Category: Investment Stab

$20,000 Silver Housing Bonus: Should You Apply For It?

Source: HDB

Today we will be answering this question: is it advisable to put $60,000 into my Retirement Account (RA) to get the $20,000 Silver Housing Bonus?
This question was submitted by one of our readers.
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Answer:
When it comes to CPF, there is not really a one-size-fits-all solution.
There are some flexibility and restrictions that you will have to consider before making such an important decision.

Assuming you apply for the Silver Housing Bonus
If you sell your home, and your net proceeds from the sale is less than or equal $60,000, immediately all of the proceeds will go into your CPF RA.
Under this scenario, you get only $1 for every $3 you put back into your CPF RA.
Eg; if you put into your RA only $30,000, you only get $10,000 in Silver Housing Bonus instead of $20,000.
If your net proceeds exceed $60,000, the bonus will be capped at $20,000.
Below is an image from HDB on the calculations for SHB

Source: HDB

Recommended Read: 6 things to do with your CNY money

Conclusion
If your goal is to have cash after you downsize your home, then this might not be suitable for you because it is possible for you to end up with no cash if the net proceeds is less than $60,000 (Of course if you managed to exceed your cohort’s CPF Retirement Sum after you topped up $60,000 + any SHB to your CPF, you will be able to withdraw the excess. So that’s another consideration you can and need to consider).

But if your goal is to ensure you have enough for retirement (in terms of monthly payout from CPF), then SHB is a pretty good option for you because, by downsizing, you get an extra $20,000 from the government to support you during your retirement.
Our motto is always ‘Free money just take’; but of course that is after you understand all the conditions attached to it.

So, it really depends on what is the end goal you want (immediate cash or monthly retirement income).
You could discuss further in details with an HDB officer or a financial adviser to assist you in making the decision.
Like we said, there is no one-size-fits-all solution, it really depends on what you want and what your circumstances are.

WSG can provide you with a career coach that is able to help you with that. 
And if you are looking for a free career coach, visit Workforce Singapore via the link below.
They can link you up with the career coach and you 
might be able to find new opportunities on their jobs portal.

Recommended Read: CPF LIFE in the Year 2020
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Is Technology After Your Job?

In 10 years, the pilot and the cameraman lost their jobs, but new jobs like drone pilot sprang up.
There will always be jobs in the economy, but are we able to take up that job if we do not upkeep our skillsets.
In the past, the pilot and the cameraman have to take on great risk in order to do 360 degrees kind of shots in the sky (imagine spinning the aircraft).
Today, just a drone will do, and if anything goes wrong, it is the drone that gets killed, not the people on board the aircraft.

Ford & Horse Carriages
We might think that technology is killing jobs, killing good jobs like pilots and cameraman.
But that is how capitalism, or how the world works.
Imagine your great-great-grandfather was trained to be a horse-carriage driver and was making a decent living until Henry Ford came in with his cars and completely killed the horse-carriage industry.
Your great-great-grandfather would probably feel angry at Ford and might blame his government for not protecting the horse-carriage industry or his job.
But fast forward to today, do you miss horse-carriage?
Do you think the world would be a better place if everyone owned a horse or rode in a horse-carriage?
Same goes for the elevator operators, people who operate lifts for you so that you can go up or down (Yes, there used to be such a job in case you are too young to know 😉, and back then lifts were a lot more complex than pushing a few buttons).
Can you imagine how much more expensive things will be if we did not improve the lift technology to make it simpler?
Just imagine every HDB, every unit has to contribute a sum of money to pay the lift operators’ salary (and we probably need a few on shift work) in order to go up and down the block.

Recommended Read: 6 things to do with your CNY money

Conclusion
Back then, if you make horse-carriages for a living, had you upskill yourself when the car industry came in, you might be able to get a job in the car industry, or maybe in carpentry (since horse-carriages and carpentry seem similar in nature).
If you rode a horse and ferried people around, you could upskill yourself by getting a driver’s license and ferry people around in cars.
Technology will continue to change, so will how we live our lives.
The unfortunate thing is, change is going to become ever faster.

