Invest X Congress: Q&A.

A feedback which I received from readers is that they wished I had given them some Q&A time after my presentation. I ran out of time and I think I took some of Rusmin's time too. My bad.


Courtesy of Audrey S. who had one of the front row seats.

Well, good thing I have a blog, right? I received quite a few emails, comments and PMs from old and new readers (mostly old as I think the new ones are still too shy) after the event and you might want to think of this blog post as the Q&A session that we didn't have time for at the event:

Q1. On the importance of an emergency fund.

A1. I said that it is important to have an emergency fund that will cover at least a year or two of living expenses and that if people who were at the event didn't have an emergency fund, they should go home and build an emergency fund first and not be investing now. If the economy should go into a recession, chances are the stock market would see prices tumbling too.

Now, imagine if we should be jobless but did not have an emergency fund. We might be forced to liquidate our investments at low prices. Not a pretty picture, is it? This is especially so when that should be the time to pick up good bargains offered by Mr. Market. It would be quite depressing.

Have an emergency fund and also a war chest. Two different funds. Not to be confused with each other.

Q2. On tipping AK.

A2. In the early days, I used to have a tip button in my blog. I installed it after seeing some bloggers having one in their blogs. I removed it after receiving that $100 tip I spoke about at the event. I don't want to feel obligated to anyone to provide advice because I receive tips from them.

I am not allowed to give advice, anyway. So, that was when I started saying I am only talking to myself in my blog. People who eavesdrop do so at their own risk. ;p

Q3. On income producing assets.

A3. Stocks, bonds and real estate. Actually, there are some very interesting assets which people invest in for income. I read that people actually invest in parking lots as well as taxis in Hong Kong to generate passive income, for examples. We can also find business trusts in Singapore which invest in assets such as infrastructure, ships, ports and cable television network.

No matter what assets we decide to invest in, if it should be for income, we want to be clear that the income is generated by the assets and we want to be sure that income distributions are sustainable. The time period could vary. The reason why I sold my investment in PCRT was because I decided that the income distributions were unsustainable.

Q4. On pyramids and percentages.

A4. I spent quite a bit of time talking about the graphic that looked like a pyramid because I felt that it is something important that income investors like myself should have in mind. Being able to compartmentalise investments is helpful in guiding our behaviour towards each investment, actual or potential. The question which I have been asked has to do with percentages since I mentioned that I would not have more than 2 or 3% of my money at the top of the pyramid which represents "aggressive" or "speculative" positions. So, what about the other layers in the pyramid? What are the percentages? I would say that it depends on the individual and his motivations.

Like I said during my presentation, if he is more of a speculator, then, the graphic for him could be an inverted pyramid. For someone who is more into growth stocks but who still believe in having plenty of cash to take advantage of opportunities, then, his graphic could look like an hourglass. Remember the population pyramids we learned in Geography classes in secondary school? You get the idea.

Q5. On Marco Polo Marine.

A5. I had an investment thesis. A sound one too, I believe. If all things had remained the same, the thesis would still be valid today. Of course, things changed over time and with only a schizophrenic bowling ball, I was not able to see the changes before they happened.

For anything positive that has a greater degree of predictability or certainty, I would allow a greater exposure to it in my portfolio. If there is a stronger element of uncertainty, then, I would trim my exposure. It is one way I manage risk. So, this was why I moved my investment in Marco Polo Marine from the "growth and income" section of my pyramid upwards to the narrower "growth" section. We could even suggest that it has a speculative element with its purchase of a jack up rig scheduled for delivery in December 2015. So, logically, it had to become a smaller investment for me.

Q6. On Starbucks, Bangkok and bras.

A6. I was told by a female reader who flashed the "V" sign at me that she was not flashing a victory sign at all. I misunderstood her. She was trying to tell me that I made an inappropriate comment about saving money. Which comment was that?

I made a joke about using money saved from not buying Starbucks coffee to fly to Bangkok to buy cheap and good bras. To all the ladies who were wounded by this joke which was apparently in very bad taste, my most sincere apology.

You can tell that I am truly remorseful because I have not sent out an email to the media stating that I had sacrificed myself to raise awareness of how we could save money and how ladies could use the money saved to buy cheap bras in Bangkok to save more money. Sounds Royt? ;p

Q7. On CMT.

