Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Wednesday, 4 November 2020

History Predicts Who Will Win The US Presidency



"History does not repeat itself, but it does rhyme".

This is a quote that aids in quite a fair bit of my decision making.

History rarely repeats in an exact way, but often in similar ways.


In my view, there are 2 ways how history "repeats" itself

  1. Same-Same-But-Different
    Think of it as stock market cycles: there's bull, there's bear, and there are corrections in between. Same pattern, just different themes: technology bubble, oil crisis, etc, and duration.

  2. Different Audience
    Those who lived through the WWI/II, the oil embargo, housing crisis, etc, would have a different mindset than those who didn't live through it. And often those who had not lived through such events are the ones who repeat history.


Who Will Win The Presidency?

This is generally under the 'Same-Same-But-Different' category.

We might think people are choosing based on ideology, based on their beliefs, based on their religion, their liking, or whatever you can name. 

But more often than not (and not completely explainable), Presidents are elected based on certain historical patterns.


Presidency History Trend 1
US Presidents tend to be re-elected for the position

Since 1933, almost every US President won their re-election.
Unless you're Jimmy Carter or George H. W. Bush.

Since 1933, 9/11 (nine-out-of-eleven. Pun intended) sitting Presidents won their re-elections.
That's a very high percentage of re-election. 

If you asked me to bet what's the likely outcome of a US election and there's a sitting President standing for the election, I am going to side with history on this one.


Presidency History Trend 2
Democrat candidates win during recessions

Very specifically since 1933, if the month of voting (which is always November) happens to be in the period of a US recession, 100% of the time the Democratic candidate wins the Presidency. 

Recession PeriodElection DatePresident
Aug 1929 - Mar 1933November 1932Franklin D. Roosevelt (Democrat)
Apr 1960 - Feb 1961November 1960John F. Kennedy (Democrat)
Dec 2007 - Jun 2009November 2008Barack Obama (Democrat)
Feb 2020 - NowNovember 2020??? 😉

There were no instances of a Republican candidate winning when the election date falls between a US recession.

That's not to say that a Democrat candidate can only win during a recession.
There are instances where Democrat candidates who have won the Presidency when the election date is not between a recession.

But, in cases where the election date does fall within a recession, Democrat candidates seem to always win.

My guess on why Democrats win during recessions:
This is purely hypothetical, but my guess is Democrat candidates are more welfare-based: free/cheap education, healthcare, subsidies, financial aids etc.
These are policies that tend to matter more to people when times are bad (aka recession), hence it aids in Democrat winning the election.

Presidency History Trend 2A
Recession in the election year flips the Presidency

As a follow-up to Trend 2, this trend evaluates when a recession happens in the year of the election.

Recession PeriodElection DateSitting PresidentNext President
Aug 1929 - Mar 1933November 1932Herbert Hoover (Republican)Franklin D. Roosevelt (Democrat)
Apr 1960 - Feb 1961November 1960Dwight D. Eisenhower
(Republican)
John F. Kennedy
(Democrat)
Jan 1980 - Jul 1980November 1980Jimmy Carter
(Democrat)
Ronald Reagan
(Republican)
Dec 2007 - Jun 2009November 2008George W. Bush
(Republican)
Barack Obama 
(Democrat)
Feb 2020 - NowNovember 2020Donald J. Trump
(Republican)
???
(Democrat?)

As we can see, if a recession occurs in the election year, tables can turn to the other team even if it ends before the election date.


Conclusion

This time around, we are seeing 2 contrasting historical trends batting out.

Honestly, even I'm excited to know what's the result even though it does not really affect me.

Do you think Trend 1 or Trend 2 will win?

Who do you think will win the US Presidency?



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Monday, 19 October 2020

Dumb Sh!t My Property Agent Said - Part 2

This is part 2 of "Dumb Sh!t My Property Agent Said", where I list down the dumb stuff my property agent said to my family.

If you missed the first part, please click on the link below to read about it.

Dumb Sh!t My Property Agent Said - Part 1


Quick Recap

My family recently went shopping for a new house. 

After we visited one of the homes, we had a conversation with the seller-side property agent.


The agent was explaining how to earn money in Singapore's property market.

Needless to say, I thought half of what the agent said was completely crazy or stupid.


To quote Uncle Roger, "Different people have different opinions, just some people are wrong".


Dumb Thing the Agent Said

"99-years properties has risen much more than 999-years and freehold property over the last decade. The trend is there. So I tell my buyers that buying 99-years property can give better returns than 999-years or freehold properties if done right"

Not the agent's exact words, but that's the gist of it.


