Overview of Main Topics

BBCWatcher’s recent forum posts cover a wide range of topics related to personal finance in Singapore, with a strong focus on CPF, insurance, investments, and housing. Key themes include optimizing CPF usage, understanding insurance policies, evaluating investment options, and making informed decisions about housing and debt. There’s also discussion on technological topics such as routers and network setups.

CPF (Central Provident Fund)

Maximizing CPF Returns and Understanding Rules

BBCWatcher emphasizes optimizing CPF usage by understanding its rules and maximizing returns, especially when it comes to the Retirement Account (RA), Ordinary Account (OA), and Medisave Account (MA).

“No. That’s right. Too good to be true. Check IRAS’s Web site for the exact tax relief rules associated with SA, MA, RA, and (for self-employed individuals) “all 3 account“ Voluntary Contributions (“VC3A”).” – BBCWatcher [19 Dec 2024]

“Every CPF member below age 65 has room for Voluntary Contributions (VCs) to MA whenever the Basic Healthcare Sum (BHS) increases. (The BHS is increasing from *SGD 71,500.00 to SGD 75,500.00* on January 1, 2025, for members that haven’t reached age 65 yet.) And every CPF member using MediSave to pay insurance…” – BBCWatcher [12 Dec 2024]

“The relevant detail for MA interest “spillover” is simply what your MA balance is when interest is credited on December 31. If your MA is at or near the BHS at that moment then some or all of the MA interest will spill over. Otherwise, MA interest will stay in MA.” – BBCWatcher [28 Nov 2024]

CPF and Housing

BBCWatcher advises against using CPF OA for housing if it can be avoided due to the opportunity cost of potential investment returns. He advocates for taking advantage of low-interest HDB loans instead.

“You’re overthinking this. If you use OA dollars to pay for a home up front, you lose the net returns those OA dollars would’ve earned if invested. You can borrow at *2.60%* for 25 years and pay off that mortgage no faster than required using invested OA dollars that are growing (you expect)…” – BBCWatcher [16 Dec 2024]

“And why on earth would you do that? You seriously want to take a nest egg that’s been growing at *13.00%/year and use it to avoid taking a 2.60% HDB concessionary loan? …OK, let’s assume it grows at 5.00% per year, as you’ve assumed elsewhere. You want to take money growing at 5.00%*/year and pay off a…” – BBCWatcher [14 Dec 2024]

“I don’t know why you’d pay what is effectively investable (and invested) cash up front for a HDB flat when *2.60% HDB concessionary loans exist. At SGD 6,000.00/month you’d qualify for a HDB loan, right? Bank loans are impractical at that quantum, but 2.60%* seems like cheap money.” – BBCWatcher [13 Dec 2024]

Retirement Account (RA) and CPF LIFE

BBCWatcher encourages consideration of funding the RA at a level higher than the Basic Retirement Sum (BRS) to maximize CPF LIFE payouts and self-insure longevity risk. They also highlight that the RA funding level is a separate decision from housing choices.

“I think we ought to get away from the notion that there are only 3 funding levels for Retirement Accounts (and consequent CPF LIFE income). In fact, you can choose practically any funding level at or above the Basic Retirement Sum (with property pledge/charge). That could be BRS+*25.00%, BRS+40.00%*…” – BBCWatcher [13 Dec 2024]

“Your RA funding level is a separate decision. It can be BRS with a property pledge or charge, or it can be something higher. The maximum is the ERS (which increases). I’d urge you to consider something higher than the BRS since the financial math will work out better. Self-insuring…” – BBCWatcher [15 Dec 2024]

“I don’t see how your future RA funding level has much to do with this decision. You can put cash into a RA. Neither SA nor OA is required to fund a RA.” – BBCWatcher [12 Dec 2024]

Voluntary Housing Refund

BBCWatcher generally advises against voluntary housing refunds when other higher-yielding options exist, such as investing in Singapore Government T-bills.

“Hopefully it’s clear enough that it doesn’t generally make financial sense to repay your own OA when (for example) you can lend money to the same government via 6 month T-bills for a higher interest rate. 6 month T-bills are currently yielding above *3.00%*. One exception: you highly value the asset…” – BBCWatcher [01 Dec 2024]

“That’s a separate matter. The question this thread focuses on is whether and when it makes sense to repay OA dollars already used for housing when you’re age 55+ and have at least met the Full Retirement Sum (or Basic Retirement Sum with sufficient property pledge/charge). In that situation all…” – BBCWatcher [03 Dec 2024]

Insurance

Home and Personal Liability Insurance

BBCWatcher points out that home insurance often includes significant personal liability coverage, which can be crucial for protecting assets from legal judgments.

“Home (or renter’s) insurance is also typically bundled with personal liability insurance. I’ve seen as much as *SGD 5,000,000.00* of personal liability coverage bundled with home insurance policies. (Has anyone seen anything higher?) If you’ve got some assets to protect from adverse court judgments…” – BBCWatcher [22 Dec 2024]

Integrated Shield Plans

BBCWatcher recommends a basic “as charged” public hospital Integrated Shield plan with a low-cost rider, suggesting that more expensive private hospital plans are often unnecessary.

