Monday, December 28, 2015

My Life In 2015 And New Year Resolutions for 2016

This is the last week before the year 2015 comes to an end. Another year went pass just like that again. I wrote some reflections for the year 2015 at the beginning of this month. You can read the post here if you've missed it out.

I did not write much about my investments and also my financial journey in that previous post so I will put it in this post.



Stocks Investment for 2015

This year was not really a good year for investments. A couple of the stocks which I invest in were down quite badly with a few others gaining such as the biggest holding in my portfolio, Saizen Reit, which was acquired by another company. This helped to offset the losses on the other stocks in my portfolio. Overall, the STI is down about -15% for the whole of 2015.

To date, my portfolio is close to $40K now which is about 50% of my investment capital. I have added in some counters such as the banks (DBS and OCBC) and the STI ETF when the market went down badly. All these which I added recently are all in positive territory at the moment. Overall, the portfolio is only up by about 3%. In total I have 14 stocks in my portfolio now. The returns are not that fantastic but I should be happy that my portfolio is not as bad as a -15% loss as that of the STI. 


Income and Expenditure for the year 2015

Having a financial blog is incomplete without writing on my financial journey. This blog is about my financial journey and how I strive to achieve financial independence. Although money is not the most important thing in life, it is still necessary to provide for our families and for our livelihood. 

Since I started this blog, I learned to create more income including passive income. The main purpose of this is to not rely just on my main job for income but to create contingency plans. I have seen people, both young and old, being retrenched by their company and its not a good feeling to have. 

My income now comes from these sources: Salary from job, income from blog, dividends from stocks and commissions from freelance consultancy work. 

Here's the chart which shows my financial journey:


My expenses has increased which is what I also wanted. I am going to focus on creating more income instead of just saving for the sake of saving money. I want to live a more fulfilling life where there is certain enjoyment and spending more on my love ones.

Passive income and other income has been rather consistent this year and adds up to about $9K for the whole year of 2015.


New Year Resolutions for 2016

2015 has been a year of experiences for me again. I felt like there were a lot of things happening and felt tired for the year. I haven't took much leave this year and no MC as well. In fact, I only took 2 days of leave so far for the whole year.

Nevertheless, it was a fulfilling year. The people I met, the new things I embark on and starting a new relationship was the summary for 2015. Now, its time to look forward to a new year 2016. This is what I hope to achieve or do next:

1) Advancing in my career

I've been in the same job for the past 5 years plus. Its a long long time especially for young people nowadays who change jobs every few years in order to advance and climb to a higher level. It seems like in most companies, employees who stay long do not advance as fast as people who change jobs.

I have been looking for more opportunities and will continue to look for more opportunities to advance in my career. I hope to at least get to the management level where I can do more and learn more. This will also greatly increase my income. I will be looking into policy or research related jobs which has been my interest all these while.

2) Eating Healthily and exercising

I have been eating more vegetable and more salads and will continue to do so next year. I have also been going to the gym every week and will continue this habit that I build into the new year. All these were a result of motivation of my girlfriend who is health conscious. I am happy to live more healthily. Health is wealth.

3) Having a more balanced life   

As mentioned earlier, I will be less tight on money and will spend when necessary. For example, I seldom took taxi in the past but am taking more now to save time. I am increasing my expenses but will still keep it in check. I have almost doubled my expenses as compared to the beginning of this year. Its not so scary to spend a little bit more money on people and things that matter to us.

4) The 100K savings challenge

I set a financial target of $100K to reach by year 2016 since I started this blog 2 years ago. Next year is the year already. I am on track to reach that target by mid of 2016. The focus will still be on increasing my income. Its not just about earning money but about believing that I have the potential do more and achieve more.

5)  Loving people in my life 

Life is all about relationships. I've been meeting many people since I started blogging. In the midst of busyness, I will constantly remind myself to set aside time and love the people who are in my life. In the new year, I will make more effort to keep in touch with old friends and continue to spend time with my family and also continue to put in effort for my new relationship with my girlfriend. I am looking forward to the new life I will embark on with her.



Its the new year in a few days time. I will be going for a short overseas trip over the new year to recharge and relax to prepare for a better 2016. Thank you all readers who have been supporting and reading my blog all these while.

Here's wishing all of you Happy New Year and a greater year ahead!



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Monday, December 21, 2015

Why young Singaporeans don’t need to worry about buying their first HDB Home in Singapore?

Almost 2 years ago in February 2014, I wrote an article on "How much money does a couple need to earn in order to afford a $300,000 HDB flat?" and it went viral. Buying their first home seems to be a concern among young people in Singapore. Is it really that scary to own a house as a young person living in Singapore? It is actually not so scary if we know what to do and how to buy a house which we can afford comfortably. Owning a house should be an enjoyable process and not a stressful situation which we put ourselves into. So what can we do to make owning a house in this high housing price era more enjoyable? Let me show you how it can be.

Paying For the Down Payment of A New Home

All of us would know that we can use our CPF to buy a house. The down payment for a house is 10% for HDB which means any of us who buy a $300,000 HDB flat would need to come up with $30,000. This is certainly quite a huge sum of money for young couples who want to own their own home. For couples, saving up for their wedding, the renovation works and the honeymoon is already stressful enough. Thankfully, we do not have to save up additionally for the down payment of a house because CPF has automatically saved it for us.

