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Choose your own CPF adventure!

Friday, February 6, 2015




There was a creature called the MS (full name "Minimum Sum") which gained mutant powers. 

In gaining mutant powers, MS was able to mutate into a smaller creature half of its original size or into a bigger creature 50% bigger than its original size.

The creators of MS hoped that more would take a liking to MS which had been verbally abused in some quarters. 





So, with newly gained mutant powers (and a new marketing team), MS took on new names for its various forms.

The smaller and cuter MS mutant was called the BRS (full name "Basic Retirement Sum"). 

In its original size, the MS was renamed the FRS (full name "Full Retirement Sum"). 

The bigger and more powerful MS mutant was called the ERS (full name "Enhanced Retirement Sum").






Everyone had to adopt a MS but they didn't have a variety to choose from in the past. 

It was a little like the first mass produced car by Ford, the Model T. 

Everyone had a choice of color. Remember? 

It was either black or black or black. 

People still had to adopt a MS but at least they would have a choice of size with the mutant forms.




The MS had been badly misunderstood by many and far from being a monster, a closer look revealed that it was actually a cow. 

Yes, it was a simple farm animal! 

The MS was supposed to provide sustenance to its owner for an indefinite period of time once the owner turned 65. 

That was when the MS would become a deity-like bovine called the CPF-Life.




Whichever choice people should make between the BRS, FRS and ERS, these cows retained their power to become deity-like bovines later on with their powers to provide more or less sustenance for life to their owners, their powers being proportional to their sizes.




Oh, the movie had a compulsory audience participation section as well. 

It was a bit like a "Choose Your Own Adventure" component. 

Yes, some of us older folks would remember flipping through what seemed like random page numbers in those storybooks with outcomes depending on the choices we made. 

They were the craze at one time.




How would things play out? 

Well, with miniaturization still a craze, I suspect that the BRS might win hands down. 

Kawaii! 

The apathetic would probably stick to the FRS. 

A smaller more prudent but insecure feeling group would choose the ERS.

If I were to use another analogy, the BRS is like a hut made of straw while the FRS is like a hut made of wood and the ERS a hut made of bricks. 

Remember the story? 




The hut made of straw was the easiest and fastest to build while the hut made of bricks was the hardest and took the longest time to build. 

Then, remember the three little pigs which stayed in the huts?




In a less child friendly (and more realistic) version of the story, the little pigs which stayed in the straw and the wooden huts were eaten by the big bad wolf. 

Only the little pig which stayed in the brick hut survived. 




In most versions, however, all three little pigs survived because the first two pigs ran to the house made of bricks to escape the big bad wolf. 

So, the little pig who took the trouble to build the hut made of bricks had to share his living quarters with his brothers. 

Well, we can choose our friends but we cannot choose our family, as the saying goes.




I believe that the movie would not only have a sequel but there could be remakes in future. 

Whatever the case might be, in the audience participation section, we would do well to choose wisely in the meantime and hope that many more would choose wisely too.




Related posts:
1. A lot of money in my CPF-SA...
2. How did AK amass money in the OA?
3. Get free medical insurance in Singapore?

https://www.cpf.gov.sg/Assets/Common/Documents/FAQs_IncreaseinSalaryCeilingandCPFConRateChanges.pdf

"From 2016, the CPF Annual Limit will be increased correspondingly from $31,450 to $37,740 (equivalent to 17 months x CPF salary ceiling of $6,000 x 37%)."

---------------------------------------------------------------




"The panel is proposing that the sum of S$80,500 for CPF members turning 55 in 2016 be called the Basic Retirement Sum. This Basic Retirement Sum should increase by 3 per cent each year for cohorts turning 55 from 2017 to 2020, to keep pace with inflation and changes in household expenditure.


"For CPF members who are not homeowners or who do not have a CPF pledge on the their property (which refers to the sum of money that will go into his CPF account if he sells the property), the panel thinks they should set aside a sum of S$161,000 in 2016 – equivalent to the Minimum Sum for those turning 55 from July. This could be called the Full Retirement Sum, the panel said.



"Those who want to put more into their Retirement Account for higher annuity payouts should be allowed to do so, felt the panel, which is proposing that they be allowed to have up to three times the Basic Retirement Sum to pay for CPF LIFE premiums (or S$241,500 in 2016).



