Average income workers have a choice to be rich!

I went out to lunch with my mom before sending her to the hospital. 

I went to a supermarket nearby to buy some chocolate which was on special offer before going to a bank to enjoy a cup of tea while waiting for her to call when she was done.

I like buying things at knocked down prices (i.e. the chocolate) and I like free (i.e. the tea). 

Anyway, there was a big screen TV right in front of me with ads flashing. 

One ad asked:

"When you have to stop working, can you afford to?"

It is a straight forward question that is also depressing because it suggests we don't have a choice as to when we stop working. 

We stop working when we have to. 

We stop working when we are told to. 

Wait a minute, that sounds like a prisoner in a labor camp serving time. Alamak!

Don't you hate the feeling of working because you don't have a choice? 

Yes, of course, you do. 

I would be surprised if you don't.

This is probably why you are reading my blog and others like it. 




You want to be financially free so that you do not have to exchange the most precious resource you have (i.e. time) for money anymore. 

You don't want to serve time. 

Time serves you.

So, instead, I would ask:

"If you want to stop working, can you afford to?"

I am going to be brutally honest. 

Not many people can. 

This is something only the rich can do. 

If you are not rich, continue to serve time. Ouch!

AK, you are terrible! 

Bad AK! Bad AK!

The truth hurts. 

So, what to do? 

Become rich lah!

I believe that even average income workers can become rich and I am not talking about "striking millions at TOTO" kind of rich. 




I am talking about "not having to exchange time for money anymore" kind of rich.

Why do many average income workers find this impossible? 

Do you believe me if I were to say it is not because they make an average income? 

The truth is many of them find this impossible because they can afford so many things in life and would get them in a heartbeat. 

This is why they cannot afford to stop working.

This is based on a true story:

Guy: "I think we should go to Europe on a vacation. The Euro is so cheap now."

Gal: "Wow! Good idea! I can buy all the branded goods there! So much cheaper than in Singapore!"

Guy: "I have $10,000 saved up this year. We can have a good time there."

Gal: "I am so happy! I think we deserve it."

Oh, they definitely deserve it! 

If this is the way they are going to live, year after year, they deserve to be destitute and get VIP (i.e. Very Impoverished Person) seats at Roy's next "RETURN OUR CPF" rally in Hong Lim Park.

This is based on a reality show I watched:

Guy: "I prefer Hawaii for our honeymoon. I don't want to go to Phuket."

Gal: "But we cannot afford it. We have a budget, remember?"

Guy: "I know we cannot afford it but I think we deserve it. We can take a loan."

OMG! That guy is an IDIOT! 

I probably exclaimed so loudly that my neighbors got a fright.

Hey, woman! Financial freedom gives us options but you don't need financial freedom to opt out of this relationship. 

I think you can afford to dump that fellow. 

Do it before your finances end up in the dumps and you cannot afford anything else!

Spend all the money we make, we will always be poor.

Borrow money to fund our lifestyle, we will be poorer than poor.

Don't let people ask you (and not at the bank):

"When you have to stop working, can you afford to?"

Ask instead:

"If you want to stop working, can you afford to?"




The difference between the two questions is one of choice. 

We have choices in life and if we want to continue having choices in life, choose carefully.

Yes, even average income workers have a choice to be rich!

Related posts:
1. Avoid financial ruin.

2. Save 100% of your pay.

3. Recession proof your life.

4. How much can you save?

5. Prepared for retrenchment.

Do online contribution to Medisave and get $88 Ang Bao.

"For those under 65, the Basic Healthcare Sum next year will be S$54,500, up from S$52,000 previously, the authorities said."
Source:
CNA, 16 November 2017





The Basic Healthcare Sum (BHS) which was known as the Medisave Contribution Ceiling (MCC) in the past has been raised from $49,800 to $52,000 in 2017. 

This means that we can voluntarily contribute $2,200 now. 

Of course, for those who are gainfully employed, this contribution will enjoy income tax relief.

For people like me whose CPF-SA has already hit or exceeded the prevailing Minimum Sum or Full Retirement Sum, this is about the only avenue we have to pump more money into our CPF to earn a 4% interest. 