A7. CMT is very well run. There is no question about it. At $1.97 per unit, we are looking at an annualised yield of 5.2%. It is also trading at a premium of 15% to its NAV of $1.71. "I would sooner buy a great business at a fair price than a fair business at a great price." Warren Buffett. To me, buying REITs is almost like buying real estate. I won't want to pay more than the NAV. At NAV, perhaps, it would be good to get some, everything else remaining the same.

Finally, if you went for the event and if you want to find out about the stuff that I could have shared if I had more time, contact me to ask for my presentation slides. I will tell you how to get the slides. Then, use the slides as a guide and search for the relevant blog posts in my blog. It will probably be similar to reading an e-book but with a bit more work required on your part. ;p

More Q&A found in the comments section of this related post: Invest X Congress: Closing thoughts.

Yummy, yum, yum lunch at $2.20!

What? AK's lunch costs more than $1.00?

Shocked? Stunned? Surprised?

I took these photos before I started eating:

Egg tofu, carrots, potato, taupok, stewed cabbage, spring onions and anchovies on steamed rice.

Looks good? A bit too oily but that is to be expected from food bought from canteens.

Forgot to bring lunch to work today. Left it on the kitchen table. Growing forgetful in my old age. So, decided to pack food from the canteen.

I guess $2.20 is not too bad.

Now, my taste buds feel a bit tingly. Must be from the MSG.

What? No drinks? Of course, I had a drink. Water from the water fountain at work is free.

Related post:
Yummy, yum, yum (60c) breakfast.

Atas Sunday breakfast and some nagging.

Too early. What? Woke up at 7am today, a Sunday morning. Too early. Yawn.

I tried to go back to sleep but it is a state of "I am tired and want to sleep but not tired enough to really fall asleep now". I don't know if you know what I am talking about but it is frustrating.

Anyway, I woke up early to have breakfast with my family. We went to town for breakfast and to celebrate Father's Day.

Here are a few photos of my breakfast today:

Broccoli, cauliflower, waffle, hashbrown, soon kueh, carrot cake and baked beans.

Porridge with peanuts, spring onion and shallots.

Fruit yogurt from Germany.

A bit different from the usual stuff you would expect me to blog about, I guess. Atas or not? Surprise!

I gave my dad a big red packet, the second one this year. First one was for his birthday earlier in the year. I gave my mom a big red packet for Mother's Day too. However, no matter how big the red packets are, they will never be enough for all that they have given me.

I also gave my dad a bit (or it could have felt like a lot to him) of nagging about being prudent with money. Personal finance is not one of his strengths. Well, I like to think that I nag because I care. That was what my mom used to tell me when I was a boy. Mom's fault. LOL.

OK, I am going to try going back to sleep. Yawn.

Enjoy your Sunday!

Related post:
Passive income: A higher purpose.

Invest X Congress: Closing thoughts and photos.

My opinion? I think I could have done better.

After my maiden attempt, I feel that I am a better blogger than I am a public speaker. I think there were many things that I missed out on delivering but I guess it worked out in the end because I went overtime even though I truncated my presentation.


Courtesy of Song Stonecold. Read his guest blog: here.

However, I take comfort in the fact that my blog is available for reading twenty four seven. So, if anyone in the audience would like to follow up on what I said during my segment at the event, they could do so anytime they like. Remember though, I am only talking to myself here in my blog. Also, don't take what I say as the gospel truth.

If I offended anyone at the event, please accept my apologies. Sometimes, jokes have a way of being misunderstood, especially when we cannot read the facial expressions of the speaker. My fault. I mean how could you have read my facial expressions? Oh, a very big "sorry" to the video guy. I waved him away and hit his camera on the way in. Lucky the video cam wasn't damaged. -.-"

If I disappointed anyone, I crave your indulgence. I promise to try to do better in future (if I do actually do something like this again). To people who sent me photos of male Korean actors imagining I look like them, I am afraid I won't be able to do better. Plastic surgery is painful in more ways than one. -.-"

A big "thank you" to everyone who turned up at the event and also a big "thank you" to everyone who could not attend but gave me encouragement anyway. I appreciate the kindness.

Also, the organisers passed me a bag of books which they said a reader wanted to give to me:

I don't know who you are but thank you for the kind gesture. I really appreciate it. Now, to brush up on my Chinese. I only got a B3 for my "O" Level Chinese. -.-"

The journey towards financial freedom is made less dreary when we have good company. :)

Related post:
Invest X Congress: Update and reminder.

