Disastrous investments in the property market: Lessons (Updated 5 July 2018).

UPDATE: 5 JULY 2018

History doesn't repeat itself but it rhymes or so they say.

Apparently, people are flocking to showflats to buy condos now and they are likely to be at it until midnight.

Many property agents are definitely enjoying a feeding frenzy as buyers panic buy.

Why the panic buying?

ABSD is going up 5% and LTV is being tightened as well.

New rules kick in at midnight.





Yes, the government has come up with another round of cooling measures.

In recent years, I have said that private real estate prices in Singapore are too high and that it does not make good financial sense to think of them as good investments for income.

Vacancy rate is still very high and in some places like Geylang, rental rates have fallen by as much as 25% due to a glut in supply.





Buying and thinking that prices can only go up is speculation and with the enormous price tags of private real estate here, it is big time speculation.

I have also blogged that unless we have deep pockets, it is best to avoid.

Still, many people are throwing caution to the winds but beware how it could get blown back as a nightmare to hit us in the face.

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

This certainly has been my experience.





The Government has raised Additional Buyer’s Stamp Duty (ABSD) rates as well as tightened the Loan-to-Value (LTV) limits for Singapore citizens and permanent residents, in order to “cool the property market and keep prices in line with economic fundamentals”.

With immediate effect, the ABSD rates will be raised by 5 percentage points for all individuals, and 10 percentage points for entities, said a joint statement issued on Thursday (July 5) from the Ministry of Finance, the Ministry of National Development and the Monetary Authority of Singapore.

There will be no change in ABSD rates for Singapore citizens or permanent residents buying their first property.






Previously, the LTV limit for a buyer’s first housing loan is 80 per cent, or 60 per cent if the loan tenure is more than 30 years or extends past age 65. This will be cut to 75 per cent, or 55 per cent respectively. 

Similarly, the limit for a second housing loan will be reduced from 50 per cent to 45 per cent, or 30 per cent to 25 per cent if the loan tenure is more than 30 years or extends past age 65.

Read full article here:
https://www.todayonline.com/singapore/government-introduces-new-round-cooling-measures






------------------------------------
I read in The EDGE that there will most likely be "a new level of pain" for landlords of residential properties in Singapore next year because rents and prices of properties are sinking while vacancy rate continues to rise.

Regular readers would remember that I said that the writing was on the wall in 2011 and that there was too much euphoria in the air as people just kept flocking to condominium showflats and buying into every new launch there was until a year and a half ago when the 8th round of cooling measures with stringent TDSR was introduced.

Some of us might remember this report in The Straits Times:

Some home buyers rushed to submit mortgage applications to banks last Friday night before tougher rules on home loan financing kicked in at midnight.

But a day after the Government's move to tighten home loan financing, the overall effect was muted as only a small segment of buyers are likely to be affected, agents and mortgage consultants told The Sunday Times yesterday.

Developers said it was business as usual at show-flats and they still managed to sell a few units yesterday.

The Monetary Authority of Singapore (MAS) said on Friday that banks have to use a standardised set of guidelines to assess property buyers' ability to borrow. It also plugged a loophole that let buyers dodge tighter loan-to-valuation limits on their second and subsequent properties.

The restrictions apply to loans with an application date on or after June 29.

As a result, some buyers hurried to submit loan applications before the Friday midnight deadline. A significant number of these were buyers at J Gateway, which reportedly sold all 738 units at its Friday launch.The Sunday Times understands that OCBC received a surge in loan applications on Friday night after the MAS announcement. 

(Source: The Straits Times, 30 Jun 13)

These buyers probably would not have been able to obtain bank loans with the new measures which are there to encourage financial prudence. 

I won't be surprised that some of these buyers had bought multiple properties too. 

This "kiasu" mentality that is born from greed is likely to be the downfall of more than a handful of such "investors".






In the last few years, I continually warned that we must be cautious about buying residential properties in Singapore in order to avoid wealth destruction unless it is a BTO flat or an EC or we have spotted a great value buy.

New launches usually have priced in future price appreciation. 

