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Saturday, 19 May 2018

Wealth Preservation: Do you believe every $10k Counts in preserving your wealth?

This blog post is trigger by Questions like should I invest in ETF and fight inflation with my savings.

To begin with, our objective must be very clear before we are able to reach our goals.

In the science of investment, every investment should have a significant returns that made a differences in our life.

I am not saying investing in any ETF by using Dollar Cost Averaging (DCA) is wrong.

We just need to know what is the goal for using the Art of DCA and will it make a differences in our life by then?

To be realistic, having a saving of $10k is achievable if we know what we are doing in our life.

In fact, many have $10k in their bank saving account now.

We should look at micro managing of our money and starting with $10k is a good amount that can make a 
significant differences  in our life.

Basically, the idea is to make $10k work harder for you and at the same time you can grow your wealth by career or business.

So how do we micro manage the $10k to our benefit?

Let's use our daily necessities like our mobile phone charges. 

If the mobile bill is $50 per month.
That means the Annual bill is $50x12month = $600/-.
If a person have $10k saving and buy a 6% reits or safer products which is "sustainable" and "bought at the right value".
$10k x 6% = $600/-

The annual distribution per unit will help pay the phone bill which is one of the essential expense in life.

With the above example, when one manage to cover their essential expenses with $10k block, they will be able to achieve more in life without making huge mistake or risks that requires big purchase that could trap the money or cause heavy losses.

Always keep your money management simple and you will see good result.

Making it complex can brew good result too but the complexity might be taxing for an individual when the macro market turns against you.

Remember this, no one can control the market, we can only progress with it or bite the bullet with it.

Do you believe me?

Another Good Deed Done!

Wednesday, 16 May 2018

Retirement Planning: Is getting a Second HDB flat a Good Investment (by divorcing)?

This post is triggered from Ms Leianne Tan post on
Married couple in S’pore agree to divorce to buy another HDB flat to rent out"
This post will not be a fair comparison but it will give an idea whether a second hdb flat is sound for the above scenario.

There will be no in depth calculation and some fees are not included in this post for simplicity.

Mr 54 years old (54yo), cannot withdraw his CPF money by next year because it does not meet the Minimum Sum, or Retirement Sum.

Ms wife, lets said 4 years younger, at 50yrs old (50y0), could not withdraw any CPF money in a few years’ time, since she also does not meet the minimum sum. We have to assume she is a housewife with no income for simplicity.

The divorced party, Mr 54yo, who has the child living with him, will be able to retain the 5 room flat.

If the loan taken is 25years and paid fully, we can assume the 5rm flat is purchased at 29yrs old.

The article mentioned Mr 54yo paid more then $800k with full or partial of his CPF  (that is why the article seems like a click bait then a real case), he would have bought a resale flat instead of a BTO flat at round $650K and paid a total of $850k for all fees and interest included (estimated with a 80% loan with HDB interest rate of 2.6%).

In this case, we give the 5rm flat the benefit of the doubt that it was sold after 5yrs minimum occupation period (MOP)  so by now, the lease of the HDB left is around 99yr-5yrMOP,-25yrs(loan) =  69yrs.

Question 1:
Is it better for Mr 54yo to sell the HDB flat instead or renting it out?

Let's be logical here.

a)Would Mr 54yo wanna to sell at a loss or a value below $850k and use the proceed to buy a downgraded HDB flat?

b) Would any buyers wanna to buy a 69yrs old flat for $850k which lead to a estimated total amount of $930k paid within 25yrs and with a HDB loan of 2.6%. 
If not paid in full by the buyers.

My humble opinion is Mr 54yo really have no choice but to live with a 3.5% rental yield according to the monthly rental of $2500 (in the article) until the greater fools theory happens to him.

Question 2:
Won't getting a second HDB flat means starting over with new debt and might lead to more losses?

The answer is Yes and No depending on what price of the HDB flat is purchased.

According to the past non mature estate for 3rm flat (assuming there is a child from above)


The price with grants can go as low as $76k for Sembawang 3rm flat.

The downside and upside is no loan is eligible for this lower amount. Cash is still King in some ways.

Assuming, Ms wife does have $90K in her CPF for all payment above, Mr 54yo annual rental income of $30k would break even the Sembwang flat cost in 3 years time.

After 3 years, they would have the rental yield as an extra/passive income for their retirement.

I drank a bit of wine so I will stop here.

Hope this post can clear some air and there is really no right or wrong answer to this.

As long as the decision made, does not do bad to anyone, then all is good.

Another Good Deed Done!

Monday, 7 May 2018

Career Discussion: Should I be An Insurance Agent?

This post is triggered from the Question on "Should I be An Insurance Agent?"

Before we go into this discussion I like to share how I know about Insurance and how it link to the above inspirational quote. 

My best friend from Poly got his first job as an insurance agent and he introduce insurance policy to me as a protection to my parents and myself if I get into an accident or CI or goes heaven.

I do not have any insurance policy and I got my first, second and then third policy from him.

