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

Thursday, 28 January 2016

A new year; fresh pessimism?

As we are almost done with the first month of the new year, there seems to be more pessimism lurking in the market, especially locally. Stock markets are tumbling lower, where the STI has dropped an estimated 9%. The local property market is not doing well either. To add on, recently there was news of retrenchments that will be done in the local jobs market. Is just me or it seems that 2016 doesn't feel like a good year?

MORE LINKS
Accrued Interest More than Housing Profits?
CPF +1% Interest for those age 55 & Above
5 Financial Things to do in your 20s
Singapore Finance Minister on Personal Finance Part 2
Reducing CPF Housing Accrued Interest
CPF +1% Interest for those age Below 55

The earlier crash of oil prices to new yearly-lows has negatively affected numerous local sectors, especially the oil rig industry. Although being one of the world-best oil rig builders, this has not defended KepCorp and SembCorp from the industry-wide trend. Posting of falling profits and announcements of major restructuring, it seems that the management is doing its best to tide against this resultant crisis.

I believe that KepCorp will soon be in good valuation and presents a good buying opportunity. With the lower pricing, M&A seems to be ripe, evident from the recent rumours of Semb Mar's news.

Furthermore, following the plunge of oil prices and predicted continuation of this trend, the management appears to be reacting to it. Numerous action plans were announced to withstand pressures and having an existing strong financial balance sheet will definitely aid it in this "crisis". The major shareholder, Temasek, is also actively monitoring the situation.

Last but not least, being one of the world's largest oil rig builders, the performance of KepCorp can act as a proxy to the performance of the industry, though limited. It can also be a bet in the entire industry, in my opinion.

While the news this year is not limited to just KepCorp and Semb Mar, numerous counters are priced at lower prices and may present a good buying opportunity for all.


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Monday, 11 January 2016

CPF Interest if I am age 55 & Above

In 2016, if you are age 55 or above, the First $30,000 of your CPF Balance will receive a bonus +1%.
This bonus +1% is on top of the extra +1% given on your first $60,000 CPF balance.

MORE LINKS
Accrued Interest More than Housing Profits?
CPF +1% Interest for those age 55 & Above
5 Financial Things to do in your 20s
Singapore Finance Minister on Personal Finance Part 2
Reducing CPF Housing Accrued Interest
CPF +1% Interest for those age Below 55

If you are age 55 and above, the order of the bonus 1% interest goes like this:
1) Retirement Account (RA)
2) Ordinary Account* (OA)*
3) Special Account (SA)
4) Medisave Account (MA)

*Bonus 1% interest earned on your OA goes into your RA. The rest of the interest earned goes to the respective account (Eg; interest from MA amount goes into your MA)

Up to $20,000 comes from your Ordinary Account, the rest from Special & Medisave Accounts.
If your RA has $30,000 or more, the $30,000 will earn the full 1% bonus interest. No bonus interest will be given to the other accounts.

If you have less than $20,000 in your OA,












Eg1
RA earns 6% interest (4% +1% +1%)
OA earns 4.5% interest (2.5% +1% +1%)
SA earns 6% interest (4% +1% +1%)
MA earns 6% interest (4% 1% +1%)
Eg2
RA earns 6% interest (4% +1% +1%)
OA earns 4.5% interest (2.5% +1% +1%)
SA earns 6% interest (4% +1% +1%)
MA earns 5% interest (4% +1%)
Eg3
RA earns 6% interest (4% +1% +1%)
OA earns 4.5% interest (2.5% +1% +1%)
SA earns 5% interest (4% +1%)
MA earns 5% interest (4% +1%)


If you have $20,000 or more in your Ordinary Account,












Eg4
RA earns 6% interest (4% +1% +1%)
OA earns 4.5% interest (first $10k) & 3.5% (next $10k)
SA earns 5% interest (4% +1%)
MA earns 5% interest (4% +1%)
Eg5
RA earns 6% interest (4% +1% +1%)
OA earns 4.5% interest (first $10k) & 3.5% (remaining $10k)
SA earns 5% interest (first $20k) & 4% (remaining $5k)
MA earns 4% interest (4% +1%)
Eg6
RA earns 6% interest (4% +1% +1%)
OA earns 3.5% interest (2.5% +1%)
SA earns 5% interest (first $10k) & 4% (remaining $15k)
MA earns 4% interest


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Wednesday, 6 January 2016

CPF LIFE Income DIfference

In today's post, we will be discussing why is the Full Retirement Sum monthly payout not double the Basic Retirement Sum's payout.

MORE LINKS
Accrued Interest More than Housing Profits?
CPF +1% Interest for those age 55 & Above
5 Financial Things to do in your 20s
Singapore Finance Minister on Personal Finance Part 2
Reducing CPF Housing Accrued Interest
CPF +1% Interest for those age Below 55

As you can see below, it is an image of the monthly payout you will get based on the different Retirement Sum.

The FRS is 2x of BRS.
However, the monthly payout from FRS is not 2x of BRS.
The same is for ERS, where the payout is not 3x of BRS.

This is because the Effective Interest Rates (EIR) on each Retirement Sum is different.
EIR is the real interest rate return you get from your money.

In 2016,
a) OA earns 2.5%
b) SA, MA & RA earns 4%
c) First $60,000 of your CPF balance gets extra +1%
d) First $30,000 of your CPF balance gets extra +1% if you are age 55 & above

FRS is 2x of BRS, however, the income derived from FRS is not 2x of BRS because the effective interest rate is not the same.
BRS enjoy a higher effective interest rate than FRS and ERS even though it will earn higher than the base 4%.

For a clearer picture on the EIR issue, please refer to our other post: EIR of CPF.
It will explain why is the effective interest on your CPF money decreasing as more and more money is accumulated in your CPF accounts


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