Term life insurance: Why buy term? How big a sum should I buy? How long a term should it be? How much does it cost?

A reader shares his wisdom:

Before we discuss about how much insurance to get, we must first understand what insurance is all about. Insurance is 

(1) a risk management tool 

(2) to transfer the financial risk of catastrophic events to the insurer 

(3) in exchange for a small sum of premiums.

In light of the above definition, I usually recommend people to stay away from whole life insurance and go for term-life instead. Insurance, after all, is an excellent risk management tool but a poor investment vehicle, IMHO.

How much life insurance should one get? 

There's many factors to consider. One of that will be your financial commitments. Say, you are a fresh graduate and no dependants at all. Technically, you only need sufficient life insurance to cover for TPD and CI. 

The required sum assured will still be high (up to S$500,000) because a young disabled man in his 20s will need lots of $$$ for care and support until he passes on. Take note that expected longevity in SG is about 82 for male and 85 for females.

An additional point to note is that when buying term-life insurance, I would suggest my friends to cap the term up to retirement age (currently 62 years old).

The reason is simple: Insurance loses it cost effectiveness after a person is in his 60s and 70s. The cost of life insurance will rise exponentially because the probability of dying also rises exponentially.

This is one of the main reasons why the Dependent Protection Scheme (DPS) caps at age 60. Getting life insurance beyond that age is no longer value for money.

When you are in your 60s, life insurance should no longer be needed because your financial commitments should be at a minimum. This means no debt, no dependants and no major financial expenditures.

People in this life-stage should be focusing on retirement adequacy.

Btw disclaimer ah, I am just talking out loud to myself in the above posts. Please visit a professional planner (not insurance agent) if you want sound and constructive $$$ advice.

I bought my insurances when I was 26 years old.

I paid $100/month for $1M term life and $250K major CI. You can use this a base for comparison.

For fresh graduate earning a market rate of $3K/month. $50/month can "smelly-smelly" get them $500K insurance coverage if they go for term-life insurance.

Friends, not everything in life needs insurance one. Ponder and chew on this point.




Get adequate insurance where it matters. Don't overpay for insurance and we do not need insurance for everything under the sun. Words of wisdom.

Note: Author would like to remain unnamed.

Related posts:
1. How much term life insurance should fresh grad have?
2. In my 40s, married with kids? What would I do?
3. Achieving level 1 financial security for Singaporeans.

No free lunch (or dinner) but what about mooncakes?

Recently, I had a mission in town and, so, I had to have an "atas" dinner in town:

Rice with stir fried vegetables, chye poh egg and sweet sour fish.

Price? $4.00. Not too bad. There is less expensive food in town too, I am glad to say.

Now, what was the mission I was on? I had to collect mooncakes and since so many people are putting up photos of mooncakes and blogging about them, let me join in the fun.

Stacked them up in the back seat of the car.

People buying the mooncakes or buying the carrier, I wonder?

I am not really a mooncake person these days and pretty lucky I am not too. They are so expensive (and unhealthy)! On that note,

HAPPY MID-AUTUMN FESTIVAL!

It is happening on 8 September (Monday). Just have to hope that the skies are clear enough to see the moon then. Crossing fingers.

Related post:
Sambal mooncakes!

Investing for income: An important element (UPDATED: BUFFETT ON BUYING HIS FIRST STOCK.)

Wah! So much mail from the broker! 

AK must be trading a lot!


I receive quite a few emails from readers. 

Among them, some are encouraging and some are depressing. 

I usually share the more encouraging ones here in my blog but not the depressing ones. 

No point, right?





Well, in case you are wondering, the depressing ones are usually along the line of how they make so little money in their day jobs and how they cannot save enough. 

So, they can't put much money into investments and for those who did, they get so little dividends that it seems meaningless.

What do I have to say in reply?





It takes time to build a strong income producing portfolio. 

It is not going to happen overnight. 

It is usually not glamorous. 

It is definitely not exciting like promises of fast money.






So, what is needed? 

Time.

Now, you have an idea what those envelopes contained.

Readers who have followed me for a while and who have put some of my strategies into action would be able to attest to how their financial health has improved if they have been disciplined.

With extra money coming in regularly, how could it not be a good thing?





A reader told me how his passive income has improved from just a two figure sum so many years ago to the five figure sum it is today. 

Impressed? 

I know I am.

So, for those who are already on the path to financial freedom, stay the course. 

