Portfolio Update December 2024

 Today is the last day of year 2024.

Time for a quick update of my investment portfolios before we march into 2025.

My SGX Income Portfolio value has declined to $377k from $380k.

My US/HK/Others Growth Portfolio has risen slightly to US$21.3k from US$19.6k.

My SRS Ultra Long-Term Portfolio value has increased to $192k from $189k.

Market Outlook 

The US stock market has remained in a healthy bull run subjected to volatility from the occasional noises and fears attributable to ongoing geopolitical conflicts, and concerns about a potential economic recession. Despite these challenges, I believe that long-term investors should remain calm and focused on our investment objectives.

Investment Strategy 

My investment strategy prioritises on owning high-quality income-producing instruments, such as local bank stocks, S-Reits, government-backed risk-free bonds and other strong profitable growth businesses including the likes of US growth tech stocks. By carefully diversifying my portfolio and remaining disciplined, I aim to weather any market storms and achieve my long-term financial goals. In the new year, I will continue to monitor the local banks and  US growth tech stocks for any sign of pullback.

Portfolio Actions

1. Subscribed to 3,000 preferential offer shares of Keppel DC Reit at $2.03 in SRS on 18 Dec.

2. Nibbled 100 shares of OCBC at $16.48, 500 shares of Kimly at $0.325 and 100 shares of Keppel Infra Trust at $0.45 in Tiger Broker by redeeming $30 cash vouchers using expiring reward points.

Portfolio Dividends

1. Received $489.22 of dividends from SSB on 2 Dec.

2. Received $396.00 of dividends from MPACT on 6 Dec.

3. Received $436.87 of scrip dividends from Mapletree Log Trust as 326 shares on 17 Dec.

4. Received $996 of dividends from Frasers L&C Trust on 25 Nov.

5. Received $514.12 of scrip dividends from Mapletree Industrial Trust as 220 shares on 18 Dec

6. Received $840 of dividends from Aims Apac Reit on 24 Dec.

SGX Income Portfolio

Portfolio Value = $377k

US/HK Growth Portfolio

Moomoo

US$5k

Tiger Broker

US$14.9k

Syfe Trade

US$1.4k

Portfolio Value = US$21.3k

SRS Ultra Long-Term Portfolio

Portfolio Value = S$192k

Disclaimer: This article is for informational purposes only and does not constitute financial advice. It's crucial to conduct your own research or consult with a qualified financial advisor before making any investment decisions.

Thanks for reading.

With love and peace, 

Qiongster

Why SRS May Not Be Suitable for Everyone

 

The Supplementary Retirement Scheme (SRS) is a voluntary tax deferment savings scheme in Singapore designed to encourage individuals to save for retirement while enjoying tax benefits. While it can be an effective tool for many, it is essential to recognize that SRS may not be suitable for everyone. Below, we explore several reasons why some individuals might find the SRS less advantageous for their financial situations.

1. Low Interest Rates

One of the most significant drawbacks of the SRS is the low interest rate offered on deposits. As of now, SRS accounts yield only about 0.05% annually. This rate is notably lower than inflation rates, which means that money held in an SRS account may lose purchasing power over time. For individuals looking for growth in their retirement savings, relying solely on the interest from an SRS account may not be sufficient.

Although individuals seeking higher returns may consider investing their SRS funds into stocks, bonds, funds or insurance endowment plans, not everyone is savvy enough to make investment decisions or has the risk appetite to stomach volatility. Investing in the wrong financial assets, businesses, stocks or companies could result in significant losses which are more detrimental than paying taxes.

2. Withdrawal Restrictions

The SRS imposes strict withdrawal regulations that can be a significant disadvantage for some savers. Withdrawals before the statutory retirement age (currently 63 years) are subject to a 5% penalty on the amount withdrawn, in addition to being fully taxable as income. This can deter individuals who may need access to their funds earlier due to unforeseen circumstances such as medical emergencies or job loss.

