How Any Singaporean Can Afford To Travel Every Year

Here’s how your friends afford their annual vacations abroad, and how you can save enough money to travel every year. Listening to friends talk about how often they travel is terrible. Like sitting on thumbtacks, or using a sandpaper napkin. The humble bragging is just grating (“Oh, I so stupidly lost my passport in Venice. For the third time this year.”) Well if you can’t beat them, join them. Here’s how they afford all those annual trips abroad, and how any Singaporean can do it too.

 

1. Create Small, Realistic Side Income Goals

You could try to afford travel just be strict budgeting. And if your income is at least $4,000 a month, it could be manageable with just disciplined saving. But if you’re making less, the only way you can afford to travel often is by earning a side income. You will probably have to consider tutoring, freelancing for one-off projects, etc. But the good news is, you don’t need to make thousands in side-income. Don’t exaggerate the amount of effort involved. All you need is a way to raise your income by a small amount–about $200 a month–to be able to travel once a year. An extra $2,400 a year will cover airfare and Airbnb accommodations in most places. And an extra $200 is far from impossible; some of you may even be able to negotiate it as a raise. So focus your efforts on this small, realistic goal. Forget disempowering delusions, like believing you have to become a CEO, or found a million dollar startup, before you can travel regularly.

 

2. Keep Up-to-Date on Hotel Promotions

With few exceptions, accommodations will make up the bulk of the cost. You will note that many frequent travellers seem to make spontaneous plans. This is because they are responding to last minute deals from hotels, or have spotted Airbnb lodgings that are going for cheap. Sign up for the mailing lists of travel aggregators, and set up a separate email address so you don’t get bombarded. Check it periodically for deals; you can save as much as 30% to 50% on last minute offers. Stalk your credit card for promotions too, as they often partner with such websites. Currently, there are a number of Agoda credit card promotions being offered for destinations in Asia and Australia.

 

3. Have a Working Vacation

Ever wonder how some travellers seem to have unlimited leave to go on vacation, or can afford to skip work for prolonged periods? The answer, most of the time, is that they can’t. Most people don’t have enough leave, and can’t afford to take unpaid leave for a few weeks or a month. But many of them organise a temporary, flexible work schedule: they talk to their bosses about being able to work remotely, just for the duration of the trip. This means they still get paid, and don’t lose out on leave. And if you think it gets in the way of a vacation, you’ll be surprised how little it interferes–how about doing some work during the night, when you’ve already retired to your hotel room? Three or four hours of skipped television isn’t a big sacrifice, surely. Most employers can be flexible, just for a few days or weeks. Just ask.

 

4. Get an Air Miles Credit Card

With the right air miles credit card, you can rack up points (or miles) for anything you spend in Singapore or abroad. You can then use these for free seat upgrades or free tickets. You can compare air miles cards at SingSaver.com.sg. In addition to earning miles, these credit cards even offer access to airport lounges and discounts when you book accommodations on Airbnb, Agoda, or Expedia. This can shave hundreds of dollars off your airfare and make traveling a lot less stressful. Another trick to maximising your air miles card is to repay the card in full every month. Not only will the interest rate overpower any savings if you fail to do so, but you can’t use your accumulated miles while you have outstanding debt.

 

5. Synchronise Your Trips with Your Paycheques

This is not an endorsement for you to live paycheque to paycheque. Always save at least 20% of your monthly income for emergencies. That said… Try to time your trip so that your bank account isn’t dry when you return. For example, say you always get paid between the 27th and 31st of the month. You could time your return from your trip on the first week of the next month, so that when you come back your pay is already in. Some people overspend while on holiday and come back to find they have two weeks to their next paycheque. They then tap into their savings or buy on credit–neither are advisable options.

 

6. Use Public Transport When Visiting Developed Countries

It doesn’t matter if you get lost a few times–discovery is part of the fun. Plus the next time you visit, you will know your way around better. In most countries, locals will be happy to help you with directions. The cost of cabs or private cars can be steep, especially if you are visiting capital cities like London, New York,Tokyo, etc. Think how quickly you would deplete your pay by cabbing everywhere in Singapore – the same will be true in other major cities.

 

7. Try to Get Free or Discounted Travel Insurance From Your Agent

Ask your family’s trusted insurance agent for special deals on travel insurance. Some agents may flat out buy your travel insurance for you, because you’re a valued client. Otherwise, they can probably a get you a better deal. (That doesn’t just mean cheaper–it could mean better coverage.) Some air miles credit cards also automatically give you a complimentary travel insurance coverage when you charge your trip on them. Check to see if your air miles credit card offers this.

 

8. Avoid “Group” Areas When Traveling Alone

Some places are “group” areas. In other words, they are much more expensive if you go alone. The best example of this Bali–many activities are run for groups of three to four people. If you have no one else to go with, you will have to pay the cost for the entire group on your own (or find some friends, quickly). The easiest way to do this is to check on TripAdvisor. But you can also email the tourism commissions of the countries to ask how a given activity is priced.

