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Old 07-04-2019, 12:14 PM   #1141
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Thanks for the insight BBCWatcher! Hmmm I think I forgot to mention is that they want to retire in the near future- think 6 months to a year�� Mum has a terminal illness and she hopes that he can spend more meaningful time with her
I'm sorry to hear that.

If your mother has a terminal illness then, strictly financially speaking, it'd make a huge amount of sense to slam as much cash into her Special Account as allowed as soon as possible. That cash will earn 4% interest in her Special Account (and Retirement Account if she celebrates her 55th birthday -- let's hope so), and then upon her demise all proceeds flow to her CPF nominated heir(s), presumably her husband. (She should certainly make a CPF nomination if she hasn't done so already.) So it's really the same answer.

In fact, slam cash into her SA as a top up, up to the FRS, then repay OA also since that's 2.5% and also quite good.

Hi BBC, is 25-year a long enough time horizon?
Yes, for the purposes I described.

Would like to get your advice please after realising that I need to be wiser about my financial planning. I’m 33, and will be getting my BTO in about 2 years’ time. Likely to take the HDB loan, because it’s generally less complicated and it’s my wife’s preference. I currently have these insurances:
  • A term life
  • A whole life insurance
  • DII
  • Critical illness coverage
  • Upgraded shield plan

So in terms of protection I think I’m generally okay.
Possibly overinsured. The whole life is unlikely to be terrific, but now that you have it it's an interesting question whether it's worth surrendering. If you'd like an opinion on that, you can post the particulars and several people will likely respond with some assessments.

But I feel that my current cash assets are not being maximised, because most of my cash is just sitting in my UOB account and I’ve actually gone beyond the $75k limit for the bonus interest. So I’m trying to be smarter with my money. I top-up $7k to my CPF SA, as well as the max $15k to my SRS as well. In terms of investments, I currently hold some ES3 and a little bit of the SG Savings Bond but that’s all. I have some questions:
  1. I’m thinking of doing DCA, likely on a monthly basis into a broader basket of ETFs. Ideally a mix that would expand my portfolio beyond the SG market. Would Interactive Brokers be the right platform to use?
Yes.

[LIST=2][*]Assuming that I already have enough cash for emergencies, how many % of my monthly income (after CPF deductions, SA/SRS top-ups) should I invest?
Invest in total? Well, everything that you aren't consuming in the present. Savings flow = income flow minus consumption flow. My suggestion is to pick a savings flow that you feel comfortable maintaining ($X/month), then stick to it. If you see cash piling up, take a look at whether you can boost that $X on a sustainable basis.

  1. Is there a recommended ratio of foreign ETFs vs local ETFs vs bonds that I should have?
Are you planning to retire in Singapore?

Considering that you have 0% global diversification at present, I don't think you'll be too heavily globalized in your investing any time soon.

  1. Is there a simple spreadsheet somewhere for me to track my DCA and the portfolio ratios?
It'd be pretty easy to create one, and I think practically everybody does. It should be simple, because you don't really need to watch this stuff much.

I have similar experience last week when the bank called me, but I have to answer a few of these "security questions" such as name, last 5 digit of NRIC, DOB. Although I have slight hesitation initially, I still answered him because I did send secured email to the bank for some stuff and he did refer to that email when explaining the purpose of the call. But I know I should NEVER EVER give them any PIN or password.
You might have some degree of confidence that the individual you're speaking with is from the bank, but what you certainly didn't know is whether that bank employee is acting in an official capacity and communicating over a bank monitored channel. If it happens again, inform the person you'll be calling your bank (don't even give the name of the bank), and ask the person if he/she wishes to provide a bank reference code. And stick to that.

Let's all work to shut down this nonsense, starting now.

Agree with you that banks should do more to protect customers. Given the options, I would usually choose email option rather than voice call option for reply or follow up action.
E-mail is not a secure channel, unless you're talking about the online "mailbox" that might be available through online or mobile banking.

Conceptually it's really quite simple: your bank needs to know who you are, but even more importantly you need to know that you're communicating with a bank employee acting in an official capacity over a bank monitored channel. You cannot verify those three elements when you get a cold (or "warm") telephone call or via e-mail.

