Peep into the 20 year old boy CPF Account - Transfer from OA to SA

It had been some time since I wrote anything about CPF.

It had also been close to a year since I shared my last "peep" into my CPF Accounts. 

Read: Peep into the 19-year-old student CPF Account - Transfer from OA to SA 

I've decided to make it more meaningful this time round aside from sharing the figures alone, and I will briefly write to myself about my feelings, experience, and thoughts towards the process. 

Source: CPF Board - BRS 2016~2020

The CPF scheme is designed and created to help working Singaporeans and PRs to primarily fund their retirement, health care and housing needs.

For every dollar we've earned from our employment, the government and our employer is helping us to contribute and "subsidize" on our costs towards funding for our retirement, healthcare and even getting a house. 

For what it matters, perspective is important. 

I'm sure there's many who view the CPF as a "stupid" system that is siphoning our hard-earned monies and locking them in for years with zero or no chances of recovering them. 




Instead, I'd like to take this opportunity to remind every reader that the monies in our CPF are still our hard-earned money! The CPF is, in fact, a benefit and privilege offered by our local government to help the citizens. 

There is several ways which we will be able to access to our monies, and we must clearly remember what the CPF is here for. 

I'm sure you would have an option to withdraw your monies from your CPF after you've hit 55 years old, should you be able to meet the FRS! 

Okay, I shall not be too talkative now and here are the numbers after 1 year:

When I share my ideas about the CPF system to my peers and colleagues weeks ago and told them about the transfer from my CPF OA-SA account, I was actually mocked and criticize for my stupidity to further lock the funds I have in my CPF account! 

After reading AK's post this morning, I realize that I'm not alone! 

Read: CPF SA time and income lost due to peer pressure

As a reminder, I hope that everyone will be able to clearly understand that the transfer from CPF OA-SA is irreversible. Having that said, please be mindful and not forget your current profile before doing so. 




Should you be needing the funds in your OA for housing needs or so, please do not follow whatever I've written here today.

I'm not trying to advocate for anyone to do what I've done, but to share about my thoughts and sentiments with regards to the CPF transfer. 




Having that said, this is my 3rd full transfer from OA-SA I've done.

The transfer is done in consideration to my current profile and following reasons:

1. I'm 20 years old today, and I'm very certain that I will not be needing the funds in my OA today or in the near upcoming years. 
2. The transfer from OA-SA is done to maximize the interest I'll earn from CPF. As the total figure I have in my SA is below S$40,000, I will be earning a 5% interest for the funds inside today.
3. The transfer is also done so that I will be able to reach FRS as early as possible.

As far as we know, the CPF OA is offering 2.5% interest and the SA is offering 4% interest.

Reaching FRS as early as possible?

The increase in Full Retirement Sum in the recent years from 2014-2020 ranges between 4.74% - 2.84%, with the increase stabilizing in the late 4 years. 

The growth rate on average since 2004-2020 of our FRS stands at 4.88% yearly. With our CPF SA account paying 4% interest to us, we do not need to work that hard to ensure that we will be able to withdraw our funds at 55 years old. 

Assuming that the CPF FRS is set to increase by 3% yearly from 2020 onwards and that I've already attained the Full Retirement Sum, I should be able to rest well with my pillows up high that I will be able to make a withdrawal of any amount I have on top of the FRS from my CPF account when I turn 55 years old. 




In short, the earlier we reach FRS, the lesser work is required on our end. 

The government will be helping us with the workload to ensure that we have enough for our retirement. 

So instead, to dwell on the fact that you've insufficient funds and you're not able to withdraw any monies from the CPF, you could always consider making good use of this scheme!


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Looking Back into One Year Of Blogging

In a blink of an eye, the 53rd birthday of Singapore has came to an end, and so does our public holiday rest. It is already the weekend after our rest.

And in time soon, really soon, I will be conscripted to the National Service and it will be my time to serve the nation.


While I can still vividly remember about a year ago, I started writing on this little space here. 




Time truly flies. 

Do beware as this is probably gonna be a relatively heavy post for the week.

Taking a look back, I can still remember my initial aim of contributing $15/day for the year of 2017 to the newly created investment portfolio of mine, after being humbled of my past.

Read:  
My First Post 
Portfolio - July 2017 

 
Not long after, I became lucky and received a notice on the opportunity for an overseas attachment program and will be heading to Japan for the winter. This opportunity has brought me to penning down several different fun and widen my perspective greatly.

Thinking back, I recall that I do have another post for Sapporo Winter 2017 which still lies in my draft and I'm really guilty that I did not manage to complete it. I guess this is something I will be moving forward to next to share my journey in Sapporo the past winter.