Have you wondered why a new project is almost always much more expensive than the surrounding condominiums? 

Is it only because the land cost is higher? 

So, it is difficult for buyers to make money from these purchases in a short time of a few years unless the euphoria continues. 

It is a game of musical chairs and the music (i.e. euphoria) will stop.

J Gateway

484 sq ft shoebox units in J Gateway sold for as high as $1,774 psf in July 2013. That is a price tag of $858,616! 

Freehold? 

Nope. 99 years leasehold. 

Yes, we know that Jurong is a promising location as our government has plans to develop it into a more robust regional centre but it just doesn't make much sense to me to pay so much for the place now. 

If that is not pricing in future price appreciation (the price would probably only make sense many years down the road), I don't know what is.






So, in the next few years, these buyers would have to service their housing loans (in an environment of increasing interest rates) and hope for the best, bearing in mind that there will be no rental income as the condominium is being built.

Now, with mortgagee sales (i.e. properties foreclosed by banks) rising and some expecting them to rise to 2008-09 levels as distress spreads from luxury condominiums to outlying areas, people who have been waiting for a meaningful correction in prices before making a purchase are going to be amply rewarded for their patience. 

Things are likely to get worse.






"Newly completed condos, including shoebox apartments in the suburbs and on the city fringe, have also popped up at auctions as mortgagee sales in recent months.... some investors holding on to multiple units may have difficulty servicing their mortgage or unable to secure tenants in their newly completed units. Collier's Ng believes, however, that mortgagee sales of upscale apartments in the prime districts will continue to dominate the auction scene. " Source: The EDGE, 29 Dec, page CC9.

Evidently, there are areas which are going to be worse off than others and if you are thinking of buying an investment property for rental income, I have said before that properties in the RCR would be more resilient and the data has supported this but, remember, if you overpay, you won't do much better at all. 

"... the leasing market is going to be more challenging in OCR and CCR, notes JLL's Ong. He sees condo units in the city fringe or RCR faring better. The city fringe is close to the city and yet more affordable. Rental decline in RCR so far has been the mildest." Source: The EDGE, 29 Dec, page CC2.







When I said that the government is determined to bring down the prices of residential properties in Singapore and warned that we should not underestimate the political will of the country's leadership, there were still many optimists out there saying that demand would stay strong enough to prop up prices. 

Recent speeches by Minister Khaw Boon Wan and DPM Tharman Shanmugaratnam indicated that prices are still too high. 

The cooling measures are staying in place.

Some might remember this from October 2013:


Alan Cheong, head of research and consultancy at Savills Singapore, made his case last Friday at Carlton Hotel marking Singapore Management University's (SMU) homecoming celebrations for its Master of Science in Applied Finance programme.

"I think barring external shocks, property prices, residential prices will stay elevated," he said.

Mr Cheong argued that a fundamental concern that there will be an oversupply of homes come 2015 is not the case at all.

"The reason is in Singapore; it is a situation of undersupply."

Source: ST Property






There are many lessons in this blog post and not to ask barbers if we need a haircut is only one of them. 

It is good to refresh my memory from time to time.

Related posts:

1. Selling a private property just got harder. (2011)
"This development is likely to hasten the weakening of private residential real estate prices which is something I expect to become really evident in 2014 or 2015.  "

2. Leverage up and buy investment properties? (2012)
"... it is obvious to me that the government is sending a clear message that they want property prices in Singapore to lower in the next couple of years.."

3. To rent or to buy: Rule of 15. (2013)
"For a while now, we see people buying real estate in Singapore and being quite happy with rental yields of 2+% to 3+%. This is acceptable really only because of the abnormally low interest rate environment. It won't last."

4. Ask these questions when buying properties. (2014)
"... for the more adventurous ones in our midst, please think again and again before handing over that cheque when temptations find their way into our mailbox."

5. Affordability and value for money.
"... we should remember that it is not about "affordability", it should always be about "value for money".

HOW IS SHOEBOX APARTMENT LIVING IN SINGAPORE? (AK's home is a hut in the sky and it makes sense.)

