2. I will not buy an old HDB flat and be stuck there for more than 5 years. Too many horror stories about weird neighbours, loanshark problems, and other stuff.

3. If after getting your place, your fengshui master tells you that the house is not suitable for you, then you are stuck for the minimum 5 years.

4. If you want your kid to get into a good school, it means you can’t move house to be near the 1km. If your kid can’t get into the school beside your place, it means being stuck there for another few years before you can move, and that means additional money on transport, and getting people to take your child to school.

5. If you have to take on a job at the opposite end of Singapore, it means you can’t sell your place and move there to save on travelling. You try telling those people who are out of work. They would rather go without a job than take public transport to wash toilets and see their meager salary be spent on transport and more expensive food in town.

6. Buying an HDB flat either resale or new come with so many restrictions. That includes not being able to buy property overseas. That means you will never be able to ride a property boom.

7. To upgrade to private property means forking out 30% cash and CPF, which means it’s probably at least $300k. Who has so much cash flow if you had already depleted your CPF account trying to pay for your flat?

8. If you want to avoid getting only a 70% loan, it means you will have to sell your house, buy your private property, and then rent and wait a few years before TOP. That means that buying a place at preview prices is out. That also means you can’t take your pick and choose your favourite unit.

9. If you are applying for a new HDB flat, you would have to wait a longer time before you can consider selling your place. It will also mean you don’t have your own place to live in after getting married. If you happen to break off the marriage agreement, tough luck, happy waiting again.

10. It all goes back to the point, why should we be penalized for wanting to buy a new place?

11. If you sell your private property and want to wait to be eligible for hdb concession loans, it is a good long wait. Where are you going to live?

12. That also means if you were retrenched, you can’t afford your private housing, you will face a lot of problem getting help.

13. If after having children, and you really need to get your parents-in-law or parents to live with you, or you move over to live with them, and your 5 year occupation is not up, then you cannot rent it out. That means paying additional money to your parents, and paying for your housing loan, without having any rental income to offset the cost of bringing up children.

14. If you made less than $3000, and qualified for a 3-room flat, and then later on have so many children or your relatives need to live with you, you are stuck with a small place and cannot upgrade to a bigger place.

15. If you are thinking about divorce, then you would be stuck if you don’t want to lose a roof over your head.

16. They tell us to live within our means, but if we want to make sure that we have enough space, that means forking out more money, which would be extremely taxing on our pockets.

17. If you get an overseas posting, you would need to pay rent over there. However, you can’t rent out your place, which means the place is empty, which becomes a liability.

18. Now that people can’t buy another HDB flat or can’t afford another private apartment to spend their extra money, they will start doing stupid investments that they are unfamiliar with, and then get burnt. So I foresee hearing more stories of people being duped by unscrupulous people.

19. If after buying a private property, you realize that there are so many problems with the place, such as extremely poor workmanship and other defects, you would be penalized for selling it too quickly.

20. Those with enough money to buy a HDB flat for investment may turn to mass market private property for investment, which will still put those who can’t qualify for public housing in a position where they can’t afford a single thing as they would push up the prices.

21. I still have lots more grouses but SM Goh says don’t complain so much.

Share This

Anyway, I feel when you have negative views all the time, you will attract negative results. Hence, I decided to think positively, and I got the answer I wanted. I’ll give the go ahead to my father, who was originally very keen just like me, until I did some googling. If he invests in this, he will have a steady source of income until 75 or more. That’s better than the CPF annuities which he will miss getting.

So, what I’m doing here is just to share my research. You should still weigh your own options.  

Share This

How do you know whether you can use your SRS money to buy unit trusts? Make use of free instruments on the Internet. At fundsupermart.com, you can use the fund selector. Just select ‘SRS available’ at the ‘CPF/SRF?’ section. You will find a list of unit trusts that allow you to tap on your SRS funds. If you plan to use your CPF-OA account, you can also do the same thing. Remember that you need to have a minimum sum of $20000 from April onwards, so you may want to use part of it to invest.

Next, to find the best-performing funds, just sort out the list according to the criteria you want. You may sort according to weeks, months or years. After that, just go to your usual online trading platform to execute your trades. Make sure your account details for CPF-OA and SRS are updated at the online platform.

So far, many of the CPF-OA approved funds are not doing as well as the other funds. Hence, do make sure you make your selection carefully. If not, you may be better off putting your money in the CPF account, earning that paltry 2.5%, subject to an additional 1% interest on your first $60000 in the accounts. Only up to $20000 in your CPF-OA will receive that additional 1%. Again, with the high inflation rate, the value of your money has actually decreased. Therefore, to beat the inflation rate, your returns have to be higher.

