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

Thursday, 27 February 2020

Can I Join the Lease Buyback Scheme After I got my Silver Housing Bonus?


This is a follow-up article from our previous article on the Silver Housing Bonus (SHB): $20,000 Silver Housing Bonus: Should You Apply For It?.

Today's topic is on the 2 schemes that the Government has introduced to help elderly Singaporeans monetise their homes.
While it might not apply to you now, it might apply to your parents, grandparents, or older colleagues, in which case, you can share with them this article to let them know of these schemes.

Can I Join LBS after I got my SHB?
Source: Flickr

You are basically downsizing first, then selling the remaining lease of the downsized flat back to HDB.
You can apply for SHB after 55 years old and then apply for LBS after 65 years old.
But, you will only be eligible to apply for either the SHB bonus or the LBS bonus, and not both.
Meaning if you had gotten the SHB bonus, you will not be able to apply for the LBS bonus in the future.

Example:
Kumar is 60 years old, and he owns a fully paid 5-room HDB flat with his wife.
He wishes to downsize to a 2-room HDB flat since his kids are no longer staying with him and his wife.
He downsized to a 2-room HDB flat (resale) with 85 years of lease left and applied for the SHB (Yes, you have to apply for it!).
He expects his wife and him to stay in the flat for up to 45 years only.
So at age 65, after he has met the Minimum Occupancy Period (MOP) of his new 2-room flat, Kumar applied for LBS to sell back to HDB the 40 years of his 2-room flat's lease that he does not need.

Kumar can get the following proceeds/bonus from SHB depending on how much net proceeds he earns from the selling and buying his flats.

Kumar can get the following proceeds from LBS, with funds used to top up his and his wife Retirement Account (RA) to their respective Retirement Sum (RS) requirement.
Kumar can then withdraw in cash the amount in excess of the RS requirement.



Recommended Read: Why are there 2 Schemes to Top Up CPF?

Can I get SHB after I joined the LBS?

From what we read on their FAQ site, it is 'NO'.
But, there is some ambiguity in how they phrased the answer in the FAQ.
So to save you the trouble, we have asked HDB on your behalf and we will post the answer here once they replied us 😉

Conclusion
Plan your moves wisely!
Since you can only get either an SHB bonus or an LBS bonus, make sure you think carefully which one gives you the most amount of bonus dollars!
Next, since you can start with SHB then LBS, but not LBS then SHB, be careful and don't rush into LBS!



WSG can provide you with a career coach that is able to help you with that. 
And if you are looking for a free career coach, visit Workforce Singapore via the link below.
They can link you up with the career coach and you 
might be able to find new opportunities on their jobs portal.


Happy Lunar New Year!
As we progress towards the next phase of our journey, we would like to find out what would make you like us even more.
So we hope you could help us fill in a short survey of 8 questions (4 of them are MCQs) so that we can help better tailor our content to you.
Survey

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Monday, 24 February 2020

Why are there 2 Schemes to Top Up CPF?



If you are an employee, this is for you!
There are 2 CPF schemes for you to voluntarily top up money to your CPF account.
They are the 'Retirement Sum Top Up Scheme' and the 'Voluntary Contribution Scheme'.
So what's the difference?
Because there was limited information on the 2 schemes online, we emailed CPF Board to clarify the difference between them.
The difference was not very obviously shown on the CPF website.
As such, we have dedicated this post for it.

Topic
Retirement Sum Top Up Scheme
Voluntary Contribution Scheme
$ Goes To
   Special Account (age less than 55)   
   Retirement Account (age 55 and above)   
   Ordinary, Special & Medisave Account*   
Uses
   Retirement only. 
   Funds cannot be used
for investments etc   
   Funds can be used for other CPF schemes   
Tax
   Contributions are tax-deductible   
   #Non-tax deductible except if all
contributions go into Medisave Account   
Interest
   SA 4%   
   OA 2.5%, SA & MA 4%   
   Contribution   
   Via Cash or CPF transfer**   
   Via Cash   
   Contribution Limit   
   Until you reach your minimum sum or
your NOKs reach theirs'   
   Annual CPF contribution Limit or
Medisave Contribution Ceiling   

Recommended Read: Can I Use CPF to Buy a House After 55 Years Old?