For those who are just starting, remember that it is always toughest at the start.





Related posts:
1. If we are not rich, don't act rich.
2. Do the right things and we could transform our lives.
3. Seven steps to creating passive income from stocks.
4. The best insurance to have in life.
5. First REIT: AK reveals size of investment.

How to size our more speculative positions?

I have shared before that it is OK to gamble a bit once in a while. 

I am Chinese and gambling is in my blood. 

It's not my fault that I am born Chinese.





So, I have nothing against speculation per se. 

1. As long as speculators know that what they are doing is speculation, 

2. As long as they are mindful of the possible consequences 

and 

3. As long as they are able to take the losses comfortably if things go wrong, there is nothing really wrong with speculation, is there?

http://singaporeanstocksinvestor.blogspot.sg/2014/08/accordia-golf-trust-hole-in-one.html

Well, I would say please keep speculative positions small. 

Of course, how small it is would depend on

1. our risk appetite 

and 

2. our ability absorb losses. 

2 to 3% of our portfolio size for some and 10% for others? 

Sounds rather arbitrary, doesn't it?





When a reader asked me for a "formula" to help quantify "small", what did I say?

I told him it would have to be an amount I can recover quickly within a year or less in case of a total loss. 

This measure has always given me peace of mind and he said it is helpful to him. 

So, I thought I should share this.





Of course, if I should have more than one speculative position, the total exposure should not exceed the amount I think I could recover within a year. 

It is a bit like having one or five credit cards from the same bank. 

The credit limit doesn't increase with each additional card issued.





Like with so many things in my life now, it is about avoiding stressful situations where possible and not losing more money than I can recoup in a relatively short time works for me.

Always ask "to what extent can I afford to be completely wrong?"

Once we have the answer to this question, we will know how to size our more speculative positions.



Related posts:
1. Motivations and methods in investing.
2. How to make recovery from losses easier?
3. To be richer, be comfortable with being invested.

Croesus Retail Trust: Acquisition of ONE'S MALL.

I had expected some form of equity fund raising and although I was hoping that it would be a rights issue, I was not surprised that a private placement has been chosen instead. It is more expeditious, after all.

However, it does not mean that I am happy about it since, in all likelihood, I won't be one of those "other investors" who would be offered new units in the Trust to be priced between 89c and 92c per unit. What? Unit price was about $1.00 when you last looked? Wow! 89c would be a steal, wouldn't it? Bummer.

Anyway, the acquisition of the new (freehold) mall, ONE'S MALL, in Greater Tokyo will cost about S$132.5 million.

The private placement is expected to raise S$70.2 million to S$72.6 million. The Trust will also be drawing upon a Japanese local bank loan for most of the shortfall (equivalent to S$74.1 million) at an interest rate of 1.29% per annum. I like the natural hedge that comes with this and also the very low interest rate.

A much smaller amount of S$6 million will be drawn from the Fixed Rate Notes issued in January this year. To utilise funds from the Fixed Rate Notes minimally is a good move as it attracts a higher interest rate of 4.6% and it is also denominated in S$. So, there will be some FOREX risk but it will be miniscule here with only S$6 million drawn.

Overall, income distribution per unit (DPU) is not expected to receive much of a boost with this acquisition because it is half funded by the private placement. Expect an increase of only 0.2% in DPU. Expect NAV/unit to increase by only 0.1%.

What about gearing level? As the purchase is about half funded by the private placement, gearing level stays more or less unchanged, reducing from 51.7% to 50.5%.

Nothing to be too excited about.

See announcement: here and here.

Related post:
Croesus Retail Trust: 4Q FY2014 DPU improved.

If our income is $3K a month, we could get a 6.6% raise!

People sometimes wonder if it takes a lot of time to prepare food to bring to work. It surprises people to find out that actually it could take very little time. It is very easy to cook oatmeal and to make sandwiches, for examples.

It could take 15 or 20 minutes to make some sandwiches to last us for a few days each time we do it. Therefore, the time taken to prepare meals on a per meal basis is actually very little. (See related post #2.)

Oatmeal takes very little time to prepare too. (See related post #1.)

So, join me for some home made lunch?

What's this?

Bread, cheese, lettuce and ham. Yummy!

Evidence of me chomping away.

Cost? Probably $1.00 or a bit more.

Whenever I ask people to try making their own lunch to bring to work, a common reason for not even trying is that they don't have the time or energy to do it.

