Tuesday, 30 January 2018

Why I have never topped up my or my parents' CPF

This article is inspired by MR 15HWW's article on why he had never topped up his CPF yet. This article is full of very good rational reasons behind his motives. 

There are many articles that talk about the pros, and the benefits one have gotten from topping up their CPF or their parents'. For the sake of a balanced article, do a google search, and you'll get all the benefits. 

Why I have never topped up my CPF?

1. Automation in place
My current employer ensures that my CPF is "topped up" automatically monthly for all three accounts (OA, SA and MA) from both my salary and from my company (thanks Ms CEO's day job employer!). As long as I stay employed in such firms, this auto top- up stays.

2. Ideology
And this is my main reason.

Unlike Mr 15HWW, I may not be getting more returns than the CPF interest rate for now. 

Have you heard of the American dream? You can read more about it herehere,  or simply do a google search. In short, it's an ideology that is coined out during independence, where democracy, and equality, will allow Americans to lead a better life which they want through creativity and ambition.

I believe in the Singaporean dream. That if I were to try hard, one day I will succeed.

If I were to go for the safest option, and what many are doing, at the end of the day, I may just be average or at best slightly above average. And if that's the case, automation in place (see point 1) may put in the average position already. Why worry?

I may have started later in the investment journey, than many of the savvy personal financial folks. 

BUT, I still have 20 years before reaching 55. As long as I have the liquidity or option to cash out (abet with potential losses), I still have the chance to make my money work harder for me in many  other ways. 

For now, I will still keep trying. I may not be better off at the end of the day, but at least, if I try, I have a chance to be way better off. The counter argument may be to top up a bit, and not all your monies, as diversification and let the compounding effect do the magic, and in a very safe method. One day, when I have exhausted my methods, and decided that the CPF is still the best, I will. Not today.

3. Time value of money
In general, a longer term bond will give a better yield. For the monies in CPF, this doesn't really apply.You get similar interest rates whether you can draw if out in 40 years, or in 1 year. Of course, on the flip side, the longer you put in, the more the compounding magic.

Why I have never topped up my parents' CPF?

I give my parents allowances every month. And I trust my parents' are capable of coming up with their own decision based on some rational or basis. It's not up to me to decide that they don't need the money, or they are better off topping up the CPF. They can do what they like with it, and topping up their CPF is what they want, so be it. If they want me to enjoy the tax relief, they can let me know. It's an allowance for them. Once I have given the allowance, it's my parents' money. They decide. 

Sunday, 21 January 2018

Three important words

I remembered my previous manager telling us, never to say "yes" to a client who wants us to meet/ finish something the next moment. His reason -- you won't be appreciated, and they will just take you for granted. 

He was right. Firstly, psychologically, clients appreciate slightly delayed response better because if you take more time, it means it is better thought out. And you are busy. Of course they appreciate you putting in time and effort for it. On contrast, if you give an immediate response, anything wrong it's because you do it too quickly with little effort. Also, since you can respond so quickly, you must be very free. Furthermore, next time, they expect it to be quicker, or if not as quick, since you are so free. Of course, you need to balance the delay (not immediate, but not too slow).

Have you noticed this in the family relationship as well? When kids grow up, you notice, parents (and parents- in- law) are often complaining about the one who is usually there, and full of praise for the one who is more absent. The psychology behind this? The one who is always there is free, but the one who is seldom there comes even though he or she is so busy. Who do you think seem to be putting more effort from the parents' (or parent-in-law's) point of view?

Slow down. If it's not life- and - death issue, some delay do not harm.

Say no. You should put your priorities first.

Respect your time. It's your time, not others. You decide.

"Say nothing"; "No"; "Wait".


Saturday, 13 January 2018

This is better than many Fixed Deposit for this month

I used to be a fixed deposit person, putting my money in fixed deposit to earn the interests. So when I found out that this low risk instrument earns better than fixed deposit (or at least for this month), I am totally surprised! Based on risk and liquidity, should fixed deposit will yield better interest than them for the same tenure.

