AK has been brewing something good!

Someone asked me why have I not blogged about stuff I eat and drink for so long? Has it been very long? Maybe so. 

I have been somewhat lazy when it comes to blogging but my habit of spending time on preparing many of my own meals has not changed.

Anyway, I am doing this blog post to share a recipe for something which I have been enjoying lately:

Hmmm...

Looks like green tea (which I enjoy too) but it is not. 

So, what is in the pot?

Hmmm (again) ...

Everytime I brew this, my tiny apartment smells so nice. In fact, I was told that the corridor on my floor smells nice because of my brew too! 

It is that powerful!

I am doing the entire floor a big favour because the aroma keeps the roaches away, I am sure.

The ingredients are inexpensive and will provide many, many days of drinking pleasure. 

Only 50c. From NTUC Fairprice.
4 or 5 pandan leaves for a pot (1 litre).

2 big pieces of ginger for $1.00 or so.
4 or 5 slices of ginger for a pot (1 litre).

Wolf berries and barley.
One tablespoon of each for a pot (1 litre).

Taking this brew has many benefits:

1. It has antioxidants like Selenium, Vitamins A and C. We know antioxidants are good for us in many ways.

2. It also has Calcium, Copper, Potassium, Magnesium and Manganese which are all essential for good health.

3. It has Vitamins B1, B2 and B3 which are essential for energy production in the body.

4. A ginger drink is also beneficial as it reduces stiffness and pain in joints because ginger as a food has an anti-inflammatory effect.

I drink this sugarless. You could add some sugar to your brew, if you like. 

I hope you like this healthy brew as much as I do. 


Related post:
My food bill grew in size but my weight reduced.

Good luck and good fortune in the Monkey year!

The Year of the Monkey is knocking on our doors.

Children and old folks usually like Chinese New Year. Children probably enjoy collecting red packets and old folks enjoy more time with family. 

Some people might prefer to go for a short holiday. Instead of 拜年, they do a 避年. They could be the singles or the married without kids.

Well, whatever the case may be, let us look forward to the new year and hope that it would be one of peace and progress for everyone. Less human conflict and fewer natural calamities would be nice.

OK, it has become a tradition for AK to churn out 4 numbers just before the Chinese New Year. 

Apparently, some readers won money last year buying the 4D which AK coughed up in a state of delirium.

I don't know if I am sufficiently delirious now but here goes:


3018

Remember, it is all for fun and a little excitement. Don't overdo it.

HUAT AH!

4 ideas related to the repayment of housing loans.

A conversation on housing loan and the CPF:

Hi AK,

First of all, Happy New Year to you and your family. I’m a 36 yr old engineer who has been following your ASSI Blog for few years already and like the rest, have benefited from your valuable advise through your posts.

I would like to seek your advise or opinion on an issue that have been bugging me lately. Both me and my wife are working (married with a child, X yrs old) and our combined income is $14k per month. We do not own car and our only major loan is our home loan.

We live in a condo that has an outstanding loan amount of $600k with remaining loan tenure of 28 years. In 3 months time, the mortgage loan lock-in period is coming to an end and the current interest rate is 2.5% (Interest rate may be revised upwards after the lock-in period).

Both me and my wife have a combined amount of $120k (approx. $60k each) in our CPF ordinary account that can be used for loan partial capital prepayment. My concern here is whether to use our money in our CPF OA for loan partial prepayment and refinance the mortgage loan or just transfer the entire money in our CPF OA to CPF SA so as to hit the minimum sum early. I’m really confused on which is the best option to choose from. 

1st option:
Use our CPF OA money to reduce loan principal amount and refinance with a better loan package

2nd option:
Transfer all our CPF OA money to our CPF SA and just refinance with current outstanding loan amount of $600k and pay off the instalment with our monthly CPF contribution

Both of us are working for a very stable company and holding on to a very stable job so there’s no issue of disruption to our employment. Our lifestyle is simple and we don’t chase after luxury but looking forward to a loan-free life and a comfortable retirement. 

I would greatly appreciate if you could lead me to choose the best option for me. Thank you.

Best regards,
C.

Hi C,

Idea 1:
Money in the CPF OA acts as a buffer for many people when it comes to home loan servicing (as not all have enough in emergency fund in their bank accounts). So, when people want to use the OA money to pay down their home loan, it makes sense to leave some money in the OA enough to continue servicing the loan for another 12 to 24 months in case they should be retrenched.

Idea 2:
As for whether you should transfer OA to SA or use the money to pay down the home loan, it depends on the opportunity cost. If your home loan attracts an interest rate of 2% and your SA gives you an interest of 4% to 5%, where should your money go? I believe that money should go to where it is treated best.

Idea 3:
If you are pretty sure that you have job security, you will be doing yourself a favour by giving your SA money more time to compound with a larger base now. Future monthly contributions to your CPF could be used for partial capital repayments on your home loan as interest rates go higher then.

Idea 4:
Finally, of course, if you are able to refinance your home loan to get a better deal with an eye on the future, you should consider seriously.

Best wishes,
AK


Related posts:
1. Aim to pay off home loan and hit MS.
2. Buy the biggest and most expensive home.
3. Buying an apartment: Considerations.

Unless we are rich, be pragmatic and not romantic.

A conversation with a reader:

Dear AK,

Finally, my husband and I have set aside $10K as emergency fund and will be contributing to this fund on a monthly basis. T

o us, this is a "giant" step as we never have any such funds before we got married.

We enjoyed reading on the couple who could save $100K in 18 months and valued their beliefs. 

The post got us thinking, if we continue saving $2000 for 5 years, we would have at least $120K in cash.

I grew up in XXXXX and my matrimonial home is also in XXXXX. We like the convenience to town and the amenities the area provides. 

However, respectively to frugality, even if we buy a new HDB 4-room flat in XXXXX, it will cost at least $500K. We felt guilty even at the thought of it.

Sell our flat in XXXXX and move to Punggol/Sengkang, maybe? That is when we will see a profit from the sale of our flat. 

However, our hearts could not bear to leave XXXXX.

Have you had such dilemma before?

AK's reply:

Hi A,

I stayed in XXXXX for many years of my life. In my mid 30s, I bought a condo in XXXXX, stayed there for almost 5 years. 

Price shot up. I loved the place but I sold it. I am a pragmatist.

Singapore is a small place. Nowhere is really too far especially with so many new MRT lines now and in the future.

Having more money earlier is a winning combination for the financially savvy. Money needs time to grow. 

The earlier we have more money, the better.

Best wishes,
AK


I know this is an emotive topic and there will be people who will disagree with me. Feel free to disagree.

I believe that only the rich can afford to have romantic ideas about their possessions. The rest of us are better off being pragmatic and ensuring that possessions (or the lack of) afford us a better future.

Related post:
New money habits led to $100K in 18 months.

"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.