Read:  
An opportunity to Japan
Hakodate, Hokkaido (Autumn 2017)
Self Drive - Niseko (Autumn 2017)
Self Drive - Lake Toya, Onuma Park (Autumn 2017)
Tokyo, Japan (Autumn 2017) 

Shortly after, I've started to read more about the different type of vehicles that can be used in Singapore such as CPF. 

Read: Peep into the 19 year old student's CPF Account - Transfer from OA to SA

In the process, I've also read more about the past financial disasters to understand from more from history. While they are definitely insufficient till I experienced it personally, I don't think I'm considered as an investor still. 

I've read up too on the 2008 Subprime Mortgage Crisis too. However, the post unfortantely is still stucked into drafts as I've yet to complete writing about the crisis, which I guess I will have to do it soon.




Read:
A lookback into 1987 Black Monday
A lookback into 1997 Asian Financial Crisis
A look back into 1986-1991 Japanese Asset Price Bubble
A look back into 2000-2002 Dot Com Bubble 

In between, I managed to understand majority of the investor's fear and evolved into reading and writing a little about the various fallacies of an investor. 

Read:
The trap in stock market
Transaction Cost - Are you trader or an investor



Fortunately or unfortunately, this sparked off another topic as I went into learning how to perform a Technical Analysis, and I'm sure that is not in my field of competence. This event had moved me into being a small trader deep down, venturing into the cryptocurrency market, which I got lucky and managed to profit a little from.

Read: 
A month as a cryptocurrency trader - Results 
Cryptocurrency for Dummy Series (link to other part at the bottom of each post) 

I've also went on to build up more positions with different companies, albeit some of them are not a good call. This had actually allow me to learn more from Mr Market and through the different books and blogs written by wise seniors, I managed to learn a little more on Mr Market. 

 
My portfolio size remains relatively small today still but hopefully with my fingers crossed, I hope that I'll be able to learn more along the way and get myself equipped with more sufficient knowledge. 




Read: 
Accumulating CDG
Portfolio Update - Far East Orchard
Increasing stake in SingTel by 250%
SGR's Analysis

As I'm learning more from Mr Market, I started to learn more to operate my personal finance to which successful companies are doing, hoping that my money will do more work for me. As I'm not a smart person to begin with, I decided to keep in simple and look into various government incentives to help us out like the SSB and deeper into CPF. 

Read:
Singapore Saving Bonds (August) - 1.78%
My 19 Year Old CPF Account - For Millenials and Young Adults
Polytechnic Student with $3.63 as net worth - 1 Year Later
Planning Ourselves and Our Finances 
Controllable VS Uncontrollable Factors 

I've been really lucky for the past year. 

Moving forward, I hope that with fingers crossed, I will be able to learn more from everything that is coming. 

 
With this, I would like to thank all the regular readers for the support as well as the wise advises from seniors and everyone that has left comment on this small space of mine.

Have a great weekend ahead!



You will also be able to look for me on some other platforms:
1. FB Page - The sleepydevil
2. InvestingNote - sleepydevil
3. SGX Cafe - sleepydevil
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My Newly Created SRS Account

To the regular readers of my blog, who might wonder if you've read the title wrongly... 
Yes, you read it right.

As much as I'm looking into different financial product, I'm actually too early for any. 

However, this shouldn't be a factor, restricting me to venture further into the different tools available in the financial world.

With a regular dose of income for the past couple of months, I will be needing another tool to assist me further in this journey. This time round, with the inception of the SRS account.

From: SRS Booklet

While it will only be temporary, I'm sure that if I'm fortunate enough to draw an income over the tax bracket in the future, this account will once again be useful to me.

I'm also pretty certain that those that are aware of the SRS account will be scratching their heads in bewilderment while reading this.

The Supplementary Retirement Scheme (SRS) is a voluntary saving scheme that complements the CPF for our retirement, introduced in 2001 by MOF. There are currently 3 operators for the SRS today - DBS, OCBC and UOB.

For each dollar contributed to the SRS account, this will reduce your income chargable to tax by a dollar. Since 2016, the maximum amount that one will be able to contribute to the SRS account is S$15,300/year.



It is a deferred tax incentive as 50% of your accumulated savings in SRS will not be taxed when you make a withdrawal from the account after the statutory retirement prevailing at the time of your first contribution. 

Example:
Should you be receiving $3,500/month or $42,000 in annual income, you will be receive an income tax of $690. 

However, if you were to contribute $15,300 into the SRS account, your taxable income will then be pushed down to $26,700. With that, your net tax payable will only be $134. 

