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There are some changes to the rules on using CPF for purchasing of properties and also changes to the HDB housing loans we can take for a HDB property. This can be quite confusing so I will skip all the complexity of it and dive in to talk about who are the people who will get affected. Let's get started.



What the changes means to us? 

In simple terms, what I see is the changes are implemented to ensure we still have a roof over our heads when we are old and also slow down the depreciation of properties which have lesser lease remaining. The changes starts from Friday 10 May 2019 which is today.

When we buy a property, especially for HDB flats, most of us do not look at the remaining lease thinking that even if the lease goes to 0, we will still get to keep our house or the government will pay us to get another flat or we may get an en bloc on the flat. This is not true at all. The government has said multiple times that if the lease goes to 0, the HDB flat asset value will depreciate to zero.

With the above concern, a new rule of making sure the remaining lease covers the youngest buyer up to 95 years old is implemented. Previously, this was at 80 years old. If the remaining lease does not cover the youngest buyer up to 95 years old, they will be offered a loan on a pro-rated basis.

The updated rules will apply to:

  • HDB flats: Flat applications received on or after May 10, 2019
  • Private properties and executive condominium units: Option to Purchase or Sales & Purchase Agreement signed on or after May 10, 2019
  • CPF withdrawals: Applications received on or after May 10, 2019

Read more at https://www.channelnewsasia.com/news/singapore/hdb-loan-cpf-rules-buy-property-flats-home-11518170


Young Couples will be affected negatively

Let's see how this affect a young buyer who wants to purchase a resale flat:

Gabriel and Rachel intends to get married in 2019 and plans to purchase a resale flat. They are age 25 currently. They shortlisted 3 HDB properties in Boon Keng, Bishan and Seng Kang. Previously under the old rules before 10 May 2019, they could get full HDB loan up to 90% loan to value.

Let's see how the new rules will affect them:



Boon Keng (Remaining lease 55 years)Bishan (Remaining lease 65 years)Seng Kang (Remaining lease >75 years)
Maximum CPF usage70% Valuation Limit90% Valuation Limit 100% Valuation Limit 
HDB housing loan63% Loan-to-Value81% Loan-to-Value90% Loan-to-Value 

As we can see, the couple can only take 63% loan for their Boon Keng property as the remaining lease is only 55 years and they are still young at 25 years old. The remaining lease does not cover them to age 95 so their maximum CPF usage and HDB housing loan is pro-rated. Even if they want to purchase a Bishan property which has remaining lease of 65 years, they can only take a maximum HDB housing loan of 81%. 

For newer estates such as Seng Kang with remaining lease more than 75 years, they can still get the full 90% loan if they take the HDB housing loan. 

Let's put some property price numbers into the above scenario for better visualisation:



Boon Keng (Remaining lease 55 years)Bishan (Remaining lease 65 years)Seng Kang (Remaining lease >75 years)
Property Price$700,000$640,000.00 $416,000
Maximum CPF usage70% Valuation Limit ($490,000)90% Valuation Limit ($576,000)100% Valuation Limit ($416,000)
HDB housing loan63% Loan-to-Value ($441,000)81% Loan-to-Value ($518,400)90% Loan-to-Value ($374,400)

If we look at the Boon Keng property, for a 4 room flat price of estimated $700,000, the couple has to fork out $210,000 cash as the maximum CPF usage is only 70% of the valuation of the property. Even for the Bishan property, the couple has to also fork out additional $64,000 cash as the maximum CPF usage is only 90% instead of the previous 100%. 

In this case, for young couples who are age 25 to 30, the wiser choice is to ballot for a BTO or look at HDB properties with lease remaining of >75-80 years. Just make sure the HDB remaining lease can cover you at least to age 95 years old and you're safe from the changes of the new rules. 


Older buyers will benefit from this changes

Good news for older buyers who want to move house to live near parents or live in a better location in Singapore. With the new changes, older couple and buyers will be able to purchase HDB flats with shorter lease and still able to use their CPF for the purchase. Previously, they may only be able to use up to maximum 80% of their CPF for HDB purchase with lesser remaining lease. 

Let's look at one example below:

Gorden and Chloe are both 45 years old. They are thinking of purchasing a resale HDB flat to live near their parents. Their parents live in an old estate with most of the flats only with remaining lease of 50 years. With the revised rules, they will be happy to know that they can use more CPF to purchase the HDB flats with lesser remaining lease. 

Let's look at an example below:


Before 10 May 2019From 10 May 2019  
Property Price$430,000$430,000
Maximum CPF usage80% Valuation Limit ($344,000) 100%* Valuation Limit ($430,000)
HDB housing loan90% Loan-to-Value ($387,000)90% Loan-to-Value ($387,000)
*Applicable limit for buyers who have not set aside the BRS. Usage beyond the Valuation Limit (up to applicable limits) is allowed if the property buyers have accumulated their BRS. 
Note: 
1. Banks also take reference from CPF restrictions when assessing how much loan to lend. 
2. Actual loan amount is subject to credit assessment which takes into account, among others, buyer’s income and age. 

With the revised rules, this couple who are 45 years old can use $86,000 more of their combined CPF savings to buy the flat. Their HDB housing loan does not change. This is because even when the remaining lease is at a low of 50 years, it can cover them till at least 95 years old (45 years old + 50 years).


Changes to CPF withdrawal rules

Previously, CPF members above the age of 55 could withdraw their CPF savings above the Basic Retirement Sum (BRS) if they owned a property with a remaining lease of at least 30 years. This will change with the new CPF withdrawal rules.

CPF members will now need to have a property with sufficient remaining lease to cover them until at least the age of 95, before they can withdraw their CPF savings above the BRS


Summary of changes

While some will be worse of with this changes, others will benefit especially for the older people who are looking to move house. Here's a summary of the changes:

  • Property remaining lease should cover youngest buyer up to 95 years old else maximum CPF usage and HDB housing loan LTV will be pro-rate.
  • No CPF can be used if the remaining lease is less than 20 years. This has been lowered from 30 years currently. 
  • CPF withdrawal above basic retirement sum is only allowed if remaining lease on property covers until at least age 95. 