 

9. Hold Off Converting Currency When You Return

Whenever you convert your currency, there is a chance you will lose money. So if there is potential for a return visit, simply don’t convert the currency back. Leave it in your drawer for the next time you visit. Over three or four trips, you will be surprised at how quickly these incidental “sock drawer savings” can pile up. These can partially fund your future trips.

 

 

(Singsaver.com.sg, Singapore's leading personal finance comparison platform, provides free and easily accessible resources such as its up-to-date credit card product page and the latest personal loan packages available in real-time.)

Should You Keep Your Savings In Your CPF Special Account?

While it’s possible to use your CPF Special Account as your retirement plan, you need to prepare for the following scenarios. In the Straits Times, we recently read about a Singaporean man who wants to accumulate a million dollars in CPF savings. Is it possible? Certainly, and we’d even say we know a few people who have done it. While it may sound like a great idea, you do have to make certain preparations if this is going to be your retirement plan.

 

What Does Getting a Million Dollars in Your CPF Entail?

In order to get a million dollars in your CPF, you need to max out your Special Account (SA). The CPF is composed of three portions: The Ordinary Account (OA), Special Account (SA), and your Medisave Account (MA). The OA is primarily used for providing housing, while SA is used for retirement. MA is used to pay for healthcare. The interest rate on your OA is 2.5 per cent, while the interest rates on SA and MA are four per cent. There is an extra one per cent interest upon reaching the first $60,000, combined across all three (and at least $20,000 in your OA). This means most Singaporeans, after a few years in the workforce, will have an interest rate of 3.5 per cent in OA, and five per cent in their SA and MA. In order to accumulate a million dollars in your CPF, the key is to move the lower interest OA money into your SA. Then, the compounding effect of five per cent per annum can build up your cash reserves faster. In addition, once you reach the Medisave Contribution Ceiling ($49,800 as of 2016), any excess will be put into your OA. Note that the amount of time this takes will differ, based on how much you earn. Singaporeans are required to contribute 20 per cent of their monthly pay to CPF, and their employers contribute an additional 16 per cent. In general, however, someone earning around S$3,000 a month, who starts working at 25 and constantly transfers money from OA to SA, could end up hitting the million dollar mark as early as age 54 to 57. It’s not a get-rich-quick method, but the reliable ones rarely are.

 

The Upsides of Putting More Money in Your Special Account

There are a number of upsides to relying on your SA to getting your  first million dollars. These are:

•    A reliable absolute return

•    An interest rate that beats inflation

•    Safety from creditors

 

1. A Reliable Absolute Return: If you were to use mutual funds or Exchange Traded Funds, your returns will usually fluctuate based on the index it’s pegged to. For example, if you buy a mutual fund pegged to the S&P 500, and the S&P 500 falls to negative 1.2 per cent returns, you would probably get negative 1.3 percent returns. If returns are a positive two per cent, you might get 1.9 per cent (it’s not exact to account for expense ratios). Now over a long term, all of this should even out. However, there’s always a chance that you’re one of those unfortunate investors who see more bad years than good ones. It’s not likely, but it could happen. The great thing about the CPF is that returns are absolute. If the SA interest rate is five percent, then you get five per cent – regardless of how well or how badly Singapore is doing. Coupled with the fact that it’s guaranteed by the Singapore government, this is one of the safest investments available to you.

 

2. An Interest Rate That Beats Inflation: For a retirement fund to be viable, it must grow at a pace that beats inflation. This is usually three per cent for Singapore and most developed countries (central banks take great efforts to keep inflation in this range, for reasons we won’t go into here). This means your retirement fund should be getting at least five per cent per annum, which your SA does. There are plenty of other investment options out there – but an insurance policy straggling around at four per cent, or Singapore Savings Bonds at between two to three per cent, don’t really cut it.

 

3. Safety From Creditors: Even if you go bankrupt, your creditors cannot take money from your CPF. This isn’t too big a deal for most people (most of us never reach that stage). But if you engage in risky activities, like being a stay-at-home Forex trader or a business owner, this is important.

 

The Downsides to Keeping Your Savings in Your Special Account

There are a number of issues you have to plan to face:

•    You have to pay for your housing the hard way

•    You’ll need banks for education loans

•    The situation may change in the long term

 

1. You’ll Have to Pay For Your Housing the Hard Way: When you take an HDB Concessionary Loan, you need to pay at least 10 per cent of the flat price. This can come from your CPF OA or your pocket. And since you have transferred everything from the OA to the SA, your pocket it is. A three-room flat costs around S$350,000. This means you should be prepared to fork out at least S$35,000 in cash somehow (it may be a little less after grants). If you are buying private housing or an Executive Condominium (EC), you will have to take a bank loan and put down 20 per cent. So a $700,000 EC would mean a cash payment of $140,000, if you have nothing in your CPF OA. In addition, many Singaporeans pay their mortgage through their CPF OA. This will, of course, not be an option for you if all the money has been transferred to your SA. You have to be very disciplined at money management, in order to make the significant down payment without CPF. And because you are paying the mortgage in cash, you will have to plan your monthly finances carefully. For bank loans, this entails knowing details like when to refinance, or how to pick between one and three-month interest rate periods with the most efficiency.