Well, I understand that it is more convenient to simply buy cooked food outside but there is always a price to pay for convenience. We might want to ask if the price we pay for convenience is too high.

High, higher, highest. It is all relative, isn't it? So, if our gross salary is $3,000 a month and we spend $450 a month eating out at work (15% of our gross income), is that too high? I don't know about you but it seems like a lot to me.

Of course, for someone who makes $10,000 a month, that same $450 monthly spending on food at work is more manageable, everything else remaining equal.

All our circumstances are probably different and saving a couple of hundred dollars a month might not look like much to some people but to the vast majority of working Singaporeans, I believe that it does make a difference.

A dollar saved is a dollar earned and, for someone who makes $3,000 a month, if he could save an extra $200 each month, it is like getting a 6.6% salary increment each month. Is that not good to have?

Related posts:
1. It takes only a few minutes to cook oatmeal.
2. Prepare 6 gourmet sandwiches at one go.

How much term life insurance should a fresh graduate have?

I don't know if it is a trait of Asian families but it seems that there are certain topics related to money which are taboo. 

I know my family generally don't like to talk about death and insurance, for example. Maybe, it is considered inauspicious but I don't care. I will talk if I think it is necessary because I do care.

When a reader sent me an email with regards to one of my blog posts about what I think young graduates might want to do to get their personal finances in order before thinking about investing money in the stock market, I said the same thing.

As we grow older, our parents grow older too. They will retire one day and might depend on us for financial support. Buying insurance on our life is for our dependents. So, it is important to talk to our parents about insurance and what we are doing for them if they should be dependent on us. They have to know.

In that blog post the reader referred to, point number 1 was:

1. Buy a term policy. Very important if we have parents or other dependents to care for. How much should the coverage be? It is up to you but I feel that $500K is probably more than adequate for most. (See related post number 1 at the end of this blog post for the full article.)

He wondered why I thought $500,000 was probably an adequate amount for a start? There is a very simple reason.

In case the insured (i.e. the fresh graduate) should meet with an untimely demise, each parent would get $250,000. 

If the parents were financially prudent, they would use the money to buy an annuity each. There could be a 5 year or 10 year accumulation period but if the annuities were worth their salt, they could provide a monthly income of $2,000 or more for each parent. 

Sounds good?

This is how that $500,000 paid out by the term life policy should be utilised, in my opinion.

Unfortunately, not everyone is financially prudent. $500,000 may look like a big amount of money but it could disappear very quickly in the hands of the less prudent. 

Then, there are people who are at the other extreme who might just put all the money in a fixed deposit or a few which is better than squandering away the money but it is still far from ideal.

So, although possibly losing their child is not something parents want to think or talk about, we have to talk to them about it at least once and tell them what they should do with the money paid out by the insurance company if the bad thing should happen. 

I believe that talking about it will ultimately give everyone a peace of mind.

The sooner we do it, the better.

Related posts:
1. Take steps towards financial security.
2. Financial freedom is a family affair.
3. An annuity proposal: A case study.
4. Free medical insurance in our old age.
5. What is our attitude towards having children?

Accordia Golf Trust: A hole in one.

I bought more this morning when the counter broke out of resistance:



In the afternoon, I closed my positions:

What if the unit price were to go higher? 

I would congratulate those who are still holding.




Won't I feel any regret? 

I might complain about it a bit but it would probably be in jest. 

What? 

Why won't I feel any remorse?




I always try to remember my motivation whenever I initiate a position. 

If the outcome matches my motivation, that is good enough for me.

Why should we feel sad if things turned out well in the way we had hoped they would?




Related posts:
1. Accordia Golf Trust: Blood in the golf course.
2. Motivations and methods in investing.

Accordia Golf Trust: Blood in the golf course.

Regular readers know that I do a bit of trading and that I like to look when there is blood in the streets. What about blood in golf courses? I am impartial.

Just a dash of technical analysis and a dose of luck.

Immediate resistance is at 80c. If that should break, the next resistance levels are at 82c and 84c.

Croesus Retail Trust: 4Q FY2014 DPU improved as expected.

In May this year, I made an estimate on Croesus Retail Trust's possible forward yield. That was when DPU seemingly took a dip after the purchase of 2 malls.