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Blogs and YouTube have become more and more popular in recent years with the help of social media such as Facebook, Instagram etc. It becomes easier for these online sources to become popular when people start to share it. Even a simple post on Facebook can go viral and attract the attention of the government and authorities which we have seen a lot in the recent NUS voyeur case. 

In recent times where I'm seeing more and more people able to create websites or YouTube channels and make it their full time work. This means that they are able to earn a decent income from their online channels that they don't have to work in the corporate world at all. If you think this only happens overseas but not in Singapore, then you're wrong. Let me show you some examples of websites and Youtube Channels in Singapore whose founders have made it possible to make money full time online and also international channels as well.



Singapore News Website Mothership

The first one is well known to many of us in Singapore. Mothership is an online news website which in essence just writes on news in Singapore and around the world. They have 300K followers on their Facebook page. On their about us page, they mention they attract over 1 Million visits to their site each month with over 60 per cent of their audience being between the ages of 25 and 44. They even have a license with IMDA where now online news channel is regulated by the government.
On advertising front, it is stated on their website that they have worked with many government ministries and stat board including MOT, MOE, MINDEF, EDB, MCCY, MOF, MND, NYC, HDB, AIC, NLB, MAS, LTA and CPF board. For companies, they have worked with big players such as DBS, UOB, Maybank, AXA, MacDonald, BreadTalk, KFC, Singapore Airlines, Singtel, Grab etc. This is quite an impressive portfolio of clients with deep pockets to pay for advertising. From my experience, with their kind of website traffic, advertisers are expected to pay a few thousand just for one article which mentions their brand.

The website started with 3 guys and I see that their team has expanded to more than 10 staff. This is really a company running in full force to deliver the best news you can get. So, they made it as the first website that could make money full time online.


Singapore Finance Website Seedly

The next website is a Singapore personal finance website called Seedly. Many of you who are reading my blog should already know or heard of Seedly. They have been gaining popularity lately due to the community fan base which they have built in just a few years. On their Facebook page, they have close to 16K followers and is still growing strongly. Recently, they also had a mega personal finance ticketed event at Suntec which attracted thousands of people to attend.

Seedly started in 2016. I met their founder Kenneth just before Seedly was born and my impression is he's a passionate guy who has the drive to make things happen in the personal finance world. He was at that time looking to develop an app for people in Singapore to track their finances. He made it happen and expanded to create the Seedly app, moving on to creating their website and building the Facebook community which is really strong now.

A quick check on similarweb shows that the website has more than 700K visits in March 2019 alone. If I'm not wrong, they are now a team of 9 running the company and recently in May 2018, they were acquired by Shopback. This is a homegrown success story for a small start up which shows that if we want to make things happen, it can be done. So, they made it as the second website that could make money full time online.


Singapore YouTuber JianHao Tan

The next one is not a website but a YouTube channel. YouTube is gaining popularity among young people especially those in their teens. I've observed that the younger generation have also moved on from Facebook to Instagram now with many of them posting photos and Instagram stories on a daily basis.

The YouTube channel JianHao Tan is created by a young guy whose name is as its channel says it is. From the looks, he seems quite young in his 20s and have already garnered more than 3 Million subscribers on his YouTube channel. He also have 476K followers on his personal Instagram page and 85K followers on Facebook. He also talks about people who recognize him when he travels overseas which is quite impressive for a Singapore start up. He is definitely doing this full time as he has registered a company called Titan Digital Media and also shows his office space and daily life routine on his YouTube channel. Of course, he's not doing this alone and has a team of about 5 to 6 staff if I'm not wrong.
Most of his videos posted have more than a million views with those more popular ones having views as high as 26M views for 1 video alone. Curious to know what kind of video can attract so many views? Here is the video for reference: https://www.youtube.com/watch?v=1KofiHFsBQk

He also has an annual fan meet up and the one I saw which was held at Dhoby Ghaut area attracted people to queue up all the way from Plaze Singapura to Istana area. Most of them are quite young who are teens in secondary school. So, they made it as the YouTube channel that could make money full time online.


International Travel Vlogger Mark Weins

For those who like to travel, ever thought that you could make money while travelling full time? This guy has done it. He's just one of the popular travel vloggers who has managed to do it. Mark Weins started his travel website Migrationology back in 2009.

His success story is reproduced below which is found on his website:

"It was during that time, back in early 2009 when I decided to start a blog. With the help of about 10 cups of coffee per day, Migrationology.com was born. 
I still wasn’t ready to get a job and stay put, so I caught a one way ticket to Bangkok, with no plans other than to eat as much as I could. 
After traveling around Southeast Asia for about 6 months, I managed to spend nearly all my money. 
I was in the Philippines at that time, and I caught a flight from Manila to Bangkok. At this point, I decided to get a job teaching English, and it didn’t take long before I signed a contract to teach English for a year. 
However, English teaching was not for me (it was a great experience, but teaching English is just not my passion). 
But during that year, I set a personal goal that I would never teach again, and that I would find a way to make a living on the internet, so I could travel (and eat) and earn money at the same time. 
It wasn’t easy. 
Every spare moment I would blog and sit glued in front of my laptop until my eyes went crazy. 
At the beginning, when I made the decision to earn a living online, I’ll admit that I had to live on the cheap (really cheap). 
One of the biggest turning points for me was when I published my first eBook, the Eating Thai Food Guide. I finally had my very first product to sell on my website. 
It took about 3 years of online work and experimenting before I really started making enough to live fully and support anyone other than myself."
It took him 3 years of online work and experimenting before he could make enough fully online. Now, his YouTube channel Mark Weins has more than 4 Million subscribers. This is quite impressive. I love his travel videos for his love for food and his expression when he eats something good is priceless.
Does money fall from the sky if we don't work in the corporate world?