New:
Invest X Congress: Q&A.

"Return our CPF" protest? What about a contest?

All of us have beliefs that we hold dear. I am sure you have your own beliefs too. Before I go on, I would like to share a reply I wrote to a reader recently:

Hi J,

We are in the territory of beliefs now. And when it is a matter of beliefs and opinions, it is hard to say who is right or wrong. In fact, it is impossible. It all depends on the philosophy that we subscribe to.

This is why a democracy is such a wonderful system. The majority decides and the minority has to follow. However, this is also why a democracy is such a terrible system. "Tyranny of the majority"?

This "tyranny" can be dealt with if we listen to the minority and see how we could accommodate their needs. Being a multi-racial society, we have done it before, I am sure you know. So, perhaps, we could try to do it with the CPF too.

To be frank, I like the system as it is now but I do understand that there are genuine cases of hardship out there. Perhaps, more help could be given to these people without letting them touch their CPF savings (if any). It is really an accounting entry if we do this. Tax payers are still paying for the financial assistance. Difference is that tax payers are paying for this sooner than later.

I think tweaking the system by letting disgruntled elderly CPF members who genuinely have the need to tap into their CPF savings will go some way to quelling the voices of discontent. Education should go hand in hand with this. Hopefully, these voices will become distant over time.

I agree that there will always be people who are irresponsible, stubborn and even foolish. We cannot kick them out of the country, can we? Since we cannot kick them out, we will have to try to fit them in, no matter how difficult the challenge. That is the job of the elected government. This is my belief.

Best wishes,
AK

We can have discussions and we will most likely disagree since we will most likely hold on to our own beliefs. There will be debates where there will be no winners. There will be contests without victors.

Putting our own beliefs aside, the fact is that we are all on the same boat. A peaceful and harmonious Singapore is to our common benefit. If this is our common belief, then, we should all consider giving up some ground. So, before we say anything else, think about this. Can we soften our stance? Can we reach some common ground for the common good?

Related post:
An(other) open letter to the Prime Minister.

Do the right things and we could transform our lives.

Some of us have advantages in life. Some of us have disadvantages in life. However, if we all do the right things, the right things will have a higher chance of happening to us.

I received many encouraging emails as well as the not so encouraging ones in the wake of my many recent blog posts on the "Return our CPF" protest in Hong Lim Park.

To readers who wrote to me to ignore negative comments, I would generally say that I will still try to reach out to those on the other side of the fence because I believe that if it is a job worth doing, it is worth doing well. They are fellow Singaporeans too. Of course, whether I succeed in reaching out to them is something I don't know.

I would like to share a thoughtful and well-written letter sent to me by a young reader. I find it very encouraging and it could also inspire other young readers. Note that he is quite candid about having an advantage in life but what we should take note of is how he decided to make important changes to the way he deals with money matters as well as how he took decisive steps to improve financial literacy which has produced a positive outcome for him.

I hope you find this heartening as much as I did:

Hi AK,

I wrote this email to you directly because the negative comments from the general public has made me do so.
 

I followed your blog since the beginning of last year and your blog posts have provided me with so many insights that my life has changed ever since. From a spendthrift student since then, I have transformed into a working adult who can live frugally, and enjoyably. Never have I ever thought that one could achieve both of these aspects concurrently. For that, I owe you a big "thank you".

Some people just do not plan ahead or think far enough. What you have shown us is a result of financial prudence which can be simplified into an income statement and statement of changes in equity. Revenue - expenses = net income (exclude taxes and lumping interest into overall expenses) and how much of the remaining income is saved and invested. Despite the revenue portion could be something harder to stretch at first, but the other variables like expenses and savings can actually be adjusted to maximise the remaining income available for investments. 

Being someone who is slightly more fortunate as my family owns a business, my monthly allowance is paid in the form of salary expense from it. As a result , a portion of this amount is being saved into my CPF indefinitely on top of my lavish expenditures. I cannot imagine what could have happened if I was handed over all the money in the past. I believe I would have most likely squandered them off too. Above all, it yields me a 2.5% and 4% return in my OA and SA respectively. Now, I am following after your footsteps and have been religiously contributing small amounts into my SRS for the tax benefits and my war chest accumulating efforts.