Source: reddit

You can sit back and grumble all you want about how you hate this change and how you want things to go back to where it was when it was easier for you, but it is not going to happen.
Change hit the horse-carriage drivers; it hit the elevator operators; it definitely is going to hit you some point in life.
So it might be better if you pick yourself up, train and upgrade your skillsets so that when the unavoidable change comes, you are better prepared for it.

WSG can provide you with a career coach that is able to help you with that. 
And if you are looking for a free career coach, visit Workforce Singapore via the link below.
They can link you up with the career coach and you 
might be able to find new opportunities on their jobs portal.

Recommended Read: CPF LIFE in the Year 2020
Happy Lunar New Year!
As we progress towards the next phase of our journey, we would like to find out what would make you like us even more.
So we hope you could help us fill in a short survey of 8 questions (4 of them are MCQs) so that we can help better tailor our content to you.

And for helping us help you, we are going to have a lucky draw.
5 lucky readers who fill in the survey will be selected at random to win $5 Grab voucher.
Survey

Remember to offer your opinions. If you don’t put your two cents in, how can you expect to get change?
Have feedback? Tell us now!

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6 things to do with your CNY money

1. Save
Emergency fund, HDB down payment, wedding down payment, car down payment, investment war chest.
These are all good reasons to save your Ang Pow money for.
Your Ang Pow is like a windfall, and like all windfall, you should try and save preferably 50% of it at least.
If you are below 26 years old, you might want to consider Standard Chartered JumpStart savings account – it gives 2% interest on the first $20,000.

2. Invest
What good is it if your money is just sitting in your bank account earning that miserable 0.1% interest.
Make it grow.
Invest in index funds, or stocks, or REITs, or assets that you are familiar with.
Never invest in anything you have no clue about.

3. Pay Debts
Pay down your debts if you have any.
Whether it’s a credit card loan, mortgage loan, car loan, student loan, whatever debts you can think of.
Including the friends and family members that you owe money to (if any).
Aim to be debt-free fast!

Recommended Read: Why I Stopped Value Investing

4. CPF
Top up to your CPF or your loved ones’ CPF account (Retirement or Special Account).
You get a tax deduction and by putting your money into CPF early, you allow it to earn more CPF interest (4%!)
Consider the top up as planning for your retirement.
If you are not well-versed in investing or have no idea how to do it, then CPF is actually not a bad place to park your retirement savings.

Click here to find out more about Retirement Sum Topping-Up Scheme and click here if you want to do the top-up.

5. Strengthen Relationships
Treat your family/friends/colleagues/subordinates to a meal or coffee.
Build relationships!
They are an important aspect of your life.
People who are healthier and live longer lives all have good relationships with the people around them.
It is a good return on investment if it benefits your physical and mental health.

6. Education
You are the engine of your wealth. (Engine Wealth image?)
There is no better investment than an investment in yourself
Use the money to educate, upgrade, and upskill yourself.
Maximise your SkillsFuture credits and sign up for courses.
If you are thinking of changing job, WSG might be able to assist you in it.

WSG can provide you with a career coach that is able to help you with that. And if you are looking for a free career coach, visit Workforce Singapore via the link below.
They can link you up with the career coach and you might be able to find new opportunities on their jobs portal.


Recommended Read: CPF LIFE in the Year 2020
Remember to offer your opinions. If you don’t put your two cents in, how can you expect to get change?
Have feedback? Tell us now!
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Why I Stopped Value Investing

There are many definitions as to what value investing is, it is the kind of question that you will get different answers depending on who you ask.Generally, there are 2 kinds of value investing.Asset-based: invest in companies selling below their net a…

CPF Accumulated Accrued Interest

Today’s topic will be on the interest you pay to CPF on your housing loan.This is a follow-up article to our previous article.When you pay your monthly mortgage via CPF Ordinary Account (OA), you are doing several things:Here’s what happens when you…

Your HDB is like a Call Stock Option

What is a Stock Option:
Before we begin, you need to understand what is a stock option first.
So here’s a link to help you understand what is a stock option.
Continue reading after you understand what’s a stock option 😉.