So, after seeing people who manage to make money full time online, do you think it is easy to do it? From my experience, it is not easy and it requires perseverance and time and effort to make it happen. Yes my blog can make some money online but it is definitely not sufficient to make enough to live fully and support my family or loved ones. It is about creating great contents consistently and working in a team is important to bring in new contents if you really want to make money full time online.

Just like a company has a team to work together to make things happen, making money online is also like running a company. Instead of the brick and mortal business we see in the past where real products are needed, online contents such as articles and videos can also generate profits now. The hard work required to create these online content products is still the same or even more to make it successful.

The difference is nowadays, everyone has the opportunity to do this online business instead of the brick and mortal which was limited to certain people only. That's why now we can see more young people trying to make the cut to be the next successful blogger, influencer or YouTuber. It may just be you if you try hard enough and are passionate for what you really want to do.
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In my previous post on The 10 Years Financial Independence Target, I laid out the strategy to compound our money to reach financial independence in 10 years. The strategy involves having a dividend yield of 6% in the investment portfolio. There are quite a few questions on whether 6% dividend yield is achievable? Also, how do we get that 6% dividend yield?

In my years of investing experience, I've learnt that it is indeed achievable to get 6% dividend yield in our investment portfolio. Over the years, I've learnt to pick some good stocks that have generated on average 6% or more dividend yield for my portfolio. Some of these stocks I've held it for many years and they are still generating stable and good dividends for me. In fact, the dividend yield should  increase over the years if its a good stock and of course the price of the stock will increase too.

Here is a glance of some of the stocks which are generating good dividends in my portfolio:


StockAvg Price when boughtDividend Yield on portfolio
Starhill Global Reit$0.686.48%
Frasers L&I Tr$1.036.95%
Suntec Reit$1.656.04%
CDL HTrust$1.297.12%
Far East HTrust$0.636.35%
Frasers Cpt Tr$1.956.16%
Ascendas-hTrust$0.728.25%
CapitaMall Trust$1.906.04%
Frasers HTrust$0.786.02%
CapitaCom Trust$1.326.59%
SingTel$3.504.97%

Above are 11 stocks in my portfolio which are generating on average 5% and more dividends. With the exception of Singtel, all other stocks are generating 6%-8% dividend yield for me. Unfortunately, most of the stocks are not giving more than 6% dividend yield based on current price. I bought most of the stocks when the price was significantly lower. 

If you've missed the boat, fear not because there will always be an opportunity to buy stocks at lower prices again. When the market is bad, that is the time to buy. But, it is important to pick good stocks so that they can ride out the bad economic situation at that time. 

Let me share some tips and what to look out for when identifying companies to buy based solely on my experience to achieve 6% dividend yield.



1. REITs and Business Trusts are good stocks to get dividend income

The first thing you will realise is that REITs and business trust is the answer to get higher dividend yield. As compared to blue chips such as Singtel, DBS or other big companies, the dividend given by REITs and business trust is mostly higher due to the fact that they are income generating assets. They own assets which they rent out to get rental income. REITs also have to give out at least 90% of their income to shareholders in the form of dividend.


2. Sustainability of rental income affects dividend yield

As dividends are given out from the rental income which the REIT or business trust receive, the sustainability of it is important. If you invest in a retail REIT such as Capitamall or Suntec, the retail sales, traffic flow and the positions of the malls will affect its rental income. Economic changes will also affect its rental income. 

For example, there has been discussions that retail sales will be affected due to the emergence of online shopping. If lesser people shop at the stores, the stores will have lesser income and thus may not want to renew their lease. If the shop space is left empty, then rental income will be affected. 

The location of the malls is also important when it comes to sustainability of rental income for retail REITs. For example, Frasers centrepoint trust has malls which are located in sub urban areas such as Woodlands causeway point, Yishun North Point etc. The malls are also mostly located next to MRT stations. This brings a lot of shopper traffic to their malls and thus they are able to attract better tenants who are willing to pay more rental. 

Other REITs such as commercial REITs, hospitality REITs and logistics REITs will also have factors affecting its rental income. Commercial REITs rental income is affected mostly by economic market conditions, hospitality REITs are affected by the number of tourists who come and stay in Singapore or the supply of new hotels and logistics REITs are affected by economic market conditions also. This is just a general statement but if we really want to dive deeper, there are lots of factors for each REIT to talk about. 

Master lease is another factor to look at for sustainability of rental income. Starhill global reit which owns Ngee Ann City has master lease with Toshin which owns Takashimaya in the mall itself. This has contributed to stable income for the REIT as there is certainty that the tenant will continue to pay its rental income under the lease contract. 

3. Is the REIT able to generate higher rental income progressively?

Besides the sustainability of the rental income, we should also look at REITs and business trust which can generate higher rental income. This is called rental reversion. Lease of the tenants do expire according to their contract. When the lease expires, tenants may renew their lease with the REIT or business trust. Good REITs will be able to generate positive rental reversion for many years. An example of this REIT is Frasers Centrepoint Trust. They have managed to generate positive rental reversion since 2007. This is 12 years and going strong. Rental reversion is the metric that shows whether new leases that were signed have higher or lower rental rates than before.

Another way the REIT can generate more rental income is through yield accretive acquisition and Asset Enhancement Initiatives (AEI). REITs will often look out for good properties to take over. A recent big acquisition is by Frasers Centrepoint Trust where they took a major stake in PGIM Real estate AsiaRetail Fund which owns the Asiamalls in Singapore. Frasers Centrepoint Trust also did an AEI few years back where they expanded North Point in Yishun and this has resulted in higher rental income due to more space which they can rent out. 

For commercial REITs such as Capitaland Commercial Trust, they did a series of yield accretive acquisition such as acquiring Asia square tower 2 and they are doing AEI on Raffles City which will increase their rental income. Hospitality trust such as Far East Hospitality is expanding with its newly built Outpost hotel Sentosa opening this month. This will add to its income which it gets from its hotel rooms and also events management revenue. 