A young person, age 35 and below, earning about $2,500 a month in Singapore would have about $20,000 in his CPF OA account within 3 years of working. 23% of his/her salary is contributed to the CPF OA every month by himself and by his/her employer.  The money in CPF OA can be used for housing which can be used to pay the down payment of a house. Together with his or her spouse, one can safely afford the down payment of a house within 3 years of working.


I started working early in my life right after my National Service. After working for 5 years, I already had more than $60,000 in my CPF accounts in total. I did not start out with a high salary, only $1,700 per month when I just started working and CPF actually helped me accumulate quite a good sum of money. Now, I don't have to worry about housing cost. The savings which I have accumulated can be used for other stuffs such as wedding and renovation costs.

Paying For the Monthly Instalment of A New Home

Besides using CPF for the down payment of a new home, young couples can also use CPF to pay for the monthly instalment of their home. A couple earning $2,500 will have $575 contributed to their CPF OA each. Together, they have $1,150 every month from their CPF OA to pay for the monthly instalment of their new home. If they buy a home within their means, they don't even have to fork out extra cash to pay for the housing loan.

If we buy a home at $300,000, after 10% down payment, we'll need to take a loan of $270,000. The monthly instalment for a $270,000 loan with HDB at 2.6% for 25 years will be $1255 per month. Now, this is still about $100 more than what a couple with combined income of $5000 would have in their CPF Ordinary account.

However, if we and our spouse have a combine income of $5500, the monthly contribution to our OA would be more than sufficient to pay for the housing loan instalment for a $300,000 HDB flat. The instalment will still be $1255 while this couple their combine CPF contribution in their OA is $1265. This is more than enough to pay their housing loans fully by CPF without the need to come out any cash.

Furthermore, there are additional measures to help young Singaporeans in owning their first HDB home a more fuss free experience. Let's take a look at the last part below on the subsidies which we'll be able to get.



CPF Housing Grants for a New Home

For BTO HDB Flats

I've researched and summarised the grants available for a new HDB home. This is for first time applicants only. The special housing grant only applies to 2 room, 3 room and 4 room flats in non-mature estates only. 


Average Monthly Household Income Over 12 MonthsAdditional CPF Housing GrantSpecial CPF Housing Grant (Not applicable for 5 room HDB)Total Grants
Up to $1500$40,000 $40,000 $80,000
$1,501 to 2,000$35,000 $40,000 $75,000
$2,001 to 2,500$30,000 $40,000 $70,000
$2,501 to 3,000$25,000 $40,000 $65,000
$3,001 to 3,500$20,000 $40,000 $60,000
$3,501 to 4,000$15,000 $40,000 $55,000
$4,001 to 4,500$10,000 $40,000 $50,000
$4,501 to 5,000$5,000 $40,000 $45,000
$5001-$5500Nil$35,000 $35,000
$5501-$6000Nil$30,000 $30,000
$6001-$6500Nil$25,000 $25,000
$6501-$7000Nil$20,000 $20,000
$7001-$7500Nil$15,000 $15,000
$7501-$8000Nil$10,000 $10,000
$8001-$8500Nil$5,000 $5,000

The CPF Housing Grants will be fully credited into the CPF Ordinary Account of the Singapore Citizen (SC) first-timer applicant, who must be listed as a co-applicant. No cash is disbursed. For a couple applying for the HDB together. each applicant will receive half of the full grant amount.

We can get as high as $80,000 in CPF housing grants. That to me is quite a substantial sum of money. Even if you and your spouse have a combined income of $8000, you would still be eligible for the Special CPF Housing Grant if you are not purchasing a 5-room HDB.

*For more information on the CPF housing grants for first timer applicants, please refer to HDB website here

For Resale HDB Flats

If you don't have time to wait for a BTO flat, you can also apply for a resale flat. Resale flats are known to be more expensive than HDB flats but not to worry, there are some other grants to help in this cost.

Family Grant

The grant available for this scheme is $30,000. To be eligible, your household income must not exceed $12,000 (revised from $10,000 before 24 August 2015). You must be a Singaporean and form a family nucleus with another Singaporean or PR. This grant is only available for first time home buyers.

Additional CPF housing Grants

The additional CPF housing grants is similar to that for the BTO applicants as below:

Average Monthly Household Income Over 12 MonthsAdditional CPF Housing Grant
Up to $1500$40,000
$1,501 to 2,000$35,000
$2,001 to 2,500$30,000
$2,501 to 3,000$25,000
$3,001 to 3,500$20,000
$3,501 to 4,000$15,000
$4,001 to 4,500$10,000
$4,501 to 5,000$5,000

Proximity Housing Grant (New from 24 August 2015 onwards)

Under this scheme, you can receive $20,000 in grant.

The eligibility criteria is:

Your parents/ married child are:
  • living with you in the resale flat
  • living in an HDB flat in the same town or within 2km
  • owner-occupants of private property in the same town or within 2km

The above grants definitely come in handy to help subsidise the housing cost for first time home buyers. Grants are disbursed into our CPF accounts for our housing needs.

