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.


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! 

Subscribe to us or 
Follow us: Investment Stab on Facebook

Read More

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


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! 

Subscribe to us or 
Follow us: Investment Stab on Facebook

Read More

CPF LIFE Income DIfference

For an updated version, refer to the article HERE.

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


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! 

Subscribe to us or 
Follow us: Investment Stab on Facebook

Read More

Effective Interest Rates on CPF Accounts

For an updated version, refer to the article HERE.

Is it always good to have a lot of money in your CPF?
Maybe, maybe not!
As the amount of money in your CPF account increases, the amount of interest you get from CPF increase (and they pay pretty high interest).
However, as your account balance grows, the effective interest rates you are getting from CPF also decreases.
What is Effective Interest Rates?
EIR is the total interest you are paid on the total amount of money you have.
Eg: Total CPF Interest for the year divided by your total CPF balance (express in percentage).

MORE LINKS
Accrued Interest More than Housing Profits?
What CPF means for those in their 20s?
5 Financial Things to do in your 20s
Singapore Finance Minister on Personal Finance Part 2
Reducing CPF Housing Accrued Interest
The Christmas Stock Market Rally

For money in your Special, Medisave & Retirement Account (SMRA),
a) each account will earn a 4% interest on its money
b) first $60,000 will earn an extra 1% interest
c) in 2016, those age 55 & above will earn an extra 1% interest on the first $30,000

Below is how the interest curve will look like

2015:

The first $60,000 in your CPF will earn an interest of 5% (excluding Ordinary Account)
The rest of the money in your CPF SMRA will earn 4% interest.
Because the first $60,000 is earning an extra 1%, your effective interest rate on your CPF will always be above 4%.
However, the effective rate will keep decreasing to close to 4% as your SMRA grows larger.


2016:

















If you are belong age 55 in 2016, the chart for 2015 will still apply to you.
If you are 55 or above in 2016, the new chart above is for you.
The first $30,000 in your CPF will earn an interest of 6% (excluding OA)
The next $30,000 in your CPF will earn an interest of 5% (excluding OA)
The rest of the money in your CPF SMRA will earn 4% interest.
Because the first $30,000 is earning an extra 2% while the next $30,000 is earning an extra 1%, your effective interest rate on your CPF will always be above 4%.
However, the effective rate will keep decreasing to close to 4% as your SMRA grows larger.


PS: It is actually more complex than this because there is an Ordinary Account section that also earns this extra 1%. We are unable to however show the graphical relationship because adding in OA would make the whole picture harder to understand

We recommend you refer to the above links to "Bonus 1% extra interest from CPF" posts for more in detail information!


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! 

Subscribe to us or 
Follow us: Investment Stab on Facebook

Read More

CPF Bonus +1% Interest for Age 55 & Above

Distribution of the CPF Extra +1% of Interest between your CPF Accounts

There is a sequence in how the bonus CPF +1% interest is distributed into your CPF account.
The sequence would determine how much money goes into your 4 different CPF accounts.

MORE LINKS
CPF Bonus 1% Interest for Below Age 55
Accrued Interest More than Housing Profits?
What CPF means for those in their 20s?
5 Financial Things to do in your 20s
Singapore Finance Minister on Personal Finance Part 2
Reducing CPF Housing Accrued Interest
The Christmas Stock Market Rally

If you are age 55 and above, the order of the extra 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 $60,000 or more, the $60,000 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,

Retirement Account
In all 3 Eg, your RA will earn 5% interest.
Ordinary Account
In all 3 Eg, your OA will earn 3.5% interest.
Special Account
In all 3 Eg, your SA will earn 5% interest.
Medisave Account
In Eg 1&2, your MA will earn 5% interest.
However, your MA in Eg3 will earn less than 5% interest.
The first $20,000 in your MA will earn 5% interest.
The remaining $10,000 in your MA will earn 4% interest.


