A Potential Representation Of Sgrean’s Net Worth By Age And Their Portfolio Breakdown

One of a recent forum posting caught our attention and we thought we wanted to note down here and share with all of you too.

Salary SG has this forum thread called “Whats Your Net Worth” for over a few years now, and apparently people have been sharing their net worth figure, albeit anonymously.

The thread has recently resurfaced after more than half a year of radio silence, and people has been sharing their net worth.

Here are some figures we screenshot from anonymous posters over the past 2 years (2019 – 2020).

Married Couples

From the various sharing, keeping in mind that some of them may not be true since most are from unregistered accounts, it seems like married couples who are well off, do have a high 6 figure net worth to even millionaires!

Most of the couples are holding 6 figures in cash, ranging from S$100,000 to some even more than S$2,000,000 in cash and stocks. Most of those who shared also has holdings in stocks, and has a relatively high figure in their CPF account.

It also seems like for couples in the early 30s, the joint net worth will rise from S$200,000 to S$500,000. After which for those in their 40s, the joint net worth will be anywhere from S$500,000 to S$2,000,000.

Single Profiles

For the profiles who are single, i think realistically when they are 40 years old, after working for almost 20 years, they should have around S$500,000 to S$1,000,000 if they are financially savvy and have some stock holdings as well as working in an average paying job.

Those who started young also would have a super good head start as compared to others.

Another factor that contributes to a high net worth is of course, a high paying job. Some of the profiles shared that they have 6 figure annual income and that definitely tipped their net worth scale to the higher end.

Not too sure where we are going with this, but thought this is a good thing to cover here, especially since we cant find much people or bloggers who actively sharing their net worth figures. Also, knowing these numbers shared doesn’t really change our lives – life still goes on as per normal.

However, having these figures give us a scale of what financially savvy people are doing and how much they have achieved, and hopefully we can learn from them.

Through this too, we realized that actually there are a lot of people who are quite well off and are secretly millionaire couples in Singapore!

Of course, we also want to point out that this is not a competition, and ultimately everyone is just trying their best to be happy. It is also a matter of perspective – one can be happy with just S$100,000 and another can only be happy with S$1,000,000.

Hopefully this is a good kaypoh read for you! Happy to hear your net worth too! Do you think these profiles are fake, or are they real?

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Also Read: The Dangerous When-Then Trap That We Never Knew We Might Be Caught In

monthly updates

What Have We Done This Month Towards Our Financial Goals – June 2020

So June has came and gone now. What this means is that, first half of 2020 is now over, and we are moving into the second half of 2020. Time really flies!

For the whole of June, both Mrs Budget and myself had been mostly staying at home due to the circuit breaker. However, we have also started going back to the office about once to twice a week for office matters and meetings.

While everyone else is doing a monthly portfolio update, we thought it is more meaningful to document what we have done this month towards our financial goals.

Portfolio Transactions

Mr Budget
Position Added: MNAC, Prime US Reit, Syfe
Take Profit: N/A

Mrs Budget
Position Added: MNAC, Prime US Reit, Syfe
Take Profit: N/A

For June, in our previous update, we mentioned that we averaged down on Mapletree North Asia Trust, and initiated a position on Prime US Reit, both of which were still trading at below their NAV.

We have also continued to contribute to our roboadvisor Syfe this month.

In June, we have been tracking the price movements over the last few weeks, and what we’ve noticed is that the market is moving sideways now, and the bulls seems to be losing momentum.

This is expected since May we saw a strong rebound for the various stock prices. With the slow down in price momentum, we probably wont be buying any counters in the Singapore market unless something exciting comes. We may initiate some positions in the US market for the long run and also to increase our US equity allocation.

Home Equity Loan

Regular followers of Mr and Mrs Budget may have noticed that we have briefly included a new portion of home equity loan towards our monthly war chest update last month.

Since April when the market crashed, and along that the drop in interest rates, Mrs Budget has been trying to get a home equity loan so that we can leverage on that as a cheap source of fund to invest in the market.

We are happy to share that the loan has been approved, although the quantum is lesser than what we had hope for. The rate that we were offered by OCBC was 1.6% for 2 years, and Mrs Budget will be taking that up.

The rate is really quite affordable and even if Mrs Budget were to use that whole loan quantum and put it in CPF, the returns will more than double the loan interest.

So if anyone is able to do this, we’d recommend taking up an home equity loan. A few people we know are doing this to leverage on the low interest rate environment now.

The home equity loan process however, took way longer than we thought – since we applied in April, we only received the approval in end June, and are told that the funds will only be disbursed in another 1 – 2 months.

We may probably be sharing an article on the whole process and our further thoughts on that.

Net Worth Updates

Our net worth continue to grow this month, due to contribution from our salary as well as the continued rebound of stock prices.