4. Make a trip down to the REIT's property

We should make a trip down to the REITs we invest in especially those that are in our home country. Having a look and feel of the human traffic, business activity of the property itself can tell a lot about whether its a good investment.

For retail REITs, most likely we would have visited before so what makes the malls stand out from the rest of its competitor? Some retail REITs are smart enough to take advantage of the rise of ecommerce such as Capitaland Mall is opening the new Funan mall in June 2019 with drive through click-and-collect and hands-free shopping service, where shoppers can choose to either pick up their purchases at Funan’s concierge when they are done, or have their shopping bags delivered to their homes.

For hospitality REITs, we can make a trip down or read the reviews on online websites such as booking.com or TripAdvisor. The reviews can tell a lot about its business activities.

For commercial and industrial REITs, it gets a little more tricky as we can't really visit these commercial offices or industrial buildings. But, we can still look at reports to gauge the occupancy and business activities. For this kind of REITs, most of the time they are more affected by economic cycles so its important to know what is going on around the world. Reports from CBRE are good sources of information to read more on commercial property activities.


5. Never over pay for a REIT

Buying REITs is like buying properties. When I invest in REITs, I will make sure I buy it at a reasonable price. You can see whether the price is reasonable by looking at the NAV or the dividend yield. The NAV is the net asset value which is the net value of all its assets (mostly properties for REITs). The dividend yield will tell you how much rental income you are getting and whether its worth the investment.

For example, when we buy a physical property for investment, we will also look at the location, then the reasonableness of the price (whether its below or above valuation) and then we will look at how much rental income we will get. Taking the rental income divided by the price we pay, we will get the % return. When investing in REITs, we should approach it like buying a real property also and most of the time this will make sure we get good value out of our investments.

It takes patience to get good value on our investments. Some of the REITs I waited a few years before I finally invested in it. When the price is right, I will know at that time because I've been reading up and researching all along.


In Summary
From my own personal experience, investing in REITs and business trust has been a rewarding experience. While waiting for the REIT to continue growing, I get dividends over the years to have some certainty on the return on investment in my portfolio. Even if the REIT does not do well later, the loss will be cushioned by the dividends we received.

Within the investment, I also buy and sell the REIT along the way to take some profit when it goes up and buy again when the price goes lower. 6% dividend yield and return on investment is possible and I've managed to achieve this consistently over the past few years. There are ups and downs over the years but the overall % return should still be there. Hope this post has helped you to get some insights on how to achieve 6% dividend yield in your investment portfolio.

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Achieving financial independence in Singapore is possible but honestly, only a handful of the population can achieve it. This is because most of us are brought up being taught that we need a job to survive and we will probably have to work till we are quite old. That is sadly still happening when I see some of my colleagues still struggling to make ends meet even in their 50s and 60s.

In the financial goals page of my blog, the target I set for myself is to achieve financial independence by the age of 42. This is about 10 years from now as age catches up quickly unknowingly. In Singapore, I reckon we need more than $800K to $1 Million in order to achieve financial independence. My way of financial independence is to invest and get enough investment income to substantiate my expenses indefinitely. Investing $800K at 6% dividend yield will get us about $48,000 a year or $4000 a month. Most of us would probably need more than $4000 a month if we have a family and thus the target of more than $800K came about.

How long does it take to save $1 Million dollars?

A million dollars is the sweet spot in financial freedom. Investing a million dollars at 6% dividend yield gets us about $5000 a month. For a person who does not invest at all, achieving $1 Million is almost impossible. For a person who saves $20,000 a year and puts it in the bank earning almost 0% low interest, he'll need 50 years to save up $1 Million. If he saves $40,000 a year, it still takes 25 years to save up that amount.

Now, if the same person who saves up $20,000 a year and invests it to get 6% investment returns, he'll only need 24 years to achieve that $1 Million as compared to 50 years. This is the power of compound interest where it effectively shortens the time to achieve the same financial target by about half. Not many people will understand compound interest as it is always almost confusing for most people. This is why 90% of the population will continue to struggle to retire even in old age. Only the top 10% of the high income earners can retire comfortably because of the high savings they have even without investing. The rest of us will not make it if we do not know what to do.


Investing for dividends to reach financial freedom

While compound interest concept is so difficult to understand, investing for dividends should be more familiar to most of us. It is actually still compounding at work but explained in a more layman way. The focus is to keep on saving and investing and getting stable dividends and one day we will just reach the financial target that we set out for.

Let's look at a person who earns $3000, spends $2000 a month and invests for 6% dividend yield, how long will it take for him or her to achieve $1 Million in savings?

Additional assumptions is the income will increase by 3% each year which I think is quite conservative as most of us would be able to earn higher income faster through promotions. Bonus is not included also. Additional savings is ="income - expenses + dividends".

This is the result:


Year Net worthIncomeExpensesDividendsAdditional SavingsInvestment return
1$0 $36,000 $24,000 $0 $12,000 6%
2$12,000 $37,080 $24,000 $720 $13,800 6%
3$25,800 $38,192 $24,000 $1,548 $15,740 6%
4$41,540 $39,338 $24,000 $2,492 $17,831 6%
5$59,371 $40,518 $24,000 $3,562 $20,081 6%
6$79,452 $41,734 $24,000 $4,767 $22,501 6%
7$101,953 $42,986 $24,000 $6,117 $25,103 6%
8$127,056 $44,275 $24,000 $7,623 $27,899 6%
9$154,954 $45,604 $24,000 $9,297 $30,901 6%
10$185,855 $46,972 $24,000 $11,151 $34,123 6%
11$219,979 $48,381 $24,000 $13,199 $37,580 6%
12$257,558 $49,832 $24,000 $15,453 $41,286 6%
13$298,844 $51,327 $24,000 $17,931 $45,258 6%
14$344,102 $52,867 $24,000 $20,646 $49,513 6%
15$393,615 $54,453 $24,000 $23,617 $54,070 6%
16$447,686 $56,087 $24,000 $26,861 $58,948 6%
17$506,634 $57,769 $24,000 $30,398 $64,167 6%
18$570,801 $59,503 $24,000 $34,248 $69,751 6%
19$640,552 $61,288 $24,000 $38,433 $75,721 6%
20$716,272 $63,126 $24,000 $42,976 $82,103 6%
21$798,375 $65,020 $24,000 $47,902 $88,922 6%
22$887,297 $66,971 $24,000 $53,238 $96,208 6%
23$983,506 $68,980 $24,000 $59,010 $103,990 6%
24$1,087,496 $71,049 $24,000 $65,250 $112,299 6%

