"Aiyoh, people so sour grape to say you how lian!"

An email from a very regular reader:

Saw your post on CPF balance. 

Aiyoh, people so sour grape to say you how lian. 







But nevermind, I support you to be how lian, k?


SMOL's comments soooo hilarious. Really made my day! ROFL. 


Honestly, OA savings aside, I think growing the SA is quite achievable.








In Jan 2008, I only had $17,084 in my SA, accumulated through the course of my active employment. 

Was contemplating to do the transfer earlier but decided to keep the money in OA for investments. 








I first transferred some funds from OA to SA in 2009 and by end 2009, I had $52,893 in SA after earning $1670 interest for the year.  

In 2010 I didn’t do anything cos I resigned from XXX and took 6 months sabbatical to finish my Masters.


No income, so nothing much to transfer. :P







Then I resumed the transfer in 2011 to 2013 till I met the prevailing CPF ceiling. 

My CPF-SA now stands at $182,213.73 after earning $7,474 of interest last year.







This year there will be more contributions accumulated since the ceiling has been raised to $6K. Happy!

So, don't say it cannot be done.

Never try, why say cannot?

Don't sour grapes.

Grapes can be sweet.





I know because I am eating sweet ones now.


Related posts:
1. AK is showing off his CPF numbers.
2. 2016 changes to the CPF and SRS.

Know our goals, have the right conditions and patience.

Regular readers know that gardening is one area I am spending more time in and I am enjoying my little planter in the sky.

Gardening suits my temperament. 

Plant the seeds, give them good conditions for growth and wait. If everything has been done right, the plants will grow. Sounds familiar?

Here are photos of my Basil plant which seem to be in the initial stage of flowering!

See?

For those with failing eyesight like mine.

When I shared this development with my sister who also grows Basil at home, she was amazed. However, she shouldn't want her Basil plants to flower because it means that they are moving from growth to reproduction which means less yummy leaves for her cooking.

Depending on what a person is after, it is either a good thing that a Basil plant is flowering or not. When we draw parallels, a parallel might be where we ask what do we want out of our investments? Are we investing for growth or for income, for example?

We can all enjoy positive results as long as we do it right and have the patience to wait. However, whether the results are desirable would depend partly on what are our goals.

Gardening and investing aren't so different, are they?
-------------
Updated: 24 July 2016

Sunflower.
Grew this from a seed.
-------------
Updated: 14 November 2016

"Gardening? I don't have the patience!"

I took a cutting from my Rosemary plant in May:

I transplanted it in September in a bigger pot (on the right):

And again today:

Having a bit of patience can be quite rewarding.

Moral of the story? Maybe, there is more than one.

(Oops. You saw more Rosemary cuttings growing in the background? Repeating a successful process? Believe it!)


Related post:
Investing or gardening, be ready to go to war!

Filial son working towards financial security (Part 2).

Our conversation continues:

Hi AK,

Firstly would like to say Happy New Year. Even thought its already mid of Jan. i writing this to you to update and share with you. I have transfer
my prudshield to NTUC enhance income shield advantage with assist rider. Then i have signed iterm for $200k term and $100k living rider(for CI) for 35years.

The Premium is $66.60/mth and till i reach 62 years old. Which is long enough. i know i may choose too little but its afforable and i feel much for comfortable in the long run. I also signed enhance income shield with basic assist rider for
both my dad and mum. So in any case, if my parents are warded, $30,000 bill just require to pay 10 percent which can be use by medisave
as well. i think its okay. i am paying giro and using my medisave to pay for both my parents. There is 25 percent premium subsides by gov. So its still within my afforable range.

At least if i get hospitalise, myself is full covered. But if my parents are warded, i use need to deduct 10 percent from my medisave. i know you
did advise me but i thinks and plan well before i done all these. if i earn more money, i will volunteer top up 7k to my MA in the future to deduct my income tax.

Secondly, i tried to share with alot of my frens all from different age, most of them earn alot but still think that OA is impt than SA because need to buy house. And they urge me to stop what im doing because they say i may face problem if im
buying house. But i know what im doing and i have still transfer full from my OA to SA for the next 3 to 5 years. i attached the interest i earn from OA and SA.

i only transfer all my OA to SA in Dec 2015. And i dont even have a gf now, so i just focus on funding SA first, so it will roll more interest through the years till my retire age.