UPDATED:
Seeing how some people in Hong Kong are living in apartments ranging from 150 square feet to 200 square feet in size makes me feel like I am living in luxury!
-----------------------------




I keep telling people that my home is a hut in the sky. 

It is a tongue in cheek way of saying I live in a high floor shoebox apartment. 

Yup, it is one of those apartments smaller than 50 sq m (538 sq ft) in size described by the ex CEO of CapitaLand as "inhuman". 

Of course, he was not the only one who had something negative to say about shoebox apartments.




To be quite honest, I was a sceptic too. 

My old place was almost 1,000 sq ft in size, had two bedrooms, two bathrooms, a big kitchen, a big living area and a balcony. 

Almost everyone who visited told me then that it was a perfect size bachelor pad.

At the time, I already had friends staying in shoebox apartments and I knew what a 463 sq ft apartment looked like. 

The first word that came to mind when I visited the place was "tiny". 

Space was tight. 

In between furniture and fixtures, there was only enough space for one person to walk around. 

Well, maybe two if the people were smaller in size.

Tiny!

So, it was a leap of faith for me to buy a shoebox apartment more than two years ago and, to be quite honest, I was somewhat worried about the space issue after the whole deal went through. 

I made copies of the floor plan of the apartment and made scaled measurements of furniture, exploring different ways of making everything fit while still having enough room to move around.

Now, having lived in a shoebox apartment for a while, I find that they are, actually, very livable. 

The trick is not to clutter up the apartment with stuff. 

Staying in a shoebox apartment makes people think more carefully about what they buy for their home. 

The question "Is this necessary?" takes on another layer of importance.


Kitchen is in the living room? Yup!

For me, the necessary furniture to buy in a shoebox apartment would be:

1. A bed.
2. A wardrobe.
3. A sofa.
4. A desk and two chairs.
5. A TV console.

Depending on the size and layout of the shoebox apartment, smaller size furniture might have to be considered. 

However, if the apartment is not smaller than, say, 441 sq ft, and the format is not oddly shaped, pretty decent size furniture, including a queen size bed and a two seater sofa should be able to fit quite comfortably.

I have learned to appreciate that living in a shoebox apartment has many advantages and, strangely, although I had much more space in my old place, I do not feel that my current home is less livable. 

Let me see if I can rattle off a list of things.

Tiny apartments are the norm in Japan.

1. The first thing that comes to mind is that there is less underutilised or wasted space. 

I had lots of space in my old place but most of it was underutilised.

I paid for space I was not using.

When I sold my old place after staying there for more than 4 years, I remember that the kitchen was in an almost pristine condition.




2. There is less cleaning to do in a shoebox apartment which saves me a lot of time. 

I remember that a thorough cleaning of my old place, including the underutilised kitchen, took me almost 6 hours! 

The shoebox apartment takes me less than 2 hours to clean.




3. Financially, the shoebox apartment is less burdensome as it was much cheaper to buy and I also pay less in property tax. 

We always hear people saying Singaporeans are asset rich but cash poor. 

Although not always the case, many people "over consume" when it comes to their homes. 

Real estate can be good investments for income but, unless we have and are willing to rent out spare rooms, our homes are consumption items.

Paying less for my home means that I have more money to invest for income.




4. I enjoy equal access to the facilities in the condominium which includes the car park but I pay much lesser in monthly maintenance fee compared to my neighbours who bought the larger units in the condominium. 

Of all the facilities available, why did I mention the car park? 

Isn't that the most boring thing on the list?





Well, I remember telling some friends that considering the fact that a car park lot is about 100 sq ft in area, I got a pretty good deal since bigger units are also entitled to only one car park lot each. 

Proportionally, a 441 sq ft apartment would gain 22.6% more space while a 1,034 sq ft apartment would gain only 9.7% more space, for example. 

Interesting, isn't it?



I thought this was somewhat extreme.

Anyway, although we might feel unhappy with the rising costs of living, as long as Singapore's economy chugs along nicely, things will only become more expensive over time. 

