Boxing Day 2019: The Day the Aliens Came

X'mas 2019 came and went. Yet another X'mas. The next day, however, was an altogether unforgettable affair. Definitely not another typical Boxing Day.

It was the day the Aliens came. Their arrival was swift and awe-inspiring, dancing in the skies for hours over lunch and into the afternoon, enthralling all. People were seen running out of the malls to see for themselves first hand, hearts palpitating.

The next day, 27 Dec 2019, hospitals and clinics island-wide reported being overwhelmed with many patients, all complaining of blurred visions coupled with neck injuries. Productivity hit rock bottom.

Oh wait, what? Not an alien invasion? But that Alien eye looking thingy ...

It's just a solar eclipse?  Oh.  *embarrassed silence*

Looks like we get to live for another 43 years before the next sign of an invasion.

Continue investing. You'll still need money to retire on. The end is not here yet.

Merry X'mas and Happy New Year!

Angst of replacing a home

It's such an angst trying to find a practical way to replace a home with another. I'm not talking about upgrading, simply about moving from one to another equivalent.

So here's the setup.  The home is a condo (originally an E-condo) with a 99-year lease. It is now 12 years old.  Things are starting to break down here and there, although perhaps nothing major.  It worked well when the kids were studying at schools nearby.  But now that they have moved on to tertiary education, the location is no longer ideal.

All that's desired is to find another equivalent place to move to, which places the kids nearer in terms of travel time to their tertiary locale, and my time of travel to work is no worse off.

A 17th floor condo at 1292 sq ft bought 12 years ago was $501,000, and is roughly worth $950,000 now. That sounds like so wow. BUT, to get an equivalent place, the price tag appears to be $1,300,000 for a 5-year resale condo on a mid-floor, with only ~1000 sq ft!  That's a differential of +$350,000 for a smaller space.

A completely new condo that is yet to TOP is even worse.  That same price can only fetch an 800 sq ft unit!  Anything in the range of 1,000 to 1,200 sq ft appears to be $1,500,000 to $1,800,000. Phew.

The alternative is to renovate the current home and fix up all that needs to be fixed. Probably $80,000 you think?  But the pain is on having to pack everything to move out during the renovation period, rent a temporary place for a couple of months, and then move back in again thereafter.  That's two moves.

Wifey and I are 52 years old now. Is it viable to live in the 12-year old home for the next 30-40 years? Or would a 5-year old resale home be a better option?  While it is smaller, I do foresee that one or both kids would ultimately get married and move out in a matter of 5-10 years from now. So the slightly smaller space might just be a short term situation.

What would you do?

So far away from being digital to the core

I went to a bank recently to close an account that I no longer needed. The whole affair was pretty straightforward.  What I found strange though was that the bank officer had to print a bunch of forms that I had to sign. In this day and age of digitalisation, it's puzzling that there's still so much PAPER work.

When I quipped this to the bank officer, he was most apologetic, and politely said, "I'm so sorry."

Then I had some queries about my wifey's supplementary Visa card issued by the bank. It seems she couldn't do online transactions with overseas sites as they needed to send an OTP to a phone number when transactions were being made. As she didn't have a bank account with this bank, there was no number to send to. On enquiry, the bank officer helpfully provided a form that we could submit to register her phone number to do so. More paper! When asked if this could be done via some online means, apparently the answer was "no".

Bet he must have been thinking that I was such a troublemaker!

We're a loooong way from fully embracing the Digital Age.

Digital to the core.

p/s: It's 12-12. Happy 12'ing.

From Relationship Manager to Grab Driver

Yet another Grab driver story. 

So this driver told me he makes about $8,000 a month driving Grab.  Turns out he used to be a Bank Relationship Manager (RM). I was curious why he switched from RM to become a Grab driver.

He explained that he used to earn shit load of money as a RM.  While his $8,000 a month from driving Grab was a far cry from the salary he used to make, he actually still saved the same amount each month as before as a RM.

"Earn more, spend more" was what he said.

As a RM, his typical day started at 8 am to receive updates, and thereafter, it was up to him, own-time-own-target. He could essentially "close shop" except for scheduled appointments.  However, most lunch and dinner hours, and way after dinner, were spent entertaining clients. He had no family life as a result.

While much of his work-related expenses could be claimed, the reality was that he had to spend on his personal effects as it was expected in his industry. When he wore a Tag Hieur watch to work, his boss asked him, "What kind of Mickey Mouse watch is that!?"  When he bought a sedan, he was scoffed at for not driving something more fanciful like an Audi.  To go to work, he had to deck out in custom suits.  That's $1,000 gone upfront for the suits.

He recounted one lady colleague, who carried expensive bags to work. And yet he knew, she was living in debt, owing far more than she could really afford.

There was another colleague who made $150,000 to $200,000 of commission each quarter! That's a lot of moolah, over $1m a year. Yet, he was eventually caught stealing from the bank and went to jail. How could a person who earned so much still found the need to steal? He could not understand.

He eventually decided to get out of this game and found that Grab works for him. Now he has more flexibility with his time, and living more healthily. 

I wish him well.

Grabbing to $11,000 a month

Ah no, I did not spend $11,000 a month taking Grab. No, no, no.

I came across yet another interesting person when I took a Grab ride home. It started with a simple question on whether he drove this as a fulltime job. I was surprised to learn that he drove 7 days a week, 15 hours a day!  That's hard work.

When asked how much he made, he said it used to be $15,000 a month when incentives were good. This was net of expenses. But these days, he could only make $11,000 a month. That is quite an impressive income as a Grab driver. I was really surprised he could make that much. I don't recall ever hearing of a Grab driver who could make more than $5,000 a month till today.

Given his income level, I was curious if he made voluntary contributions to CPF. He laughed and shared that he has more than enough and didn't need to do so.

He used to own a commercial laundry service. It's those industrial class type that service hotels. A few years back, he got an offer to buy out his business. The offer was the equivalent of 10 years of income. As he could only make 6% ROI on his business, the offer was too good to refuse. So he sold off and cashed out.