Third, i also stop spending unnecessary money. i always think about what is the need and wants. And do i spend more money to buy smth just because of convenient. Just like what you shared. buying a can drinks in outside cost 1.50 where you go NTUC its only cost 70 cents. Start saving money and doing my best to focus on my studies and work.

Currently plan to save up $20k then go for 9 to 12 month FD. Meanwhile wait till i read enough before i start any investment such as S-reits etc.

you can use my screenshot and share on your blog. im okay with it.

sorry AK. i signed $200k term and $150k living rider(for CI) for 35years. The Premium is $75/mth and till i reach 62 years old. just to provide you in case people wish to find out

Lastly, thank you for the effort of keep posting and giving guidance. I still keep reading and following your blog and FB. All the best AK in your investment.


Warmest Regards
S

My reply:

Thank you so much for taking the time and effort to share with me your progress. I am very happy for you. I am sure you feel a deep sense of satisfaction and also a higher level of security now. Good job!

From S:

Yes AK, I'm feeling so much ease now. Hope you can continue to spread more knowledge to us. But I must admit it's hard to convince others about investment or transferring of oa to sa. But it's okay. As long as we know what we are doing and believe in managing ourself and the interest will prove through the years.

Related posts:
1. Filial son working towards financial security in 2016.
2. Beyond needs and wants is the price of convenience.
3. Do you know if your parents have H&S coverage?
4. A lot of money in my CPF SA...
5. AK is showing off his CPF OA and MA.

AK answers 3 questions on early retirement.

Dear AK

I have been faithfully following your posts for the past year and have benefitted much in terms of my own early retirement planning.

What I applaud you on is not only having wisdom in value and passive income investing but also the willingness in imparting this knowledge to other investors aspiring to financial independence. Well done!

I figured from your posts that you have recently retired from full time work and are now financially independent reaping the benefits of your most commendable and lucrative passive income.

If you may and don't mind sharing, can I tap your experience on the following:

1) at what point or level of passive income returns did you make the decision that you had sufficient safety buffer to leave your full-time work? It's always nice to have the safety net of a monthly pay-check and medical coverage and it is not easy to let this go in return for more free time;

2) even after achieving financial independence and leaving full time work, are you able to occupy your time fully and meaningfully? I struggle with this aspect as I fear boredom and a meaningless daily existence wondering how to occupy my time.

3) how do you keep yourself up to date on your work related skills in case you decide to return to full time work?

Thank you in advance and appreciate your guidance and sharing from your personal experiences.

Regards
A Kindred Spirit

My reply:

Hi AKS,

Welcome to my blog. :)

#1. When my passive income was as much as my earned income, I was basically in a position when I worked because I wanted to and not because I had to.

However, I am Singaporean and KS. So, still worrying, I waited for my passive income to be a bit more than my earned income. How much more? Maybe 30% more?

As for medical coverage, I recognised a long time ago that I must have good H&S coverage and not depend on the coverage provided by my employer. Visits to the clinics don't cost much since I am a Singaporean and I go to Polyclinics when I am ill.

#2. Initially, retirement could be boring but I am hardly bored. Blogging and related activities took up quite a bit of my spare time. That kept me from being bored but I blog less now. I am also slower to reply to comments and emails.

Then, what am I doing to occupy my time? I am spending more time learning about health matters, especially matters related to nutrition, weight loss and exercise. I am doing Yoga again and I spend quite a bit of time in my planter gardening. I also read up a bit on the subjects.

I am always learning something new. I am not bored.

#3. For me, I have no intention to go back to active employment. So, this is not a burning question for me. I have an academic degree and not a professional degree. So, I guess this is another reason why this question is not really important for me.

I was teaching for a while and I could always do some relief teaching if I really want to, I guess.

I do know of people who say they don't ever want to retire. As long as they are happy and healthy, there isn't anything wrong with having no desire to retire.

However, if they say they can't retire or if they are unhappy and suffer in their jobs, that is a big problem. They should really have exit plans then.