The above chart shows it takes 24 years for this person to achieve that $1 Million sweet spot. However, if you look at the dividends column, his dividends have already covered his $24,000 per year expenses at year 16. 

This person could grow his money because the dividends received could offset his expenses and in turn increase his additional savings significantly when he has more capital. If you look at year 10, the dividends received of $11,151 is contributing to his savings which is quite significant. 

Of course, some of you will say it is impossible for expenses to stay at $24,000 a year ($2000 a month). Now, this brings me to the 10 year financial independence target. 

The 10 Years Financial Independence Target

Achieving financial independence in 10 years is possible with the following in place:
  1. Starting savings/investment capital of $300,000
  2. Take home pay of $6400 with 2 months bonus
  3. Salary increase of 3% per annum
  4. 6% dividend yield
  5. With $5000 per month expenses
If you look at the above scenarios, it would most likely apply to a couple who work towards a financial target together. If you are already earning that amount of salary with the above investment capital, then you can achieve it yourself. 

Here's the breakdown of the numbers: 


Year Net worthBasic SalaryBonusTotal incomeExpensesDividendsAdditional SavingsInvestment return
1$300,000 $76,800 $12,800 $89,600 $60,000 $18,000 $47,600 6%
2$347,600 $79,104 $13,184 $92,288 $60,000 $20,856 $53,144 6%
3$400,744 $81,477 $13,580 $95,057 $60,000 $24,045 $59,101 6%
4$459,845 $83,921 $13,987 $97,908 $60,000 $27,591 $65,499 6%
5$525,344 $86,439 $14,407 $100,846 $60,000 $31,521 $72,366 6%
6$597,711 $89,032 $14,839 $103,871 $60,000 $35,863 $79,734 6%
7$677,444 $91,703 $15,284 $106,987 $60,000 $40,647 $87,634 6%
8$765,078 $94,454 $15,742 $110,197 $60,000 $45,905 $96,101 6%
9$861,179 $97,288 $16,215 $113,503 $60,000 $51,671 $105,173 6%
10$966,353 $100,207 $16,701 $116,908 $60,000 $57,981 $114,889 6%
11$1,081,241 $103,213 $17,202 $120,415 $60,000 $64,874 $125,289 6%
12$1,206,531 $106,309 $17,718 $124,027 $60,000 $72,392 $136,419 6%
13$1,342,950 $109,498 $18,250 $127,748 $60,000 $80,577 $148,325 6%
14$1,491,275 $112,783 $18,797 $131,581 $60,000 $89,477 $161,057 6%
15$1,652,332 $116,167 $19,361 $135,528 $60,000 $99,140 $174,668 6%
16$1,827,000 $119,652 $19,942 $139,594 $60,000 $109,620 $189,214 6%
17$2,016,214 $123,241 $20,540 $143,782 $60,000 $120,973 $204,755 6%
18$2,220,969 $126,939 $21,156 $148,095 $60,000 $133,258 $221,353 6%
19$2,442,322 $130,747 $21,791 $152,538 $60,000 $146,539 $239,077 6%
20$2,681,399 $134,669 $22,445 $157,114 $60,000 $160,884 $257,998 6%

It would take some time to digest the above numbers. In summary, in just 10 years, the above person or couple can achieve close to $1 Million in 10 years with dividends received of $57,981 using 6% dividend yield. They can spend about $5000 per month freely even without working at this stage. This would be the desired financial independence where quality of life is still quite alright.

Achieving financial independence should always start from good savings habit to accumulate a sizable investment capital. Once the foundation is built and investment capital crosses above $200K, focusing on investment will make more sense. I am at the stage where I should be focusing more on investing and so generating more passive income through dividends is what I am going to do.

If you do not want to be stuck in a job you don't like but have no choice but to keep working because you do not have financial independence, then its time to start planning and see how it is actually achievable. There are many disgruntled employees in the workplace where they have no choice but to work till their old age. I've worked in 3 different companies and everywhere I go, there will be unhappiness in the workplace. I foresee in the future, working in Singapore will get more and more stressful as the ageing population puts a strain on the infrastructure spending in our country. As our workforce shrinks, each employee have to work longer hours and take on more roles and even roles of multiple persons. It is already happening and the drive for productivity using technology doesn't seem to really work. Instead, what I see is more workload for the existing employees.
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By now, many of you would have heard of the open electricity market and have seen the roadshows by many of the new electricity retailers who are offering much lower prices than Singapore Power (SP) group's current electricity tariff. There are as many as 13 different new retailers now apart from SP group. Many of you might have seen the prices and know that it is indeed lower but is there a catch to all these lower prices? Should we all be switching to these new electricity retailers to take advantage of the lower prices?

To answer all the above electrifying questions, we have to understand what is the open electricity market first. I know there are lots of info out there and it is confusing so in this article I will explain why electricity retailers can offer rates cheaper than SP group and why SP group could not in a simple to understand way.

What is Open Electricity Market (OEM)?