Should I Buy The Biggest HDB Available?

More often than not, I've heard suggestions to buy the biggest HDB flat as early as possible or even on their first home. But, is this a wise advice for young couples? For a fuss free home ownership experience, I strongly believe we should buy a HDB flat within our means.

In Singapore, loans for HDB flats are limited to 30% of our gross monthly income. This is the mortgage serving ratio (MSR) set by the MAS to make sure home owners do not over stretch their finances. If we lose our jobs or should interest rates increase, the MSR of 30% will make sure we can still service our loans.

CPF also has a First Home Calculator to help home owners calculate and make sure they do not overstretch their finances. If you're planning to buy your First Home, you can check out the calculator here.

Another point to consider is that our first home is actually not an investment but a liability. This is because even if you sell the house you're staying in, you still need to buy another house to live in. If you're planning to buy a property for investment, your first home should be bought conservatively so as to save up capital for a second investment home.

Do young people have to worry about buying their first HDB home in Singapore? For me, I can say that when the time comes for me to apply for my first home, I do not have to worry much at all. The money in my CPF account is more than enough to cover all the necessary cost for my first home. Furthermore, with the CPF housing grants, the experience of owning a home will be much better.

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Related Posts:
1. Should Couples Buy A 5 Room HDB Flat For Their First BTO Application?
2. The 3 Big Decisions in Life - Marriage, Buying a House and Retirement

Tuesday, December 15, 2015

Your HDB Flat Is Not Really An Investment

It is very hard to make money on your HDB flat. By this, I'm saying about the first HDB flat you buy. Many people treat the home they are staying in as an investment where they are willing to put in money and pay a lot for the mortgage every month.


Is it really worth it to buy the largest HDB flat and think we could make money from this in the future? Let me show you why your HDB flat is not really an investment.

Why Buying The Largest HDB Flat May Not Make Sense?

More expensive and lesser grants

Your first home is for you to stay. Spending more money to pay for housing loans means you will have lesser for retirement or for your expenses.

The recent BTO launch at Bidadari (Toa Payoh) attracted quite a lot of attention. The location is good and so is the price higher. Let's take a look at the prices of the different flat sizes at Bidadari for the recent launch:
  • 3 Room - $297,000 - $385,000
  • 4 Room - $433,000 - $550,000
  • 5 Room - $544,000 - $625,000
As we can see, the prices are definitely higher than areas like Punggol. If we buy the largest HDB which is the 5 room flat, as compared to the 4 room, we need to fork out an additional $100K for it. Furthermore, there are lesser grants for 5 room flats as compared to 4 room flats. I'll write more about the grants in another article coming up next. In general, we could lose out up to $40,000 in grants if we buy the biggest HDB flat.

The monthly instalment for a $450,000, 4 room flat and a $550,000, 5 room flat will be as below:

4 Room Flat: $1838/Month
5 Room Flat: $2246/Month

The above scenario is assuming a 90% loan and 25 years loan tenure at 2.6% interest from HDB loan. As we can see, buying a 5 room flat will set us back with $408 lesser a month. This will add up to $122,400 in total for 25 years.

Higher resale levy

I think a lot of couples buy the largest HDB flat because they think they can make more money from it when they sell it and buy another BTO. This may be true in the past but its not true currently. For a 5 room HDB flat, if you sell it either to upgrade or downgrade, the resale levy imposed is higher than that of a 3 room or 4 room flat.

Here's the resale levy payable:

First Subsidised Flat TypeResale Levy Amount
2-room$15,000
3-room$30,000
4-room$40,000
5-room$45,000
Executive$50,000

A resale levy is payable on these conditions as quoted from HDB website:

  • You sell your subsidised flat after meeting the Minimum Occupation Period (MOP), and then buy a second subsidised flat from HDB or take over ownership of a subsidised HDB flat
  • You sell your subsidised flat after meeting the MOP, and then buy an EC from a developer where the land sale was launched on or after 9 December 2013, including those where tenders were not closed, i.e. Westwood Avenue, Canberra Drive and Anchorvale Crescent

You need not pay a resale levy if you are buying any of these:

  • Design, Build and Sell Scheme (DBSS) flat from a developer
  • EC from a developer; where the land sale was launched before 9 December 2013
  • HDB resale flat
  • Private residential property

Why A HDB Flat Is Not Really An Investment?

HDB is a leasehold property for only 99 years

All of us know that HDB has a lease of 99 years. What are the implications of this? It is confirmed by the minister of national development during a 2014 parliament seating that at the end of 99 years, HDB's asset value will depreciate to zero. 

In fact, we don't really have to wait until the end of 99 years to feel the impact of it. By the time your HDB is left with 60 years or less, the banks will limit the loan tenure which one can borrow if they purchase that flat. This means, if you want to sell your HDB flat with 60 years or less lease, you will have some problems as your potential buyers may not be able to qualify for the bank loan. With additional cooling measures such as the TDSR, MSR, it makes it even harder to get the loan. 


Your money is stuck in the HDB

All the money you pay for your HDB is stuck there until you sell it. If you sell it, you still have to buy another house to stay in and you need to pay a resale levy if you buy another subsidised flat. There is little chance where you will be able to get any extra cash out if you sell your HDB. 

