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.

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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.

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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!