CPF Life - Basic or Standard Plan? (Part 1)

Do you know that there are two different CPF LIFE Plans that you can choose from - LIFE Standard Plan and LIFE Basic Plan? The former gives you a higher monthly payout but a lower bequest for your beneficiaries, while the latter gives you a lower monthly payout but leaves more behind for your loved ones. Below is an illustration taken from CPF website:

Figure 1: LIFE Standard Plan gives you higher monthly payouts, but leaves behind lower amount of bequests for your beneficiaries. The opposite is true for LIFE Basic Plan.

While the illustration is factually correct, it leaves out tremendous amount of information essential for decision-making. There are many more considerations than just the monthly payout and the size of the bequest. Even if these are the only two factors, we still need to get a better sensing of the relevant figures to make more informed decisions.

This Straits Times article published on the 23 Aug 15 provided some useless (yes, this is not a typo) figures for comparison of the two plans [link]. It's useless because of one important change - members only need to choose their LIFE Plan when they wish to start their monthly payout. This change applies to CPF members who turned 55 on or after 1 Jul 15. 

Figure 2: Screenshot of the Straits Times article on the comparison of the two CPF LIFE Plans available. 

The article was published after the change. The author also acknowledged this change in the beginning of the article, so he/she must be aware of it already. However, this is where the major discrepancy is: the author did not factor this change into his/her subsequent analyses.

As enclosed within the purple box in Figure 2 above, the figures in the article are supposed to illustrate the monthly payout and bequest for a male who turned 55 on July 1. However, on closer look, the figures totally ignore the change mentioned earlier! For a male who turned 55 on July 1, 2015, he only needs to make his choice when he wishes to start his monthly pay-out, which is when he turns 65 at the very earliest. This means that between 55 and 65, the money will stay in his Retirement Account (RA) to earn interest. The major giveaway is at age 65. If the member is to pass on at 65, just before he starts receiving his monthly payout, the bequest amount should be the same for both plans because the money in his RA has not yet been (or just been) used to pay for the CPF LIFE premium. This is clearly not the case for the illustration used by Straits Times. I think the author must have used the figure for someone who turned 55 before 1 Jul 2015. For this group of people, they have to make a choice at 55, which is also when the first deduction up to the Basic Retirement Sum of $80,500 is made. Figure 3 below explains this. The scenario provided by the Straits Times article is clearly not for those who turned 55 on 1 July 15.

Figure 3: Deductions of premiums for CPF LIFE Standard Plan for members who turn 55 before 1 Jul 2015.

For this group of people who turned 55 before 1 Jul 15, the interest earned on the money used to pay for the CPF LIFE premiums will not be refunded upon the death of the member. This means that the first deduction of up to $80,500 at age 55 will not earn "refundable" interest for the next ten years. This explains the lower bequest amount at 65 for the LIFE Standard Plan.

I am appalled by this piece of misinformation by our news publisher. With such a large reader base, such mistake can cause many readers to make the wrong choice. I almost gave the wrong advice to my dad! Luckily, I didn't take the numbers presented at face value, and went on to read up more on CPF website.

I urge all of you who have vested interest in the CPF LIFE to read up more on CPF websites to further your understanding, instead of relying solely on news publications. If Straits Times can make such a mistake, CPF can too, but we will have a stronger case to fight for justice if the mistake is made by the latter. 

For those turning 55 on or after 1 July 2015, Figure 4 below tells you how the premiums are being paid instead. This is taken from the CPF website. 

Figure 4: Screenshot from CPF website showing the difference in premium payments for the two different CPF LIFE Plans.

I first started out with this post hoping to do some analyses on the figures provided by the Straits Times. Now that we know they are not relevant anymore, I will have to try and derive some figures myself. I am quite sure I don't have all the information to calculate the figures accurately, but I hope to be able to make some guesstimates. 

That will have to be in the next post.

Meanwhile, I hope this post helps you to avoid making a false decision because of the misinformation provided by the Straits Times. 

