ending of the hospitality expansion cycle.






Some pertinent points which I picked up:

1. Very real rising operating costs and, increasingly, operators are under a lot of pressure to keep a lid on expenses.

2. The expansion cycle in the US hospitality sector could very well be coming to an end after 10 years of consecutive growth.

3. Since the Global Financial Crisis, there is a strong sense of financial insecurity and US consumers are given to eliminating vacations altogether in a recession as was seen in the last recession as half of US households spent nothing on vacations then.

Any entity holding US hospitality assets who is thinking of going asset light would be very happy to have a REIT as a captive buyer at this point when discretion could be the better part of valor.







On hindsight, the lukewarm response to Eagle Hospitality Trust's IPO might have been a sign of things to come.

Especially so when the IPO launched with a lowered offer price of 78 cents a unit probably after a less encouraging book building exercise.

A lowered offer price was necessary to give a higher projected distribution yield to make the IPO more attractive to investors.

"In EHT's IPO, no applications were received for about 60 per cent or 26.6 million stapled securities out of the 44.9 million available to the Singapore public for subscription, at the close of the public offer on May 22. 

"The subscription rate for the public offer is therefore 0.4 times."

Source: 
The Straits Times.

An IPO in which the public offer was only 0.4x subscribed?

Eagle Hospitality Trust probably made IPO history in Singapore.

Memorable but not in a good way.






Eagle Hospitality Trust's DPU is partially shielded by Master Leases where fixed rents make up 66% of the Trust's total rent.

Of course, we have to remember that Master Leases are only as strong as the lessee.

Questioning the financial strength of the lessee is probably a prudent thing to do.

Master Leases also have the possible effects of inflating asset valuations and masking the real ability of an asset to generate income.

Without the fixed rents provided by Master Leases, ARA Hospitality Trust's DPU performance could possibly be a clearer indication of what things are probably like on the ground.

ARA Hospitality Trust's DPU missed forecast by a wide margin in the face of challenging conditions in the US hospitality sector and not due to any major internal issues.

"ARA H-Trust On Wednesday separately reported DPS of 1.77 US cents for its third quarter, 11.5 per cent lower than the 2.01 US cents figure forecasted in its IPO (initial public offering) prospectus.

"This comes after overall supply growth outpaced demand growth in the upscale select-service segment for the first three quarters of fiscal 2019, it said."

Source:
The Business Times.





Are these reasons enough to explain the seemingly irrational and repeated insider selling even at a huge discount of more than 40% from the IPO price and in large chunks?

Maybe but probably not.

Of course, we are referring to insiders of Eagle Hospitality Trust, specifically those who sold some hotel assets to be injected into the Trust.

Money should go to where it is treated best and smart money probably know where to go.

Eagle Hospitality Trust could be a good investment for income but just not good enough for the insiders who reduced their stakes aggressively.

Is this an optimistic statement about what has happened at this point in time?

Probably but maybe not.







I am ending the blog with a couple of video clips.

The first one is about hotels in the USA.

Titled "Selling Hotels 2020", the video clip has some interesting insights.

"The buyer pool for value add properties is a lot deeper than the buyers that are looking for stabilized income properties." 






The second video clip is just for fun and laughter.

Ho ho ho!

Alamak, how come like that?

Support SPH a bit lah. ;p








Related post:
His plight and my philosophy.

Recently published:
IREIT Global is going to Spain!