Our combined net worth is now at S$718,000, including CPF but excluding our property and mortgage. This is up from S$690,000 last month, a change of +S$28,000.

The growth rate these past few months is quite high as we have lowered our spending significantly, and Mr Budget’s Malaysia mortgages are halted.

However, we are mindful that these number may change as we have a significant exposure to the equity market, which currently stands at a total equity exposure of S$280,000.

War Chest Updates And Watchlist

With the various transactions, here’s an update on our war chest:

Mr Budget War ChestS$90,000
Mrs Budget War ChestS$40,000
Mrs Budget Home Loan War Chest (pending)S$70,000

As our war chest has been increasing, and our cash position % is getting slightly larger than what we would ideally like, hopefully we are able to deploy our war chest soon. Counters on our watch list:

  1. Ascendas REIT
  2. Keppel DC REIT
  3. IREIT Global
  4. SGX
  5. DBS
  6. Mastercard
  7. Adobe
  8. Amazon
  9. Square
  10. Tesla (NEW)

We’ve added Tesla into our wishlist as a speculative counter, and may initiate a small speculative position if any opportunity arise.

Stay safe everyone, and happy hunting! We’d be happy to also hear your recent purchases too so that we can keep an eye on them too.

Monthly Tracking

Looking to invest via Syfe? You can use our referral code: SRP6X8B8Y when you create an account.

We would both get $10 to $100 depending on your first deposit amount, and you’d receive your bonus within 5 business days.

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New Portfolio Milestone And The Confusing State Of The Current Stock Market

For the longest time, when Mr Budget look at portfolio shared by other individuals, whenever we saw that the figure is more than S100,000, there will be slight envy.

A 6 figure portfolio seemed to be an invisible target to hit – probably because of all the media sharing articles on how one should reach a S$100,000 savings by 30. And for the longest time, our soft goal is to reach S$100,000 in Singapore equities.

Finally, Mr Budget’s Singapore’s portfolio touched S$100,000 for the first time yesterday! And Mrs Budget’s total equities (Singapore and US) portfolio hit S$100,000 too!

While Mr Budget’s equity investment has been more than six figures for a while now as we’ve shared on our portfolio page, our equities investments consist of stocks from Singapore, US, HK and Malaysia.

And when we track these portfolio, we look at these portfolios respectively because all market behave differently, and each portfolio serves a different purpose. For example, for our Singapore portfolio, they form the backbone of our dividend investment for future passive income, while our US portfolio serves as the growth component of our overall portfolio.

Hence reaching S$100,000 of value for our Singapore portfolio was a mini milestone for us and we wanted to just put this down here for future reference. 🙂

Here’s the portfolio value now:

As of 10/6/2020Mr BudgetMrs Budget
Singapore Portfolio$106,392.91$80,985.18
US Portfolio$64,537.42$21,550.35
Excluding Syfe and SSB which is our emergency fund

And we just realized that we have a combined equities holding of over S$270,000. We may be reaching our short term 2021 portfolio target goal of S$300,000 earlier than we projected!

Looking at the figures and penning this down, we realized that this is quite a significant amount, although it did not occur to us that our exposure to the market is quite large. Thinking about it scares us a little.

We will continue to invest and hopefully this rewards us in the future!

Stock Market Disjointed With Actual Fundamentals And State Of Economy

The majority of the growth of the portfolio is from the rebound of the market, and it seems like prices of equities across the board are going back to pre-covid prices.

As each day passes, and stocks go back to their all time high, the likelihood of us seeing a W shape economy (now that we are passed the V shape) is getting higher and higher.

We still think the stock market is very disjointed with the actual economy – how can price levels be at pre-covid prices as if covid never happened?

And then there are news like this:

Hertz skyrockets 825% since filing for bankruptcy as Robinhood traders pile in

Nikola May Not Be Next Tesla, But Its Valuation Is More Extreme

The Nikola article is just ridiculous – Nikola is forecasting zero revenue for 2020 and its first $1 billion year in 2023. And yet Ford Motor Co., which is expected to report about $115 billion of revenue for this year, has trailed Nikola by market cap at several points in intraday trading.

A zero revenue company has a higher market cap than a $115 billion dollar revenue company – the world has officially gone crazy, and for us, we probably will not be able to sleep well if we were to park some money in companies like Nikola.

In any case, the companies on our wishlist continue to hit their all time high, and its becoming quite expensive for us to buy anything.

However, over the past one week, we averaged down on Mapletree North Asia Trust, and initiated a position on Prime US Reit, both of which were still trading at below their NAV. That should conclude our purchase for the month!

Should the market plunge, we still have some cash to fall back to, to pick up more counters or average down on our current shareholdings.