Are all the policies the cheapest and most down to earth policies?

The answer is no.

Is my best friend still an insurance agent?

The answer is no.

Is he still my best friend?

The answer is yes and we are still in contact. We even have an annual classmate gathering getting eating dinner and sing KTV.

Why didn't I blame my best friend and disown him for the money wasted on the policies?

The reasons are simple

a) All the policies I purchased are not cheap but they did serve as a protection to me.
b) When he sells me the policies, he sold me with the best knowledge he had as a fresh poly graduate.
c) He helps me to claims when I met with an uncertain situation and never mia from any phone call or smses.
d) After he left insurance, i realised i have to pick up more in financial products and be independent.

After I took effort to learn about financial products, I manage to reconstruct my insurance policies that serve me better in my retirements plan. 

All this links back to the Inspirational quote above.

"If you light a lamp for someone else, it will also brighten your path."

If I choose not to buy any policies at all and the uncertain situation hits me, I will be badly damage.

By buying at least the essential policies, to help my best friend and myself, I am protected in some ways.

I am not saying we should anyhow buy any policies but rather we need to get protected by the essential policies like private integrated shield policies.

If you ask me whether I prefer to pay more or less for the best protection, of cos I wanna the best deal but sometimes we have to learn the hard way.

Blaming will not change the situation, rather is the willingness to learn and progress that will reverse the situation for the better and I get to keep my best friend!

There is really no regret on my side but I hope no one have to go through any bad insurance experiences
because we trusted our friends.

Back to the main post on : Should I be An Insurance Agent?

I always advocate on learning at least a skill when I speak to people.

If we take away discussion about the best insurance products or bad ethics.

Being an insurance agent allows the individual to gain knowledge on

1. what are the best products for their family members or ourselves

2. Sales technique hopefully not abused.

3. How to claim hopefully without complications. (Some really try to fight the claims for their clients)

4. Financial planning if the individual find passion in this.

5. Spark out a retirement plan which the school does not teach.

The world just need to be a little kinder to see the goodness in every trade.

**Lastly, always compare and confirm with black and white before you commit to any product you can afford to fulfill the full term.**

Another Good Deed Done!

Saturday, 5 May 2018

Retirement Planning: When Supplementary Retirement Scheme (SRS) becomes a downside

This post is triggered from SRS being a better fund for "Guarantee Return" Endowment Plan GE270 rather then cash on hand.

I will only focus on what are the possible downside and not the regular upside you can find online.

Now, why use SRS fund for a low risk low return with certainty (eg. GE270) rather then high risk high return equity?

Before we start discussing the downside of SRS, you can refer to the link below for an overview of SRS and the latest enhancement plus new contribution rate.


In retirement planning, we need some certainty or at least a target figure for x number of years to support our lifestyle if we choose not to work or our age does not allow us to work.

In the case of SRS, we need to know the amount stated in MOF that allow us to pay the least tax or no tax for the amount (currently at $400k), we can withdraw (currently within 10 years) when we reach the statutory retirement age (currently 62 years old).

From the above statement we can start listing down what are the possible down side of SRS Account.

1. The tax exemption amount (currently at $400k) might not increase with inflation rate.

That means if you manage to accumulate for example $1 million due to good investment returns you "might" just pay back the tax you saved for years from the tax you paid for each SRS withdrawal.

This is also why GE270 seems like a good deal as a low risk low return with certainty compare to 0.05% interest rate from the bank if the tax exemption amount does not increase.

The tax exemption rate is really the "KEY" for incentives from SRS fund.

You can go to the link below to check out the tax bracket and do your own calculation to avoid "paying more tax back" from the tax you saved.


2. If a party hit the maximum SRS contribution cap for the year and the investment have an opportunity to average down at a good price from the company rights issue, the party could not subscribe to the rights entitlement if

a) the money in the SRS account is all used up
b) the investment/stock is only purchased with SRS funds.

Again, the certainty from product like GE270 or in the future Singapore Saving Bonds (SSB) seems like a less complicated way to grow the money in SRS and controlled in growth not to pay back more tax then what was saved.

3. (edited) Your SRS funds is also part of your estate upon death. There will be a 50% of the withdrawal subject to income tax. If a party could not withdraw out in 10 years time or for an example passed away when the party managed to accumulated $800k,

First $400k exempted from Tax
Next $400k x 50% = $200k

With no other income,  the tax payable is $21,150.

You can refer to the link below for Tax on SRS withdrawal

4. The last point I wanna to touch on might not happen unless

a) the retirement age increased
b) tax increased from a higher salary package for "full time employee" (currently is $1200 from 1 Jul 2018 which is still insignificant)

The withdrawal amount plus your full employee income get you taxed more then you saved in your younger days.

The solution is Retirement Planning!

SRS Account should be "ONE OF THE" retirement vehicle that help you in the long run.
Learn to catch up with the rules & regulations and allows it to help you save instead of pay.

SRS is not necessary for Everyone unless your high income earning is definite.

A Dollar Saved is A Dollar Earned but don't do it blindly and become pound foolish penny wise.

