CPF account is recovering almost $700K. Thoughts.

Regular readers know that I strongly believe in the CPF system.

I believe that it is a good habit to sock away some money consistently.

In other words, I believe in saving money.

We never know what could go wrong in life and having some savings, substantial savings, is really comforting.

Of course, I also say that we should put our money to work.

We don't want to spend our life working for money.

We want our money to work so that we can enjoy our life more.

So, parking our money in the CPF in an environment of lower interest made good sense as it paid much higher interest rates.

However, in an environment of higher interest rates, to be fair, 2.5% p.a. is pretty decent too.

Still, we would like to have higher returns where possible from instruments with the same risk profile.

This was why I bought a 1 year T-bill with CPF OA funds about one year ago.

Well, the T-bill is maturing today and the money is coming back.

I will perform a transfer from CPF IA to CPF OA when it happens.

Unfortunately, it would not make it back into my CPF OA before the end of the month.

So, I will lose 2 months of additional interest from the CPF OA instead of 1 month.

The breakeven cut-off yield for that T-bill is 2.92% p.a.

For those who are interested in finding out the breakeven cut-off yields, here is a link to a blog that does it: https://growbeansprout.com/cpf-t-bill-sgs-bond-interest-rate

Since that 1 year T-bill had a cut-off yield of 3.87% p.a., I received additional interest of more than $6K.

The funds deployed was almost $700K which explains that more meaningful difference.

Better than leaving the funds inside my CPF OA.

Since I received it as a discount immediately upon the commencement of the T-bill, the interest rate really was higher than 3.87% p.a. compared to a fixed deposit where interest earned is received at the end of the tenure.

I also bought another T-bill with CPF OA funds, leaving only $20K in the CPF OA, and that is maturing in March.

That was a much smaller sum.

Like I said in an earlier blog post, I would place competitive bids using CPF OA funds to buy T-bills.

Non-competitive bids run the risk of getting a cut-off yield that is lower than the breakeven using CPF OA funds.

Since the highest breakeven cut-off yield is 3.33% p.a. which is for 6 months T-bills possibly losing 2 months of additional interest from CPF OA, a sensible competitive bid is 3.5% p.a.

So, that is the plan.

When I turn 55 years old in 2026, after setting aside the Full Retirement Sum in the newly created RA and locking up the Basic Healthcare Sum in the MA, the rest of my CPF savings becomes my emergency fund since I could withdraw the money anytime I want.

That would free up my existing emergency fund which would become part of my war chest.

That would be quite a substantial boost since my current emergency fund is able to cover 24 months of expenses for my parents and myself.

Years of careful planning and patient execution is paying off.

If AK can do it, so can you!

My plan after 3.45% p.a. 1 year T-bill.

Massive disappointment.

Many felt that when the cut-off yield came in at 3.45% for the latest 1 year T-bill auction.

I somehow got the dates messed up and I couldn't take part in the auction.

Regular readers might remember that I bought a 1 year T-bill about a year ago using CPF-OA money.

That cut-off yield was 3.87% p.a. and would mature on 30 January 2024.

So, it would not have matured in time for the recent 1 year T-bill auction.

Somehow, I kept thinking that it would.

Anyway, no loss there.

3.45% p.a.

I would not have gotten the T-bill even if the money came back in time.

I would have placed a competitive bid of 3.5% p.a.

That is minimally acceptable to me when using CPF OA money to buy T-bills.

This is because the breakeven is 3.33% p.a.

This covers the possibility of losing 8 months of CPF OA interest and not just 7 months.

So, at 3.5%, I am only getting 0.17% more than what CPF OA would pay me.

This means that for $100,000, it is a $170 difference.

For $670,000, which is the amount from my last 1 year T-bill with CPF OA money, the difference would have been about $1,140.

Nothing to write home about but still something.

Of course, getting 3.87% the last time, the difference was more significant.

Anything lower than 3.5% p.a., I would just leave the money in the CPF-OA.