Cash Is King, Until It No Longer Is

Allow me to share with you a (true) story.

My paternal grandparents were born in the 1920s/1930s. They owned a small piece of land in Pulau Tekong where they cultivated rubber trees, grew vegetables, reared live stocks like chickens and pigs et cetera. As you all know, the island is now exclusively used for military training. My grandparents were displaced when that happened, but not without being compensated with a 3-room HDB flat right beside Tampines Mall and some money. Exactly how much, I have no idea, but at one point, my granddad had over a $100k.

At that time, that much money could get you a freehold landed property. But nope, my granddad decided that keeping it in the bank is the way to go. The outcome needs no elaboration. 

While cash is king, we must remember that we are actually losing money every year if the returns on that money is lower than inflation. My portfolio consists of mainly cash now, as I wait patiently for the opportunity to pick up great companies on the cheap. I don't know when that will come, so meanwhile, the best I can do is to find the highest yielding place to park my money without taking on too much risk nor losing too much liquidity. Not that I have got tons of money though, as a bulk of my savings were spent on wedding, down-payment for my property, renovation & furnishing, having a kid, and all the other things that an ordinary, young married adult will need to spend on. What's left, I park them in the following places while waiting for the right time and opportunity.

1. OCBC 360

Criteria to fulfill to earn bonus interest on balances of up to $60k in OCBC 360 account. 

This is my salary crediting account, and it yields me 1.25% (1.2% bonus interest + 0.05% base rate) without me doing anything else. Of course, the other low-hanging fruit is making 3 online bill payments to earn an additional 0.5%. I am also usually able to spend $500 on my OCBC cards to earn the other 0.5%, yielding me a total of 2.25%. However, I prioritise my UOB credit card spend before OCBC's because UOB gives me a higher yield on their UOB ONE account, which brings me to the next point.

2. UOB ONE

Criteria to fulfill to earn bonus interest on balances of up to $50k in UOB ONE account. Note that unlike OCBC 360, spending of $500 on UOB credit card is a must for the account to qualify for any bonus interest at all.

I strictly maintain $50k in this account, nothing more, nothing less, due to the tiered structure of its interest rates. I've already set up three GIRO bill payments, so it only makes sense for me to prioritise spending $500 with my UOB ONE Card. If I don't, I am back to earning the base rate for that month. If I do, the GIRO deductions will bump up the effective interest rates to 2.43% on the $50k balance. Spending $500 on my UOB credit card also helps me in getting higher interest rates in my 3rd account - Bank of China's SmartSaver account.

3. BOC SmartSaver

Criteria to fulfill to earn bonus interest on balances of up to $60k in BOC SmartSaver account.

I maintain a minimum of $50k in this account, so my base interest is 0.40%. Together with the 3 bill payments, the account already yields me 1%. I forego the 1% from crediting my salary into this account because well, I only have 1 income source, and OCBC gives me 1.2% for that. The last criteria, $500 credit/debit card spend to give an additional 1.55% is the real deal. I am going to let you in on a little secret of mine; this mighty combo I believe many of you will be thrilled to find out. Ready? Here it goes: 

The Bank of China Great Wall International Debit Card that is issued together with the SmartSaver account can be used to pay for another credit card bill. This IS the real deal. I use this as the perfect combo with UOB ONE Card. This means that I only need to spend $500 a month with UOB ONE card, and then use BOC debit card to pay for that credit card bill. Voila! I kill two birds with one stone. It's hard to chalk up so much credit card spend every month, so this works like a charm, giving me an additional 1.55% interest on the balance in this account to yield a total effective interest of 2.55%.

So if you have $170k cash, and are thinking hard about making them work harder for you, the above solution might work for you. With just $500 credit card spend, OCBC will give you 1.75%, UOB 2.43%, and BOC 2.55%. If you can chalk up $1000 credit card spend a month, OCBC can yield an additional 0.5% to make 2.25%. Not worth forcing it just for that 0.5%, but on months when you have that extra expense coming in, why not, right?