With the various transactions, here’s an update on our war chest:

Mr Budget War ChestS$80,000
Mrs Budget War ChestS$30,000
Mr Budget Home Loan War Chest (pending)S$50,000
Mrs Budget Home Loan War Chest (pending)S$120,000

Counters on our watch list:

  1. Ascendas REIT
  2. Keppel DC REIT
  3. IREIT Global
  4. SGX
  5. DBS
  6. Mastercard
  7. Adobe
  8. Amazon
  9. Square
  10. Facebook

Stay safe everyone, and happy hunting!

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monthly updates

What Have We Done This Month Towards Our Financial Goals – May 2020

So May has came and gone now. We are almost at the end at the circuit breaker period which means most of the Singapore economy will start to open up soon.

For the whole of May, both Mrs Budget and myself had been mostly staying at home due to the circuit breaker. While everyone else is doing a monthly portfolio update, we thought it is more meaningful to document what we have done this month towards our financial goals.

Mr Budget
Position Added: SEA, Booking, Lendlease, Syfe
Take Profit: N/A

Mrs Budget
Position Added: Syfe
Take Profit: N/A

This month, Mr Budget bought into 3 counters, and these counters should probably be familiar names here at Mr and Mrs Budget. The first counter is SEA – the counter that Mr Budget sold off in March and now bought in again at a higher price.

 What a stupid move missing out on so much. Although Mr Budget took profit (18%) in March and bought back in earlier 2 weeks ago at a much higher price, the counter is now at a 33% profit in just 2 weeks. The profit would have been +120% if he did not sell his initial position.

SEA is really quite an amazing counter as it is investing in 3 main growth areas – gaming, e-commerce, and fintech.

Rather than waiting for the counter to drop and buy in again, the strategy now is to accumulate whenever there is a price weakness, than risk losing out on the upside. SEA is now part of Mr Budget’s coffee can portfolio too.

The second counter that Mr Budget bought in is Booking – a counter that Mr Budget has mentioned a few times here.

Bookings is the dominant player in the OTA space, and has various strategic holdings such as in Grab, Didi, and Meituan. In the short to medium term, travel won’t go away, and Bookings is probably the most well capitalized company to ride on that rebound.

Our entry price is not the lowest as we wanted to time the market even more, but we realised that the current price may never come back. Hence we entered a small position and will accumulate more if there are any future price weakness. 

The third counter Mr Budget bought in was Lendlease REIT – and this is just to average down on our initial purchase.

The good news is that with the Circuit breaker ending soon, all retail Reits are staging a rebound in price. The price level in May is probably the last chance for us to average down our holdings

Mrs Budget on the other hand, did not make any purchase as she is looking to build up her cash position. However, both Mr and Mrs Budget did continue our monthly contribution to our roboadvisor Syfe. 

The market had also rebounded a fair bit and our positions entered during the circuit breaker gave us a decent rebound onto our portfolio value:

AIMS AMP+20%
Capitamall Trust+15%
Ascendas India Trust+24%
Keppel Pacific Oak US REIT+43%
Lendlease REIT+19%
Alphabet+25%
SEA+33%

We are slowly thinking and accepting that this is a V shape recovery, although we are still quite reluctant to accept that.

Stock market seems very disjointed with what is happening with the economy. We would have deployed more of our war chest if we truly believe that this is a V shape recovery.

But on hindsight, the government has really helped stabilize the economy by a fair bit – with the GDP forecasted to fall up to -7% this year, the 4 budget announced by the finance minister totalling up to 20% of last year’s GDP can more than cushion the impact of the GDP loss this year.

In any case, we are quite happy with our purchases past few weeks, and if there are any price weaknesses in the counters that we are eyeing, we are happy to pick up more purchases along the way.

Our net worth continue to grow this month, due to contribution from our salary as well as the rebound of stock prices.

Our combined net worth is now at S$690,000, including CPF but excluding our property and mortgage. This is up from S$650,000 last month.

With the various transactions, here’s an update on our war chest:

Mr Budget War ChestS$95,000
Mrs Budget War ChestS$40,000
Mr Budget Home Loan War Chest (pending)S$50,000
Mrs Budget Home Loan War Chest (pending)S$150,000

As our war chest has been increasing, and our cash position % is getting slightly larger than what we would ideally like, hopefully we are able to deploy our war chest soon. Counters on our watch list:

  1. Ascendas REIT
  2. Keppel DC REIT
  3. IREIT Global
  4. SGX
  5. DBS
  6. Mastercard
  7. SEA (bought)
  8. Booking (bought)
  9. Adobe
  10. Amazon
  11. Square
  12. Facebook

Stay safe everyone, and happy hunting! We’d be happy to also hear your recent purchases too so that we can keep an eye on them too.