Before OEM was opened to residential estates, we could only buy power from SP group. However, OEM is not new in Singapore actually. Prior to OEM being opened to residential estates, business consumers with an average monthly consumption of at least 2,000 kWh (approximately $400 in electricity bill) can buy electricity from other licensed electricity retailers already.

There are 3 main players in the industry. Firstly is power generation companies, then electricity retailers and lastly are the consumers. Power generation companies are power plants that generate electricity. In the wholesale electricity market, they bid to sell their power to electricity retailers in bulk. Then, electricity retailers compete to sell it to consumers like you and me.


Why new electricity retailers can offer cheaper rates as compared to SP group?

In the OEM, we could buy power from other electricity retailers other than SP group. These new retailers are either the retail arm of power generation companies or independent retailers who buy power from these power generation companies at wholesale prices. Previously, SP group is the only company who buys power from these power generation companies and in turn sells it to us.

With the OEM, we can now buy electricity directly from power generation companies instead of going through a middle man like SP group. It is like we buy goods from a wholesale warehouse instead of from a retail shop who also gets the goods from the wholesale warehouse and sells it to us at a higher price after accounting for their manpower and rental costs etc. Independent retailers who do not generate their own electricity but buys from power generation companies and sell to us can sell cheaper than SP group because most of their operations are online with low overhead costs.

If we look at the chart below, we can see that SP group is paid 5.71 cents per kWh, out of 23.85 cents per kWh paid by households. This comes to about 24 per cent of the tariff. Now, does this 24% rings a bell which coincides with the discounts which new electricity retailers are offering? Yes, because we successfully cut out the middle man which is SP group, we directly save about 24% in our electricity bills straight away.

Adapted from Energy Market Authority Singapore

Why can't SP group offer consumers electricity at lower rates?

Electricity tariffs are not set by SP group, but are regulated by EMA to recover the long-term costs of producing and delivering electricity to consumers. This includes fuel prices, building and operating power plants as well as maintaining the power grid. In layman terms, it means they are stuck with this kind of situation as regulated by the authority.

Isn't it unfair for them and won't SP group get into trouble if everyone switches out from them? The  answer is no. SP group is still the biggest player in the market now and it is unlikely more than 50% of the population will switch out. SP group can now also take advantage of the situation and offer customer service solutions to these new retailers and in turn charge a fee for the services. Instead of earning from households, they can go into the business of earning from retailers in the open electricity market.

We can actually buy wholesale electricity from SP group also but the price will fluctuate every half hourly which is confusing for most consumers. It becomes we have to monitor the electricity rates across the day itself and manage our usage accordingly. In an average day, electricity prices will be highest during the day when the demand is the highest and should drop at night when demand is lower. This is how the wholesale electricity rate fluctuates.


Where can I compare the best OEM price plan if I want to switch?

I have helped my parents switched our electricity from SP to Geneco fixed price plan which is 30% lower than the current SP rate. I did not do any comparison beforehand as I think the competition is intense enough and most of the retailers are offering roughly the same package. Just make sure to read the terms and conditions properly as some retailers do charge admin fees or collect deposits. Nevertheless, if you want to compare the prices, you can do so easily too.

Besides the many road shows on the streets which you can walk around and compare the prices, you can also compare the best price plan from the official OEM website here: https://compare.openelectricitymarket.sg/#/home

3/4 of the population can now switch to enjoy lower electricity rates. Here are the zones as well as when you can start to switch:
  • Zone 1 - Postal code 58-78, From 1st Nov 2018
  • Zone 2 - Postal code 53 – 57, 79 – 80, 82 – 83, From 1st Jan 2019
  • Zone 3 - Postal code 34 – 52, 81, From 1st Mar 2019
  • Zone 4 - Postal code 01 – 33, From 1st May 2019
In conclusion, the open electricity market allows us to buy electricity directly from power generation companies without going through a middle man. This definitely lowers the cost of electricity for the consumers. To enjoy sustainable long term low cost on our electricity bills, I think its better to sign up with those retailers who are the direct retail arm of power generation companies with big power plants. In this way, they can always offer cheaper electricity rates as compared to other companies who just resell the electricity to us.

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Hyflux has been the talk of the town lately due to its cash flow problems which triggered a restructuring process. This process is getting more and more hot after it announced the details of its restructuring plan. Retail investors now face as much as 90%-97% loss of their investment capital with this plan.

The Hyflux restructuring plan unveiled

For every S$1,000 invested, a holder of Hyflux’s perpetual securities and preference shares will recover S$106.54, or an implied return rate of 10.7%, under the company’s newly announced restructuring proposal. Out of this 10.7%, only 3% is paid in cash and the other in shares of Hyflux. For medium term note holders who are ranked higher on the creditors' list, they will get 24.6% where the cash component is about 13.9%.

Sadly, I am one of those affected as I've invested in the Hyflux 6% cumulative preference shares just 8 months before it was suppose to be redeemed in April 2018. I invested the smallest amount which I possibly could as there were some elements of risk for this but it was a risk I thought I could take betting on the sale of TuasSpring to redeem the perps. After all, Hyflux is a national pride dealing with water, which seems like a strategic asset in Singapore and this was a well known name too. Losing money is painful nonetheless even if it doesn't really affect my financial health as I had diversified my investment portfolio. Net net after writing off this investment, my investments are still in the positive but my returns will drop because of this episode.

Stories of plight of retail investors revealed

The Hyflux saga affected more than 34,000 retail investors, many of them are mom and pop investors who are in old age and probably retired. Many have even invested their hard earned life savings into it. Let me share the following which was posted by Straits Times today:

Madam Loo Leong Hun was 55 years old when she was given a list of corporate bonds in June 2012 by a DBS relationship manager to invest in as she had savings in her POSB account.
"Hyflux preference shares was on the list, and it was strongly recommended as it was a strategic and national asset. The money was to facilitate expansion and build desalination plants. I thought I had invested in a good company... which was our nation's pride," Madam Loo, now 62, told the High Court yesterday. 
One of some 34,000 registered holders of Hyflux perpetual securities and preference shares, Madam Loo was allowed yesterday by Justice Aedit Abdullah to voice her concerns, which he said are "shared by many of you". 
She cited the case of another elderly investor who had invested in 2,500 preference shares. "She is 86, lives alone in a one-room flat and... has mobility problems. She used Hyflux dividends to pay off some of her daily expenses. Now, she has no more earning power,"she said.
Madam Loo is just one of the 34,000 retail investors who are affected. She proposed a plan to waive off the coupon payment for the perpetual and preference shares but hopes that this group of people will not be eliminated from Hyflux books once and for all.