Of course, for those of us whose mandatory contributions (MC or contributions from earned income) are lower than the CPF Annual Limit ($37,740), we can also do regular voluntary contributions for the difference, maxing out the CPF Annual Limit. 

The CPFB will apportion the contribution to our OA, SA and MA. 

How much goes into each account will depend on our age group.

I am so glad to be promoted to the next age bracket which means more of my regular voluntary contributions will go to my CPF-SA which is paid a higher interest. 

One of the reasons for me to be happy with ageing.





We can do a contribution to our CPF-MA online.

Here is how to do it:

Go to CPF e-Cashier homepage.

Enter details and choice.

Check allowable contribution

$2,200 this time of year.

Contribute online using eNETS

It is done!

I contributed only $2,000 because that is the daily limit for me.

How much interest will $2,200 earn in a year? 




At 4%, that is $88.

Some people might say $88 is not a lot of money. 

What will AK say? 

It is still money and good money from the government too.




How do we build wealth through saving money? 

Slowly and steadily, every dollar adds up.

From my FB wall.

Don't underestimate the power of saving a few dollars a day, every day. Don't underestimate the power of compound interest.

What? Don't have $2,200 to contribute to your CPF-MA? 

Oh, you need the money buy your daily cup of Starbucks coffee? 

OK lor. You are free to choose.




I choose to have free medical insurance. 

It is such a no brainer.

I forgot to mention that 88 is such an auspicious number too. 

Huat, huat ah!




Related post:
How to get free medical insurance?

Mr. Lee Kuan Yew said China could become pushy.

"I don't want to sound apocalyptic but I don't see Taiwan as being able to resist the pull of the mainland. There will come a time when the 7th fleet cannot intervene." Mr. Lee Kuan Yew.

A long time ago in ancient China, there was a big village that sat on both banks of a river. One day, there was a big fight in the village and villagers living on the left bank said they wanted to have nothing to do with the villagers on the right bank. 

The village chief who was living on the right bank rejected this and called the newly appointed village chief on the left bank a traitor.

Then, there was a small village farther inland on the right bank that was friendly with the big village. Although the big village was broken into two and continued to quarrel, it had nothing to do with the small village. 

A case of domestic conflict, chief of the small village thought.

The small village was quite good at doing certain things and designing war chariots was one of them. Being small, the village didn't have room to test them and would send them to the left bank of the big village for testing. The chariots had to pass through the right bank of the big village to do so and for years that went on without incident.

Then, one day, the quarrel in the big village escalated. On that fateful day, the chariots being tested on the left bank were on their way back to the small village. 

It didn't matter that the late chief of the small village helped them before, the right bank which sought to isolate the left bank took hold of the chariots. The small village which needed the big village in more ways than one was helpless.

The small village then understood the saying:

穷不与富斗，富不与官斗。

In ancient China, the rich would pay money just to get a position in government. Being rich was good but being rich and powerful was better.

Got power, can be pushy. 

Got power, can be assertive.

Of course, it was not the first time our country's first Prime Minister, the late Mr. Lee Kuan Yew, got it right.

Related post:
Mr Lee Kuan Yew on the Eurozone crisis.

“As the case is still under investigation, no further information is available. The suspected controlled items are still kept at a customs storage place in Tuen Mun. They have been stored indoors since December 6,” a spokesman said.

At a daily press briefing, Chinese foreign ministry spokesman Geng Shuang would only say that the Hong Kong government is handling the incident in accordance with relevant laws.

Beijing has always known about the arrangements between Taiwan and Singapore and remained silent on the issue until now, seizure of the armoured vehicles provides it with an excellent opportunity. Whether this occasion is orchestrated or opportunistic is of secondary importance. The affair gives China floor to push back against the undesirable activity, drive a wedge between Singapore and Taiwan and give a lesson to Singapore for recent statements on the South China Sea and China’s role in the dispute.

AK showing off his CPF-OA and MA (2017).

