How AK saved 32.7% + 9% in Cold Storage supermarket?

Regular readers know that I have a big weakness for ice cream.

So, it should not be surprising that whenever I visit the supermarkets, I would go to the frozen food section and take a look at the tubs of yummy ice cream.

However, I never pay full price for ice cream in the supermarkets. Even as I give in to my weakness, I insist on having value for money. If it is not value for money, AK does not buy! 

OK, I feel better now. See how weak I am?

So, what is the "lobang" this time? This:

This is an ongoing special offer. This was taken at the branch in Bugis Junction. I don't know if the special offer is available at all the Cold Storage supermarkets in Singapore but if you have a weakness for ice cream like I have, this is a chance to buy "atas" ice cream on the cheap. The special offer ends tomorrow.

How did I pay for my purchase? 

1. $15 discounted CapitaMalls shopping vouchers! So, I save another 9.1% or $1.36.

2. I am a Passion Card member. So, I received some TapForMore points which are equivalent to about 13c for the $19.99 purchase.

3. I paid the balance of $4.99 using the NETS Flashpay function in my OCBC Frank Card. So, I save another 6% or about 30c. I also receive 6 chances to win a condominium in a lucky draw happening end of next year. Well, one could always hope, right?

Extra savings = $1.79. I know how some people would sniff at the savings but in terms of percentage, it is a big deal. Believe me when I say that savings do add up. To people who think what I am doing to save money is nonsense, sorry, but I cannot change. This is me.

I am losing the battle of the bulge to happiness in a tub!

Related posts:
1. CapitaMalls: Providing value for money deals.

2. High class ice cream without the high price.

Tea with EY: Questions for the CPF Board (Part 2)

Q:
For the Medisave balance in excess of the Medisave Minimum Sum (MMS), i.e.[MCC] $48,500 – [MSS]$43,500=$5,000, would CPF automatically transfer this amount to the member’s OA when he/she reaches 55 years old or would CPF allow the member to maintain his/her Medisave balance up to the MCC of $48,500?

A:

The balance above the latest Medisave Minimum Sum (MMS) in your Medisave Account (MA) at age 55 will not be automatically transferred to the OA.

If you are able to set aside your full Minimum Sum when you turn age 55, you may then apply to withdraw the remaining CPF savings from your OA, SA and any balance above the latest Medisave Minimum Sum (MMS) in your Medisave Account (MA). The MMS is adjusted each year in July.

Q:
To participate in the CPF LIFE Basic plan with the entire MS of $161,000 at 55 years old, what does the member need to do?

A:

When you join CPF LIFE, all your RA savings (except for new money that is paid into your Retirement Account after your drawdown age) will be used for your CPF LIFE plan.

We would like to share that for the CPF LIFE Basic plan, we will take the annuity premium from your Retirement Account (RA) in two instalments.

When you are 55 years old, we will deduct a small portion (about 10%) of your RA savings as the first instalment of your annuity premium. The rest of your RA savings will stay in your RA.

One to two months before your drawdown age (DDA), we will deduct a small portion (about 10%) of any new money that has built up in your RA between your 55th birthday and your DDA as the second instalment of your annuity premium.

When you reach your DDA, you will receive monthly payouts (paid from your RA) starting up until one month before you reach 90 years old. Once you reach 90 years old, you will continue to receive monthly payouts (paid from the annuity fund) for as long as you live.

Singapore citizens and permanent residents who are born in or after 1958 will be placed on CPF LIFE if they have at least $40,000 in their Retirement Account (RA) when they reach 55 or at least $60,000 when they are reaching their Draw Down Age (DDA). We will write to them one month after their 55^th birthday on their participation in CPF LIFE.

