Investors eat crusty bread with ink slowly for peace of mind.

Older readers will remember an older blog of mine which asked

"How to have peace of mind as an investor?"

In that blog, I suggested that we should

"Eat bread with ink slowly."

Using mnemonics, it stood for:

1. Emergency fund.

2. Borrowings.

3. War chest.

4. Income.

5. Sizing.

If you cannot remember the details or if you are new to my blog, you might want to read the blog: HERE.





Actually, there is something missing from the list and I have been thinking of doing an update for a while but long time readers of my blog know that I have such a busy life.

This week, in fact, I have spent tens of hours adventuring in a new world.

Yes, a new world.

It is likely that I will spend hundreds of hours in this new world in the coming months.

It is an ARPG this time which is quite different from the MMORPGs like Neverwinter and Guild Wars 2.

ARPG stands for action role-playing game.

The name of this ARPG?

Path of Exile.







Once Mod 18 in Neverwinter goes live on 21 January, I will be busy adventuring in Avernus, the first layer of the Nine Hells of Baator.

Path of Exile and Guild Wars 2 will provide me with alternative worlds to adventure in each time I wait for new Mods from Neverwinter.

I can never be bored in retirement as I enjoy adventuring in such fantastic worlds.

The amazing thing is that I don't have to pay a single cent (and I don't) in order to enjoy these larger than life adventures.

Some people say:

"Aiyah, you can do this because you are rich mah."

This might sound a little sour but, to be honest, they are right.





We want to be financially free so that we do not have to exchange the most precious resource we have (i.e. time) for money anymore.

Why do many average income workers find this impossible?

Do you believe me if I were to say it is not because they make an average income?

If you are a new reader or if you don't remember, read this blog:

Average income workers have a choice to be rich.






To be richer, learn to be better savers first.

This brings me to the crux of the blog or in this case, the "crust".

"Eat crusty bread with ink slowly."

Using mnemonics again.

The letter "C" in the word "crusty" stands for CPF.

I have said in many blogs before that having a rather significant safety net allows me to invest the way I invest with peace of mind.

My CPF savings is a very big part of this rather significant safety net.

In fact, I said that the CPF would continue to be an important part of my passive income strategy even after I had made $1 million in dividends from my many investments in equities and trusts.

Now, when was this?

This was back in October 2016.

See:
The AK passive income strategy after making $1 million.

So, to have peace of mind as an investor, not only do I eat bread with ink slowly, I choose to eat crusty bread with ink slowly.

1. Emergency fund.

2. CPF.

3. Borrowings.

4. War chest.

5. Income.

6. Sizing.






I rather like this update.

Definitely sounds complete now.

Sounds a bit more yummy too.

Sedap!

Don't you think so?

Related post:
CPF is all we need unless we are very rich.

CPF fake news and financial prudence.

When we use our CPF-OA money to purchase a property, we must be aware of the opportunity cost that comes with the decision.

When we use our CPF-OA money to purchase a property, we are losing out on interest payments made by the government to us.

Despite what some people say, we are not paying interest to the CPF for using our CPF savings in the purchase at all if we should sell the property with a capital gain.

We are, in fact, paying ourselves interest (to our CPF account) for the CPF savings we have utilised in the purchase of the said property.





Now, what if we made a loss from selling the said property?

Would we have to top up our CPF account to make up for the capital loss?

Alamak!

Real or Not?

Don't listen to hearsay!

Beware the fake news!

Watch this video for the answer:







As property prices have risen a lot in the last 10 years, some people find it hard to believe that there is a possibility that property investments could go horribly wrong in Singapore.

Well, they have gone horribly wrong before in the past and they could go horribly wrong again in the future.

The possibility exists.

We have to remember that not everyone has the ability to handle such a possibility even if they have the willingness to do so.

Those who have been swept away by euphoria and paid prices too high should beware.

Buying and thinking that property prices can only go up is speculation.

With the enormous price tags of private real estate here in Singapore, it is not an overstatement to say that it is speculation on a relatively large scale.