Not enough meat for me to be interested.

So, what am I doing with the CPF OA money coming back?

I will try for 6 months T-bill, bidding competitively at 3.5% p.a.

If I don't get it, no big deal.

If AK can talk to himself, so can you.

Reference:
CPF account got hacked!

Reducing risk and volatility on portfolio level.

I have picked up Yu Gi Oh again!

Found that I could play it for free online.

It was something I played but only for a bit and I enjoyed the anime.

I didn't have a deck of my own as it was too expensive to build one.

I had to use a friend's deck.

It was so long ago.

Old brain.

So rusty.

It is a strategy game that really tests my ageing brain which is a good thing.

Helps to slow the onset of dementia, maybe.

Anyway, like I said in a previous blog post, I have been contemplating just buying T-bills and bonds from now on.

Of course, if the yields decline, I could always go back to making contributions to my CPF account.

Regular readers know that I treat my CPF savings as an investment grade bond component of my portfolio which pays reasonably attractive coupons.

This way, I would continue to grow the risk free component of my investment portfolio.

I must realize and embrace the fact that I don't really have to take on more risk anymore although I could still buy more stocks if Mr. Market goes into another severe depression.

Like I said several times before, that would be the time to dismantle my T-bill ladder.

Doing this, buying T-bills and bonds in the meantime, price volatility on the portfolio level would reduce over time.

The last T-bill auction saw a cut-off yield of 3.74% p.a.

Until the Fed reduce interest rate, I am expecting similar cut-off yields for the time being.

I have put in a non-competitive bid for the upcoming auction happening on this Thursday, 18th of January.

That's all for this update.

If AK can talk to himself, so can you!

Related post:
SSB, T-bills, banks and plan.

4Q 2023 passive income: Why the smile?

In my first blog post of the year, I said that 4Q 2023 passive income should come in weaker.

This is because OCBC and UOB only pay dividends in Q2 and Q3.

So, missing these major contributors, it is only reasonable to expect lower passive income numbers for me in Q4 2023.

Also, I expected Q4 2023 passive income to be lower, year on year.

This is because my investments in REITs and property developers were generating less income for me in 2023 compared to the year before.

High interest rates are pretty challenging for some entities.

Fortunately, DBS pays dividends quarterly.

Being another substantial investment in my portfolio, hopefully, this would provide a bit of a cushion.

This is especially when DBS increased their dividend per share not too long ago.

My persistence in building and strengthening a T-bill ladder in an environment of higher yields should also help.

All of that went on in my head.

So, how did things turn out?

Total passive income generated by my investments in 4Q 2023 was:

$ 24,849.44

This is some 2% lower, year on year.

It was $25,331.81 in 4Q 2022.

Hmm, the decline was not unexpected.

Still, like the title says, I smiled because it wasn't too bad.

2% decline on a relatively smaller sum.

Not too damaging.

Thanks to strong Q2 and Q3 numbers, full year 2023 registered an improvement.

Q2 and Q3 saw larger percentage gains on relatively larger numbers, after all.

Everything taken into consideration, pretty decent.

Full year 2023 saw a 12% increase in income generated by my investment portfolio, year on year.

Total amount: 

$231,495.19

This compared to $205,999.73 for full year 2022.

To new readers of my blog, this is probably all very impressive.

However, readers who have been following my blog for many years would know that blog posts like this is more to inspire than to impress.

If AK can do it, so can you!

I am not just saying this.

I mean it.

It is about being prudent with money.

It is about keeping our needs simple and our wants few.

It is about being patient and getting rich slow.

It is about being pragmatic and staying invested in bona fide income generating assets.

If it all sounds very boring, well, it is.

It is all about staying grounded and marching towards that pot of gold we know is waiting for us to unearth.

Unearth?

That sounds like work.

Yes, it is.

There is no free lunch in this world.

It is not about going after what could be there but what we know is there.

So, what is my strategy for 2024?

More of the same, really.

I expect my investment portfolio to continue generating income for me this year, barring earth shattering events.