It surely does lock up your $15,300 till you're 62. But you're paying yourself instead of IRAS and you'll be able to withdraw this amount of monies to you after you've reached 62. 

Upon reaching 62, you will be able to withdraw your SRS funds over a spread of 10 year. The amount withdrawn will then be taken as your income and 50% of it will be taxed.  

However, if we're unemployed at that point of time with a balance of <$200k in our SRS Account. We could technically stretch the withdrawal over 10 years, untaxable as we do not satisfy the minimum income tax bracket. 

To simplify it, all regularly employed individual that draws an income over $1,666.67/month in Singapore will be subjected to income tax. 



The greater your income, the greater your tax. As much as possible, income tax is an expenses and definietly if there is a mean to reduce this expenses here, the more money we will have in our pockets.

In view of that, the SRS account seem to fit into the bill perfectly as long as we are receiving an income that exceeds the tax bracket. 

It always sound better to be paying myself instead of paying IRAS. With SRS, I'm given an option to pay lesser taxes in the future. 

Only if the income tax bracket narrows down or if the rate of chargable income increases very significantly in 42 years time, I will definietly be able to play around a little with the holes theoretically. 

Maybe I will pound on myself too!?



You may wish to refer to the income tax bracket for reference:

For people like me that is lazy... you might wish to download the income tax calculator for YA2018 here from IRAS.

With the inception of my SRS Account, I've made my first contribution of $1 to this account. Given the statutory retirement age today at 62 year old, this will also mean that regardless if the government decided to push the statutory retirement age further, I will not be enrolled into that situation. 

So, even if the retirement age is raised, it will not affect anyone with an SRS account created earlier. 

Having that said, this is another factor which I'm looking at when I've created this account.

While there is a possibilities that the retirement age will be pushed down, I guess I'm fine with the numbers today at 62. 

My newly created SRS Account

The different operators charges differently for the SRS Account and it is important to take a look into it before jumping onto it. 



Below are the link for the SRS Account by different operator and charges:
- DBS Supplementary Retirement Scheme (Fees: Schedule of Charges)
- OCBC Supplementary Retirement Scheme
- UOB Supplementary Retirement Scheme (Fees: Schedule of Charges)

DBS has waived the service charges to the account, while UOB charges $2 per counter/holding quarter. There are also a list of charges that are imposed by UOB/DBS for the SRS account. 

After looking into OCBC SRS and googling for awhile, I was actually a little surprised to find out that there is no charges. Upon knowing so, I went ahead with creating one SRS with OCBC. 



Readers that has a SRS with OCBC, do feel free to comment on any charges that OCBC is imposing.

Creating a SRS account with OCBC is relatively easy for those with an OCBC account and has internet banking access. The account can be easily created from there.

The 2 key highlight for this account is:
- The savings of taxes upon contribution
- The savings of taxes upon withdrawal

Should anyone make a withdrawal from your SRS account before the retirement age, 100% of the sum withdrawn will be subjected to tax and a 5% withdrawal penalty will be imposed unless you're dead, bankrupted or due to medical grounds.



Hence, as a reminder, although the SRS account is a tool that could be used for reducing your income tax expenses and possibly improve your net worth. You should always consider your own position prior to acting. 

Should you have any financial obligations or restricted cash flows, it will not be wise for you to dump and lock up a fraction of your wealth in it. 

It would probably be easier for one to be reminded that the funds you've injected into the SRS account is as good as gone until you're 62 year old.  

The funds in the SRS as the name suggest is to supplement your retirement and not your current expenses. Hence, once again, it's also very important to know yourself and what you're doing. 
 

The SRS Funds can be used to invest in: 
- Buying Shares
- Bonds
- Unit Trusts
- Fixed Deposits
- Insurances



You will not be able to invest in real estates through the funds in your SRS Account and life insurances (except for single premium product

Once again, the monies inside although locked up, they are ultimately your hard-earned monies. We will still have to be responsible for our own monies as nobody elses would be for us.  

Same applies to CPFIS OA/SA Account. All this funds here are still our hard-earned monies. Just because I'm not able to spend it tomorrow or the day after, it does not represent that we should punt with it.

It is still important for us to act diligently on our own monies. 
 
There is many options available around and today, I'm exploring one of them.  



My chargable income for this year, will not be that significant for me to touch on the SRS yet. However, having the SRS account created, I have another avenue to tap on. 

For now, I'll be making use of another favourite platform of mine to assist me. 