At the time, I said that:

In the quarter April to June 2014, the 2 newly acquired malls will contribute a full quarter of income. This will bump up quarterly DPU. Annualising that DPU will more accurately reflect the annual DPU and hence the distribution yield of the Trust.

Of course, I was really staring hard into my schizophrenic bowling ball and hoping that it would cooperate when I also said:

With distribution income for January to March 2014 at JPY 619.78 million which gives us a DPU of 1.76c, an additional NPI of JPY 144.4 million (JPY 72.2 million x 2) will have some positive impact on DPU for the quarter April to June 2014. Even assuming that costs go up by some JPY 50 million (additional management fees and financial costs), we would still be looking at some additional JPY 94 million which can be distributed to unit holders. This is an increase of about 15%. So, we are looking at a DPU of possibly 2.024c.

Well, 4Q FY2014 DPU came in at 2.00c. My bowling ball was a bit off by about 1.2%. OK, no spa treatment (i.e. polishing) for it for the next two months!

To be fair, the two newly acquired properties began contributing their first full quarter of income when higher consumption taxes were introduced in Japan on 1 April 2014. Overall, consumers in Japan cut back on spending somewhat country wide. So, a DPU of 2.00c is, I believe, commendable.

So, what is the distribution yield now?

Of course, since my blog post in May, Croesus Retail Trust's unit price has gone up a fair bit, from 93c a unit to $1.02. This is an appreciation of 9.68% in 3 months.

So, yield has compressed. Annualising a quarterly DPU of 2.00c gives us 8c or a forward yield of 7.84% at a unit price of $1.02. For those who got in at 87c, yield on cost is almost 9.2%.

Would yield improve in future?

Distributable income looks set to improve in the next 12 months as tenants accounting for 20% of Croesus Retail Trust's total revenue will see their leases coming up for renewal. Positive rental reversions could also surprise on the high side as some leases have not seen any increase in rents for many years. This will result in a higher distribution yield for unit holders, all else remaining equal.

What to look out for?

The management of Croesus Retail Trust are still on the prowl for quality properties to acquire. However, with gearing rather high, some form of equity fund raising is probably required to either fully or partially fund future purchases. Whether they are able to do this in a way that would add value for existing unit holders would tell us something about the management.

See: Media Release.

Related posts:
1. Croesus Retail Trust: What is the forward yield?
2. Croesus Retail Trust: Motivations and risks.

Saizen REIT: Still a good investment for income?

Saizen REIT is now one of my top 3 investments in S-REITs and in a recent talk, I said the same thing. I also explained why I invested in Saizen REIT and why I quadrupled my long position in the REIT when I did.

Anyway, Saizen REIT's latest presentation is now available for viewing and I have attached the link: here.

DPU: 3.1c.

While I believe that the weakness in the Japanese Yen is likely to continue for many more years, residential properties' occupancy and rental rates should start to pick up in the next couple of years if Abenomics gain even more traction.

Having said this, remember that Saizen REIT is distributing income in an amount that pretends that its loans are non-amortising in nature. What is the effect? Amortisation of loans cost 1.46c per unit which means if the REIT did not have the cash resources to pay for this and if the money were taken from income generated by the REIT's portfolio of properties, only 1.64c would have been available for distribution to unit holders this time.

See related post #1 at the end of this blog post.

NAV/unit: $1.22

In JPY terms, the valuation of properties in the REIT's portfolio seems to be rising and in one of my earlier blog posts, I shared that Saizen REIT's real estate assets could be more undervalued than we think.

See related post #2 at the end of this blog post.

Gearing: 37%.

Although Saizen REIT published their net gearing as 31%, I will take 37% for a more conservative guidance. I also want to remind myself that Saizen REIT uses its cash resources to offset amortisation cost. See earlier point on DPU above.

Weighted Average Loan Interest Rate: Less than 3%.

Debt profile: Earliest loan maturity in 2020.

Unlike most other S-REITs, Saizen REIT is able to secure loans with relatively long tenures which makes a lot of sense since real estate investment is essentially a long term commitment. The inability to refinance when loans mature was a reason why many S-REITs were caught in a bind during the GFC only a few years ago. Some of Saizen REIT's loans actually only mature in years falling in between 2031 to 2044.

Occupancy: 91%

There is still room to bump up income by getting more tenants but this would really depend on whether the Japanese economy improves meaningfully but with plans to allow more foreigners to join the economy, things could start looking up.