For more details under the CPF Life and its plans, you may refer to the CPF Life booklet for more information:

CPF LIFE Information Booklet

http://mycpf.cpf.gov.sg/NR/rdonlyres/09EA0C05-C8E9-4705-9D91-E8BD1D12CF1E/0/LIFEBrochure.pdf?NRMODE=Unpublished&wbc_purpose=Basic&WBCMODE=PresentationUnpublished

Q:
For a member who has participated in the CPF LIFE Basic plan based on the prevailing MS of $161,000 at 55 years old and subsequently, the MS is adjusted to say $200,000 by the time he/she reaches 65, would the member be able to ‘top up’ $39,000 by transferring the OA/SA balance into the RA account and use it to add to the CPF LIFE Basic plan?

A:
In general, the maximum amount that you can commit to CPF LIFE is the prevailing Minimum Sum which is revised yearly (i.e. $161,000 from 1 July 2015). To receive higher CPF Life payouts at your DDA, you can make top-ups into your RA after 55, up to the prevailing Minimum Sum when there is any upward revision in future.

A big "thank you" to EY for graciously allowing me to share some of the questions and answers here in my blog with all my readers.

Related post:
Tea with EY: Questions for the CPF Board (Part 1)

Tea with EY: Questions for the CPF Board (Part 1)

EY asked the CPF Board some questions.

Q:

At 55 years old, if the member does not intend to withdraw any amount from any of his/her CPF accounts and would like to use the entire MS to participate in the CPF LIFE Basic Plan, how would the savings in each of the accounts be redistributed among the OA/SA/RA/Medisave? Is the following balance distribution and interest rate correct based on prevailing guidelines?

OA – $50,000 (2.5% interest)

SA – $39,000 (4% interest)

RA – $161,000 (1st $60,000 at 5%, balance at 4% interest) Medisave - $48,500 (4% interest)

A:

As in your example, upon reaching age 55, the Board will set aside the Minimum Sum in your CPF Retirement Account (RA) by transferring funds in the following accounts and sequence:

(i) funds in your Special Account (SA);

(ii) if (i) is insufficient to set aside your Minimum Sum in full, funds in the Ordinary Account (OA) will be transferred to your RA to make up the Minimum Sum.

The balance (if any) in excess of your Minimum Sum will remain in the OA/SA and will earn the respective interest rates. 

The CPF interest rate for the OA\SA\MA are reviewed quarterly, while the interest rate for the RA is reviewed yearly.

The extra 1% interest per annum will be paid on the first $60,000 of a member's combined balances. 

The priority of the accounts that make up the $60,000 is as follows:

1st        : Retirement Account (RA), including balances used to pay for the annuity premium under CPF LIFE

2^nd        : Ordinary Account (OA), up to $20,000

3^rd         : Special Account (SA)

4^th         : Medisave Account (MA)

The extra interest received on the OA will go into member’s RA (if he is 55 and above), to enhance his retirement savings.

For a member who has joined CPF LIFE scheme, the extra interest earned will be paid into his RA or the CPF LIFE Annuity Fund.

See also:
Tea with EY: Questions for the CPF Board (Part 2).

Heart to heart talk on achieving financial freedom (UPDATED).

I have heart to heart "talks" with readers sometimes and those whom I have "talked" to know that the conversations could last an hour or more sometimes. 

Although I am not a financial planner nor a trained counsellor, I try my best to put things in perspective for everyone and, hopefully, throw some light on issues.





I know that Singapore can be a bit of a figurative pressure cooker sometimes and a topic that is evergreen in our very green garden city has the same color. 

Green is the color of money or so they say. 

Yes, the topic is "money".

There are more than a few readers who have, in the past, left me comments, sent me emails and chatted with me in FB who told me that they want to be like me. 

They want to achieve financial freedom. 

However, they think it is really hard to do so in just 20 years which is more or less the time I have taken to do the same.





Some readers even told me that although they are inspired by my blog, they also feel some depression at the same time. 

This, of course, is not what I want to achieve through my blogging efforts. 

If this is what my blog is doing to people, then, I should stop blogging.





Not too long ago, I had a chat with another reader in FB and I think that a few "bubbles" from me neatly encapsulate what I want to say to readers who are 

1. married with children, 

2. who make above average salaries, 

3. who have a mortgage to service 

and 

4. a car to maintain. 