So, apartments will become more expensive too. 

Smaller formats are more affordable, for sure, but beyond affordability, many are concerned about whether they would compromise on the quality of life.

If we believe that a HDB 4 room flat, 970 sq ft in size and has 3 bedrooms, is about right for a family of 4 or 5, then, each person in the family would have 242.5 or 194 sq ft of space, proportionally. 

A shoebox apartment that is 441 sq ft in size would, therefore, provide plenty of room for a single person or even a couple. 

It is all relative, isn't it?





Finally, I have been watching a program called "Tiny House Nation" recently. 

This is a movement in the USA and we all know how the Americans love their big houses. 

I remember a friend from the USA told me that a 1,300 sq ft apartment was tiny for a family of 5 when I was staying with my parents in an apartment which was about that size.

Anyway, I really enjoy watching "Tiny House Nation" and to learn that more Americans are downsizing, being less wasteful and more environmentally conscious.

Images from "Tiny House Nation."

"In “Tiny House Nation,” renovation experts and hosts, John Weisbarth and Zack Giffin, travel across America to show off ingenious small spaces and the inventive people who live in them, as well as help new families design and construct their own mini-dream home in a space no larger than 500 square feet."

If you want to find out more about "Tiny House Nation", here is the link:
http://www.fyi.tv/shows/tiny-house-nation/videos

Shoebox apartments might not be right for everyone but they could be right for some. 

Definitely, we could live large in a tiny home.




Related posts:
1. Housing and the CPF.
2. Slaving to stay in a condominium.
3. Affordability of housing in Singapore.
4. How big is a 452 sq feet apartment?
5. Smaller apartments' prices more resilient.

AK's birthday wish is for everyone to be wealthier.

UPDATED (10 JAN 17):
People say this Oyster Omelet best.

Quite yummy. $5.00 only. We are so lucky to have good food at reasonably affordable prices in Singapore.
------------------------
I always say that packing food to work daily would save us plenty of money. 

My mom prepared a bento for me today.
Steamed rice, stewed fish and ginger.

If we want to eat out, we can also visit the many hawker centres in Singapore which I think have good and inexpensive food.

When my family asked where would I like to go to have dinner to celebrate my 43rd birthday, I suggested Whampoa Market! Surprised?
Actually, there are many millionaires in our HDB estates and they lead simple lives. 

We might not know much about them because they are not very talkative (like I am) but they are more common than we think they are.

I like fried Ngo Hiang et. al. very much.

Realised I don't have a photo showing only the food.
This is the best shot after some cropping.
The Hokkien Mee was already half eaten. -.-"

Decided not to have a birthday cake.
Just stacked 3 waffles on top of one another.
Then, just eat with ice cream! I like!

(Apologies for the photo quality. The photos are in my mobile phone. I used a digital camera to take the images from the screen of my phone and cropped them. I am such an IT dinosaur, I know.)

Good company. Good food. Good price.

We don't have to go to "atas" restaurants to be happy.

People who have above average income would often tell me that it is difficult to build wealth in Singapore but if they were to examine their lifestyles, they might be surprised at how much money they could actually save if they were to make thriftier consumption choices.

I know it is possible to build wealth more rapidly in Singapore and some readers who have decided to make changes to their consumption choices with an eye on wealth building have written to me to say that they have made good progress. 

Get the whole family in on the project (which some readers have done) and our success rate would be even higher.

Remember, it is always the toughest in the beginning but if we are determined and disciplined, my birthday wish for everyone to become wealthier will come true.

Related posts:
1. AK's free birthday cake (2010).
2. Good food at good prices (2011).
3. The Millionaire Next Door.
4. Financial freedom is a family affair.
5. If we are not rich, don't act rich.
6. Be $48,000 to $60,000 richer in 10 years.

Do we need new or is old good enough? (How to be richer? Another personal story of frugality.)

UPDATED (22 DEC 16):

Related post: Never bored in retirement.

Old game but still a fun game!

As I play the game, I am also watching the anime online. All 180 episodes! I can binge watch!

All for FREE!