See related posts #3 and #4 to hear me talk to myself a bit more about the REIT. For me, Saizen REIT is still a great investment for income.

Related posts:
1. Saizen REIT: Is the DPU sustainable?
2. Undervalued and possibly more so.
3. Rewarding patient investors.
4. Saizen REIT: A foreign talent.

Two blog posts I would like the "recovery group" to read.

Earlier this month, I shared that I was going to give a talk and that talk happened last night. After the talk, I went home and thought about it and only fell asleep at 2am, maybe, 3am. Not too sure. I am terrible, I know, but that's me. Insomnia is nothing new.



Insomnia? Banana...

Anyway, in case participants of last night's session should visit my blog, here are the two other blog posts I would like for them to read:

1. How to make recovering from investment losses easier?

2. Managing exposure in AK's investment portfolio: Examples.

Of course, anyone is welcome to read them too. No bias here. I nice or not?

Find out who invited me to give a talk and also read the review: here.

How to earn 6.30% interest after 4 years?

Someone tried to interest me in this not too long ago:

I have forgotten about it until I saw an email advertisement recently.

Any interest in this "interest"? Well, I blogged about why it did not interest me before and if you are interested, please read related post number 1 at the end of this blog post.

What I find objectionable about this advertisement is the use of the word "interest". What do we think of when a bank promises us a certain interest rate? What do we understand by the word "interest"?

Definition of "interest":
Money paid regularly at a particular rate for the use of money lent, or for delaying the repayment of a debt.

When a bank promises an interest rate of 6.3% after 4 years to us, most people would interpret it as a fixed deposit with a total of 6.3% in interest paid after 4 years (or about 1.575% per annum). If we asked any reasonable person, that would be the view. Then, if the product is not what any reasonable person think it is, we have a problem, don't we?

Read the small print:
"Because the Structured Deposit is structured with the objective of returning your initial investment amount only at maturity, repayment of your initial investment amount does not apply if you terminate the structured product prior to maturity. You may potentially lose the principal sum invested if the investment is not held to maturity. There is no unconditional guarantee of repayment as repayment is subject to the creditworthiness of the (bank) i.e. if (bank) defaults, you may lose your initial investment amount."

This is a structured deposit, not a fixed deposit. It is an investment product and not a savings product. It is very different from what any reasonable person would have thought it was looking at the advertisement.

And the disclaimer:
"You must seek your own independent advice from a licensed or an exempt financial adviser regarding the appropriateness of investing in this product, before making a commitment to purchase this product. In the event that you choose not to seek your own independent advice from a licensed or an exempt financial adviser, you should carefully consider whether the product is suitable for you. (bank) has no fiduciary duty towards you, nor does it assume any responsibility to advise on, or make any representation as to the appropriateness, suitability or possible consequences of investing in this product."

The person who served me was quite pushy and I had to give her a piece of my mind. I was there to start a 15 months fixed deposit which promised to pay an interest of 1.25% per annum.

Now, this is not the point of this blog post but, theoretically, over 4 years, if I could get paid 5% in interest by putting my funds in a fixed deposit that pays 1.25% per annum, why would I bother taking on greater risk for another paltry 1.3% "interest"?

I don't like it when advertisements are worded in ways which could mislead and this advertisement ranks highly on the AK Dislike Scale.

Related posts:
1. Why fixed deposits over structured deposits?
2. Nobody cares more about our money than we do.

Save money: Frank Card, Signature Card & Dividend Card.

My sister brings my niece to buy textbooks and other school supplies every year. It is a ritual and some of us will remember doing the same when we were school children.

One of the places that we would visit was Popular Bookshop. Over the years, they have established themselves as the most sought after school textbooks supplier in Singapore.

This is probably one reason why they have managed to survive in an industry which is so plagued by online competition that names like MPH went the way of the Dodo.

Well, I was talking to my sister about buying some Popular Bookshop vouchers online because I am able to get a 6% rebate for all online shopping with my new and funky looking OCBC Frank Card (which I got because of the OCBC 360 account). Buying $300 worth of vouchers would mean saving $18.



Click to enlarge.
https://www.popular.com.sg/jsp/gv/gv_order.jsp

My sister could then use these vouchers to buy school textbooks and other school supplies for my niece end of this year. She could also use her Popular Bookshop membership to get discounts, where allowed, before paying with these vouchers. Then, we would be getting a discount on top of a discount. Sounds good? I might buy the vouchers next month.