Monthly Tracking

Looking to invest via Syfe? You can use our referral code: SRP6X8B8Y when you create an account.

We would both get $10 to $100 depending on your first deposit amount, and you’d receive your bonus within 5 business days.

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What We’ve Learnt This COVID19 – Price Levels, Selling And Coffee Can Portfolio

Hello everyone!

It’s been a while again since we last updated here! As usual, we want to write as much as we can, but haven’t really come out with much topics to update here.

So if you have any topics suggestions, or any questions – please drop us a comment below – we love reading them! 🙂

Today however, we thought we want to just quickly pen down some thoughts and nuggets of wisdom we have gathered from others here, both as a sharing and as a reminder to ourselves.

Obsession Towards Price Level

One of the key things that we’ve internalized recently is that, prices are just snapshots of offers from the market and that we should not be too obsessed by it. There was a recent saying we heard: “if you think the current price is too high, this is and will be the new low”.

A lot of times, there are a lot of counters which we are eyeing towards, and we often want to wait for the best time or a better price to buy. Eventually, what end up happening is that, we will miss the boat and the prices just keeps going up and up. And we will just not buy it.

This is true for companies with strong momentum and those that are 100 year old companies, such as amazon. Amazon for example, has been going up non stop – and at anytime you buy over the past 5 to 10 years, literally any day, you would still have made money today.

The lesson here is that, don’t be too obsessed about entry price – if it is a valuable company, just buy in and keep for the long term.

When To Sell

Which leads to my second learnings on when to sell.

Recently there was a few webinar which a few bloggers shared that during the COVID-19 downturn, they actually did not sell or adjust any of their portfolio. Of course, some of their losses might be recovered now. The more important thing though is that they did not trim any of their winners.

On when to sell – you should only sell when there are better opportunities to deploy your money. And it is actually quite hard to find better opportunities that the ones that you have invested in and are winning counters.

Case in point – during the last correction, Mr Budget sold off his winners Amazon, SEA, AXXN to lock in the profit and to buy more assuming the market crash more. However, the prices of these counters have since went back up at least 20-30%, and now his previous entry price is too far behind and quite unlikely that he will be able to get those price levels.

The lesson here is probably that you should never sell your winners and just ride with them. If there are any corrections, these corrections should actually give you opportunities to buy more of the winning counters.

Coffee Can Portfolio

In a recent webinar, the Coffee Can portfolio was introduced by Ser Jing from The Good Investor and I thought it really covers the 2 pointers above.

Coffee Can Portfolio is a concept based on the research done by Rob Kirby. In simple words, one selects a list of high quality growth stocks and invests in them, and then literally forgets about it.

The benefit of this is that, the costs are low in the long run because you don’t trade regularly (and save on fees), and also that you will not be obsessed with checking the prices everyday, and you wont time the market. You also wouldnt need to battle with your internal struggle of whether to sell to take profit.

Warren Buffet also had a similar saying:

“I could improve your ultimate financial welfare by giving you a ticket with only twenty slots in it so that you had twenty punches – representing all the investments that you got to make in a lifetime. And once you’d punched through the card, you couldn’t make any more investments at all. Under those rules, you’d really think carefully about what you did, and you’d be forced to load up on what you’d really thought about. So you’d do so much better.”

And I think this really inspired me to take a look at our current holdings and to start identifying some stocks as our coffee can portfolio.

Of course, it is definitely easy to start a coffee can portfolio, but to actually have the conviction to hold it for long term and not touch it requires a lot of resolve, as well as a lot of financial freedom to be able to leave the portfolio there on the side.

For Mr Budget, I am currently holding about 21 counters. For my own coffee can portfolio, it would mostly be my US holdings: NVIDIA and Alphabet and only CMT for my SG holdings now.

Moving forward, I will also be increasing my US equity exposure so that there are more global high growth counters in my coffee can portfolio.

Will do more updates on this, and add a new “Coffee Can Portfolio” update on our portfolio section.

What have you learnt this COVID19?

Also Read: Our Thoughts On The Very Irrational Market Behaviour

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monthly updates

What Have We Done This Month Towards Our Financial Goals – April 2020

So April has came and gone now. 33% of 2020 is now over.

For the whole of April, both Mrs Budget and myself had been mostly staying at home due to the circuit breaker.

While everyone else is doing a monthly portfolio update, we thought it is more meaningful to document what we have done this month towards our financial goals.

Mr Budget
Position Added: SPH REIT, Centurion, Alphabet
Take Profit: Fu Yu, Accordia Golf Trust, Keppel Infrastructure Trust

Mrs Budget
Position Added: SPH REIT, Centurion, Alphabet 
Take Profit: N/A

This month, we bought into 3 counters, namely SPH REIT, Centurion and Alphabet.