Wahahaha! Bad AK! Bad AK!
-------------------------
I hear friends talking about getting good ear phones so that they can enjoy music on the go many times before.

A friend actually brought me to a shop in the basement of ION Orchard to look at these super earphones before and when I saw the prices, my jaw dropped.

I don't know if you believe me but a pair of these diminutive ear plugs, yes, they look like ear plugs, could cost more than $300 or $400! 

How could something so small cost so much? It is simply mind boggling! What is more amazing is that some people actually buy the latest (expensive) ear phones as and when they become available!

When recommended to get a pair for myself, I politely declined, saying that I don't have use for earphones. Actually, that is not true. I do use earphones. I use them when I watch movies on my iPad. I use them when I travel. I use them when I go to the gym (once in a blue moon).

However, my earphones didn't cost me $300 or $400. They didn't even cost me $15, if I remember correctly.

So, what do my earphones look like?

I don't know if they still sell earphones like these. They come in a plastic case with a nifty rotating feature to reel in the cords neatly. I like the neat design very much.

I happen to leave my earphones on my desk today because I used them in the gym yesterday. A friend who was visiting remarked at the "antique".

Well, I must have had these ear phones since I was in college or when I was in National Service. I cannot remember exactly. So, they are pretty old but they still work.

I have shared in various blog posts before on the things I have and some of these things I have had for a long time and still using today. (See related posts below.) These ear phones are another example.

I don't see the need to get the latest gadgets which are usually rather expensive, anyway.

If the older stuff still work, unless there is a very good reason, we shouldn't replace them.

Waste not, want not.

Related posts:
1. Some of my stuff (Part 1).
2. Some of my stuff (Part 2).
3. Some of my stuff (Part 3).
4. How I earned $9,216 with a mug?
5. AK denied Starhub extra income!

A meal for $2.00 from McDonald's!

My Christmas Eve lunch:

A McChicken Burger and a 16oz cup of Iced Milo.

$2.00 only.

A friend told me about McDonald's Surprise Alarm and now I get a surprise almost every day!

For more information, see: McDonald's Surprise Alarm.

This is not an advertorial. I just like McDonald's and I like freebies. LOL. ;p

Related post:
McDonald's Singing Bones Kitty!

An important message from AK as ASSI turns 5.

It was on Christmas Eve of 2009 that ASSI was born out of boredom and curiosity. Yes, it has been 5 years! 5 incredible years of (mostly) happy blogging!

The journey has not been all smooth sailing but we have had many more days of good weather than bad. The stormy days were made more bearable because of the kind words of encouragement from many of you and that kept me going. You know who you are. So, thank you from the bottom of my heart.

As we celebrate my blog's 5th birthday, I wish to remind everyone that most of us in Singapore will be able to find financial freedom using some common sense and following some tried and tested principles in personal finance and investment.

Regular readers will know that this is true and some have shared with me that their savings, investments and passive income have grown tremendously in the last few years. New readers who hoped to find some mysterious get rich fast method in my blog have been disappointed or so I was told but to those who have decided to become income investors, I am hopeful that all will find success.

There were also readers and guest bloggers who have contributed comments and guest blogs, respectively. They have shared their experience and shown us how they were able to achieve or work towards financial freedom as well. So, if you are among those still wondering, please remember that financial freedom is not just a dream.

As we celebrate the festive season and be charitable to those who need help most, we want to be reminded that nobody cares more about our money than we do. The blog post that received the most "Likes" this year in ASSI is one example of how we should give more thought to how we treat our money.

Which blog post am I referring to? This one:

FREE Investment Linked Policies or Term Life Policies?

Share the link to the blog post and it might be one of the best presents to give to your friends and family this festive season.

"... what makes sense for the investor is different from what makes sense for the fund manager. And, as usual in human affairs, what determines the behaviour are incentives for the decision maker." Charlie Munger

HAVE A MERRY CHRISTMAS!

Related posts:
1. ASSI turns 4.
2. Retiring before 60 is not a dream.
3. Nobody cares more about our money than we do.