If another pandemic strikes or if war happens on a global scale, expect income generation to slow down or stall.

I can only hope that sanity prevails and that more people in power are willing and able to avoid war on a larger scale.

War is fully avoidable unlike pandemics.

Unfortunately, many human beings are selfish and narrow minded.

When they are put in positions of powers, they could then influence the gullible to do the unthinkable.

This is not a problem exclusive to less developed countries or politically less stable regions in the world, of course.

I am spending some time to talk to myself about this because compared to economic challenges, this is a bigger problem.

Where economic challenges are concerned, high inflation has been tamed or so it seems.

Expectations are for interest rates to start declining sometime this year and there are some experts who think that the Fed will bring interest rate down to under 3% in order to ensure a soft landing.

This is good news for REITs, especially those which are highly leveraged as well as those which have a big part of their debt on floating rates.

For banks, it would mean moderating earnings as rapid interest rate hikes end a strong tailwind.

Still, banks have proven again and again that they have been able to deliver earnings growth over time.

So, staying invested is what I will do.

Before I end this blog post, I will remind myself of the following.

"There will come a day when my passive income generated exceeds my earned income doing what I do.

"If I have always been prudent with money, that is probably the day I become financially free.

"That is when I no longer have to work for money."

No more unearthing to do.

So, believe me when I say this.

If AK can do it, so can you!

$3K CPF MA Top Up in 2024 to new BHS.

Like I shared in a recent blog post, the new Basic Healthcare Sum is $71,500 which is an increase of $3,000 from $68,500 in 2023.

This was what my CPF statement looked like at the start of 2024:

After doing the Top Up of $3,000 using PayNow, this is what my statement looks like now:

I decided to do the Top Up earlier than later in the month because I might forget.

Growing old and forgetful.

For those who are not forgetful like me, doing the Top Up a few days before the end of January would mean making a little more in interest income in a savings account.

If AK can do it, so can you!

However, sometimes, it is better to do it your way!

Of course, for those who are still gainfully employed, doing this will also get income tax relief.

It is a win and a win again!

Finally, a question from a reader is worth reproducing here: 

"Just wondering, if I were to also top up my MA to $71,500 in Jan, but as I am still getting monthly CPF contribution, would the top up be refunded without interest as my employer/employee contribution would also flow to MA, or would it go straight to OA/SA?" 

My reply: 

If we are doing voluntary contributions, then, we would have to be mindful of the CPF annual contribution limit. This is because mandatory contributions would count towards that limit. However, when we do Top Ups to our SA and MA, they are independent of that limit.

Reference:
Why top up CPF MA?

Recently published: 
CPF savings, SSBs and T-bills...

CPF savings, SSBs & T-bills in January 2024.

Last year, I published a blog post with a very eye catching title regarding my CPF savings.

"More than $1.1m in CPF savings!"

Well, this time, it is a whimper, in comparison, at less than half a million dollars. ;p

So, how much exactly?

Here is my CPF pie chart at the end of 2023:

Some readers might say that for the first time in a long time, my CPF savings look "normal." ;p

CPF OA savings less than CPF SA savings.

For people who use most of their CPF OA savings to fund a flat purchase, this is probably normal.

Of course, regular readers of my blog would know that most of the money in my CPF OA went to buying T-bills.

Two T-bills.

A one year T-bill is maturing end of this month.

A six months T-bill is maturing in the middle of March.

So, the money will come back.

I will transfer the money from the CPF IA to the CPF OA when it happens.

Then, if yields stay relatively high, I would probably buy T-bills again.

Of course, with CPF funds, I do competitive bidding.

3.5% p.a. is a reasonably sensible bid to place.

I produced a video on this topic before too and, in case some are interested, here it is:

Hope the video is helpful.

Of course, another reason why my CPF savings did not grow as quickly as before was because I did not do voluntary contributions last year.

The money earmarked for that went to buying Singapore Savings Bonds instead which offered higher than 3% p.a. in 10 year average yield.