For SPH REIT, we believe that the Reit, which is trading below its NAV, may reward its unit holders in the long run due to several reasons – exposure into students accommodation and SPH is slowly realising that it is morphing into a property player. 

Similarly for Centurion, while it may be in the news now for not so good reasons, the counter is still undervalued, and once COVID is over, the price may go up again due to its defensive accommodation nature.

We previously sold off Centurion and bought back in straight after to lower down our entry price further. We spoke about SPH REIT and Centurion in our previous update 2 weeks ago too.

For Alphabet, we have been eyeing this counter for a while now – the parent company of Google is probably the dominant player in the online advertising space, and with its recent battered down share price, we took a position in Alphabet which we will keep for very very long.

To replenish our war chest further, Mr Budget sold off his holdings in Fu Yu, Accordia Golf Trust, and Keppel Infrastructure Trust. To be honest, the selling off are all speculative play, as we foresee the prices to drop further in the next few months. If the price level fall back to lower than our entry price, we will pick them up again for cold storage. 

So the equity purchase movement this month is really just a recycling of our existing holdings into new counters which are trading at below NAV, and these stock purchases are funded by the selling off of 3 existing share counters.

There were some positions which Mr Budget sold off last month which he deeply regretted now: his positions in Amazon, SE, as well as AXXN – all of which he entered at excellent prices and are all now back to their all time high.

The market is really irrational and are not reacting to all the negative news in the economy, so hopefully the prices will come back down for him to pick them up again.

If it doesnt, it’s a really good lesson for Mr Budget to not let go of winning counters in the future and to just let the winners run. That’s probably one of the many lessons learnt from this market sell down.

The market had also rebounded a fair bit and our positions entered last month (Keppel Pacific Oak +27%, Ascendas India Trust +10%) gave us a decent rebound onto our portfolio value.

Overall, the portfolio of Mr Budget has now broken even, which means everything is at cost to Mr Budget now. What this also means is that we are now back to zero since started investing 2 years ago.

However, we think that the market will continue a slow decline over the next few months, and our view is still that we will see further market correction.

That said, in case we are wrong, we are continuing to invest, cautiously, over the next few months.

Our net worth continue to grow this month, due to contribution from our salary as well as the rebound of stock prices.

Our combined net worth is now at S$650,000, including CPF but excluding our property and mortgage. 

With the various transactions, here’s an update on our war chest:

Mr Budget War ChestS$100,000
Mrs Budget War ChestS$40,000
Mr Budget Home Loan War ChestS$50,000
Mrs Budget Home Loan War ChestS$150,000

As our war chest has been increasing, and our cash position % is getting slightly larger than what we would ideally like, hopefully we are able to deploy our war chest soon. Counters on our watch list:

  1. Ascendas REIT
  2. Keppel DC REIT
  3. IREIT Global
  4. Suntec REIT
  5. SGX
  6. DBS
  7. Mastercard
  8. SEA
  9. Booking
  10. Adobe
  11. Amazon
  12. Square
  13. Facebook
  14. Fu Yu

Stay safe everyone, and happy hunting!

Monthly Tracking

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The Current Market Crash Pushed Our Retirement Goal Back By 3 Years, And It Might Get Worse

So the market dived another 8-10% or so yesterday. 

Every retail investors is probably mass selling and taking profit off their positions now.

There were reports that trading firms are overwhelmed and true enough, when I log into Vickers, I couldn’t even connect to my account. This truly is a once is a decade / life time event.

I wouldn’t lie, when the market crashed, it has been emotionally testing – its painful to refresh my app to see the market prices.

So earlier today, I went ahead to do a quick number crunching to see the impact of a further 20% drop of my equities towards my retirement / S$1M goal projection.

Here’s a look at the previous projection with the following assumptions:

  1. US Equity – Monthly Contribution with an overall portfolio growth rate of 8%
  2. SG Equity – Monthly Contribution with an overall portfolio growth rate of 5%
  3. Syfe – Monthly DCA with an overall portfolio growth rate of 5%
  4. Annual EPF and CPF contribution at current level.

According to the earlier projection, excluding our properties and mortgage, we should

  1. Hit a net worth (Equities, Cash, CPF) of S$1M at end 37 years old, or in December 2025
  2. Hit a liquid net worth (Equities, Cash) of S$1M at 42 years old, December 2029.

However, as the market plunged this week, we now have to add new numbers into our projection model. 
What we did was:

  1. Update our projected 2020 numbers by entering current portfolio number
  2. Add a further 20% drawdown to all our current equities position
  3. Stop our US, SG, and Syfe Investment contribution for this year

Based on the 3 new parameters, here’s the updated impact towards the 1M goal.

