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.

Crowdfunding... the new way forward?

Just read of 2 ladies helping to raise money for their mother's bills in the newspaper the other day. Their mother contracted ovarian cancer and the  bills and the care for her came up to about $9,000. They raised  $25,000 through crowd funding. Crowd funding is about getting strangers with big hearts to donate to a cause. Read more about crowd funding here. 

Wow! So can I assume the need to do a financial plan is now obsolete? No need to plan for critical illness because I can raise funds through crowd funding? No need to plan for retirement cos funds can be sourced through crowd funding? No need to plan to replace income if premature death occurs for your dependants? If you intend not to do any financial plan, then do your family and yourself a favour and teach them and yourself what crowd funding is. How crowd funding works and where to find the sources to get crowd funding to fund the emergencies. But if asking people for money in an emergency is too much for your pride and dignity then maybe it is time to sit down to do a financial plan. Let insurance be your crowd funding.

The fact is: insurance IS crowd funding. Anyone that pays a premium is technically pooling their monies into a fund so that they can withdraw it when an emergency happens. These emergencies are hospitalisation and surgery, premature death, critical illness or disability. And the amount of money that you fund is technically, one CENT for every dollar per year. Means that you give the insurance company $0.01 per year and when an emergency happens they give you $1 plus bonus. And to fully pay up the $1 the company will give you in an emergency you need 100 years. 

Some of you may think I have already leh... yes of course you have. But is it effective? Is it sufficient? I have met people who have claim to have already leh but only got 1 policy with $10,000 coverage. 

So let us take for example, you think you have no need for insurance because you are single and no dependants. Have you ever wondered how much money your parents have spent to bring you up? Lets not make it too complicated. Lets just take a meal of $4 a day. Your parents fed you 3 times a day, $12. In a year, $4,380 for the past 30 years $131,400. I have not even taken into consideration education, pampers, utilities and the other miscellaneous items. So if you left prematurely, all that money they spent is wasted and if you have only a $10,000 coverage what does it stand for. What can $10,000 do in this time and age? Think about it. 

You know who to call or email if you want to speak to someone.

And I have to share this video below.. I just love commercials that are tongue in cheek...enjoy!

Impossible To Retire in Singapore

How many times have we heard the phrase mentioned by Singaporeans? 'Singapore is getting too expensive.' 'How to retire here?' 'Government must do something'. It always irks me that many people expect the Government should do something for them, anything goes wrong its the Government. MRT breakdown, Government fault. Bus driver strike Government fault. Toilet breakdown, Government fault. Lorry knock down people, Government fault. I cannot retire, Government fault. 

The way I see it, many things are within the control of ourselves. Whether we can retire in future is very much dependent on the things we do today. For example, if you know you need to have 1 million in future at retirement, what do you do today? You save. But Tang, things getting more expensive in future! You save more. But Tang things so expensive now how to save? Why you never save earlier? But the truth is its all about managing your money. Too many of us (including me in the past) saves after spending. Our saving formula looks like that:

Salary - Expenses = Savings

But every month we have an excuse to spend on something or we want to go on a trip or there is a newly launched gadget or new season fashion or new handbag, new shoes, new everything... so Tang how to save?

Lets move the formula:

Salary - Savings = Expenses

Wa Tang like that no need to spend already. Well maybe, but  I dare bet that if your formula changes to the above you will definitely be able to retire. If you were to spend on one less gadget or one less holiday or even one less beer per week, you will have found some extra money to save for the future. 

If you believe that the above formula can work you will probably ask how much to set aside each month. Rule of thumb 10% to 20% of your current income will be a good start. As your salary increases (and I hope it does, if it doesn't please take a good hard look at yourself) you increase the saving amount to maintain the 10% to 20% ratio. 

Have a good mix of asset to ensure the monies you have set aside is moving your monies closer to the inflation rate. Yes property is a good hedge but please it should not be the only hedge. It is still an asset and the value will fluctuate. 

If you are currently planning for your retirement already, get a financial adviser to project and estimate the amount of retirement fund you will need and work backwards to ascertain the amount to save today towards your goal. This will give you a more specific amount to set aside on a regular basis. Once again, if this actually concerns you and you do not have somebody to speak to, please email me tngjinyau@gmail.com. Whatsapp or SMS me 9180 3448. My consultation is on a no-obligation basis and I do not charge a fee.... yet...

Birthdays

I want to thank all my well-wishers on my birthday today 22nd May 2013. I just got older. So have you wondered why birthdays are celebrated? Well it seems that there is no real documentation of why Birthdays are celebrated. Though I will like to believe that in olden days, it is a joy to live another year if you have not already been taken by disease. I mean have you seen the average human life span in the early 1900s? People live till about only 40 plus years old. Today life expectancy is easily at 80. That is 40 more extra years!