If banks in Singapore absolutely insist on calling their customers, then I can think of one way they could do it: offer a "call me" option with a reference code. I don't recommend what I'm about to describe since it's lame, but at least it'd be reasonably secure. Let's suppose it's OCBC. If you were to visit:

https://www.ocbc.com/callme

then punch in your phone number, click Submit, and get a reference code ("XYZ1234") -- "This code is only valid for the next 30 minutes" -- then that might be OK. The person calling you would have to give you the reference code right away, e.g. "Hello, I'm calling from OCBC. Our reference code is XYZ1234." Otherwise, you would hang up.

THAT might pass muster in security terms, but I'm not necessarily recommending that.
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Old 09-04-2019, 10:37 PM   #1142
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Gentle reminder to U.S. persons (only): the deadline for 2018 Individual Retirement Account (IRA) contributions is fast approaching. Any such contributions must be deposited no later than April 15, 2019. You don't have to make investment decisions right away, so don't worry about that.

You're eligible to make a U.S. IRA contribution if you have earned income that you are NOT excluding on your 2018 tax return via IRS Form 2555. If you have a legal spouse then you're often able to make IRA contributions for him/her, even if he/she doesn't ordinarily qualify (no earned income).

There are income limits to make certain types of IRA contributions. Nondeductible Traditional IRA contributions don't have income limits, and Traditional IRAs (including nondeductible ones) can be converted to Roth IRAs. Just be careful that you understand all the rules about IRA conversions.

The 2018 IRA contribution limit per person is US$5,500 (US$6,500 for someone who was age 50 or older at any time during 2018).

If you don't have an existing IRA then you really need to act quickly. If you have an existing relationship with practically any U.S. bank or U.S. brokerage you should be able to get an IRA opened quickly. If you don't have such a relationship, try contacting Schwab Singapore to see if they can help beat the deadline.
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Old 09-04-2019, 10:37 PM   #1143
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Thanks for the reply!

Actually I've read that Saxo is decent as well because using Saxo I can buy local and overseas equities - any particular reason why Interactive Brokers is recommended over Saxo?

For the second response - would you be suggesting that all my savings go into investments (after emergency funds)? Wondering if I should keep some cash on hand given that my BTO flat would be ready in about 2 years' time too.
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Old 09-04-2019, 10:50 PM   #1144
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Actually I've read that Saxo is decent as well because using Saxo I can buy local and overseas equities - any particular reason why Interactive Brokers is recommended over Saxo?
Cost.

For the second response - would you be suggesting that all my savings go into investments (after emergency funds)? Wondering if I should keep some cash on hand given that my BTO flat would be ready in about 2 years' time too.
Generally yes, but if you expect some home renovation costs (for example) in about 2 years then you could boost SSB holdings to prepare for that bit.
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Old 10-04-2019, 12:04 AM   #1145
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Hey BBC, do you have insights regarding Form K1 1065? We got mail from Proshares because of Uvxy traded in 2018, lucky it was net loss, and the form indicate 0 every where.

How do singaporean go about filing IRS tax if needed, do US have an IRAS website to login and submit?
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Old 10-04-2019, 07:32 AM   #1146
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Hey BBC, do you have insights regarding Form K1 1065?
That’s Schedule K-1, IRS Form 1065, and it’s used to report partnership income.

We got mail from Proshares because of Uvxy traded in 2018, lucky it was net loss, and the form indicate 0 every where. How do singaporean go about filing IRS tax if needed, do US have an IRAS website to login and submit?
I’m assuming you’re not a U.S. person. If you have zero U.S. taxable income then I don’t think there’s anything left to do. Just keep a copy of that income statement in your personal financial records. Are you trying to claim a tax refund of some kind — tax that was withheld that you don’t think should have been withheld?
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Old 10-04-2019, 10:59 PM   #1147
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Hi BBCW, i've been reading lots of your posts on HWZ and learnt a lot from you. really impressed with your knowledge on singapore's CPF system. thank you for sharing your knowledge with us!

your posts on CPF made me wonder if there's anything i can do for my mum. she's recently acquired PR status in sg at the age of 56, so she has literally $0 in all her CPF accounts at the moment. as she doesnt have any income, i feel tempted to top up her CPF account so that i can save some tax benefits, and she might be able to get some cpf pay-out later when she reaches 65 or 70. but tax relief is capped at 7k cpf contribution per year, and i'm the only person working in the family and therefore the only person to top up her cpf. given that she's already past 55 years old, do you think it's still worth it for me to make voluntary contribution to her cpf account? if i make 7k contribution each year starting this year, it seems that she still wont be able to have enough money to enjoy CPF Life? do you think i should make contributions more than 7k a year to make it worthwhile?

would greatly appreciate your advice. thank you!
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Old 10-04-2019, 11:02 PM   #1148
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Oh no, i won't even think of claiming tax refund, that is asking for trouble, already we are glad 2018 uvxy was a net loss, so better stay low-key. Just worried if need be, i have to submit a US tax return, very alien to us how to go about it...