Based on the table, just by adding a further 20% drawdown on our equity position and stopping our investment this year, our S$1M net worth (ex property and mortgage) goal is pushed back from December 2025 37 years old to December 2026 38 Years old. 

If we exclude CPF (liquid net worth), the impact is even bigger: our S$1M goal is pushed back from December 2029 42 Years old to December 2032 45 years old, a good 3 years goal push back!

Which means now, if everything stay constant, I have to work for another 3 years just because the market crashed.

Of course, while this is bad news, we also acknowledge that the growth rate once the market recovers will hopefully be able to counteract the current decline in our portfolio and hence move our current target back on track. 

This exercise paints a good picture for us to see the impact of the current equity drawdown on our portfolio, and to really reassess our portfolio resilience. 

Currently our cash level is the highest it has been since the past 2 years as we manage to sell some stocks before the second wave of crash. Hence we will be accumulating our war chest and deploy them when situation show more signs of stabilisation. 

I feel like there will be a further 20-30% drawdown in the market because we have yet to see the domino effect of the global virus situation – ie the housing and credit crisis. 

So things will probably get worse, as we also have a significant exposure in properties.

You can also read about our horrible experience not being able to sell our stock via DBS Vickers: Earlier Today I Experienced Every Investor’s Worst Nightmare – Unable To Sell My Stock

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We Care Less About CPF Life’s Rate Of Return, More As A “Forced Savings” For The Compound Interest

Recently Mr Budget received a comment from a reader (thank you! We love reading them!) commenting on the CPF scheme.

Ronald shared his views that I should do a calculation on the CPF Life annuity scheme to see if it is a fair deal before committing so much into CPF, after all CPF contribution is a one way street – once you put in the money, you can only see it more than 25 years later.

That prompted Mr Budget to do some digging. 

Many in the financial space will be familiar with Kyith’s work from Investment Moats, and we are also big fans of his.

Kyith always use data to support his articles, and when we dug deeper into his archive of works, we found that he calculated the returns of CPF Life, which saved us the trouble of doing the calculation ourselves.

In case you are unfamiliar with the CPF Life scheme, at age 55, CPF will automatically create a new Retirement Account (RA) for you. The source of the RA account come from both your OA and SA account. For us, we foresee that we will be able to hit the full retirement sum, which is at S$181,000 now. 

Here’s the internal rate of return Kyith simulated based on the following parameter: Computed in December 2018, at age 55, a total of S$180,000 is transferred to the RA account.

Source

As Kyith rightfully pointed out, the IRR and amount disbursed changed according to the age you pass away. 

For Mr Budget, I foresee I will be able to live until 65 – 70 years old, hence the IRR for the basic plan will be between 3.97% to 4.33%, with me getting back between S$275,112 to S$313,526 from the S$180,000 CPF retirement scheme.

Of course, there are a lot of moving parts in calculating the IRR and amount received as the government will raise the basic retirement sum over time and they might also adjust the payout amount, but at this point we can only hope that Singapore has our best interest in mind, and that we can only plan based on current data.

So the question is, are we happy with the returns? I’d say we are quite happy with the results as it is quite rare for us to be able to find a guaranteed annuity giving this rate of return, especially since we expect our risk profile when we are older to be significantly lower than what we have today.

Of course, knowing the payout only paints part of the picture.

The reason why we actively contribute to the CPF account is also we see this as part of a forced savings so that we can really see compound interest in the works when we are older.

Here’s Mr Budget’s projected CPF with the following parameters: constant CPF contribution from employment as well as annual S$7,000 RSTU scheme, at an annual interest of 3.5% (instead of 4%).

YearAgeStart of Year CPFCPF ContributionCPF InterestEnd of Year CPF
201729$0.00$14,370.65$347.46$14,718.11
201830$14,718.11$25,624.74$1,029.86$41,372.71
201931$41,372.71$36,730.00$3,063.91$81,550.48
202032$81,550.48$33,640.00$4,031.67$119,222.15
202133$119,222.15$33,640.00$5,350.18$158,212.32
202234$158,212.32$33,640.00$6,714.83$198,567.15
202335$198,567.15$33,640.00$8,127.25$240,334.40
202436$240,334.40$33,640.00$9,589.10$283,563.51
202537$283,563.51$33,640.00$11,102.12$328,305.63
202638$328,305.63$33,640.00$12,668.10$374,613.73
202739$374,613.73$33,640.00$14,288.88$422,542.61
202840$422,542.61$33,640.00$15,966.39$472,149.00
202941$472,149.00$33,640.00$17,702.61$523,491.61
203042$523,491.61$33,640.00$19,499.61$576,631.22
203143$576,631.22$33,640.00$21,359.49$631,630.71
203244$631,630.71$33,640.00$23,284.47$688,555.19
203345$688,555.19$33,640.00$25,276.83$747,472.02
203446$747,472.02$33,640.00$27,338.92$808,450.94
203547$808,450.94$33,640.00$29,473.18$871,564.12
203648$871,564.12$33,640.00$31,682.14$936,886.27
203749$936,886.27$33,640.00$33,968.42$1,004,494.69
203850$1,004,494.69$33,640.00$36,334.71$1,074,469.40
203951$1,074,469.40$33,640.00$38,783.83$1,146,893.23
204052$1,146,893.23$33,640.00$41,318.66$1,221,851.89
204153$1,221,851.89$33,640.00$43,942.22$1,299,434.11
204254$1,299,434.11$33,640.00$46,657.59$1,379,731.70
204355$1,379,731.70$33,640.00$49,468.01$1,462,839.71
Mr Budget’s CPF Projection