Here it is:

I keep saying that all of us have difference circumstances in life. 

We might make very different choices in life and with those choices, there are pluses and minuses. 

We must make the best of our situations and, if possible, improve on our situations. 





Incidentally, I believe that it is almost always possible to improve on our situations. 

More often than not, it depends on how badly we want things to change.

So, some might take 20 years, some might take less than 10 years and some might take 40 years or, maybe, more. 





The important thing is that we all get there in the end or at least try our very best to do so.

Anyone who is diligently working towards financial freedom in a responsible manner is, in my opinion, already a winner and we should never forget that.





Related post:
Journey to financial freedom is not a race.

If I had done this, I would have hit the minimum sum too.

-------------------------
This is my reply to a comment by a reader and because I want as many people to read this as possible, I am publishing this as a regular blog post.

See qook's full comment: here.
".... I just ran some numbers and they were illuminating. If I'd done the same as AK, I would have hit my minimum sum too!"

AK's voluntary contribution in March 2014.

AK's reply:

Hi qook,

Yes, absolutely! That is what I have been trying to tell people for a long time. :)

Feed our CPF-SA early and feed it well. If we do it early enough and well enough, we would only have to do it for a few years and time will do the rest for us.

4% compound interest is powerful. 4% compound interest risk free is very attractive. 

However, we need a more substantial base to see more meaningful results. 

So, we need to help it along to help ourselves. ;)







Once you hit the ceilings for the SA and MA in any year, your monthly CPF contributions for the rest of the year will go to your OA and SA but not the MA.

So, the money in the SA will continue to grow into something much bigger. 

At age 55, there could possibly be a small windfall for us and not just a $5,000 payout. 

The rest of the money goes into a newly created RA and at age 65, CPF Life will kick in.

Like many things in life, the outcome depends on the decisions we made in the past. :)







Want to create a risk free and more conservative portion for our portfolio and not very sure about bonds? 

I hope this blog post has provided some food for thought. 

There is still quite a bit of time before the year ends.

Related posts:
1. Towards retirement adequacy before the year ends.
2. Videos on reaching 55 and CPF Life. (6 minutes in all.)
3. Build a bigger retirement fund with CPF-SA.
4. Do the right things and transform our lives. (Real story.)
5. We do better managing our savings than the CPF?

A way towards retirement adequacy before the year ends.

A reader sent this message to me in FB and agreed to have me share it in my blog:

Hi AK,


Many thanks for your blog post "How to grow my wealth as I approach 40 years of age" and the other cpf related posts.


After poking around our cpf site, finally decided to move my entire 2013 OA contributions into SA. While it is nowhere near the MS, i feel it's a step in the right direction despite the fact that i am closer 40 than 20!


Thank you for always sharing your thoughts, journey AND nagging at us


P


P.S.
CPF website has an "Ordinary Account-Special Account Savings Transfer Calculator". It estimates how much MORE interest we earn by moving $x amt from OA to SA account. Unfortunately, it only calculates up to age 55 and not the 65 you mentioned. However, it is still a great gauge. Perhaps this may be useful for your readers to convince themselves of how wonderful this 4/5% interest is!

Here's the link:
https://www.cpf.gov.sg/cpf_trans/ssl/financial_model/oa2sa/oa2sa_cal.asp

if you feel it will help others, please (share)

the exchange between you, Endrene and a few others were very helpful to me.

If you like what you read here, there are still a couple of weeks left before the year ends.

Related posts:
1. How to grow my wealth as I approach 40 years of age?
2. How to upsize $100K to $225K in 20 years?

Investing for income and position sizing for peace of mind: Inspired by an exchange of words in Kallang Wave Mall.

Some time back, a reader said it must be a good feeling to be out and about and overhearing people talking about AK71 without them knowing that AK71 was listening in. I replied saying that it had never happened before and AK71 was not as popular as he thought.

Well, you know what they say about never saying never.

I was out one evening, visiting the new Kallang Wave Mall to take advantage of the opening promotional deals when it actually happened. I don't know about having any good feeling. In fact, the experience was rather spooky.