 

2. You’ll Need Banks For Education Loans: Your CPF OA can be used for education loans when applying for studies from a recognised institution (and yes, you do have to pay it back with interest!). If you have not completed your diploma or degree but intend to, you will have to turn to banks if your OA is empty. This is, of course, a less forgiving option. With the OA, you are simply using your own money, with an obligation to pay yourself back. Once you use a bank, you have a student loan that you have to be careful to repay. Failure to do so can greatly impact your credit score later.

 

3. The Situation May Change in the Long Term: This method, of course, assumes CPF rates stay the same. The situation may change 20 or 30 years down the road.

 

It’s Probably Better Than Trying to Invest Your CPF Money

You have the option to invest a portion of your CPF savings (see the CPF websites), in order to chase higher returns. Given that the SA already gives higher returns however, and is guaranteed, many Singaporeans would be better off transferring their money to their SA than trying to invest it.

 

 

(Singsaver.com.sg, Singapore's leading personal finance comparison platform, provides free and easily accessible resources such as its up-to-date credit card product page and the latest personal loan packages available in real-time.)

5 Ways Shopping At Malls In Singapore Beats Online Shopping

Shopping at malls in Singapore offers great experiences you can’t capture online. Online shopping. Once you’ve had a taste of the incredible bargains it can net you, how could you shop IRL ever again? Well, don’t pooh-pooh the good ol’ bricks-and-mortar shop just yet. With a little bit of legwork, you can save more than just money by going to town to pick up that brand-new toy. Here are the things we love most about going shopping at malls in Singapore.

 

The Freebies

Sure, you might receive the occasional department store flyer in the mail or see ads on Facebook alerting you limited-time offers on certain brands. What you may not always be alerted to are the freebies sales staff can sometimes throw in to sweeten the deal for you. For example, many cosmetics brands bundle attractive samples with their goods above a certain value. Or, you could get free accessories thrown in to make your new laptop even more useful. In many cases, this generosity is often the prerogative of the salesperson attending to you, which brings us to the next reason we love shopping IRL.

 

Human Interaction

There are times when shopping is best done in your PJs in the dead of night, searching diligently for deals and getting it just-so at your own pace. Other times, though, it’s really nice to have a human being explain things to you without you having to research until your eyes water. A good sales experience can be a great way to lift your mood after a long day — and you can’t really put a price on that. More importantly, that salesperson can explain technical details, and provide tips on maintenance of the item. This something you rarely encounter online, even if you might save some money by buying it over the Internet.

 

Surprise Sales

The feeling of satisfaction is even further enhanced if you happen to have chanced upon an unexpected price reduction on your item. Often, shoppers choosing between similar items are persuaded by the one that happens to be on offer. I mean, paying less is more, no? Thing is, you likely would not have known about the sale item if you hadn’t ventured into the store in the first place. And while you might be able to get the same thing online for less, there’s shipping costs plus the interminable wait time. It might make more sense to buy it at a mall in Singapore. Even without surprise sales, certain credit cards confer additional discounts and loyalty points for specific malls. This helps you save on everyday purchases made in-store. The new American Express CapitaCard, for example, rewards you with 3 STAR$ for every S$1 you spend at CapitaLand Malls. Once you’ve accumulated a nice collection of STAR$, you can trade them in for CapitaVouchers. 10,000 STAR$ gives you a S$10 voucher, while 50,000 STAR$ gets you a S$50 voucher. You also get free parking at CapitaLand Malls if you spent at least S$1,200 in a calendar month. Oh, and did we mention that you also get 50,000 STAR$ if you spend S$888 on the card for the first 6 months?

 

Authenticity

Of course, bargain hunting online is fun and amazing — that is, until you get scammed. Savvy shoppers will already know where to find legitimate deals online, but not all of us are so clever. That’s where the bricks-and-mortar shop is still useful. By vouching for the authenticity their wares, these retailers are eliminating one major worry you might have. If anything goes awry with your purchase, you could very well bring it back to them and get an on-the-spot exchange. Try doing that with an online shop.

 

Some Stuff Shouldn’t Be Bought Sight-Unseen

Finally, there’s this, too. I mean, how could you possibly buy furniture without testing it first? Or checking that it fits you or your décor? This is also true of electronic gadgets like hi-fi systems and TVs, which you really should try out before purchasing (no matter how good the reviews). A lot of things may look good on paper but is not actually compatible with you — which could turn out to be a major dampening. So, by all means, shop for good deals online. But don’t forget to get out there every now and then. You’ll be surprised by how shopping at malls can still be so satisfying.

 

 

( Singsaver.com.sg, Singapore's leading personal finance comparison platform, provides free and easily accessible resources such as its up-to-date credit card product page and the latest personal loan packages available in real-time.)