Fortunately, at the current juncture, at the age of 26, my financial intelligence has levelled up significantly. Now, my net worth excluding CPF has recently grown to 6 figures. This amount though small and could have only been your 1 year's dividend income, however, this means a lot to me. As 50% of this amount is in dividend paying value stocks in blue chips and reits where my portfolio is currently yielding an average 6% yield, this means that I have created $3000 in passive income per year and better still, it doesn't stop here since I will be generating more income and my accumulated reserve is large enough to purchase more stocks should the unexpected occur. This is something which I am excited about because in a few years time, the amount from my OA + a little top up in cash (without liquidating my stocks) should be able to let me purchase a HDB flat very comfortably with minimal debt obligations. And hopefully the rule of 15 still gives a green light to pull my trigger by then ( Source ASSI ;) )
 

Most importantly, I do not need to depend on my parents to pay for my home. 

 

So much about myself, let's get back to my original intention of writing to you. The people who irritates me are the people who deliberately go against the system without a reasonable stand point. Just by reading what they have written in your comments section, I know they are confused. Worse, they deny and insist on playing the blame game. As much as I feel sad for them and would like to help them see the light, however, for some who have been so used to hating the system, this could be more than a challenging feat. Even if its possible, the time and effort spent trying to "redeem" them might be counter-intuitive. If I were in your shoes, I would simply thank them for their comments and move on. Ultimately, they have a choice in what they read. If going against the system is their pagan, there's not much you can control.

Because, in my perspective as a reader, he is just a waste of resource since he is competing with me and other readers for your time and effort to reply their comments where this time could be otherwise, be used to write another blog post, where like-minded people like us who are rational and genuinely interested in adopting a second level thinking of looking at things could learn from. 

 

I will end off by saying thank you again and look forward to reading your many posts to come. Its a shame that I wouldn't be able to attend Invest X Congress this coming Saturday since I will be overseas. 

Understand that this is your first public appearance, all the best ahead!

Warmest Regards,

PN

Having advantages in life helps but:

"Time is key to building your financial security."
Suze Orman.

Make good use of it and be amply rewarded.

 

Related post:
Journey to financial freedom is not a race.

 "Each of us have our own circumstances and priorities. What matters is that we achieve the goal of financial freedom. Some might get there faster. Some might be a bit slower. Everyone who arrives at the destination is a winner. There are no losers at the end point." AK

 

Invest X Congress: Update and reminder.

I was informed that the tickets to the event are sold out. All 400 tickets sold.

To those who managed to get a ticket, please don't forget our appointment. See you soon.

Related post:
AK's first public appearance.

An(other) open letter to the Prime Minister.

If we are prepared to divorce our wife, we can kick our mother in law in the butt. ;p

If we are prepared to renounce our Singapore citizenship, then, we can kick the CPF in the butt. LOL.

That is always an option that disgruntled CPF members who want their CPF funds released in full can consider, some would say.

They say that we cannot have our cake and eat it too. Now, I think Roy et. al. are trying to have their cake and eat it too by pushing for CPF funds to be returned in full to the public without having to give up their Singapore citizenship. Could this happen? It could possibly happen with a change in our country's leadership. For me, it is a scary thought as I feel that the CPF now is more good than bad.

However, I have faith that as long as there is a sensible silent majority, as long as Singapore is a democracy, the system now will most likely stay intact. Crossing fingers.

Writing open letters to the Prime Minister seems to be the thing to do now and AK will also write one saying what AK would do if he were in government.

Dear Prime Minister,

1. Without deviating from the philosophy that is the bedrock of the system, power up the system to provide higher returns. Singapore is a very expensive country to live in and also to retire in. It is about helping CPF members feel more secure about meeting their retirement needs, a hot topic for a while now. Powering up the returns on the first $60K in the OA and SA was something you did before. Now, powering it up a bit more will definitely help.

2. Inject some compassion into the system while staying level headed. There are those who are irresponsible, who had advantages but squandered them. There are also those who suffer through no fault of their own. Applications by these CPF members to tap into their CPF savings could be given consideration.

Allow micro-tapping if it is going to help meet these members' needs in life. Explain to them the consequences of micro-tapping over the longer term and try to find better and socially more responsible solutions to their problems so that they are resolved permanently.