Once you have selected the option to use your SRS or CPF-OA funds to pay for the unit trusts, you may leave it to the company to contact the agent banks (DBS, OCBC and UOB) for transactions. If your company is a CPFIS-Registered Investment Administrator (IA), then you pay less on your transactions. Remember that you have to pay additional charges on the number of transactions. Hence, you may want to consolidate your transactions to save on charges, if yours is an IA. According to Fundsupermart, it is still cheaper than if you have gone to a non-IA company.

Share This

First of all, on one hand, there is a currency risk. You invest US$10000. Currently, with the weakening of the US currency, you don’t need to fork out that much money compared to 4 years ago. Having said that, if the US currency continues to fall further, which until recently, it was unthinkable that it would breach the US$1=S$1.4 barrier, the returns you get will be lower when it is converted to SGD. If there is a huge drop, then your investment gains will be negated by the losses through foreign exchange.

On the other hand, if the US dollar continues to weaken, then the price of oil will continue to climb, since the value of oil is somewhat stable. Hence, the losses in currency exchange may be covered by the increases in oil prices. The higher the oil prices, the faster you get back your original investment.

Second, there is an environmental risk. If a hurricane strikes your oil field you have a share in, production will be halted. If an earthquake happens, I’m not sure how they can resolve the problem easily. According to the sales rep, payments may stop for a few months, before production continues. This is because the oil company has a 75% share in this, so they cannot afford not to resume production quickly. In addition, since oil is underground, the structures that may be destroyed in a natural disaster will be quickly rebuilt. For other physical risks, such as fires, insurance will cover that.

Third, even though this company has been marketing such oil and gas investments since 2002, little else is known about them. I always have this fear that companies will fail and my money will be gone. That is why whenever I purchase packages for all sorts of beauty-related sessions, I wonder whether my money is safe. Perhaps this risk is always there, and we have to weigh the risks carefully. One good thing is the main company, Powder River, is traded on OTCBB in the US under the symbol PWDR. The only thing I know about OTCBB is that it is for microcaps.

Forth, oil and gas production has its own risks. It might not be that easy to continue production for a long period of time as it may be commercially unviable. If the oil well dries up, then income will fall. Hopefully with 25 fields spread out at different locations, the chances of all of them failing in the short term will be negligible.

Fifth, I can’t find much information from people who have invested with them. The sales rep at the fair showed me his earnings because he also invested with them. However, he has vested interest, so it is hard to say. At least two people with some authority, Mr Tan Kin Lian, and Mr Dennis Wee, had come out to say they will not invest in such schemes. Other people at forums think it might be the making of a Ponzi scheme. When I was listening to the sales rep, he mentioned right from the start that it was not a Ponzi scheme. That means this must have been a concern raised by many would-be investors for him to say that. Basically, it means that money from later subscribers is used to pay the earlier subscribers, instead of real money that is made. This point cannot be substantiated though. There are other threads that discuss Oilpods.

By googling Oilpods, I only come across some consultants that mention similar things that I had mentioned in my earlier posts, but they do not mention the risks. When some consultants who post in forums were questioned by other forum members, they were unable to fully explain. Some people mentioned that there was insider selling, but when I checked, somebody from the company bought the shares twice.

For more news, you can check the press releases over at Yahoo Finance.

Hence, I am still thinking hard whether I should invest in this. Whatever it is, caveat emptor – buyers beware.

Share This

I tried both refunds and non-refunds. The difference isn’t much. It all depends on how much money you have in your minimum sum.

 I tried $100000 as minimum sum. The difference I got was $20+.  

Share This

However, if you can earn more money from unit trusts and stocks, then you should take the money out. Besides, if you are planning to buy a HDB flat, HDB will wipe out all the money in your OA. Hence, to have a buffer when you make your repayments, just in case you are in the midst of changing jobs or taking time off, you will be able to sell your investments and use that money to continue to pay for your flat. This will reduce the possibility of you forking out cash to service your loans, especially when you do not have a job. Even if you have a job, the repayments may be quite high, and when you sell your investments after making money, this sum of money can go towards refinancing your loans and you will pay less interest.

With the new ruling, quickly go and apply for a CPFIS-OA with any of the three banks in Singapore: DBS, UOB and OCBC. There is no difference. What I recommend is just to get the account from them, and then you use your own other trading accounts to make your trades.

While making your trades, take note of the percentage of sales charge. Some of my friends recommended using POEMS for unit trusts, but the lower sales charges (1.5%) only apply to certain unit trusts. The rest cost 2.5%. Fundsupermart still allows me to buy them at 2%. So, just check before making your purchases. Anyway, for those who like getting freebies, by retaining at least $10000 in your Fundsupermart account, you can get a free quarterly magazine from them.