Upon withdrawal of SRS funds after reaching the retirement age, 50% of the withdrawn amount is subject to income tax. Withdrawal can be in a lump sum or spread over a maximum of 10 years. 

While we could strategise on minimising the incurring of income taxes from SRS, we are unable to avoid paying tax totally despite all the efforts.

3. Limited Flexibility and Autonomy over own money

Akin to Central Provided Fund (CPF) accounts, our funds stashed away in SRS becomes illiquid. 

For those who prioritize liquidity and flexibility in their financial planning, other savings or investment options may be more appropriate. High interest savings accounts, annuity plans, robo-advisor managed investment portfolios or even self investments could generate higher returns to even offset the taxes incurred from controlling our own money saved from our main income.

4. Cash is King

The SRS requires contributions to be made exclusively in cash, which can limit participation for those who may not have sufficient liquid assets or value Cash as King. 

Individuals with significant investments or commitments in property or stocks are not able to easily stake or liquidate these assets just to make contributions to their SRS accounts.

It may be more important to maintain our active cashflows for daily expenses and war chest for investment opportunities in the next property or stocks.

We can consider CPF Voluntary Contributions to Medisave or Retirement Sum Top-Up to own CPF Special Account to enjoy tax relief before considering top-ups to SRS.

5. Tax Efficiency Considerations

While one of the main attractions of the SRS is its tax benefits—contributions are tax-deductible and withdrawals are taxed at only 50%—this advantage may not be significant for everyone. 

Individuals in lower tax brackets may find that the tax relief provided by SRS contributions does not outweigh the penalties and restrictions associated with early withdrawals.

Before committing to an SRS account, individuals should assess their current and projected income levels. Lower Income Individuals earning below a certain threshold may benefit more from other tax-saving instruments i.e. CPF top-ups, course reliefs, donations etc.

Exploring investments that provide capital gains or dividends can sometimes offer better after-tax returns than the SRS.

Conclusion

The SRS presents a valuable opportunity for many in Singapore looking to enhance their retirement savings while enjoying tax benefits. However, it is crucial to recognize that it may not be suitable for everyone due to its low interest rates, efforts required to manage investments, withdrawal restrictions, cash-only contribution requirement, and varying tax efficiency based on individual income levels.

Before deciding whether to participate in the SRS, individuals should carefully evaluate their financial goals, liquidity needs, and overall investment strategy. Consulting with a financial advisor can also provide tailored advice that aligns with personal circumstances and long-term objectives. Ultimately, making informed decisions about retirement savings will lead to a more secure financial future.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. It's crucial to conduct your own research or consult with a qualified financial advisor before making any investment decisions.

Thank you for reading!

With love & peace,

Qiongster

Last Chance to Top Up my Medisave for Tax Relief

  

Merry Christmas!

As I have attained full retirement sum of $205,800 for 2024 in my CPF Special Account, I could not make voluntary top-up under Retirement Scheme Top-Up to qualify for tax relief.

A maximum tax relief of $8,000 applies when we top up our own CPF SA or RA, and an additional tax relief of $8,000 if we top up loved ones' CPF SA or RA. The combined $16k tax relief on COF cash top-ups is shared with any contribution to MA of our own or loved ones.

I have already top up my mum CPF RA with $8k and my own Supplementary Retirement Scheme account by $15,300 early this year to qualify for tax relief.

The other options for tax savings would be to enroll in courses, make donations to qualified charity organisations or to make top up to Medisave account.

After spotting that my CPF Medisave account (MA) is no longer at the Basic Healthcare Sum (BHS) of $71,500 for 2024 after deductions of Medishield Life premiums were made days ago, I sensed this opportunity for a Medisave top-up to qualify for some tax relief.

Effectively, I would be making cash top-up of $297.29 which is the total premium costs, after subsidised by the $400 free Medisave top-up from Assurance package, back to my CPF Medisave account.

However, fret not, I am not taking my own cash to pay for insurance premiums which could be offset by CPF Medisave.

Thank you Aims Apac Reit for the Christmas gift and sponsorship!