For those who didn't know this, here is the link to the blog post:

"SSB: Mission accomplished."

I won't be doing voluntary contributions to my CPF account this year in 2024 either.

Why?

I front loaded the "contributions" last year, buying more Singapore Savings Bonds later in the year.

See this blog post:

"SSB: Missions update!"

All as well.

The latest Singapore Savings Bond is offering only 2.81% p.a. in 10 years average yield.

So, that is an easy skip for me.

In any case, I am in no hurry to buy more Singapore Savings Bonds since whatever I want to buy to replace voluntary contributions to my CPF account in 2024 was filled last year.

If the yield remains low for the rest of the year, I will go back to doing voluntary contributions to my CPF account in 2025.

Easy.

Till the next blog post, mask up and stay safe!

If AK can do it, so can you!

List for 2024! CPF BHS. T-bills. 2023 passive income.

Happy new year!

Brand new month and brand new year!

I have been busy the entire month of December and now I have to plan my January.

I have so much to do in different worlds.

Neverwinter, World of Warships and Black Desert Online.

12 to 14 hours of time spent in virtual worlds.

Of course, I must not forget things I must do in the real world too.

January looks like it is going to be another busy month too.

Oh dear.

I wish I had 25 hours a day instead of 24.

Maybe, 26 or 27 hours would be better.

Yeah, bad AK!

So many things to do in my retirement and so little time.

Anyway, as I am growing forgetful in my old age, this blog will quickly outline the stuff I am going to do when it comes to money matters.

1. Top up my CPF MA to the new BHS.

The new BHS is $71,500 in 2024.

This is up from $68,500 in 2023.

Interest earned in my CPF MA will flow into my CPF OA since my CPF SA has already hit the FRS.

So, I will be able to do a $3,000 top up to my CPF MA this month in January.

I will do it earlier than later just in case I forget later.

2. Blog about my updated CPF balance.

My CPF balance will look very "weak" in 2024.

I published a blog last year where I reacted in "horror" that my CPF account was "hacked!"

The bulk of my CPF OA money is in a 1 year T-bill with a cut-off yield of 3.87% p.a. which is why my CPF OA balance is much lower.

That T-bill is maturing at the end of the month.

So, the money is coming back.

I must remember to transfer the money back into my CPF-OA.

3. 6 months T-bills.

I got both 6 months T-bills offered in the month of December 2023.

The cut-off yields were 3.74% p.a. and 3.73% p.a.

Not too bad.

The plan is to maintain my T-bill ladder in 2024.

The yields are still relatively attractive to me.

So, I have already made a non-competitive bid for the auction taking place on 4th January 2024.

If Mr. Market should go into a depression in 2024, it would be time to dismantle the ladder.

4. 2023 full year passive income.

I have been so busy in December that I have not been keeping up with things on the investment front.

I will have to spend some time looking at numbers to account for my passive income in 2023.

I am expecting a weaker Q4 2023 since UOB and OCBC pay dividends only twice a year in May and August.

Year on year, passive income could come in weaker as the REITs I hold are generating less income for me too.

There will be some income generated by T-bills in the portfolio but that won't move the needle much, I suspect.

Hmm.

I think that is all when it comes to money matters and blogging.

Lots of other stuff I have to do but I shan't clutter this blog post.

OK, maybe just this one thing.

I shared this screen-shot of the port of Velia in Black Desert Online in my YouTube community tab on Boxing Day.

You can see my ship docked in the extreme right of the picture.

I am working on upgrading it be like the taller and larger ship with the black sails in the center of the picture.

Work in progress and I should be able to get it in a few more days.

Makes me happy thinking about it.

Will be happier once it is done!

That is all for now.

Look out for upcoming blog posts on my CPF savings and 2023 passive income update.

I will be back!

If AK can talk to himself, so can you!

SSB, T-bills, DBS and UOB. Plan for December. Easy.

This is probably going to my final blog post for 2023.