Note that bill payment is never a concern because you can simply pay $5 to the same three bills that are GIRO-ed from UOB ONE account. Do this using your OCBC and BOC accounts every month, and the outstanding amount will be GIRO-ed from UOB ONE account.

What about you? Where do you park your warchest to maximise the return while you wait?

7.53% Instant Capital Gain + 5.38% Yield on Capital

Is there an investment that gives you an instant 7.53% capital gain + a minimum yield on capital of at least 5.38% for the next 15 years? Sounds too good to be true? Read on to find out more!

I haven't given much thought to this excellent long term "investment" previously, but ASSI's blog post on "How Younger Members can Get 6% per year from the CPF" inspired me to dig deeper and think harder. Yes, like what most of you seasoned personal-finance gurus would have figured out already, this investment is our CPF.

Before I came across the article, I only thought about contributing to my own CPF to get the 4%  that our Special Account (SA) is yielding. But because I am 4 decades away from retirement, have a huge mortgage to service, a 10-month-old daughter to feed, and 2 aging parents who aren't quite prepared for their own retirement, I put off the idea.

But what if there is a new variety of seeds that will start to bear fruits in 15 years time? What if there is a 7% early bird discount now? Will I buy those seeds to plant them today? I am very tempted to.

Let me first explain how I got the numbers.

If I make a cash top-up to my loved ones' SA, I get to enjoy tax relief of up to $7000 per calendar year. In my latest year of assessment, after all the reliefs I qualify for, my chargeable income is between $40k to $80k. This means that if I were to contribute $7000 to my mum's SA, I will pay $490 lesser in tax (source: IRAS). Essentially, this is like getting $490 for free from the government if I put in $6510, or a 5.38% gain in capital immediately (490/6510 x 100%). Got freebies who don't want???  
*do note that any contribution above the Full Retirement Sum is not eligible for tax reliefs. My mum has (only) $12k (after checking, I realised she only has 2k, but nevermind, we can assume she has 12k for the subsequent illustrations in this post.) in her CPF, so I don't have to worry about that.

Tax relief for the giver? It's like free money from the government!

What about the 5.38% yield on capital that I purported above then? If you look at the footnote# under the table in the print screen above, the first combined balances of up to $60k attracts an additional 1% interest. This means that for my mum who just turned 50 this year, balances in her SA will earn 4+1 = 5%! But remember my capital outlay was only $6510? That gives me a yield on capital of 5.38% (350/6510 x 100%). Okay, I am really just playing with numbers here, but it really does sound like a good deal, doesn't it? Moreover, the interest rates will be bumped up to 6% for the first $30k when she turns 55.

So what's the game plan?

Given that I only qualify for 7% discount every year on the first $7000, with the likelihood of the discount getting bigger in the years ahead (pay rise, yay!), I am inclined to spread out my contribution.

Let's run some numbers.

8th Wonder of the World, indeed.

Let's assume that my mum has $12k to begin with, and I start my yearly contribution of $7k just before she turns 51. This will last for 5 years. Thereafter, I will not contribute anymore.

Total capital outlay (after tax relief): $12,000 + ($6510 x 5) = $44,550
Balance at beginning of 65 (after compounding for 14 times) = $89,495.29

Not bad. Almost hitting the Basic Retirement Sum of $93,215 for her cohort.

How much can she expect to get every month?

Referencing the Straits Times article published on 23 Aug, 2015, the amount one can expect to receive per month on the Basic Life plan is about $650. (I will talk about why I prefer Basic Plan over Standard Plan in another post) This is based on $80,500 being set aside at age 55. I have no idea how the smarties in CPF or MOF came up with this numbers, and I concede that I am not half as smart as them. So how? How can a layman like me estimate the amount that my mum can expect to receive?

Let's try two methods:

First Method: Proportionality. 
If $80,500 set aside at 55 results in about $650 a month from 65 onwards, $53,265 will result in...