Recommended Read: Cannot Withdraw CPF Money If Never Hit CPF Retirement Sum?


My Inner Thoughts

The salvage point of the whole statement the Agent gave, was that ending of "if done right".

Otherwise, the whole statement is just a logical fallacy. 


"99-year properties have risen more in value (or price) than 999-years or freehold properties over the last decade."

This statement is true - refer to 99.co research.

But it is a bad idea to presume what happened in the past will continue forward, especially for the following reasons.

A: the Government announced in 2017 that all 99-years properties will be worth $0 at the end of its lease. 

Would you still push prices up knowing that it'll be worthless after 99 years? 


B: assuming that 99-years higher growth rates will continue indefinitely into the future.

The price will probably peak at where the price matches those of freehold status. 

People are not that dumb to spend equal or more money to buy a 99-years property when that same amount can be used to buy a freehold. 

So that growth rate will reach a cap and eventually the 99-years will grow at the same rate as the freehold.


Personal Take

Personally, I'm not a huge fan of property investments because of several reasons.

1. Govt always has a stake in ensuring property prices/rentals are not too high.

If prices are too high, people will complain, and Govt will lose votes.

Which is why we have tools like ABSD, etc.

All these policies are putting a cap on my returns.


2. Too many fees involved.

Commissions to agents for buying/selling/renting.

Then there's maintenance, conservancy, property tax, etc.

With stocks, I pay no capital gains tax, no dividend tax, & I don't even need to manage anything.


Of course, this is just my point of view.

You can have your point of view on why properties are such great investment. 


Conclusion

A great property agent is not a great financial or investment adviser.

If the Agent can get your house sold easily, GREAT!

But financial or investment advice from them, take it with a pinch of salt.


There are more to come as a slowly breakdown crazy stuff the property agent said.

Subscribe to us so you will be notified once we published it 😉.


Recommended Read: Complicated Steps To Pay $10 DBS Stock Brokerage Commission

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Monday, 12 October 2020

Dumb Sh!t My Property Agent Said - Part 1


My family recently went shopping for a new house. 

After we visited one of the homes, we had a conversation with the seller-side property agent.


The agent was explaining how to earn money in Singapore's property market.

Needless to say, I thought half of what the agent said was completely crazy or stupid.


To quote Uncle Roger, "Different people have different opinions, just some people are wrong".


Dumb Thing the Agent Said

"We should make our money work for us. That's why I recommend my clients if they have the chance to sell their 2 homes and upgrade to a landed."

Not the agent's exact words, but that's the gist of it.


Recommended Read: Cannot Withdraw CPF Money If Never Hit CPF Retirement Sum?


My Inner Thoughts

If you have 2 houses, you can stay in one, rent out the other one, and essentially live off rental income for the rest of your life - if it is sufficient.

That's the real "making money work for you".


If you sold the 2 houses to buy 1 landed and stayed in that landed.

Where you going to get your monthly (rental) income if you don't work?

You basically cannot retire or live off your rental income.

You going to break that landed into different segments and rent it out to different families while your own family stays in it?


To me, that was just the Agent making a sales pitch.

The commission from selling 2 houses and then buying a landed is HUGE!


Not a good investment or property advise.


Conclusion

A great property agent is not a great financial or investment adviser.

If the Agent can get your house sold easily, GREAT!

But financial or investment advice from them, take it with a pinch of salt.


There are more to come as a slowly breakdown crazy stuff the property agent said.

Subscribe to us so you will be notified once we published it 😉.


Recommended Read: Complicated Steps To Pay $10 DBS Stock Brokerage Commission

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Thursday, 1 October 2020

Complicated Steps To Pay $10 DBS Stock Brokerage Commission

I signed up for DBS Vickers trading account recently after I saw the minimum $10* trading fee.

The standard fee is $25++ so naturally, it made sense to switch over to DBS Vickers from my current broker.


In addition, investing via DBS Vickers qualifies as 1 of the eligible transactions to earn higher interest for our savings in the DBS Multiplier account.

It is one of the things that we wrote about in the previous article: 3 Tips To Earn More Interest With DBS Multiplier.


But, it is not as straight forward as it seems.

I tried to trade with the $10 fee, and I ended up paying the $25 standard trading fee.

And so this article is to help you not have to go through what I went through 👍. 



Applying for Cash Upfront Trading

There's a ton of guides online on how to set it up.

Go read them.

Or, read this one from DBS 😉.



Logging Into Vickers 

If you want to pay the $10* rate, DON'T LOGIN TO VICKERS!

Yes, DON'T!