I do not know why Hyflux had to go into such extreme that they have to accept a proposal by SM Investments Pte Ltd to eliminate the retail investors once and for all. Are there any other solutions or maybe they really have no choice? Throughout all the communications sessions which Hyflux had, the message is clear that if this restructuring plan is not voted through, then the company will face liquidation where perpetual and preference shares investors will not get a single cent back.

I do not have the full picture of what is happening behind when Hyflux selected SM Investments Pte Ltd proposal our of the 16 who approached them. Are there really no other better offers? In Hyflux's investor relations website, it stated that Hyflux’s board unanimously agreed that in the circumstances faced by Hyflux, SM Investments Pte Ltd proposal was the best way forward for stakeholders. From a layman point of view, getting 60% of the company for $530 Million and eliminating $2.4 Billion of debt sounds like a good deal. Without the debts, SM Investments Pte Ltd can then really run the business well where they won't face anymore cash flow problems. Of course, this is done at the expense of the retail investors who loss all the hard earned money they have put in.


What happens moving forward?

Hyflux will hold a third round of town hall meetings with holders of its notes, perpetual securities and preferences shares, as well as ordinary shares on Mar 13. The scheme meeting will be held on 5th April where everyone will come together to vote Yes or No for the proposed restructuring plan. 

To pass, the scheme will need to be approved by at least 50 per cent in number and 75 per cent in value of each creditor class. “If one class fails, the scheme fails,” said Hyflux’s legal advisor. I'm not sure if its easy to pass the scheme and whether retail investors will accept the meagre recovery amounts. There is already a petition ongoing, started by some retail investors to appeal to the Singapore government for help. Many of them are saying they will vote No and rather see Hyflux go into liquidation then let them restart by eliminating the debts. All eyes will be on this voting which will probably be a media sensation in Singapore's history. A popular household name with rag to riches stories may be going back to the rags again this time.

I feel sad that some investors are really losing all they have and some even have their whole families having invested in Hyflux together. Though all investments comes with risk and we should manage our risk by not investing everything into one basket, it is very hard for the average man on the street to know what risk means especially when they are already at a certain age. Nobody likes to lose their life savings which is painful to begin with. Will there be hope for these retail investors who are invested heavily in Hyflux? Time will tell what will happen next.


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Far East Hospitality Trust should not be new to readers here as I've blogged about this stock on several occasions. I first wrote about investing in the hospitality industry back in April 2017 in this post. I went on to invest in CDL Htrust and Far East Htrust thereafter. Both have been performing well since then and providing good and stable dividends for the past few years.

Let's focus on Far East Htrust. This company has done well in its latest results which prompted CIMB, OCBC and DBS to write and cover the stock the past few days. Net property income went up 13.9% Q on Q with DPU up 3.1%. With this good set of DPU, dividend yield is now about 6.5% for this stock.

For hospitality stocks, it is important to look at the RevPAR which is the revenue per available room. For Far East Htrust hotels segment, this has gone up 7.5% due to an uptick in overall market demand, the positive impact from the addition of Oasia Hotel Downtown to the portfolio and the recent renovation of Orchard Rendezvous Hotel (formerly known as Orchard Parade Hotel). Average occupancy has also increased from 85.4% to 86.2%.

For its serviced residences segment which has not been performing that well previously, there are also signs of improvements where Revenue Per Available Unit (RevPAU) also increased 7.5% and average occupancy increased from 78.2% to 84.3%. This increase was driven by online bookings from the leisure segment.

Far East Htrust has enjoyed 4 quarters of consecutive DPU growth. It is trading at 0.8x price to book value which represents a discount of 20% to book value. I've invested additional 7000 shares in this hospitality trust at $0.61 back in December 2018. Besides the newly acquired Oasia Hotel Downtown, they also just newly opened Outpost hotel at Sentosa which will further strengthen the DPU growth in the future.

Newly opened outpost hotel Sentosa
I believe Far East Htrust will continue to do well moving forward. In fact, this is just the beginning of its growth story which I've waited 2 years for it to materialise. This stock is now the 2nd largest in my portfolio which is paying good dividends with potential for growth in the near term. Singapore Tourism board also recently released its tourism statistics which shows that visitor arrivals to Singapore has hit an all time high due to the Trump Kim Summit and the release of Hollywood movie, Crazy Rich Asians which was filmed in Singapore. This has put Singapore in a good light and attracted many tourists to come to Singapore for holidays.

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Happy Lunar New Year to all! Chinese new year holidays went pass just like that. I hope all of you had an enjoyable time getting or giving ang baos and visiting your relatives in this new year.

Chinese new year is always associated with wealth and prosperity. While it doesn't happen by chance, some knowledge on how to grow our money will help in this financial journey. Some people pay thousands of dollars just to attend seminars but actually free ones are equally good out there. In this new year, there's this wealth summit where you can learn more about finance and investments. The best thing is you can learn from the comfort of your home and its totally free with no terms and conditions attached.

Honestly, this is the first time I heard of a virtual summit with great speakers including a keynote with legendary investor Jim Rogers who will be sharing where he will be putting his money for investments in 2019. Other speakers include Alvin Chow from Dr Wealth and many other topics such as value investing, trading and economics will be covered.

If you want to learn how to make your money work harder for you this new year, click here to register and get your free access to this virtual summit happening on 23 February 2019.


