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

Tuesday, 27 October 2015

Reducing/Preventing CPF Housing Loans' Accruing Interest

One of our readers asked us this question on our blog: Understand that the accrued interest have to paid back when we the property that is used to finance is sold. So if the property is not sold, the amount of OA used will still be incurring accrued interest, in this case, can we settle the amount to our CPF OA account using cash to stop it from accruing interest? 

We went to do some research and asking and we got the answers for you!
The answer is below:
Yes! You can actually voluntarily choose to use your own money to pay back into your own CPF account the amount of money you used to buy your house.

It has become common for Singaporeans to know that CPF current charges an accruing interest (currently at 2.5% p.a.) on the amount in your Ordinary Account you use to pay for your house.
This accruing interest is not the interest you pay for borrowing money to buy your house.
This accruing interest is the interest you CONTRIBUTE BACK TO YOUR CPF in the future when you sell your house.
This is to make up the difference for what you could have in your CPF account IF you did not use it to buy your house.

More Links
What to Own during Rate Hikes?
Fine Print of CPF Money Withdrawal
5 Financial Things to do in your 20s
Singapore Finance Minister on Personal Finance Part 2
Repaying CPF Accrued Interest - Why?
CPF Housing Interest

Benefits:
If you have spare cash, and unable to find a good place to save with higher interest rates, you can put it to cover your accruing interest.
By reducing the amount of CPF money you used to pay for your house, more of your money will end up earning the CPF interest (2.5% + 1%) instead of coming from the appreciation of your house.


If you sell your house in the future, the accrued interest going back to your CPF comes from the appreciation of your house value.
Your RIGHT Pocket transferring money to your LEFT Pocket - There is NO NET GAIN IN VALUE!

If you put more of your cash into your house, keeping your CPF money intact, then your CPF money can earn Interest from CPF instead of from your house.
CPF Pocket going into your Pocket - You GAIN money paid by CPF!

Of course, the big point is you should have spare cash that cannot earn interests in excess of CPF interest (2.5%+1%).

More information can be found in the link below under "General Information on Housing Matters".
https://www.cpf.gov.sg/Members/FAQ/schemes/housing/

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Wednesday, 21 October 2015

Jack Bogle 4 Investment Rules

https://www.cnbc.com/2015/10/14/jack-bogle-follow-these-4-investing-rules-ignore-the-rest.html

Jack Bogle, founder of the whole's largest mutual fund, Vanguard Group, is a long-term advocate of simple long-term Index investing.
He has a basic portfolio consisting of ONLY US Stocks and US Bonds.
As you grow older, more percentage should shift toward Bonds instead of Stocks.
At 86 years old, his current asset allocation is 50% Stocks 50% Bonds.
This is very different from what most financial books advice regarding asset allocation: taking 100 minus away your age, that should be your stock allocation, and the rest are bonds. This would result in Bogle having only 14% in stocks, which is a little under-invested.

More Links
What to Own during Rate Hikes?
Fine Print of CPF Money Withdrawal
5 Financial Things to do in your 20s
Singapore Finance Minister on Personal Finance Part 2

The 4 rules Bogle set for investing under such investment period:

1. Bogle doesn't rebalance — if you must, once a year is enough.
You reduce the brokerage fees you pay.
You don't end up selling your winners too early just to keep your portfolio "balanced"

2. Bogle doesn't invest overseas — at least, not directly.
He focus only in US because of legal protection available in US for investors. So invest in places that have a safe political and legal playing field.
Simultaneously, US companies also derive more than 50% of their income from overseas (developed and developing markets), so you ain't exactly missing out on overseas investment opportunities and growth!

3. To Bogle, diversification means bonds — and it doesn't need to mean anything more than that.
If you are okay with short-term volatility (aka risk), investing 100% in stocks is not a bad idea because historically, it give the best returns.
However, a little bonds are good for some emergency short-term needs like sudden medical bills - especially when the stock market is not doing very well for the short-term.
Bonds have reduce chances of massive drop in portfolio value

4. Bogle believes that if you make the 'simple' portfolio choices, you'll spend a lot less time worrying.
A simple Low-Cost Index Stock-Bond portfolio with minimum re-balancing will gives him the peace of mind because it is a simple strategy. No need for huge reports or massive phone calls on great investment ideas. 
just a simple monthly investment savings plan will do

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Saturday, 10 October 2015

What to Own During Rate Hikes

CNBC recently have an article regarding what stocks should investors own if the Fed decides to raise interest rates.
We figured it would be good to reproduce the piece here for our readers' reference.

Below is the link to the original article
http://www.cnbc.com/2015/09/15/when-the-fed-raises-rates-heres-what-happens.html

MORE LINKS
GE Effect on STI
Raising of Re-Employment Age to 67
Singapore Finance Minister on Personal Finance Part 1
Singapore Finance Minister on Personal Finance Part 2
Getting out of CPF Retirement Sum

Investment Play when Interest Rates go Up

WINNERS
Majority business dealings in the US will benefit
Strong Balance Sheet companies tend to outperform in the first 3 months of a rate hike
High Return on Capital companies tend to outperform their lower quality counterparts
Low Volatility Stocks tend to outperform their higher volatility counterparts

LOSERS
Multinationals with lots of debts do far worse


Remember to offer your opinions. If you don't put your two cents in, how can you expect to get change?

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Wednesday, 7 October 2015

Fine Print of CPF Money Withdrawal

Everyone knows that when you reach the age of 55, you need to set aside a sum of money in your CPF.
You can start drawing
That sum is known as Full Retirement Sum (FRS, previously known as Minimum Sum)

MORE LINKS
What is Full Retirement Sum(FRS)?
What is Basic Retirement Sum (BRS)?
Singapore Finance Minister on Personal Finance
Singapore Growing ETF Choices
Raising of Re-Employment Age to 67
How to Escape Minimum Sum?

What you do not know is, there are fine prints to this.

Withdrawal above Basic Retirement Sum (BRS) is only savings - aka money, you contribute in via your salary or voluntary contribution.
*BRS requires you to pledge your property to withdraw the amount in excess of your BFS.

Money that comes from the below options cannot be withdrawn no matter what
1) Interests earned from Retirement Account
2) Government Grants
3) RSTUS Top up Money

However, chances are, the sum of all 3 money most likely will never reach half your FRS amount. Thus this is actually not too big a concern - BUT, it is good to know if you happen to be the special 0.1%



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Sunday, 4 October 2015

To a whole new world!

As the blog marches on towards more and more viewers, we are also looking for ways to engage you better, more effectively and via a convenient channel. Few months before, we launched a mailing list for you to receive updates as well as feedbacks on our blog easily. It is a simple mailer that anyone could scrap up from the vast resources that the internet now offers but it was a humble beginning for us to connect to our readers. Some might have noticed that we changed the layout of the email updates slightly to make it more readable and a better user experience. This is compared to the previously more cluttered and wordy layout.




Just few weeks ago, we created a Facebook page to allow our audience to have access to our articles at a even more convenient platform and also to share the information that you think that your friends deserve to know as well.

Today, we would like to invite you to like our page and share it with your friends to catch up on our blog updates instantaneously.

Our Facebook Page

As we strive to improve the site as well as the content that we would like to offer, a survey was created to gather readers' opinions. We value your opinions but as much as we hope to quickly correct for the better, there are limitations as to what we can offer and provide. We can only ask for your patience and continuous support.

For those who had missed out on the survey, do help us and provide your feedback here.

We are also looking to expand our content in order to provide more for our audience. If you think you can create great articles in the aspect of finance relating to any topics, such as travel, eating or even having fun, do write to us at Investmentstab@gmail.com.