3. Step up efforts to educate the public on how the CPF can work for them. Let them know what they can do to make a secure retirement happen with their CPF savings as a cornerstone of their financial portfolio. It is about the public helping the CPF to help themselves.

Knowledge gives everyone power while the lack of knowledge gives some amongst us power. This will give a new meaning to the phrase "power to the people" which Roy Ngerng et. al. are using now to rally support. 

Once financial literacy is widespread amongst the people, then, the people will truly have power over their financial health. Only then, will they be truly powerful.

Constant wide reaching education done well is the most important measure to take and will empower our people.

Respectfully,
AK

Related posts:
1. We do a better job than the CPF.
2. Achieving level one financial security.

We do better managing our savings than the CPF does!

In the latest issue of The EDGE, there is a very good 2 page write up by Kelvin Tan on the current CPF rate debate. 

For anyone who would like to be better informed, I would suggest getting a copy:

"It may sound easy but beating the OA's guaranteed annual interest rate of 2.5% is by no means an effortless task for CPF members who are looking to grow their savings under the CPFIS.

"Indeed, only 15% of CPF members who sold their CPFIS-OA investments for FY2013 ended Sep 30 made profits in excess of the OA interest rate of 2.5%... 

"42% of these CPFIS-OA investors actually incurred losses in FY2013...

"While it makes sense for savvy long-term investors to invest their excess OA money, some financial advisers advise their clients not to take any risk with their SA money which is already earning decent returns of 4% to 5% a year.

"For risk averse CPF members... they could consider transferring OA to SA...

"Conservative CPF members can also use cash to top up their SA to the prevailing minimum sum ... (and) could also enjoy a tax relief of up to $7,000 per calendar year.





"(Singaporeans) should look at their CPF SA like the bond portion of their overall portfolio...

"In their retiring years, they should look at their CPF Life as their annuity investment, giving them a monthly amount for life.

"I am happy with CPF Life, an annuity that grows at 4% per annum and pays me $1,200 a month from age 65 until my demise. 

"The annuity will form the income floor of my monthly income needs and will help me hedge my longevity risk," says Tan from Providend.




"Singaporeans who generally have little in their CPF accounts should start saving more, do early retirement planning and invest prudently with a long term view to growing their nest eggs rather than demand higher interest rates on their CPF savings."

There are voices of reason which, unfortunately, I think, will not reach the ears of people who need to hear them most. 

With emotions running high, these words could very well fall on deaf ears too.

"As for Singaporeans who have highlighted that other countries such as Malaysia and India pay higher interests in similar pension schemes, my view is that they forget that our Singapore dollar is rated AAA and has appreciated against the currencies of many other countries," William Cai, GYC Financial Advisor. 

Would we be rather making Singapore dollars and receiving 4% per annum in risk free rate or be making Ringgit or Rupees and receiving 6% instead? 




What is our choice?

Update (27 July 2014):

Source: www.cpf.gov.sg



Related posts:
1. "Return our CPF" protest.
2. Free e-book: Retiring before 60 is not a dream.

"Return our CPF" protest in Hong Lim Park (UPDATED).

UPDATE (12-12-2016).

State pension schemes in a number of countries are under tremendous stress. We try to look after our old people but in a sustainable way.

A very down to earth message from a reader, JQ, to ASSI's readers:

"Think of CPF as money that can be used for meaningful purpose than a windfall that you can splurge. If you looked at the flip side, for CPF, you contribute a certain amount, your companies topping up on top of your contribution and the government gives you a nice interest on it, so now whose money is it anyway? entirely yours?" JQ
---------------------------
Hi JQ,

I liked a certain female politician from the opposition but when she shouted "Whose money is it, anyway?" during her rally, I dropped her from my favorite list.

After so many years blogging about financial matters, CPF or not, there is one group of people I have given up entirely. These are people who are ignorant, opinionated and stubborn. 

If they are rich, they will manage somehow. If they are poor, well, I hope they win the lottery.

AK 
12-12-2016
----------------------
Anyone who is in favour of the CPF would have to be very brave to speak up in Hong Lim Park today. Some netizens who were at the protest estimated the turnout to be between 3000 to 6000 people! This is truly mind boggling.

The speakers included Tan Kin Lian, Kenneth Jeyaratnam and the now very famous Roy Ngerng. I checked twice to make sure I got his surname right.

There is a whole lot of unhappiness. There is a whole lot of distrust. There is a whole lot of work for the government to do to diffuse this time bomb. 