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

Retirement Account
In all 3 Eg, the RA will earn 5% interest.
Ordinary Account
In Eg 4&6, your OA will earn 3.5% interest.
In Eg 5, the first $20,000 in your OA will earn 3.5%, the remaining $10,000 will earn 2.5%.
Special Account
In Eg 4, your SA will earn 5% interest
In Eg 5, your SA's $10,000 will earn 5% interest while the other $10,000 will earn 4% interest.
In Eg 6, your SA's $20,000 will earn 5% interest while the other $5,000 will earn 4% interest.
Medisave Account
In Eg 4, your MA will earn 5% interest
In Eg 5&6, your MA will earn 4% interest (no bonus interest at all)



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! 

Subscribe to us or 
Follow us: Investment Stab on Facebook

Read More

CPF Bonus +1% Interest for Age below 55

Distribution of the CPF Extra +1% of Interest between your CPF Accounts

There is a sequence in how the bonus CPF +1% interest is distributed into your CPF account.
The sequence would determine how much money goes into your 3 different CPF accounts.
The higher the percentage your OA & SA make up of the $60,000, the higher the chances of you drawing out your CPF at old age.

MORE LINKS
Accrued Interest More than Housing Profits?
What CPF means for those in their 20s?
5 Financial Things to do in your 20s
Singapore Finance Minister on Personal Finance Part 2
Reducing CPF Housing Accrued Interest
The Christmas Stock Market Rally

If you are below age 55, the order of the extra 1% interest goes like this:
1) Ordinary Account (OA)*
2) Special Account (SA)
3) Medisave Account (MA)

*Bonus 1% interest earned on your OA goes into your SA. 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 you have less than $20,000 in your Ordinary Account,

Ordinary Account
In all 3 Eg, your OA will earn 3.5% interest.
Special Account
In all 3 Eg, your SA will earn 5% interest.
Medisave Account
In Eg 1&2, your MA will earn 5% interest.
However, your MA in Eg3 will earn less than 5% interest.
The first $20,000 in your MA will earn 5% interest.
The remaining $10,000 in your MA will earn 4% interest.


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

Ordinary Account
In Eg 4&6, your OA will earn 3.5% interest.
In Eg 5, the first $20,000 in your OA will earn 3.5%, the remaining $10,000 will earn 2.5%.
Special Account
In all 3 Eg, your SA will earn 5% interest.
Medisave Account
In Eg 4 your MA will earn 5% interest.
In Eg 5, your MA's $10,000 will earn 5% interest while the remaining $10,000 will earn 4% interest.
In Eg6, your MA's $15,000 will earn 5% interest while the remaining $10,000 will earn 4% interest.



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! 

Subscribe to us or 
Follow us: Investment Stab on Facebook

Read More

The Christmas Stock Market Rally

December is the month of the Stock Market!

MORE LINKS
Accrued Interest More than Housing Profits?
What CPF means for those in their 20s?
5 Financial Things to do in your 20s
Singapore Finance Minister on Personal Finance Part 2
Reducing CPF Housing Accrued Interest

https://www.cnbc.com/2015/11/30/86-years-of-history-point-to-year-end-rally.html

December has been a time where the market has never performed worse than any point in the year.
December also has a history of posting gains from the start of the month to the end of the month over 86 years.
When the market starts the month of December above the 200-day Moving Average and in an uptrend, there is an 80% chance for the market to gain 2%.
December is also the month that frequently sees the expansion in valuation (rising P/E, P/B etc).
So seasonally, December is the month to invest in the market.

With S&P500 priced at 2102 on December 1st, there is a very high chance of S&P500 ending the year in more than 2150.
Considering that currently, the price of S&P500 is at 2020+, it is a pretty good entry point.
The S&P500 is also down 1.85% year-to-date, we shared an article that mentioned that 2015 will be a good investment year, read up here why (LINK)
Of course, the US Fed is expected to raise rates next week, which might create a little turmoil in the markets, but if you can hold and ride through the week, historically, the odds are in your favour!

As Warren Buffett always says: "Be greedy when others are fearful and fearful when others are greedy!"

Disclaimer: I am not suggesting any claims that the market will rally. I am only stating that the historical trends point that there might be a rally. It is by no means any form of recommendation to purchase stocks in the market. Investors are recommended to do their own assessment of what they should or should not invest in.


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! 

Subscribe to us or 
Follow us: Investment Stab on Facebook

Read More