Planning on taking it easy for the rest of the month when it comes to social media.

Have been a little too active in the last few months on YouTube.

Now, going to spend more quality time with myself.

Being able to play three games everyday on my new gaming laptop makes me very happy.

That is what retirement is about.

It is about being happy.

A few things to talk about.

1. T-bills and SSB.

The Singapore Savings Bond being offered this month is offering a stunning 3.07% p.a. 10 year average yield.

Stunning for the wrong reason since last month's offer gave an attractive 3.4% p.a. 10 year average yield.

I think I will give this one a miss.

Am I veering away from my plan to keep buying Singapore Savings Bond as long as the yield is above 3% p.a. or not?

Well, the plan was to replace CPF Voluntary Contributions with Singapore Savings Bonds.

I have already done it with money meant for the CPF in 2023 and 2024.

2025 is work in progress and there is really no hurry.

In the meantime,  I will continue to strengthen my T-bill ladder.

The last T-bill auction had a cut-off yield of 3.8% p.a.

Hopefully, it stays there for the auctions happening this month too.

2. DBS and UOB.

I still want to increase my investment in the local banks.

OCBC is already a very large position.

So, the idea now is to grow my positions in DBS and UOB.

For me, the stock prices to add would be between $30 to $30.50 for DBS and closer to $26 for UOB.

3. Taking it easy.

I have been thinking of taking it easy when it comes to investing for some time.

However, after a recent recording with The Fifth Person, I have been thinking about it even more.

The decision to retire early was a big step for me.

I was always a worrier and I still am a worrier.

Still, I convinced myself that I had sufficient financial resources to retire early.

Then, in retirement, I began to question if I really did have enough.

I continued to invest for income and increase my passive income in retirement.

In recent years, I have been telling myself to take it easy and that I have enough financial resources not to have to worry.

I have had some success but something Adam said during the recording hit home.

So, I could simply just buy more Singapore Savings Bonds and T-bills from now on and still be quite comfortable.

Risk free and volatility free.

Don't have to do anything else.

This would be another phase in my life, if I should do this.

To be honest, I rather like it.

Anyway, that's all the talking to myself for now.

If AK can talk to himself, so can you!

Merry Christmas and Happy New Year!

Unemployed AK grew his passive income from $100K to $200K per year.

I thought of making a video out of this but I am feeling a little under the weather.

So, I decided to blog about this instead while the thought is still fresh on my mind.

Something I do regularly is to blog about my passive income.

It is a digital record of not only the numbers but also my thoughts at those different points in time.

Of course, the blog posts are also to inspire readers.

Hopefully, more regular folks like me would make investing for income a part of their journey towards financial freedom.

Yes, if AK can do it, so can you.

While having a conversation with some friends recently, they asked me how did I continue to grow my passive income while lacking an earned income in the past 8 years?

One of them reminded me how my annual passive income was closer to $100K more than 10 years ago.

Now, it is more than $200K.

It isn't something I have given much thought to.

So, what did I say?

"I am just very frugal when it comes to money which allows me to continue investing more money although I lack an earned income."

When I left the workforce, the biggest disadvantage was losing that earned income.

While still receiving an earned income, I was able to reinvest all of my passive income and also some of my earned income.

Retirement has definitely slowed the pace of wealth building.

A friend told me that being able to continue to grow my wealth even in retirement is quite impressive.

(Most people see their wealth dwindling in retirement.)

How did I achieve this?

In a nutshell, this is the beauty of investing for income.

I consume the income generated by my investment portfolio.

I do not consume my investment portfolio.

I do not eat the chicken but the eggs laid by the chicken.

However, this isn't the full story.

Remember how my friends did a CSI on my passive income and reminded me that my annual passive income was closer to $100K more than 10 years ago?

Wasn't $100K a year already enough to F.I.R.E. for someone like me?

Well, it probably was more than enough.

So, what was the problem?

I am a worrier.

Hard to change.

I needed a buffer and a significant one too.

How significant a buffer?

