Friday 29 March 2024

My Investment Portfolio - SG (End Mar 2024)


Transactions:
- Added 1,500 units of CapLand Ascendas Reit at $2.65
- Added 200 units of Mapletree Logistic Trust at $1.524 via scrip dividends
- Added 150 units of Lendlease Reit at $0.569 via scrip dividends

I was considering adding either CapitaLand Investment or CapLand Ascendas Reit as the prices were similar. In the end, I settled for the reit as it gave more dividends but it would be more impacted by the delay in rate cuts. I also continued to add stocks with scrip dividends when it made sense to. Resulting in the addition of Mapletree Logistic Trust and Lendlease Reit. 

Now all eyes are on what the Fed bank do again in the next few months. Will the rate cut really happen this year or will it not. As usual, I will just add on when opportunities arise. It is impossible to predict the future.

Glad that dividends start flowing in again, helping to replenish my warchest. 

Dividends received* during the month: (Ascendas Reit, Mapletree Industrial Trust, Keppel DC Reit, Keppel Reit, Mapletree Pan Asia Commercial Trust, Mapletree Logistics Trust, Keppel Reit, Ireit Global, Lendlease Global Commercial REIT, CapitaLand China Trust, CapitaLand Integrated Commercial Trust)

Total dividends received in 2023: $3,506.40

Average dividends per month^: $292.20

Total Portfolio Market Value: $376,238


* Dividends are recognised after payment date. Average dividends per month is calculated by dividing the dividends received by 12 months regardless of the month. 
Portfolio excludes Singapore Savings Bonds, T-bills and Foreign Stocks
Divided by 12 months regardless of month of the year. 

Wednesday 6 March 2024

No SA Shielding? Life goes on. What I plan to do: 55 then decide!

I am sure by now you had already heard about upcoming changes to CPF. It was announced in Budget 2024 in February 2024. If you had not heard about it, I do not know how you chance upon this post. I had previously post on the more important changes and you can read more about it here:

CPF latest policy changes (No more SA Shielding), so how?

If you looked back at your life, let say since you started schooling, you will probably know that nothing goes according to plan. You can make certain plans such as education, career, family or even travel itinerary, there will always be a need to change the plan entirely or tweak parts of it. This is because factors impacting your plans are changing on a constantly basis.

This applies to any investment plan that you may have as well. You can buy a stock of a business and fall in love with it, but when it is fundamentally not sound, you need to trim down your position or cut it off entirely from your portfolio. It is important to know your goal, factors that could impact it, mitigate those risk and be flexible to change your plan to your plan B or plan C or even to a new plan.  Likewise this applies to CPF as in this instances, the change in policy (policy risk) will now force everyone to rethink their retirement plans.  

I have shared in the past about how CPF is my plan B, my safety net, and how I reached Full Retirement Sum (FRS). You can read about then here.

1. My CPF Strategy - Reached Full Retirement Sum (FRS) of $198,800 in 2023
2. 2023 CPF Interest of $11,134.61 and top up CPF MA to the new BHS

With CPF Changes, I had to think through whether my plan is still valid and what I should take note of or do. 

CPF is and will still my safety net

Based on current context, I will likely still do yearly cash top-up in January to my CPF MA to hit the Basic Healthcare Sum (BHS). This is because I want that tax relief and continue to earn that 4% in SA. If there is no tax relief, I will definitely not bother to do cash top-ups. 

When I reach 55 years old, the excess amount remaining in my SA after FRS has been formed in RA will be transferred to OA.

At this life stage, I am reluctant to think whether I want to pump my RA into ERS amount after 55 years old as I do not know how long I am going to live. If I am sure I will die only at 90 or even 100 years old, I will pump my RA to ERS. If I am sure I will die before 80, I will want to put in BRS or FRS into my RA. 

As mentioned in my previous post. "The interest accumulated on your CPF LIFE premium, along with the premiums of other CPF LIFE members, ensures that you can continue receiving payouts no matter how long you live, even if your CPF LIFE premium balance is depleted.". Hence, whatever interest earned from your CPF Life premium, it is not yours. It is pooled together

When I reach 54 to 55 years old, it will be the time for me to make an assessment of my own health and look at the latest data on the average life expectancy in Singapore. Also, by then CPF would have other policy changes. So why worry about something I cannot control now. 

