Saturday, June 15, 2024

Aged 75 and he has not withdrawn a cent from "CPF" !

My dad is aged 75 this year and he has not withdrawn a cent from EPF but my mum did, she is aged 74. Both are still healthy and able to walk and drive car by themselves. That's very good!

EPF is like Singapore's CPF. He simply does not need to touch the EPF as he has other means of retirement income and EPF gives good interest rate. It was 5.5% last year.

As of today, his EPF balance stands at RM 523,190. Not bad la for a retiree at age 75.

He was a school principal and was asked to retire at age 55.

He has great pension plan. The government gives him RM3,000 a month from age 56 to LIFE.

As he is now aged 75, he had received the monthly pension for 20 years.

RM3,000 x 12 months x 20 years = RM720,000!

I always ask my parents to continue to stay healthy and expect to receive another 20 years of pension!

EPF is one great retirement monthly income indeed, just like CPF LIFE. :)

EPF invested in stocks and the return is pretty good and it's quite transparent too. 

Unlike CPF, they do not disclose what they have invested because they afraid you guys manipulate their stocks. LOL.

Wednesday, June 12, 2024

HDB rental yield now 13.52% !

On May 28th, 2024, my tenants confirmed (through my property agent) that they were not going to renew the rental contract which will end on July 31st, 2024.

On June 10th, 2024, my property agent had found new tenants for me. They will start the tenancy on August 1st, 2024. Perfect. The new monthly rental is S$4,000, an increase of 8.11%. It's a 4-room HDB flat.

On June 13th, 2024, I had received one month faith deposit (security deposit)!

My property agent is simply amazing. 

She always does a good job. I am very happy to pay full commission to her too. :)

From year 2022 to 2024, my rental had increased 86.05%.

Rental yield now is 13.52%.

The new tenants agreed to rent by viewing the video of my unit.

A quick check on the 4-room HDB rental transaction for the past 12 months at Toh Guan HDB estate (Jurong East), filtering the rental from S$3,701 to S$5,000 as my current rental was S$3,700. 

There are 15 units rented out above S$3,700. The highest rental was S$4,600, rented out in July 2023.

The second highest rental was S$4,000 and there are 3x units. 

I will be the 4th unit clocking S$4,000 rental at Toh Guan. Second highest! 

Read also:

Thursday, May 2, 2024

Received 6 months T-bill interest for CPF OA funds (Revision 02)

Revision 02: May 12, 2024

The CPF OA deduction (for T-bill application, Auction Date: May 9, 2024) happened on May 10, 2024.

That brings our total 6-month T-Bill investment to a total of S$547,000 (with cash and CPF OA).

Revision 01: May 2, 2024

We finally received the 6 months T-bill on the maturity date (April 30th, 2024). 

We did CPF refund through internet banking on April 30th and the funds were reflected in our CPF OA account on May 2nd.  

How many months of CPF OA interest loss incurred? 

For me, the most is 1 month for each investment, either in fix deposit or T-bill. See below illustration on my true case.

Firstly, I placed CPF OA in OCBC Fix Deposit for 8 months, 3.88% p.a., effective date on Feb 15, 2023, and maturity date on Oct 16, 2023. Hence, there was 1-month extra CPF OA interest loss (9 months instead of 8 months, counting from February to October).

Thereafter, I placed the CPF OA funds into 6 months T-bill, 3.95% p.a., which started on Oct 31, 2023, until April 30, 2024. I don't count October CPF OA interest loss here as I have counted October interest loss in my previous Fix Deposit placement. Hence, there was 1-month extra CPF OA interest loss (7 months instead of 6 months, counting from November 2023 to May 2024). I counted May 2024 as one month interest loss because the maturity date was on April 30, 2024, and the funds only back to our CPF OA account on May 2, 2024.