Dont buy uvxy friends! It is considered partnership, meaning you conduct business in US.
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Old 11-04-2019, 08:08 AM   #1149
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your posts on CPF made me wonder if there's anything i can do for my mum. she's recently acquired PR status in sg at the age of 56, so she has literally $0 in all her CPF accounts at the moment. as she doesnt have any income, i feel tempted to top up her CPF account so that i can save some tax benefits, and she might be able to get some cpf pay-out later when she reaches 65 or 70. but tax relief is capped at 7k cpf contribution per year, and i'm the only person working in the family and therefore the only person to top up her cpf. given that she's already past 55 years old, do you think it's still worth it for me to make voluntary contribution to her cpf account?
Yes, absolutely. The $7,000 of tax relief is still valuable to you, and she gets 6% (!) interest on that money.

if i make 7k contribution each year starting this year, it seems that she still wont be able to have enough money to enjoy CPF Life?
No, it’s possible to join CPF LIFE even if you have a really low balance Retirement Account. The monthly payout won’t be much, of course. CPF LIFE participation is mandatory when the balance hits $60,000, unless you apply for and qualify for a waiver (based on having a suitable alternative life annuity).

do you think i should make contributions more than 7k a year to make it worthwhile?
Well, on the first $30,000 she’ll earn 6% interest, and on the next $30,000 she’ll earn 5% interest. Then 4% interest thereafter. And you/she can top up her MediSave Account to the Basic Healthcare Sum and Retirement Account to the Enhanced Retirement Sum. That’s hundreds of thousands of dollars. While her RA is below the Full Retirement Sum you can qualify for $7,000 of tax relief per year. Even if you’re shoving $30K/year into her Retirement Account that’s still several years of tax relief for you.

So yes, I’d be zooming up her balances, even faster than the tax relief limit. It seems like a no brainer since nothing else is going to be that attractive.

If you can afford $30,000 this month, or even $60,000, I’d do that. I mean, 6%! 5%! Wow, that’s something these days. Even 4% is excellent.

One more rule about CPF LIFE. If she terminates her PR status in the future and is not already receiving CPF LIFE monthly payouts, then she won’t be able to join CPF LIFE. In that event she could leave her funds in her CPF subaccounts earning interest. Any withdrawal has to be in one big chunk, all CPF dollars. There are no partial withdrawals allowed for ex-PRs/ex-citizens. The earliest she can start CPF LIFE payouts is age 65, although in my view it’s smarter to wait until age 70 (the default) if financially possible.

Also, she should stop by a CPF office and make a CPF nomination, meaning she designates who will receive her residual CPF assets when she passes. If she doesn’t do that then there’s a trustee fee involved along with some complexity, even if she has a will. (Wills don’t apply to CPF assets.)

I would emphasize her Retirement Account at this point since that’s about her retirement income. Her MediSave Account is at least less important right now. You should probably assume her MediShield Life (or Integrated Shield base plan) premiums using your MediSave Account since you qualify for tax relief and could, conceivably, top up your own MediSave Account if you have room below the CPF Annual Limit.
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Old 11-04-2019, 09:17 AM   #1150
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Thank u BBCW so much for your valuable insights! I have previously suggested to mum on this idea of me topping up her CPF account. She said she wants to "sit down together and do some maths". I think she's worried that after I shovel in so much hard earned cash into her cpf account, if she's not able to live till a certain 'breakeven' age (*fingers crossed*), it would not be fair to me. So I find it a bit uncomfortableto "do the math" with her, it feels like discussing when someone should pass on and putting a dollar sign to an invaluable life.
But after reading your reply, I guess I'll just go ahead and do it. Guess it's the best for both of us.
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Old 11-04-2019, 09:31 AM   #1151
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Hi BBCW, I have another question, which i was not able to find a definite answer on the CPF website.

Is my understanding correct that as long as I can top up my mum's retirement account to meet the basic retirement sum 6 months before her 70th birthday, she would still be able to enjoy CPF life at the age of 70?

It seems that I can only make contribution to her RA now instead of SA, so I assume only her RA balance will be counted towards the basic retirement sum when she decides to join CPF life right? And her SA and OA accounts are not even relevant anymore since she's already past the age of 55?
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Old 11-04-2019, 02:25 PM   #1152
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Under current rules she or somebody could top up her Retirement Account at age 79 and 10 months (for example), and she could join CPF LIFE before age 80.