Then, recently, I received advice from UOB saying that I have reward points (known as UNI$) expiring next month. The thing I thought of doing right away was to exchange them for CapitaMalls vouchers simply because there are so many CapitaMalls around. So, there is always a good chance of being able to use the vouchers. There are Popular Bookshops in CapitaMalls too.

However, since Popular Bookshop have vouchers of their own, I decided to check if I could exchange UNI$ for Popular Bookshop vouchers instead. What did I find?

Wow! That is a big difference! I am glad I checked.

There is a catch with these "free" Popular Bookshop vouchers. They cannot be used with membership discounts and they cannot be used for the purchase of school textbooks. However, we can still use them for the purchase of stationery.

So, still a great deal being able to get 25% more in value for the same amount of UNI$ used. So, if you are a parent with school going kids and if you are a UOB credit card holder, you might want to take note of this.

Having said this, if your UOB card is a VISA Signature card and if you have accumulated UNI$ 4,000, there is an even better deal! What is it?

You could get a S$ 100 cash rebate (which translates to S$20 for every UNI$ 800)! This is much better than the rate for getting a S$20 voucher from Popular Bookshop or CapitaMalls.

Happy!

However, this is probably the last time I am getting any reward from my UOB Signature card as my credit card of choice now is the OCBC Frank card. I still use my Citibank Dividend card for the purchase of petrol because of the 5% cash rebate (for fuel purchases of above $50 per visit) but not much else.

Save some money if we have to spend some money? Yes, I like this.

Related posts:
1. Getting value out of everything.
2. OCBC 360 and CIMB Star Saver.
3. 7 ways AK saves money.

8 pragmatic reasons to be Singaporeans.

A reader, JK, shared his perspective and he has graciously allowed me to publish it here after some editing.

Why a Singapore citizenship?

1. Pay less in HDB Service & Conservancy Charges (S&CC)
 Most of the town councils have increased the rates for S&CC. Singaporeans don't have to pay the higher rates. Our 4-room HDB flat pays a monthly rate of S$51.60 instead of S$61.50 which means an annual savings of S$118.80.

2. Plan to have children? You will get a cash gift called Baby Bonus from the Singapore government. You get S$4,000 for your 1st child. It is free money for you to use as you like. It was raised to S$6,000 for the 1st child starting from end of August 2012.

3. More money for your child? Sure, you could get an additional $6,000 from the Singapore government if you save $6,000 in a Child Development Account (CDA). It is a dollar for dollar matching program by the government.  There are only two banks offering the CDA, Standard Chartered Bank and OCBC Bank.

OCBC CDA gives 0.5% interest, if you keep a $20,000 balance in the CDA account, the interest rate is 0.8%. I upgraded my OCBC CDA to OCBC CDA Extra, agreeing to a contribution by GIRO of S$50 per month. This option will pay an interest rate of 0.8% per annum too. 

Money in the CDA may be used by all your children for fees at Approved Institutions (AIs) which have registered with MCYS under the Baby Bonus Scheme. These include child care centres, kindergartens, medical clinics, licensed pharmacies and optical shops.

4.  Parenthood Tax Rebate. Get a one time tax rebate of S$5,000 for your first child. Second child?  S$10,000. 3rd child? S$20,000. For some, it is like not having to pay any income tax for the next 20 years. Why don't Singaporeans want to have more kids ?

5.  Working Mother's Child Relief (WMCR). For the first child, a mother can claim 15% of her earned income. There is a lot of savings come from here. Do the maths and you would be shocked too. For those who have 3 children or more, they could claim up to 25% of the mother's earned income which translates to huge savings!

6. Qualifying Child Relief (QCR). Either the father or mother of a child can claim QCR which is S$4,000 per child. With WMCR and QCR, there will be huge savings in taxes paid per year. 

7. Only Singaporean households can keep their HDB flats if they should purchase private residential properties. Singapore PR households MUST sell their HDB flats 6 months after the purchase of private residential properties or 6 months after the T.O.P. date of the private residential properties.

8. Singaporean households are also allowed to rent out their entire HDB flats after obtaining the relevant approvals. Singapore PR households are NOT allowed to rent out their HDB flats.

For the pre-edited articles, follow the links below:
"Singaporean Benefits (Part 1) and (Part 2)."