[More on his laundry business another day]

Being a divorcee and with a daughter already in her final year in the University, he didn't have much that occupied his time. So he was happy to be a Grab driver, and even more so because he liked to drive. He quipped that while he was driving his beaten-up car for Grab service, his daughter drove their family's BMW to school.

He takes breaks once in a while, usually a few months at a go, traveling overseas, alone.

Since he started driving, he has cut down on his drinking and smoking. He used to drink everyday. It was probably killing his liver. He now hardly drank. Smoking was still a habit, but he had cut down from two packets a day, to less than half a packet. It's certainly an improvement. I wish him good health.

A pleasant late evening ride.

Bill Gates Wants to Give Me $5Million

I received the following e-mail recently.  What's your reaction?

From: Bill_and _Melinda_Gates_Foundation
Subject: Bill_and _Melinda_Gates_Foundation

I hope this information meet you well as I know you will be curious to

know why/how I selected you to receive a cash sum of $5,000,000 USD),

our information below is 100% legitimate, please see the link below:

please see the link below:

https://en.wikipedia.org/wiki/Bill_%26_Melinda_Gates_Foundation

I BILL GATES and my wife decided to donate the sum of $5,000,000 USD) to

you as part of our charity project to improve the 10 lucky individuals

all over the world from our $65 Billion Usd I and My Wife Mapped out to

help people. We prayed and searched over the internet for assistance

because i saw your profile on Microsoft email owners list and picked

you. Melinda my wife and i have decided to make sure this is put on the

internet for the world to see. me and my wife have cancer and as you

could see from the webpage above, am not getting any younger and you can

imagine having no much time to live. although am a Billionaire investor

and we have helped some charity organizations from our Fund.

You see after taken care of the needs of our immediate family members,

Before we die we decided to donate the remaining of our Billions to

other individuals around the world in need, the local fire department,

the red cross, Haiti, hospitals in truro where Melinda underwent her

cancer treatment, and some other organizations in Asia and Europe that

fight cancer, alzheimer’s and diabetes and the bulk of the funds

deposited with our payout bank of this charity donation. we have kept

just 30% of the entire sum to our self for the remaining days because i

am sick and am writing you from hospital computer.and me and my wife

will be traveling to Germany for Treatment.

To facilitate the payment process of the funds ($5,000,000 USD) which

have been donated solely to you, you are to send us

your full names

your contact address

your personal telephone

so that i can forward your payment information to you immediately. I am

hoping that you will be able to use the money wisely and judiciously

over there in your City. please you have to do your part to also

alleviate the level of poverty in your region, help as many you can help

once you have this money in your personal account because that is the

only objective of donating this money to you in the first place.

Thank you for accepting our offer, we are indeed grateful You Can Google

my name for more information: Bill Gates Charity or Bill & Melinda Gates

Foundation

God bless you

Regards MR Bill Gates

--

Oh, the extent of typos! Gave me a headache reading it.  Why do they even try?

Free Smoked Duck Breast at Cold Storage Causeway Point

Free box of Smoked Duck Breast for every $15 purchase of fresh port and marinated meat products at Cold Storage Causeway Point.

Don't forget to ask for it.

Till 30 Oct 2019 only.

Watch your eyeballs!

Aging comes with many annoyances.  Most come with signs and symptoms, or preventive checks from various markers could provide an early heads-up to cause some level of panic. But the most insidious types are those where NOTHING is noticed.

If one were to poke the eyeball, do we feel pain?  In some movies, a person is being tortured with some scary looking object, threatening to pierce the eyeball. We feel so much pain even before it has breached.  Cringe.  But it seems there is no sensation to be felt on the eyeball itself?

In any case, it was a serendipitous circumstance that led wifey to pay a visit to an ophthalmologist. Turns out the amazing scanner the ophthalmologist had picked up an object floating above the retina. It looked like a UFO flying above a planet when a picture of it is taken from outer space.

Turns out she had experienced a retinal tear without detachment.  No sensation whatsoever.  When asked what the consequence could be, we were told, "Blindness". That sure was an absolute bummer.

The good news was, the doc could fix it.  All it needed was to laser around the torn area to fuse it back.  We were lucky it was detected early.  All hail modern science!

And when asked when could we get it done, he said, "Immediately". Wah! One hour and with temporary blurred vision later, wifey emerged from the procedure at the hospital laser lab at the next building, all done.

Seems like it could be covered by the Integrated Shield Plus programme that wifey had too. Fully covered.  And it was a breeze as the hospital admission could simply do an "E-filing".  No additional information was required. Easy breezy.  All hail Smart Nation and digitised government healthcare system!

Watch your fragile eyeballs!

What are the ways to put money INTO your CPF?

Reader 'Adam' has been sharing a lot of information from his experience as a post-55er.  Here's another that he shared on ways to put money back into the CPF accounts, which I thought was worth reposting to share to a wider audience who might have missed his comments to another post.

Some people seek ways to extract money out of CPF, and certainly would not be looking at putting money into it!  So this might come across as being strange and would not resonate with that audience. Hah. So skip this if you fall into the above category.

But if you're not, read on!

--
[As shared by 'Adam' ... (with some edits) ...]

I thought it would be a fitting complement to your post on "How are the excess fund withdrawn after meeting the FRS?" with this one "What are the ways one can take to put money into their CPF accounts!"

There are a few ways one can put money into their CPF accounts besides the automatic monthly deductions from your salary and the employers' contribution.

But before I go into the above topic, I would like to highlight again this tip on the best time to make withdrawal from your CPF OA and SA if you wish to only withdraw the interests earned for the year and at the same time keep the principal amounts intact to earn further interest in the next year. This step is important especially if you have substantial money in your SA that you want to "preserve" to earn the yearly 4% interest. The best time to withdraw the interests is in Dec, and you can only withdraw 11 months' worth of interests! That is, 11 months of interest from your SA (for Jan to Nov), and likewise, 11 months of interests from your OA.