Let me give you some examples:
-  UOB gives a 1.2% per annum interest (with minimum deposit of $20,000) for a 10 month fixed deposit
- OCBC gives a 1.18% per annum interest (with minimum deposit of $20,000) for a 12 month fixed deposit
- Standard chartered gives their non- priority members 1.2% per annum for a 7 month tenor, and 1.3% per annum for a 10 month tenor, with minimum placement of $25,000. For their priority banking members, they get 1.25% per annum for a 7 month tenor, and 1.35% for a 12 month tenor.

For your information, this instrument that I am talking about is very flexible, and can be withdrawn any month (on a particular date) after its issue date, and you can start as low as $500! And guess what? It's giving you 1.55% on your first year, and 1.59% on your second year. What's more, unlike fixed deposit where you only see the interest at the end of the entire tenor, this instrument gives you your interest every 6 months. The only draw back is that you pay $2 when you get this instrument, and another $2 if you withdraw it in less than 10 years. These additional transaction fees are easily made up by the difference in interest rate.

What is this?

It is non other than our Singapore's Saving Bonds, and since this article is written in Jan 2018, I am comparing some promotional fixed deposit rates with the Singapore Saving Bonds that is to be issued in 1 Feb 2018 (you have to apply by 26 Jan 2018, 9:00 pm).

This is not a sponsored post. The writer expresses her thoughts and observation in this article.

The post is based on the online research at the time of writing. Websites referred to are referenced (via URL link to key words) in the post. Note that the information may have changed when you are reading. In addition, while the writer of this article tries to be as accurate as possible, there is no guarantee on the accuracy, completeness, suitability or validity of any information. In addition, all ideas expressed in this blog should not be thought of as an enticement to buy or sell any products, securities, assets, commodities or whatsoever mentioned.

See also, the section on disclaimer at the bottom of the website.

Wednesday, 10 January 2018

New Year Resolutions - UnSMARTing 2018

I was thinking about the new year resolutions for this year, and looking at the past years. Apparently, I only blog once about goals. Last year, I was thinking of setting monthly goals instead of new year resolution, by breaking down items into smaller bites. Well, it didn't go well. I stopped the monthly goals even before the first quarter of the year.

So this year, I'll try to be different (yet again) by unSMARTing myself.

S-M-A-R-T as in the acronym for specific, measurable, achievable, results, and time. This year's goals will be qualitative. There are things that I would like to achieve e.g. get a better job, be more involved in the stock market and so on. But these are just some things that I'll try to achieve. Not a hard and fast year. If by June, I realise that this is a totally aimless year, I can always start making more concrete plans. But for now, or at least for the first half of the year, no definite plans.

My intention of 2018 is to make it more experimental. Just like the many privileged young children today, whose parents let them try all sorts of activities before they focus on just some in later years. The parents' aim is to give the kids more exposure. When we are adults with more independence (both in terms of finance and choice of activities), shouldn't we continue with such explorations? As a kid, till my early adulthood, I have tried many things that I want to try, throw out many unsuitable ones, and kept just very little stuff. But as the demands of parenthood, work and complacency kicks in, I have stopped looking beyond what I usually do. The world has changed so much since then. What the hack was cryptocurrency then, pay from the handphone, etc. For many years, I have just looked at new things within the needs of my career, and necessity of life, I have not really tried much things. At this rate, very likely I will be like the antique using the public phone calling my friend on her landline, and getting no response. Okay, I exaggerated.

But my point is, for 2018, I will just do whatever my heart pleases me, and let's see what I'll achieve in this unSMART year.


Friday, 29 December 2017

What do Mr. Money Mustache and Early Retirement Extreme have in common?

These two are very popular people who have achieved financial independence at an age where most of us are still working, not by building a multi dollar business, but through their executive jobs, frugality and smart investment.

But apart from this, they also have supportive spouse who believe in their notion, and are working on their side to achieve this goal.

If aiming for financial independence early is your goal, it's important to get your spouse on your side (or at least someone who will be consequence natural to your goal). And in Asian context, your parents and the in- laws are important as well.