Well, consider this.

Even today, with inflation being as high as it is, I recently blogged about how I would probably be quite comfortable with $48,000 a year.

See how significant the buffer is?

If I had retired more than 10 years ago instead of 8 years ago, I would have had a smaller buffer.

If I had spent money more freely, the behavior would have probably carried into my retirement years.

I would not have been able to continue building my wealth to what it is today then.

For most of us, it is far easier to curb the outflow than to grow the inflow of wealth.

So, it isn't just about not eating the chicken but the eggs.

It is also about having more than one chicken or having a buffer.

Don't consume all the eggs so that we can sell some of the eggs to buy more chickens.

Of course, there were also times when buyers offered much higher prices for my chickens.

I used the proceeds to buy even more chickens.

Not all chickens thrive but most of them do.

So, how did AK the early retiree grow his passive income from $100K a year to $200K a year?

No earned income but can continue growing passive income?

Confirm and double confirm!

If AK can do it, so can you!

Related post:
Inflation, passive income and budget.

Added to position in DBS. T-bill 3.8% p.a. cut-off yield.

Just a quick update on what I have done in recent days to my investment portfolio.

For anyone who is following me on YouTube, it is no secret that I have been looking to add to my investment in DBS.

I identified the immediate support to be at $32.00, and if that should break, then, $31.80 would be next.

I added to my position at closer to $31.80 a share but it is just a nibble.

I see longer term support for DBS at between $30.00 to $30.50 a share.

So, that is where I would like to buy more.

DBS continues to impress me with its much higher ROE of 18% to 20% when compared to UOB and OCBC which have ROE of around 14%.

So, I feel that this justifies DBS trading at a higher price to book.

There is also the fact that DBS pays dividends quarterly and as a retiree who lives off his passive income, this is also attractive to me.

Next topic is T-bills.

The auction happened yesterday and the cut-off yield was 3.8% p.a.

I estimated it to be 3.88% p.a. but 3.8% p.a. is good enough to make me happy.

What also makes me happy is that non-competitive bids were fully allotted.

T-bill ladder is intact!

Next auction is happening on 7 December.

So, nothing earth shattering happened, really.

Just sticking to my plan.

Always have a plan, your own plan.

If AK can do it, so can you!

F.I.R.E. Always have a Plan B! Better and cheaper!

I always say try not to be married to our jobs.

This is because if we spend our lives working and doing nothing else, if we should one day be retrenched or if we must stop working for whatever reason, we would be lost.

This is why so many people say if they retire, they would die faster.

For me, I have always thought of work as a means to an end which is to achieve F.I.R.E.

Of course, back then, there was no such acronym.

I was just thinking about being able to retire earlier from work or being able to stop exchanging my time and energy for money.

Anyway, having been a retiree for about 8 years now, I have been spending a lot of time on something that I really enjoy and that's video gaming.

Now, I have to take my own advice but with a twist!

Don't be married to any one hobby!

Recently, my gaming laptop has been a bit wonky.

The video card is probably on its last leg.

To be fair, I work it very hard as I use it for 8 to 14 hours daily.

I have been thinking of getting a new gaming laptop for some time but I decided to wait for prices to come down.

During the pandemic, the prices of computers shot through the roof as people were buying them to work from home and also because they had more free time, online video gaming activity also sky-rocketed.

So, I kept waiting until now.

I took advantage of the 11.11 sale going on now and bought a new gaming laptop, also from ACER.

Still a Nitro 5 which is a value for money gaming laptop by ACER but this is an upgrade with 16G of RAM and a RTX2050 graphics card.

For sure, it isn't top of the line but it is already an upgrade to my current Nitro 5 with 8G of RAM and a GTX1050 graphics card.

Well, my current laptop is 6 years old.

Oh, the new NITRO 5 will also have a SSD that is 4x bigger than what I have now.

However, what is really amazing is how I am paying only $1,100 for my new Nitro 5!

When I paid $1,349 for my current laptop back in the day, people told me it was a good deal.