There it goes. Using Paynow for instant top-up and reflection in the CPF transaction.

Restoring my MA back to BHS, earning potentially 4% for 2025 in Medisave worth $12 and saving 15% of income taxes worth around $44.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. It's crucial to conduct your own research or consult with a qualified financial advisor before making any investment decisions.

Thanks for reading. Stay focused and remain steadfast as always!

With love & peace,

Qiongster

From $0.01 to $100,000: The Incredible Journey of Bitcoin

Bitcoin, the world's first decentralized cryptocurrency, has undergone a remarkable price journey since its inception in 2009. From a mere fraction of a penny to a staggering $100,000, Bitcoin's rise has been nothing short of extraordinary. In this article, we'll delve into the key milestones and factors that have contributed to Bitcoin's meteoric ascent.

Early Days and Humble Beginnings

Bitcoin's journey began in 2009 when an anonymous individual or group known as Satoshi Nakamoto released a whitepaper outlining a new form of digital currency. The concept was revolutionary: a decentralized system that could facilitate peer-to-peer transactions without the need for intermediaries like banks.

In the early days, Bitcoin was largely unknown and traded at negligible prices. In fact, in 2010, you could purchase a pizza for 10,000 Bitcoins! This demonstrates just how undervalued Bitcoin was in its infancy.

The Rise of Bitcoin

Several factors contributed to Bitcoin's gradual rise in popularity and value:

Decentralization: Bitcoin's decentralized nature, where no single entity controls the network, appealed to those seeking financial freedom and privacy.

Limited Supply: Bitcoin's fixed supply of 21 million coins created scarcity, driving up demand and potentially increasing its value over time.

Technological Innovation: The underlying blockchain technology powering Bitcoin has evolved, leading to increased efficiency and security.

Growing Adoption: As more individuals and businesses began to accept Bitcoin, its legitimacy and utility grew, attracting new investors.

Institutional Interest: Major financial institutions and corporations started to take notice of Bitcoin, investing in it and offering related services.

Key Milestones in Bitcoin's Price History

2010: Bitcoin's price fluctuated between $0.01 and $0.10.

2011: The price surged to $1, reaching a market capitalization of over $1 billion.

2013: Bitcoin experienced its first major bull run, peaking at around $1,100.

2017: The cryptocurrency market exploded, and Bitcoin reached an all-time high of nearly $20,000.

2020-2021: Bitcoin embarked on another bull run, surpassing $60,000 in early 2021.

2024: Bitcoin continued its upward trajectory, breaking the $100,000 barrier for the first time.

The Future of Bitcoin

While Bitcoin's price has been incredibly volatile, its long-term potential remains a subject of debate among investors and analysts. Some believe that Bitcoin could become a major store of value and a hedge against inflation. Others are more cautious, citing regulatory risks and potential technological disruptions.

Regardless of future price predictions, Bitcoin has undeniably made a significant impact on the global financial landscape. It has challenged traditional notions of money and paved the way for a new era of digital assets and decentralized finance.

As we look ahead, it is crucial to approach Bitcoin and other cryptocurrencies with a level of caution and thorough research. The cryptocurrency market is highly speculative, and it's essential to understand the risks involved before investing.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. It's crucial to conduct your own research or consult with a qualified financial advisor before making any investment decisions.

Thank you for reading!

With love & peace,

Qiongster

Passive Income for 2024 Exceeds $30k!

  

Year 2024 whizzed past in a blink of an eye. As the year draws to a close, let me take a moment to reflect on my passive income journey.

From 1 Oct to 31 Dec 2024, the following dividends are my main passive income source.