*Money goes into OA, SA & MA based on a fixed percentage that is determined by your age.
There is a Voluntary Contribution Calculator on the CPF website.
However, we have done the work for you, and the contribution rates are posted HERE

#There are 2 voluntary schemes, one is fixed contributions to 3 CPF Accounts (OA, SA & MA), which are non-tax deductible. Another is where all contributions go into your MA, which is tax-deductible.
However, if you are self-employed, there are other tax-related exemptions for you that are beyond the scope of this post.

**You may transfer your excess CPF funds to your next-of-kin if you have met the current prevailing Retirement Sum (RS) if you are aged below 55.
If you are age above 55, you may transfer your excess CPF funds above your RS to your next-of-kin's CPF.
Next-of-kin are parents, spouse, siblings, grandparents, parents-in-law, & grandparents-in-law.

Dear Reader!
As we progress towards the next phase of our journey, we would like to find out what would make you like us even more.
So we hope you could help us fill in a short survey of 8 questions (4 of them are MCQs) so that we can help better tailor our content to you.
Survey


WSG can provide you with a career coach that is able to help you with that. 
And if you are looking for a free career coach, visit Workforce Singapore via the link below.
They can link you up with the career coach and you 
might be able to find new opportunities on their jobs portal.
Link me up with a coach


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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Friday, 14 February 2020

Is Greta Thunberg Overrated?


I would like to share a perspective after seeing people bashing one environmentalist over another, pitting one against another as if the environmentalists are in some sort of competition against each other.
Except they are not, they are fighting for the same cause: to get people to start acting responsibly for the world.

NARRATIVE PERSPECTIVE:
A tap is running, the sink is overflowed and water is spilling onto the floor.
You got 2 children both of which cannot reach for the tap to stop the water from flowing out.
Your older son took a mop and start mopping the floor dry while the water continues to overflow.
Your younger daughter went to call you up from your bed to come and close the tap.

Do you find your son more useful than your daughter?
Or do you find both of them are actually trying to get something done and you as the parent should f**king wake up your idea and turn off the bloody tap?
Source: Reddit

Pitting of Environmentalists
So instead of pitting one against another, maybe we should wake up our idea, and start doing something for the environment.
Don't pit one environmentalist against the other as your justification to not do anything about the environment.
We use 1.76 billion plastic items in 2018.
473 million of them are disposable plastic items like takeaway containers and cutleries, equivalent to 432,000 people throwing away a food container, a spoon, and a fork, every day!
Maybe, just maybe, if we all just brought a fork and spoon to work and not use the disposable plastic fork and spoon for our lunch, we reduce 2 plastic per person per day, we can make the planet better for our future generations.

Source: The Kritic

"Our plastic are burnt in our incinerators, so there are no turtles being poked by our plastic."
That seems to be the only thing people in Singapore can say.
"I throw my plastic trash into the trash bin/recycling bin, I am therefore a responsible plastic user and a recycler."
Except, things don't work that way.
Less than 20% of our plastics are recycled - most of them are shipped to Third World countries and causing health problem for their people.
Even if we recycle our plastic, these plastic do not bio-decompose; instead, they break down into smaller pieces call 'micro-plastic', and it has been found that we eat about 1 credit card size worth of micro-plastic every week.
Plastic is not a climate problem, it is a waste problem.
Yes, we have the technology to burn it and capture most of the harmful pollutants it releases
We are still releasing a lot of harmful pollutants that we can't capture into the environment, and that will only grow as we continue to use more plastic in our daily lives.
At the rate that we are going, we are going to fill Semakau landfill by 2035, and then what do we do with our trash?
Will we be able to keep finding wasteland to pile up our trash in land-constrained Singapore?

Recommended Read: The HDB Pricing Dilemma


"I just cannot live without plastic, I need plastic bags for my trash, straws to drink my BBT..."
IT IS NOT "ALL IN OR NOTHING"
I have spoken to many people about going green.
I've tried going green - I tried to use less plastic, use reusable food containers for takeout, use bottles/tumbler for takeaway drinks, take more public transport, etc.
Nonetheless, I still use plastic - the candies I eat are wrapped in a wrapper, the ice cream I eat still comes in a plastic container, the food delivery I ordered came in plastic bags, and I still fly around and travel.

People seem to think that if someone is going green,
they must do the following:
1. Use ZERO plastic (no disposables, no plastic bags, etc)
2. Don't fly or travel
3. Don't eat meat
4. Generate minimum waste
You are either environmentally-friendly or not environmentally-friendly, you can't be in between.

