Yes! There is interest on your CPF Housing Grant, BUT...

No, this is not another pro-government blog post. Neither is this another anti-government post. This is purely a post to make sense of the article posted by The Online Citizen.
The Online Citizen recently published a post called 6 things you weren't told about the CPF housing grant.
We thought that the content was really new and surprising and that spurred us to do our own research if it was true - especially in current times where fake news is rampant!
The Investollo team had done a great job dissecting the CPF Housing Grant, and you can read more about what they have written:  CPF Housing Grant Increases.
We recommend reading their article first before reading ours - just in case you are lost.

Recommended Post: Singapore Retirement, Re-Employment, CPF Withdrawal Age

We did some digging, consulted experts and people with knowledge of the whole process.
We present our findings below.

1) Yes! There is an accrued interest attached to the CPF Housing Grant that you will have to return TO YOUR CPF ACCOUNT if you sold your house. (In case you missed that point, re-read the part we put in caps).
There is an accrued interest attached to the CPF Housing Grant, but at the end of the day when you sell your house, your CPF Housing Grant Money and the Accrued Interest goes Back Into Your CPF Account(s).

2) It is really difficult to find any information regarding the CPF Housing Grant and its 'terms and conditions'. To be exact, there is no such page on the internet.

3) If you die, your dependents do not need to repay the CPF accrued interest you have accrued. However, if the surviving spouse used his/her CPF savings to pay for part of the house, the accrued interest accumulated on the amount that he/she withdrawn will still need to be returned to CPF upon selling the house.

4) You cannot withdraw the grant out as part of your withdrawal. They will remain in your CPF as part of the non-withdrawable amount. This applies to accrued interest earned in your Retirement Account and other money you top up into your CPF.
For more information on this part, read up on our previous post: Fine Prints of CPF Money Withdrawal.

5) Point 3 in the article from The Online Citizen, it is stated that the Housing Grant levies a 2.6% accrued interest on the Grant money. It is actually 2.5% - the prevailing CPF Ordinary Account interest rate.

Recommended Post: Singapore Budget 2017 - GST Vouchers

Conclusion:

The CPF Housing Grant is still free money from the Singapore Government to you. The accrued interest accumulated in your CPF Housing Grant still goes back into your CPF Accounts. While it may reduce the amount of cash you can get from selling your house, at least the money is still with you - just in an account that you cannot touch until you are 55 years old. Although the way that it is structured is not very ideal, it does not change the fact that it is FREE MONEY from the Singapore Government that we can use in the future.

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What is Contra Trading?

Contra Trading, is the act of
1) buying a stock and selling it before payment date
2) selling a stock and buying it back before payment date

In Singapore, after a trade is executed, you have three working days before you need to pay the total cost of the stock.
If you buy a stock on Monday, you are only required to pay the total cost of the trade on Thursday.
However, in contra trade, you sell the stock before you are required to pay on Thursday.
You can sell on Monday, Tuesday, Wednesday or Thursday.
This effectively means you do not have to fork out a huge amount of money to pay for the stock.
In this scenario, you earn or pay the difference between the selling price and the buying price.

Recommended Post: Singapore Retirement, Re-Employment, CPF Withdrawal Age

Example 1: Normal Buying and Making a Profit I buy 1,000 shares of ABC company at $3.00 per share on Monday. Total I will need to pay $3,000 for these shares on Thursday (excluding brokerage fees) On Wednesday, I sold the shares for $3.10 each. I will earn $0.1 x 1,000 shares = $100 (excluding brokerage fees) I earn $100, and I do not need to pay $3,000 for the shares that I have bought.

Example 2: Normal Buying and Making a Loss I buy 1,000 shares of ABC company at $3.00 per share on Monday. Total I will need to pay $3,000 for these shares on Thursday (excluding brokerage fees) On Wednesday, I sold the shares for $2.90 each. I will lose $0.1 x 1,000 shares = $100 (excluding brokerage fees) I will need to pay to my brokerage firm $100 for the losses I incurred for the trade But I do not need to pay $3,000 for the shares that I have bought.

Example 3: Shorting a Stock and Making a Profit I sell 1,000 shares of ABC company at $3.00 per share (I do not own any shares previously). Total I will take $3,000 in cash and I will need to delivery 1,000 shares of ABC (excluding brokerage fees) On Wednesday, I buy back the ABC shares for $2.90 each. I will earn $0.1 x 1,000 shares = $100 (excluding brokerage fees) I earn $100, and I do not need to deliver the 1,000 ABC shares that I sold.