Here are the steps one can take to grow your CPF

1. Monthly deductions from your salary. The amount deducted from your salary will depend on your salary capped at $6,000 a month and a further cap of $102,000 per year. What this means is that if you earn $7,000 a month, the CPF deduction (contribution) is based on $6,000. Say, you have 5 months bonus, then the deductions from your full year of salary and the 5 months will be capped at $102,000, giving you the maximum contribution of $37,740 for the year.

2. Have more than one job. If you work two different jobs with two different employers, both employers are obliged to contribute your CPF via the employers' contribution. This way, you can exceed the limit of $37,740 per year contribution to your CPF.
[I was wondering if this is valid though? Thought the cap is an upper bound in totality?]

3. Make voluntary contributions to your CPF. Say you earn less than $6,000 a month and together with your bonus, your annual salary is less than $102,000. You can make voluntary contributions to your CPF any time to hit the yearly limit of $37,740. In my case, after I turned 55 years old, my CPF contribution was shifted to 26% instead of 37% of my salary [which was pre-55]. So I have been doing voluntary contributions to my CPF to hit the $37,740 limit each year.

4. Return money that was withdrawn for property purchase. If you have extra money, you can return the money into your CPF to redeem the amount that was withdrawn to purchase property, including the accrued interests. My wife and I have returned the full amount we withdrew from our CPF OA, including accrued interests, that we had used to purchase our properties.

5. Top up your RA. This one is only applicable to those 55 years old and above. I have topped up my RA to the ERS, and I continue to top up each year to meet the new RA ERS.

6. Invest through CPFIS. This one is a little controversial in that you could lose money through bad investment rather than build your CPF. There are investors who have successfully enlarged their CPF OA and SA through astute investment through CPFIS.

7. Inheritance. You can only receive inheritance into your MA, SA and RA up to the prevalent limit. The rest of the inheritance money will be paid to you in cash. Put another way, you cannot bequeath CPF money into your beneficiaries' OA, you can only bequeath to their SA, MA or RA, and only up to the limit prevailing.

'Adam'

Related:
Maximising CPF (post-55)
How will CPF retirement sums be formed (post-55)
How are excess CPF funds withdrawn after meeting FRS (post-55)

Quit Like a Millionaire - The FIRE Strategy

Have you read the book "Quit Like a Millionaire" by Kristy Shen and Bryce Leong yet?  They offer a pretty compelling approach to achieve FIRE.

Their broad FIRE strategy is as follows:

1. Have a global medical insurance policy in place.
2. Determine investment portfolio needed - i.e. Annual_Expenses x 25.
3. Invest in low-expense Exchange Traded Funds (ETF) that track indices for a balanced equity-bond portfolio.  
4. Weigh it more heavily with higher-yielding ETFs for the initial 5 years to reduce the negative impact of retiring in a downturn market - i.e. mitigate against sequence-of-return risk.
5. Perpetually withdraw at a 4% rate per year during retirement.
6. Income yielding portfolio provides a Yield Shield - i.e. even if the market tanks, there is still distribution.
7. Create a Cash Cushion to cover the shortfall in those bad years. Bad years typically did not last beyond two years before the market recovers to previous levels. 5 years is however assumed as a margin of safety. Cash_Cushion = (Annual_Expenses - Annual_Yield) x 5.  In good years, use any surplus to top up the Cash Cushion.

Steps 5 (Yield Shield) and 6 (Cash Cushion) are part of the mitigation strategies against bear markets. Additional options include:

• Geographical Arbitrage. Live in lower cost-of-living countries till market recovers!
• Side Hustle. Create alternate streams of income. 
• Part-Time Work. This needs no explanation.

There's a fair bit of treatment on dealing with taxes due to Canadian and US laws. But taxation in Singapore is much easier without the capital gains tax to worry about. And prevailing tax avoidance means of SRS and CPF schemes are much simpler to understand.

--
Based on this strategy, they retired with a $1,000,000 portfolio for a lifestyle that requires $40,000 a year.  It turns out they were able to travel around the world, living more months in low-cost countries, yet they still managed to keep their expenses within $40,000 a year.  In the meantime, their portfolio has actually grown to $1,300,000.

I must say their very low annual expenses may seem extreme (minimalistic) as it probably involves not having a house that is a home (perhaps a StoreHub will do?), and being prepared to lead a fairly nomadic lifestyle.

It's also easier for them as they do not have children. In their book, they did address those situations involving children though. Nor are they tied down by having to look after their parents - a trait that is perhaps less common for western cultures.

There are various other strategies to optimise expenses that they described in their book. Have a read. I enjoyed it.

Related:
Quit Like a Millionaire - By Millennial Revolution

End of Life - Last Wishes

Browsing around books on Personal Finance at the Library, there are plenty of books with exciting titles screaming out for attention!

But here's one that probably wouldn't naturally draw interest.

Would you borrow it to read?

It's one of those subjects that don't excite, but when the time comes, there is just no time left to read!

Give it a go. It's an easy read.

Related:
Dilemmas dealing with end of life
End of Life - Death Certificate
End of Life - How much does a funeral cost?
End of Life - What happens to your CPF?

How are the excess CPF funds withdrawn after meeting the Full Retirement Sum?

Presuming that at age 55, you have the necessary CPF Retirement Account (RA) funded, what happens to the rest of the 'excess' money in the Ordinary Account (OA) and Special Account (SA)?  Can we withdraw freely, and how in what order will it be withdrawn from the respective accounts?

Here goes the responses from CPF Board ...

--

Question: If there is still balance in my SA after deducting the sum for RA, will it remain in the SA, or will the balance be transferred to OA?
It will remain in the SA.

Question: And thereafter, is it correct that any time after age 55, I can withdraw any balance left in both OA and SA?
Yes, your understanding is correct.