Not going to deny, there are those who do live their lives that way, but most environmentalists don't.
Think of it as a spectrum.
On one end, it's the person that uses only disposable items, drives diesel cars, meat-only, and generates tonnes of wastage - 10 tissues to clean 1 mouth. Let's say this is 0 marks.
On the other end, it's the person that uses zero plastic, flies when necessary, vegan, generates waste that fits inside a jar. Let's say this is 100 marks (full marks).
Most of us are in between, we use plastic, eat meat, travels, and generates a decent amount of waste, but we also use cups and plates (at home), take public transport, and turn off lights when not in use.
The goal here is to be as close as we can to the full marks, or a nice 70 marks would work too.
Most of us probably fail - I don't have a matrix for this but if you do food takeout daily (food or drinks, especially coffee and lunch), you probably failed.
Think about it, 1 plastic container, 1 plastic bag, 1 plastic spoon and fork, 1 plastic cup (paper cups are actually just as bad as plastic - surprised?), all used and thrown after about 1 hour of use.
If you go to work 200/365 days, you generated 200 sets of the above combination. That's a lot.

But, we can always improve to a pass.
1. Bring your own food container to put takeaway food (can save $0.20 container money).
2. Bring your own bottle to put takeaway drinks.
3. Turn your air-con to fan mode after a couple of hours
4. Sleep early (if you don't use lights at night, you don't create emissions 😜)

Recommended Read: CPF LIFE in the Year 2020

"Using non-disposable items also waste water"
Yup, I know, I heard people say "but if I wash it, it wastes water. Isn't it just as bad?"
Well, at home you use non-disposable cups, plates, and cutleries, right?
I don't see you saying you are wasting water using these non-disposable options.
That aside, we have a NEWater plant, we have developed ways to clean water so that they can be reused.
I haven't heard we have developed anything to biodegrade plastic harmlessly or reuse disposable plastics.

Conclusion
We have gotten used to our lives that we cannot revert back already.
It is almost impossible now to work without air-conditioning or to expect us to not travel as the world gets more interconnected.
But what we can do, is to use renewable and sustainable alternatives.
Use renewable energy instead of coal, generate less waste, push for greener materials in buildings, push for more energy-efficient transportation, etc.



WSG can provide you with a career coach that is able to help you with that. 
And if you are looking for a free career coach, visit Workforce Singapore via the link below.
They can link you up with the career coach and you 
might be able to find new opportunities on their jobs portal.


Happy Lunar New Year!
As we progress towards the next phase of our journey, we would like to find out what would make you like us even more.
So we hope you could help us fill in a short survey of 8 questions (4 of them are MCQs) so that we can help better tailor our content to you.
Survey

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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Friday, 31 January 2020

Can I Use CPF to Buy a House After 55 Years Old?



Today's post will be on: Buying a House using your CPF after age 55.
This is part of the chain of housing-related posts.
We have the misconception that upon reaching age 55 if we sold our house, the money we get from it will be transferred to our Retirement Account (RA) until the Retirement Sum (or Minimum Sum) is met.

We would like to share today that, you can actually use the money in excess of half your applicable Retirement Sum to buy your next house if you are age above 55.

Example:
You are 54, you recently sold your house, and your applicable Retirement Sum is $155,000.
If you wish to buy a new house, you can withdraw the amount in excess of half your Retirement Sum ($90,500) to pay for your house.
However, let's say you do not meet your Retirement Sum (you only have $130,000).
Then you can withdraw the amount in excess of half your Retirement Sum ($90,500), meaning that you can withdraw ($130,000 - $90,500 = $39,500) to partially finance your new home.

Recommended Read: The HDB Pricing Dilemma

However, this usage of your Retirement Sum to finance your new home is not an automatic option.
You would need to make a request to CPF to allow you to reserve a portion of your OA to not transfer to your RA.
The instruction on how to do it can be found here.

For more information on this, you may visit CPF's website, or more simply email/comment us with your questions and we will do our best to find you the answers.

Happy Lunar New Year!
As we progress towards the next phase of our journey, we would like to find out what would make you like us even more.
So we hope you could help us fill in a short survey of 8 questions (4 of them are MCQs) so that we can help better tailor our content to you.

