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BREXIT and AK the investor.

Saturday, June 25, 2016

I just spent the better part of an hour replying to emails from readers and the topic which cropped up the most often was, not surprisingly, BREXIT. Here are a couple of conversations:

Reader: What do you think of the Brexit? Can you talk to yourself on the impact to your portfolio?



AK says: BREXIT will affect me as an investor if:

1. I have income generating assets in the UK.


2. I am invested in companies which export goods and services to the UK.


3. I have exposure to debt denominated in the Sterling Pound.

I think it is none of the above for me.


However, I am worried about the possibility of contagion. The UK is not a member of the Euro (i.e. the currency) but if European countries which use the Euro decide to do their own versions of Brexit, it would affect my investment in IREIT Global. How? I cannot say yet.

Best wishes,
AK



Reader: Given that Brexit is confirmed . The GSS of stock market is likely to happen . Can talk to yourself what spore stocks you are eyeballing?


AK says: Almost everything I have ever blogged about as investments for income, actually. ;p

Best wishes,
AK


Have our shopping list ready, stay calm and buy when our target prices are hit.

Remember, it is almost impossible to get the best deal. If someone else manages to buy at a lower price after we have bought, it might not mean that we got a bad deal. That person got a better deal.

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

Sell 5 room flat and buy 2 condo units for better cash flow.

Friday, June 24, 2016

Recently, I shared on FB a conversation I had with a friend regarding a talk he went for:

Friend:
"I went for a talk on property investment recently.


"The person wants us to sign up for his course and he will teach us how to sell our HDB flat and invest in private properties for better returns. 

"What do you think?"








AK:
"He will make money from the course. 


"He will make money when you sell your flat. 

"He will make money when you buy the private property. 

"I guarantee that he will make money. 

"Can he guarantee that you will make money?"





Seeing that, a reader who went for the course shared her experience and thoughts with me:



Y:
Refer to this post. I went for the course. Paid abt 3k. Learn all the concept. N it's workable. 

Just we mostly will not take any action to sell Hdb n go buy two privates. 

Because most of us will scare. Any step goes wrong then just gone case.



But they after the course also will provide service to help u achieve your dream la. Eg. Help u sell n buy n also get loan n tenant etc. 


Total 8k help u turn from one HDB to two privates. 






AK:
Refer to the questions I asked my friends. My opinion has not changed.

Y:
Just share my experience only.

If not prepare to pay the almost 10k. Better don't go for the course. 

If hardworking enough. All info can get from Internet





AK:
Basically, the students bear all the risks. ;p

Y:
Ya
Speaker make the most. N easily buy properties for themselves


AK:
 that guru makes BIG $$$.


Y:
Risk here is. Risk of our market turning down. So. Property might not able to rent out easily





AK:
Interest rates rising. Oversupply problem. Rental falling. 

I think there will be many who are going to be caught swimming naked when the tide goes out...

In fact our govt has done good job
For the protection part

All the taxes or rule is not set for fun de
This is to avoid ppl too greedy n anyhow buy

Ppl just cannot explore too much. Except those real rich millionaire




AK:
Yes, problem is that the "guru" will not discriminate between the millionaire students and the not so rich students...


Those borderline cases will be the ones who suffer the most as they don't have holding power or the ability to take a big knock.

In the pursuit of greater wealth, we should not throw caution to the winds.
---------------------------------




Honestly, if we are after cash flow, why not rent out the spare bedrooms in our 5 room flat?

What? 


Bedrooms occupied by children? 

Then, how are we going to have enough space in a shoebox apartment?

What? 

You have seen a family of 4 living in a shoebox apartment after they sold their HDB flat and bought 2 private shoebox apartments?

You know, I believe you because I also know a family who did that.

Seriously mental.






Finally, when people tell us that we can sell our HDB flat and own 2 private shoebox apartments, remember that unless they are fully paid for, we don't have ownership. 

We might have control of the apartments but we don't own them.


(Remember, nobody cares more about our money than we do and don't ask barbers if we need a haircut.)


Related posts:
1. Should I sell my HDB flat to fund condo buy?
2. Buy that second property and pay the ABSD?
3. Disastrous investments in the property market.

He met the CPF minimum sum but has one regret.

Wednesday, June 22, 2016

Regular readers know that AK transferred all his CPF-OA money into his CPF-SA in the first few years of his working life. That provided a bigger base and a longer time for compounding to work its magic. Of course, I have shared the numbers here in my blog too.


Now, this was part of a chat this evening with a reader who is buying a HDB flat:

Reader:
do you mean that letting HDB wipe out the OA money first? My flat will be ready in 2019. So in this 3 years, do you have any views on what should be done using the CPF OA money?eg. Transfer abit to SA account? I will take your comments as opinions. Do not WORRY!"

AK:
That was what I told a friend. He transferred a large portion of his OA money into his SA about 10 years ago before he bought his flat and now his SA has already hit the minimum sum. But this will work for someone with an emergency fund on hand that would also cover the mortgage payment initially as his OA builds up again after the flat purchase.


The chat gave my memory a jog. I cannot remember exactly how many years ago but it was probably more than 10 years ago when a friend discussed with me what to do with his CPF-OA money. He was still single then and not buying a flat yet.