Question: Which gets deducted first if I choose to withdraw? Must it be from SA first, before OA? Or do I have a choice?
The Board processes your withdrawal in the following deduction sequence:


Question: Is it true that I can then withdraw as often as I want after age 55? For instance, can I withdraw a monthly sum of my choosing till the balance in OA and SA are depleted?
Yes, you can withdraw all the savings in your SA and OA at any time from age 55 (i.e. multiple times in a year), provided you have set aside the FRS in your RA.
--

Related:
What happens to my CPF savings when I turn 55?
How much CPF savings can I withdraw from age 55?
How much CPF LIFE monthly payouts will I receive?

How will the CPF Retirement Sums be formed upon age 55?

So we have heard about the various CPF retirement sums, i.e. Basic (BRS), Full (FRS) and Enhanced (ERS), which gets committed upon reaching age 55, and for which these will generate lifetime of payout from age 65 onwards (or deferred till age 70 if so decided).

Here's an interesting response that a friend of mine obtained from CPF Board on his queries. It provided details on how the FRS and ERS will actually be formed.

--
[edited extract]

Question 1: Instead of FRS or ERS, can I choose any amount that is in between, even though I have enough for ERS at age 55?


Allow us to share with you how Retirement Account (RA) will be created for you when you turn 55.

By default, the Board will create your RA when you turn 55, by setting aside the applicable Full Retirement Sum (FRS) in the RA.

The transfers of CPF accounts to make up the FRS will be made in the following accounts and sequence:
(i) funds in the Special Account (SA); and
(ii) if (i) is insufficient to set aside the FRS in full, funds in the Ordinary Account (OA) will also be transferred to your RA to make up the FRS.

The process of setting aside the FRS is automatic and applies uniformly to all members turning 55.

After the RA is created (with FRS) at 55, you can then transfer the remaining savings in your SA and/or OA of any amount and at any time to your RA, as long as it is within your topping-up limit. The topping-up limit is the maximum amount you can top up to RA.

Topping-up limit in RA is computed as follows:


Hence, if you wish to transfer an amount lesser than the topping-up limit in RA (i.e. setting aside a retirement sum between FRS and ERS), you can do so as well.

Question 2: If there is still balance in my SA after deducting the sum for RA, will it remain in the SA, or will the balance be transferred to OA?


It will remain in the SA.
--

For more information:
What happens to my CPF savings when I turn 55?
How much CPF savings can I withdraw from age 55?

Related:
Maximising CPF Post-55

Maximising CPF Post-55

It's really great to hear from the post-55ers on their interesting ideas and experience in maximising retirement benefits.  Here's one from 'Adam' that cropped up in a previous conversation which I found especially interesting ... (re-posted with edits):

--
OA: Ordinary Account
SA: Special Account
RA: Retirement Account
FRS: Full Retirement Sum
ERS: Enhanced Retirement Sum
--

How do you protect your SA money from being taken to form the RA upon reaching 55 years old?

As it stands now, money in the SA earns 4% pa of interest. Likewise money in the RA also earns 4% per annum of interest. For those 55 years old and above, CPF also gives 6% per annum to the first $30,000 in your RA, and 5% per annum to the second $30,000 in your RA, while the rest of the money in your RA earns 4%.

So for example, I have $176,000 in my RA, the interest my RA money would earn in a year is: $176,000 x 0.04 + $900 = $7,940. The $900 is derived from the 6% and 5% interest for the first $30,000 and second $30,000 respectively.

Now, the issue is, how to "prevent" the CPF from taking money from your SA to form the FRS in your RA when you turn 55?

Supposing I am now 54 years and 11 months old, and I have $230,000 in my SA. Next month, when I turn 55, CPF would automatically take $176,000 from my SA to form the FRS in my RA, leaving me with only $54,000 in my SA. I would rather that CPF take the $176,000 from my OA to form the FRS in my RA and leave my $230,000 in my SA intact to earn 4% interest pa.

Right on my 55th birthday, I woke up in the morning, logged in into my CPF account and lo and behold, my RA was created. At that time, the FRS was $161,000, and all the money came from my SA with a little leftover.

Right from the start, I had planned to top up my RA to ERS. If I were to use my CPF money to top up my RA to ERS, they would take money from SA first before taking money from the OA. Since I didn't want my SA to be hollowed out, I had to use cash ($80,500) to top up my RA to the then ERS of $241,500.

Every January 1st since then, I have been topping up my RA with $7,500 in cash, to keep up with the new ERS limit. The interest earned in your RA each year is not counted towards the new ERS limit. Let me explain:

This year the ERS limit is $264,000. By next year, it would be increased by $7,500 to the 2020 limit of $271,500. My current RA amount is $296,000 including the interests earned over the few years, but I would still be able to top up another $7,500 in January 2020.

So you can indeed continue to top up your RA to meet the new ERS amount of each progressive year up till you are 70 years old. 70 years old is the latest age at which you can join the CPF Life plan. 55 years old is the earliest age at which you can opt to join the CPF Life plan.
[This para may be misleading. Firstly, what Adam is saying is that a CPF member can choose to delay CPF LIFE payout till age 70. So up till then, top-ups to RA up to ERS are still possible. Secondly, a CPF member can decide which CPF LIFE scheme to select any time after age 55, up till a decision is made to begin payout (latest by age 70).]

The biggest hurdle (and pain) is the very first top-up from the FRS to ERS. For those turning 55 years old this year, the FRS is $176,000 and the ERS is $264,000, this makes the top sum to be a whopping $88,000!! This is no small sum and takes some saving effort to build up. So if you intend to top up your RA to ERS, you must plan and start saving early. After that first top-up, every year is $7,500, a more manageable sum.
--

How's that for maximising our CPF?

--
[Appended ...]
Stay tuned for next two weeks' posts on CPF Board's responses to some related queries.

