Takingstock @ - Seedly
Takingstock @

I work in accounting and do balance sheets, budgets and cashflow @ work. In my free time, I apply what I learn in school and work to my personal finance and have learned quite a bit over the past 12 years. I feel I have reached a point where it would be really good to share some of the lessons I paid my tuition fees (ie lost $$), so that others could learn and benefit without paying those fees. =) I really think this would be a good way for me to contribute to society and hopefully help a few folks to get through in life.

Takingstock @

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I work in accounting and do balance sheets, budgets and cashflow @ work. In my free time, I apply what I learn in school and work to my personal finance and have learned quite a bit over the past 12 years. I feel I have reached a point where it would be really good to share some of the lessons I paid my tuition fees (ie lost $$), so that others could learn and benefit without paying those fees. =) I really think this would be a good way for me to contribute to society and hopefully help a few folks to get through in life.

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Takingstock @

48Upvotes
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CPF

Takingstock @
Takingstock @
Level 4. Prodigy
Updated 4d ago
Actually how fine and detailed are you into your budgeting for now? I am happy to share my current framework though it is certainly not that perfect - I use excel. a) budget the monthly income, and fixed regular expenses (including loan payments, credit cards, utilities etc) b) budget the monthly allowance and the amounts you give your dependents c) budget out annual expenses so that you can average out a monthly amount to set aside. This includes travel, insurance and certain bills that you may have opted for annual payment, and dental / medical / optical. d) last I set a category for saving. I am at a rather advanced stage now, and yes, its good to make saving for voluntary contribution a separate category. Just to be clear, are you doing voluntary contribution or the minimum sum top up that gives relief? The minimum sum top up goes straight to special account, and you get relief for up to 7k. Voluntary contribution is generally for self employed and gives not much tax relief unless it counts into the cpf relief. There's a difference so you might need some checking. I use the OCBC savings goal to do auto-saving / set aside or accruing for the future expenses. When the bill comes, I release the $$ from the goals to pay for the bills. Its an alternate way for envelope budgeting which is really awesome. My main savings goals are - retrenchment / rainy day / emergency fund. I lump the insurance and some unavoidable bills here together to build the saving altogether. - rewards fund for travel and hp upgrades etc - an angpow fund for giving CNY / father / mother day / xmas fund, and in case for wedding presents - an investment fund - which I am splitting into three, a regular monthly one, a periodic one (sorta for timing the market), and one for cpf + srs. => I used to do it all in one goal, but it keeps me mind focused on only increasing my regular dividends / passive income, and I felt bad for doing the cpf / srs sometimes. I decided doing a split was the better long term way. I just need to work out a good split, then I got my emotions in check.

Insurance

Investments

Savings

Takingstock @
Takingstock @
Level 4. Prodigy
Updated 4d ago
Endowment policies are really one of the worst products out there. But face the facts, the loss usually comes from the entire cost of your first year premiums being pure insurance cost, usually for a coverage that is not meaningful, typically a death coverage, ie you get money if you die. They are heavily sold because insurance agents get a nice commission off your first year premiums. Key question to ask: - how long is the endowment going to run for? - what were you originally planning to save this money for? The money lost is sunk cost. You will never recover the cost of the first / two year premiums that is used to pay commissions and service admin cost for the insurance company that's underwrite and administer the death policy. The only other thing to check is whether the returns are decent, which they will prob give as good as SSB, sometimes worse than SSB. The 3+% and 4+% return marks are illustrative guides and do not mean that the investment returns of the insurer are really that high. They often declare bonuses that are less than these %s, even when they do achieve those level of returns so that they can defer the bonuses guaranteed to you. They call it smoothing in case future years are not so good, but there are no guidelines or rules when they should declare the portion due to you. They probably make it a standard practice to only calculate out and pay the cumulated bonus when the policy matures. If you were in the first few months of policy, it would be a better idea to back out of it and ask for refund. But since you are into your third year, this is rather moot. Take note and bear in mind in future. Endowment policies are one of the worst things ever, to require an insurance cost equal to the first one-two years premiums. Do you have a death coverage policy? If you dont then you can hang on to the policy until you have death coverage from a proper policy. Its not exactly a good situation, as you already went through the two years where the costs are loaded upfront, and your surrender value is a small portion of the premiums paid to date. Technically I dont even know whether they can breakeven, maybe like after 20-25 years. I cancelled my first and only endowment policy at about 15 mths. I cancelled because I meant for the money to be a form of savings, and eventually decided I would be better off using the $$ for premiums to make minimum sum top-ups, get tax relief and earn 4% in SA.