I did not touch on Early Withdrawal because the moment you start your SRS journey you must already planned to keep the money untouched unless special circumstances occur.

This blog post is not to deter anyone to open an SRS account, rather is to provide information on the possible downside to avoid so the SRS account brings in a win win situation and not a someone sure win situation.

Another Good Deed Done!

Wednesday, 2 May 2018

Wealth Preservation: GE270 vs CDP-SBJUN18

This blog post will not go into how much to qualify or how to go about the purchase.This will just be my humble opinion of the 2 products GE270 and CDP-SBJUN18.

Basically,  the above picture speaks more than a thousand words.

The illustration is for a $100k single premium which works well for a comparison to Singapore Saving Bond (SSB), CDP-SBJUN18 in your bank statement.

GE270 is an endowment products that have "Death" and "Total & Permanent Disability" throughout the term.

There wasn't information on the proceed amount but the usual total proceed is 105% for the premium paid. Please check with the official before you commit to any products.

Basically, the important points to note are

a) Option 1 gives a guarantee paid out.

b) Option 2 give a "non guarantee paid out" which can be change without prior notice!

c) You will lose money if you need to redeem early.

Singapore Saving Bond (SSB), CDP-SBJUN18 have a cap of $100k for your CDP Account.

This means even if you got $250k which is the cap for GE270, you can only use $100k at most.

Basically, the important points to note are

a) You need to have a CDP account before you can apply. Are you in time for CDP-SBJUN18 opening a new account if needed?

b) You need to apply through an ATM machine with a $2 transaction fee and you might not get the full amount you applied.

c) You can redeem early with no penalty in multiples of $500 up to the amount you have invested for each bond with a $2 fee per redeem and you get pro rated interest rate depending on the duration.

Basically, this means if you do not know how to invest your money and wanted some certainty, Using $100k as an example, GE270 "Option 1" beats CDP-SBJUN18 by the below comparison if we hold for 5 years.

1) GE270 "Option 1" Guarantee Return for 5 years is

Capital $100k
Payout $13500

2) CDP-SBJUN18 Early Redemption Return for the 5th year is

$100k capital redeem in full amount,
which is taking back
Capital $100k
Payout $10,540 - $2 = $10,538 (edited)

Multiples of $500 is from $500, $1000, $1500 to the full amount.

Please note there is no $2 transaction fee if you hold to maturity.

So will I participate in the above 2 products?

For me I won't.

Another Good Deed Done!

Saturday, 28 April 2018

Estate planning: A Possible Distribution Plan

My old post.

 I was ask about what is a good way to distribute asset in a will.

In my humble opinion, if Mr Sian have 5 loves one (parents must be included), non are minor,

It is great to give them 10 year income in a lump sum but make it clear to them that the amount is for 10 years and is best to withdraw monthly.

In my own planning, my siblings are included.

For Example:

Using current market rate for elderly, ( I assume they are at a certain age by the time Mr Sian passed away),

It is good to have an estate value of $900k.

Each person can get 20% of the estate which is $180k.

Divide by 10 years will be $1500 per month.

This will definitely make life easier for them.

 Inflation not explored in the above example.

Another Good Deed Done!

Thursday, 26 April 2018

Insurance Planning: How much is sufficient for Critical Illness (CI)

This post is trigger by a Question on How much is sufficient for Critical Illness (CI)?

This post will not touch on what are the CIs covered and what products are available.

This post will focus on a scenario on a recovery patient from CI treatment and roughly how to calculate the "sufficient" amount of coverage.

Based on a true situation from someone I know,

Mr Sian went for a body check out and found out he have "a 
Critical Illness" and needs treatment for it.

The first 3 years are the critical mile stones for a cancer treatment and another 2 years for recovery and hopefully no recurrence for that period. 

Mr Sian Couldn't work due to the treatment side effects and that is where the CI policies come into the picture to claim for loss of income.

Treatment fees are already insured by integrated shield plan. (unless the treatment is not done in Singapore)

Mr Sian requires at least three years income 
protection and the period in getting a new job which is around another one year income protection.

So by rough estimate is 3yrs+1yr+1yr(additional) = 5yrs income protection, just in case the economic is gloom for job position.

The calculation is rather simple but what we have to take note is

1. Most CI coverage is accelerated benefit (AB) from the total death benefit.

That means the proceed will eat into your death benefits which you have planned to leave for your family.

Non-accelerated benefit (NB) are available as stand alone (more expensive) but whether a person needs an AB or NB will depends on each individual situation.

2. After you claim a CI proceed, there is a high chance you cannot get another CI protection unless you already have an additional CI protection that is not claimed.

3. There are now new products in the market that allows point 2 to be negated but I am not in position to suggest or recommend because I am not in the Insurance industry.

4. There might be other Cancer implication which hopefully does not happen.

Hope this post help readers gets an idea on a real CI situation rather then just the amount of money that is paid out.

We have to plan beyond the payout sometimes.

Another Good Deed Done!