"Also addressed in its first set of recommendations is lump-sum withdrawal of CPF savings at the age of 65. The panel suggests allowing the withdrawal of up to 20 per cent of Retirement Account savings, inclusive of the S$5,000 that can be withdrawn from age 55."


Source: Today Online, 4 Feb 15.

See all the infographics: here.





---------------------------------------------------------------
UPDATE: 
The Straits Times, 11 Oct 2016.
LUMP SUM WITHDRAWALS
Central Provident Fund (CPF) members who turned 55 in 2013 and later can make a lump sum withdrawal of 20 per cent from their Retirement Account when they reach the payout eligibility age (i.e. age 65).
AUTOMATIC PAYOUTS FOR RETIREMENT SUM SCHEME
Previously, members on the Retirement Sum scheme had to apply to start their payouts. Starting from 2018, payouts will begin automatically once the member turns 70.

When to buy (and sell) a private residential property?

Thursday, February 5, 2015

Please don't take what I say as the Gospel truth. I am just sharing my thoughts and limited experience. This was an exchange on FB:




  • M
    Bro. Your property post always trigger my interest and thinking!
    Anyway during the talk, you mentioned there are still good property deals around.
    I wonder what's your definition of good deals?
  • Assi AK
    Well, if people are looking for a BTO flat for own stay, I just shared an example in CCK (on my FB wall). Good deal.
  • M
    How about private?
    Ps. I should be clear.
  • Assi AK
    If people are looking for condos for investment, it is quite hard to find a good deal now.
  • M
    Still will like your brain juice on what are good deals on private. Lol
  • Assi AK
    I know that some developers like Bukit Sembawang and Capitaland are slashing prices but I don't think the prices after discount are good (enough) yet.
  • M
    Haha. How much you will go in?
  • Assi AK
    For example, someone bought a condo in Cairnhill by BS and it was heavily discounted. Just under $2m. Previously, would have to pay $2.4m to $2.5m for similar unit. However, the current rental is only $4K a month.
    ... Buyer said good deal. He said earlier buyers overpaid. I think (earlier buyers) just overpaid more than he did.
    His gross yield at $4K a month rental would work out to be about 2.4%. His housing loan interest rate is (probably) 1% + 3 months sibor... So, it is almost 1.7% now... It is probably going to be higher in the next 2 years... -.-"
    But what to do? D9 atas. I had a D9 property that I bought during the GFC and sold it when market recovered. This person (I feel) bought as market peaked (again) and beginning to correct.
    I sold off my properties that would have yielded just under 4% per annum. I found properties that were able to yield 6.1% per annum (later on). It made sense to me even though the 6.1% yielders are not in atas locations.
    In the current environment, those that I sold are yielding just above 3% per annum while the would be 6.1% yielders are now 5.1% yielders. (What a difference 2 years make.) All declined but I have a bigger margin of safety now.
  • M
    Power!! Love your explanation. Gonna share w my wife bro.
  • Assi AK
    Aiyoh, pai seh lah... I anyhow say de.
  • M
    Nvm. Keep anyhow say
  • Assi A
    I think I cut and paste for my next blog post. I ran out of ideas. This one just nice. LOL.
  • M
    Yes. This one really vvvvv good
    It will educate a lot of property standbyers
  • Assi AK
    Kamsiah. You very kind lah. I only sharing my thoughts and experience. I pai seh.
  • M
    You Pai seh what. Haha. I sincerely appreciate that. My frens and wife learnt a lot too

Assi AKReally? Thanks for the encouraging feedback. Very happy they enjoyed themselves.




Feeling happy (but also a bit scared) to share.

One thing is for sure though. You can safely ask AK if you need a haircut because AK is not a barber.

Related posts:
1. An evening with AK and friends.
2. Affordability and value for money.
3. Considerations for first timers.
4. CCR, RCR or OCR for rental income?
5. Smaller apartments' prices more resilient.

IREIT: What is a more realistic distribution yield now?

Wednesday, February 4, 2015

A reader who attended last Saturday's event sent me an email asking me about IREIT Global because he got in during its IPO and he is now worried after hearing what I had to say. 