Related post:
Retiring before 60 is not a dream!

New money habits led to saving $100K in 18 months - Part Two.

Updated (27 Dec 16):

I am such a kaypoh (i.e. busy body), I know. I told myself many times before that I should change. I should not talk to myself but it is very difficult for me not to.

Although I left the profession donkey years ago, I guess I am still a teacher at heart.

Source: Wife becomes tai tai...

If every day should see one person becoming financially more secure from reading my blog, I would be very happy.
----------------------




This is a continuation of an earlier conversation which generated quite a lot of discussion on my FB wall:

Hi AK,

Thank you for your reply!

Saw your recent post where you share my email and wow - it drew quite a few strong comments from your facebook readers. Haha.

 Anyway, im not sure why there are such strong comments about the S$100K but no one commented on the $50K loan. All I wanted to say was it is really possible for a couple to save $100K if we put aside 4K monthly and save up all the bonuses within that 18 months. =)

 Others may not believe it but its really not our incentive to convince them. As long as we continue to do the right things to help ourselves and achieve the results that we wanted, why bother about what others say. Right? =)

 My hubby and I had some discussion and decided that we will keep the funds as our emergency funds instead of paying down our loans. 

The purpose of the emergency funds are meant to cover our monthly routine expenses in order to maintain our current lifestyle.



Sleep tight. Sweet dreams.

 In the event if we are retrenched suddenly, with just a $50K cash on hand, this will shorten the period which will allow us to go on a "no pay leave" scheme and we are not quite comfortable with it. Given the current economic climate, perhaps its better to hold cash.

 Meanwhile, its time to build up our war chest. Hopefully the market will not crash so soon so as to allow us to build on our war chest.

Taking very sensible steps. I am glad.

Gambatte!


Related post:
New money habits led to saving $100K in 18 months (Part One).

AIMS AMP Capital Industrial REIT: A private tour..

I was given an opportunity to take a tour of 4 of AA REIT's properties in the western part of Singapore and since the REIT is the largest investment in my portfolio, I accepted the offer right away after confirming that the tour is a private one. (Yes, I am still very shy.)

Everything tells me that my opinion of the management is right as they put investors' interests right at the front. 

Being AK, in jest, I said they must do that since Mr. George Wang has such a big personal stake in the REIT. 

Bad AK, bad AK!

Appointment time: 10AM.

Shuttling between properties, we had a good conversation going:

1. With the oversupply of industrial properties in Singapore, I am worried about the vacancy rate for warehouses the most. 

Apparently, the REIT is spending a lot of resources on as it is rather challenging and could get more so. 

I reckon the REIT is doing quite well, otherwise.





2. Of course, we have heard stories of how some local companies move across the Causeway to take advantage of the cheaper land in Johor. 

The biggest challenge is in finding labour and also the right type of labour for companies in the Iskandar region. 

There is plenty of land there but not enough labour. 

So, for many years to come, Singapore industrial properties will still be in demand.





3. Asset quality is a pertinent concern when we invest in REITs. 

The REIT is picky not only when it comes to buying and divesting properties, they are also picky when it comes to which existing properties to benefit from AEIs. 

Active portfolio management is something the REIT does well, I agree.





4. In a rising interest rate environment and also softening rentals, is there any plan to hold back a percentage of distributable income to lower the gearing level? 

To be fair, the REIT's gearing level is not very high at about 32% but expecting property values to decline, gearing level could bump up. 

The answer seems to be that the REIT rather distributes 100% of the available distributable income because they would have to pay corporate tax on whatever income they decide to retain even if it was just 5% or 10%.





5. Is there any possibility to refinance, locking in the still relatively low interest rates for a longer term? 

There is a MTN maturing later this year and the interest on that is 4.9%. 

They explained that a longer term loan could mean a higher interest and that a shorter term loan would mean a lower interest. So, there will be a trade off. 

Well, I am hoping for a new 7 years MTN with interest meaningfully lower than 4.9%.





OK, here are some other photos:

8 and 10 Pandan Crescent

20 Gul Way.

30 & 32 Tuas West Road being redeveloped.