(53,265/80,500) x 650 = $430

Second Method: Use the tools provided by CPF here, but tweak the inputs.
The tool only works for those who are between their payout eligibility age and 80 years old. For my mum's case, the tool doesn't work, but I can cheat the system a little to get an estimation.

Since we've already computed the amount she will have in her RA when she hit 65, I will simply assume that she has already hit 65 this year (means the year of birth is in 1951). The amount in her RA, I will input as $89,495 as computed.

Next, the tool will ask you for your annual assessable income and annual property value. This is to determine if you qualify for CPF Life Bonus. My mum does not, so I chose the highest range for both so no bonus will be included in the calculation.

Nope, my mum doesn't qualify for CPF Life Bonus.

The result? She will receive about $444 a month. Not too far off from my first method, so I think it's rather safe to assume that she will receive slightly more than $400 monthly from 65 onwards.

Is this a good amount? I think it's not too shabby. It's not enough for sure, but it can certainly help to ease the financial burden a little.

What do you think? Are any of your parents without much money in their CPF? Maybe this might work out for you too.

Expense Update - May 16

So I started keeping track of my expenses from 10 May. I've been wanting to do this for the longest time, but every time I felt compelled to start, I always managed to rationalise to myself that it is not worth the effort. I finally managed to take the first step on 10th May.

Because I don't receive my salary on the 1st of each month, my financial month runs from 10th to 9th of the month. It makes life a bit harder, but it works for me.

Let's start with my own personal expenses.

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Since this is my first post, I will list down my fixed expenses.

1. Joint Account Contribution: $1300
2. Endowment Plan: $198
3. Parents' Allowance: $150
4. Savings for Daughter: $50
5. Investments for Daughter: $100
6. Auto Insurance: $138.26
7. Road Tax: $50
8. Medical Insurance: $50

The first item on the list is actually a joint account I maintain with my wife. Both of us each contribute $1300 to this account to pay for "joint" expenses. I will detail our "joint" expenses in the next section.

Now, let's examine my variable expenses for May:

Food - $100. Note that meals out with my wife are charged under our joint account. This segment only accounts for the meals I take when I am not with her, i.e. usually lunches on workdays.

Car - $711.61. Apart from the auto insurance and road tax, which are accounted for under fixed expense, there are other running costs associated with car ownership. This month, I spent $400 on tyre change, $150 on cashcard top-up, and the remaining on petrol. $150 in my cashcard will probably last me more than a month.

Bills and Misc - $49. Mobile phone bill came up to $44, while an additional $5 was spent on haircut.

Discretionary Spending - $450. This is where I lost control this month. I spent $450 on LEGO sets. Bad bad. There are usually a few sets that I will be eyeing, but will put off buying them until I've got enough to buy to chalk up $600. I need this minimum amount to be charged to my StanChart Singpost Credit Card in order to get the 7% cash rebate for online spending. This month, the stars are aligned: weaker USD, 20% discount on a set I've been eyeing, et cetera. I spent $450 on sets that I want, and another $300 (tracked under joint expense) on a set that both my missus and I want. =/

In summary...

Total Fixed Personal Expenses: $2036.26

Total Variable Personal Expenses: $1310.61

Total Personal Expenses: $3346.87

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Let's examine our fixed joint expenses:

1. Household Contribution (given to parents as we stay with them): $500
2. Maid's Salary: $580
3. Maid's Levy: $60
4. Conservancy: $90
5. Property Tax: $108.14
6. Medical Insurance for Daughter: $30
7. Utilities: ~$200
8. Mortage: $2680 (CPF OA)

Our mortgage is a bomb, I know. It's one of the financial mistakes we made, but no regrets really. More on this in another post.

Our variable joint expenses:

Food - $173.15. This didn't come up too badly. We are eating out a lot lesser now that we have a baby.

Baby's Stuff - $62.90. $50 for a booster seat and $12.90 for a cardigan.

Gifts - $272. $250 on wedding angpows and $22 on fruits for grandparents.

Discretionary Spending - $300. LEGO. Nuff' said.

In summary...

