Let's get moving - Step 1

笨mummy has been tasked to help a friend to kick start her financial planning journey. While one can help out by giving advice, but it still strongly depends on the person's willingness to change her mindset.  笨mummy started by presenting the pot of gold at the end of the rainbow with a constant saving every month (3,333/mth or 40,000 per year)  and earning a varying of return yield of 2% to 4%. This meant that one can get half a million at the end of 11 years at a conservative yield of 2% (by saving 440K) and 10 years at a yield of 3-4% (by saving 400K). Compounding interest / return does the balance of the work. 

Yr	B/F Balance	Saving	Yield -4%	Total
2015	-	40,000	-	40,000
2016	40,000	40,000	1,600	81,600
2017	81,600	40,000	3,264	124,864
2018	124,864	40,000	4,995	169,859
2019	169,859	40,000	6,794	216,653
2020	216,653	40,000	8,666	265,319
2021	265,319	40,000	10,613	315,932
2022	315,932	40,000	12,637	368,569
2023	368,569	40,000	14,743	423,312
2024	423,312	40,000	16,932	480,244
2025	480,244	40,000	19,210	539,454
2026	539,454	40,000	21,578	601,032

Yr	B/F Balance	Saving	Yield -3%	Total
2015	-	40,000	-	40,000
2016	40,000	40,000	1,200	81,200
2017	81,200	40,000	2,436	123,636
2018	123,636	40,000	3,709	167,345
2019	167,345	40,000	5,020	212,365
2020	212,365	40,000	6,371	258,736
2021	258,736	40,000	7,762	306,498
2022	306,498	40,000	9,195	355,693
2023	355,693	40,000	10,671	406,364
2024	406,364	40,000	12,191	458,555
2025	458,555	40,000	13,757	512,312
2026	512,312	40,000	15,369	567,681

Yr	B/F Balance	Saving	Yield -2%	Total
2015	-	40,000	-	40,000
2016	40,000	40,000	800	80,800
2017	80,800	40,000	1,616	122,416
2018	122,416	40,000	2,448	164,864
2019	164,864	40,000	3,297	208,162
2020	208,162	40,000	4,163	252,325
2021	252,325	40,000	5,046	297,371
2022	297,371	40,000	5,947	343,319
2023	343,319	40,000	6,866	390,185
2024	390,185	40,000	7,804	437,989
2025	437,989	40,000	8,760	486,749
2026	486,749	40,000	9,735	536,484

How about for those who are not able to save as much as 40K per year? What about saving 1K per month or 12K per year? 笨mummy managed to save 1K a month when she started work after university and only earning 2.3K a month (before deducting EE CPF). 

Yr	B/F Balance	Saving	Yield -4%	Total
2015	-	12,000	-	12,000
2016	12,000	12,000	480	24,480
2017	24,480	12,000	979	37,459
2018	37,459	12,000	1,498	50,958
2019	50,958	12,000	2,038	64,996
2020	64,996	12,000	2,600	79,596
2021	79,596	12,000	3,184	94,780
2022	94,780	12,000	3,791	110,571
2023	110,571	12,000	4,423	126,994
2024	126,994	12,000	5,080	144,073
2025	144,073	12,000	5,763	161,836
2026	161,836	12,000	6,473	180,310

Yr	B/F Balance	Saving	Yield -3%	Total
2015	-	12,000	-	12,000
2016	12,000	12,000	360	24,360
2017	24,360	12,000	731	37,091
2018	37,091	12,000	1,113	50,204
2019	50,204	12,000	1,506	63,710
2020	63,710	12,000	1,911	77,621
2021	77,621	12,000	2,329	91,950
2022	91,950	12,000	2,758	106,708
2023	106,708	12,000	3,201	121,909
2024	121,909	12,000	3,657	137,567
2025	137,567	12,000	4,127	153,694
2026	153,694	12,000	4,611	170,304