If you had instead bought a smaller flat to stay in, the extra cash or CPF you have would earn interest which will compound over the years. CPF gives interest as high as 5% while your cash can generate investment returns if you invest it. 

It is better to buy a smaller flat if you're planning to stay in it and save up more for another investment property later. 

You cannot cash out of your HDB flat but you can for private property

There is no way for you to cash out of your HDB or mortgage it for any other purposes. The banks do not recognise it as an asset. For a private property, you can take an equity loan or term loan and use the cash for other uses. This is also called cashing out of your property. 

Let's compare between a $600,000 HDB and a $600,000 private condominium. For the private condo, you can take an equity loan of about 70-80% of the property value minus the outstanding mortgage you have and any CPF utilised. For the $600,000 condominium, you can cash out about $480,000 at an interest of the current property loan packages available which is less than 2%. This is the lowest you can get as compared to other loans such as car loans, business loans or personal loans. You can use this cash to start a business or even use it for investment. You cannot do this for a HDB flat at all. For a $600,000 HDB, your money is stuck inside without you being able to cash out.

*If you're planning to cash out of your private property, you can email me at sgyi@homeloanwhiz.com.sg for a complimentary consultation. I would be able to advise you on the best rates and process your application for you. 

Conclusion

The primarily purpose of HDB is to provide affordable housing to Singaporeans so that each of us have a roof over our heads. Treating HDB as an investment and wanting to make money from it may not be the wisest choice as the government will do all they can to limit speculation in the subsidized public housing market. This is to ensure public housing remains affordable for the majority of Singaporeans who want to own their own homes and start a family.

Buying a smaller flat for your first home will make owning a house a more fuss free experience so that we will have more money in the future should we want to have another investment property or use the extra money for other investment purposes.

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Related Posts:
1. Can You Afford That Million Dollar Condominium?
2. How Much Loan Can You Get For Your HDB flat?
3. Is It Necessary To Refinance Our Housing Loans?

Wednesday, December 2, 2015

After 2 years of blogging...

Time really flies... It's been more than 2 years since I started blogging and this blog has grown tremendously and I have also grown as a person too. I'm a person who likes to reflect and think a lot so here's this post on my thoughts for the past 2 years. Some of you may have followed my blog since the early days and I thank each and everyone of you for reading, recommending my blog to your friends and family, sharing on social media and showing your support with words of encouragement either through email or comments on my blog. This blog has officially crossed 2 Million page views and I'm deeply humbled by the readers who supported the ideas that I write.


There are ups and downs to blogging. Fortunately, the experience for me has been a more positive than negative one. I've heard of bloggers who get criticised so badly that they decided to give up. Thank God nothing of that sort happened to me. I've been quite lucky that people have mostly been quite kind to me. The past 2 years plus was an amazing journey. Being a blogger exposes me to a whole lot of things, meeting up quite a number of people as a blogger even though I'm still anonymous on my blog.

My blogging experience has expanded far beyond just the online world. Right from the start, I thought blogging was just something that I'll do at home, writing at the comfort of my bedroom and nothing else. I was completely wrong. I had so much more experience through blogging than just typing away on my keyboard.

Through my blog, I had the opportunity to experience things that I would not have been able to experience if I was just a normal salaried employee in Singapore. The best part of it was meeting new people and discussing on how to spread the importance of financial literacy better. I still believe that if we have the knowledge and build good financial habits from young, we will be much better off and avoid all the financial sufferings later. Credit, debt and retirement issues are still causing a lot of problems for many families because of a mismanagement of money.

I've met up with people who are passionate in bringing financial literacy to the next level. People from various government ministries, educators, investors, businessman, financial bloggers, finance professionals, students are part of the groups of people whom I've met so far. I am careful to meet only those people who are sincere in bringing good to the society through finance and not just about making money.

Earlier this year, I had the chance to work and interact with NTU interactive investment club all thanks to my cousin who introduced me to the club and link me up with the people there. I had the opportunity to contribute and I personalpy saw how young people's lives can be impacted in the areas of financial planning. Students as young as 13 were able to understand the importance of financial planning through games and competition.

I've been busy with lots of things in my life. Working as a freelance mortgage consultant was a role that I took up a few months ago which has given me a lot of experience working with various banks and understanding how mortgage loans work. I could help people get the best rates for their housing loans and at the same time earn some extra money also. Besides this, in July this year, I met the love of my life. Yes I've been dating and in love for the past few months. It has been an amazing journey with her, creating our own experience and memories. I want to thank my precious girlfriend for being who she is and supporting me, encouraging me all these while.

As you can see, money is not the most important thing in my life. Experiences are far more important than what money can bring. However, money is the most basic for our livelihood. I always say take care of the money and you can then pursue the more important things in life without having to worry about money.

The end of the year is coming. Its the festive season as we celebrate Christmas, the season of giving, and cross over to the new year 2016. Have your life been good for the year 2015? Even if its not, I hope all of us will look forward to a greater year in 2016. Happy holidays ahead!!