In the past, I would wonder why some people want to be Singaporeans. After all, our homes and cars are notoriously expensive. However, I do know that the Singapore passport is well respected and that we have a good and safe environment to bring up children.

Now, after this blog post, I have a better appreciation of why some PRs would like to become Singaporeans. For sure, there are many benefits which are for Singaporeans and Singaporeans only which I did not appreciate before.

Related posts:
1. Why I don't feel proud to be Singaporean?
2. CPF-HDB scheme to trick Singaporeans!
3. Take the good with the bad retiring to Malaysia.
4. Something only Singaporean males know.

How I was moved by Lucy?

I watched Lucy, the movie, last night.

It was thought provoking and I enjoyed it very much.

Morgan Freeman asked if we humans are too concerned with having instead of being? I like that question.

I asked myself what would I like to be?

Pause.

Pause.

Pause.

I would like to be a person who can make a positive difference to people's lives.

I want to be a good influence.

I think a person like this is good to be.

Of course, whether I will actually be someone like this is harder to say.

Related posts:
1. The kindness of strangers.
(Published in the month of August last year.)

"I feel that if we can make a positive difference in the lives of others, why not? If we can show some consideration to others and make the world a better place, isn't that a good thing?" AK.

2. Another day in paradise.
3. The world is full of nice people.

Should I become a permanent resident (PR)?

I am publishing this in the hope that there are PRs amongst my readers who are willing to share their thoughts on the matter.

From reader:

Hi AK

 

I have been reading your blog for half a year now. It has been my great source of knowledge! Thank you for wonderful blog!

 

I have some questions on whether I should apply for PR. Here is my background. I have been in Singapore for 10 years. Started off as student at secondary 3 then JC and university. I have been working for nearly 2 years now. Still holding an EP. My friends and colleagues often ask me if I would apply for PR. My answer to them so far is no. The main reasons are I still do not see myself living here permanently. The high costs of house and car are the main factors as well. Nonetheless, I may end up living here if there is great opportunity ahead, plus I have pretty much adapted to life here.

Also, the benefits of PR, of course, is CPF contribution from employer but I also do not like the idea of monthly contribution while I am still uncertain of living here or not. I know that I can take all CPF back if, in the end, I discard my PR but again, there is no second chance if I drop my PR. Short-term wise, I see myself here in the next few years. Should I then apply for PR?

 

If it does not trouble you so much, I'd like to seek your advice or opinion on this matter. Thank you for reading this.

Regards,
C
 

Share a thoughtful moment?

My reply:

Hi C,

I cannot give you any advice but I can share with you how I might think if I were in your shoes.

Being a PR has quite a few advantages compared to being an EP holder, as you have rightly pointed out. I would simply ask myself whether those advantages are important and attractive enough for me to want to be a PR. If they are, then, I should apply to be a PR and pray that I am successful.

There is a big element of subjectivity in making this decision, of course. So, only you know if this is something you want to do.

Best wishes,
AK

Please leave your thoughts in the comments section for C. Thank you.

A way to be $48,000 to $60,000 richer in a decade!

My blog post on what I had for lunch yesterday attracted an interesting response from a reader who is in his 20s and who is new to my blog.

He said that his breakfast is typically bought from Subway or McDonald's near his office. These would cost him about $5.00 to $6.00 every morning. His lunch would cost as much or, usually, more. Any amount between $5.00 to $10.00 for lunch is quite normal.



Then, if he should stay in the office to put in extra hours in the evenings, he would spend another $10.00 on dinner which usually includes a cup of gourmet coffee from Coffee Bean. I was surprised it wasn't Starbucks but that is not the point.


Anyway, typically, he would spend some $400 to $500 on meals at work every month. Over the course of a year, it would amount to $4,800 to $6,000. That is quite a bit of money for someone who is making under $3,000 a month.

Anyway, the long and short of it is that the reader is thinking of making his own breakfast and lunch for work now, winning a stamp of approval from AK!

If he is good at this, he is going to be $48,000 to $60,000 richer over the course of a decade. 

I cannot see how that is not a tidy sum of money to have and this is assuming he leaves the money in a biscuit tin (or mooncake tin) at home too. No interest income and no investment income.


Related posts:
1. A quick and economical lunch.
2. Afternoon tea break with AK.
3. Economical gourmet sandwich.
4. What's for lunch?
5. Seven money saving habits.

A quick and economical lunch. Healthier?

What did I have for breakfast? Did you guess oatmeal? You are right!