Before I go on, in case you are wondering what lobang (Singlish for "a good deal") I had in Kallang Wave mall, it was this:

I spent $200 in NTUC Fairprice using the Citibank SMRT Card and got a 7% rebate. At the information counter, I showed them the receipt and the Citibank SMRT Card and I was given a $10 Kallang Wave voucher, an Olaf plush toy (Olaf as in the Olaf from the Disney animation "Frozen") worth $19.90, a chance to spin the wheel to win more "Frozen" products and to take part in the grand lucky draw to win a trip for 4 to Hong Kong.

OK, now, you know why I went to such an ulu (Singlish for "in the middle of nowhere") mall.

Now, back to the spooky experience I had.

I was in an aisle in the supermarket looking for some biscuits when I overheard 2 ladies talking about me behind my back! I mean, literally, they were behind my back!

A: "This AK recently like very bad luck. Bought SembCorp and price dropped so much."

B: "Ya. I followed him and bought too. Now, lost about 20%."

A: "OMG! Did you buy a lot?"

B: "Not cheap. Buy a few lots also a lot of money. Now stuck. (Sigh)"

A: "Don't worry. AK says strong company. He buy for the dividends..."

Then, they walked away. I was wondering if I should follow them discreetly to see what else they had to say. I know, terrible! I was eavesdropping! Anyway, I decided not to. Imagine them calling security because an old, fat and ugly man was stalking them. Yikes!

Anyway, if you know me, I didn't write to simply share a spooky tale. There is enough stuff in that short exchange between the two ladies which disturbed me enough to blog about my thoughts.

It is true that I started buying SembCorp Industries at $5.04 per share not too long ago and I blogged about my motivations for doing so, admitting that it was not a cheap purchase at the time. It ticked all my boxes but because it was not undervalued, I nibbled. I initiated a small position.

As its share price fell, I nibbled again at various points. Some might be interested to know that I actually nibbled a bit more at $4.14 a share just yesterday. I will probably continue to take small bites because although I feel that the stock is now undervalued, I am reminded of the saying that Mr. Market can stay irrational for a long time.

Although my initial entry price of $5.04 has lost almost 20% in market value, it might be useful to know that the nibble formed less than 1% of my entire portfolio. So, it means that my portfolio has lost 0.2% in value because of that purchase. If we add my other recent nibbles and their paper losses along the way, the total paper loss due to these is probably between 1% to 2% of my portfolio's value.

So, although the absolute dollar value might look substantial to some, we must remember that it is about percentages. We should always look at our own circumstances and decide how to size our positions in the stock market accordingly. Don't bite off more than we can chew.

Finally, because I am more interested in investing for a regular income, most of my portfolio ensures that I always have funds coming in on a regular basis. Yes, even my badly timed investment in SembCorp Industries will, in all likelihood, generate income for me in 2015 and beyond. This is an important reason why I am able to stay level headed, well, most of the time.

I thought for a while whether to blog about this because the two ladies I mentioned will probably read this blog and I don't know how they would feel but I guess I should just do it for everyone's benefit, including mine.

Related posts:
1. How to make recovery easier?
2. Motivations and methods in investing.
3. Do not love unless it is worth the loving.
4. Managing exposure in investment.
5. What should I do when I am down 25%?
"... the important thing to know is "What should I do?" given a certain set of circumstances." AK

Hock Lian Seng: Robust order book at a 3 year high.

I have been a shareholder of Hock Lian Seng's since 2010. 

I accumulated a core position in the stock and also did a bit of trading for extra pocket money. 

In the last couple of years, however, I have mostly been accumulating the stock because I thought Mr. Market was too pessimistic.





The last time I bought more of the stock was in February 2014 at 25.5c a share. 

Before that, I bought more in May 2013, at 26c a share. 

As some readers might have guessed, I developed an interest in Hock Lian Seng because of its attractive dividend payouts. 