Total Fixed Joint Expenses: $1568.14 + $2680 (CPF)

Total Variable Joint Expenses: $808.05

Total Joint Expenses: $2376.19 + $2680 (CPF)

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This is the first time I am listing down our expenses like this.

Scary sight.

Part 3 - Financial Planning for My Daughter

This is the third part to a three-parts series on the financial planning I’ve done / will be doing for my 9 months old daughter. Part 1 details how I am saving for her, part 2 describes my attempt at making these monies work, and lastly, part 3 documents the type of insurance coverage she has.

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Saving and investing are important first steps to a more secured financial future. While we can do our best at preparing ourselves for whatever life has to throw at us, sometimes we just can't be prepared enough. This is why people get themselves insured. This is the only one thing that people pay money for, but do not wish to receive anything in return. (Note: I am referring to pure insurance policy that does not have any saving/investment component tagged to it.)

When life happens, and huge sum of money is required, there could only be three outcomes: Your savings are depleted, your loved ones' savings are depleted, or you drown yourselves in debt. Neither of these are pleasant outcome. If you have been thrifty, the last thing you would want to see the wealth that you have so painstakingly accumulated over the years get wiped out overnight. That is why I insist that I get myself, and everyone around me, insured against such life "happenings".

The most important policy that everyone should have is the Private Integrated Shield plan. The newly introduced Medishield Life covers all pre-exisiting conditions, which is awesome, but it still requires the insured to fork out the first $3000 (deductible) and co-pay 20% of the remaining amount (co-insurance). Further, if you are only covered under Medishield Life, your options are limited to B2 or C class wards, which is not-so-awesome. B2 and C class wards are also usually running at full capacity, which means you can expect yourself to stay along the corridor for the first part of your stay. For my daughter, I don't wish to limit her to such narrow options, which is why I got her covered up till private hospital under the Great Eastern's Supreme Health P-Plus plan.

Though Supreme Health P-Plus covers my daughter should she be warded into a private hospital, it still has a deductible and co-insurance portion. To get my daughter fully covered, such that hospital bills are fully paid for by the insurer, the plan has to be supplemented by Total Health. The table below shows the premium rates for the various plans (correct as at 31 May 2016).

For my 9-month-old daughter, I have to fork out an additional $287 for her Supreme Health P-Plus Plan, and $384 for Platinum Total Health, on top of the premium she has to pay for the compulsory Medishield Life Plan. Part of these extra monies used to purchase her Additional Private Insurance Coverage can be paid for by her Medisave (which already has $4000 thanks to the Medisave Grant for Newborns), up till the Additional Withdrawal Limit (AWL) of $300 for her. More info here.

One of the added advantage of getting my daughter covered early is that as long as I continue to maintain the policy, she will be covered for all medical conditions. I would urge all parents to cover their children while they are still young and healthy. I am trying to get my parents covered, but because they already had some pre-existing conditions, any new coverage I buy now will exclude these existing conditions.

Part 2 - Financial Planning for My Daughter

This is the second part to a three-parts series on the financial planning I've done / will be doing for my 9 months old daughter. Part 1 details how I am saving for her, part 2 describes my attempt at making these monies work, and lastly, part 3 documents the type of insurance coverage she has.

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Deciding where to park my daughter's savings is one of the hardest financial decisions for me, mainly because these are not my money, and I really don't wish to "lose" it away for her. Yet, for vehicles that guarantee capital (read: fixed deposits, SSBs), the returns are often so low that I can't convince myself that parking her money there will secure her financial future. Therein lies the dilemma. It's a case of emotions fighting against cognition, the heart fighting against the brain. Truth be told, I am still at a deadlock. I hope that by penning down my thought process here, I will gain more clarity on the best way forward.