What did I have for lunch? Did you guess instant noodles? You are right, again!

OK, before anyone starts scolding me, I love instant noodles but I have been cutting down. The last time I had this was in June. Not too bad lah.

It is the same brand of instant noodles. It is the type that comes in a bowl and all I have to do is to add hot water after pouring in the seasoning and dried vegetables that come with it.

The last few times I had this, I added only half a packet of seasoning. This time, I decided not to add any at all.

I know that the packet of seasoning is just lots of MSG and I know it is bad for me. Actually, I have become less tolerant of MSG as I grow older. I really should watch it.

Anyway, I also felt like having noodles without the soup. So, I poured in 50% less hot water than usual. The end result? Not bad.

Price? $1.10.

Warm, moist, springy and still tastes quite good without any seasoning. Well, the noodles are naturally fragrant and the vegetables had some flavour.

OK, maybe, it's more acceptable to older people.
Seriously, I have found that in recent years, I like rather bland food.

So, don't take my word for it but you might want to try it. If it is too bland for you, you could always add the seasoning later.

What? You threw the packet of seasoning away already? Oops.

Related post:
Think we can't save $400,000?

In my 40s, married with kids? What would AK do?

To do better, one way is to invest for higher returns but at the same time we want to have some measure of stability. This is quite natural.

As we age and take on more responsibilities, including getting married and having children, we might start looking at things differently. 

Quite suddenly, we might not feel so carefree. 

Of course, we want to provide our loved ones with a better life too.





We fear that one wrong move on our part, we might jeopardise not only our future but the futures of those who are dependent on us. Again, it is quite natural to feel this way.

For people who have fallen along the way, it could be really difficult to get back up to continue the journey. 

I know because it happened to me before too but such is life and we simply have to soldier on. 

We only lose when we stop trying.

My way might not be your way.
However, we will find our cup of tea.

So, to someone in his 40s, married with young kids, who lost lots of money in his investments before and who is trying to find his way now, it could be quite a stressful process. 

Add multiple leveraged investment properties, some of them co-investments, and it could create a feeling of being stretched too thin, like spreading a little butter over too much bread, as Bilbo Baggins would say.

Here, I share a recent reply to a reader:

Actually, it is really a coincidence that you should be writing to me at this juncture because I have been invited to give a talk for a "recovery group" next week. 

It is for a group of people who lost a lot of money in stocks and are feeling somewhat demoralised...

... when bad things happen to anyone, there has to be closure. It is like a wound that needs to heal but it should heal properly. 

To have proper closure, we have to examine what went wrong and if there is some way we can grow to accept it and grow stronger in the process. 

Not an easy process which is why many who fell never recover.

You might remember that I have a blog post on how building an income portfolio is like building a house. 

So, if a bad thing should happen and the house was destroyed, what do we do? Go without a house? No, of course not. 

We build another house. This time, try to make sure that the foundation is stronger. Maybe, even install some earthquake proof technology. ;)

Bad things happen sometimes.

So, I would say that we want to take care of the basics first:

1. Have an emergency fund ready, enough to cover fixed expenses for 12 to 24 months. In your case, this should include the many mortgage payments for your many properties as well. 

2. Make sure you have necessary insurance in place. H&S, Critical Illnesses, Disability and Term Life. Term Life should cover the remaining mortgages of your properties and your dependents' needs till they graduate from tertiary education. Ask your insurance agent about reducing Term policies for the mortgages. Yes, they exist.





3. Plan for retirement and that is where your investment properties possibly fit in. If you feel that you are over-exposed and are uncomfortable, reduce your exposure. Losing sleep over anything is a bad idea.

4. I like the CPF-SA and I have maxed it out years ago. I do not know of any other instrument that will give me a risk free return of 4 to 5% per annum. As a tool for retirement funding, this is as easy as it gets.

5. Any excess money then can go into a war chest to wait for opportunities.




Like with anything, start from the ground up. 

Financial planning and investing for a better future? 

Much of it is about staying grounded and having a peace of mind. :)

I hope that this blog post has provided food for thought and if you should have opinions which you would like to share, please feel free to do so in the comments section.

Related posts:
1. Building an income portfolio is like building a house.
2. The best insurance to have in life.
3. Achieving financial freedom is a family affair.
4. How to upsize $100K to $225K in 20 years?
5. Thoughts on financial security for Singaporeans.