So why the longer life span? Well with advent of new methodology to detect illness, these illnesses can be arrested earlier and treated, ensuring one live longer! In olden times, people say bless you when one sneeze because it may be the sign of one falling sick. And if you fall sick then, there may be a chance you will not survive. People were dying from the common flu! Today out common flu is treated at our local HDB block GP with that yellow tablet that makes you super drowsy and some can get high on..

So what is the future like in terms of life span? What are new medications that may be invented to treat our diseases? Will we live beyond a hundred? Will somebody invent something that will allow us to live like Benjamin Button after we hit 80? If you have not watch Benjamin Button, it is about a boy who lived his live backwards, from old to young.

We will never know what the future hold in terms of life span. But more importantly at this very moment if we know that our life span is about 80, what have you done to ensure that you will live life to the fullest? What have you done instead of burying your face in front of the office computer from 9 am to 9 pm at night? Have you set down and wrote your bucket list? The things you will want to achieve before death? Have you PLANNED to do those things?

Many of you may wonder why I sound like a pessimist, but I like to tell you 'I am not a pessimist but a planner' I control what I can control and spent less time worrying about what I cannot. I find predictabilities in unpredictables and control the predictabilities.

So when do you plan to retire? Do you intend to spend your whole life working? Those of you who is now thinking Tang retirement very far away leh... think again if you are 20, you only have 60 more years to live. If you are 40, you already lived half your life. If you are 60, I am sorry if you are still working without having the CHOICE not to work, but if you have a choice and you are working just to pass time, kudos to you!

So have you planned that upon your retirement, you can exercise the option of not working? If what I have mentioned is alien to you, please I urge you to make an appointment with your financial adviser, tell them to do a retirement plan for you. If your financial adviser just sells you products then call me, we can sit down and do a plan for your life and if you want to buy products from your adviser after doing your life plan with me, go ahead. I can rest peacefully knowing I have touched another life.

Mine! All Mine! My daughter at 1. Will she live to a hundred?

Lessons From A Taxi Driver

23/10/2012 Tuesday

Dropped my bike off at AMK industrial park 2 for some oil leaking from my engine and decided to grab a cab home. As I was walking towards the junction, a cab pulled up going to make a left turn. Flagged it. Uncle wound down his window,

'Where you going?' He asked. 'Uncle, Simei.'. He hesitated , took a second glance at his clock and waved me on board. 'How you want to go? CTE then PIE then exit Simei?' he asked.

'Uncle, TPE also can' I said.

'CTE then PIE then exit Simei? Ok ah?' he asked again. Figured he was hard of hearing already, I said: 'Ok, ok, can can.'

As I was sitting in the back of the taxi, I remembered attending one of Dr Andrew Goh's training titled: Think Like A Taxi Driver and decided to engage with uncle. 'Uncle, you had lunch already?' I asked.

'After I drop you off I am going to return taxi at Sengkang.' he said.

Eeeerrrrr... ok ok uncle hard of hearing. Ask again: 'Uncle, you had lunch already?' 

'Eat liao. But nowadays don't eat rice, just eat porridge. Drive taxi no time eat.'

'So uncle, how long have you been driving taxi already?' Uncle ask me guess. '10 years?' I answered.

'34 years already. This year I 67. (At that moment I felt at peace knowing I had at least a million dollars worth of insurance coverage) 3 years time, I going to retire'

'Wa uncle so long ah? You got kids or not?' Uncle said got kids, 1 boy, 1 girl. 'Then uncle relax liao la, no need work so hard.' I said.

Uncle went on to tell me his wisdom; he said he used to drive taxi for 12-14 hours when younger now drive for 6 hours, enough to cover his basic needs. He told me not to expect from my kids. If they make it big in life they can give you more ok. If cannot then have to continue working to sustain. He gets $300 from CPF and he has some savings. He said he co-owned his taxi for 20 years. If you don't co-own, you pay $60 rental for taxi in 1980s. If co-own you pay $60 for 4 years and $30 after that. He said he saved the $30 per day and now has savings to pay off some stuff every month. In essence, he told me he cannot stop driving his taxi.

Then he told me: Young man, now that you are still young, better save for your retirement. Don't anyhow spend your money. When young earn more, but also save more.

Sigh! As a financial planner we advocate that to people on a daily basis. We have plans and solutions for many of these financial objectives including retirement. But half of the replies you get when you want to meet up with people: I got already. You people earn so much. Bluff people one. Think about it. No need. And finally the best: NOT INTERESTED. 

And guess when will people be interested to do something about their retirement?

During retirement.  

Well guess life's like that. The quote from Gladiator sums it up: What You Do In Life Echoes in Eternity. So whether your retirement allows you a choice to work or not depends on what you do today.