I've sourced around and found a few possible places to put the money to work:

1. Invest in STI ETF
2. Purchase Singapore Savings Bond (SSB)
3. Park the money in Child Development Account (CDA)
4. Put in fixed deposits

As with everything else, each of them has their own merits and flaws. I attempted to summarise them as shown in the table below:

1. Invest in STI ETF

Over the long term, investing in STI ETF has the greatest chance of yielding the highest return - past 10 year return of ~4% without dividends reinvested, or ~7% with dividends reinvested. It is also highly liquid, as units can be sold in the market anytime we wish. But these are not without risk. Market fluctuates, and although the risk can be minimized over the long term, in the short term, should we need money urgently in a down market, we run the risk of losing part of our initial capital.

2. Purchase Singapore Savings Bond (SSB)

The first few issues of SSB were actually pretty good. I think the average yield if held till maturity was somewhere in the region of 2.5%. However, the yield has been falling, with the latest one in Jun 16 yielding only an average of 1.94% over 10 years. While SSB can be redeemed anytime without risk of losing the initial capital and past interests earned, it is worth noting that the bond is structured in a way that pays bond holders progressively higher interest. This means that the interest in the first few years is low, and should I need to redeem early, my returns might be much lower than the average 10 year yield.

3. Park Money in CDA

The money in CDA can be used at approved institutions (AIs) only. These are mainly for healthcare (e.g. pharmacies; optical shop; payment of medisave-approved private integrated insurance plans) and educational (child care centres;  kindergartens) purposes only. More information here. My CDA account with OCBC currently yields 2% p.a. and comes with a NETS card which I can use to make payments at AIs. 2% is not too shabby to be honest, given that I can choose to use the money anytime I wish. Since CDA can be used to pay for healthcare or educational expenses, which is what Emergency funds should be used for anyway, it seems like a good place to park my E. funds. Do note that this flexibility ends on 31 December of the year the child turns 12. All unused funds will be transferred to the child's Post-Secondary Education Account (PSEA), which has an interest rate pegged to the CPF OA account (currently at 2.5%) and higher level of usage restrictions. When the child turns 30, funds in his/her PSEA will be transferred to his/her CPF OA (source), not a bad gift for my child to help her pay for her first house.

4. Fixed Deposits

The most obvious and natural choice, fixed deposit is perhaps the best option for those who wants some liquidity, little chance of losing their capital, and earn some interest in exchange. I think many of the banks, especially smaller foreign banks like CIMB and Maybank are trying to attract more deposits by offering rather high yielding fixed deposits. At the time of writing, CIMB is offering 1.6% p.a. interest for a 6-month tenor, while iSAVvy Time Deposit offered by Maybank is giving up to 2% p.a. if you are willing to lock your money up with them for 3 years. These are great places to park your money for the short term.

So what should I do then? I guess the prudent way is to set aside two different funds - fund A should be highly liquid so it can be used in an emergency, and the other, fund B can be locked up for the long term. The risk/return profile of the two funds should also be opposing in nature - Fund A to be used for emergencies should be capital-guaranteed (low risk), and perhaps a low level of return in exchange for that security; Fund B should aim to have higher return with managed risk.

With these criteria in mind, it becomes quite clear that fund A can only be parked in SSB, CDA or fixed deposits, while fund B should be used to invest in STI ETF which gives substantially highly return compared to the rest. As of now, CDA yields the highest compared to fixed-deposits and SSB, and has no penalty should the money need to be used. Although SSB and fixed deposit is preferred when it comes to how the money can be used, it's less of a concern here since Emergency fund should not be used for frivolous expenses anyway.

Hence, for now, I shall leave the $12k that's already in CDA as it is as Emergency funds. The Baby Bonus and all the other angbao monies will be used to invest in STI ETF. To be prudent, I will deploy 20% of the savings when STI hits 2500, 30% at 2300, and 40% at 2100. The monthly saving that I am putting aside for her will be used to buy STI ETF using either Kim Eng's Monthly Investment Plan (MIP) or POSB Invest-Saver.

Summarising...

Part 1 - Financial Planning for My Daughter

This is the first part to a three-parts series on the financial planning I've done / will be doing for my 9 months old daughter. Part 1 details how I am saving for her, part 2 describes my attempt at making these monies work, and lastly, part 3 documents the type of insurance coverage she has.