Yr	B/F Balance	Saving	Yield -2%	Total
2015	-	12,000	-	12,000
2016	12,000	12,000	240	24,240
2017	24,240	12,000	485	36,725
2018	36,725	12,000	734	49,459
2019	49,459	12,000	989	62,448
2020	62,448	12,000	1,249	75,697
2021	75,697	12,000	1,514	89,211
2022	89,211	12,000	1,784	102,996
2023	102,996	12,000	2,060	117,056
2024	117,056	12,000	2,341	131,397
2025	131,397	12,000	2,628	146,025
2026	146,025	12,000	2,920	160,945

 After showing the "carrot", the next question is whether one is willing to change to achieve that saving level by a lifestyle change and also finding the investment tool to achieve the yield. 

Update for Apr 15

Finally, there are some actions taken for this month by 笨mummy. She had bought 2 lots of ST Eng (CD status) at $3.50 on 6 Apr with the intention to reap the dividend of $0.11/unit. She sold them on 14 Apr as the profit from a short 2 weeks holding period is more than the dividend amount.

Apr and May are always the 2 months that 笨mummy would expect to receive the main bulk of her dividends. For Apr, a total of S$1,059.30 is received for Apr, and for May, she is expected to get S$2,117dividend from Keppel Corp ($360), ComfortDelgro ($45), ST Eng ($440), Suntec REIT ($223), Ascendas India Trust ($246) and Ascendas REIT ($803).

Dividend received this month
Hyflux CPS - S$89.75
Genting SP Pref Bond - S$255.55
M1 - S$714.00

Dividend received in Year 14	$ 8,241.99
Dividend received in Apr’ 15	$ 1,059.30
Dividend received in Year 15 to date	$ 1,720.01

New OCBC 360 account

The revised terms for the 360 account is finally released on last Thursday. Here is a table comparing the different between the previous and the revised conditions for earning interest. 

	Previous	Revised wef 1 May 15
Salary credit Bonus (Salary of at least $2,000 and credit through GIRO with the transaction description "GIRO - SALARY")	1%	1.2%
Payment Bonus (3 unique bill payments from 360 account with OCBC Online Banking or through GIRO)	1%	0.5%
Credit card Spend Bonus	1% ($400 / mth to quality)	0.5% ($500 / mth to quality)
Wealth Bonus Purchase any new eligible financial product from OCBC of at least S$40,000	NA	1%
Save Bonus Incremental account balance is the difference between current and previous month's account average daily balance	NA	1% on incremental amount only

The bonus interest cap has revised from 50K to 60K. 

笨mummy is happy that the salary crediting would still entitled her to get 1.25% given the hard work spent in getting her HR department to change the transaction code for the salary crediting. It took the HR department close to 7 months just to get the transaction code amended in Jan 15.  

The other 2 new conditions to get additional bonus is not easy to hit since 笨mummy is not planning to get any insurance product from OCBC in the near future. But she is happy with the 2.25% including base interest on her 60K now. 

For details, you can refer to OCBC website - http://www.ocbc.com.sg/personal-banking/accounts/360-account.html

On a quest to solving the mystery of the lost money

笨mummy is on a quest to solve the mystery of the money that got lost. When 笨mummy started work after graduation, she was earning $2,300 and after deducting employee CPF of $469 and giving $500 to parents for allowance, she was able to save $1,000 a month. This meant that she only spent $340 per month on transport, phone bill, Internet subscription, food, clothing and entertainment. This was in year 2001.. 14 years ago. Adding in inflation, the spending amount should be much higher. 

Coming back to 2015, 笨mummy budget for expenses were $1,100. This is excluding common household expense like PUB bill, town council fee, house Internet bill, etc that were set aside in a common account with her hubby. This $1,100 is allocated for 笨mummy own expense like her phone bill, transport, F&B,etc. This amount is excluding a $510 set aside for insurance premium monthly. How did an expense of $340 on year 2001 grow 3.25 times to $1,100?


笨mummy has no answer to this. And she has set her mind to find the answer by starting to track her expenses and identify where her money gone to every month.