Thursday, November 26, 2015

Fixed Deposit Home Rate - The Alternative Interest Rate To SIBOR

Interest rates are going up. This has been the concern for the past few months for many people. A rise in interest rates hurts borrowers and benefits savers. If you are a borrower, a rise in interest rates will really affect you. If you have existing loans such as car loans, housing loans and student loans, a rise in interest rates will mean you'll have to pay more every month to repay these loans. 

If you have existing loans especially housing loans, here is some good news for you. There are ways to mitigate this rise in interest rate and reduce the impact it has on you to the lowest. In this post, I'll show you what the industry calls Fixed Deposit Home Rate. This is an alternative rate to SIBOR which I believe is much better for home loans. If you're on a SIBOR or other variable home loan packages, read on to find out more about this new rate which will be beneficial for you to refinance to.

How Do We Know If Interest Rates Are Rising In Singapore?

The most widely used rate for interest rates here in Singapore is the SIBOR. It is called the Singapore Interbank Offer Rate, a rate which Singapore banks lend to each other. There is the 1 month SIBOR, 3 month SIBOR and the 12 month SIBOR. These rates are commonly used for housing loans when you loan from the bank on a variable rate package. 

Currently, the 3 month SIBOR is about 1.1%. The highest 3 month SIBOR was 7.75% in January 1998 and the lowest was 0.25% in September 2011. From the chart below, SIBOR can really swing quite widely. It is really possible for SIBOR to increase back to the 2-3% mark.  



When SIBOR increases by too much, those with housing loans will have to pay more for their instalments. For the past few months, I've been working closely with banks for my mortgage consultancy work. I've seen rates increase and also helped people refinance their home loans to better rates. There is an alternative rate to SIBOR which I think is a better choice for those with existing home loans. If you have existing home loans, listen to this carefully as it will definitely help you save more money in the long run.

Fixed Deposit Home Rate - The Alternative Interest Rate To SIBOR

In the past, there are only limited choices for home loans. People either choose the fixed rate packages or the floating rate packages pegged to SIBOR or the bank's board rate. For SIBOR, the rate is too volatile while the bank's board rate is not as transparent meaning the rate can change as and when the bank decides to change.

To safeguard ourselves against interest rates increase, we can choose the fixed rate packages but fixed rate packages are only available for 2 years to a maximum of 3 years currently. Thereafter, the rate will revert back to the variable package pegged to either SIBOR or bank's board rate again.

Now comes a new package called the fixed deposit home rate. This rate is pegged to a bank's fixed deposit rate where it is certainly less volatile than the SIBOR. Why the fixed deposit rate does not increase that much is because increasing this rate is a cost to the bank. Especially in Singapore where a lot of cash is parked in the fixed deposit accounts, banks have to think twice before increasing this rate.

From the past historical trend, the highest fixed deposit rate was around 0.875%-0.925% as compared to the highest rate of SIBOR at 7.75%. The fixed deposit rate can be either pegged to the 12 month, 18 month, 24 month or 36 month rate. Currently, only 2 banks in Singapore offer this home loan package which is pegged to the fixed deposit rate.

Refinancing to this rate would mean more stability for our monthly housing loan instalment and cost savings in the long run. To find out more about this rate or refinance your housing loans to this rate, you can email me at sgyi@homeloanwhiz.com.sg. I do not charge any fees for providing advice or refinancing your loans. This is a strictly complimentary service I offer to readers here.

Alternatively, fill in the contact form below for a free consultation and I'll get back to you shortly:

foxyform

Monday, November 16, 2015

Term Insurance Or Whole Life Insurance? Which Is A Better Choice?

My Encounters with Insurance

For the longest period of time, whole life insurance and insurance savings plan (endowment plans) were the only thing I know which existed in the market. 9 years ago when I was at the age of 18, I had my first encounter with insurance. I was still a student back then and was approached by a financial consultant on the streets while I was going out. I'm sure many of you have been approached before too. I agreed to hear more about insurance and sat at a MacDonalds with this consultant for the next 1 hour plus listening to what insurance is all about. I was introduced a savings plan and was told the interest will certainly be more than a bank's interest. Besides that, this plan also has death, total permanent disability (TPD) and critical illness coverage. It kinda makes sense that I can put in money, get higher returns for my money and still get the coverage. It sounds so attractive that I signed up on the spot. To this day, I still have the policy which I've been paying for the past 9 years.

The policy which I had, although has a coverage for death, total permanent disability and critical illness, was only $10,000. It is certainly not enough should I have dependants or if I need to provide for my parents in the future. My next few encounters with financial consultants was on the topic of whole life insurance. This time round, I took my time to decide whether to take up an insurance policy as the premiums weren't cheap. Many times, I was recommended policies with $100,000-$200,000 coverage at premiums of $200 per month or $2400 a year. I only just started working back then and didn't have a high starting salary. Paying $2400 a year is still quite a big sum of money to me.

Fast forward to today, I didn't purchase the whole life insurance for only $100,000-$200,000 coverage for $2400 per year. Later on, I found out another insurance called term insurance which I could get One Million coverage for only about $1500 a year. The same $200,000 coverage would only cost $300 a year back then instead of the $2400 which I was recommended. Why is there such a big difference in the premiums?