Hence, for now I will still do what I can to pump up my CPF SA and MA to earn the 4% till 55 years old;
- transfer excess OA to SA if I had not reach FRS;
- yearly cash top-up to MA to hit BHS provided I get tax relief.

At 55 years old, then I will decide what to do, whether to 
- withdraw that OA amount out to put elsewhere;
- continue to put that amount in OA to earn 2.5% and withdraw it any time I want; or
- pump the OA amount into my RA to reach up to ERS to earn 4% for a higher monthly payout. 

Decide now also no use since policy may still change. 

I would also want to highlight that I have other investment passive portfolio to rely on. If CPF is your own retirement plan, then you may want to plan different. I would also strongly encourage that you rethink and review your retirement plan on a frequently basis, not only when there is a CPF policy change. 

CPF cannot be your only retirement plan. Do not put all your eggs into one basket.

These are my personal thoughts and based on my understanding of CPF mechanism. You will need to do your own due diligence and fact finding.


Thursday 29 February 2024

My Investment Portfolio - SG (End Feb 2024)

 

Stockcafe

Transactions:
- Added 2,500 units of CapitaLand Investment at $2.81

I have been eyeing CapitaLand Investment since it was formed and listed after the demerger from the development business of CapitaLand Limited. For those who remember, this happened in September 2021. I had practically given up hopes on having a holding in this share, until my price alert was triggered after Lunar New Year. On Valentine's Day (14 Feb), I decided to queue for it and my ordered got fulfilled! Such is the wonders of price alerts, there is no need to monitor shares constantly. Just set price alerts and wait.

Meanwhile my overall portfolio is just slightly above the water. The market value of my portfolio is $363,679.31 while my invested capital is $362,976.61. I am not monitoring it as I am mindful that banks will start going down soon, when they XD and when the rate cut starts. If all remains the same, my portfolio will turn red, which is also the time when I should purchase more at a prudent manner. This is because SG stocks will go down when US market start going down. Ironically when US market has been doing so well in recent weeks, STI has either gone down or remained flat. 

Hence, while I will be looking at building up this portfolio, I am mindful that I may have to pace our my purchases. I am also looking forward to receiving a sum of dividends in March to add into my warchest. I have opted for scrip dividends for Mapletree Logistic Trust and am likely to also do so for Lendlease Reit. 

Reminding myself to focus on the long term goal, add on the fundamentally sounded businesses and ignore the short term volatility and noise.

Dividends received* during the month: $173.30 (CapitaLand Ascott Trust)

Total dividends received in 2023: $173.30

Average dividends per month^: $14.44

Total Portfolio Market Value: $363,679.31


* Dividends are recognised after payment date. Average dividends per month is calculated by dividing the dividends received by 12 months regardless of the month. 
Portfolio excludes Singapore Savings Bonds, T-bills and Foreign Stocks
Divided by 12 months regardless of month of the year. 

Thursday 22 February 2024

CPF latest policy changes (No more SA Shielding), so how?

This is a long post. Previously, I had shared about how my Special Account (SA) had reached Full Retirement Sum (FRS), the interest I received in CPF for 2023 and my CPF strategy. You can read more about them here:

1. My CPF Strategy - Reached Full Retirement Sum (FRS) of $198,800 in 2023
2. 2023 CPF Interest of $11,134.61 and top up CPF MA to the new BHS

In my first article, I wrote about the policy risk a few times and true enough CPF has made a huge changes in policy during Budget 2024 and it would be effective in 2025. Budget 2024 had the usual incentives and CPF tops as previous years. 

The huge changes are 

(i) Closure of Special Account (SA) for members aged 55 and above; and 
(ii) Raising of Enhanced Retirement Sum (ERS) to four times of Basic Retirement Sum (BRS)

These changes have huge impact. Let me explain below. 