Yes, I feel that it is a time bomb.

If not handled sensitively and in a timely manner, it could turn out badly. I am sure no matter whether we are for or against the CPF, we do not wish for the country to sink into anarchy. Think Thailand.

Here are some photos netizens shared on FB:

Read a rather sterile report by Channel NewsAsia: here.

"... distrust is something so emotionally charged that it is guided by its own perilous logic and propelled by its own alarming momentum. It has already widened the original disconnect between the PAP and the people into an almost unbridgeable chasm." Catherine Lim.

Read the full impassioned plea by Catherine Lim: here.

Regular readers know what I think of the CPF and how I believe it could work for us. 

The CPF is a good tool if we know how to make use of it.

However, if people no longer trust the system, then, it is almost impossible to even make them listen.

Related post:
Achieving level one financial security.

Building an income portfolio is like building a house.

After blogging for so many years, I have received a fair number of emails and comments. 

I have no way of telling how many emails I have received in total thus far but BlogSpot makes it easy to see how many comments have been published.

As I make an effort to reply to all emails and comments, half of the comments published should be my replies. 

I have, by now, received more than 10,000 comments from readers.





As I blog about money management and investing for income frequently, it is no surprise that I should receive emails from readers with questions related to these topics. 

Of course, in my replies, I am mindful to tell readers that I am not a financial advisor and I am just sharing what has worked for me. 

I always say that, in my blog, I am just talking to myself.





Although I have received enthusiastic emails from readers both young and old who were thinking of investing for income for a more secure future, I have also received some which had more pessimistic tones although they were willing to give income investing a try.

Even though it would take a bit more work to encourage these people, I was happy because the writers, despite the pessimism and, maybe, scepticism, decided to take that next step in an effort to possibly improve their lives.

As the saying goes, we can lead horses to water but we cannot make them drink. 

If a horse which was suspicious at first decided to taste the water, we should be happy. 

The proof is in the pudding and, in all likelihood, the horse would then drink.





Today, I received a letter from an institution which I invested money in many years ago. 

It is one of those investments that I almost forget that I have. 

I am reminded once a year of its existence when it is time to receive dividends. 

I remember saying this about Hock Lian Seng as well.

You will see that the amount is not big but I have had this investment for so many years. 

So, it adds up. 

The same goes with many of my other investments.

Although how much we receive from each investment is important, how persistent we are in building our income generating portfolio is even more important.





There are many analogies which I like to use when I talk to people about investing and regular readers are probably familiar with the one about grasshoppers and ants. 

The one I am going to share today is about building a house. 

Building an income generating portfolio is like building a house.

When we make our first investment with the intention to build an income generating portfolio, we have taken the first step in building this metaphorical house. 





Over time, as we make more investments, we are putting in the floors, the walls, the windows, the doors and other things which make the house functional.

When the house is complete, our mission is accomplished. 

We could choose to move in and enjoy the house as it is or continue to add features to make it more comfortable or, even, luxurious. 

We might want to put in a gazebo or, maybe, even a swimming pool, for examples.





What we want in a house is quite subjective. 

Similarly, how much we want in passive income will differ from person to person. 

However, what is not different is the need for time in order to build a dream house, to have a portfolio that generates income which we feel is sufficient for our needs and, maybe, wants.

The Chinese people have a saying: 

万丈高楼平地起

Even skyscrapers start from the ground up. 

Don't ask me about the basements though.

For regular people, our first investment for income might not yield much but make more investments over time and we will see how it all adds up. 





Patience is required.

Like they say, all in good time. 

However, time can only be good for us if we do the right things.

...





Related posts:
1. To be a happy peasant.
2. Save 100% of take home pay.

Free medical insurance in our old age?

On 14 December 2013, I blogged about how we could possibly get free medical insurance in Singapore. 

I shared my own experience and how things have worked for me. 

The beauty about the method I shared is that it is risk free and, therefore, stress free.

You don't know what I am talking about? 

Then, you might want to read this first:
How to get free medical insurance in Singapore?






Of course, there is some concern with how the annual premium which we pay for our H&S (hospitalisation and surgical) insurance will increase as we grow older. 

This means that the cost of coverage will become more expensive over the years with annual cost exceeding $2,000 as we age into our 60s in some cases.