Tea with EY: Get a lifetime income of >$2K a month.

I am very pleased to publish another thoughtful guest blog by EY. If you are concerned about retirement funding adequacy and if you wonder how it could be achieved in a risk free manner, you should read this:

What can we learn from squirrels?

A big part of my retirement planning revolves around optimising my CPF-SA to generate at least $2,000 of monthly cash flow at 65 years old. With this in mind, I set the target at 32 years old to meet the CPF Minimum Sum by 40.

I hit 40 more than a week ago and have managed to accumulate $161,671.23 in my CPF-SA which coincides with the CPF Minimum Sum of $161,000 effective 1 Jul 2015.

Assuming that I continue to contribute $4,800 (based on approx. 14 months of income) to CPF-SA till 55 years old, my CPF-SA balance would grow to $391,833 by then.

In 15 years’ time at 55, I would expect the CPF Minimum Sum to be adjusted to $200,000. After setting aside this amount in the CPF-RA account to participate in the CPF LIFE plan, I would have $191,833 left in my CPF-SA.

If I stop contributing to my CPF-SA at 55 years old and leave the balance to earn 4% interest, my CPF-SA would have grown to $285,991 at 65 years old.

At 4% interest, I could collect $11,652 per year or $971 per month, without touching the principal amount.

For the CPF-LIFE plan, I intend to participate in CPF LIFE Basic which allows me to leave a larger bequest for my family. With $200,000 in RA at 55 years old, the monthly payout at the draw down age (DDA), currently at 65, is $1,316 - $1,467.

This would mean I would have a life time monthly income of $2,287 - $2,438 each month.

When I kick the bucket, my family will receive the following bequest:

Now, the pertinent question – ‘Would $2,000+ of income a month be sufficient to meet my retirement needs in 25 years’ time?

I don’t know. Really. What I do know is not putting all my humpty dumpties in one basket. Besides this fixed income plan, I will be actively building up other income sources.

Related posts:
1. Level 1 financial security for Singaporeans.
2. The best insurance to have in life (is passive income).
3. Millionaire or not, plan early for retirement.

Get a 75% price discount on a smoked turkey sandwich!

I really like having smoked turkey breast sandwiches but they are usually quite pricey.

Whenever I am in the supermarket, I would check out the cold cuts and see if there are some special offer items. If we don't mind eating stuff which are expiring in 2 or 3 days, we can usually get rather good deals. For example,

Eat by 25 Dec 14, Christmas Day!

Half price! What a deal!

Of course, it was not the first time I bought this product at half price from Cold Storage supermarkets. Just trying to create an air of excitement here. Yeah!

This brand has a good selection of cold cuts but I like the smoked turkey breast the most. I like to think that it is the healthiest option there is. See?

99% fat free and has the healthier lifestyle stamp!

Anyway, this is about 200 grams of turkey and is enough for me to make 4 sandwiches, each with 2 slices of meat.

If you are interested, here is the list of ingredients to make the sandwiches with:

1. 200 grams of smoked turkey breast. $4.75.
2. 8 slices of Gardenia wholemeal bread. $1.65.
3. A small cucumber. About $0.40.
4. 4 slices of cheese. About $0.80.
5. Some trans fat free margarine. $?.??.

Packed and ready to go!

Each gourmet sandwich would cost less than $2.00 to make but you would have to be like me and not mind having the same thing for breakfast and lunch. However, if you are making breakfast or lunch for the whole family, this is not an issue.

Biting into my lunch!

We can have "atas" food without the "atas" prices.

Related post:
Gourmet sandwich by AK Deli.

Grow some plants that bring wealth and good luck?

It has been quite a while since I had my own outdoor space at home. Today, I went to a plant nursery to get myself a few potted plants to start populating my new pad. Here are two of them:

They look quite cheery, don't you think?

I chose these plants because they don't need much care. Perfect for me. However, they do need to be in a bright and preferably shaded location or so I was told. Perfect for the outdoor space I have at home since it doesn't get any direct sunlight.