I thought that only my CPF-SA numbers garnered a following but it seems that my CPF-OA numbers have a following too. 

So, I agreed to share more of my CPF numbers here. 





Latest CPF numbers, OA, SA and MA:

If we add all the three accounts together, the total amount of savings I have in the CPF is:

S$723,088.16

At the ripe old age of 45 too.





I know this is impressive to many people and although it is achievable, please don't think that this should be a benchmark for you to latch on to. 

Remember, we have to be realistic. 

Not many of us who want to buy our first property can leave our CPF-OA money untouched. 






Indeed, regular readers know my story. 

My CPF-OA savings was not always untouched.

See: 
How did AK amass so much money in his CPF-OA?





For most of us, what is more achievable and more rewarding is to top up our CPF-SA and CPF-MA. 

These accounts pay higher interest and they will help with our retirement and hospitalisation funding. 

Be pragmatic. 

These accounts should have priority.

See: 
1. How to upsize $100K to $225K?
2. How to get free medical insurance with CPF-MA?





Interest earned in the CPF-MA will flow to the CPF-OA if both the CPF-SA and CPF-MA have hit their ceilings. 

That interest will help the CPF-OA grow. 

I know because this is what happens to me.





Later on in life, to grow our CPF-OA savings faster, if we have spare cash, we can always think about doing voluntary refunds to our CPF-OA. 

Of course, when we are older, we could also sell our property and downsize.

See: 
How to stop accrued interest we owe from growing in CPF-OA?


The CPF can go a long way to providing us with a financially more secure future.





We have to help the CPF to help ourselves and the earlier we do it, the better.

Now, I wonder how much my lump sum withdrawal from CPF at age 55 could be? 

What? 

The government allow a withdrawal of $5,000 only? 

Not for me.

Related posts:
1. AK showing off SA numbers again?
2. AK showing off CPF-OA and MA (2016).







"They all say CPF is XXX... How like that?"

AK showing off his CPF-SA numbers again?

(4 things you need to know about your new CPF statement.)

I hope my blog has not caused too much trouble for the authorities.

Just like my passive income numbers, my CPF-SA numbers seem to have garnered a following as readers reminded me on Facebook that it is time. 

Even Facebook reminded me that it is time.

I guess sharing my CPF-SA numbers is inspiring to many readers and it helps them to stay the course.

Er... OK, I am not quite sure what to make of the last comment (and some say I am cryptic).

Anyway, although I thought I might skip it this year, a remark from a reader on FB gave me a nudge.

AK was old, fat and ugly. Now, AK is old, slimmer and ugly.

If by revealing my CPF numbers again, AK can be old, slimmer and handsome, OK, I do it.

What? 

You surprised AK is like that? 

Alamak, you didn't know?

I am human too!

Hey, who wants to be old, fat and ugly? 

Cannot do anything about old but if can do away with the fat and ugly, that's two out of three! 

I win!





OK, the numbers:

How much has my CPF-SA money grown from the year before? 

See related post at the end of this blog.

Worried about the projected 3% yearly increase in Minimum Sum (Full Retirement Sum)? 

Not me.

How did this "miracle" happen? 

If you have to ask, you must be a new reader. 

See related post at the end of this blog.

Ask why does having more money in our CPF-SA and as early as possible make sense? 





How to do this?

See the related post at the end of this blog. 

Then, go to the right side bar of my blog to read more of my blogs related to the CPF.

If you are a regular reader, you should be smiling now! 

Huat ah!





Truly Happy New Year!

Related post: CPF-SA outperformed.

Another undervalued investment of mine is no more?

(How much is a company worth if it ceased operation today?)
Today, a reader sent this to me:

Hi AK, is this related to AAReit har?

http://www.businesstimes.com.sg/companies-markets/property-fund-of-aims-under-attack-from-wind-up-attempt?xtor=EREC-16-1[BT_Newsletter_1]-20170102-[Property+fund+of+AIMS+under+attack+from+wind-up+attempt]&xts=538380

AK says:
This is not about AIMS AMP Capital Industrial REIT. It is about AIMS Property Securities Fund which I blogged about in November last year.