Share This

If you happen to enjoy longevity, the extra money that is payable to you actually comes from other people who passed away before the entire sum is fully paid out. If you want the money unpaid to go to your family members in the event of your death, like some form of insurance, then you will have to pay higher premiums.

All these money will come from the CPF Minimum Sum. You can choose to start receiving payouts from 65, 70, 75, 80, 85 or 90 years all. I am very puzzled about the 90 years old. How many years can this person enjoy before passing away? In addition, the interest earned from the premiums do not seem to be transparent at this stage. With close to 45 years, the interest earned would be huge. This also means that the government can delay paying for a longer period of time. I doubt many will take up the 90 years option. Already, people were complaining about receiving money only after 80 years of age.

I guess the successful retirement plan should include many streams of income after 50. It would be great to come into different sources of money every few years after retirement. In addition, since we cannot predict inflation, the $300 promised to you now may be worth peanuts after another 30 years. They had already said that they could not factor in inflation because the costs would escalate wildly.

In a nutshell, this annuities scheme should be only one small source of income come retirement. Make use of your SRS, CPF, insurance payouts, rental, stocks and royalty payments among others. Include pocket money from children. Train them from young that they need to give you pocket money when they start working.

When do you think you want yours to start? Which one do you want to opt for?

Share This

While the reasons for increasing the Minimum Sum are sound, we should remake our plans for the future. Currently, my endowments payments and my CPF withdrawals are timed in such a way that I would be getting a neat sum of money every few years. With the change in the minimum age, I would require another sum of money of money to come in when I am around 62 and before I reach 65. The SRS will come in useful as you can withdraw money from it over a span of ten years, lasting me until 72.

The Minimum Sum is currently set to increase to $120000, and that is before inflation is taken into account. If we fail to meet the Minimum Sum, that means we can only take out $5000 from our CPF. According to the CPF website, there are three ways to invest this sum. First, we can buy annuities with a participating insurance company. Second we can take the money out and put at a participating bank. Third, we can leave it with CPF and get it after we turn 65.

You may apply for exemption from the Minimum Sum Scheme if you have bought your own life annuity using cash. The monthly payment you receive from the life annuity should be equal or above the Minimum Sum monthly payment.

This is something you can consider by buying your own life annuity.

According to the government, quite a significant number of people live beyond 85 years. The government would look into getting the people buy compulsory annuities. This money would be paid out. Depending on this is not enough for most of us, since with inflation, the amount of money we require post-retirement is even more than now.

Since the boundary for to get our money is constantly being pushed back, we need to have more sources of income. Apart from savings, endowment plans, insurance and other investments are necessary, because we will never know when the government will change the ruling (again). It is wise to receive the money in stages, so that we do not have to worry about running out of money after a certain age. I’ve once read that this lady will have policies maturing every few years all the way until she is 85 years old. That’s some food for thought.
 

Share This

Jeff asks: Hi Sarah, in view of the recent PM’s national day rally speech, any idea if the SRS withdrawal age (i.e. 62yo) will be similarly postponed like the CPF withdrawal ?

Let’s take a look at what PM Lee said first. From CNA,
Legislation
a.             Clear signal to employers and the public that we are serious
b.             Some ask – why not just pass a law to raise the retirement age?
i.               Experience shows this will not solve the problem
ii.             Legal retirement age now 62
(1)          But only 2/3 of men are still working up to 62
(2)          1/3 have stopped earlier, despite legal retirement age
(3)          Many women stop working even earlier
iii.           Simply raising retirement age beyond 62 may discourage employers from hiring older workers
c.             Better approach – legislate for re-employment to continue working beyond 62

Based on information given by MOF regarding SRS, http://www.mof.gov.sg/taxation/withdrawalsrs.html

When can I make a withdrawal from my SRS account?
Anytime. However if you make a withdrawal before the statutory retirement age prevailing at the time of your first contribution, 100% of the sum withdrawn will be subject to tax. A 5% penalty for premature withdrawal will also be imposed.

This means to say that currently, there is no change in the SRS withdrawal age, as the current legal retirement age is 62. Hence, we can withdraw our money at the age of 62 without paying a penalty. To avoid any further changes to the retirement age in the future, we should make our first contribution soon, just in case the government decides to make changes. 

Sarah Tan – SingaporeProfit.com

Share This

Some information required as you use the retirement calculator are your income, current CPF money, property payments, annual expenditure and other investments.

I seriously need to cut down on my expenses and increase my streams of income. I’ve just started rethinking about increasing my streams of income so hopefully it will work out. As for my expenses, I really need to keep a tight rein on where the money is going. I spend too much on clothes, books, courses, beauty, spa and my car.

Share This