As from April 2013 my Journey in Investing is to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

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Saturday, 26 December 2020

When Your Bank RM Called??? (6)

Read? When Your Bank RM Called??? (5)

Sillyinvestor 26 December 2020 at 11:29:00 GMT+8

Hmm CW,

You haven answer Hyom or I could not fathom enough. Any impact if interest rate raises? Is 10 years and is a long time

Reply Delete


Doing some Maths to keep his mind functioning! LOL!

RM's illustration is based on projected income @ 4.75% return on top of guaranteed fixed monthly income and projected bonus.

Projected 4.75% return by RM may be too juicy so Uncle8888 used 3.25% to do his Maths!

Actually; the real investment gains from this Premium Financing plan will depend on how well Uncle8888 invests this free up $144K which was previously locked up as Cash asset under AUM in the Bank earning low interests.

Time for him to power up! LOL!


  1. CW,

    LOL! You have lost the right to poke others for using margin to increase passive income liao ;)

    If you do, sure kenna poked back its 50 steps laughing at 100 steps...

    I believe some readers were thrown off the track because they were looking at what you did from a "SAVE MORE" perspective.

    Glad you have made it clear its an "EARN MORE" exercise ;)

    Its no different from taking a home equity loan on our fully paid home, no more asset rich but cash poor!

    Or like when I took up a housing loan when my CPF is enough to pay it down in full at the time of purchase.

    Notice how we change during our journeys?

    Young that time you abhor debt. Quickly paid up your flat in 5 years. Then for equities you only used contra during early days. No margin account ever. Now? Eh, you discovered the "blue pill"?

    Then there's that Tarzan young got 3-4 investment properties! Now climbing down the mountain switch track to voluntarily contribute to CPF?

    Real people, real stories so very interesting!!!

    P.S. Your precision in 2 decimal places can be a bit "distracting".

    The most important statement in this whole post is:

    "Actually; the real investment gains from this Premium Financing plan will depend on how well Uncle8888 invests this free up $144K which was previously locked up as Cash asset under AUM earning low interests."

    And "invests" is not voluntarily contribute to CPF hor!


    1. Anyone can answer?

      Is our Housing Loan also classified under AUM with the Bank?

    2. Hi SMOL,

      when one is climbing down the mountain, it is important that one has already enjoyed the view from the top, and learnt life's lessons when climbing up. Some of these lessons should include "greed has no bounds", "Money is important but is not everything!" and "Learning to let go!"

      Admittedly "Learning to let go" can be difficult if one is competitive by nature. Even a leisurely weekend jog among us "uncle" jogging buddies can turn into a competition to see who can run further and faster. Unbelievable and hilarious.

      Have been reading local financial blogs the last few days, since cannot travel overseas, and observed that many if not all, have reported investment gains. It seemed surreal that in this pandemic, many have actually made financial gains and some even managed to get better paying jobs after ditching their old ones.

      For myself, even while climbing down the mountain, I still have some targets to meet (financial and otherwise) for 2021 for when I turn 60. The pandemic has delayed but not derailed the goals. I should meet two of my financial goals by end this year (3 more days to go).

      Finally to answer CW's question on whether housing loan with a bank is classified by the bank as your AUM with the bank, the answer is no. Thats what DBS told me. :-)

    3. mysecretinvestment,

      I'm with you :)

      My trading account has gone up 10 fold, but I've only increased my position size 2 fold.

      In a sense, we are doing the same thing - dialing down risks as we stroll down the mountain ;)

      Our friend is doing the opposite. Whole life no margin, avoid debt. Koala as in SGX stocks only.

      Eh? All of sudden into leverage and HK tech stocks?

      He reminds me of:

      Beware of the Goody Goody Guy


    4. Sign of market crash in 2021? Beware! LoL!

    5. CW,

      I don't know about markets...

      But if you start putting on cologne, dye your hair, and don't mind paying up for finer new threads, triple confirm you are making up for "lost time"!

      Gentle reminder from our Army days:

      Can do anything you want; just don't get caught!

    6. Quote "But if you start putting on cologne, dye your hair, and don't mind paying up for finer new threads, triple confirm you are making up for "lost time"!"

      Quite true! Got real person. Real story!

      My wife recently told me that she took the same lift down with old uncle neighbor who was wearing flowery shirt, tight pant and strong cologne. She said old uncle freedom liao! Now can go havoc!

      His wife passed away few month ago!

  2. Let me try in simple SIMPLE SIMON's way.

    Housing loan is AUM with Bank only when your property has equity in the current market.

  3. Actually CW8888, what U are doing is many Reits Managers are doing in the market.

  4. Basically 2 words B&S-aka trading lol.

  5. But i think it is not a bad move because for the black swan to appear swimming in a pool full of QEs, is very difficult-fortune teller told me so.