From the article:

"... Australian fund AIMS Property Securities Fund (APW), is currently under attack from minority unitholders who have convened a Jan 3 meeting to vote on a motion to wind up the fund.

"The motion was initiated by Samuel Terry Asset Management, a Sydney-based boutique investment management company, which claims to have amassed substantial support from other unitholders to go against APW's majority shareholder, AIMS Financial Group.

"However APW's executive chairman George Wang is confident of defeating the motion, pointing out in a recent interview with The Business Times that this is not the first time Samuel Terry (referring to the company) has tried to wind up APW; the previous unsuccessful attempt occurred in 2013.

"Samuel Terry's gripes with APW are similar to LIM's with AMP Capital's fund. First, APW's share price in December 2016 remains at a significant 23 per cent discount to its net tangible assets, although this is already an improvement from 72 per cent in 2009, when AIMS took over the nearly-insolvent MacarthurCook Limited.

"Another of Samuel Terry's gripes is that APW being a "fund of funds", there are extra layers of fees and costs, not all of them disclosed. Also, 71 per cent of the portfolio is now invested in other funds managed by AIMS, compared to just 18 per cent two years ago."

Now, the strange email I received last month makes sense:

Hello,

I am working with Fred Woollard to seek to wind up BVP (formerly A0P).  I see you blogged about it recently.  Might I ask how many units you own, and whether you currently intend to support Fred’s wind up proposal?

regards

Warwick Sauer

BVP. Oh, I see.

I remember telling myself I would look at the email again later but I totally forgot. 

Alamak. Growing old and forgetful.

Related post:
AIMS Property Securities Fund.

Power to become financially stronger is within us.

Although there were not many comments in my blog when I asked if I should continue talking to myself in 2017, I received many emails and also messages in FB. 

They are all positive (so far).





I am particularly touched by a couple of emails.

First, this email from a reader of modest means:

Hi AK,

As the new start of the year, first thing I want to do is to write this thank you note to you.

I have been following your blog since Aug2015 and benefit greatly from it. 

As an employee with salary below average, I couldn't have much to invest. 

However I value the awareness that you created among your followers.





I am started to be more responsible to my own financial management and learnt a little bit about investment. 

I believe many of them out there too. 

I feeling grateful to "meet" you through text. 

Thank you very much.  Hope u and ur family stay healthy , happy and wealthy always.

I will still following your blog as long as u still talking to yourself. 
Regards,

AK's reply:

Hi,

I am happy that my blog has been inspiring and helpful.

All of us have different circumstances and all of us have different abilities to improve our financial health. 

If we diligently do whatever we are able to do in order to have a more secure financial future, it is always better than doing nothing.






I realised that many Singaporeans might not have the funds to invest with even if they want to. 

This is a reason why I decided to blog about the CPF as much as I had in recent years, sharing my own story. 

Making full use of the CPF will give us a measure of financial security in our golden years.

Wishing you a very happy and rewarding new year,
AK

Second, this email from a reader who is determined to effect a sea of change in her family and extended family:

Hello AK, 

Happy New Year!  

I have been your avid reader ever since my friend introduced your blog to me in end 2015. 

 Hence 2016 is my first year of financial "spring-cleaning" project, applying whatever tips you advocate that make sense to me!

And the result - managed to increase income by 35% y.o.y. and cut expenses by 32% y.o.y.! 

 And my family members start to buy into my nagging and becoming more of a saver than spender! (still long way to go, but I am determined to keep on brainwashing them)   

Of course if I include paper loss in stocks (Singtel, AAReit & Comfortdelgro), it would be 33% improvement on income. 

At the very least, reading your blogs serve as a reminder for me to always be mindful about spending, putting a lid on it before things go out of hands.   

Just 1 thing I probably didn't listen to you - I bought a 30+ years old HDB in the East.  

As there are not much new 3-room flats in the East, I decided to go for convenience sake when selecting house (near future mrt, wet markets and other amenities).  

Don't have intention to sell in future, either.   

Hence it is fine to own an old house as it fits my purpose. 