I will apply a fresh new 6-months T-bill in May (expected to be at least 3.70% p.a.), which is on May 14, 2024, to maturity date of Nov 12, 2024. Guess what, there will not be any CPF OA interest loss in this 6-months T-bill (6 months counting from June to November, May interest loss had been counted in the previous 6 months T-bill) so long I return the fund back to CPF OA account before November 30th. I have more than enough time to do that, but I will probably pour the funds back to 6-months T-bill again on November 26, 2024. :)

In my above cases, there are maximum 1-month extra CPF OA interest loss or no CPF OA interest loss at all at each investment (be it fix deposit or 6 months T-bill).

So long 6-months T-bill yield stays above 3.00% p.a., just use CPF OA funds to whack it in full to beat the poor 2.50% p.a. CPF OA interest!

I decided to make my figure looks perfectly nice at half a million dollars, S$500,000 by doing VHR (Voluntary Housing Refund).

Nevertheless, I have two more 6 months T-bills maturing on July 23 and Sep 3, 2024.

Not to mention I also have some funds in the SGX stock market using CPF OA (which is not counted in the table below as the value depends on market performance).

In short, we both had reached S$1.057 million mark on May 2nd, 2024.

Once you break S$500K, your CPF balance will shoot up very fast. 
Almost S$100K more every 2 years on each account due to massive compound interest effect.

The message below is from Patrick at "CPF Wealth Tree" Telegram group.

Do take note, for any kind of investment (be it fix deposit or T-bill):

the breakeven yield for OA funds is 2.71% for 1 month loss of interest for 1 year Fix Deposit or 1 year T-bill.

The breakeven yield for OA funds is 2.92% for 2 months loss of interest for 1 year Fix Deposit or 1 year T-bill.

Thursday, April 25, 2024

Additional Wage (AW) Ceiling - CPF contributions for the whole year

It took me a while to recall how to calculate the maximum amount of Additional Wage (AW) subject to CPF contribution for the year. As there are many changes in CPF for the next 3 years, I would like to pen down the information before I forget again.

The CPF Ordinary Wage ceiling had been increased in September 2023 and January 2024.

Hence, the total CPF contribution (37%) had been increased from S$2,220 to S$2,331 and S$2,516. It will continue to increase to S$2,738 in year 2025 and S$2,960 in year 2026. 

CPF Ordinary Wage ceiling is Singapore happy index. So, the new Singapore happy index will be S$8,000 a month. :)

The CPF annual salary ceiling remains unchanged at S$102,000. This is my bet, the CPF annual salary ceiling shall be increased in year 2026, let's see.

For year 2024, if your monthly salary is S$6,800 and above, the CPF system will automatically calculate in the following:

S$6,800 x 12 months = S$81,600

As CPF annual salary ceiling is S$102,000, you left the balance of:

S$102,000 - S$81,600 = S$20,400

The magic number S$20,400 is applicable to every CPF members if you earn monthly S$6,800 and beyond.

As my company always gives bonus in April, the maximum amount of Additional Wage (AW) that will attract CPF contribution will only be S$20,400. That says, even if your bonus is S$30,000 or S$50,000, it will still cap at the maximum CPF contribution at S$20,400.

S$20,400 x 0.37 = S$7,548 (maximum allowed additional wage CPF contribution) 

+ S$6,800 x 0.37 = S$2,516 (maximum allowed monthly CPF contribution)  

= S$10,064 (that's the maximum CPF contribution you see in the bonus month).

Thereafter, your 13th month bonus given in December will not attract any CPF contribution too!

In addition, you have reached the maximum tax relief of S$20,400 under personal reliefs category of Providend Fund/Life Insurance.

Some really useful information for references.

Sunday, February 18, 2024

What is the impact to me for the CPF closure of Special Account (SA) at age 55 ?

My numbers are out.

With CPF Special Account (SA) force closed at the age of 55 and with "no CPF SA shielding", the impact for me would be:

(1) At my age of 65, liquidity dropped S$130K
(from S$1.28 million to S$1.15 million).

(2) At my age of 65, CPF balance dropped S$100K
(from S$1.9 million to S$1.8 million).

Well, we can always use CPF OA to buy DBS, SATS, SIA, Mapletree Industrial Trust or 6-months Singapore T-bill (if the yield is above 3.00%).

I can also draw out the CPF OA monies to help my son to buy private property with no ABSD!

Be water!