TDLR (Too Long Didn’t Read) of a Stock Option
A stock option is a ‘contract’ that lets you buy a specific stock at a specific price by a specific date.
Eg; I pay $1 to buy a stock option that allows me to buy 1 Microsoft share at $50 before August 2020.

Scenario 1: I exercise my stock option
I can exercise the stock option to buy the Microsoft share, and my total cost of the share is $51 ($50 + $1).
It makes sense to exercise my stock option when Microsoft’s share price is above $51 (eg; $52) because then I can sell it straight to the stock market and profit from the difference.

Scenario 2: I don’t exercise my stock option
But if Microsoft’s share price remains below $50 by August 2020, I will let my stock option expire, and I will lose $1 that I spent buying that option (cost of the stock option).

Scenario 3: I sell my stock option
I can also sell my stock option to other people in the market that are interested in it.
Eg; if Microsoft share price rises to $52, people can bid for my stock option for $1.50 (they can then exercise the stock option, sell the stock, and profit $0.50).
If I sell to them, I will earn $0.50 without going through the hassle of buying to exercise my stock option and then selling my shares to the market.

Recommended Read: CPF LIFE in the Year 2020

How is Owning an HDB like Owning a Call Option?

  • There is a time value to both HDB and Stock Option
    When the stock option reaches its expiry date, it becomes worthless. Before that date, however, there is a value associated with it.
    The same can be said for HDB also before it reaches the end of its 99-year lease, it has a value to it. Once it reaches the end of the 99-year, there is no more value to it.
  • You can sell your Stock Option or HDB to reap a profit (or loss)
    You bought a stock option for $1, after some time the price of the stock option increases to $2 before its expiry date. You can sell the stock option to earn $1 in profit. Similarly, if the price of the stock option drops to $0.50 and you sell it, you will incur a loss of $0.50.
    The same can be said for HDB as well, you can buy an HDB for $500k and sell it for $600k after 10 years and earn a $100k profit. You can also sell it for $450k 10 years later and incur a $50k loss.
  • You own the Stock Option or HDB, not the underlying asset
    In the case of a stock option, you own the stock option and not the underlying stock (the asset) the stock option is tracking. Eg; you buy a Microsoft stock option, you do not own any Microsoft share as a result, you merely own the stock option that allows you to purchase the Microsoft share.
    For the HDB, you own your HDB, but not the land it is built. 
  • The Difference?
    You can exercise the stock option to buy the underlying stock (eg; Microsoft). But you cannot exercise your HDB to buy the underlying land. Once the 99-year lease is up, there goes the HDB. So you either apply for Lease Buyback Scheme before the end of your HDB or sell it to someone before your 99-year lease expires.

Are there any other similarities that you have spotted between HDB and a Stock Option?
Let us know in the comments below 😉

Recommended Read: What is CPF Enhanced Retirement Sum (ERS)?

Remember to offer your opinions. If you don’t put your two cents in, how can you expect to get change?

Have feedback? Tell us now!