Using CPF-OA as a High-Yield Savings Account

Property is really expensive in Singapore. For most, buying a home is pretty ingrained as a basic need to establish a family. So it is often the case that we would tap on our CPF as a source of cash to fund the purchase of a house.

We are poor savers, by and large, particularly at the tender ages of 20's to 30's. Being new in our career, with a salary at its lowest point, and yet filled with floords of commitments and distractions. Plus, we're probably dead silly in the way we manage our money anyway.

So we raid our CPF-OA (Ordinary Account) to help fund a huge chunk of the property purchase and continue to ride on our CPF-OA to pay the consequent installments. And we thank the gahmen for forcing us to compulsorily contribute to this. Over time, it can be a really huge chunk that we take out of our CPF-OA.

Now, there is actually no requirement to pay it back, unless we sell away our property. It remains optional to pay back what we took, plus accrued interest, otherwise. And so we never have to if we don't wish to, till the day we kaput (transit to the netherworld).

So here's an idea:

Suppose you are already past 55 years of age, and you have fully funded the Full or Enhanced Retirement Sum (FRS/ERS) into the CPF-RA (Retirement Account).  And because you have achieved FIRE, you are happily retired, drawing a passive income that is generated from a range of investment instruments. Well done! Being the studious hack that you are, you are looking for ways to manage this cash flow generation.

Suppose you generate $50,000 a year, but you only require $4,000 a month to cover monthly expenses.  Instead of keeping the remaining $46,000 for the rest of the year in cash in a bank savings account at a pathetic savings interest rate, what if you do a voluntary cash refund of CPF savings used for housing into your CPF?  The money goes into your CPF-OA where it earns 2.5% (or whatever prevailing rate). But because these are excess over the fully funded FRS/ERS, we can request to withdraw anytime, any number of times, as you're already post-55. So we can gradually withdraw $4,000 per month thereafter. Rinse and repeat.

Now, 2.5% (or whatever it may be) is pretty much risk-free and not to be scoffed at.

Is this workable?  Any catch?

--
This is what the CPF website says:

You can refund any amount, capped at the full principal amount you have withdrawn for the property with the accrued interest. Please complete the Application to make cash refund of CPF savings used for property (HSD/VR) (PDF, 0.4MB) and enclose a cheque/cashier's order in favour of 'CPF Board' for the amount you want to refund. Mail both the form and the cheque/cashier’s order to: Central Provident Fund Board Housing Schemes Department Robinson Road P.O. Box 3060 Singapore 905060 Alternatively, you can deposit the cheque/cashier's order and the form at any of the CPF service centres. The refund will be made to your CPF account within 7 working days from the receipt of your cheque/cashier's order (subject to fund clearance).

I don't understand why they still go with cheque though. *shrug*

Rise of the Financial Ruler - by Paul See

Reading stuff on the mobile phone is quite an addictive thing. But I think we are all going to experience increasing cases of eye problems in time to come. As it is, my eyes blur out and lose focus after staring at laptop screens and mobile phones all day long. Hourly breaks are recommended.

So it's probably good to break off and read books and magazines when I don't really have to be stuck to these electronic hypnoses.

The libraries are stocked full of options. And the National Library Board has been setting up shop at places where people tend to commute. Quite clever. Know thy customer.

The one recently opened at VivoCity has a really cool layout. Its reading area at one end faces Sentosa Island with full height windows. The view should be really cool in the evenings. Pun intended.

Anyway, I picked up this book from the VivoCity Library recently. The cover page was partly what attracted my attention (note the "Financial Ruler"). The other reason is that it is really thin. I figured it would be light enough and convenient enough for light reading while I'm commuting on the MRT.

"Rise of the Financial Ruler", by Paul See (Code: 332.024).

The style of writing is really fun. It's definitely not the usual personal finance book with serious overtones. Over 14 chapters of only 74 pages, it weaves a tale centered in ancient Egypt; 7 years of feasts and 7 years of famine. Sounds familiar? Biblicalicious.

It's quite fun if you were to try and relate the events in the story to recent events that impacted financial journeys in the past decade, including events specific to Singapore. At the same time, we could also relate to the personal finance ideas being alluded to.

In the final 37 pages, it explains the motivations and ideas behind the tales of each chapter. Pretty neat.

Worth a read.

So which is your persona? Benjamin or Reuben?

End of Life - How Much Does a Funeral Cost?

Of the multitude of things we examine into concerning our personal finance, investments, medical costs and such, FUNERAL is certainly not something that I would have gone around to actively find out.

But when the need comes, there is little time to think, nor are we likely to be in the optimal state of mind to weigh options carefully. There is an emotional factor at play. So I guess we would tend to just go with the flow?

So just how much does it cost? For sure, it varies over a wide range, from the basic to the exorbitant grandeur. The type of religious practice, size of family, number of days - these are all variables that will size up the cost of the entire package.

To offer a gauge, here's one sample based on the following parameters:

Religion: Buddhist
Size of Family (mourning): 15-20 pax (i.e. children, grandchildren, great-grandchildren, etc)
Number of Days: 5

Item Description	Amount (S$)
Crematorium fee	$                50.00
Use of HDB void deck (water, electricity)	$              160.50
Drinks, peanuts and such	$          1,400.00
Funeral services package	$          8,000.00
Meals for 4 dinners, final day lunch	$          4,600.00
Clothings (15-20 pax)	$          2,000.00
Security, tables, chairs, fans	$          1,000.00
Funeral offerings, 2 buses	$          2,300.00
Claim ashes	$                20.00
Newspaper - orbituary	$          5,885.00
Ang pows and miscellaneous	$          1,000.00
Total	$        26,415.50

There will be other costs that affect various members of the family individually.

Security pertains to the hiring of 2 pax to look after the wake at the night. You could save a few hundred bucks if you're prepared to tire up family members to do so instead.

The obituary was published on both Zhao Bao (Chinese papers) and Straits Times. It is EXPENSIVE, and cannot be under-emphasised. This item alone contributed 22% of the costs.