$147.50 SSB (1 Oct) SRS

$303.00 SSB (1 Oct)

$399.72 CICT (17 Oct)

$612.19 SSB (1 Nov)

$270.00 Guocoland (19 Nov)

$540.54 DBS (25 Nov)

$162.00 DBS (25 Nov) SRS

$187.15 Astrea 7 A-1 PE Bond (27 Nov)

$79.00 Suntec Reit (28 Nov)

$722.40 Frasers Centrepoint Trust (29 Nov)

$134.00 Netlink Trust (29 Nov)

$489.22 SSB (2 Dec)

$396.00 MPACT (6 Dec)

$436.87 Mapletree Log Trust (17 Dec) DRP

$996.00 Frasers L&C Trust (17 Dec)

$514.12 Mapletree Ind Trust (18 Dec) DRP

$840.00 Aims Apac Reit (24 Dec)

They amount to $7,229.71.

My passive income for the first 9 months of 2024 is $24,516.32

Altogether, my passive income for 2024 is

$31,746.03

This is 16% higher than the $27,304.87 of passive income for year 2023.

My target for 2024 is $28k and I am pleased that my actual passive income exceeded expectation.

My ultimate goal to achieve FIRE is to own an $1m investment portfolio generating at least $50k of annual passive income. Currently, I am at about half of the journey as my SGX income portfolio and SRS ultra long-term portfolios are valued at around $500K and passive income has crossed the half-way milestone of $25k.

Though we are moving past the peak of high interest rates, the impact of high interest rates on S-Reits is evident and expected to prolong for the next few years, resulting in the current subdued performance of S-Reits.  Nonetheless, I remain comfortable holding a portfolio with a significant allocation to S-Reits alongside safe havens such as risk-free Singapore Savings Bonds and fixed deposits in local banks.

2024 has been a peaceful and rewarding year despite being clouded by immense uncertainties and fears about inflation, recession, war, politics and so on.

I am optimistic and believe that 2025 will be a better year despite the looming recession and potential global economic slowdown which could present more opportunities for investors.

I anticipate the Federal Reserve to remain accommodative towards interest rates cuts to help mitigate global economic slowdown while balancing inflation concurrently. I embrace the resilience of the real estate market, with the potential for REITs to increase rentals and continue paying consistent dividends. The world will go round no matter what happens.

As investors, we shall continue to acquire income-producing businesses and assets to enhance our future passive income streams. Let us also look forward to the upcoming interest payouts from CPF in Jan 2025.

Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investment decisions should be made based on individual circumstances and after careful consideration of risks and potential rewards.

Thanks for reading. Stay focused and remain steadfast as always!

With love & peace,

Qiongster

8 CPF Changes in 2025

  

The Central Provident Fund (CPF) Board has announced significant changes to the CPF scheme, which will come into effect in 2025. These changes aim to enhance retirement adequacy and provide more flexibility to CPF members.

Key Changes in 2025:

1. Increase in Ordinary Wage Ceiling

The CPF Ordinary Wage (OW) ceiling limits the amount of OW that attract CPF contributions in a calendar month for all employees. The OW ceiling will be raised to $8,000 by 2026. The increase took place in four steps since 1 September 2023 to allow employers and employees to adjust to the changes.

There will be no change to the CPF annual salary ceiling of $102,000, which sets the maximum amount of CPF contributions payable for all salaries received in the year, inclusive of both Ordinary Wages and Additional Wages. 

There will be no changes to the Additional Wage ceiling and CPF Annual Limit, where they will remain at ($102,000 – Total Ordinary Wage subject to CPF for the year) and $37,740 respectively.

Please refer to the table below for the CPF OW and annual salary ceilings from 2023 to 2026. 

2. Increased CPF Contribution Rates

From 1 January 2025, the CPF contribution rates for employees aged above 55 to 65 will be increased to strengthen their retirement adequacy. The changes apply to wages earned from 1 January 2025:

3. Closure of CPF Special Account for members above 55

The CPF Special Account (SA) will close in the second half of January 2025 for members aged 55 and above.

The savings in the SA will be transferred to the Retirement Account (RA), up to the Full Retirement Sum (FRS), so that members can get higher payouts. Any remaining SA savings will be transferred to the Ordinary Account (OA) which earns the short-term interest rate and can be withdrawn when needed.