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Unhappy with your job? There’s something you can do about it.
A. Save up enough money from your job so that you can fire your boss – the problem is it might take some time and some effort
B: Find a new job, search for new opportunities. A career coach might be able to help you with that. And if you are looking for a free career coach, visit Workforce Singapore via the link below.
They can link you up with the career coach and you might be able to find new opportunities on their jobs portal.
http://ow.ly/GY8150wlfrF

Best cashback credit cards to use with SimplyGo for paying Bus/MRT fares

Source: TransitLink
This article is a guest contribution from our friends over at WhatCard

Using Credit Cards To Pay for MRT/Bus

LTA launched SimplyGo 6 in May this year, enabling commuters to use credit cards to pay for their MRT/bus fares as an alternative to the trusty EZ-Link cards which have been a part of people’s wallets for more than a decade.
We had written about this new scheme in an earlier article 9, and it sparked some great discussions about the pros (you get credit card rewards, no longer have to carry an EZ-Link card around) and cons (you may drop your credit card, there is a short delay/lag when tapping) of using a credit card as opposed to Ez-Link to pay for your rides.
To add to this discussion, we thought that it would be good to do a more in-depth review of some of the best cashback cards compatible with SimplyGo, as we had not devoted much space to it in our earlier article.
For the miles lovers out there, a separate article for best miles cards will be coming soon as well!

The volume of comments on just one Facebook group

Best Cashback Cards for SimplyGo

We had shared this table in the earlier article:
Best Cashback Cards Rewards Minimum Monthly Spend
CIMB Platinum 10% Cashback $800
DBS Live Fresh 5% Cashback $600
Maybank Friends & Family 5% / 8% Cashback $500 / $800
UOB One Card Up to 3.3/5% Cashback $500/$1000/$2000, it’s complicated 27
While these listed cards all give really high cashback rates, the thing with all cashback cards is, it is all in the details. Here’s what to look out for and our assessment of these cards:

1. CIMB Platinum – Highest headline of 10% cashback, but there is a $20 cashback cap for each of the 5 categories

The CIMB Platinum is well known for its marketing of exceptionally high cashback rates (10%!!!) – far surpassing other cashback cards in the market which in comparison have paltry bonus cashback rates from 1.5% up to 5-6%. Furthermore, 10% bonus cash back is awarded across 5 really common spending categories:
  1. Wine & Dine
  2. Transport & Petrol
  3. Health & Medical
  4. Selected Electronics & Furnishing merchants (e.g. Harvey Norman, Best Denki, Challenger)
  5. Foreign Transactions
HOWEVER, we almost never recommend this card because the T&Cs are one of the most restrictive in its peer group of category cashback cards. Not only is there a rather high $800/month minimum spend, but the biggest issue is also that there is a cap of $20 cashback per category (or $200 spending on that category). Any spending above $200 per category gives a base 0.2% cashback. This implies that: to hit the minimum spend requirement AND maximise your 10% cashback, you have to split $800/month between 4-5 different categories, making sure to spend as close to $200 on each category
We can see a scenario where somewhere has quite a regular spending across these 5 categories and able to optimise their spending well enough to take advantage of the 10% cashback, but for us, it is just a tad bit too much effort to optimise spending to this level of detail. This card may suit you if you have the bandwidth to track expenses to be within a narrow $200 transaction range for each category consistently every month.

2. Maybank Friends & Family – 2nd highest headline of 5%/8% cashback, with a relatively higher $80 cashback cap across all the categories

The relatively less well-known Maybank F&F card went through a major upgrade 15 in Sept 2019, and with that, it has actually become a rather decent all rounded family spending card similar to the OCBC 360/BOC Family card. With a minimum monthly spend of $500 or $800, you get either 5% or 8% cashback across a wide range of common categories:
  • Dining
  • Telcos
  • Groceries
  • Petrol
  • Transport
  • Selected Learning & Retail merchants – Popular bookstore, Toys ‘R’ Us, Yamaha
The only thing to take note of is that there is an overall cashback cap of $80/month, regardless of whether you are getting the 5% or 8% cashback rate. That there is an overall cashback cap makes this a much easier card to optimize for than the CIMB Platinum and DBS Live Fresh (covered below) since you can get great cashback by more easily spending the full $500/$800 on whatever you are currently spending on, even if that is spending the full $800 on just Groceries and Petrol categories – for example for a family person who owns a car.
The bonus cash back categories are rather comprehensive and should cover most of your spending needs already, the only major category that it is missing is for Online Spending.