If all things stay constant, Mr Budget should be able to hit S$1,000,000 in his CPF by age 49. That is really quite a lot, and from the table, you will see that every year, the interest received is getting higher and higher, and we earn the magical interest on interest.

To be honest, we have yet to enjoy the benefits of compound interest especially in our current bank account because we are always moving our cash around. Our cash in bank will also be depleted every time we have a new milestone in life.

Hence CPF in a way is really our “forced savings” portion of our portfolio, for us to really see the effects of compound interest. There is probably no other ways we can clearly see this manifested in our lives other than CPF because we tend to move our funds around, and that’s always the case for Mr Budget.

By age 55, after setting aside the basic retirement sum, Mr Budget can also withdraw the rest out for usage. 

We confirmed that we can withdraw the rest of our CPF based on the CPF withdrawal Q&A on the CPF website.

CPF example of withdrawal computation

Of course, this is the idealistic projection because there are many unforeseen things that could happen:

  1. Government might change certain rules with regards to CPF withdrawals or interest rates.
  2. Mr Budget might lose his job or have a pay cut
  3. Mr Budget may need money for his child expenses, hence the annual contribution will be reduced by S$7,000
  4. Mr Budget passes on before 65 years old.

If Mr Budget really passes on before 65 years old, then the S$180,000 would not be worth it. By then, money wouldnt matter anymore to me haha.

So to Mr Budget, the main reason for the annual CPF top up is basically leveraging the CPF to get an annual 4% interest rate so that we can see a compound growth over the next decade and we can enjoy the fruits in the future. The annuity portion of CPF life is really just a small reason why we actively contribute to CPF. 

And hopefully the government don’t introduce big changes to the CPF scheme over the next 30 years! 

Also one last note, this post is not to show off the CPF amount, because the truth is, the same compound interest applies to everyone, and if most people chart their CPF projection, they will most probably get similar graphs.

It’s to share our thinking behind why we contribute regularly and to visualize (in numbers) compound interest in the works. This is also not any investment advise as Mr and Mrs Budget is just 2 regular working PMET trying to make sense of our financials and to plan for the future. 🙂

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Baby Steps For Our Retirement Planning – Regular Top Up Of Our CPF Special Account

One of the many stuffs that Mr and Mrs Budget set out to do this year is to top up our Special Account via the Retirement Sum Topping Up Scheme. 

With the receipts from the wedding angpaos recently, Mr Budget has used the receipts and went ahead to top up S$7,000 to his Special Account.

The reason why I do it earlier in the year is to allow the compounding effect to start earlier this year in order to enjoy the interest rate by end of 2020. Of course, we also stand to claim a personal tax relief of the amount contributed.

Mrs Budget will also be contributing to her CPF SA account in the next few weeks when we do our monthly finance reconciliation. 

With the RSTU done, what’s left for Mr Budget this year is to:

  1. Increase Singapore portfolio to S$110,000 from the current S$80,000 level.
  2. Reduction of annual expenses from current S$95,000 to a more manageable S$60,000, or even lesser since the real mandatory expenses we calculated for last year was at around S$35,000.
  3. Start renovation for Malaysia property and then rent it out for rental income to balance off the monthly mortgage payment. Will have to wait for the TOP for the project.
  4. Monthly consistent S$1,000 contribution to Syfe Roboadvisor.

If you are thinking of topping up your CPF SA account to enjoy the tax relief this year, you should probably do it earlier too. 🙂

Also, Chinese New Year is just less than 2 weeks away, if you have not exchange your new bank notes, you should probably do so soon!

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The Best Personal Finance Decision Mr Budget Made In 2019 – Expenses Tracking

Regular followers of Mr and Mrs Budget will know that we track our expenses monthly.

We have been publishing our monthly expenses since the start of this publication and if you have missed it, here’s our expenses for October, November, and December.