Members can top up their RA to the Enhanced Retirement Sum (ERS), transfer CPF savings to their loved ones, or have the flexibility to withdraw or invest the CPF savings in their OA.

Members can view the estimated amounts that will be transferred from their SA to their RA and/or OA by logging in to their CPF Retirement Dashboards.

When your SA is closed, your SA savings will be transferred to the RA, up to your FRS, so that you can get higher monthly payouts. These savings will continue to earn the long-term interest rate. 

If you have set aside your FRS, whether fully in cash or with a mixture of property and cash, any remaining SA savings will be transferred to your OA. These savings will earn the short-term interest and can be withdrawn when you need them.

4. Enhanced CPF Retirement Sum

From 1 January 2025, the Enhanced Retirement Sum will increase from three times to four times of the Basic Retirement Sum (BRS). This will provide CPF members aged 55 and above the option to voluntarily top up more to their Retirement Account (RA) for even higher monthly payouts in retirement.

The ERS in 2025 will be $426,000. To illustrate, members turning age 55 in 2025 can receive CPF LIFE monthly payouts of more than $3,000 for life from age 65, if they choose to top up to the raised ERS in 2025.

5. Increase of Basic and Full Retirement Sum

The Basic Retirement Sum (BRS) and Full Retirement Sum (FRS) will be raised. This increase reflects the rising cost of living and aims to provide a more comfortable retirement.

Here are the retirement sums that are applicable to members who turn 55 from 2024 to 2027:

6. Increase of Basic Healthcare Sum

The Basic Healthcare Sum (BHS) is the estimated savings required for basic subsidised healthcare needs in old age. The BHS is adjusted yearly for members below age 65 to keep pace with the growth in MediSave use. Once members reach age 65, their BHS will be fixed for the rest of their lives.

From 1 January 2025,

1.      For members aged below 65, their BHS will be raised from $71,500 to $75,500.

2.     For members who turn 65 years old in 2025, their BHS will be fixed at $75,500 and will not change thereafter.

For members aged 66 years and above in 2025, their cohort BHS has already been fixed and will remain unchanged.

Members can make contributions to the MediSave Account (MA) up to the BHS. MediSave contributions in excess of a member’s BHS will be automatically transferred to his or her other CPF accounts.

CPF members who have less than the BHS are not required to top up their MA and will still be able to withdraw from their MA to pay for approved medical expenses.

 

6. Interest Rates for SA, MA and RA reverts to 4%

The interest rate for CPF Special, MediSave and Retirement accounts will dip to 4 per cent per annum in the first quarter of 2025.

The lower interest rate is due to a decrease in the 12-month average yield of 10-year Singapore Government Securities.

The Ordinary Account (OA) interest rate will remain unchanged at 2.5 per cent for the first quarter of next year.

The concessionary interest rate for HDB housing loans, which is pegged at 0.1 per cent above the OA interest rate, will remain unchanged at 2.6 per cent during the same period.  

In line with the government’s efforts to boost retirement savings for CPF members, members will continue to earn extra interest on their CPF savings. 

Those below 55 years old will earn an extra 1 per cent interest on the first S$60,000 (US$44,460) of their combined balances. This interest is capped at S$20,000 for the OA. 

Members aged 55 and above will receive an extra 2 per cent interest on the first S$30,000 of their combined balances, capped at S$20,000 for the OA, and an extra 1 per cent on the next S$30,000. 

The extra interest earned on the OA balances will go into a member’s Special Account or Retirement Account. 

Members who are above 55 years old and participate in the CPF LIFE scheme will still earn the extra interest on their combined CPF balances. This includes the savings used for CPF LIFE.

7. Matched Retirement Savings Scheme

As announced in Budget 2024, the MRSS will see the following enhancements from 1 January 2025:

Eligible seniors can make more top ups to their RA and receive the higher matching grant amount.

Additionally, the removal of age cap means that more seniors will be eligible to enjoy the benefits of MRSS.

The cash top-up and the matching grant in your RA will earn risk-free interest rates of up to 6% per annum. This allows seniors to accumulate more savings, boosting monthly payouts in retirement.