Hock Lian Seng pays out about 40% of its earnings as dividends to shareholders every year and the yield is upwards of 5%.

I was waiting for more weakness in its share price to accumulate and since the stock was hardly covered by analysts, I thought the chances were quite good. 

Well, I think I can stop waiting.

Why?



There could be much more interest in the stock now that The EDGE published an article on it and after UOB Kay Hian published a report that highlighted a few points regarding Hock Lian Seng:





1. Company has a net cash position of $88 million or about 58% of its market cap.

2. Its two industrial properties, Ark@Gambas and Ark@KB, in Sembawang and Kaki Bukit are 80% and 99% sold. They are expected to obtain TOP in end 2014 and early 2015, respectively. So, Hock Lian Seng's cash position will improve as it recognises net proceeds of $60 million to $70 million from the projects.


3. Consistent and attractive dividend payout of a third or more of its earnings. Special dividends possible. See point 2.

4. Order book with contracts worth $345 million as at September. This is a 3 year high.






If Hock Lian Seng should attract coverage from more analysts and if they are mostly positive about the stock like I am, I think opportunities to accumulate the stock on weakness could be harder to come by in future.

Click to enlarge.

Looking at the chart, Hock Lian Seng's share price could retrace to 27c, the support provided by the trend line. 

If it should happen, it could be an opportunity for me to buy more although I would have liked to buy at prices lower than that.




Related post:
Hock Lian Seng (My last done analysis in April 2014.).

Home made waffle with a twist for Sunday lunch.

What did I have for lunch today?

I had some leftover waffle made by my sister but instead of having them with maple syrup and butter, a style more in keeping with breakfast, I decided to prepare a savory version instead for lunch:

Heat up both sides of the waffle on a frying pan.

Layer on cheese, cucumber slices and cherry tomatoes.

Voila! A warm and savory waffle sandwich is served!

Bon appetit!

Now, what should I do for dinner? Hmmm... I wonder.

Related post:
Save money and have a good dinner.

How to grow my wealth as I approach 40 years of age?

"Big money prefers practicality over opulence."
This is my reply to a recent email from a reader approaching the big 4 in life:
Welcome to my blog. :)
I have to say that I am not a financial advisor. So, I can only share with you what I think makes sense to me. There are a few issues here:

1. Emergency fund - Generally, people keep 6 to 12 months worth of routine expenses in this fund. Personally, I keep a lot more, about 24 months. So, ask if your emergency fund is excessive. Could the amount actually be lower?

2. 2 room BTO flat - I gather from your email that you are a single. So, I think this is a super choice for a home. Good value for money and most practical. You will be paying for this with your CPF-OA funds, I guess. Of course, you want to set aside some money for furnishing and stuff. Call this your renovation fund or something. For me, I think $10K is probably enough.

3. Endowment policies - These sound like they are going to behave like annuities (for you). Sounds like good retirement income tools although without further details, it is hard to tell if the returns are attractive. If the returns are attractive enough for you and they give you peace of mind, just keep them.

4. Take a look at your CPF-SA. You can do minimum sum top ups yearly up to $7,000 a year. Try to hit the MS ceiling as soon as possible. Let the magic of compounding do the rest. It will ensure that you have a meaningful monthly income from your CPF Life annuity from age 65. It could be as much as $1,300 a month (for now).

5. As for investments, the first rule is that you must only use money you can afford to lose. This means that you should be able to suffer short term losses on paper without having to worry. Money that has been earmarked for specific purposes or might be needed in an emergency should not be used. Then, you have to read up. Pick up some knowledge. If you do not have the inclination to do this, you could consider regular investment plans offered by OCBC or POSB.

Many of the things I have mentioned in this reply are found in my blog. So, just do a search and you will find them. ;)
Best wishes,
AK

All genuine and constructive comments are welcome. No direct or indirect advertisements, please. Thank you.
Related posts:
1. Why emergency fund is important?
2. Affordability and value for money.
3. About life insurance and grapes.
4. $100K to $225K? (CPF-Life)
5. POSB Invest-Saver account.