“In my view anything above a public hospital Integrated Shield plan is not necessary. Of course there are many ways to spend money on goods and services beyond necessities. For example, there are insurance carriers in Singapore (and outside Singapore for that matter) that’ll happily sell…” – BBCWatcher [11 Dec 2024]

“I think there’s merit in getting an “as charged” public hospital Integrated Shield plan with lowest cost rider. Last I checked Great Eastern and Prudential offer better cancer coverage and otherwise generally competitive plans, but “shop around.”” – BBCWatcher [11 Dec 2024]

Analyzing Insurance Policies

BBCWatcher emphasizes understanding the specific terms and conditions of insurance policies, including critical illness (CI), early critical illness (ECI), and disability income insurance (DII). They also highlight the importance of aligning coverage with financial needs and life stages.

“You’ve essentially purchased term life insurance to age 75 with TPD (always included), CI, and ECI with a thin veneer of whole life insurance (*SGD 60,000.00*). That’s a puzzling decision in many respects, as others have mentioned: planning to work to age 75 and with one or more people dependent on your…” – BBCWatcher [01 Dec 2024]

“That’s not disability income insurance. That’s (essentially) long-term care…” – BBCWatcher [02 Dec 2024]

“What Disability Income Insurance (DII) coverage do you have?” – BBCWatcher [02 Dec 2024]

Singlife Policy Changes

BBCWatcher notes a change in Singlife policies, where the threshold for payout is reduced from 3 Activities of Daily Living (ADLs) to 2, and mentions it’s being offered on an opt-out basis.

“It appears that Singlife is offering you a “2 ADL” amendment on an opt-out basis. If I understand it correctly, currently you must be unable to perform at least 3 Activities of Daily Living (ADLs) in order to qualify for an insurance payout under this policy. Singlife will reduce that threshold…” – BBCWatcher [12 Dec 2024]

Great Eastern Sp series

BBCWatcher points out that while the Great Eastern SP series has a cap of *SGD 200,000.00* per person, higher yields might be available on the secondary market through Singapore Government Securities.

“The *SGD 200,000.00 per person cap. (Or your nephew works for Great Eastern?) However, on the secondary market it looks like you can buy a Singapore Government Security maturing about when this Great Eastern endowment plan does. And get a net yield higher than 2.50%* p.a. And get some coupons along the…” – BBCWatcher [16 Dec 2024]

Investments

Lump Sum vs. Dollar Cost Averaging

BBCWatcher cites financial studies that suggest investing lump sums into long-term, diversified investments is historically more effective than spreading investments over time.

“I think you’re asking how you would (re)invest lump sum income of some kind if you’re investing for the long term. Financial studies suggest that historically you would’ve been better off (on average) just pushing those lump sums into (prudent, low cost, well diversified) long-term investments…” – BBCWatcher [20 Dec 2024]

“Historically it’s fine to reinvest windfalls in one go, that that has worked better on average. But slicing up a windfall into 12 monthly installments as you suggest has worked almost as well historically, on average.” – BBCWatcher [26 Nov 2024]

Safe Withdrawal Rate (SWR)

BBCWatcher cautions against setting a Safe Withdrawal Rate (SWR) of *5.00%* without considering CPF LIFE payouts, which can significantly impact retirement income.

“With reasonable (and even fairly unreasonable) assumptions, yes….But how are you treating CPF LIFE in terms of computing your SWR? If you’re asking whether you can safely set a SWR of *5.00%* as something of a bridge to a well funded CPF Retirement Account (and CPF LIFE payout from age 70)…” – BBCWatcher [15 Dec 2024]

“Q: Is *5.00%* too high? A: Yes, but with a caveat.” – BBCWatcher [16 Dec 2024]

Bonds vs. Equities

BBCWatcher highlights that bonds are not inherently safer than equities and that both can have risks, using Lehman Brothers as an example. They also note that longer duration bonds generally have higher yields.

“By the way, Lehman Brothers shareholders were completely wiped out. Lehman Brothers minibond holders received partial refund of principal. Ergo, bonds are generally safer than stocks, right?” – BBCWatcher [04 Dec 2024]

“How does the default of a single bond issuer prove or disprove whether bonds are generally safer than stocks? Do I really need to list any individual stocks that have fallen to zero value? (As it happens, I owned a couple such stocks.)” – BBCWatcher [04 Dec 2024]

“Not exclusively. Bonds (that haven’t defaulted) pay coupons. On average longer duration bonds have higher yields than shorter duration instruments, and I don’t think you should try to time markets — bond markets included.” – BBCWatcher [02 Dec 2024]

“Why is that necessarily so? On average shorter duration bonds are lower yielding. For planning purposes at least retirement is a ~40 year proposition, not ~3 years.” – BBCWatcher [01 Dec 2024]

U.S. Dividends

BBCWatcher notes that the U.S. dividend withholding tax rate for Singapore residents is *30.00%* and warns against not complying with U.S. financial reporting requirements.