Another 20 Gul Way in the making!

1A, International Business Park.

Oh, I also want to share these photos taken during the tour of the award winning (Green Mark Gold) 1A, International Business Park:

Definitely a beautiful working environment.

I cannot share everything that was discussed mostly because my memory is not what it used to be but I was very impressed by what I saw and what I heard.





Real estate can be a very good income generator. 

However, not all of us have the ability to invest directly in a piece of real estate. 

Even if we have a million dollars or two, we would be hard pressed to invest in a portfolio of real estate to reduce concentration risk. 

Investing in well managed REITs solves this problem.

Although I have never attended a single AGM by AA REIT, just by taking note of what they did over time, I could tell that AA REIT is a well managed REIT where investors' interests are not neglected. 

I am glad to have affirmation on this tour.





UPDATE (28 DEC 16)
AIMS AMP Capital Industrial REIT received Temporary Occupation Permit for its redevelopment at 

30 & 32 Tuas West Road which is valued at S$60.7m, up more than 4 times from its former value S$14.1m. 

It will deliver S$4.15m in rental income annually in year one with fixed annual rent escalations over the term of the lease – up from S$0.82m.






This is NOT a paid advertorial.

Related post:
2015 full year income from S-REITs.

A note on the CPF and a break from blogging.

Regular readers know that I only want to be a happy peasant. I was never royalty or an aristocrat. I am of the masses. 

DPM Tharman said before that the CPF is meant to help the working masses. That is why there is a limit to doing OA to SA transfer, to doing MS Top Ups to the SA and also to doing Voluntary Contributions to the MA.

For many people, it is easy to miss the big picture. A fixation on theoretical opportunity cost could turn out to be costly. 

In our investment portfolio, the CPF should be considered an investment grade bond component that gives us peace of mind (and relatively good coupons). It is not, however, the be all and end all in a sound retirement funding plan. 

We cannot build a house on just a cornerstone but to give up a cornerstone in a house, we must have a high level of certainty that whatever takes its place is going to be just as strong or stronger. 

If the alternatives have a higher level of risk or a greater degree of volatility, then, we would need a helping hand from Lady Luck to ensure the house remains standing in the years to come.

Be careful who we listen to when we build a house of our own.

I will be taking a break from blogging etc. for a few days. It is probably a good idea to get away from things familiar for a bit. 

Don't worry. I will be back. :)

In the meantime, keep building your house carefully. ;)

Related posts:
1. AK is showing off his CPF-OA and MA.
2. AK's SA outperformed in 2015.
3. Building a cornerstone in retirement funding.

Tea with FunShine: Less is more - Prudent Living.

This is a guest blog contributed by a reader who goes by the name of FunShine.

A bit about the writer - FunShine

The writer hopes that his personal account will be a good read for people hoping to take small steps towards different degree of financial freedom.

FunShine has been working in the Community and Social Service Sector for over 10 years. It has always been an interesting sector to work in.

He has decided to take a 6 months break and live prudently, surviving on his dividends and interests for his personal expenses.

FunShine does not want to compete with the Joneses and is contented with his lifestyle.

----------------------------------------

My dividends and interest earned for the month of Dec was $338.37. Ever since the start of my break, I have been trying hard to just live on my dividends and interest for my personal expenses.

Due to this challenge to myself, I have learn and did a few things very differently in Singapore as compared to when I was employed.

1. Meeting with Friends Friends that choose to meet up are given a few choices. 

A. We meet in hawker or coffeeshop.

B. They treat me if we want to eat in restaurant.

C. I have meals at Home first then just have soup at the restaurant of my friend's choice.

Most friends are understanding since I am not employed. For those not so understanding, you just do not meet them. Thankful that during this season, I have been blessed by good friends.

2. Transport Transport actually is the main bulk of my cost which is hard to cut.

A. Meet friends for early breakfast, so that I can have the free transport before 7.45am.

B. If it's only a few bus stops or 1-2 mrt stations, walking is a cheaper alternatively.

C. Farrer Park Mrt to Lavender Mrt is actually not that far and you save a bit if you walk.

D. Punggol to Bishan by walking is viable if you have the time. Gd exercise.

3. Giving/Contributions I struggle with this part the most initially.

A. Contribution Contribution to joint account, parents and grandma must still be there. It's my decision to take a break but that does not excuse myself from my responsibilities as a son, eldest grandson and husband. Contribution from this category will eat into my savings. Thankful that I have enough for this break.