Last but not least, thank you AK, and pls continue to blog as I hope my young nephews could benefit from your blog posts and avoid the unnecessary mistakes in their path to financial freedom. 

Take care! 

AK's reply:
Hi,

I am so happy that you are getting your family and extended family on the bandwagon. 

I always say that financial freedom is a family affair!

I am happier still that your financial health has improved after taking action. 

I am very sure your positive results and attitude will spur you on in 2017 to achieve even more.

The journey towards financial freedom starts with financial prudence and if we become better savers, that is half the battle won.






Congratulations on getting your own flat. I share my thoughts in my blog but I am not dogmatic. 

I just nag a lot. 

Growing old, you know. 

Nagging is a privilege that old people have. 

As long as your purchase matches your motivations, as long as you are aware of the effects of your decision and as long as it is not going to cause you any problems, OK.

Wishing you and everyone at home a very rewarding new year,
AK




It is safe to say that most Singaporeans can be better off financially if we are willing to help ourselves. 

Although the strength to do so may vary from one person to another, most of us have the ability to do this. 

If WE can do it, so can YOU!





Related posts:
1. 2016 FY income from non-REITs.
2. CPF for retirement funding.
3. Financial freedom is a family affair.
4. Really, thank yourself in future.
What is inflation?

Simple investment wisdom keeps us afloat.

I found out my friend is a TV star!






What AK thinks of the LRIS:
"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." Source: A cornerstone in retirement funding. 






Reader:
Dear AK, May I seek your wisdom?

1. Can CPF SA be invested on SDPR STI ETF? I have check in CPF website it stated yes.

2. However, I went to OCBC where I have CPFIS account to ask, OCBC staff not able to reply.

3. I ask approved CPFIS broker they cannot answer as well.

Is there some place I can seek clarification, please enlighten me. Thanks

AK replies to reader:
I don't think the questions have anything to do with wisdom.

1. Er. I dunno.

2. Er. I guess they dunno.

3. Er. Ask CPF Board.

Now, I will share something which (hopefully) has something to do with wisdom. I wouldn't risk a AAA rated sovereign bond paying 4% to 5% coupon for an ETF.

Best wishes,
AK





A bird in hand is worth two in the bushes (provided that they are of the same size). If AK says so, it must be so.

Related posts:
1. Will AK invest his CPF money?
2. My CPF-SA outperformed.

STAR WARS AND FINANCIAL FREEDOM IN 2017!

A reader made a droll statement on FB and I decided to share some quotations from my favourite Science Fiction movie on the first day of 2017:

Related post #1. There are many who do not believe in delayed gratification and the power it has to improve our financial health:

I find your lack of faith disturbing.

Related post #2. For those of us who believe that saving more and investing in income producing assets for a more secure financial future is the way to go, remember, if a job is worth doing, it is worth doing well. Don't be half hearted.

Do or don't do. There is no try.

Related post #3. We will do well to embrace our financial fragility. We are not invincible. It is better to be cautious even if we are strong. Why? Strong, yes. Invincible, no.

Don't get cocky.


Related post #4. There will be times when we feel like throwing in the towel. I know. Sometimes, life just throw us a curve ball or two. I have been there. Well, you might want to book mark this page and remember the X-wing fighter that destroyed the Death Star. Don't let the bad guys win!

Stay on target.

Related post #5. Of course, there is always fear. There is fear that we can never beat the system (e.g. CPF). There is fear that we might grow old and destitute. There is fear that we can never retire. There is also fear in Mr. Market from time to time. Make use of Mr. Market's fear and build passive income!

There is something stronger than fear. The Force (of passive income).


For those who don't follow me on FB, the culprit:

BEWARE THE DARK SIDE which is usually full of bling bling stuff and other tempting objects disguised as needs and very often touted by self serving minions as such.

MAY THE FORCE BE WITH YOU!
HAVE A STELLAR AND FUN 2017!
Related posts:
1. Delayed gratification.
2. Building an income portfolio.
3. I lost my life savings.
4. Make $1m investing for income.
5. Best insurance in life!