The one in the blue pot is a Dracaena Fragrans while the one in the black pot is a Pachira. The one in the blue pot is also known as an Iron Tree in Asia. When an Iron Tree flowers, it will bring good luck to the owner. So, I hope it flowers.

I kept an Aloe Vera plant that grew to be a giant before and it flowered multiple times. If you are new to my blog, see the related post at the end of this blog post to look at the photos I took of the Aloe Vera plant before.

The Dracaena Fragrans is also an organic air purifier. Apparently, it removes pollutants such as formaldehyde, xylene and toluene. I am not a chemist. So, don't ask me for details but they sound like nasty stuff. Source: NASA Clean Air Studies.

The Pachira plant is believed to bring wealth and is also known as the Money Tree. It also cleans the air of smoke. Anyone here living or working with smokers? Go get a Pachira plant.

I just found out that it could grow to be 15 feet tall although the size of its pot could limit its growth. Oh, dear. I could be in trouble if mine grows much bigger. I better be mentally prepared. Source: Care for Pachira plants.

Now, I have another thing to do on Sundays apart from the laundry.
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UPDATE: 19 FEB 2017
My Money Tree today:

Compare to the photo at the top of the blog and you will see how much it has grown in just 2 years.
Also read: Know our goals, have the right conditions and patience.
Related post:
AK's Aloe Vera plant flowered?

How AK saved 32.7% + 9% in Cold Storage supermarket?

Regular readers know that I have a big weakness for ice cream.

So, it should not be surprising that whenever I visit the supermarkets, I would go to the frozen food section and take a look at the tubs of yummy ice cream.

However, I never pay full price for ice cream in the supermarkets. Even as I give in to my weakness, I insist on having value for money. If it is not value for money, AK does not buy! 

OK, I feel better now. See how weak I am?

So, what is the "lobang" this time? This:

This is an ongoing special offer. This was taken at the branch in Bugis Junction. I don't know if the special offer is available at all the Cold Storage supermarkets in Singapore but if you have a weakness for ice cream like I have, this is a chance to buy "atas" ice cream on the cheap. The special offer ends tomorrow.

How did I pay for my purchase? 

1. $15 discounted CapitaMalls shopping vouchers! So, I save another 9.1% or $1.36.

2. I am a Passion Card member. So, I received some TapForMore points which are equivalent to about 13c for the $19.99 purchase.

3. I paid the balance of $4.99 using the NETS Flashpay function in my OCBC Frank Card. So, I save another 6% or about 30c. I also receive 6 chances to win a condominium in a lucky draw happening end of next year. Well, one could always hope, right?

Extra savings = $1.79. I know how some people would sniff at the savings but in terms of percentage, it is a big deal. Believe me when I say that savings do add up. To people who think what I am doing to save money is nonsense, sorry, but I cannot change. This is me.

I am losing the battle of the bulge to happiness in a tub!

Related posts:
1. CapitaMalls: Providing value for money deals.

2. High class ice cream without the high price.

Tea with EY: Questions for the CPF Board (Part 2)

Q:
For the Medisave balance in excess of the Medisave Minimum Sum (MMS), i.e.[MCC] $48,500 – [MSS]$43,500=$5,000, would CPF automatically transfer this amount to the member’s OA when he/she reaches 55 years old or would CPF allow the member to maintain his/her Medisave balance up to the MCC of $48,500?

A:

The balance above the latest Medisave Minimum Sum (MMS) in your Medisave Account (MA) at age 55 will not be automatically transferred to the OA.

If you are able to set aside your full Minimum Sum when you turn age 55, you may then apply to withdraw the remaining CPF savings from your OA, SA and any balance above the latest Medisave Minimum Sum (MMS) in your Medisave Account (MA). The MMS is adjusted each year in July.

Q:
To participate in the CPF LIFE Basic plan with the entire MS of $161,000 at 55 years old, what does the member need to do?

A:

When you join CPF LIFE, all your RA savings (except for new money that is paid into your Retirement Account after your drawdown age) will be used for your CPF LIFE plan.

We would like to share that for the CPF LIFE Basic plan, we will take the annuity premium from your Retirement Account (RA) in two instalments.

