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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. I will be penning some of my thoughts and knowledge at the blog below.

Takingstock @

About

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. I will be penning some of my thoughts and knowledge at the blog below.

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Takingstock @

  • Answers (166)
  • Questions (8)
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Investments

Personal Finance 101

For those that are investing already and have multiple stocks, what are your thoughts about using excel to track your stocks?
Takingstock @
Takingstock @
Level 6. Master
Answered 1d ago
Use stocks cafe instead. The app pulls daily prices, and does the tracking for you. You only need to input the buy / sell prices. If you are serious about tracking performance, you should input any additional / recurring fees like custodian fees.
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In the News

Career

Salary

Is minimum wage really a bad idea?
Takingstock @
Takingstock @
Level 6. Master
Answered 4d ago
Minimum wage is bad because... Once you set minimum wage, the salaries of more jobs will be set to the minimum wage, instead of market. Companies will be focusing on asking why your job shouldn't be at minimum wage. So while you are pushing the bar up for the people at the bottom, you are also simultaneously pushing a lot of people down to that bar. Once minimum wage is set, you will see those who are paid at minimum wage struggle with the same pay package year after year, because companies are abiding to the law, and paying the legal minimum - this leads to every employer setting recruitments at this minimum because it is built into everyone's expectations.
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Payments

Lifestyle

Expenses

Savings

What are some interesting money habits you have developed over time?
Takingstock @
Takingstock @
Level 6. Master
Answered 2w ago
Here goes mine... 1) yes to automation, my mantra is as much as possible. I automate transfers of allowance, giro to all the key bills, setup future payment of my credit card bills, and even the savings (to set aside / accrue) into savings goals. So my pay comes in 23rd, between 25th to 28th the monthly transfers of allowances and savings goals are completed etc. Only difference I see against other folks is I don't transfer my savings, but rather only the allowance to my spending account. 2) this year I made a change, instead of a monthly allowance, I have weekly transfers of allowance to my spending account. In addition to addressing spending variances for long / short mths (5 weeks vs 4 weeks), it leaves a higher average balance in the 360 acct to earn interest. 3) I have a weird habit to never keep more than 2 dollars of coins. Partly coz it just doesn't make sense to buy a coin purse, or those clanking sound when you walk. Whenever I have more than 2 dollars of coins, they must be used first in the next purchase, coz it makes sense to have less coins and keep those 2 dollar bills to make your wallet lighter right? 4) my new initiative from 2019 is to set aside an amount for tax relief measures that is based off my incremental tax rate. Cause I realize 15k for SRS and 7k for cpf top-up is siong. But when I set it to be say 11.5% of my taxable salary, the amount makes more sense. So the more I earn, the more relief I do to reduce tax. Don't have to go for maximum. 5) regular savings / BCIP - In the past I would have just set aside the regular monthly amount. Since 2018, I came up with my DCA2 system - in addition to choosing the counter to BCIP into, I adjust the monthly contribution (try to at most twice per year, but this year is special) based on the forward dividend yield - so if the yield goes above 5%, the bcip amount would be like 1k monthly. If the yield is between 3.5 - 5%, then its about 800, if the yield is below 3%, then i set the bcip to 600. 6) SSBs as a way to enhance cash flow / hedge against mortgage loan - I now focus only on SSBs for the mths of Jan / Apr / Jul / Oct. Because few stocks / reits pay dividends in those mths. I have a cash flow drought - to minimize the difference in interest + dividends received monthly, SSBs into these four months will reduce variance in incoming monthly cashflow. The other thing I see is also apply a concept similar to DCA2 system to allot more funds for purchases of SSBs, so that I would end up with a higher average 10 year yield that plays differently to my mortgage which is on 3 mth SIBOR. 7) listen to central banks. Interest rates goes up means need to store more cash and buy higher rate bonds. Interest rates go down means economy no good, more spending required... So you use the cash stored to do purchase assets like bank stocks and reits, so your trade counterparty can utilize the cash proceeds from the sale of stocks / reits to boost consumer spending and stimulate the economy.
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Savings Accounts

Savings

How do you manage your bank accounts? Do you keep your money in one or two accounts or segregate them based on different goals?
Takingstock @
Takingstock @
Level 6. Master
Answered 3w ago
I just have two, ocbc 360 and a Frank account. The savings goal function that ocbc offers is able to offer the functionality of different accounts without actually opening multiple bank accounts. My five saving goals on the 360 (while concentrating the funds to earn the extra interest) 1) reserve 2) investment warchest 3) for top-up cpf / srs 4) rewards (travel, gadgets etc) 5) family reserve / change furniture etc Instead of having multiple bank accounts to store cash, I move my cash out quite often to A) buy dividend paying stocks / reits - my dividend yield is still better than 2% B) buy SSBs coz I still have a tendency to spend if I see too much cash in my bank accounts. Rather store it elsewhere so I got no temptation. C) put towards srs and cpf top-ups (or repay funds used for property).
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Investments