“The U.S. dividend withholding tax rate for residents of Singapore (who are not U.S. persons) is *30.00%. Still 30.00%* but with the added bonus that the brokerage could close your account since you haven’t complied with U.S. financial reporting requirements. The broker might also have to assume the…” – BBCWatcher [09 Dec 2024]

Housing and Debt

Renovation Loans

BBCWatcher advises against taking out renovation loans prematurely, as the interest rates are not relevant until the actual renovation is undertaken.

“First of all, you wouldn’t take out a renovation loan now. You’re not buying a renovation now. You’re buying a renovation in the future. So you’re not trying to beat a hypothetical *5.00%* renovation loan interest rate now because there’s no loan to beat now.” – BBCWatcher [16 Dec 2024]

Mortgage Interest Rates

BBCWatcher observes that mortgage lenders adjust their fixed and floating rates based on benchmark rates like SORA.

“If (for example) mortgage lenders revise their interest rate forecasts such that they expect market interest rates to fall less quickly and/or less far than they previously forecasted (even if they still expect rates to fall) then they would rationally raise their fixed rates somewhat.” – BBCWatcher [28 Nov 2024]

“The facts are that the 1 month and 3 month compounded SORA interest rates are currently at or near lows for this year (2024) and for quite some time before this year. Mortgage lenders mostly set their fixed and floating interest rates based on these benchmark rates.” – BBCWatcher [28 Nov 2024]

HDB Loans

BBCWatcher consistently highlights the advantage of taking HDB concessionary loans at *2.60%* rather than using cash upfront for housing, allowing for investments to grow at higher rates.

“You’re overthinking this. If you use OA dollars to pay for a home up front, you lose the net returns those OA dollars would’ve earned if invested. You can borrow at *2.60%* for 25 years and pay off that mortgage no faster than required using invested OA dollars that are growing (you expect)…” – BBCWatcher [16 Dec 2024]

Technology

Xiaomi Routers

BBCWatcher notes the low price of the Xiaomi AX3000T router on Shopee, and discusses which models work well with OpenWRT firmware.

“The Xiaomi AX3000T is only *SGD 45.00* on Shopee right now. Wow.” – BBCWatcher [22 Dec 2024]

“Which of these Xiaomi wireless routers work well with OpenWRT? I think the AX3000T is one. Any other models?” – BBCWatcher [21 Dec 2024]

MoCA Network Setup

BBCWatcher explains the use of MoCA adapters for Ethernet over TV cable, and notes how to date fixed line telephone numbers in Singapore based on the prefix change in 2002.

“Yes, with adapters, and assuming the coaxial wiring is still intact between the points you’re trying to connect. On edit: By the way, it’s possible to date that outlet fairly accurately. Singapore added the prefix 6 to fixed line numbers in March, 2002. So a 7 digit fixed line telephone number…” – BBCWatcher [22 Dec 2024]

Fiber Broadband

BBCWatcher compares different fiber broadband providers, noting WhizComms’ promotional price and StarHub’s slightly less expensive 5 Gb/s plan.

“Let me amend my comment upthread… WhizComms is offering that *SGD 29.99/month promotional price on a 12 month contract. If you’re looking for a 12 month instead of a 24 month contract, that’s a great offer. Please note that it’s actually the equivalent of SGD 34.53* per month for 12 months since they…” – BBCWatcher [28 Nov 2024]

“It’s competitive, but I think StarHub’s *SGD 29.55*/month promotion still wins. StarHub‘s 5 Gb/s plan promotion is slightly less expensive, you can choose ONT or ONR, and it comes with some bundled wireless equipment that you can sell on Carousell at least.” – BBCWatcher [27 Nov 2024]

Router Flash Storage

BBCWatcher mentions a positive update about the flash storage on certain routers, noting it has been bumped to a more future-proof 256+16.

“It looks like they bumped the included flash storage to a more future proof 256+16.👍” – BBCWatcher [06 Dec 2024]

Other

U.S. Social Security Fairness Act

BBCWatcher highlights the passage of the Social Security Fairness Act in the U.S. Senate and its potential impact on those who have worked in the U.S.

“The Social Security Fairness Act has achieved final passage in the U.S. Senate. The bill now heads to President Biden. He’s expected to sign it into law. This is a big deal for those of you who work(ed) in the United States, contributed to the Social Security system, qualify for retirement…” – BBCWatcher [21 Dec 2024]

U.S. Government Shutdown

BBCWatcher notes the averted U.S. federal government shutdown due to a continuing resolution passed by Congress.

“UPDATE: The House passed a continuing resolution, and the Senate is expected to approve it. It appears a government shutdown will be averted. The U.S. federal government will partially shut down at 12:01 AM Washington” – BBCWatcher