Any guesses? :)


You will also be able to look for me on some other platforms:
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2. InvestingNote - sleepydevil
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Portfolio - July 2018

Current Portfolio (31/07/2018)

No.	Counters	No. of Shares	Market Price (SGD)	Total Value (SGD) based on market price	Allocation %
1.	SingTel	1,000	3.21	3,210.00	29.56%
2.	Wilmar Intl	500	3.13	1,565.00	14.41%
3.	Starhill Global REIT	1,700	0.70	1,190.00	10.96%
4.	Far East Orchard	800	1.37	1,096.00	10.09%
5.	AIMS AMP Cap REIT	400	1.41	564.00	5.19%
6.	ComfortDelGro	100	2.35	235.00	2.16%
7.	Singapore Saving Bonds	1	1,000.00	1,000.00	9.21%
8.	Warchest	1	2,000.00	2,000.00	18.42%
	Total SGD:			10,860.00	100.00%

July had been a relatively quiet month to my portfolio here and nothing much have changed, aside that I've injected some cash into my warchest while all else remains equal.

I'm beating myself up a little when my queue at 3.02 for SingTel did not materialize. However, I did not went to chase after the opportunity when this boat at 3.02 left the port. How delicious would it be to receive the 10.7 cents of dividend when buying into SingTel at 3.02 level? It basically translate to an entry price at 2.92.

 

Well. Nonetheless, I still view SingTel today as a pretty undervalued counter and is looking carefully for a chance to add onto my holdings despite SingTel taking up a very big chunk off the pie. This is basically how much confidence I actually had for SingTel.



I mean afterall, I'm receiving my income from them for a couple of months already. So why not, another stream from them as well?

To those which are wondering... Yes, I currently belong to the Infocomm Technology sector.

I'm not suggesting in any way that SingTel is a counter that one should buy, and we should always do our due-dillegences before entering any positions. If we don't take ownership of our monies and take care of them well diligently, no one else will feel the pain to it when we're losing it.



Hence, as a reminder again, it's very important to know ourselves. 



I pretty much enjoy the big fraction that SingTel is currently taking up in my portfolio and would gladly add on to make SingTel one of my strong dividend knights that will provide me with an additional stream of cashflow.

The roller coaster ride by SingTel in the last month had been a really exciting one. But do bear in mind that there could possibly be more coming ahead. So it's never wise to throw everything in regardless of how confident you are.

On a side note, I actually missed out the tasty SSB for August that is offering 1.78% interest for the first year despite blogging about it earlier. I will not write too much about this first, but I am currently preparing to adding a little more into my stock holdings.



Read: Singapore Savings Bond (SSB) - 1.78% (Aug 2018)

I've been trying to increase the portion of my opportunity funds progressively. And I guess I will continue to do so. Having a certain fraction of my portfolio parked there, this has actually caused the performance of the portfolio to be dragged slightly.

It might mean both good and a bad thing. Good for me, if my decision to invest in a certain company goes in the opposite direction. Or bad for me, when it goes in my intended direction. However, I understand pretty much what the funds here are used for. So I'm cool with that.



Today, the opportuinty funds are parked in my CIMB Fast Saver account that is offering a 1% interest for each cents inside. So, I guess it's not that bad aftereall? Some consolation intended.. Haha

Overall Portfolio Performance (as of 31/07/18):
Total (Capital Injection) in 2017 = S$ 6,566.79
Total (Capital Injection) in 2018 = S$ 3,069.79
Total Capital Injection 2017 & 2018 = S$ 9,636.58



Realized P/L = 16.44% or S$ 1,583.79 (Based on total injection)
Unrealized P/L = -3.40% or -S$ 311.77 (Based on total cost for each counter)
Cum. Dividends = S$ 305.67
Realized + Unrealized P/L + Dividends = $ 1,577.69 (16.44% base on cost)


Current Portfolio Value: S$10,860.00 (+7.98% m.o.m due to capital injection, dividends and portfolio performance)



CAGR = 8.53% (Based on start date at 14/02/17) - Days Count: 532
XIRR = 9.06% (This high % you see here is due to the wild card from Crypto in 2017 and relatively short duration)

Do take note that both XIRR and CAGR % is on a relatively high side due to the short duration that I'm in the market. As a reminder, a simple bear market should be sufficient to wipe out all the positivity you see up there.


As the time goes on, the % will be significantly reduced and adjusted based on time.



Current Cash Position (based on Opportunity Funds + SSB) = 27.62%

 

Dividends received in July: $48.00
Total dividends received in 2018: $194.44
Average dividends/month: $16.20


You will also be able to look for me on some other platforms:
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2. InvestingNote - sleepydevil
3. SGX Cafe - sleepydevil
4. You may also subscribe to receive my latest email updates here.