Money FM 89.3 Show - Seedly

Money FM 89.3 Show

We'll be on a 5-part series on the Money FM 89.3 Show talking about personal finance hacks for young adults in Singapore.

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We're unveiling an Exclusive radio show segment with MONEY FM 89.3

It will happen between 4 September to 2 October 2019.

The best part? We're involving guests who are above Level 8 Top Contributors from our community who are folks like Hariz Arthur Maloy and Junus Eu, who will appear alongside us on the radio show!

It will be conducted by Radio show-host and DJ, Michelle Martin, an 18-year veteran of the media industry. Michelle is the drive-time host on MONEY FM 89.3.

Here's the schedule:

  • 4 Sept 2019, Wed 10am: What you need to know about choosing your energy provider to save monthly (feat. Yeap Ming Feng, Content Head at Seedly)
  • 11 Sept 2019, Wed 10am: Hacks to maximise your CPF (feat. Hariz Arthur Maloy, Top Contributor at Seedly and FA)
  • 18 Sept 2019, Wed 10am: Personal finance 101 for Millennial young working adults (feat. Chew Tee Ming, Co-Founder, Product at Seedly)
  • 25 Sept 2019, Wed 10am: How to know when you should start investing and how to start with your first $5,000? (feat. Junus Eu, Top Contributor at Seedly and Entrepreneur)
  • 2 Oct 2019, Wed 10am: Planning your retirement blueprint at 30,40,50 (feat. TBC)

We'll be covering topics surrounding Savings, CPF, basics into budgeting, cashflow, and of course planning towards retirement, investments and basic portfolio construction tips!

Ask your questions in the QnA section below to have them answered LIVE!

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Money FM 89.3 Show

Savings

Investments

J
Jefremy

()

Level 2. Rookie
Updated 1d ago
Singapore has created safety nets for its most vulnerable citizens. However, the millennial question is still up in the air. The government is reacting with lowering tertiary fees and such. As millennials, we grew up with information at our fingertips and grown to realise the fact that our HDB is not an asset, our CPF is a never-ending chasm that never gets filled and though we love travelling, our pockets are never full enough to go far. We have to learn from our parents' folly of not taking profits. Accept the fact our generation is crushed like the eggs in an egg mayo sandwich and plough through. Save and insure what you can to create a buffer from ruin, get smart about money and invest the rest.

CPF

Money FM 89.3 Show

Savings

Takingstock @
Takingstock @

()

Level 5. Genius
Updated 4d ago
Topping up Medisave gives no tax relief. But if you are concerned about hospital costs n premiums, it could be a good idea. Besides, once Medisave is maxed out vs BHS, any contributions auto-transfer to SA unless your SA is at the level of FRS, it will then flow to OA. One more thing I learned this year, when your Medisave is say maxed out at BHS, and you already have RA account, the interest on Medisave flows to OA. If you have set aside enough, the OA, in this case, becomes like a bank account that always pays 2.5% deposit... Better than SSB and CIMB account!! Just withdraw when you like from OA but I don't think can put back in again. Topping up SA with cash gives up to 7k tax relief for retirement sum top-up. So you pay lesser taxes the following year. If I decide, I would rather go with RSTU to SA and get the tax relief. The reduction in taxes would be used to fund some bill at home or give angpow within the family. BHS is currently 57200 for 2019 and increases by about 3500 each year until you turn 55, and that amount is fixed as the BHS limit for the rest of your life. FRS I believe is 178000 this year, and increases by about 7000 per year. Once your SA reaches FRS, you won't be able to do RSTU anymore, but I believe contributions from employment will not be rejected. I don't think the FRS amount can be fixed. I recall in my conversations at CPF when your Retirement account is opened, then the RA cap is fixed based on when you elect to start the CPF payout. I might be wrong here, but I think payout for my father will auto start when he turns 70 in 3 years. So the FRS for him should be capped at 178000 + 7000x 3. That's how I am interpreting at the moment.

CPF

Money FM 89.3 Show

Savings

An extra 1% interest per annum is currently paid on the first $60,000 of a member’s combined balances (with up to $20,000 from OA). (Quote from CPFB) Hence, extra interest earned is earned on both SA and MA, so as long as you have $40K combined in MA and SA, you'll get an extra 1% on them. There's no need to have $40K specifically in SA, so a 50/50 split will work (i.e. $20K each in SA/MA). The remaining $20K in OA will also earn the 1%, but it is credited to your SA. Beyond those limits, Hariz and Larry have given some options to consider for the excess money. Usually, I don't advise my clients to invest SA, since 4% guaranteed is pretty difficult to beat. I find that I'll have to be getting at least 6-ish percent returns on my SA to have it worthwhile since I'm exposing myself to market risks and volatility.

CPF

Money FM 89.3 Show

Savings

Retirement

No right or wrong answer, but I do advocate ERS if there is sufficient liquidity elsewhere. For example, if you have something like $1 million in liquid assets, increasing your SA to ERS will only require $88K if you are 55 this year, which is a mere 8.8% of your asset base. The trade-off is that it is a one-way thing, so you will only receive the money back in the form of CPF Life payouts. However, a guaranteed life annuity with this kind of payouts backed by an AAA-rated government is practically impossible to find, so it is a trade-off between having control of how you generate income from your assets or relinquishing part of the control to CPF. I often find that if one has easy access to liquid funds, they usually don't last very long since we tend to under estimate our spending patterns. Consider your risk appetite, existing income assets, and ability to manage your investments before taking any action.