Example 4: Shorting a Stock and Making a Loss I sell 1,000 shares of ABC company at $3.00 per share (I do not own any shares previously). Total I will take $3,000 in cash and I will need to delivery 1,000 shares of ABC (excluding brokerage fees) On Wednesday, I buy back the ABC shares for $3.10 each. I will lose $0.1 x 1,000 shares = $100 (excluding brokerage fees) I will need to pay to my brokerage firm $100 for the losses I incurred for the trade But I do not need to deliver the 1,000 ABC shares that I have sold.

Recommended Post: Can Crowdfunding ever be Secure?

Do note that although you are allowed to do Contra Trading in Singapore, there is an additional requirement if you are short-selling and buying back within the 3-day period.
You are required to "borrow" the stock you are short-selling from SGX (you need to have an account approved for short-selling) before you can short-sell.

Revolution to Trading Singapore Stocks 

using Contra Squeezing Techniques

Learning Points
1) How to perform contra trades using contra squeezing strategies
2) How to pick the right stocks for short-term trading
3) How to spot important entry and exit points for trading positions
4) Risk Management for Contra Trades
5) Sneak Peek into new category of Growth stocks

Speaker: Ronald K- Self-made millionaire investor
- Featured in Sunday Times twice for his approach to investing

Event Details:

Date: 25 March 2016 (Saturday)
Location: City Index Asia Pte Ltd, 6 Battery Road

Time: 10.00AM – 3.00PM (registration starts from 9.30AM)
Price: $10 

*Lunch is provided

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Crowdfunding: Can it ever be secured?

Now you might be thinking we are hypocrites right now, with all the contrasting views on one topic. Well, that is precisely the reason why we set up this site. It is to provide our two cents on finance-related topics so that you can have a more holistic view on issues that impact your finances.

Crowdfunding has been around for quite some time and Singaporean investors are definitely aware of this alternative option that they can use to improve their investment returns (if you are new to crowdfunding, you can read more here). There are also some common names that we have heard in this space as well. Examples are Funding Societies, CoAssets and MoolahSense.

Recommended Post: When Crowdfunding Fails

Compared to the USA, in Singapore, investors do not have the option of raising equity through crowdfunding. Hence, there is only the crowdfunding of debt present here.

However, just as our previous post shows, there are many risks to crowdfunding which warrants higher return rates. Just as how debt can be secured or unsecured, one interesting advancement of crowdfunding is the move towards collateralisation. In many other countries, real estate crowdfunding is the preferred alternative investment as there is the presence of collateral in the form of property or land. A simple search on Google can prove that. The vast supply of land and apartments as compared to fewer approved loans made this even more attractive. Hence, the speed of obtaining funding and lower loan requirements are compensated from the higher rates of return. Though, this will certainly be lower than unsecured crowdfunding.

Given the relatively stable property market in Singapore, secured real estate crowdfunding will provide a good return with lower risks. Interestingly, CoAssets has recently incorporated a real estate subsidiary that focuses on asset-backed crowdfunding and was announced in January. Hopefully, it will be released soon for retail investors to have another investment alternative.

Recommended Post: Singapore Retirement, Re-Employment, CPF Withdrawal Age

In our view, this is definitely an attractive option. Just think about it. Having an 8% to 10% rate of return (slightly outperforming the average STI returns - 8.4%) while enjoying the safety of collateral in the form of a property that is comfortably valued more than the loan amount.

If you wish to know more, do read more on crowdfunding or visit CoAssets' website.

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

Have feedback? Tell us now!

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When Crowdfunding Fails

Before I proceed, let me make it absolutely clear that I have nothing against crowdfunding. I believe the basic principle behind crowdfunding is sound, and, in a perfect world, it would boost innovation and provide talented, creative people with an opportunity to turn their dreams into reality.

Unfortunately, we live in the real world, and therefore it’s time for a reality check:

Reality /rɪˈalɪti/

noun

1. The state of things as they actually exist.
2. The place where bad crowdfunded ideas come to die.

While most entrepreneurs may feel this mess does not concern them because they don’t dabble in crowdfunding, it could have a negative impact on countless people who are not directly exposed to it:

1. We are allowing snake oil peddlers to wreck the reputation of crowdfunding and the startup scene.
2. Reputational risks extend to parties with no direct involvement in crowdfunding.
3. By failing to clean up the crowdfunding scene, we are indirectly depriving legitimate ideas of access to funding and support.
4. When crowdfunded projects crash and burn, the crowd can quickly turn into a mob.

This is my argument: Entrepreneurs, developers, and enthusiasts have to be committed to weeding out bad apples in crowdfunding, for the greater good of our industry.

But Wait, Crowdfunding Gave Us Great Tech Products!

Continue Reading...

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