I was puzzled because I asked if anyone was invested in the REIT on Saturday but there was no indication that anyone was.

Anyway, for those who are interested, I did not say anything new last Saturday. 

Please see related post at the end of this blog. 





Basically, I again explained why I avoided investing in IREIT Global when they had their IPO middle of last year.

I also said that people who invested in the REIT because of the expected 8% distribution yield would probably be disappointed. 

So, what is the expected yield now?

The Euro has been in a downtrend against the S$. 

Today, the exchange rate is one Euro to S$1.54 which is much lower than it was middle of last year at S$1.70.





Based on the estimated income available for distribution to unit holders of Euro 8.3 million (6 months) and approximately 419 million units in issue, annualising the DPU in S$ terms now gives us a distribution yield of about 6.8%.

IREIT Global's unit price has retreated since hitting a high of 90.5c a unit.










Will IREIT Global's unit price go much lower? 

It looks like it could, especially if Mr. Market still demands an 8% distribution yield.

What? Take a stab in the dark? 

Er, well, if the annualised DPU is 6.1c, to get an 8% yield, the REIT would have to trade at 75c a unit which is some 15% lower than its IPO price of 88c a unit.





Related post:
IREIT Global: Distribution yield of 8% safe?

Suddenly, financial freedom looks less remote!

Tuesday, February 3, 2015

Blogging about my meals has had positive consequences both for me and some readers.

1. There are people who care enough to write to me to tell me I don't eat enough vegetables. So, I have been making a conscious effort to incorporate vegetables in my diet more regularly, thanks to their nagging. What did I have for dinner this evening?

Non-fried noodles. Broccoli. MSG free soup cube.


Add mom's secret ingredients plus a mug of genmaicha.


2. Some readers have informed me that I have inspired them to pack lunch to work and to have dinner at home more often instead of going to the restaurants. Some of them actually realised substantial savings especially when they managed to get the whole family to participate. 





Like with many things, it gets easier with time as is the case for a lady who told me her husband is now a firm believer in the changes she has made to their lifestyle because of the resulting savings he sees accumulating in their bank account.


Their wealth is growing more rapidly now, month after month, and this gives them a greater sense of financial well-being. This is an achievement. 

I feel happy for them.

Through sharing very personal information such as how much I receive in terms of passive income, how much I have in my CPF-OA and SA, how I am able to get free health insurance in Singapore and how I save money on a daily basis, just to name a few things, I have found that it is easier to convince people, to inspire people to take their first step on the journey towards financial security and, ultimately, financial freedom. 

Suddenly, it is not just something people talk about. 

Suddenly, it looks more achievable. 

Suddenly, it does not look so remote.






It has been a 20 years journey for me but, hey, if AK can do it, so can you, right?

Some might take a shorter time. 

Some might take a longer time. 

It doesn't really matter, does it?

I know some people might ridicule me for blogging about my meals but I am sure regular readers are able look beyond the facade. 

Regular readers know that my journey towards financial freedom is anchored upon a philosophy and that philosophy is apparent in my daily life.




Updated on 2 July 16:


Related post:
How to recession proof your life?

Singlish with AK: Give a talk? Can but not free.

Aiyoh, the title is so ambiguous lah. Fun, right?

Got people invited me to give talks and I said just read my blog lor, it is free lah.

At home, I blog, reply to emails and interact online with readers. All own time, own target and for free mah.

If I have to leave my home to give a talk, it cannot be free liao. Why? AK lazy. AK doesn't want to leave his home. Too bothersome. (Don't later some smart aleck suggests to have talk in my home hor.)

I made the remark, "I fishing no use hook de..."




From the reply, I think the person doesn't know what I am talking about. LOL.

How to make my money last longer? A senior's example.

Monday, February 2, 2015

The very first question I was asked during the meeting with readers last Saturday was, "I am 60. What can I do to make my money last longer?" 

Well, in our golden years, I feel that we probably want to be less adventurous when it comes to money matters and I shared some of my thoughts with everyone at the event. This blog post coincidentally exemplifies one of those thoughts. I don't know if the lady who posed the question on Saturday will be reading this or not but I hope she does.

My dad might not be the most financially savvy person I know and he has some bad money habits but he has very good work ethics. He belongs to a generation of hard working Singaporeans who refuse to stop working. He is almost 70 years old and, yes, still working.