And for helping us help you, we are going to have a lucky draw.
5 lucky readers who fill in the survey will be selected at random to win $5 Grab voucher.
Survey


WSG can provide you with a career coach that is able to help you with that. 
And if you are looking for a free career coach, visit Workforce Singapore via the link below.
They can link you up with the career coach and you 
might be able to find new opportunities on their jobs portal.
Link me up with a coach


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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Thursday, 30 January 2020

The HDB Pricing Dilemma


As for if it is a problem of cooling measure of economic failure, I would say it's probably neither, but it's the social phenomenon in modern societies - we technically see it in most asset classes like stocks and bonds too.

HDB Problem:
The older generation (those with HDBs) or any sellers would love the prices to be high so that they can sell it for a profit and have a comfortable retirement egg nest.
The younger generation (those buying BTOs and resale) or any buyers would love the prices to be low so that they don't have to pay as much for a home (lower debt burden).
It's a struggle (or tug-a-war) between people of different generations and it is tough to say which side should get more help.

Help the Buyers of Houses?:
Sell BTO at the cost of construction to buyers
Buyers can buy cheaper BTO flats.
After the 5 years minimum occupancy period (MOP), these buyers can sell their flats in the resale market.
That will probably result in a drop in HDB resale prices on a whole (you as a buyer would not pay a huge premium for a resale flat if you knew it was sold initially at cost price).
The result is people who previously bought a flat before the drop in resale prices (ex-buyers who bought at a high price) will now be underwater (loan amount > HDB value).
It is also possible that these ex-buyers are retirees relying on their flats for retirement income, and suddenly the drop in the value of their flats might affect their ability to retire.
Qn: Do you want to give subsidies to those homeowners who are underwater to compensate them on their losses?
Let us know in the comments below.

Help the Sellers of Houses?:
Sell BTO at marked-to-market prices to buyers
Buyers buy more expensive flats.
Initial buyers are given subsidies to afford the high cost of homeownership.
After the 5 years MOP, these buyers can sell their flats in the resale market.
Flat prices in the resale market will probably remain high.
Sellers can sell at even higher prices in the resale market.
Qn: Do you want to give subsidies to the new home buyers to help them afford their first home and make homeownership a reality for them?
Let us know in the comments below.


Our View:
Housing is a sensitive issue that requires delicate handling and balancing of the interest of both the buyers and sellers.
We think the Singapore Government did manage to solve this pretty well with all the grants being given out to the younger generation to ensure they can buy a home.
It is more important to ensure that homes in Singapore are kept at a fair value so that it does not disadvantage the older or younger generation too much.
So some form of cooling measures and some form of grants would be needed.
That's not to say that what we have now is perfect - there is always room for improvements.
What are some improvements can you think of?
Let us know in the comments below 😉.

Also, because of the need to balance between buyers and sellers, we think that HDBs are not really a great investment - because the Singapore Government has to keep it at a fair value, which means there is kind of a "cap" on how high prices can go.
That is also why we prefer stocks over HDBs, as we had previously written in an article.
Link here: 3 Reasons Stocks are Better than 99 Year HDB

Happy Lunar New Year!
As we progress towards the next phase of our journey, we would like to find out what would make you like us even more.
So we hope you could help us fill in a short survey of 8 questions (4 of them are MCQs) so that we can help better tailor our content to you.

And for helping us help you, we are going to have a lucky draw.
5 lucky readers who fill in the survey will be selected at random to win $5 Grab voucher.
Survey

WSG can provide you with a career coach that is able to help you with that. 
And if you are looking for a free career coach, visit Workforce Singapore via the link below.
They can link you up with the career coach and you 
might be able to find new opportunities on their jobs portal.

Recommended Read: CPF LIFE in the Year 2020

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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Wednesday, 29 January 2020

What Happens to the CPF Accrued Interest when the Owner Dies?

Today we will be answering this question: What happens to the CPF accrued interest when the Owner of the HDB passed away?
This question was submitted by one of our readers.
We would like to thank all our readers who post questions or tips to us.
We would love to see more of that coming in, so do feel free to keep sending us these messages!
You can contact us via email (investmentstab@gmail.com), comment on our blog, or drop us a message via Facebook or Instagram.

Answer:
If the owner of the house dies, the accrued interest is waived.
Think of accrued interest as something the owner needs to return into their CPF account in order to ensure that they have sufficient money for their retirement.
The accrued interest is technically taken out of their profit from the sale of their flats.
If the owner passed away, there is no need to plan for their retirement, and hence the accrued interest is cancelled.
The new owner(s) of the house will now be able to sell the house without the need to pay back any money into CPF.