The closure of SA in early 2025 will mean that for members aged 55 and above, their SA savings will be transferred to the Retirement Account (RA) up to the Full Retirement Sum (FRS), where they will continue to earn long-term interest rates. Any remaining SA savings will be transferred to your Ordinary Account (OA), where they remain withdrawable and will earn the short-term interest rate.

Before the age of 55, you will have the 3 accounts; Ordinary Account (OA), MediSave Account (MA) and Special Account (SA). 

At the age of 55 and after, RA will be created and the savings in SA (and OA) will be used to form up to FRS in your RA. Any excess in SA will be transferred to OA and SA will be closed. 

With the closure of SA for members aged 55 and above from early 2025, it means the SA shielding loophole has been closed. This impacts everyone, even those who had done SA shielding in the past, whether 1 month ago or 10 years ago. The current loophole allows some to withdraw their SA savings withdrawn on demand from age 55 while earning the 4%, which is the long-term interest rate. Effectively, this benefits those who have more savings in SA; i.e. those who are rich (aka more well to do). 

Hence, this is really to fall back to the intent of Central Provident Fund (CPF). "CPF is a key pillar of Singapore’s social security system". It is meant to helps= Singapore Citizens and Permanent Residents set aside funds to build a strong foundation for retirement. 

With this loophole closed, the intent will be that only savings that cannot be withdrawn on demand should earn the long-term interest rate, and savings that can be withdrawn on demand should earn the short-term interest rate. After all, CPF is for the everyone and not to help the rich become richer. If the certain part of the mechanism needs to help a certain group, it would be to help the lesser privilege or those with minimal amount of CPF savings and with a small property (note, this group is different from those with minimal amount of  CPF savings with a big or has more than one properties). 

While I am sad that this loophole has been closed and that I am not able to benefit from it, I am glad that our government and civil servants are doing the right thing as I agree with the policy intent and principle behind this. There is no perfect system in the world, it is easy for everyone to ask why CPF had not foresee this loophole. What is important is that the system is being improved constantly and these improvements are aligned to the intent and objective.

What do those members with alot of CPF savings and want a higher payout upon retirement do? They  can voluntarily top up their Retirement Account to ERS, which is four times of BRS when they are 55 and above for even higher CPF monthly payouts in retirement. This is the reason why CPF is  raising the Enhanced Retirement Sum (ERS) to four times of Basic Retirement Sum (BRS).

Sounds good? Sounds like better than SA shielding? 

Let us go back to SA shielding. SA shielding allowed members to shield a amount of money and then realised them back to SA after RA has been formed. This amount that is put back into SA allows members to earn 4% interest and yet withdraw it on demand (i.e. anything, with no strings attached). To put things into perspective, this is even better than DBS Multiplier, UOB One or OCBC 360 accounts where you need to do certain actions to get high interest. In CPF SA, you do not need to do anything, just do that SA shielding once. 

In 2025, when the changes are implemented and you can voluntarily put in a big sum into RA, up to ERS and get 4% interest. However, you cannot withdraw this amount*.This amount is locked up until the age you select to start your CPF LIFE payout. Let me digress slightly to CPF Life..

At this payout age, your CPF LIFE premium is formed. CPF LIFE premium amount is the addition of your RA amount and compounded interest earned in RA account.

It is important to note your CPF Life monthly payout depends on the amount in your CPF LIFE premium. For example if you top up till ERS and choose start monthly payout at the age of 68, this monthly payout is from your own RA amount plus interest earned to date (your CPF LIFE premium) from 55 to 68 years old. So after your first month, CPF will deduct this payout amount from your CPF Life Premium and this balance amount is called CPF LIFE premium balance. 

So does your CPF LIFE premium earns interest? Yes, it does! But this interest may not go to your directly until your CPF LIFE premium is depleted. "The interest accumulated on your CPF LIFE premium, along with the premiums of other CPF LIFE members, ensures that you can continue receiving payouts no matter how long you live, even if your CPF LIFE premium balance is depleted." See image below. 

CPF FAQ

The concept of interest from all members' CPF LIFE premium being pooled together to ensure that members continue to receive payout even after their CPF LIFE premium has been depleted is really interesting. This ensures that Singaporeans are taken care of till the day they die. Really salute the team that came up with this.  