Of course the big disadvantage is that nobody is collecting the sweet 4+% annually compounded interest over the many, many years before her 80th birthday.

If you're flush with cash you're certainly allowed to shove lots of it into her CPF accounts, starting with her Retirement Account (to the Enhanced Retirement Sum).

You're right that her Ordinary and Special Accounts aren't too relevant at this stage, but they could be. At the rate of $37,740 (the CPF Annual Limit) it's possible to shove cash into her OA/SA/MA ("all three" top up). Not so exciting when her RA is empty, or for the next $180K or so, but it could become interesting if you/she are looking for a reasonably attractive place to park cash. Once her RA has hit the FRS the OA+SA part is just like a bank account for her, really -- a strangely high yielding one.
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Old 11-04-2019, 04:18 PM   #1153
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Hi BBCW, really appreciated your detailed explanation, ive tried to study the CPF website but found the cpf rules to be very complicated.

May I summarize my understanding as this:

1. I can top up my mums RA up to the enhanced retirement sum at any time, although tax relief for me is capped at 7k contribution/year.

2. At any point before 79 years and 10 months old, she can choose to join CPF life (even with RA < BRS). But to do so, i assume she has to inform CPF specifically about it, otherwise she will not be automatically put to CPF life even her RA hits the BRS before 65?

2. At any time, on top of the RA top up, I am also allowed to make "all three" cpf top up to her OA/SA/MA at $37,740 per year, earning 2.5%/4%/4% interest (assuming I've placed more than FRS in her RA), although without any tax benefits.

3. At any time after her RA balance is more than FRS, she will be able to "withdraw" cash from her OA/SA freely, although any deposits will have to be made to "all three" accounts (up to $37,740/yr) and MA money can only be used for designated medical purposes. (Not sure when u said her OA/SA can be used like a bank account, does it mean that cash deposits can be made only to SA account, therefore earning 4% interest and nothing will flow into her MA?)

May I know if you think my understanding is correct?
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Old 11-04-2019, 07:30 PM   #1154
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1. I can top up my mums RA up to the enhanced retirement sum at any time, although tax relief for me is capped at 7k contribution/year.
That’s correct. Her first $30,000 in combined balances will earn 6% interest, the next $30,000 will earn 5%, and additional RA/SA/MA dollars will earn 4%. OA earns 2.5%.

2. At any point before 79 years and 10 months old, she can choose to join CPF life (even with RA < BRS). But to do so, i assume she has to inform CPF specifically about it, otherwise she will not be automatically put to CPF life even her RA hits the BRS before 65?
There’s a $60,000 threshold for “mandatory” participation in CPF LIFE. But yes, she should inform CPF before age 70 what she’d like to do.

2. At any time, on top of the RA top up, I am also allowed to make "all three" cpf top up to her OA/SA/MA at $37,740 per year, earning 2.5%/4%/4% interest (assuming I've placed more than FRS in her RA), although without any tax benefits.
That’s correct.

It’s also possible to make directed MA top ups, also with no tax relief (since she doesn’t qualify for her own tax relief). MA top ups must also fit within the CPF Annual Limit and they must fit within the Basic Healthcare Sum (BHS), currently $57,200.

3. At any time after her RA balance is more than FRS, she will be able to "withdraw" cash from her OA/SA freely, although any deposits will have to be made to "all three" accounts (up to $37,740/yr) and MA money can only be used for designated medical purposes. (Not sure when u said her OA/SA can be used like a bank account, does it mean that cash deposits can be made only to SA account, therefore earning 4% interest and nothing will flow into her MA?)
Once her MA hits the BHS — which is fixed on her 65th birthday, by the way (no more increases) — an “all three” deposit will flow only to her OA and SA. And, assuming her CPF LIFE participation is funded well enough, OA+SA then turns into a weirdly high yielding (>2.5%) on demand savings account for her, yes.

May I know if you think my understanding is correct?
Yes, I think you’ve got it.

In summary, and cash permitting, newly minted PRs really ought to zoom up their CPF balances. It’s a great deal.
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Old 11-04-2019, 09:34 PM   #1155
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Thank u BBCW for helping clearing my doubts! I still feel uncomfortable to 'sit down and do the maths together' with my mum, so I'll just go ahead and make the contributions. I think it's best for both of us.
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