Stocks Discussion

Blue Chips

Online Brokerages

Dividends

Hi, im confused how does OCBC blue chip investment work. Since it's a type of monthly savings plan, does that mean i only earn by dividend from the stocks bought?
Takingstock @
Takingstock @
Level 6. Master
Answered 4w ago
I have been using BCIP since 2016. Technically, for monthly investment of 200, the fees deducted is 5 dollars (there's an additional 37 cents fee for SRS). So for 200, you will get 97 shares, they deduct 5 dollars for fees, and refund 1 dollar to your bank account. The 97 shares are held by ocbc in custody for you. You can perform instructions to sell those shares if you decide to, so that money deducted from your bank account merely goes towards the share purchase under your bcip account. Its pretty visible in the online banking, and they will show your average cost and the latest market value.
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CPF

Retirement

Savings

Does the CPF Matched Retirement Savings Scheme only apply to CPF Life? Or is it also applicable to the Retirement Sum Scheme?
Takingstock @
Takingstock @
Level 6. Master
Answered 4w ago
I think it applies to both, but those who are eligible will be notified by CPF board. The scheme targets only those who are 55-70, and have less than BRS set aside, so these are the folks who will have low cpf payout as it is. I beleve you get 800-1k per mth maximum at the full BRS amount now). The scheme encourages top-ups and the 1 for 1 match to get the higher payout, because you are looking at folks who may have so little in their cpf that they may only be getting less than 100 to 200 monthly payout. Basically the target recipients will be those under Merdaka generation and a little younger than that, as there are a large portion of those folks who had few education, and jobs that may not contribute cpf. If you know of someone who qualifies, then you should consider helping them even if you may not qualify for the tax relief. Any dollar added to their cpf goes a long way for their lives.
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CPF

Insurance

Life Insurance

Do anyone have any idea how is the CPF Life Payout amount computed? I understand there is a CPF Life Estimator available, however it does not explain how the value is derived. Any advice?
Takingstock @
Takingstock @
Level 6. Master
Answered 4w ago
Wow its very technical, and from what I learned myself. Core concepts: A) when you turn 55, your retirement account RA is setup using sums from your OA and SA. The general choices to set aside for the RA are either the BRS, FRS or ERS. B) The amount set aside in RA grows for 10-15 years with a blend of interest rates from 4 to 6% (first 30k at 6%, next 30k at 5%, and remainder at 4%). C) most important assumption to know - the cpf life payout now estimated to pay till age 90 (I think the previous assumption was 95). D) one last variable to take note is when you assume payout happens, it can start when you are 65, or now latest it will start at 70 (cannot be deferred further). If you take all the four points together, what cpf life tries to do is to recalculate how much payment the amount set aside in RA can be paid out to you from the 65-70 (you elected this - point D) to when you turn 90, considering the additional interest paid on the first 60k. Choosing ERS plan further complicates the payout as it adds 2% additional payment each year, so you get paid less in the starting years, but a lot more as time goes by considering 2% yearly increment. Once you gather the answers to the four points, it will just be a maths question..
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Savings

Insurance

Savings Accounts

Investments

I am a 29 year old male who has no financial planning and no insurance. I have bare minimum savings. Where do I begin to save and to grow my money?
Takingstock @
Takingstock @
Level 6. Master
Updated 4w ago
On top of what others suggested, I would advise on the how to trim expenses / save money to start your journey (a) track your last three month expenses and group them to find out how you are spending your money. I do something like Apr Bank start balance + salary - allowances - other expense = Apr Bank ending balance. Most online banking functions already have some feature that allows you to analyze the cash flows in / out of your bank account or credit card. The thing is when you start, you may find a lot of incomplete information like a few atm withdrawals that you would have to try to recall what you spent it on. For time being, just make it into a generic group first, and also why I suggest three months for starters. (b) one way to control your spending and the unknown cash spends is to pay yourself an allowance. I have my salary going to ocbc 360 account, and then I do weekly transfer of my allowance to my other ocbc account that I withdraw cash from. This leaves majority of the salary in the 360 account for the regular bills etc while I have a pre-determined allowance I can spend that is known. (c) you need to figure out from (a) and (b) where most of your money is spent. Different people have different poisons, eg some people have a daily bubble tea / Starbucks that may cost them 100+ per mth, some do a lot of online shopping, some buy too many 4d/toto, some spend it on maintaining their cars, some take expensive holidays, some spend too much on the kids. Everyone spends money but the important point is - we should spend within what we earn, and keep some savings (other than cpf). Since you say you don't have a lot of savings, aim to start small at 10% of your take home pay first, then slowly increase it to maybe 30% or more it should be more than 30% coz when this portion should form your savings for marriage and home down-payment until u get your house and will use this 30% to pay monthly mortgage - you will need time to adjust to spending less. There are a few threads on how to save money, but it's the mindset change that matters. Instead of saying "I have no life after I cut my expenses", you should see it as I only have this much for spending and I would want to spend on this and that item that matters to me . - one tell tale sign of a spending problem is when you need to buy containers or furniture to store "something". That something is your own poison, that you need to set a maximum spend per year cap on, if not you will just keep buying and buying even when you have lots of it. (d) after going through the expenses you will cut, this forms the savings and budget that you will use to fund the necessary insurance and savings / investment. If you have credit card, or some cash loan, study loan etc, I would suggest you pay that off first before considering investment. Take small steps and set small targets first like 5%, then increase to 10%, then 15%. Once you see your bank balance slowly grow, you know you are on the right track.
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CPF