CPF

SeedlyTV EP06

Takingstock @
Takingstock @
Level 4. Prodigy
Updated 3w ago
A little variation off Elijah's reply, with my own perspective now in my third year of pursuing the two. A) cpf sa earns 4%, no matter what. B) the money in SRS has to be invested to show better than probably 0.1% interest. And when it comes to investing, then two things kick in - the transaction fees (there are additional transaction fees for srs investments, small but definitely incremental vs investing in cash), and timing / length of investing. C) putting $$ in either means taking money out from your cash side. The tax relief is real, but it can also be pretty rough if something bad happens (eg retrenchment, or hospital bill) and you can't depend on either to save your most immediate pressing financial concern. D) on timing of withdrawals, srs (if you have the acct now), you can start withdrawing when you reach 62. For cpf on the other hand, assuming no changes, and you already hit FRS by 55, it is very possible you are accessing the "excess returns" as early as 55. E) you dont pay tax on the "excess returns" you withdraw from cpf (above your choice of the brs / frs / ers). 50% of the withdrawal from srs will be taxed. I would think that say if you have 1 million in srs, and start withdrawing 100k at age 62, then 50k is tax free, and you would start paying tax on the next 50k on top of your other taxable income. This is a first world problem though (paying tax is better than being broke). F) From my female colleagues, I learnt they have not much benefits from doing srs as they generally hit the max 80k relief cap from working mothers relief, cpf relief etc. So they probably only need to consider at most the cpf mstu / rstu. I have two rules of my own. 1) if I think I cant beat 4% (use last yr srs portfolio return as reference) I prioritize the cpf top up first. 2) to balance on issue C above (远水救不了近火), and I dont think I earn that much, I finally decided that a healthy amount to put into the reliefs was my annual bonus. Coz I would want cash to deal with the rainy days, even though I would end up paying more tax next year. My tax bracket wasn't that high till I should max out both. I do have a strong feeling that if your incremental tax rate is greater than 15+%, it would probably make sense to max out both (i have not mathematically proven this, its just a hunch).

Investments

Savings

Singapore Saving Bonds (SSB)

Bonds

Takingstock @
Takingstock @
Level 4. Prodigy
Updated 3w ago
If your time frame is only two months, why do you need to consider SSB? Granted the transaction fee is $2, but what you end up getting is 1.68% 2/12 say 10000 = 28. Minus 4 total transaction costs - that's just 24 of interest for 10k of SSB for 2 months... What are your plans for life after marriage? Or at least for financing the wedding? I would suggest - if you don't have a joint account, but am planning to have one in future, go for a high interest rate account like ocbc 360, dbs multiplier or the cimb 1+% one. Have your wedding budget here, then it earns decent interest while your cash is going out bit by bit for the wedding. But this also means opening the discussion on combined finances. When it becomes a common pool, it becomes easier and more transparent about family finances, not his or her money. - or just compare yout current account interest versus any of those suggested earlier. The returns are not that bad compared to the ssb for short term. In my honest opinion, that's a better use of your time and effort.

Investments

Stocks Discussion

STI ETF

ETF

REITs

SeedlyTV EP05

Takingstock @
Takingstock @
Level 4. Prodigy
Updated 3w ago
Short answer - index funds. After thinking about what Warren Buffet taught, a) index funds are low cost and dont erode returns through high fees. b) the index self corrects in the long run. c) the index will always go up in the long run. d) there's no skill or knowledge involved because you are buying the average. So you can't be really doing worse than below average. But what's the catch? 1) in the long run, we are all dead. So dont bother thinking 1-3 years is the long run if that's your timeframe... Its better to think of it in tens of years. 2) the index is effectively an average of the best blue chips in that market. It could be cream of the crop, but its still an average, which could really capture some underperformers, eg HPH trust on the STI. 3) the average and long run might not correspond to your own goals and targets. Eg the sti could still be underperforming in the short run when you want to withdraw it for retirement. Maybe not, but it could. Buying individual counters will take homework, but the reward is you could do better (or worse than average), and it should be more aligned to your risk preference, timing etc. The advantage of reits is really in stable dividend income (which is useful to some, eg in offsetting regular bills and expenses). You probably cant expect it to generate abnormal returns of appreciation. As an analogy, if you are into rpg, the index is like a pre-built team with a mix of tanks (blue chips), healers (reits) and mages / high dps (growth stocks). You dont really get to control the mix. And it might not have the support you need for certain missions. But it would highly likely do better than a team with only tanks, or only healers (who can't really kill the boss), or only high dps (but may not live long enough to deal that much damage). I think for starters, go with index in small manageable pace. Do your self learning in the meantime. Figure out after one to two years if this is what you want or could live with. If you think you can beat the market by then, you could start to customize according to your preference. I myself am an dividend / passive income investor. I focus on generating recurring cashflow that either pay the bills or allow me to save up and buy good blue chip counters when they are on discount. In the long run, I should end up with higher amounts of recurring dividends per year. I don't buy index because I believe I can build a portfolio that has a higher dividend yield compared to the index, I am keeping fees low, and the recurring cashflow helps to buffer through the bad times. I know this is the strategy I want, and I am willing to do the homework to ensure it continues, and try to beat the sti in terms of return.