*Disclaimer: Before I continue, this post is not a recommendation for any insurance policies as I'm not here to do that. I will only list down the facts of what term insurance or life insurance is and let you see for yourself which is a better choice. Let's start!

Term Insurance Or Whole Life Insurance?

During NTUC Income's 40th anniversary dinner, Senior Minister Goh Chok Tong supported the use of term insurances and even asked insurers to put more emphasis on it. Let's see the rationale behind term insurance and whole life insurance and find out which is a better choice?

Whole Life insurance premiums are definitely much more expensive than that of a term insurance for a similar coverage. A person at the age of 20 can get a $200,000 death and TPD coverage for just $300 a year with a term insurance as compared to $2000+ a year for a whole life insurance. For whole life insurance, you get something back when you terminate your policy but for a term insurance, you would get nothing back at all. This is the argument put forth which discourages term insurance.

However, let's understand why we would get something back for a whole life insurance and not for a term insurance? For a whole life insurance, every dollar you pay as premium for the whole life plan, a portion will go into paying the mortality charge that provides you the cover you need. The rest of it is invested into the insurance company’s life fund. The mortality charge portion is never returned back to you. The only reason why you get money back from a whole life plan is because you gave the insurance companies extra money to invest. When you buy a term plan, you are effectively paying only for the mortality charge; you are just buying pure protection.

Have you heard of the phrase buy term and invest the rest? This is saying we should buy term insurance and invest the rest of our money on our own. Instead of putting our money into the insurance company's life fund, we can invest our own money and manage our own fund. This is of course subjected to individual preference. Some may not know how to invest their money and would still be better off putting their money in the insurance life fund.

But, there is a problem with whole life plans. If let's say we want to get 1 Million insurance coverage, it becomes too expensive if we were to get a whole life insurance. A check on DIYInsurance's comparison portal shows that a $100,000 coverage for whole life insurance would cost between $1600-$1900 a year. How much would a One Million coverage cost for life insurance? It could easily be above $10K a year.

DIYInsurance has also launched a term insurance table to compare the premiums across insurance companies in Singapore. The following is a table adapted from DIYInsurance's website for your reference. This Term Insurance table is also updated monthly by them.

We consider the following example of a Male, Non-Smoker:

  • Policy coverage till 65 years old (Eg. when children are independent)
  • S$1million Death and Total Permanent Disability (TPD) Coverage

Annual premiums of insurers in Singapore (S$):

AgeAvivaAXA LifeEtiqaGreat EasternHSBC InsuranceManulifeNTUC IncomePrudentialZurich LifeApply for Cheapest
30108710881990156013391202181016581304Apply 
40183518713440269026402016268125672001Apply 
50337933795330426044943701470242683549Apply 

For a Female, Non-Smoker,

Annual premiums of insurers in Singapore (S$):

AgeAvivaAXA LifeEtiqaGreat EasternHSBC InsuranceManulifeNTUC IncomePrudentialZurich LifeApply for Cheapest
3086879113901070100894813501249967Apply 
40139013572370175019801410210718811506Apply 
50245020783450260031442276385030492661Apply 
*With information from www.diyinsurance.com.sg and comparefirst. Figures are compiled on 5th November 2015.

** Prices reflected in the table reflect ongoing existing promotions and discounts which are in the knowledge of.

Term insurance or whole life insurance? You can make your decision base on the information provided above. There are many ways to compare insurance premiums now in this IT savvy world we live in. All of us can make better informed choices!

DIYInsurance by Providend Ltd

To compare and purchase insurance, DIYInsurance (Do It Your Way Insurance) is Singapore's First Life Insurance Comparison Web Portal by Providend Ltd. DIYInsurance aggregates products from various insurance companies and provides 30% commission rebates in addition to ongoing promotions.

Backed by key people with almost 2 decades of experience, all staff from DIYInsurance are salaried based and do not participate in sales-based compensation or incentives of any kind. Not being remunerated on a commission-basis means there is no hard-selling and over-selling. This is insurance based on no one's agenda except your own. Click here to request a Term Life Insurance quote through DIYInsurance.

*This post is written in collaboration with DIYInsurance. The opinions and expressions in this article are solely based on my own thoughts and experiences. 

Saturday, November 14, 2015

Does Money Make You Mean?

Money is the root of all evil? I came across a video on Facebook which shows an experiment that was conducted using the game of Monopoly to see whether does money really make people become mean? Its interesting to note how money can really change a person. Watch the video below:

Does Money Make You Mean?
What happens when a rigged game of Monopoly makes some players really rich? Watch the full talk here: http://t.ted.com/TKyFGXE(Created in collaboration with AJ+.)
Posted by TED on Wednesday, November 11, 2015



The experiment shows that having more money does make people become less sensitive to the plight of others. As a person gets wealthier, their feelings of compassion and empathy goes down and their feelings of entitlements goes up. The wealthier you are or the higher your status, the more likely you're to pursue personal success to the detriment of others. This is quite true as what we can see even in work places. Bosses compete and take advantage of employees just to climb the corporate ladder or meet their targets.

But, there can be changes to this by reminding people on the benefits of cooperation instead of competition, or the advantages to community. This can make wealthier individuals more empathetic in this world. Its a good reminder to us as we earn more money or climb the corporate ladder in our own lives. Its not about chasing money but creating value in the world. That's what I believe.