So, the new laptop is better and cheaper than my old one!

That makes me happy.

Of course, if you have been following my blog long enough, you would know that I am not just talking about my recent purchase.

This blog post is more allegorical.

Think about having contingency plans.

Think about delaying gratification.

Whether stocks or socks, we like to buy better products at lower prices.

Related post:
Spent money and will spend more time.

Full Retirement Sum is not enough to retire on!

It has been quite a while since I tinkered with the CPF website.

I remember how I used to visit the website very often back in the days when I was actively plotting how to make full use of the CPF system.

Anyway, as I close in on 55 years of age, I decided to revisit the CPF website.

That is when I get a Retirement Account set up.

I thought it would be a good idea to check on how much my Full Retirement Sum would be by then.

This was what I found:

Source: CPFB

So, it would be $220,400 for me.

My CPF-SA has more than that right now and it will continue to grow based on interest earned yearly alone.

Therefore, it isn't a worry for me.

This was how it looked at the beginning of the year:

Then, I checked how much I would get when CPF LIFE kicks in for me at age 65.

For this, I used the CPF LIFE estimator: HERE.

I had to tell the AI that I am 55 years old now in order for it to work and then input the FRS for my age group.

It is a fun calculator to use because I was able to use sliders to change the payout age and also the amount of funds involved to see how things would look like.

Anyway, if I just stuck with the FRS of $220,400 and had the payout start automatically at age 70, I would be paid $2,380 monthly.

If I should request for payouts to start at age 65 instead, I would be paid $1,760 monthly.

Back in 2014, I published a popular blog post that has received almost 50,000 pageviews by now.

It was "To retire by age 45, have a plan."

In that blog post, I said that I wanted to retire by age 45 and thought I would be quite comfortable with $2,500 a month in passive income.

I accounted for inflation and by age 65, I would need $5,081 a month in passive income.

I calculated the required monthly passive income till age 75.

If you are interested to see all the numbers at various ages, please go the blog post and I have hyperlinked the title earlier.

So, what is the point I am trying to make?

For me, at least, the Full Retirement Sum is not enough to retire comfortably on.

At age 65, there would be an estimated shortfall of $5,081 - $1,760 = $3,321 a month.

Please don't get me wrong. 

I think that the CPF LIFE is a very good idea because many people are not very good with money and even worse at planning for retirement funding.

So, with CPF LIFE, at least there is some kind of minimum safety net.

However, that is what it is.

A minimum safety net.

In case you are wondering what triggered this blog post, it was a news article on how Singaporeans are falling behind in savings and more can only afford basic expenses.

See article in The Business Times: HERE.

"More Singaporeans can afford only basic spending, don't have enough savings, a survey by OCBC found."

"Most do not have sufficient "emergency funds" or enough savings to meet their families' needs over the next year."

We really want to take action early to help ensure retirement funding adequacy.

During good times, don't become complacent because bad times could hit us when we least expect them to.

Always have a crisis mentality.

It might not be fun but we should do better than those who don't.

If AK can do it, so can you!

Note: Numbers are based on CPF LIFE Standard Plan.

Recently published:
3.75% p.a. cut-off yield for T-bill.

3.75% p.a. cut-off yield for T-bill. Disappointing.

The results for the 6 months T-bill auction came out at 5pm or so.

I made a short video on this soon after.

In a nutshell, I was disappointed.

I did make a video a few days ago saying that we could see 3.88% p.a. based on the daily SGS prices and yields published by the MAS.

Of course, I didn't expect an exact match but 3.75% is even lower than the auction that took place one month ago.

That gave 3.87% p.a.

The last time it was lower was 2 months ago in September at 3.73% p.a.

Anyway, as I was using cash, I just placed a non-competitive bid.

This is so that I would get at least some of my application filled if there was a high level of interest.

Well, only 95% were allotted.

This means that if we had applied for $20K, we would get a refund of $1K.

To be fair, a cut-off yield of 3.75% p.a. is not bad.