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While most parents are focused on sending their kids to the best schools, with many even strategizing years in advance to boost their kids' chances of admission to their choice colleges, I am more concerned about my child's financial security in the future. Though providing my child with good education is important, I am not convinced that education itself is enough to secure her future. People around the world are getting more educated, and with increased mobility, I am forced to face up to reality - The chances of my daughter being in the top 5% in terms of intellectual ability is low. Good, quality education might help, but it's no magic. I value good, early financial planning more than good, early education. I believe that kids should be allowed to be kids. They should spend their earliest years playing and exploring.

With that clarity, I set out searching for ways to help her save/invest. Let's start with saving, the all-important first step to achieving financial security.

The lowest hanging fruit to me is the $8000 newborn grant given by the government, This grant, known as Baby Bonus, is given out in tranches between 0-18 months from the birth of the child. All monies we received from the government are saved up for her. We've also deposited $6000 into her Child Development Account (CDA) and received the 1-to-1 dollar matching from the government. Simply by doing these two things alone, she will have $20,000 ($8k in cash and $12k in CDA) by the time she is 18-months-old. For those who can't afford to deposit $6k into her CDA, you can either take your time to save up slowly (the government will match $1-to-$1 as long as you make the deposits before the child turns 12), or you can use part of Baby Bonus for this purpose. [Note that for babies born after 24 Mar 2016, your child will receive the CDA First Step Grant of $3000. You only need to deposit an additional $3k to get a total of $6k from the government. More details here.] The $1-to-$1 matching is something every parent should take advantage of. Although there are restrictions to how the monies in the CDA can be used, I assure you that you will have no problem spending them, if you so wish. If you plan to send your kids to infant/child care, those will cost a bomb. You CDA account will be depleted in no time. For me, however, I am choosing to leave the money inside as emergency fund, primarily because of the 2% interest rates that CDA with OCBC offers. I will only use emergency monies for very specific purposes (medical / education), and because CDA allows for these usage, I am happy keeping my money inside earning 2% and not having to worry about yield and liquidity.

The second thing we did to jump-start her savings is to save up all her angbao monies. Even for NTUC/MotherCare vouchers we received during her baby shower, we "bought" them over using cash. Over the years, she will be receiving angbaos during Chinese New Year. All these have been/will be socked away as well.

Third, I am putting aside a fixed amount for her monthly. The money saved in the last 9 months, together with the baby bonus received thus far, adds up to be a sizable amount already. Perhaps not in the 5-digit range yet, but not for long as we are expecting to receive more Baby Bonus. While saving is important, the challenge for me now is to put these monies to work. To allow compounding to work its magic, I should procrastinate no more.

The Hardest First Step

And so I’ve finally took the first step of setting up a blog to keep track of my fight for financial freedom. It won’t be a stroll in the park, for sure, but I am committed. The constant upkeep of this blog shall be the testament to my dedication.

Okay, that’s me talking big up there. To be honest, I don’t even know if this blog will last beyond 2 months, but I am giving myself another chance. I’ve started numerous blogs in the past, but none of them ever lived to celebrate their first birthday. Why am I trying again then?

I’ve actually put off starting this blog for more than 2 years already, mainly because I don’t want to give myself another chance to hate myself. I am sick of giving up. I feel like a failure every time that happens. But in all past instances, I simply couldn’t find the strength to carry on. Something wasn’t right; my heart wasn’t in the right place; my intentions were wrong;

Because of my fear of giving up yet another project, it took me a great deal of courage, dedication, and conviction to start F4FF. For once, I am going to start a blog with no hope or plan for it to become anything else (read: second source of income, ticket to riches etc). This blog shall be in existence to serve one and only one purpose: as a personal diary to keep track of my progress as I embark on this journey towards financial freedom. There shall be no expectations on this blog beyond being a humble, online diary.

I hope this time round, I won’t give up again. I know I won’t give up on my fight for financial freedom, I just don’t know if I will give up on F4FF. I hope I don’t end up confusing the two.