8. CPF Contributions by Platform Workers

From 1 January 2025, platform operators are required to deduct CPF contributions from platform workers' earnings as and when they earn and submit it to CPF Board every month. This will help platform workers make timely CPF contributions without needing to submit the CPF contributions themselves.

According to CPF's definition, Platform workers provide ride-hail or delivery services under a platform work agreement with a Platform Operator (PO), and receive a payment or benefit; and are under the management control of the PO when providing the platform service.

For platform workers who are mandated or opt in to increased CPF contributions, Ordinary, Special and MediSave contributions will be deducted.

For platform workers who do not opt in to increased CPF contributions, only MediSave contributions will be deducted.

Details are found on CPF website: https://www.cpf.gov.sg/member/growing-your-savings/cpf-contributions/saving-as-a-platform-worker

Why These Changes Matter:

These CPF changes are designed to help Singaporeans build a stronger financial foundation for their retirement. By increasing CPF contributions and raising the retirement sums, individuals can accumulate more savings over their working lives. The enhanced CPFIS will provide more opportunities for members to grow their CPF savings and potentially earn higher returns.

By understanding these changes and taking proactive steps, you can make the most of your CPF savings and secure a comfortable retirement.

Disclaimer: Please note that this is my personal general overview of the CPF changes. It's advisable to consult with a financial advisor or refer to the official CPF website for the most accurate and up-to-date information.

Thanks for reading.

With love and peace, 

Qiongster

Net Worth Update Dec 2024 | Achieved New Record High SGD 1.735m

  

In the final month of 2024, my net worth reaches a record milestone of S$1.735 million driven by the timely influx of bonuses and dividends.

Net Worth Breakdown:

Safe Heavens (63%)

CPF (36%): As the cornerstone of my retirement savings, my CPF accounts has been diligently funded over the past years. Attaining Full Retirement Sum FRS in 2022 was a significant milestone. At this juncture, I am looking forward to the credit of 2024 interests on 1 Jan 2025.

Cash and war chest (17%): A liquid reserve strategically stashed in fixed deposits and Fullerton cash funds, earning around 3% p.a, this cushion provides me with a peace of mind and security for unexpected expenses or investment opportunities.

Bonds (10%): A balanced portfolio of low-risk Singapore Savings Bonds and Astrea Bond ensures stability. I have maxed out my SSB individual limit of $200k in Aug 2024, just before the interest rates declined.

Retirement Savings (13%)

SRS (8%): This tax-deferred savings account allows me to set aside an additional layer of retirement savings. Annual individual limit of $15.3k is maxed out. My SRS funds are currently deployed into $30k of SSB and 6 local stocks - Comfortdelgro, DBS, OCBC, Keppel DC Reit, Keppel Reit and Wilmar.

Insurance (5%): I also own Prudential whole life insurance plan and other savings plans which in total, could provide me with 6-digit lump sum payout after my retirement.

Income and Growth Assets (23%)

Stocks and Reits (23%): A carefully curated portfolio of stocks and Reits, focuses on dividend income and long-term growth. This segment of financial assets is riskier and more volatile but offers the potential for consistent passive income and returns.

More than just numbers

While the numbers are encouraging, the true value lies in the journey. It has been a journey of patience, discipline, and a relentless pursuit of financial freedom. I have learned to navigate market volatility, embrace uncertainty, and make informed financial decisions.

The Art of Financial Wellness

Financial success is not solely about accumulating wealth; it is about achieving a state of financial wellness. I realised that true wealth encompasses more than just building net worth. It is about having the freedom to pursue your passions, enjoying quality life, and contributing back to the society and world.

As I move forward, I strive to balance financial growth with personal fulfillment. By setting realistic goals, making informed choices, and staying mindful of my spending, I hope to inspire others to embark on their own financial journeys.

Remember, the journey of a thousand miles begins with a single step. Start small, dream big, and never stop learning.

Thank you for reading!

With love & peace,

Qiongster