It is still more than what most 6 months fixed deposits would pay, and if we consider the fact that the interest is paid at the start of the duration, it is actually more than 3.75% p.a.

So, disappointed I may be but not too much so.

Think positive!

Better for my mental health!

As for people using CPF-OA money, I always say to do competitive bidding because we do not want to be a victim of the unthinkable.

I have said in the past that a sensible competitive bid would be one that would not cause us to lose out on interest income in the end.

So, using CPF-OA money, the break-even is about 3.33% p.a. and since we should be aiming for more than breakeven, a competitive bid of 3.5% p.a. makes sense.

(3.33% p.a. takes into consideration the possibility of losing 8 months of CPF-OA interest.)

To be honest, unless the amount is significant, the difference in interest income is not going to be very meaningful.

I think this is not hard to understand.

So, I wouldn't be too worried if the amount of  CPF-OA money involved is, say, less than $50K.

So, until the next T-bill auction, it is back to my games.

If AK can do it, so can you!

SSB missions update! Redemptions! SSB I forgot I had!

I don't usually look at my CDP statement these days because I really dislike looking at it online. 

So uncomfortable.

I miss the paper statements so much.

Yes, I know the argument for going green but I am not sure that going from chopping down trees to guzzling energy in data centers is a good trade or not?

After all, we can replant trees but unless we are using renewable energy, data centers are big polluters, if we think about it.

1. SSBs

Anyway, I had to check my CDP statement just to be sure that my paper records are accurate for Singapore Savings Bonds.

As it turns out, there was a Singapore Savings Bond which I thought of buying but wasn't sure if I could.

I blogged about it but it wasn't very clear.

See:
SSB 3.06% p.a. 10 years average yield.

Well, I could not find any trace of this in my CDP statement.

Blessing in disguise, maybe.

After all, this month's offer is for 3.4% p.a. 10 years average yield.

2. SSB redemption.

I am redeeming SBMAY23 which I did buy.

That offered a 3.07% p.a. 10 years average yield.

That was bought to partially replace CPF voluntary contributions in 2024.

See:
Saving for income 3.07% p.a.

Will use the funds to apply for SSB this month.

But the funds will only come back to me next month!

How like that?

I will have to use money in my war chest first and the returning funds will go back to my war chest next month.

Like I said in the previous blog post, AK can juggle money.

3. Forgotten SSB!

While going down the list of investments in my CDP statement online, I found an SSB that I forgot I had!

This was bought in 2018!

OMG!

10 year average yield of less than 3% p.a.

Alamak!

OK, I am redeeming that too.

The funds will go to my war chest next month.

More money for T-bills, maybe.

4. SSB mission for 2023.

Anyway, this is a blog post to remind myself of what I have done and what I am doing in the SSB space.

Mission accomplished in replacing VC to CPF with SSBs in 2023.

See:
SSB mission accomplished.

5. SSB mission for 2024.

For VC to CPF in 2024, I am (re)applying for SSB this month with funds from the redemption of SBMAY23.

Together with another SSB purchased in March, this will (re)complete the mission for 2024.

See:
SSB March 2023 3.15% p.a.

I thought of redeeming the SSB bought in March too but I have a feeling that the SSB this month is going to be oversubscribed as well.

So, I could end up being only partially allocated if I applied for a larger amount.

Anyway, my war chest doesn't like being depleted even if only temporary.

With yields at the long end of the curve rising, like I said in an earlier blog, there is no hurry to lock in higher yields.

Famous last words? Maybe.

6. SSB mission for 2025.

If I get what I apply for this month, it would be $15K of SSBs in total for the year 2025.

Since this is a mission for 2025, I have plenty of time to complete it.

Crossing fingers that 10 year average yields for SSBs will remain relatively high.

See:

SSB 3.16% p.a.

SSB 3.32% p.a.

SSB 3.4% p.a. (and 6 months T-bill ladder.)

If AK can buy SSBs, so can you!