CPF

Money FM 89.3 Show

Savings

Hariz has given an excellent answer, but just to add on here: 1. The best time to contribute is at the start of the year. CPF interest is calculated monthly, but credited and compounded annually in December. So $7K contributed in early Jan earns $280 more compared to $7K contributed at the end of Dec. I experimented with this myself and although I can't get the exact figure, contributing earlier seems to result in a little more interest. 2. The faster you hit FRS, the faster you can let compound interest take care of the increase in FRS sum that occurs every year. 3. The tax savings from the contribution can be quite decent. More tax savings = more money for investing. Over time, this builds up.

CPF

Money FM 89.3 Show

Savings

The advantage would simply be the accelerated impact of compounding in SA. I sometimes wish I had done that earlier in my 20s, as 10 years does make a difference. (In my case, I would probably have around 50K more in SA by now if I transferred every cent during the first 2 years of my work) It will help you get to FRS faster, and you will worry less about the FRS going up year on year. If your sum in SA is sufficient, the interest alone will negate the yearly increase in SA, and help build your retirement safety net. Having said that, it is a one-way thing, so you will have lesser CPF OA funds available for housing, education and the like. You will have to weigh your options based on where you are in life now. However, I do advocate leaving at least $20K in OA as that earns 3.5% interest, which is not too far off from 4%, but still gives you the flexibility to utilize for housing payments, etc.

CPF

Money FM 89.3 Show

Savings

Retirement

Family

Ahh one of my favourite topics I cover with my clients in single-income households. First the math. Statistically, females marry a man 2-4 years their senior. And men on average die 4 years earlier than females do. So there’s a big possibility that a wife may have to spend 8 years of her life without her husband (sounds like a good thing, right ladies). Ok jokes aside, why is this important? Usually, females are the non employed spouse in the household. And CPF Life payouts are tied to only one CPF Member. There’s no joint account here. That means if only the husband gets the payout, and he dies 8 years earlier than his wife, his wife will not have a stream of income to depend on from CPF if she doesn’t have her own payouts. There are 2 ways to top up your spouse’s account. One would be by cash. And the other by transferring one RA balance to the other. The limit here is up to the Basic Retirement Sum of the year. Example: Husband has 200k in RA. Wife has 50k. He can choose to transfer 112k maximum from his account to hers. Leaving him with the BRS and potentially a higher amount for her. Is this enough, probably not, so for men with a non-working spouse, make sure you top up her CPF account and also plan above and beyond CPF Life. I recommend complementing it with another lifetime retirement or annuity product for both of you.

CPF

Money FM 89.3 Show

Savings

Family

Yes, firstly the $14k is divided into $7k for your own personal top-ups and another $7k for loved ones. The thing to take note here is that the tax relief for topping up your spouse/sibling’s account will only be given to you if their annual income is less than $4000/yr. So this usually is applicable to a single income household. Oh and topping up for your parent’s if they’re above the age of 55 also has another caveat. You can only claim tax relief up to the difference between the current Full Retirement Sum and their current balance in the Retirement Account. For example, this year’s FRS is 176k, and your parents have 170k, you can top up 7000 but only 6000 is given as tax relief. This also means any top-up above FRS will not be eligible for tax relief. So if you’re only doing this solely for the tax relief, then you have to choose! :P

CPF

Money FM 89.3 Show

Savings

There are 2 things to look at here. 1) Accrued Interest on CPF OA monies 2) Opportunity Cost (both ways) Firstly, understanding the accrued interest rule. When you withdraw your CPF OA money to pay for your home, you have to return that money to your OA account with interest upon the sale of your home. Why? Because, if the money was left there unused, it would have earned a 2.5% interest. Now since it's not there, you have to take over and pay that interest back to yourself. However, if you're planning to immediately purchase another flat right after, you can then use that refunded money again. So that's not that big of an issue. Secondly, the opportunity cost. If you believe you can earn a potentially higher return above 2.5% p.a with your cash savings, it might be better to invest your cash and pay your mortgage with CPF. If you aren't an investor and want to take the guaranteed 2.5% return, pay with cash and stock up and compound your CPF OA money. Paying with cash also would mean that if one day, you are unable to continue paying with cash, you can always switch to using your OA instead.

CPF

Money FM 89.3 Show

Savings

Some of the common misconceptions are: 1) You can only use CPF for retirement. 2) You can only touch the money at 55 or 65. 3) You only need to worry about it when you're old. First of all, all the above are not true. You can use your CPF savings for housing, child's education, investment, healthcare, and finally retirement. Many Singaporeans are already tapping on their CPF the moment they pay for the downpayment on their flat and then servicing their mortgage payments. My mom even used hers to pay for the Home Improvement Programme our house had about a year ago or so. So this also debunks the second misconception, you can start using your CPF actually from day 1! By paying for your Medishield Life premiums and then your Integrated Shield Plan premiums, you're already using your Medisave balances which is part of your CPF. And the last point is that if you only start worrying when you're old. It's too late. 37% of your income goes to CPF, it's your money, and you should learn how to make it work best for you. With regards to mistruths or half-truths, it's always good to check with the official source like CPF's Website and their subsidiary websites like AreYouReady.sg. Don't easily believe what you see online and always fact check and clarify with CPF.
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