Investing for income more difficult as CPF SA goes away?

Recently, I blogged about how the CPF SA would vanish once we turn 55 from 2025.

This was, of course, announced during Budget 2024.

Many people have thought of using the CPF SA as one of the ways to generate passive income in retirement.

That is now out the window.

We would be left with the CPF RA which we can choose to top up to the ERS which is going to be 4x the BRS instead of 3x the BRS.

We would still have the OA but that attracts only 2.5% p.a. and not 4.0% p.a.

That 1.5% p.a. difference is a big deal for some people.

Imagine a $200,000 sum would see a difference of $3,000 which could cover a month's worth of expenses for some retirees.

So, how are we going to make up for the shortfall?

For as long as I have been blogging and longer than that, if I were to consider my pre-blogging days, I have said that CPF is a cornerstone in our retirement funding strategy.

However, it should not be the be all and the end all.

We should learn to invest for income in addition to having the CPF as a cornerstone.

Of course, when I say "we", I am referring those of us who are not born with a spoon made of some precious metal in our mouth.

Ahem.

CPF should be the ultimate safety net for most of us in case all else should fail.

I have shared my journey as an investor in all these years of blogging and many have asked me to conduct courses.

Of course, being lazy, I have refused again and again.

However, regular readers know that there is one course I have been promoting year after year.

Yes, Dividend Machines.

Dividend Machines is a course on investing for income and it is conducted yearly by The Fifth Person.

Being the first blogger to promote Dividend Machines so many years ago, I am happy to promote the course again this year.

Learn to invest for income and be less reliant on the CPF to fund our retirement.

Learn to build our own Dividend Machines.

Learn more about Dividend Machines using this link:

DIVIDEND MACHINES 2024.

Value for money.

Or else AK would not promote it.

Dividend Machines will help beginners and seasoned investors alike.

Roar to financial freedom in the Year of the Dragon!

If AK can do it, so can you.

SRS portfolio in 2024. What did I do?

SRS was a topic I used to blog about pretty often.

I have not been blogging about it as much since I have not been making contributions in recent years.

Reason is because I no longer pay income tax.

See:
Income Tax payable?

If we are still paying income tax, contributing to our SRS account makes sense to enjoy some tax relief.

Of course, we want to put our SRS money to work or we would get a very miserable interest rate.

For many years, I used the SRS money to buy plain vanilla endowment policies.

They were savings plan with some insurance thrown in.

In fact, I still have one or two of those with NTUC Income using SRS money.

In recent months, I also used the money to buy T-bills with yields being so much higher than a couple of years ago.

Dividends paid by my investments in stocks using SRS money are used for this purpose.

Yes, I also use SRS money to buy stocks of businesses which I think make good investments for income.

I have blogged about this before and shared what kind of stocks I would buy with SRS money.

Basically, the businesses must be good income generators with strong balance sheets; nothing which is likely to do rights issues.

The very practical reason is because we must have the excess funds in our SRS account to take part in rights issues.

This can be difficult to ensure.

I shared my SRS portfolio of stocks before but that is outdated by now.

See:
Win and win again with SRS.

I had SATS in the portfolio.

Of course, regular readers would know that I sold it shortly after it announced the decision to buy WFS.

SATS just didn't have sufficient resources to do what they suggested.

They had to raise funds from shareholders.

It was something unexpected.

So, I took the opportunity to sell when there was a bounce in the stock price.

In place of SATS, there are ComfortDelgro and OCBC in my SRS investment portfolio now.

This is what the portfolio looks like now:

Based on the purchase prices, it is not difficult to guess that DBS and ST Engineering have been in the portfolio for some time now.

So, like what I did?

Paid less income tax and put the money to work to generate more tax free passive income?

We can certainly win and win again with SRS.

If AK can do it, so can you!

Reference:
How AK used his SRS money?