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Thursday, November 12, 2015

Do You Like Your Life? - Appreciate What You Have

Just a few days ago, I saw a comic series on 9gag which to me was surprisingly quite meaningful. 9gag is known for its just for laughs material and some don't really make sense. But this particular comic they shared is certainly not just for laughs. It's titled: "Appreciate what you have".

In life, a lot of people are unhappy. We're unhappy we have to work, we're unhappy we have not enough money, we're unhappy that we can't be better than others. Let me bring you back to the days when you were still a student and let's see what made people unhappy and unappreciative of what they have.

When you're just a student, you probably don't have much material possessions and at that time you hope you'll be able to grow up faster and start earning your own money so you can buy the stuff you like. You may envy others who come from richer families and when your friend shows you the things their parents bought for them, you also wanted it and go back home to try and ask your parents to buy for you.

After you graduate from school and start working, you were initially excited about working and earning your first pay check. However, as time goes by, you start to dread work and the money doesn't really motivate you anymore. You wake up unhappy going to work every single day not knowing that there are other people out there who want to work but don't have a job.

You go to work taking the public transport and one day you missed the bus and will be late for work soon. You get frustrated and thought how good if you had a small car which you can drive around.

Soon, you earn enough money to afford a small second hand car but the air con breaks down a lot of times and its not as comfortable as it seems. You look at the car beside you and thought how good if you can afford a new car.

After a few years, you bought your own new car and am happy with it. However, one day, you see another bigger car beside you and thought how good if you can own a bigger car which is more comfortable. Your car seems to be a little small and squeezy.

Indeed after another few years you manage to buy a bigger car. You feel comfortable and happy. However, one day, you see a very nice car just beside you. You thought cars are not just meant to be comfortable. Its meant to be nice too so it shows your status. Your car seems to be a little dull and boring.

And really, after a few years, you bought that nice, beautiful, comfortable car of your dreams. Then, when you think you won't want more than that again, you got stuck in the same traffic jam and thought how good it is if you can own a helicopter.

Helicopter? How is it possible that someone will be not satisfied to the extent he wants a helicopter for transport. Well, it has happened all over the world before. There are people who own their own helicopters and private jets to travel.

And now, here's the comic from 9GAG. Do you appreciate what you have in life? Being grateful can certainly make our lives happier. Remember while we are enjoying the small pleasures of life, there are other people who are less fortunate than us.

Photo Credit: 9GAG

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Monday, November 9, 2015

Passion or Discipline? What Makes A Person Successful?

What makes a person successful? Some say its passion, some say its discipline. What do you think?

Passion to me is when we love something we do, its a feeling we have that keeps us going. Passion however, can get us out of hand sometimes. Feelings makes us emotional and can't think rationally. We may end up doing crazy things because of passion and end up causing our health to suffer. When we like something so much, we sometimes can be obsessed with it to a point when we are willing to give up everything for a cause.


Discipline on the other hand is building up habits in our lives. We brush our teeth everyday not because we feel passionate about it but because we build up discipline or habits for it. We know what's important in our lives and take care of our health by eating healthier, sleeping well etc. We build up habits to save money not because we are passionate for it but because we know it is important for our future.

Now, which is more important? Passion or discipline? In life, I think we need some passion and also some discipline. Let me explain why. Imagine if you're passionate for something and you don't eat or sleep just to do that thing you're passionate for. Is this even sustainable in the long run? You may end up lying on the hospital bed even before you could be successful. On the other hand, if you just have discipline only and not passion, then your life is just a routine without any feelings.

Having both passion and discipline is not easy. We may have found our passion but do not have the discipline to make sure we balance our lives by sleeping enough, eating well etc. We may have discipline but will find it boring if we do not have passion in what we do. Blogging has been a passion to me. But I make sure I do not get so obsessed with it that its the only thing in my life. I still work because blogging doesn't give me an income to sustain my lifestyle. I still have my own social life and take care of my health. It actually takes both passion and discipline to write on my blog.

Discipline can be trained. It takes effort to build up good habits. Habits of saving money, habits of eating healthily and habits of sleeping well can be trained. This is the first step to sustain us for life. However, passion cannot be trained. We cannot force ourselves to like something. When I was young, I had the opportunities to explore the artistic side of me such as arts and music but I did not have the passion for it. I've seen people who are so passionate for arts that they spend hours upon hours drawing or practising their skills. This is just not me.


Passion has to be searched. It comes from the heart. When we find it, we will know it in our hearts. Its that simple, just search your heart and take time to listen and think about your life. Without passion, our life feels meaningless. With passion, we still need discipline to make sure it is sustainable. Find your passion, train your discipline. Life will be more meaningful and sustainable as a whole. Success is not measured by how much you have but by how much you have lived your life as a person.

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Related Posts:
1. How Delayed Gratification Can Determine Success or Failure?
2. Finding Your Passion and Keeping It Alive

Friday, November 6, 2015

Benefits of Crowd Lending VS Stock Trading

Crowd lending or crowd funding is something very new in Singapore. In the past few months, there are more and more reports on the mainstream media on crowd lending in Singapore which resulted in more people investing their money through these crowd lending platforms. I have written on crowd lending and also on stock trading before. I mentioned before that many young people started out trading in the stock market partly because of the lure of quick money. Both crowd lending and stock trading has its risks and I'll explore the differences between these two. Let's see which is a better choice for most people to start with.


