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Monday, April 13, 2020

How I saved some money during the Circuit Breaker period

The 2 instant water heater for shower room at home turned 10 years old recently. My wife has been complaining about the low water pressure coming out from them and asking me to replace them for a while now. I was googling on suitable replacement for them but couldn't really find the time to compare and finalized on a good one.

After the Circuit Breaker (CB) kicking in last week, I finally get the time to clear off some of my "household backlog". In fact I have so much time on hand that instead of trying to find a suitable instant water heater online, I disassemble my current one to see what's causing the water pressure to be so much lower than I first bought it 10 years ago.

After some loosening of screws and detective work, I found that there is a flow control valve in the instant heater that is causing the water pressure to be so low. With the time on hand, I didn't stop there. I disassemble the control valves to see why is it restricting the flow. After some more probing, I found that the valve needle, made of plastic, had swollen after 10 years of being soaked in water. Fortunately, I can just remove that needle to remove the restriction. I lost the flow control ability on the water heater with that removal but I didn't need that anyways. It was always on max flow. Some photos of the valve being taken apart below.

So after spending about 2 hours to troubleshoot and fix the 2 instant water heater, I managed to save on 2 new water heater which works out to be about S$500 worth of savings. That is another $500 going into my war chest. Not bad for 2 hours of work.
On top of the savings, I guess it is also environmentally friend to not just throw away 2 otherwise good instant water heater.

On to the next project this coming weekend………

Happy Value Investing

Sunday, March 15, 2020

You cannot withdraw interest earned, government grant and top ups from your CPF at 55??!!??

Recently, I was having a discussion with my colleague on CPF withdrawal at 55 when he mentioned that we cannot withdraw any top up monies or interest earned!

All the while I am only aware of the below 3 withdrawal scenario for CPF withdrawal at 55. We can withdraw

1) All of our Special Account and Ordinary Account savings if we have $5000 or less.
2) $5000 if we have less than FRS
3) $5000 or any amount above FRS if we have more than FRS

I was not aware that any top up monies and interest earned being excluded from the above! I have been faithfully topping up my SA and earning the 4% interest to build up my retirement nest egg for a meaningful withdrawal at 55!!

I did some research and found below information from CPF website here.

I have also sent and email to CPF to clarify the above statement. You can see the response from them below with an example as well below. Seems like the exclusion is only applicable to lump sum withdrawal from the Retirement Account only. Once your RA is formed, you can withdraw whatever that is left in our SA and OA anytime you like. For those who are intending to withdraw from your RA, do take note that the amount you can withdraw excludes any interest earned, government grants and retirement sum top ups.

Happy Value Investing

Saturday, February 29, 2020

Who wants to be Rich By Retirement?

I have just recently finished a book titled "Rich By Retirement" by Joshua Giersch (a.k.a Shiny Things on HWZ).

I would say this book is really a pleasant and easy read. I would recommend this book for anyone who wants a fuss free method of constructing your portfolio that works!

Below are some of the key points I have managed to digest from the book.

1.     Make sure you have some liquid cash on hand before you do any investment. The liquid cash should cover 6 months of your expenses just in case you lose your job. I have my liquid cash in POSB and SSB earning about 1 to 2% interest.
2.     You should have yourself covered with hospitalization insurance. Insure with term life insurance if you have dependents. The Medishield Life (MSL) plan from CPF should cover the hospitalization insurance. The term life should cover your dependent expenses until they are self-reliant. I got my MSL covered but need to add on to my life insurance.
3.     The rest of your savings after covering all of your expenses (including 1 and 2) will go to investing. Ideally you should start as early and as much as you can save. However, it's always better to start now and whatever you can save (as low as $100). Better be late than never!
4.     Split this sum of money into 2, one for investment in equity and the other in bonds. Percentage of investment in equity should be roughly 110 minus your current age and the rest will go into ETF that tracks Singapore bonds.
5.     The amount for equity is further split equally with 1 pile going to ETF that tracks Singapore Stocks and the other into ETF that tracks Global Stocks. See table below for the ETF to get.
6.     You can do step 3 to 5 regularly (monthly or quarterly) while maintaining your Percentage in Stocks and bonds. i.e you put more money into the ETF where you are short of.
7.     Twice a year, in May and November, re-balance your portfolio. i.e sell whatever is more to buy whatever is short.
8.     If you can consistently do this for the next 10, 20 or 30 years, you should be on your way to a richer retirement!

ETF to get
Where to get it from*
Singapore Bond ETF
Nikko AM SGD Investment Grade Corporate Bond ETF
POSB Invest-Saver
OCBC Blue Chip Investment Plan
Standard Chartered Bank (Manually)
Singapore Stocks ETF
POSB Invest-Saver
OCBC Blue Chip Investment Plan
Standard Chartered Bank (Manually)
Standard Chartered Bank (Manually)
Global Stocks ETF
iShares Core MSCI World UCITS ETF
Interactive Broker (Manually)
Standard Chartered Bank (Manually)
Vanguard FTSE All-World UCITS ETF
Interactive Broker (Manually)
Standard Chartered Bank (Manually)

*Where you get the ETF from depends on the cost. You should go for one that cost you the least. You can use Shiny Thing spreadsheet to help you determine that.