You won't see the 'Cash Upfront' payment option, you will only see the 'Cash' option in 'Settlement Mode', which is not the same as 'Cash Upfront'.



Recommended Read: Cannot Withdraw CPF Money If Never Hit CPF Retirement Sum?


Paying the $10* Rate

After you have got the cash upfront account set up, now it is time to select that option when making your investment purchase.

NO! 
It is not as simple as logging in to your DBS Vickers account and simply click 'Buy'.
You can't do that even though it should be that intuitive.
There are steps involved 🤷‍♂️.

If you just logged in straight to DBS Vickers to make your purchase, you are going to be charged for $25++ standard trading fees, just like how I got charged that much for my trade.

To get the $10 rate, these are the following steps:

1. Log in to your DBS/POSB Internet Banking

2. Go to 'Invest' > 'DBS Vickers Online Trading Services'

3. Go to 'Trade' > 'Place Order'

4. Under 'Settlement Mode', choose 'Cash Upfront'

And that's how you get the $10 trading fee.


Side Note

Make sure you have previously linked your DBS eMulti-Currency Account or Multiplier Account.
Make sure you also have sufficient funds of the currency inside to pay for your trade.
Ie; if you are buying stocks paid in USD, make sure you have USD in your account.


Actual Cost of Trade

The minimum cost of a trade is $10, or 0.12% of the whole trade, whichever is higher.

Source: DBS

To view the actual cost of trade via Cash Upfront, click HERE.


Conclusion

So hard to save money on trade commission.

We hope you don't have to make this mistake that we did.


Recommended Read: Why You Should Max Your CPF Retirement Sum Early

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Wednesday, 2 September 2020

3 Tips To Earn More Interest With DBS Multiplier



We looked at our own DBS Multipler account and started questioning how the interest tier works and how to maximise our interest.


After reading the FAQs and thinking hard, we (kind of) found 3 tips that are quite worth sharing with you 😉


A New Tool

Before we dive into the DBS Multiplier tips, we want to let you know a new tool we've built here at Investment Stab.


If you're like us, always wondering how much more should I spend in which category in order to maximise the interest I will earn, FRET NOT!


We've took the time to build a DBS Multiplier Account Interest Estimator.


Now we can know how much more to spend in 1 category so as to earn more interest from the DBS Multiplier Account.


Let us know in the comment below which other bank's saving account you would like us to build a calculator for 😉


Alright, and now for the tips.


Tip 1: Combine your Salaries into a Joint Account

Your salary: $3,000 per month

Your spouse salary: $3,500 per month


If you both credit your salary into your individual accounts, your Multiplier account will record your 'Income' as $3,000.

Your spouse's Multiplier account will record their 'Income' as $3,500.


But, if you both credit it into a joint DBS/POSB account that you both own, both of your Multiplier accounts will record your 'Income' as $6,500!


That's like an extra $3,500 income for you and an extra $3,000 income for your spouse, to hit the Multiplier criteria.


Recommended Read: Cannot Withdraw CPF Money If Never Hit CPF Retirement Sum?

Tip 2: Invest in DBS Invest-Savers

The DBS Invest-Savers is a Regular Shares Savings (RSS) plan.

The lowest amount to invest in the RSS is $100.


If spending an extra $100 yields you additional interest that is more than $100 because you added another category, then why not.


Furthermore, it is low in fees and buying the STI ETF means you are buying the top 30 companies in Singapore.


Sounds pretty worthwhile.


The downside is that the contributions are recognised as "Investment" for only a year after you start the Invest-Saver plan with a Multiplier account.

After that, the RSS investment no longer qualifies as the "Investment" category.


Tip 3: Be Joint Borrowers of DBS/POSB Home Loan

Your monthly mortgage payment is $2,000.


If you are the only name on that mortgage, your Multiplier account will get $2,000 under the 'Mortgage' category.


But, if you add your partner's name into the mortgage, both of your Multiplier accounts will record your 'Mortgage' category as $2,000!


That's like an extra $2,000 mortgage for your partner to earn higher interest.

And you don't actually have to really pay another extra $2,000 to earn that qualifying sum ✌


FAQ

For more on the FAQs about DBS Multiplier account, you can click HERE.


Conclusion

We hope these tips are good enough for you.

If you got any more tips you want to share, let us know in the comments below 👍


Recommended Read: Why You Should Max Your CPF Retirement Sum Early

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Saturday, 22 August 2020

The CPF Withdrawal Age & CPF Payout Eligibility Age

There are 2 age-numbers about CPF that you should know about.

They are the CPF Withdrawal Age, and the CPF Payout Eligibility Age.