  6. most associate levearge with equity tarding/investment. Too volatile & risky for me, used leverage for years in other ways, for my life insurance, invest grade corporate bonds and annuity. Bought annuity in September 2019 on ~85% levearge (before COVID, with prevailing 1 month SIBOR at ~2%). Was aware of the risks - insurer return even lower than the illustrative low of 3.25%, SIBOR goes above 2%, may not live long to enjoy the benefits of annuity - who benefits most under CPF Life? those who live to 66 or those to 100? . Nonetheless proceeded because (1) RM offered upfront discount and borrowing at 1 month SIBOR + 0.5%, even better than my equity housing loan (2) insuerer investment return (typically ~ 60% bond + reamining 40% in equity, property etc) would move in tandem with interest rate (3) Benefit of my life insurance (read family) moves in opposite direction as my annuity

  7. Hi Uncle8888,

    In this case, the bank's collateral is your life ... insurance. :P

    Hmm, you must be getting pretty good benefits from priority banking to maintain your AUM.

    I mean, paying fees to take cash from illiquid property is one thing.

    To pay fees to take cash from cash... šŸ¤”

    I gave up my DBS Treasures many years ago after I felt that it wasn't doing much for me ... felt more like their cow being milked LOL. Maybe they've improved by now!


  8. "To pay fees to take cash from cash... šŸ¤”"


    If i convert my WL to Annuity, is it like above?

    But i will stop paying premiums to service my WL.

    So how?

  9. ii have been wondering why the Insurance Company so "good" to let me convert to Annuity.

  10. Already paid 30 years premiums.

    Maybe sell in the open market better value than conversion to Annuity-If there is buyer?

    1. Do the Maths and see any worse off in converting from WL to Annuity. Annuity is more towards spending our money in our life time while the WL is leaving behind as inheritance.

  11. collateral for my annuity loan is the policy iself. likewise, collateral for life insurance loan is the life insurance policy & collateral for equity proprietray loan is my residential property. That is, all borrowings are ringfenced.

    Knew my DBS Treasure RM for many years since she introduced me to equity property loan money making. For several years after WFC, could get ~ 5% coupon for investment grade corporate bonds, wheraes housing loans were around ~1.5%. Called me every other month for new investment oppoturnities as they arose - currency trading, gold trading, structured notes, leveraged life insurance, leveraged annuity etc. Took up suggestions where they made sense, rejected if not. Most make money, a very satisfying experience overall for the last 12 years.

  12. My maths is very limited-more on comparison/common sense.

    Like if i convert to annuity compare to if i can sell in the market.

    Or if i can afford it to leave as an inheritance.

    Common sense or intinctly can sell in the market is second best and the best is can leave as a legacy.

    Insurance company is populated by Actuaries; who am i to challenge them?

  13. annuity is mainly to supplement RSS/CPF life as a form of regular passive incomes for retirees (like me). CPF schemes have higher return & certainty (thank to garmen) than private. without levarage, annuity return is generally close to OA 2.5% or lower because of expected low interest enviroment for many years to come (just received my endowment payment, rate of return at compounded 2.9+% for 10 years, not too bad). if risks are acceptable, leverage annuity annualised return could range from 4% to 10% or more, if live to 90 and beyond.

    1. With no margin calls for leveraged annuity plan; it should be less stressful for retirees than to leverage on margin account for a basket of REITs/stocks for dividend income to supplement CPF Life

    2. Yes uncle 8888

      during this march speed melt, seen many margin account with reits/dividend stocks kana calls like gf/wife gives u missed calls.

      btw your annuity also comes with disability income benefits?

    3. No. Only death benefit which higher than surrender value

    4. other than my own report card, that is the first time i see so many reds.

  14. If i want to convert my WL to annuity, of course the insurance man must sell his snake-oil medicine to me first why i should not sell in the opened market.

    Vice versa, now the man in the opened market must convince me why i should not convert my WL to Annuity.

    The best still i think just let it be a legacy until if really need money lol - Touch wood.



  15. life insurance is for family/legacy, annuity is for own (indirectly family). Best to leave them as they are.

    Margin call when annuity payout is less than interest payment. But very remote (keep finger crossed), unlike equity trading on margin


    The above is happenning now when i already said in one of "Silly Investor's" blogging that because of Western Culture (White Supremacy thinking & very individualistic thinking of their democratic rights)) is so much different from us Asian's culture, that this pandemic is not so easily solved.

    Now their (WEST) thinking is that VACCINE will solve this pandemic.

    Even then not all or most will agree to be vaccinated.

    Another words not so good for World stock markets when World's CBs have spend all their QE bullets.
    Not to mention more lives will be lost.

    My 2 cents.

  17. when World's CBs have spend all their QE bullets then how?

  18. Chinese says, "Lau Bu Siu"

    Ang Moh says, "Johnny Walker" is good for long life.


    1. So which camp are U in?

      Ang Moh believes:

      Have U heard even it's working (any part of your body), if U don't use it, U lose it.

      Same as investing in the stock markets.

  19. Loan rate still remain on lower end

    Dec 19 : 0.99%
    Jan 20 : 1.05% (Higher)
    Feb 20 : 0.99% (Drop back to Dec 19 rate)

    Average : 1.01%


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