Happy Value Investing

Thursday, January 30, 2020

Are you prepared for the Coronavirus?

What a way to start a lunar new year..... Not with the good old chilled Corona Beer but with the new and infectious Coronavirus.... 

So, are you all prepared for the Corona Virus?

And noooo, I don't mean the surgical mask, thermometer or sanitizer. I'm sure most of you have gotten all of these to combat the spread of the Virus since they are all sold out in the pharmacies and all major supermarket!

What I mean is are you all prepared for the "blood" in the stock market? The STI index has dropped about 3% since the first trading day after CNY on the 28 Jan 2020 after the news of infected cases increasing in China. Is it going to drop further? Will this be another repeat of 2002 SARS? I don't have an answer to that

But what I am doing in preparation for it is to do a screen of the value stocks. Then do a CNAV of those companies and wait for the price to drop below the CNAV before buying it. You can find the criteria I am using for searching value stock here.

On a side note, the one person that is most prepared for all of this is ASSI!
Always with a mask and sunglasses to protect himself against the virus and always on a lookout for value in the stock market…… No offence ASSI if you are reading this. 😁😂😃😄

Happy CNY 2020 and happy value investing!

Friday, January 3, 2020

My Mom CPF account updates

This post is an update of my Mom CPF account after my hack on topping her Retirement Account with my ordinary Account to fund her monthly allowance.

Her CPF retirement account has grown from 20k to 50k during the year 2019. This 30k increase includes Retirement sum top up for tax relief, transfer of my OA to her RA and the $2200 interest she received from CPF end of last year. It is nice to see the government help fund my Mom allowance.

With this amount in her RA, I believe her monthly payout had increased from $250 for about 10 years to $370 per month for 17 years. I am intending to continue topping up her account up with my OA till she is 70 to earn more interest from the government before requesting for her retirement sum scheme payout. With this, it should greatly reduce the cash I need for her allowance 2 years down the road when my Mom turns 70.

The cash saved would then go into funding my Special Account top up for tax relief. A triple win I think. What do you say? 

Happy Value Investing

Tuesday, December 31, 2019

Considerations for setting up my SRS account

Happy 2020!

I have finally opened my SRS account this year after some consideration for 2019 tax relief. I think it might be worthwhile to share what I was considering before deciding to finally lock up my money till I am 62. These might be something that you would want to consider as well before setting up and contributing to your SRS account.

1)     Confirm that I have not exceeded the annual $80K tax relief and my contribution will be eligible for tax relief.

2)     Amount of tax relief I will be getting. I was using CPF top up to my/my parent Special Account and parent relief to reduce my payable tax for the past few years. Unfortunately, for 2019, my siblings will be claiming for the parent relief instead. Hence I am using SRS to compensate for that portion of tax relief.

3)     Can I live without the money till 62? Since there is a 5% withdrawal penalty plus the sum will would fully taxable before 62, the tax savings might not make sense for an early withdrawal.

4)     To lock up the withdrawal age for SRS funds to the current retirement age of 62. The retirement age is currently being reviewed to slowly increase to 65 by 2030. You can consider contributing $1 to just lock up the withdrawal age at 62 if you are not ready to commit bigger amount.

5)     What are the investment I would be doing with the SRS funds. Since the SRS account only pays 0.05% interest, the money inside would be eaten up by inflation. It is very important to think about what are the investment available with SRS and what fits into my investment appetite. I was considering a passive ETF regular savings plan and I ended up opening an account with OCBC which allows the use of SRS funds for their BCIP (Blue Chip Investment Plan).

Below are some additional resources if you want to find out more about SRS scheme.

Happy Value Investing in 2020!

Friday, March 8, 2019

Giving your parents allowance the smart way

I believe most of you gives monthly allowance to your parent after you all start working. I do so myself too. I am currently giving my parent a monthly allowance in cash. Recently, I have found a smarter way to give my Mom monthly allowance.

My mom is currently 67 years old and already has her CPF Retirement Account setup. She can actually start her monthly payout under the retirement sum scheme already, but we are delaying it till she’s 70 to give more time for compounding to work its magic.

Recently, I have started to top up her account via CPF transfer. I am transferring my CPF OA money to my Mom's Retirement Account. Although doing CPF transfer top up does not attract any tax rebate, the money transferred will attract a much higher interest than having them sit in my CPF OA. Instead of the 2.5% I am getting, it will get 5% in my Mom's RA since she has less than $60k inside.

In a way, I am using my putting my mom’s future monthly allowance in her CPF account and let the government help me beef up that allowance for my Mom. One thing to note is that to use your CPF OA to top up for your parents CPF, you need to set aside the current BRS, with sufficient CPF property charge to make up the current FRS. The BRS can be set aside using your OA and SA savings, including net amounts withdrawn for investments (you can go here for more information)

So are you making full use of CPF to fund your allowance?

Happy Value Investing