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Looking back at my first post on SG Young Investment back in 2013, I was only 25 years old back then. How time flies, this is my 6th year of blogging and I'll be turning 31 this year. Till now, when I meet new people, often I'll be asked the question: "Why did I start blogging?" The answer was simple, because I was inspired by other financial blogs out there and wanted to contribute towards financial education too.

As time goes by and as life gets busier and also life changes along the way, it gets harder to blog as frequently as before with the limited time I have. As I document down my journey towards financial freedom, I also start to realise how hard it was. This is the reality of life because it is not as smooth sailing as what we would want it to be. Many ideas were written and said before but implementing it and seeing it through is another thing altogether. Many long time bloggers are not writing as frequently too and some have even taken a break indefinitely. They are all good people whom I've known for the past few years.

Blogging has enabled me to reach out to more people than I could have ever imagined. It has been an eventful 6 years where I have managed to meet many different people in the finance community. The community has evolved and the outreach is far wider now which attracts a lot of young people who are interested to manage their finances well with finance websites or groups such as Seedly, Dr Wealth, DollarsAndSense etc. They are operating full time and have much more capacity to outreach to more people as compared to part time bloggers like me who only write in their free time. We are all friends in this community.

If I look back at how many posts I have actually posted since SG Young Investment started, it stands at 483 currently. I would have covered all aspects of financial planning including personal finance, investments, housing, macroeconomics, insurance and so on. It becomes harder and harder to write new stuff and I sometimes feel I sound like a broken recorder repeating myself over and over again. Sometimes I sit in front of my computer and find that I have nothing to write or if I have ideas to write, I feel that I have not enough time to really sit down and write like how I do before. I have more important things to do in my life such as clearing my work, planning for wedding and most important resting and leisure as work is tiring enough for the week.

I have significantly reduced the amount of times I post articles for the past 1 year and I would think this would be the case going forward too. I do not think I know a lot in terms of investing and my philosophy for investing is very simple, to make it as fuss free as possible. Throughout the years, I've built up a rather passive portfolio which I don't really need to monitor at all and it still continues growing. It becomes really boring and there is nothing much to write about on investments when a portfolio is like that. I just do the same old thing over and over again and make sure I don't make stupid mistakes which I did just recently on an investment in Hyflux which I most likely have to write off . Still, life goes on and the portfolio will continue itself just that I have to remind myself to make it boring and not look for shortcuts and become greedy again.

I thank all readers who have supported me and many of you have been really kind to leave encouraging comments and even emails to me to say how my blog has inspired you. While in blogging there will always be negative comments too, I really appreciate the people who have encouraged me to continue writing. I may be blogging lesser but I will still continue to write.

Chinese new year is coming in just 1 week's time. Here's wishing everyone Gong Xi Fa Cai and happy CNY in advance!
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Have you ever wanted to travel luxuriously on a plane in a first class cabin? I think at some point in our lives, we would have thought of travelling first class but do not want to spend the money on that expensive first class tickets. Another way is to redeem air miles so that we do not feel its so painful to travel first class.

Luxury travel is being shared widely on YouTube and I've seen quite a few of those videos. Its quite interesting to watch the level of service provided in first class cabin. Below is a video of Singapore Airlines A380 First Class Suite flying from London to Singapore.


Singapore Airlines A380 First Class Suite London to Singapore (PHENOMENAL!) - YouTube

In the video, we can see that first class ticket comes with access to the first class lounge and also a first class cabin in the plane itself with fine dining food. The level of luxury is really top notch and its a dream for many. However, if we look more carefully, how much does it cost to enjoy this first class experience? The YouTuber actually said he used 115,000 Krisflyer Miles and paid an extra 200 GBP just for a one way trip from London to Singapore. 

Now, with all the hopes of redeeming the air miles to enjoy this first class experience, is it really possible to earn enough miles for this? I would say not many people will be able to reach this level of miles. For example, with the American Express Singapore Airlines Krisflyer credit card which earns 1.1 Krisflyer miles for every $1 spend, this means we would need to spend about $100,000 just to redeem a one way first class ticket from London to Singapore. This is just insane to me. 

Let's maybe look at a nearer destination like Hong Kong and see how much miles it takes to travel first class. A quick check on SIA's website indicates that it cost from 75,000 to 140,000 miles for 2 way first class ticket from Singapore to Hong Kong. 



Its still quite a lot of miles to accumulate to me just for that 4 hour flight. While luxury travel is a good to have, cashback on the other hand puts money in our pocket and gives us instant savings straight away. Miles credit cards tempts us to spend more just to get more miles which is not really good for financial planning. 

With cashback credit cards, I do not have to spend more money to earn miles just to spend money again to redeem miles on a good to have travel. The cashback I earn is a straight savings for me on my everyday spending and its fuss free too. Cash back credit cards like the Standard Chartered 1.5% Unlimited cashback credit card earns 1.5% cashback on any eligible spend with no minimum spend required and no cashback cap. If we spend $100,000, we'll get $1500 cashback in return. Its as simple as that. 

Singsaver is running a CNY promo where you'll get instant cashback of $250 if you apply for the SCB unlimited credit card and do not have any existing credit cards with Standard Chartered bank. Check out other cashback or airmiles card here too. Promo ends on 31st January 2019.

So, is first class travel really worth it? While the luxury experience seems really good, it still seems too much to spend just for that few hours of enjoyment up in the air. Even using miles to redeem that ticket, it may take a long while unless we take advantage of some scheme to let us earn miles faster or you charge your company's expenses to your credit card. Alternatively, charge all your expenses to a cash back card and get instant cash back to offset your expenses. Cash is king!



The race between Team AirMiles and Team Cashback is currently neck and neck. It's going to be a close race to the finish! 

If you've already picked a card on this page, make sure you complete the entire application process to be eligible for $1,000 in cash ang pow. Follow the steps here

Every card application counts! 

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