During a meet up a few months ago, he told me that he already hit the CPF minimum sum and to a large extent, it was thanks to the hefty interest payments received for his CPF-SA savings. He basically transferred all his CPF-OA money into his CPF-SA after the discussion we had and did nothing to his CPF-SA since. 

So, apart from the mandatory contributions from employment, the money in my friend's CPF-SA really grew through compound interest!


Did my friend regret anything?

Well, it was something like this:

"I should have transferred more money from OA to SA in the following years. Then, I would have received even more interest and hit the MS even earlier."

Alamak. If AK had done that, he would have even more money in his CPF now too. Aiyah.

Of course, all our circumstances and motivations are different. We have to question if this route is something that is good for us too.

This would work for someone who is not thinking of buying a property soon or is able to buy a property without using money in his CPF-OA. 

In the latter case, to be safer, he should have emergency cash on hand which also allows for 12 to 24 months of mortgage repayments as his CPF-OA savings is rebuilding.

For a more complete picture, please read the related posts below.
3. A lot of my CPF-SA money...
...the interest I received in my CPF-SA has been higher than my mandatory contributions to it for many years by now... 

Why work hard and plan early for retirement? (UPDATED)

Monday, June 20, 2016

Reader said...
Actually retire also hard work to make it work well.

AK said...
Oh, I am working very hard in retirement.
Trust me, I know what you mean. ;)



(F.I.R.E. = Financial Independence & Retire Early.)

If you haven't listened to the song, listen, there is a hidden message.





Our conversation continues:



















My reply:

Hi iwimsasl,

I believe that everyone's life can be and should be better.

I know people who belonged to the low income group who took affirmative action to change their lives for the better and I have shared some of their stories here in my blog too.

If you are born poor it's not your fault but if you die poor it's your fault.” Bill Gates.





This is true especially in societies like Singapore where everyone has equal access to education and opportunities are available to those who are willing to work hard and look for them.

There is no point for the low income workers to complain or feel sorry for themselves. 

Unfortunately, many do and it doesn't change anything.

I see some complaining on FB all the time. 

They have time to complain, why not spend time to improve their lives?






Asking for CPF LIFE to start paying them earlier is unlikely to make a big difference in such an instance since there is probably not enough in their CPF-RA to last them very long. 

Pay them a monthly income from a smaller sum for life? 

The monthly payout has to be much smaller to be equitable. 

I don't think it is a reduction of only 7% or 8%.

Accumulating for only 5 years at 5% per annum (bearing in mind that the first $30K is paid 6% p.a. while the next $30K is paid 5% p.a.), CPF-RA money would only grow 27% while accumulating for 10 years, it would grow 63%!






So, with this understanding, we see that the monthly payout, proportionally, would have to be 22% lesser to be equitable if payout were to start at age 60 instead of 65.

The prudent thing to do for these CPF members would be to continue working for as long as possible, putting off retirement and allowing their CPF-RA money to accumulate for at least 10 years.






Unfortunately, for many low income workers who are much older, it might be the reality they must face as the probability for upward mobility dims for them. 

Younger low income workers who are physically and mentally whole should not give up.

I shared before in my blog that what pushed me to work harder in my younger days, holding 3 jobs at one time, working 7 days a week, and to plan early for retirement was mainly the fear of growing old and destitute. 

人无远虑, 必有近忧.

Many people just don't think ahead and I hope more people will.






Related post:
Worried you won't live to enjoy all your CPF?

What do we call people who want everything for free?

Sunday, June 19, 2016

I just wasted half an hour of my life talking to someone on FB.

There are some people who have difficulties despite their best efforts to make ends meet. 


They might be handicapped in some way.

So? What to do? 

We should help these people.

However, there are those who are physically and mentally whole but are complaining day in and day out. 






These are usually the ones who keep asking why must they pay for this and why must they pay for that?

They want free education.


They want free transportation.


They want free medical attention.

They complain until sometimes I run out of patience.

Wah! A poem? 

Not bad, AK!





We are familiar with the saying "there is no free lunch in this world". 

If lunch also cannot be free, how can education, transportation and medical attention be for free?

Hey, AK. Why not? 

In some countries in Europe, really got such free things!

Alamak! 


Then, AK is the stupid one lor. 

Cham liao.

Please lah. 


AK not stupid.





Free education? 

Do these people think that the lecturers and tutors work for free? 

Do these people think that books grow on trees and the libraries are manned by altruistic house elves? 


Do these people think that the lights and machines are powered by magic and water flows clean and freely from Mount Faber?







Please lor.

All these have to be paid for.

If we wish to enjoy something, we have to pay for it. 


If we got it for "free", someone else is paying for it. 

Providing subsidies for financially struggling families is the caring thing to do but if we are not financially struggling, don't cry father, cry mother. 


Pay up!

What? 







We are financially struggling because we must pay for our car, our maid, our twice a year atas family vacations etc.?

Alamak, so, those tax payers who don't have a car, who don't have a maid and who don't go for atas vacations must subsidise our lifestyle, is it?


佛都有火.









So, what do we call people who want everything for free?










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