Many might find that tracking expenses is a tedious thing to do, especially you need to log down every single transaction that you spend on a daily basis. Mr Budget, like many many Singaporeans or Malaysians trying to sort out his life, tried to start tracking his finances long time ago, and always failed to keep to the habit. 

I remember my first attempt of daily expenses tracking was in university back in 2010, when I needed to know where I spend my money on. After tracking for a few days, life caught on and I soon stopped tracking because I didn’t understand why I need to track my finances, and told myself that since I have no control over my finances, there was no point in tracking.

After all, every month I would always end up spending everything in my bank account.

I tried again when I first entered the workforce in 2012, but because I was living pay check to pay check, with an entry salary of S$2,400, all of my salary would be used up for my rental payment, school loan payment, and my daily expenses.

To me, there was no point in tracking my expenses too because the entry would be the same – I would spend S$500 on rental, S$500 in school loan payment, S$500 on food, and the rest would either be brought over to next month, or will be spent indulging on entertainment.

It was only in mid 2018 when I finally sit down and told myself that I need to know where my money is going and only with these information can I optimise for my cashflow. 

This was also due to the fact that all financial gurus out there included expenses tracking as one of their mantras – surely all of them cant be wrong?

Here’s the first annual expenses report after I started tracking my expenses:

Expenses CategoryTotalAverage%
Meals$4,861.24$405.105.05%
Transportation (mrt)$795.04$66.250.83%
Entertainment$1,278.51$106.541.33%
Groceries / Home$9,931.37$827.6110.31%
Shopping / Cloths$1,525.40$127.121.58%
Phone Bill$687.20$57.270.71%
Utilities$495.25$41.270.51%
Insurance$2,720.51$226.712.83%
Parents$2,574.66$214.562.67%
Income Tax$1,415.72$117.981.47%
Hair Cut$323.20$26.930.34%
Digital Subs$302.51$25.210.31%
Malaysia Mortgage 1$10,222.20$851.8510.62%
Malaysia Mortgage 2$1,308.91$109.081.36%
Rental$2,125.00$177.082.21%
Singapore Mortgage & Home Renovation$16,102.11$1,341.8416.72%
Travel$2,575.48$214.622.67%
Hometown Expenses$1,305.12$108.761.36%
Wedding$13,758.50$1,146.5414.29%
CPF / EPF$8,000.008.31%
Others$13,976.99$1,164.7514.52%
Total$96,284.92$8,023.74100.00%
Mr Budget 2019 Expenses Table

Looking at Mr Budget’s 2019 annual expenses, the highest expense categories are our current Singapore home related expenses, taking up a 16.72%. This is on the high side as we just moved into our new home this year and incurred a one off renovation and move in expenses. 

This is followed by our wedding expenses, which Mr Budget spent almost S$14,000 on. This is another one off item and the cost is cushioned by a one off receipt in January from our wedding angpao received. 

Another high expenses category is the monthly mortgage payment of Mr Budget’s condo in Malaysia, which will be done soon, earmarked for investment purposes. 

Our home and groceries expenses is also another high expense category as both Mrs Budget and I are still purchasing new stuffs for our home occasionally and we are figuring out our co-living expenses. We foresee this to ease a bit this year in 2020.

Surprisingly, Mr Budget’s food expenses only makes up 5% of his total expenditure in 2019. We will be using this as a barometer to compare against our projected expenses for our retirement planning. 

While the overall expenses is high, eclipsing almost $100,000 of cash outflow in 2019, Mr Budget draw comfort in the fact that the high expenses categories are either one off items or are for asset building purpose.

These are the expenses paid in 2019 for asset building:

Asset Building ExpensesTotal%
Malaysia Mortgage 1$10,222.2010.62%
Malaysia Mortgage 2$1,308.911.36%
Singapore Mortgage & Home Renovation$16,102.1116.72%
CPF / EPF$8,000.008.31%
Total$35,633.2237.1%
One Off ExpensesTotal%
Rental$2,125.002.21%
Wedding$13,758.5014.29%
Others$13,976.9914.52%
Total$29,860.4931.01%

Minusing these, the actual day to day expenses such as meals, insurance, commute, groceries et cetera only makes up 32% of my total expenses in 2019.

With these data points, Mr Budget looks forward to comparing them with my 2020 expenses to see if there will be any improvements. I foresee that while bulk of the one off expenses this year will be channeled towards the asset building expenses this year, especially to continue servicing my mortgage responsibilities, we will see an overall reduction in expenses this year. 

For those of you who have not been tracking your cashflow, Mrs Budget and I really encourage you to start doing that. Once you get into a monthly habit of collating your expenses, you will continue to do that to find your spending patterns and with that, you are able to better optimise your personal finance and make data driven decisions. 

Happy tracking! 

Side note, do you track your expenses? What do you use to track them?

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