People rarely make money buying real estate in a market euphoria but they usually make money buying when Mr. Market is depressed.

Also, people do lose their jobs and for those who are financially leveraged to the max, it could be hell on earth.

Unless we have deep pockets, it is best not to participate as just one mistake could sink us.

Remember not to ask barbers if we need a haircut.

For sure, no one cares more about our money than we do.






For most of us, unless we are very rich already, our CPF money is our ultimate safety net in retirement funding.

The fact that we don't have to top up our CPF savings if we make a loss in the sale of our property doesn't mean we should just anyhow use our CPF savings to anyhow buy a property or, indeed, multiple properties.

This is not "masak masak".

Don't "suka suka".

Financial prudence might not make us rich fast but it will ensure we avoid painful falls, some of which we might never ever recover from.






1. Everyone needs to learn financial management skills.

2. Everyone wants a higher standard of living.

3. Everyone needs to think of all the bad things that could happen to them.

If you find this unfamiliar to you, you are probably rather new to my blog.

If you are interested to find out more, read the story:

From rich to broke?





Related posts:
1. Buy property in Iskandar, Johor.
2. $500,000 in bad property investment.

Voluntary contributions to CPF in January 2020.

Remember the blog I published two years ago in January 2018?

Which blog?

This blog:

8 years AAA bond with 2.5% and 4% coupon!

I was referring to a AAA rated sovereign bond.

Know where to find such a bond?

Pause.

Pause.

Pause.

Regular readers will know that I was talking about the CPF, of course.

Guess what?

This "bond" is even more attractive to me now!

Why?

It is more attractive to me now because the tenor has shortened by 2 years and the coupons are still 2.5% and 4%!






Get the same coupons from the same bond but for a shorter tenor?

What an attractive deal!

You know what people say about Singaporeans loving to queue for deals?

Willing to join long queues to spend money on things like stuffed toys (think Hello Kitty) or mobile phones (think Huawei Y6 Pro)?

OMG!

These people are crazy!

Overnight queue for BTS Singapore concert merchandise?


Madness!







So, is AK saying we should queue to do voluntary contributions to our CPF instead?

Alamak, you don't know?

We don't even have to queue!

Just do everything online!

Amazing or what?

OK, I know.

I say you crazy.

You say I crazy.

Now, why not ask if you would rather be 

crazy and poor 

or would you rather be 

crazy and rich?


See:
Do online contribution to CPF?

Wait.

What?

You don't know why it is a more attractive deal for me now?

Basically, the closer we are to 55 years old, the more attractive the "coupons" become as the waiting time is shorter.

Chop, chop!

M.T.L.

Yes, I have made voluntary contributions (VC) to my CPF accounts (OA, SA and MA) this month.

The CPF Annual Limit for 2020 remains at:

$37,740.

So, a $2,800 VC to my MA.

Then, a $34,940 VC to my OA and SA.

Yes, AK bought a 

"6 years AAA rated sovereign bond with coupons of 2.5% and 4%" 

this month!






Why make maximum VC this month?

The idea is pretty simple to the economically inactive AK.

Hit the CPF annual contribution limit in January each year to get the most interest income possible.

Remind myself again to think of it as having bought AAA investment grade sovereign bonds that pay 2.5% (OA) and 4% (SA and MA) coupons!

"Spend less than you make; always be saving something.

"Put it into a tax-deferred account.

"Over time, it will begin to amount to something.

"This is such a no-brainer."

- Charlie Munger






I plan to keep doing what I have been doing with my CPF because I want it to "amount to something" by the time I am 55.

I know some readers want me to show my CPF numbers.

Patience.

Look out for an upcoming blog on what my CPF savings has amounted to so far.

This will happen probably before the end of this month.

Yes, soon, it will be time to see our pies. ;)

If you are absolutely clueless, please read the blog I hyperlinked at the intro of this blog for a more detailed reasoning as I do not want to repeat myself (too often) lah.








Related posts:
1. How to grow our CPF savings!
2. 4 ways to boost our CPF savings.
3. VC to CPF-MA in 2020.

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."