Termination of Insurance Coverage

Today received a letter from Central Provident Fund (CPF) Board, informing me that my Home Protection Scheme (HPS) with them has been terminated.  Officially I am debt free now.

Home Protection Scheme (HPS) is a mortgage reducing insurance scheme administered by the CPF Board.  Should the insured member become permanently incapacitated or die prematurely before age 65, the CPF Board will pay the outstanding housing loan based on the amount insured under HPS. 

Housing loan mortgage payment is the number one expense for me every month.  Although I am funding my housing loan payment fully from my CPF, it is definitely good to have one thing less to worry about going forward.  Just imagine what would happen to the housing loan if interest rates would go up to 7% or 5%.

Also, the remaining money in my CPF and whatever future contribution has the safe chance for compounding 2.5% per annum going forward.  And I would very much like to see this interest rate going up!

The Home Protection Scheme (HPS) is a mortgage-reducing insurance scheme to help insured members and their families pay off outstanding housing loans in the event of the insured members' permanent incapacity or premature death before age 65. - See more at: http://www.mom.gov.sg/employment-practices/employment-rights-conditions/cpf/Pages/home-protection-scheme.aspx#sthash.GWpniff4.dpuf

The Home Protection Scheme (HPS) is a mortgage-reducing insurance scheme to help insured members and their families pay off outstanding housing loans in the event of the insured members' permanent incapacity or premature death before age 65. - See more at: http://www.mom.gov.sg/employment-practices/employment-rights-conditions/cpf/Pages/home-protection-scheme.aspx#sthash.GWpniff4.dpuf

The Home Protection Scheme (HPS) is a mortgage-reducing insurance scheme to help insured members and their families pay off outstanding housing loans in the event of the insured members' permanent incapacity or premature death before age 65. - See more at: http://www.mom.gov.sg/employment-practices/employment-rights-conditions/cpf/Pages/home-protection-scheme.aspx#sthash.GWpniff4.dpuf

Passive Income Farmer - My Biggest Investment

For most Singaporeans, the biggest investment is our home - the house that we live in.  And for most people, it is the biggest purchase in our lives.

As Singapore has small land area but with big population, the property market is sizzling hot and our "house" is the fastest growing investment in our investment portfolio.

Recently in February, an executive maisonette (EM) at Bishan changed hands for S$1.01 million, beating the previous S$1 million paid for a similar unit in Mei Ling Street last September.

This record sale also creates a vicious cycle and boosting the housing prices even higher.  It is people's nature that seeing your neighbour sold his flat at such high price, you would also raise your own expectation.

As I am currently staying at an EM too, so I expect my flat also worth close to 1 million.  Potentially I am a millionaire, just that I do not feel like a millionaire myself and I do not think we should count our house when evaluating our wealth.

Previously when I received cold calls from property agents asking whether I want to sell my flat, jokingly I quoted them 1 million, as I have no intention of selling.  Look like I will need to raise my asking price now.

I come from a very humble beginning.  I stayed in a rented two-room flat in Toa Payoh when I was young.  My father not daring to buy HDB flat then as he worked as an odd-job worker.

After I started working for a few years, HDB torn down some old flats in Toa Payoh and rebuilt some new flats .  The new flats were opened for ballot and for fun I paid $10 and submitted an application form.

Lady Luck smiled on me and I was allotted a four-room flat in that ballot.  The flat cost $200K and emptied my CPF money and I have to take up a housing loan.

I stayed at the four-room flat for 10 years and then I decided to sell and upgrade to EM.  I found that my role was very contradictory at this sell-buy moment.  At one end, I wished that I could sell my flat at the highest price possible, while at the other end, I wished to pay the lowest possible price for my new flat.

I managed to sell at $450K, which was more than double my original cost.  I topped up another $100K loan for the EM.  The housing prices have really sky-rocketed now and looking back, I would not be able to afford the EM without that "stepping stone" of the 4-room flat.

I feel bad for the younger generation nowadays.  Most of them are buying expensive houses/flats, taking on 25-30 years long term loans and working hard just to service the loans.