CPF... Cheating People Fund? Really?

Have been surfing the web and chance upon many post about CPF and how it seems to be taking monies from us and we never see it. Many is complaining about how we will never see our CPF monies. 

It's amazing how many of these information is publicly available but many still choose to rant and rave and not bother to go find out about it themselves. Though I have to agree that CPF seems to handle too many things and they try to put all that information on the website and it's kinda cluttered but still the information is there. So if any of you need information on CPF you can go to www.cpf.gov.sg

Many people has questioned that why is CPF taking our monies? CPF traditionally was formed to help us with our housing, education and retirement needs. Though with the pace of progress and with inflation, CPF cannot fully meet all those needs now. But it will still meet some. Many will have read the article posted on Facebook that there are people at 35 but with no savings... But the article did not mention they have CPF! They may still buy a house even if they have no cash savings. Nothing fancy but it's still a roof over their heads. 

Many is also planning to use their CPF for the education of their children in a local tertiary institution. 

For retirement, many complain that we cannot withdraw our monies at 55 if we do not meet our Minimum Sum Scheme. But let's say we can... What will we do? Splurge on a new car? A new home? Double or quits at one of the casinos? Invest? Leave it in fix deposits drawing 0.75%?

I read with amusement on one of the site that someone actually mentioned: How many investments in the world actually make money? None! He said. What ignorance! If you have invested in MSCI World since 1994 you will have gotten an average return of 7% per year today. Even if you have invested in MSCI World the past 10 years, you could still get about 6% per year today. Many lose money because of much teachings to cut loss. Cut loss? How much loss can you cut before you have practically lose all your money? Anyway that strategy ain't investing. It's speculating. So investing is about having a long term time frame and not let emotions take control of you so that you realize the losses that is on paper, unless you are sure the markets will go down forever and never recover ever again. By the time that happens, money or cash or currencies as we know it is of no value anyway...

Please email me or contact me if you have invested and is not making money in them. Let's have a free no obligations chat. 

So if strategy for investment is to have a long term time frame then isn't that what CPF has? CPF guarantees a minimum 2.5% return on your monies in OA, which other institution guarantees that without risk? All they need is time.

Many have also asked what happens to CPF monies when they die? Once again, publicly available information... Then we have people saying CPF take everything.. It's a ordinary account not savings account... Duh. Then CPF ask us to nominate for what? For fun? So that they can do more work? No lah.. So that they know who they can distribute your CPF to if death was to occur la.. So if I never nominate how? Then it will be distributed according to intestate laws through a notary public lor.. Though the process may take longer so it is always better to nominate your beneficiaries.

If you need help doing that please contact me too, if not the form can be downloaded from the CPF website.

CPF now has CPF life which will pay a monthly income to you till death occurs. Not good meh? So let us assume that you did withdraw your CPF monies at 55 then you are not the spending kind then you leave it in a Fix deposit that gives you 0.75%... Inflation 3% rate of return of your money -2.25%. Which means your money is being eaten up by inflation and value will drop over the long term. Leave it in CPF retirement account, get 4% then get paid a monthly income during retirement, if you so happen to leave a long life CPF will still pay you... So how does CPF cheat people money like that?

But with all that said, we still cannot rely on CPF to be the only source of funding for our retirement or education needs. Some forward planning is still needed. So please contact me if you have not started on your retirement plan or your children's education plan or your medical plan. 

There is still many aspect of CPF that has not been touched on, if I did then this blog will be as long as what CPF website has in pages.

Hello Kitty

Ha $25k for a Hello Kitty? Fights breaking out because of a cat? And its not even a cat fight...

Come on people, seriously? What the hell is the draw for a plush cat? Besides hoping that you can make $25k from it, and if you were smart enough you will know it was probably made in China and a search on the internet will tell you, you can buy it off the net for just RMB35. Which works out to be S$7 and damn the chinese manufacturers will still be making a damn decent profit at $7...

So is it all about making money or a real passion for the cat? I wonder, because if making money is the reason there are other ways to make money. Like by investing, yes it does not give you 25K over night but at least you can accumulate wealth instead of spending your whole night queueing at McDonalds. You also can have 66% chance that your investment will return you 10%.

I search on the net that you have a probability of hitting 4D is 1 in 10,000. So isn't 66% chance of getting 10% a damn good odd.

So instead of looking at how Hello Kitty can make you alot of money, think about how spending a little more time to think about accumulating money may work better.

The Problem With Investments

The problem with investments is that many expect money put in today make money tomorrow or very quickly. Thats not investing, its speculating. It does not help that many people are drawn into advertisements that tell you, you can make millions with just 15 mins everyday. They claim they found the success formula in investing and they are here to share their knowledge bacause they feel good things must share. Their sharing cost $3000 plus. Eeerrr since when did sharing become a commodity?

I knew of somebody that paid that kind of money and when I asked them for their lesson notes, I saw them using charts of companies during 2003 and 2004 period. Any idiot with a dart and a list of stocks during 2003-2004 can make money in equities. Stick the piece of paper on the wall, throw the dart at it. Whichever stock the dart hit you buy, to make it more challenging do it blind folded.

I started to realise that many "investors" is running on greed and these marketers of these programs are capitalising on it. You will notice that these advertisements will be the most rampant when the economy is at a slump and the only way for the economy is up.

And greed caused problems to these "investors" too. Many have bought into technology stocks or funds in year 2000. In 2003 when I was in the bank I met numerous customers that have a negative return on their investments and 99.9% of them has most, if not all, of their portfolio in technology. Why?

Greed has driven the mass buying of technology as tech stocks in 2000 was in favour. Tech funds was doing almost 10% a week! And people were optimistic of the new era of internet. If you think about it, in 2000 if you were a startup company with a laptop and called yourself something.com your shares will be flying off the shelf. But what assets is supporting these share value? You and your laptop....

So whats the difference between investing and speculation. We all know speculation, put money today and try to make a reaping in a very short time. But investing is putting your money in and knowing it will give you a return in a longer time frame because of good fundamentals in a company or fund. Those of you who have watched Forrest Gump will know what I mean. At the ending sequence he said he found some piece of paper his grandfather left behind and it had a picture of an Apple on it. Thats investing but still kinda high risk cos his grandfather may have just put his money in one company. What if it had failed?

There were many more lessons in investments like asset allocation, diversification and time horizon. These I picked up through many discussions with my clients. And some of these lessons are hilarious. I remembered doing road show and when an uncle walked past, i casually asked if he did investments. Yes he said. Wa uncle good! What you invest in? He replied, 4D, toto, big sweep, soccer. Wa uncle not only you invest you also know how to diversify ah? He never became my client but its people like these that makes my job so much more interesting and enriching.

Photo by www.stockmonkey.com