Figures have not included the cost of the niche at the temple and other temple associated 'fees' over the post-funeral 100 days.  Most certainly a few more thousands.

15 Ways to Save Money, Redux

Was watching this YouTube video by Lavendaire on 15 Ways to Save Money (YouTube) She is based in Los Angeles. So these 15 ways to save money might have a certain slant towards American consumerism.

But here's a quick summary of the 15 ways, and my thoughts on some of these points:

"1. Use cash instead of credit card". You will realise how much you are actually spending. Credit card charges high-interest rates if the debts are not paid in full. By using case, you will be pending what you have, versus spending on borrowed money.

I think it's just a complete lack of discipline that can cause a problem. Credit cards can come with various benefits like cash-back, mileage, etc. So I don't see a problem if one is paying in full the bills every month.

"2. Write down all of your spendings on paper". Know where you are spending.

Some people need to write things down to register mentally. I work fine with spreadsheets. So it's probably ok to record all your spendings on spreadsheets. Also, I find it easy enough since most of my spendings are cashless. The credit card bills and bank statements would have the information I need to reference to record into my spreadsheet. Whatever I actually spend with cash are few and far in between. Much of it for food and miscellaneous. and generally, they aren't much.

"3. Cancel any unnecessary subscription". For those that you don't use anymore, cancel or put on hold the subscriptions.

I can agree with that. 

"4. Always google a coupon code". Get the discount!

This is something I'm not in the habit of doing. Perhaps couponing is less of a practice in Singapore? Neither do I do a lot of online ordering. Or maybe I'm just in denial?

"5. Use E-Bay to get cash back from purchases".

I don't do much of E-Bay either. Although, I must admit I did quite a bit when I was residing in the US for a short period. It's a whole lot of difference when you click buy one day and the goods show up in a day or two!

"6. Start building an emergency fund". Build up 6 to 9 months of your monthly expenses to deal with any emergency.

Definitely a piece of good advice. Especially if there is any risk of losing your job, or to deal with some unexpected emergencies.

"7. Schedule your shopping allowance". Add items to a shopping list. And buy only on scheduled days. It helps to control impulse buying.

Curbs unnecessary spendings. Window shopping should be kept to simply that.

"8. Wait it out". Give yourself 14-30 days, to curb impulsive shopping.

Good advice.  If after 30 days, the desire remains, then maybe it is something that gives you love.  [Borrowing from Marie Kondo's words]

"9. Buy only what you really need and will really use". Buying bulk just because they are on sale may not be the way. 

Anything else is just clutter and junk.

"10. Use your public library". It's free.

And it's great here in Singapore because the libraries are well stocked. And in recent years, the National Library Board has been locating libraries in publicly accessible places, including popular shopping malls - like VivoCity!  Now if only I can figure out how to convince them to subscribe to all my favourite magazines.

"11. Plan your meals around grocery store sales". Go for items on sale. And use those coupons!

This takes some getting used to. Not something I would particularly bother as neighbourhood food isn't all that expensive around here. Plus, groceries can be cheaply bought in most cases from supermarkets. In Japan, the basement food shops are heavily discounted towards 8-9 pm near closing time. 

"12. Buy used instead of new". There can be good stuffs that are opened but not used. 

I don't feel too positively with this. Too many opportunities for con jobs if bought secondhand from online channels, like Carousell.  Never know what you are actually getting either, hygiene wise.

"13. Make your own versus buying". DIY whatever you can. Cook at home if you're good at it.

I'd leave that to wifey. She bakes, big time. 

"14. Cut or do your own hair". Yet another DIY.

I wouldn't trust myself to do that. And besides, it's only $10 at the local barber. I'm fine with that.  I guess some other equivalents would be: "wash your car yourself", "clean up the house yourself, don't engage a part-time cleaner (or maid)", etc.

"15. Get social and swap with a friend".

Need a lot of friends? Probably end up with even more group buys and spendings instead! Hah.

Using Leverage for REIT Investment

So here's a play I came across, mentioned by a number of people:

• Worked for a few years, saved some money. Let's say $100,000.
• Take that $100,000, borrow some (leverage), say at an interest rate of 4%.
• Let's assume $100,000 + $100,000, giving a total capital of $200,000.
• Put everything in REITs, yielding say 6% annually - i.e. $12,000.
• Pay $4,000 in interest. And still, make $8,000.
• That's an 8% yield over a starting capital of $100,000!

Sounds good right? The numbers seem credible under such a low interest rate environment.

Let's play out this scenario ...

There is an economic downturn resulting in a drop in the valuation of REITs. The 6% yield may be there, but it is now against a lower valuation.  So suppose the value of the REITs drops 30%.  The $200,000 worth of REITs (at cost) is now worth only $140,000. At a 6% yield, that now generates $8,400. Paying off the $8,000 interest, there is still a balance of $400.  The achieved yield has dropped to 0.4%.  Still ok.

In the following year, the REIT market continues to tank by another 20%.  The $140,000 of REITs is now worth only $112,000. At a 6% yield, that gives $6,720. Paying off the $8,000 loan (that never goes down!), you are now making a loss of $1,280. The achieved yield has dropped to -1.28%. Not so ok, but probably still bearable.

And then the REIT gets taken private, giving a cash value back of $150,000. What happens now? After paying off the interests ($4,000) and the loan capital ($100,000), you're left with $46,000. Poorer than when you started.

That's now a loss of 54% of the starting capital. Can you deal with that?

Leverage, it works both ways.

On good days, there is money to be made. But all it takes is ONE bad day to wipe out everything.

I think there is money to be made with this, but the downside has to be understood.

Where Does a $120,000 Annual Retirement Income Go To?

I am most grateful to a reader who shared his monthly expense figures. I'm not even sure if I should say "he" or "she"? But for convenience, I'm going to just call him Adam (A).

[To: 'Adam' - Give me a shout out if prefer to be called by another name?]

