Den of The Lion Investor

Just a note to share that the subscriptions for Capital Plus has crossed $150 million yesterday. However, NTUC-Income will still accept any application recieved by 5pm today. Remember to include a photocopy of your NRIC together with your application forms.

As there is an influx of applications for Capital Plus over the past few days, NTUC-Income will not be able to issue all proposal before the month end. Many of these proposals are expected to be issued in August instead.

In current market conditions, it appears that people are more easily attracted to such capital protected products.

My personal investment philosophy has always been to be on the look out for more investment opportunities when others are fearful, and to be cautious when others are greedy. And fear is almost at a peak in the markets right now.

Question for Lion Investor

Hi,

I like your blog. There is always a write up of the latest events happening in Singapore. As a Singaporean, it is very useful to be updated on all current issues. It provides a one-stop info centre.

Just wanted to check with you: about the current min. CPF sum requirement :
1) assuming I have less than the required min. cpf amt. at age 55
2) I sell my house at age 56 yrs.
3) Will the cpf auto deduct the min. cpf amt. from the sale proceeds?

Assuming:
1) I reach 55 yrs in 5 yrs time.
2) I used $250,000 CPF money to pay for my house, besides the cash portion. The house has been fully paid up.
3) I can sell the house at 1 million dollars.
4) I have $50,000 in OA, $40,000 in Special, $34,000 in medisave.

Appreciate your help on this so that I can plan when to sell my house.

Many thanks!

Elly

My Comments:

Hi Elly, assuming you continue to earn interest from the CPF board (at 2.5/4) and there are no further additions or withdrawals to your CPF accounts, you will have about a total of 144k in OA, SA and Medisave in 5 years time.

About 34k will be set aside in your Medisave as the Medisave Minimum Sum, with the balance 110k in your retirement account (RA).

The CPF minimum sum then will be about 120k, and you can pledge your property for half of this amount. This means you will withdraw 50k cash, keeping 60k cash in your RA. Your pledged property will make up for the other 60k of the CPF minimum sum.

If you sell your house at 56, 60k will need to be returned to the RA to make up for the property pledge. The amount to be refunded will increase due to the accumulated monthly interest on the pledged amount.

If you sell your house before you turn 55, you will need to refund 250k plus accrued interest to CPF. Then when you turn 55, 120k from your OA and SA will need to be set aside for your CPF minimum sum.

Since you will quite easily meet the CPF minimum sum requirement either way, getting a good price on your property might be a more important consideration for you in deciding when is the best time to sell it.

Hope this makes it clear for you.

There has been a lack of updates for the past few days as I have fallen sick. Measured a temperature of 38.5°C the other day along with the standard running nose, cough and sore throat.

It is quite amazing how fast medical inflation has come along - a 5 minute consultation at a GP near my house costs me a grand total of $54 including the medicine.

My cough seems to be getting worse, so I will be making another trip to the doctor this afternoon. Getting sick in Singapore can be a pretty costly affair.

Normal blog updates should be expected to resume next week.

NTUC Income’s Capital Plus is a single premium 12 months policy with a guaranteed yield of 2%.

It is only available to existing NTUC Income’s policy holders and can be purchased with cash or SRS savings. The minimum purchase amount is $10,000.

There is also a small death and total and permanent disability (TPD) benefit of 105% of the premium amount.

If you are looking for fixed deposits at the moment and are also an Income policy holder, the Capital Plus with an interest of 2% is a worthwhile alternative.

Please note that the application will close on 31 July 2008 or when the cap of $150 million is reached.

SGAM has decided to postpone the launch of SGAM AsiaPAC Income Plus Fund due to soft market and investor sentiments. The product will be launched at a later date when the market sentiment improves.

Investors who have already invested monies into the fund will have their funds returned. Details on the refund will be announced upon finalisation.

Looks like the current market sentiment is so bad that this fund has failed to attract sufficient interest for the launch to go ahead.