B. Giving to Church You still give just that the amount is reduced as God loves a cheerful giver. Besides, the air-con that I enjoyed in church, someone still needs to pay for it.

C. Donations Donations still carry on if necessary. As I want my tax deduction and giving somehow will make you feel good. Even better when you know the dollar and cents mean a lot more to you now then previously.

D. CPF contribution It's a bit painful to see that there is no money coming in to your OA account. As I have this habit of just keeping 20k in OA and any extra will be transferred to my SA account. Thankful that with the money left in my OA, making payment for my 4 room flat is a non-issue.

E. SRS contribution Contributed to my SRS for long term financial planning in Dec 15. Was bo Liao enough to contribute the amount such that my income tax next year is only $88. Last year income tax was $130+. The amounts are for the whole year not monthly.

4. Lifestyles Changes

A. Plain Water Bringing a bottle out used to be a big hassle. It's so much easier to just grab a drink from the fridge, be it in the Super Market or 7-11. With the challenge, I have to bring my own water. Healthier lifestyle not by choice but by the income I am depending on.

B. Long Walks I love long walks ever since my near fatal bicycle accident in 2008. Also, long walks are free and the scenery in our parks are most lovely.

C. Taxi You have the time. You dun feel rush. Why the need for taxi?

D. Restaurants All restaurants visit in SG is cut to almost zero. We only spurge on this when we are overseas as it is so much cheaper.

What's next for me?

I really dun have a very detailed concrete plan. But for friends that know me, I always have a overarching plan to follow.

Right now, is just to enjoy this 6 months break from Nov 15 - Apr 16.

As for my financials goals, since I have achieved personal expenses freedom which is a small step in the right direction, it's time to think about other goals.

It should be as follow:

1. Enough recurring dividend for the amount I give to my grandma

2. Debt free, pay off my 4 room HDB in full

3. Enough recurring dividend for the amount I give to my parents

4. Enough recurring dividend for the amount I contribute to my family account

5. Legacy Fund

Once there is no purpose for item 1 and item 3, the assets will go into this fund (item 5). This fund will aid in my giving, be it to charities or missionaries.

That's all for now.

Thank you for reading.

---------------------------

For sure, keeping our needs simple and wants few will improve our financial well-being.

Good job, FunShine!

Related posts:

1. Think you cannot reduce your spending?

2. If we are not rich, don't act rich.

3. 3 points to make us happier people.

"Every man is rich or poor according to the proportion between his desires and his enjoyments."(Samuel Johnson)

Building a cornerstone in retirement funding with CPF.

I try to be holistic in my approach to wealth building. 

So, ASSI is not about investing in the stock market per se, it is about personal finance in general. 

One topic that comes up pretty often is "retirement".

All of us want a comfortable retirement. 

Who wants to be old and destitute?





Unfortunately, many people don't plan for retirement and I do know a few myself. 

I also know a few who over-plan for retirement. 

Actually, I could be one such over-planner and I have been trying to moderate myself. 

Hey, if a worrier like AK thinks you are over-planning, then, you are probably over-planning. 





Anyway, an important part of retirement planning for Singaporeans is understanding how the CPF works and how we could be maxing out the benefits. 

These are benefits we could and should enjoy as Singaporeans.

The CPF is one of the very little welfare Singaporeans can get from our non pro welfare country. 

So, if you are still clamouring for some welfarism, hey, get moving.





I blog about the CPF often and I notice that the subject generates a lot more interest than when I blog about investing. 

I guess it is something that more people can understand and are able to participate in with less fear.

So, I am inspired to come up with another "e-book" which is really a collection of some popular blog posts on the CPF for ease of reference and sharing. 

This is probably something I should have done sooner:

Chapter 1:
The original mission of the CPF is to help members fund our retirement. 

However, many have said that the CPF is not enough to retire on. 