So, before you set your financial goals, perhaps it's good to get your family on your side.


Saturday, 23 December 2017

2017 in review - Current Business

It's just a week before we usher into 2018. Having done a year of review for the finance sector, it's time for me to review about my accomplishments in the current business (essentially my day job) and to plan for 2018.

2017 hasn't been so so for me. Career wise, this is the year where I feel that I have been left to "rot", and it's a year where I see the future of my career stagnating. There is no signs of promotion for me, in the near future, nor is there any signs of a change in the role (for the better) for a long time to come. It seems that I have been forgotten, or overlooked for most things. I attribute this to a lack of networking within my own organization.

In terms of pay, my pay increment has been in line with the organization's overall pay increment. With no promotion, it's a normal increment to adjust for inflation and so on. I have come to realise that significant pay increase only comes with either a change of job or promotion. Having been in the same role, same grade for almost three years, it's time I look at increasing my pay significantly. For the same amount of time and risk I put into the job, I prefer to go for the one that pays more, as it simply means a better appreciation of my efforts.

Thus in 2018, the focus will be on better networking, and also to explore better opportunities.

Sunday, 10 December 2017

2017 in review - Finance

We are now in December of 2017. How time flies. With all the dividends and coupons in at this time of the year, it would be nice to make a wrap- up of my finances for the year.

This is the year where I started to be more active in stocks, and be more vested in them. Some sales and purchases were made, and Genting which I have been holding and staying in the red for a period of time, was sold once it was profitable. 

These transaction exercises simply highlighted my "kiasuism", being so afriad to lose. Realize that I have been selling the counters once they are profitable, but on the contrary, and then holding on to those that are in the red. Well, for now, though I still have no urge to sell those counters that are in red (Kingsmen Creative, PEC and M1). 

Nonetheless, in terms of performance, dividends is at $1843.10 (as compared to $310 in 2016, of course this is mainly due to more money in the stocks market this year), with a current stock market value of $40,290.

Realized gains for this year is $2,050.85. You'll realize all counters in red are not sold, so there is only realized gains (excluding dividends). Paper losses stand at $2163.04 (excluding dividends). 

Dividend - $1,843.10; 
Current Market Value - $40,290
Realized Gains - $2,050.85
Paper Losses - $2,163.04

2. Bond Investing

This is the year where the first retail bond, CMA 3.8% I ever bought was redeemed. Total bond holdings actually dropped for 2017, compared to 2016. Some of the cash from this redemption was then channeled to stocks. Of course, with this redemption, the coupon received for 2017 fell to $4805.22, compared to $5048.61 in 2016.

I also bought some bonds, all Singapore government bonds, with $3,000 of 5- year government bonds, and $2000 of Singapore Saving Bonds (SSB) being bought. The decision to put in some money into these bonds was simply to earn the interest rates, as at this point in time. My OCBC 360 and UOB One has reached their maximum, and putting in extras here will only help in liquidity.

The foray into the SGS bonds was also to experience how the system works, though many will argue that you can just read online to find out how it works. As usual, our Singapore system, is transparent, efficient and seamless. You subscribe for the SGS bonds, and to know the results, simply check your CDP account (I have an online account, so this is simple). When the time comes to get the coupon, it gets automatically debited into your bank account. Totally like stocks when you buy them in Singapore.

Coupon Received - $4,805.22; 
Redemption Value - $130,000
(market value not considered, as there are no plans to sell them before redemption date for the time being).

3. Endowment Plan

No endowment plans bought this year. I am still holding on to my Maxsave and Maxgrowth. This year just involves paying the premiums for the Maxgrowth policy. I'm very glad the Maxsave premiums have been fully paid. The amount right now stays at $64,197.70 (by taking sum assured - premiums outstanding).

Assumed value - $64,197.70

4. Debt

My current debt will be the mortgage for my resale flat. To calculate net debt, the formula is used:
(outstanding amount - CPF OA savings of me and partner)/2

This is divided by 2 since my partner and I are responsible for the monthly repayment.We manage our finances totally separately.

Net Debt - $90,000