For those who think that the payouts will not be adjusted, please note that the payout may be adjusted. The payout is reviewed yearly to account for deviations in mortality experience and interest rate. Should there be adjustments, CPF will inform members. CPF shared that any changes are expected to be small and gradual.
CPF FAQ

There is another interesting thing to note, which is what happens if you pass away. 

"If you pass away before your CPF LIFE premium is depleted, your beneficiaries will always get back any remaining CPF LIFE premium that you have put into your plan.". 
CPF FAQ
It would mean that if you pass away after your CPF Life Premium is depleted, your beneficiaries get nothing from your CPF Life Premium. They will still get something from your OA and MA. 

I had wanted to share what I plan to do moving forward, but this post is way too long. I will post more about it in my next CPF post. 

These are my personal thoughts and based on my understanding of CPF mechanism. You will need to do your own due diligence and fact finding.

* technically you can pledge property or get back 20%, but lets not complicated things. For those who know what I mean, you are probably those already quite financial savvy. For the purpose of this post, I will not complicate things further. 

Wednesday 31 January 2024

My Investment Portfolio - SG (End Jan 2024)

Transactions:

- Added 4,000 units of Mapletree Log Trust at $1.54

I never expected to make any buy transactions in January. But when my T bills applications kept being unsuccessful coupled with current T bills maturing, and Reits going down again, I decided to deploy my warchest. A few stocks that caught my eyes include Mapletree Industrial Trust, Mapletree Logistic Trust and Raffles Medical. 

For Mapletree Industrial Trust, it is already my biggest holding, hence I decided to add only if it goes lower. 

For Raffles Medical, with foreigners returning and the fact patients are not as price sensitive when it comes to medical especially for serious conditions, I wanted to buy Raffles Medical. Their China play was also attractive. "Was" is the keyword as the context has just changed again.

China play which was attractive in the past is now the bottleneck. This is for both Raffles Medical and Mapletree Logistics Trust. Is China economy recovering or does it need to undergo a bigger scale  industry transformation and restructuring? It looks like it is the latter, which if true will take sometime.  But as usual, I cannot predict the future and cannot time the market. I decided to add on Mapletree Logistics Trust due to its strong track record and also the fact that it in other countries too. If Raffles Medical and Mapletree Industrial Trust drops lower, I think my itchy fingers will be triggered. 

January has typically been the month when I have a dry harvest (i.e. no dividends at all). It continued to be this way for 2024. I hope to start collecting a small amount of dividends in Februray, followed by a bumper harvest in March. 

Dividends received* during the month: $0

Total dividends received in 2023: $0

Average dividends per month^: $0

Total Portfolio Market Value: $364,647


* Dividends are recognised after payment date. Average dividends per month is calculated by dividing the dividends received by 12 months regardless of the month. 
Portfolio excludes Singapore Savings Bonds, T-bills and Foreign Stocks
Divided by 12 months regardless of month of the year. 

Wednesday 3 January 2024

2023 CPF Interest of $11,134.61 and top up CPF MA to the new BHS

1 January is always an exciting day. Not because it is the start of the new year, but because it is the date where we can all check how much CPF interest we have earned in the preceding year.  


I received $11,134.61 in interest from CPF for the year of 2023. In 2022, I received $9,281.95 in interest. The MA interest was adjusted into OA as my SA had already reached Full Retirement Sum (FRS). 


With MA Basic Healthcare Sum (BHS) being increased to $71,500 from $68,500 in 2024, I did a $3,000 cash top up to my MA on 1 January.  Hence, my MA is now back at BHS level (i.e. $71,5000). 

Why did I do a top up on the first day of 2024?
1) I wanted to get tax relief of $3,000 for Year of Assessment 2025
2) My monthly CPF contributions from employer is typically credited on the first or second day of the month. I did not want that contribution to decrease my tax relief, I wanted to get a full $3,000 tax relief. 
3) I will now be able to 'super charge' my OA. My monthly contributions from employer for MA will not flow to OA. This is because my MA has reached BHS AND my SA has reached FRS.

If you would like to find out how I reach FRS last year, you can refer to this post