Sharper ones will ask if they have done anything beyond complaining? 

Yes, it is true that the CPF is not enough to retire on but we can certainly make it a larger amount to retire on.
See: How to upsize $100K to $225K in 20 years?





Chapter 2:
The government has implemented some changes to the CPF system to help give a boost to retirement funding for CPF members. 

Count our blessings. Every little bit helps.
See: 2016 changes to the CPF and SRS.


Chapter 3:
Bearing in mind the original mission of the CPF, remember that if we should use more of our CPF funds to pay for our home, we would have less money in our CPF. It is not magic. 

It is math. 

Yes, there is such a thing as over-consuming when it comes to housing.
See: Buy the biggest and most expensive home we can afford.





Chapter 4:
Hate the idea of having to pay accrued interest for money we took from our CPF accounts for housing? 

We might want to think about voluntarily refunding money we borrowed from our own CPF accounts to pay for our homes. 

Why pay interest to ourselves when we can have the government pay us instead? 

Duh.
See: How to stop the interest we owe ourselves from growing?





Chapter 5:
All of us are worried about costs. 

Rising cost of healthcare is probably one at the top of the list. 

We need to have insurance. 

This is the only way to get a handle on the issue. 

However, what about the cost of insurance? 

Ah, but this is more manageable because we can budget for this. 

Hey, did I tell you it is possible to get free health insurance in Singapore. 

Don't believe me?
See: How to get free medical insurance in our old age?





Chapter 6:
I have shared my CPF OA, SA and MA numbers in a shock and awe tactic but remember Rome was not built in a day. 

It has been a 20 years journey for me.
See: AK is showing off his CPF numbers.

Chapter 7:
Of course, all of us have different circumstances in life. 

However, if we share the same philosophy and goals, we will all move in the same direction. 

The magnitude of success is not as important. 

Everyone who has taken affirmative action is a success story. 

Start and stay at it.
See: Two friends and their CPF savings.






Chapter 8:
The CPF Minimum Sum or what is called the Full Retirement Sum now is not impossible to reach. 

The constantly increasing level is not impossible to keep up with. 

In fact, we might not even have to do anything to keep up with the increases.
See: If I had done this, I would have hit the MS too!


Chapter 9:
If we want a basic level of certainty in retirement funding, we would probably do well to consider getting an annuity. 

You know what? 

The CPF Life which starts paying us monthly for life from age 65 is the best annuity there is.
See: An annuity: Would you rather have it or not?





Chapter 10:
Lastly, for the investors amongst us, if we believe that we should hold some investment grade bonds in our portfolio for diversification, then, the CPF is the most attractive AAA rated sovereign bond there is and with very attractive coupons to boot. 

Of course, it could be considered a long term or short term bond, depending on our age. 

A risk free and volatility free investment? 

You want?
See: AK is buying a AAA rated bond.





It is not magic. It is just math.

If AK can do it, so can you.

(There are hundreds of blog posts on the CPF here in ASSI. So, it is probably a good idea to treat this "e-book" as just an introduction to the topic. Use the "Search ASSI" function at the top of the blog to read more.)

UPDATE: 14 August 2016

Another investment avenue - using CPF savings - is the recently introduced Lifetime Retirement Investment Scheme (LRIS), mooted by the CPF Advisory Panel. The LRIS is an alternative, simplified investment option that will offer a small number of low-fee, well-diversified and passively managed funds. It is targeted at CPF members who do not have the financial expertise or time to select and monitor their investments.

"When the new LRIS is rolled out, Mr Wong can consider investing monies accumulated in his Ordinary Account for higher expected returns, if he is prepared to take some risk," said Mr Tan.

Source: ST, 14 Aug 2016

My take:
Since I treat my CPF savings as a risk free and volatility free component (i.e. AAA rated sovereign bond) of my investment portfolio, I am unlikely to take part in the proposed Lifetime Retirement Investment Scheme (LRIS). Of course, money in the CPF-OA doubles up as a war chest which could be deployed in the event of a stock market crash for possibly better returns than what the LRIS could deliver.

Related post:
My CPF-SA outperformed in 2015!