It looks like Adam's household is made up of a couple, an elderly and a maid.  Not sure if there are any children? In contrast, my situation (B) is that of a couple and two children.  While the specifics are not the same, there are high similarities - i.e. four persons in the household, close to retirement.

I took the liberty of regrouping Adam's data so that I could make reasonable comparisons.

Expenditure Item	A	B
Condo maintenance	$      330	$      295
Car/transport related	$      670	$      594
Property tax	$      280	$        33	A's is for 2 condos
Utility, broadband, phone	$      350	$      474	B's includes replacements
Insurance	$      300	$        40	B's exclude Medishield using CPF-MA
Food/meals, groceries, households	$   1,500	$   2,392
Medical	$      100	$      750
Gifts, clothings, misc	$   1,750	$   2,286	B's include contributions to parent
Donations	$      150	$        53
Condo maintenance (investment property)	$      350
Maid (to look after elderly parent)	$      650
Maid levy and medical	$      150
Travel	$   1,500	$   2,110
TOTAL	$   8,080	$   9,027

One key difference is that Adam has a second property, an investment property, from which he is earning rental income. And he has a maid to look after an elderly folk.

Adam also mentioned that he owns a car, which he views as essential to ferry the elderly. And he is concerned whether there is enough money to buy a replacement in time to come. This is clearly something he needs to prepare for. Buying a replacement car is a hefty investment, perhaps $100,000? This is an expense that is going to happen once every 9 to 10 years. But as one age, perhaps we would reach a point where it is no longer safe to even drive one? But the removal of car-related expenses (road tax, car inspection, insurance, maintenance, fuel, parking - they really add up!) would be substituted by other public transportation expenses.

Going through the data, I was wondering if I might have missed out something in my insurance. Wifey and I do have Integrated Shield plans, ElderCare plans, and property insurance. But nothing else. With the income stream from our investment portfolios, there didn't seem any reason to need anything else for retirement. With most of it paid via CPF-MA (and therefore not reflected in above), there is little cash involved, for now.

Our medical expenses are higher, as both wifey and I have certain conditions that require regular treatment. That explains the much higher medical expenses compared to Adam's.

My family is probably spending a lot more on food (groceries and meals out) and household expenses. That is something of a lifestyle desire. Or perhaps we are just eating too much and growing fat!? Hah.

Adam's family has been fortunate, investing early in their career in property and shares, and that has paid off.  My family started investing late, much of that only in our 40's, in shares and some unit trusts. It was too late to go into properties, but we were lucky to have gotten a decent condo at a fairly low price.

Adam's family is also comparatively more generous with tithing/donations. This is an area I am prepared to contribute more on if my investments pay off.

My family's travel expenses are higher. Perhaps Adam's family travel expenses do not include one or two persons in the household? This is probably seen as a major luxury item. But it is certainly something meaningful to my family, exploring the world around us. For sure, this is an item that some flexibility can be exercised on if financial circumstances vary - especially, during market downturns.

In time to come, my family's expenses will drop significantly once the children are working and eventually, moved out.

In summary, neither hit $120,000 a year, although close to. But with inflation, both surely will soon.

End of Life - What happens to the CPF?

While we are still growing up in our twenties, CPF is just a 'sinkhole' where part of our salary ends up in. Goes in, never come out.

Over time though, as we progress towards our thirties, it becomes the source upon which we can only be glad that there is money to help pay for our housing.

And when you are getting closer towards retirement in your forties, you think about how to accelerate the build-up of CPF to get the desired retirement funds desired. As well as tax-deductible top-ups to reduce the burden of taxation.

In our fifties, we start to want to know how the CPF money will fund CPF LIFE to support our retirement.

By the sixties, we are looking forward to finally collecting CPF LIFE payouts.

But what about upon death? I know it's morbid. But that is really something important to take care of as well. A CPF nomination needs to be made to determine how the CPF money would be distributed.

What's the significance?

A CPF Nomination covers:

• CPF savings in the Ordinary, Special, Retirement and Medical Accounts
• Unused CPF Life premiums
• Discounted SingTel shares

A CPF Nomination does not cover:

• Properties bought using CPF 
• Payouts from Dependent Protection Scheme
• Investments in CPF Investment Accounts - i.e. CPFIS-OA and CPFIS-SA.

Well, years ago, Pa and Ma both did their respective CPF nominations. That was a good thing. Trouble is, nobody knew who they actually nominated!  Over time, we did eventually figure out that they had nominated each other. Perhaps they should have told somebody or have the information attached to a Will for reference?

When Pa passed away some years back, CPF Board automatically issued a cheque of the balance left in his CPF in Ma's name and sent to her home address. No actions were required from anybody. Apparently, when the death certificate was applied, it automatically triggered notices to various government agencies, including CPF Board. And CPF Board took action to process accordingly and the nominee would receive a cheque within two weeks.

More recently, Ma passed away too. Unfortunately, her nominee was my Pa. So how?  Since he was no longer around.

• We looked around for a recent copy of her CPF statement. Took a while to find it.  There wouldn't even be one if you had accepted the paperless option! The CPF statement would indicate if she had made a nomination, and in which year. So that was a clue.
• We considered checking her CPF online, but she didn't even have a Singpass account to begin with! Best to have one. 

Well, apparently, if the nominated parties are no longer alive, the CPF money gets transferred to the Public Trustee who will investigate and distribute the money according to the Intestate Succession Act. That would take about 2 to 4 months to conclude, and there is some fee involved. It takes a bit longer. I hope it works out.

Related Information:
For a quick overview: CPF Pamphlet on Losing Loved One
And for more details: CPF Guide on Preparations for Death
If you're hearing some nonsense, read this: Government Debunks False Message
For a quick idea of the Intestate Succession Act: Dealing with the CPF Monies of Someone Who Has Passed Away

Can You Top-up CPF-RA Beyond FRS to Achieve ERS After Age 55?