Recommended Read: $20,000 Silver Housing Bonus: Should You Apply For It?

Side Note:
The paying back of the accrued interest is to ensure that your "retirement egg nest" is not reduced because of the act of taking money out to buy a home.
And that accrued interest in a way would be funded by the profits (if any) from your home sale.
Even if the sale of the home results in a loss, technically the accrued interest would not affect you much because we technically never have to pay it back anyway.
The accrued interest would keep accumulating in this case, but we technically will never have to pay it back until we buy another home, sell it again, and make profits on it.


Happy Lunar New Year!
As we progress towards the next phase of our journey, we would like to find out what would make you like us even more.
So we hope you could help us fill in a short survey of 8 questions (4 of them are MCQs) so that we can help better tailor our content to you.

And for helping us help you, we are going to have a lucky draw.
5 lucky readers who fill in the survey will be selected at random to win $5 Grab voucher.
Survey

WSG can provide you with a career coach that is able to help you with that. 
And if you are looking for a free career coach, visit Workforce Singapore via the link below.
They can link you up with the career coach and you 
might be able to find new opportunities on their jobs portal.
Link me up with a coach


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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Subscribe to our newsletter too in case social media platforms decide to stop showing you our content.

Tuesday, 28 January 2020

$20,000 Silver Housing Bonus: Should You Apply For It?

Source: HDB

Today we will be answering this question: is it advisable to put $60,000 into my Retirement Account (RA) to get the $20,000 Silver Housing Bonus?
This question was submitted by one of our readers.
We would like to thank all our readers who post questions or tips to us.
We would love to see more of that coming in, so do feel free to keep sending us these messages!
You can contact us via email (investmentstab@gmail.com), comment on our blog, or drop us a message via Facebook or Instagram.

Answer:
When it comes to CPF, there is not really a one-size-fits-all solution.
There are some flexibility and restrictions that you will have to consider before making such an important decision.

Assuming you apply for the Silver Housing Bonus
If you sell your home, and your net proceeds from the sale is less than or equal $60,000, immediately all of the proceeds will go into your CPF RA.
Under this scenario, you get only $1 for every $3 you put back into your CPF RA.
Eg; if you put into your RA only $30,000, you only get $10,000 in Silver Housing Bonus instead of $20,000.
If your net proceeds exceed $60,000, the bonus will be capped at $20,000.
Below is an image from HDB on the calculations for SHB
Source: HDB

Recommended Read: 6 things to do with your CNY money

Conclusion
If your goal is to have cash after you downsize your home, then this might not be suitable for you because it is possible for you to end up with no cash if the net proceeds is less than $60,000 (Of course if you managed to exceed your cohort's CPF Retirement Sum after you topped up $60,000 + any SHB to your CPF, you will be able to withdraw the excess. So that's another consideration you can and need to consider).

But if your goal is to ensure you have enough for retirement (in terms of monthly payout from CPF), then SHB is a pretty good option for you because, by downsizing, you get an extra $20,000 from the government to support you during your retirement.
Our motto is always 'Free money just take'; but of course that is after you understand all the conditions attached to it.

So, it really depends on what is the end goal you want (immediate cash or monthly retirement income).
You could discuss further in details with an HDB officer or a financial adviser to assist you in making the decision.
Like we said, there is no one-size-fits-all solution, it really depends on what you want and what your circumstances are.

WSG can provide you with a career coach that is able to help you with that. 
And if you are looking for a free career coach, visit Workforce Singapore via the link below.
They can link you up with the career coach and you 
might be able to find new opportunities on their jobs portal.

Recommended Read: CPF LIFE in the Year 2020

Happy Lunar New Year!
As we progress towards the next phase of our journey, we would like to find out what would make you like us even more.
So we hope you could help us fill in a short survey of 8 questions (4 of them are MCQs) so that we can help better tailor our content to you.

And for helping us help you, we are going to have a lucky draw.
5 lucky readers who fill in the survey will be selected at random to win $5 Grab voucher.
Survey

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!

Follow us on Facebook and Instagram for more timely updates about finance-related articles and memes! 😁
Subscribe to our newsletter too in case social media platforms decide to stop showing you our content.