When you are 55 years old, we will deduct a small portion (about 10%) of your RA savings as the first instalment of your annuity premium. The rest of your RA savings will stay in your RA.

One to two months before your drawdown age (DDA), we will deduct a small portion (about 10%) of any new money that has built up in your RA between your 55th birthday and your DDA as the second instalment of your annuity premium.

When you reach your DDA, you will receive monthly payouts (paid from your RA) starting up until one month before you reach 90 years old. Once you reach 90 years old, you will continue to receive monthly payouts (paid from the annuity fund) for as long as you live.

Singapore citizens and permanent residents who are born in or after 1958 will be placed on CPF LIFE if they have at least $40,000 in their Retirement Account (RA) when they reach 55 or at least $60,000 when they are reaching their Draw Down Age (DDA). We will write to them one month after their 55^th birthday on their participation in CPF LIFE.

For more details under the CPF Life and its plans, you may refer to the CPF Life booklet for more information:

CPF LIFE Information Booklet

http://mycpf.cpf.gov.sg/NR/rdonlyres/09EA0C05-C8E9-4705-9D91-E8BD1D12CF1E/0/LIFEBrochure.pdf?NRMODE=Unpublished&wbc_purpose=Basic&WBCMODE=PresentationUnpublished

Q:
For a member who has participated in the CPF LIFE Basic plan based on the prevailing MS of $161,000 at 55 years old and subsequently, the MS is adjusted to say $200,000 by the time he/she reaches 65, would the member be able to ‘top up’ $39,000 by transferring the OA/SA balance into the RA account and use it to add to the CPF LIFE Basic plan?

A:
In general, the maximum amount that you can commit to CPF LIFE is the prevailing Minimum Sum which is revised yearly (i.e. $161,000 from 1 July 2015). To receive higher CPF Life payouts at your DDA, you can make top-ups into your RA after 55, up to the prevailing Minimum Sum when there is any upward revision in future.

A big "thank you" to EY for graciously allowing me to share some of the questions and answers here in my blog with all my readers.

Related post:
Tea with EY: Questions for the CPF Board (Part 1)

Tea with EY: Questions for the CPF Board (Part 1)

EY asked the CPF Board some questions.

Q:

At 55 years old, if the member does not intend to withdraw any amount from any of his/her CPF accounts and would like to use the entire MS to participate in the CPF LIFE Basic Plan, how would the savings in each of the accounts be redistributed among the OA/SA/RA/Medisave? Is the following balance distribution and interest rate correct based on prevailing guidelines?

OA – $50,000 (2.5% interest)

SA – $39,000 (4% interest)

RA – $161,000 (1st $60,000 at 5%, balance at 4% interest) Medisave - $48,500 (4% interest)

A:

As in your example, upon reaching age 55, the Board will set aside the Minimum Sum in your CPF Retirement Account (RA) by transferring funds in the following accounts and sequence:

(i) funds in your Special Account (SA);

(ii) if (i) is insufficient to set aside your Minimum Sum in full, funds in the Ordinary Account (OA) will be transferred to your RA to make up the Minimum Sum.

The balance (if any) in excess of your Minimum Sum will remain in the OA/SA and will earn the respective interest rates. 

The CPF interest rate for the OA\SA\MA are reviewed quarterly, while the interest rate for the RA is reviewed yearly.

The extra 1% interest per annum will be paid on the first $60,000 of a member's combined balances. 

The priority of the accounts that make up the $60,000 is as follows:

1st        : Retirement Account (RA), including balances used to pay for the annuity premium under CPF LIFE

2^nd        : Ordinary Account (OA), up to $20,000

3^rd         : Special Account (SA)

4^th         : Medisave Account (MA)

The extra interest received on the OA will go into member’s RA (if he is 55 and above), to enhance his retirement savings.

For a member who has joined CPF LIFE scheme, the extra interest earned will be paid into his RA or the CPF LIFE Annuity Fund.

See also:
Tea with EY: Questions for the CPF Board (Part 2).