Here's something that I've been puzzling about regarding the CPF retirement sum.

Say you only managed to accumulate enough for a Full Retirement Sum (FRS) of $176,000 by age 55. But you actually wanted to achieve the Enhanced Retirement Sum (ERS) of $264,000. Can you still do so somehow later?

Up to age 55, you can contribute to the Special Account (SA) up till the FRS amount. And at age 55, the Ordinary Account (OA) and Special Account (SA) are then poured into the Retirement Account (RA). But let's suppose you didn't have any money left in the OA, and the SA had $176,000. So the resultant RA would only be $176,000.

Post-55 though, you can contribute to the RA up to the ERS amount.  But how do you move from FRS to catch up all the way to ERS? Is it a matter of topping up the difference of $88,000?  I think not.

This article offers some clue (see page 9): CPF Retirement Planning Booklet - Be Ready With CPF.

"The retirement sum that you set aside at age 55 will grow with interest over time. The table below shows how much your retirement savings will grow to at different ages. If you would like to have a specific level of monthly payout, these are the estimated RA savings you should set aside at the various ages. Do note that the amount you can top up to is capped at the current Enhanced Retirement Sum for members aged 55 and above." 

For the ERS of $264,000 at age 55, it is $393,400 at age 65. This means that in the course of 10 years between age 55 and 65, you can contribute to the RA up till $393,000 at age 65, in order to catch up to the equivalent of FRS.  Whereupon, the estimated payout would then be $1,960 to $2,110 per month.

Is this the correct interpretation?

Related:
CPF Retirement Booklet - Your Assurance in Retirement

Phone Smashed in the Land of the Rising Sun II - The Outcome

So I mentioned how Wifey's phone got smashed up during our trip to Japan (Phone smashed in land of the Rising Sun).  Thankful that we were reminded that this should be covered by our travel insurance.  We had completely overlooked that.

Thank goodness for travel insurance!

Checking through the details, it seems the insurance we bought could cover up to a maximum claim of $500 for lost or damaged items. So we submitted a claim.

Not bad. Just received a cheque for $203. Considering that the phone is already two years old and would have depreciated in value, it was still a reasonable outcome.

Something is better than nothing right?

Saving more with SP Utilities app and UOB One Card

With the recent liberalisation of power services, I think many would have switched out of SingPower (SP) by now.  If you have not, time to give it some serious thought (see Switched to Keppel Electric, saved some).

But there remain other utilities that are still serviced by SP. So here's a quick hack offered by SP to provide further discount on the remaining bill with them:

"Enjoy power on your fingertips with your UOB One Card. Paying your utilities bill is now an easy finger tap away via SP Utilities app. What's more, enjoy up to 6% rebate on your SP utilities bill with UOB One Card."  -- from advert e-mail from UOB."

Here's how:

1. Download the SP Utilities app from your app store.
2. Configure your SP account number.
3. Select Payment Method to add UOB One Card as the primary payment option.

And that's it.

Related:
Switched to Keppel Electric, saved some
How can we stretch the interest on our bank savings account

A Lifetime of Income for Retirement

Recent articles mentioned local survey results which suggested that an aged single could live off $1,379 per month. That works out to be $16,548 annually. A portfolio of $413,700 could generate that income perpetually based on 4% extraction (i.e. annual income needed x 25). But we need to understand that this is for a minimalist lifestyle for a single.

Referencing the last published Department of Statistics report on Household Spendings by Age Group, the average monthly household spending of those aged 50-59 was $4,837 (or $58,044 annually), and drops to $3,586 (or $43,032 annually) for those aged 60 and above.

But these were based on 2012-13 survey data. If we compound these with an estimated annual inflation of 1.5% (inflation has been low in recent years) for 6 years (from 2013 to 2019), the corresponding figures would be $63,468 (aged 50-59) and $47,053 (aged 60+) respectively.

Summary of data points:
For an annual spend of $16,548, perpetual income portfolio is $413,700.
For an annual spend of $58,044, perpetual income portfolio is $1,451,000.
For an annual spend of $43,032, perpetual income portfolio is $1,075,800.
For an annual spend of $63,468, perpetual income portfolio is $1,586,700.

For an annual spend of $47,053, perpetual income portfolio is $1,176,325.

So indeed a household spend of $120,000 annually would be quite a FAT FIRE to retire on. It should be pretty comfortable.
--

Somebody mentioned to me that assuming he retires at 65 and lives for another 25 years, he would need $3,000,000!  $120,000 x 25 = $3,000,000.  And if he was to retire earlier, he would need even more. So if he was to plan for 30 years, that would be $3,600,000!

I said no, that's not correct. Using the rule of 4%, he would only need $3,000,000 to generate a perpetual lifetime income of $120,000 annually.  $3,000,000 x 4% = $120,000.

And thanks to a little hack, all thanks to CPF, it's not even necessary to have $3,000,000 to generate $120,000 annually.

End of Life - Death Certificate

Sharing some nuggets with dealing with End of Life issues ...

Upon death, there is a need to obtain a Death Certificate.  Usually, if a person passes away at a Restructured Hospital, the Death Certificate is automatically issued.  But if a person passes away in a private hospital, then you need to bring the Cause of Death letter issued by the hospital to a Police Post to register for an official Death Certificate.

Other things required:
- NRIC of the reporting person
- NRIC of the person who has passed away

The Police Officer will punch out the NRIC to void it.  There is no fee involved.

And you could politely ask the Police Officer if he could make a few copies of the Death Certificate. Be nice!  You are going to need a couple of copies for the following purposes:

• Application from Town Council to book a space for the wake within the estate
• For family members who need the cert to apply compassionate leave

The original Death Certificate is needed if you are doing a HDB tenancy transfer.

Incidentally, the Death Certificate is also attached with a permit from NEA for cremation. This permit is needed by the Undertaker to apply for cremation services on your behalf.

Related:

NEA Post-Death Matters