Lifestyle

Takingstock @
Takingstock @
Level 4. Prodigy
Answered on 10 Jul 2019
Learning to drive is rather cool. I mean the smallest of situations could be driving yourself around on overseas vacations to remote vineyards and whatever. For other more serious stuff, maybe you need to help drive / send a drunk / injured / ill friend or family to home or hospital? Those are rare situations driving might come in somewhat useful? I mean what if there's an upcoming fire / earthquake / typhoon / tsunami about to hit your family, and you couldn't get away coz you can't drive? These things could happen when you are overseas

Credit Card

Takingstock @
Takingstock @
Level 4. Prodigy
Updated on 09 Jul 2019
From what I've been through, I believe you can only apply for debt consolidation when your total credit is equal to 12 months of your salary. I find this to be a stupid rule (for the consumer), but works in favor of the finance companies and banks. And the rates on debt consolidation are pretty good I believe (maybe in the 4-8% per annum range). Having said that, the few key suggestions: 1) find ccs to help you and take the debt counselling. 2) In the interim, you need to sort out the debts and find out which cards / credit lines are charging how much interest per annum. You need to find the lowest (preferably 16% per annum or lower). Clear the minimum payments for each card and 2 days before due date. Before I dash out any further advice, how much credit card / lines debt do you have (in terms of mth of salary)? The right principles would be - stop adding new debt on the credit cards / lines - clear minimum payments and stop late fees for each of them - if there is no additional fees or interest for doing so, use the lower rate credit lines to clear off the more expensive credit cards first. This could bring the debt down to the lowest interest, and one thing about this "self consolidation" is once the debt is concentrated in one place, you have less no. of minimum payments to make, each with its own potential late fee charge, and this will reduce these additional fees. I know this isnt the best advice because credit lines still have like 16+% interest rates (google tells me there are some less than 10% per annum), but its better than 26+% interest on credit cards. The lower rate of interest the better. You may need someone to help you go through and sort out to advice on the best way to bring the debt down, but you definitely need to pay more than minimum sum somehow in order to bring the debt down.

Credit Card

Bank Account

Takingstock @
Takingstock @
Level 4. Prodigy
Updated on 03 Jul 2019
Dont spend for the sake of getting rebate or rewards / miles, but only if there are clear benefits in rearranging your expenses. I long thought it was foolish to spend an additional 200 for one mth, and if I didnt spend that, I wasnt entitled to the bonus interest, which was less than 50. It just made sense to skip the bonus interest. For my own credit card spending, initially I started out small, then racked more and more household bills onto my credit cards, as I do analyze my credit card spend, been using the Money Insights and expense categorization tools to split them out and look for cost reduction opportunities. If I get extra cashback in the interim, why not? But if I decide those expenses should be cut, the rewards shouldnt be a justification for keeping the spend. Note 1: Through the spend analysis, I have since then cut a couple of hundred / maybe 1+k of expenses, scrutinizing over the cable tv / mobile phone / shopping expenses as I set annual targets for cost reduction, amd cut out things we were paying for but not really using. My goals now are more geared to reducing wastage. Note 2: I eventually skipped UOB one card because there were quarters where I spend high in two mths and didnt need to spend so much on the third. It was so agonizing to either ration my expenses (how you split travel or dental costs), or think about spending more to qualify, it was just easier to switch to a card that still gives cashback on variable spending.

Career

Takingstock @
Takingstock @
Level 4. Prodigy
Answered on 02 Jul 2019
I would say its ok, but I would phrase it as what kind of experience / pay grade are they looking for. The background was in 2010 when I left a local company and was looking for another job. One of the recruitment firms asked me to attend an interview (which I was somewhat not keen on). And it turns out the hiring manager's budget was about 20% lower than my expected pay, the location was in changi (i stay jurong), and I was expected to report to folks that might be less experienced than me. It was a horrible matchup. So I do think its a fair question, regardless of what HR thinks. If HR insists on underpaying vs the market, then at least you know what you are getting yourself into. Nowadays a lot of companies want to hire experienced, but pay up to 20+++% less (usually restructuring and adjusting the role to be one to two pay grades lower)

SeedlyTV EP06

CPF

Takingstock @
Takingstock @
Level 4. Prodigy
Updated on 01 Jul 2019
revised answer My first guess is the related to either the database / processing speed, or system limitation. My second guess is maybe keeping interest calculations separate from the transaction balance would make it easier, in case parliament passes something like an incentive to some folks, and have it dated retrospectively, eg from the beginning of the year, even if it was say approved in parliament in april. Tested simulation using my own cpf OA 2015 transactions, and I got an answer that was only 59 cents lower than the interest shown (889.05 vs 889.64) on the 2015 statement. So I found - the good news is the interest is compounded monthly. - the bad news is the interest appears to be possibly calculated on the lowest balance figure of the month The calculation logic I used was - derive full year interest on beginning balance - derive 11/12 annual interest on jan change to balance - derive 10/12 annual interest on feb change to balance.... Etc So hope this answers your question - there is monthly compounding. Also, going by this logic then there might be an unexpected impact between timing of transaction and the amount of interest earned in a year.
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Level 4. Prodigy
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