Is it that easy to make money through stock trading? 

Trading is a psychology game. Buying and selling stocks in the short term while betting on price movement requires a lot of hard work too. We've heard traders who earn tens of thousands in a very short time and we see these advertisements very frequently on those trading workshops. Some of these workshops even have software to help you trade and make money automatically. It was said this eliminates the psychology aspect and doesn't require much effort on our part. Is it really that easy to make money?

I heard a real life story of a lady who was retrenched during the 2007/08 financial crisis. She was a futures broker in a financial institution for 17 years. She worked mostly from 6pm in the evening to 5am in the morning trading futures market.

After being retrenched, she thought she would be able to trade at home and have time to look after her son. But, within 10 months into trading at home, she lost quite a lot of money and stopped. Why did she lose money? She said trading in a financial institution allowed her to have tips and instant news to make decisions fast. Trading at home is different as most of the time the news is delayed. The second reason is trading an institution money's is different from trading your own money. The emotional and psychological aspect is completely different. Even with the experience and knowledge of trading, it is still highly possible to lose money.

After hearing this story, it made me realise trading is not easy. Firstly, I've heard that most people lose money in trading and it is said that only 5% of the traders in the world can make money consistently. Secondly, I've heard that trading is a psychological and emotional game. If you can't control your emotions, you can't be successful in trading. This point is also confirmed.

So is it still possible to make money through trading? I think it is still possible to make money from trading but it will not be a lot of money. In actual fact, very few people are full time traders. Most trade on the sideline occasionally. You may not agree with me but I've traded before and know what it is like to lose money. It is really an emotional game. Want to make a lot of money through trading? Think again.


What about investing through Crowd lending platforms? 

Investing through crowd lending platforms can yield you more than 10% a year. That is a pretty decent return on investment. Wait... some of you may be thinking this sound too good to be true? How can there be such thing as a more than 10% yield on investment? Let's pause for awhile and take a look at how crowd lending works to understand it better.

Crowd-funding is the practice of funding a project or venture by raising monetary contributions from a large number of people, typically via the internet. One of the crowd-funding platform for businesses in Singapore is Moolahsense. MoolahSense, as quoted on their website, is “a trusted P2B lending platform that empowers investors to stimulate economic growth by providing finance directly to growth SMEs, in exchange for an attractive rate of interest.”

MoolahSense co-founded by the CEO Mr Lawrence Yong, who has been a practitioner in the financial sector for the past 12 years, with experiences spanning private wealth management and investment banking. MoolahSense has opened up a whole new avenue for us ordinary investors who want a part to play in investing in SMEs in Singapore.

The investment opportunity provided by MoolahSense is essentially a bond-like program where one can lend money to the SMEs and get interest in return on a certain time period – either on a monthly or one-time basis. Only 1 in 20 SMEs get funding from banks even though they contribute greatly in the economy of Singapore. Crowdfunding is a win-win situation for both SMEs and investors. SMEs get the funding they want and investors get the interest in return.

In simple layman terms, when we crowd fund a company, we are lending money to that company in exchange of some interest. We become lenders just like when the bank lends money to individuals, they charge an interest in exchange for the loan.


Crowd Lending VS Stock Trading

Limited Losses

Every investment has its own risks. Stock trading can make you a lot of money but can also make you lose a lot of money. I've heard of people who lost hundreds of thousands of dollars through stock trading. Stock trading like Forex, options or futures is highly risky as we can lose more than the amount we have.

For crowd lending, your losses are limited to the amount you invest in. For example if you invest $1000 and the company defaults on its payment, you will only lose a maximum of $1000. Moolahsense, a crowd lending platform, limits the risks for investors by meeting up with the management of the company, engaging them in investors sessions and in the case of default, they have directors of the individual companies as guarantors and also debt collectors agencies to recover the money.

Timing the market and volatility

As mentioned earlier, trading is a psychology game. Why so few traders are profitable in the long run is because the market is always changing. The market is volatile and is definitely not for the weak hearted. Nevertheless, there are still some successful traders who manage to make money from trading the markets.

For crowd lending, we are essentially just lending to a corporation. The returns are in the form of interest payable to us as we lend to these corporations. In crowd lending particularly, we are lending to SMEs. The returns are predictable so there is no need to time the market or be subjected to the volatility like the stock market.

Fees for buying/selling

For stock trading, there are always fees for each buying and selling transaction. If we only trade with a small sum of money, it wouldn't make sense at all as the fees would have eaten up most of our profits. For crowd lending with Moolahsense, there are no fees charged at all. This is certainly beneficial to investors who just want to invest a small amount of money. You can invest  from as little as $1000 in each company.


Crowd lending vs stock trading, which do you think suits you more? There are many different investment products and different ways to grow our money. Diversifying and knowing the risk in investment will help us go a long way.

Check out Moolahsense website to find out more about the opportunities for SMEs funding and investments.