Recommended Read: Should I Top Up My Young Next-Of-Kin's CPF?


What is the CPF Withdrawal Age?

Singapore's CPF Withdrawal Age is currently set at 55.

This is the age you can start withdrawing money out of your CPF account.


How Much Can I Withdraw?

You can only withdraw money above the Full Retirement Sum or $5,000 (whichever is higher).

Alternatively, you can withdraw money above the Basic Retirement Sum if you perform a property pledge.

Click here to see the examples of how much you can withdraw.


For members turning age 65 from 2023 onwards, they can also withdraw up to 20% of their Retirement Account savings in a lump sum anytime from age 65 onwards.


Recommended Read: Cannot Withdraw CPF Money If Never Hit CPF Retirement Sum?


What is the CPF Payout Eligibility Age?

Singapore's CPF Payout Eligibility Age (PEA) is currently set at 65.

This is the age you can choose your CPF LIFE plan (CPF LIFE) and start receiving monthly payouts until you pass away.

You also have the option to start your CPF LIFE payouts later, up to age 70.


Why Would I Want To Delay My Payout Age?

You can choose to start receiving payouts anytime between age 65 and age 70 (eg when you reach age 67), but the latest age to start is 70. 

For each year deferred, your future CPF LIFE monthly payouts may increase by up to 7%.


Conclusion

Understand at what age you can withdraw how much from CPF.

Consider if you really need to make that withdrawal at 55, or is it better to keep the money inside CPF to earn the higher interest rates.


Recommended Read: Why You Should Max Your CPF Retirement Sum Early

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Friday, 14 August 2020

Should I Top Up My Young Next-Of-Kin's CPF?

Young next-of-kin refers to family members that are below the age of 55.

We'll do the 'next-of-kin above age 55' next time.

So subscribe to us if you want to be notified when the next article is out 😉.


Who Qualifies As Next-Of-Kin?

  • Spouse
  • Siblings
  • Parents
  • Parents-in-law
  • Grandparents
  • Grandparents-in-law

Recommended Read: Why I Still Own Big Tech


Benefits of Topping Up

1. Tax Incentive

If you top up your next-of-kin's CPF accounts using cash, you get up to $7,000 per calendar year of tax deduction.


2. Earn More Interest

Topping up to your next-of-kin's CPF allows them to build up their retirement savings, and it will earn interest of up to 6%.


Criteria

There is a list of criteria to fulfil before your cash top-up to your next-of-kin qualifies for the tax deduction.


1. For All Next-Of-Kin Below Age 55

To recipients age below 55, you only get the tax deduction for up to the current Full Retirement Sum (FRS).

FRS - SA Savings - SA monies withdrawn under CPFIS*

*CPFIS: CPF Investment Scheme


Example:

The current CPF FRS is $181,000

Your mother's CPF SA currently has $150,000 and had previously withdrawn $30,000 for CPFIS.

So her "Total SA Savings" is $180,000.


If you top-up $7,000 cash to her CPF SA, only $1,000 will be eligible for the tax deduction.

Any additional amount ($6,000) you top-up will not be eligible for the tax deduction.


2. In Addition For Spouse/Siblings

To qualify for the tax relief for spouse or siblings top-up, in addition to the criteria above, they must also meet one of the following criteria:

  1. Income (e.g. salary or tax-exempt income such as bank interest, dividends and pension) not exceeding $4,000 in the year preceding the year of top-up*; or
  2. Handicapped** 

* "Income" of a person would include income from all sources, such as tax-exempt income (e.g. bank interest, dividend and pension) and foreign-sourced income remitted into Singapore. Hence investment income/rental income/directorship income etc, are considered to be the income of a person.


** A handicapped person is one who has been incapacitated mentally or physically. Some examples are visual-impairment, loss of hearing, loss of limb and dementia.


Recommended Read: Why You Should Max Your CPF Retirement Sum Early


Any Additional  Things to Note?

One More Thing...

There is a cap on maximum tax deduction one can receive in a given year.


The personal income tax relief cap is currently $80,000.

Meaning you won't get any additional tax deduction for each dollar you top-up to their CPF accounts if you hit the tax deduction cap of $80,000 before the top-up.


Conclusion

Topping up next-of-kin's CPF for tax reduction is a lot of work.

Need to make sure they have not met FRS.

Need to make sure they meet the income criteria.

Need to make sure I have not hit the cap for tax relief.


So view the top-up as helping your next-of-kin hit their retirement goals.

The tax deduction is just icing on the cake; additional benefits.

Not the main point.


Recommended Read: Cannot Withdraw CPF Money If Never Hit CPF Retirement Sum?

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