3. DBS Live Fresh – 3rd highest headline of 5% cashback, but again there is a dollar value cashback cap of $20 per category

The DBS Live Fresh card is very popular among Singaporeans who use cashback cards, and for good reason – it gives 5% cashback on two very common and easy to hit spend categoriesOnline and Contactless (which covers many offline places such as restaurants) spending. It definitely also does not hurt that any spending on this card helps with getting a bonus interest rate on the DBS Multiplier Account 6.
There are some limitations to note: On top of the minimum monthly spend of $600, cashback is capped at $20 per month per category (i.e. you only get 5% cashback on up to $400 spending on each of Online and Contactless category)
For those whom we worked with for our free 1-1 credit card consultation service 4 2 months back (we have changed it to a waitlist now for those who are still interested), you already know that DBS Live Fresh is one our favourite cashback cards to recommend. This card works best for those who have relatively low and regular monthly spending that can be funnelled to either online or contactless spending.
Spend at most $400 on each category (Online, Contactless) to this card to maximize the dollar cashback.

4. UOB One – Up to 3.33%/5% cashback, awarded on a quarterly basis based on hitting a minimum monthly spend each month for the quarter

The UOB One card works in a completely different way from other cards that give a percentage cashback of your spending amount. Instead, the UOB One Card gives a flat quarterly rebate based on you hitting the minimum monthly spending per month, for each month of the quarter. For example, to get the Q1 quarterly rebate you have to hit the minimum monthly spending in January, February, and March. There are 3 tiers of monthly spending which give different quarterly cashback amounts as below:
Spending Tier Quarterly Rebate Maximum Cashback of Up To
$500-$999 per month $50 3.33%
$1,000-$1,999 per month $100 3.33%
$2,000 and above per month $300 5%
Given these 3 tiers and the fixed quarterly rebate, the UOB One card gives the optimal cashback rate if you spend just above $500, $1,000, or $2,000 per month consistently. However, do note that if you miss the minimum spending for even 1 month in the quarter, you will lose the entire rebate for that quarter.
The big benefit of UOB One is that all spending counts, so you don’t need to worry about where you are spending your money, instead only worrying about how much you are spending total each month. Works best for those who prefer to just track their total spending each month without worrying about which category to spend on.

Summary

Given all the T&Cs around cashback cards, we encourage our readers to never just focus on the headline percentage when choosing a cashback card – especially so for category cashback cards like CIMB Platinum and Maybank F&F.
Readers should take note of the dollar value of the cashback caps, and determine a strategy to charge at least the minimum required monthly spend and at most up to the cashback cap (for e.g. $400 spending on the online category with the DBS Live Fresh Card gets the maximum $20 or 5% cashback, but this must be coupled with another $200 of spending elsewhere to hit the minimum monthly requirements of $600 for bonus cashback to be awarded.
You can use our affiliate links below if you are interested to apply for any of the cards listed above. WhatCard was set up to help the community get the most from their credit card rewards. We have been delivering objective commentary with no ads or sponsored content, and affiliate links help us to keep the site running :slight_smile:

If you would like to get the maximum rewards from your credit cards, do consider integrating WhatCard 20into your lifestyle to help you optimize your credit card rewards, and follow us on Facebook 1 to stay updated on the latest tips, tricks, and hacks (like this article!) to get the most out of your credit cards

About WhatCard
WhatCard was created by a group of credit card and personal finance enthusiasts with a simple mission – how can we build something that will help each person get the most value out of their credit card spending.
With the best credit cards willing to give up to 5% and more of the total amount spent back as rewards, typically either cashback or as airline miles, people who do not pay with a credit card (where available) or use a sub-optimal credit card strategy are essentially giving the credit card companies a free lunch on all their spending.

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What is CPF Enhanced Retirement Sum (ERS)?

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