This is one reason why I am quite happy to have the government increase the limit for the Medisave Account (CPF-MA) which pays 4% per annum, risk free. 

Having more money in my CPF-MA means receiving more in interest payment.

Last year, I received $1,760.35 in interest payment for money in my CPF-MA. 

The year before that, I received $1,654.48. 

That is an increase of more than $100. 

However, withdrawal to pay for my H&S insurance remained at $665.00. 

So, I have some surplus.





If the MA ceiling is raised year after year, I should have more surplus in my MA year after year too. 

This means that funds in my MA earn more interest to pay for the higher insurance premium that is bound to come as I enter the next age bracket and the next and so on.

So, the argument that even this method will not ensure that we get "free" medical insurance in our golden years is weakened. 

In my 60s, I would probably have to pay more than $2,000 annually for my H&S insurance. 

Last year, I already received $1,760.35 in interest payment. 

With the MA's ceiling raised annually, could I see more than $2,000 in interest payment eventually? 

I cannot say for sure but, everything else remaining equal, I think so.





Of course, by having the maximum allowed in my MA now while I am younger, I will enjoy plenty of surplus as I receive the maximum in interest payment while paying relatively lesser for my H&S insurance. 

The surplus amounts to a few hundred dollars each year, in fact. 

It is like receiving more money now to pay for the higher cost of insurance in our old age.

If you worry about the high cost of health care in Singapore, you should get yourself covered with a good H&S insurance policy. 

If you worry about the cost of insurance escalating as you age, you might want to max out your MA, letting time and the government help you accumulate the funds to give you free medical insurance that so many say we do not have in Singapore.





Related post:
Enhanced Incomeshield (H&S) for my mom.

Free "e-book": Don't depend on wage increases for higher income (UPDATED in 2018).

I am sure you have read the news and it is sobering. 

Wages are increasing more slowly and actually if our wages did increase, we should count ourselves fortunate. 

Some people I know are not seeing any increase in wages.

One of the things we must never take for granted is that wages will always increase year after year. 

There will be years when we might not get any increase. 

There will be years when we might have to take a pay cut. 





What? You have never experienced a pay cut before? 

Lucky you.

What could be worse than not getting any wage increase? 

Getting a pay cut, of course. 

What could be worse than that? 

Retrenchment! 

What could make that worse? 

To see inflation marching on. 

That would make everything a double whammy.





What to do? Take on another job? 

I guess we would have to do that if we didn't have a choice and if we could get another job. 

There would be bills that still need to be paid, wouldn't there? 

There would be expenses that could not be avoided. 

It could get very depressing but human beings have the tendency to feel invincible when things are going swimmingly their way, never preparing for how things could go wrong.

Of course, if we had money stashed away, it could lessen the pain. 

This is why an emergency fund is important. 

Having said this, even emergency funds could get depleted. 

So, for double protection, we should own assets which consistently generate income. 

Indeed, this is something that should benefit all of us who want a secure financial future.

These are topics I have blogged about often enough.

So, here are a few chapters in another "e-book" which you might be interested in reading. 





Don't depend on wage increases for higher income:


Chapter One

People who depend on their monthly wages just to get by are wage slaves. 

Don't be a wage slave.

See: Freedom from wage slavery.





Chapter Two

We need to put aside a meaningful emergency fund. 

This is probably the most basic thing we must do to have a measure of financial security.

See: A meaningful emergency fund is important.





Chapter Three

In order to own income producing assets, we need to have money. How do we have money?

See: The first step to becoming richer.

Chapter Four

We always hear about how we should start investing to grow our wealth as soon as possible. 

Starting young would give us more time to grow our wealth.

See: Retiring a millionaire?






Chapter Five

Remember, however, that it is never too late to learn how to invest for income. 

The best time to start is always "now".

See: Retirement adequacy for late bloomers.





Chapter Six

It is also important to always have a war chest ready. 

In good times, I would never ever be 100% invested. Why?

See: Ready to come out on top from a recession?





Chapter Seven

As we embark on our journey towards greater financial security, try to involve everyone in the family. 

Mutual understanding and support will make the journey perhaps more enjoyable and, hopefully, easier.

See: Achieving financial freedom is a family affair.





If you are new to my blog, I hope that this "e-book" has inspired you. 

If you are a regular reader, you might want to share this with people you care about, especially people whom you want to journey towards financial freedom together with.