Savings

Is it true that amount top up to CPF cannot be withdrawn?
Takingstock @
Takingstock @
Level 6. Master
Updated on 13 Jul 2020
To answer your question, Yes, its true, but I think you are not taking it from the right perspective. Let's use an example If we go with the current sum of 181k for FRS in 2020, and you do RSTU / OA transfer of say 100k, and the cumulative interest earned is 30k, then OA balance at 55 = 15k SA balance at 55 = 200k Total reserved amount in SA = 100k + 30k = 130k You elect FRS which is 181k. To form the RA account, they will deduct the 130k reserved amount first, then deduct another 51k from SA to form the 181k. After the deductions, Available remaining for withdrawal anytime: OA account = 15k SA account = 200k - 181k = 19k. You will need to choose either the BRS / FRS / ERS when you turn 65-70 and elect when to start cpf life payout. It is an eventuality, and frankly, the cpf system is already primed that you cannot do further top-up or OA transfer once your SA balance hits the FRS amount, so you can NEVER EVER top-up or transfer more than the FRS amount. I just think its not enough to be a concern, but I guess too many people freak out when they see this whole warning that you can't take it out. edit the only scenario that I can think of a valid concern is when your reserved amount is more than FRS amount, but you want to elect only to go with BRS amount. in that scenario, I think you don't have a choice... You can only choose FRS or ERS but frankly I can't see why you would be worse off
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Supplementary Retirement Scheme (SRS)

Retirement

Savings

What are the benefits of SRS? I'm finding a lot of cons, not a lot of pros. Any advice?
Takingstock @
Takingstock @
Level 6. Master
Updated on 28 Jun 2020
It's a tax deferral scheme and is more beneficial to high income earners by granting tax relief which lowers the income tax they have to pay. I came up with my own guidelines sometime last year, which is to use my incremental tax rate x annual income to determine the amount to set aside for tax relief. Example say Benny earns 7k salary per mth, 12 mth + 13 mth bonus = 91k. After deducting the cpf relief, Benny's incremental tax rate is likely to be 7% on chargeable income (between 40-80k). In this case, I would advise Benny to consider doing tax relief of 7% x 91k which is about 6,300. For this amt, it might be better to just set all of the 6,300 in cpf retirement sum top-up (risk free 4% plus no future tax liability). Benny would save 7% of 6300 = 441 on next year income tax bill. Consider Charlie who earns 9k per mth, with 13 mth bonus, annual salary is 117k. Charlie's incremental tax rate is probably 11.5% for chargeable income between 80-120k. So I would recommend doing tax relief of 11.5% x 117k ~ 13.5k. I would further recommend first 7k into cpf retirement sum top-up, and the remaining 6.5k into srs, which allows him to do a regular savings plan of 500 per mth, possibly using those robo advisors doing index investing. Charlie will save 11.5% x 13.5k = 1550 on next year income tax bill. When Charlie reaches 62, assuming Charlie did this over 20 years, and the funds grew 200%. The srs pot would be 6.5k x 20 x 3= 390k. He could withdraw 39k each year and only need to pay tax on half the withdrawals. Assuming tax rates don't change, and he is not working, he only needs to pay less than 350 of income tax on the 39k withdrawal, each year for 10 years. So Charlie would have 1550 x 20 years = 31,000 of tax savings over the 20 years but pay less than 3,500 of taxes between 62 to 72. How would this not be a good deal? Note: the numbers are agar agar, so please don't troll me. =) Note 2: To be fair, the tax savings on the srs contributions would be 11.5% x 6500 x 20 = 14,950. The balance of tax savings would be due to the 7k cpf top-up, which increases your SA and allows you to have more payout from frs without incurring tax.
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