My dad used to spend money very easily, too easily, and, for many years, I was very worried. I wondered whether he would have enough money for retirement. So, in my own retirement planning, I factored in the cost of my parents' upkeep, just to be safe.

For a long time, my dad was also very suspicious of the CPF but, in his old age, as he fears not having enough money for retirement, he started believing in the system instead of joining the Hong Lim Park "Return our CPF" protests. Well, this is largely due to my nagging.

Son nagging at father? Bad AK! Bad AK!

This morning, my dad sent me a message:

"Son, my cheque to CPF cleared already."

I logged into his CPF account just now to take a look.




My dad continued to work beyond 55 years of age and, in so doing, accumulated more funds in his CPF account. Any voluntary contribution he makes now can be considered as short term savings as he is allowed to withdraw money from his CPF account once a year while still working and anytime he wants once he stops working. 

The funds will enjoy interest rates of 2.5% (OA) and 4% (SA) per annum in the meantime. No fixed deposit rates in Singapore can beat these.

If you are a senior or if you have loved ones who are seniors, this might be something worth considering and sharing if they are trying to achieve retirement adequacy.

IMPORTANT (added 4 Feb 15):
For seniors 55 to 65 years old, please read comment by Sally Tan in the comments section below.

Related post:
Retirement: Buying a AAA rated bond.

How to recession proof your life? Your time will come too.

Sunday, February 1, 2015


Last evening, after the group photo taking ended, I took my first selfie ever with a couple of readers and the lady asked me whether I might make some changes to my frugal spending habits as I go into retirement. Well, maybe not in those exact words but I think that was what she meant.

Actually, many people asked me questions along the same line before. Why not be more generous to myself since my investments are generating meaningful income annually? Why am I still so frugal? (Aiyoh, car, chocolates, ice cream, remember?)

"I don't think I will change anything. I am too used to what I am doing now. I don't think I can change," was my reply. Now, this can either be viewed as a good thing or a bad thing, depending on what we are talking about.

My breakfast this morning.
Yes, got chye sim! Trying to take more vegetables.
I nag at readers about money and readers nag at me to eat vege.
Sounds fair to me. ;)



Human beings are creatures of habit. Everyone has some habits, whether good or bad. Look at ourselves and be honest. I am sure we can identify some of our own habits.

We might need a little help because our eyes are looking outwards. So, ask our friends and family members and they will tell us. They might be brutally honest but that is a good thing. It is all going to contribute to an important body of knowledge, self knowledge.

A visit to NTUC Fairprice in the morning.

There will always be some habits in life that will hold us back from achieving financial freedom. There will be habits in life that will help and, no matter what your persuasion might be, it is probably difficult to dispute that being frugal is one good wealth building habit. If we keep to our frugal lifestyle even as we make more money in life, we would probably be on our way to financial freedom.


My dinner tonight, breakfast and lunch for tomorrow.



I shared last evening that my family narrowly averted bankruptcy when I was in primary school. It was a difficult thing to understand for a boy but my mom was able to paint a picture of total loss for me that has stayed with me till today. I forgot to mention last evening that although we averted bankruptcy, we suffered financial hardship for many years. We lost almost everything. How does one forget something like this? Quite impossible.

The fear of growing old and destitute stayed with me till today.

I must never be in a situation like this, I told myself, and the last two decades have been a journey of self-discovery and stumbling in the dark, somehow doing mostly the right things but also falling into a few pits along the way. I do feel that I have been mostly lucky.


Of course, I could still fall into a pit or two in future. I don't know everything there is to know, for sure. However, I hope that I have done enough that is right so that, unless the pits I fall into in future are particularly deep, I would be able to recover quickly.







In summary,

1. Develop good habits that will help to build wealth.


2. Discard habits that lead to wealth destruction.


3. As our wealth and income grow, maintain a frugal lifestyle.

If we do all these, we would most likely become more recession proof than the average person too.

It is always hardest in the beginning. It takes time but you must believe that your time to work when you want to and not because you have to will come too just like it has for AK the giam siap fellow.


Related posts:
1. If we are not rich, don't act rich.
2. Three points which could turn our lives.
3. To retire by age 45, start with a plan.


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