Monday 30 October 2017

Which CPF Life Plan To Choose - Part 2 of 2

Its easier to score distinctions in Science and Math subjects as the answers are more binary - you are either right, or wrong. Precision. It's either black or white. Simple! 

But for Arts subjects like Literature, there's no such thing as right or wrong answers - you are marked according to how well you've argued out your case. Its grey, murky, and fuzzy, but we can see all 7 colours of the rainbow!

(History can score distinction that's because you have memorised the version that's told by the victor; if you ask the subjugated, they'll have another version - hence the many revisionist attempts. Its grey.)

If you tell me you are confused when faced with different, alternative, and opposing viewpoints, as a people reader, I can bet you're not from the Arts stream!

Its very comforting to know big daddy is moving away from the 10 year series rote learning style of education. The earlier children start to think for themselves, the better!

What's the point of financial literacy if we can't think for ourselves? (Don't encourage your child to drop Literature?)

A financially literate parrot is still a parrot...

You OK; I OK

When someone chooses a CPF Life Plan different from us, that does not mean you right, they wrong.

Ask how and why they have made the choice they made. Maybe you're the one having second thoughts now!

If a person tells you he based his decison making on precision math and logic, and you discovered its based on bad math and poor logic, walk away...  What's the point right?

There's such a thing called the Distribution Curve.

I'm frequently turned on by intellectually brilliant and elegant debates, even though we have totally opposite viewpoints. Its definitely not the purpose of this 2 part post to change anyone's mind. I'm not a bleeding heart, remember? You die your problem!

You are not aligned

In Zen and coaching, we like to use these questioning techniques to help others figure things out for themselves without telling them the solutions or what to do. 

Let's have some fun now!

1.  CPF Life is an annuity plan. Tell me what you know about the Good, the Bad, and Ugly aspects about annuity plans in general? 

Eh? You've made a decision without knowing what's an annuity? 

2.  You like to parrot, "Buy Term and invest the rest".  Now, is an annuity plan closer to Term, Wholelife, or Endowment policy in reverse?  

3.  The initial introduction of CPF Life Plans only include up to max the Full Retirement Sum (FRS) contribution - which means around $1,400 per month for life from age 65 onwards.

Is your paycheck at age 55 or 65 around $1,400 per month? 

Whatever happened to the rule of thumb to retire at 70% of our last drawn paycheck?

Do you think you were the target group for CPF Life?

4.  OK, crash got sound. Thanks to overwhelming "demand", now we can contribute more to CPF Life through Enhanced Retirement Scheme (ERS) - increase the monthly payouts to around $2,000 per month for life, if we so wishes.

Now tell me. Is this the reason you studied hard (to get to the right schools), and worked hard (to outrun the other hamsters) - so that at age 65 and beyond, you get $2,000 per month for life?

5.  You always try to frighten and shock your love ones they must invest for their retirement early or else! Money shrinks through inflation and rots in the bank! Cannot rely on savings alone! Must invest!

How do you square the circle now that you are OK with receiving the same $2,000 per month for the next 30 years?

I remember 30 years ago, new graduates earn around $1,000 per month. Can you accept no pay raises for the past 30 years?

By the way, what are you investing for again?

6.  Is $100K mickey mouse money to you?

I mean if you 100% sure you'll live up to 90 and beyond, there's really not much different between the different CPF Life plans. OK, if you insist to split hairs, the new Escalating Plan will win out.

But if you compare the bequest differences between Basic and Standard Plans on ERS  when you visit the la la land between age 80 and 85 (acturial science betting BIG on you here), that's a cool $100K plus!

Even if you chose to contribute less to CPF Life under FRS or BRS, its still tens of thousands you are leaving on the table...

All this for that measly $100 to $300 more per month? 

Do you hate your children or siblings that much?

Are you a rock?

Are you an island?

You hate math, do you?

I am not you; you not me

Its not a secret. I've shared elsewhere that I'll go for the Basic Plan even though I'm single and childless.

The idea of me subsidising anonymous people I don't know does not appeal to me.

I rather leave my money to my siblings. (Keep it all in the family, I cheena or what?)

One is richer than me; the other likes to spend a lot. 

If they don't need my money, they can jolly donate it to their favourite charity or church. That's their decision!

I know. I throw my problem to them. What are siblings for? LOL!

If you ask me today, and since I can't opt out of CPF Life, I would choose the Basic Retire Sum since that's the least demage for I never wanted an annuity plan in the first place.  

Hello! I'm a full time trader and investor remember? 

It makes as much sense otherwise as someone who quits work to invest full time using a low cost passive indexing strategy... Wait. What!?

Having said that, from now till my age 65 is still a good 15 years away...

If I blew up my trading account and my investment account has been decimated by a prolonged bear market that lasted 10 years or more... 

I can't be certain I won't capitulate....

If I did, I'll probably choose ERS and swore off investing and trading for good... Chop fingers!

Then I'll claw back to my cage like a domesticated animal that has been let loose to freedom in the wild, but found freedom on my own too daunting...

I'll stop pretending to be a cat.

Woof, woof!

I'll be a good obedient dog.

Look! I'll even wag my tail for you!

Woof, woof!

Friday 27 October 2017

Which CPF Life Plans To Choose? Part 1 of 2

Its amazing isn't it?

One would expect questions on CPF Life Plans to come from financially illiterate people or those not very into DIY investing or trading - not those from our community of financial freedom seekers...

I mean if one can't make an independent decision ourselves, it sort of brings into question our abilities to practice active DIY retail investing and trading, doesn't it?

Half the readers will leave in a huff now.

Good. Now that I've filtered out the freeloaders, lets move on...

I come with foreplay; I'm the man with the slow hands.

Its all our fault

Remember a time when seniors before us can withdraw their CPF savings at age 55 pronto without ifs and buts?

That worked well for the majority of seniors at that time were quite "obedient" in selling salted eggs at around age 65 - more or less exactly as what the actuarial science has predicted.

Then something went horrifying not according to plan...

People started living longer than "forecasted".  

CPF savings that were "enough" suddenly became woefully inadequate... 

Make a wild guess who is the party most concerned with everyone doing an Oliver Twist act and begged, "Sir, can I have more?"

Hence, the start of the "crash got sound" era of constantly moving goal posts.

But that came at a political cost...

Surely we can't move the goal posts indefinitely!?


I do like our CPF system. 

When I were in Athens, Greece, I had the opportunity to witness how the pension system can be ponzi scheme like - those who collected the pension benefits early are better off than those who collect much later.

The Greek senior who retired 20 years earlier had the consolation he got 20 years of full pension benefits in contrast to that poor soul who just retired when the Greek economy blew up - and found out his "promised" pension is now cut by half...

Similarly, some cities and states in the US are near bankrupt... Would you like to be the young working adult contributing to social services to fund the generous pensions promised to seniors ahead of you? And knowing the kitty is pretty much empty when its your turn to collect? 

How about those rapidly aging countries like Japan, China (due to the one child policy), and Western Europe? I suspect when their pension systems were designed, it has 5 working adults (or more) supporting 1 retiree; not 1 working adult supporting 5 retirees...

No. I like our CPF system much better!

Our monies are clearly compartmentalised. My money is my money; its not mixed with my neighbour's. If my neighbour blew his money on wine, women, and song, that's his business! I'm not subsidising his indulgences!

Spreading the Risk

I ask you. Can you figure it out why CPF Life was introduced?

I stop my foreplay now. You finish off yourself.

Can read, can write, can count

No serious! You do it yourself! 

That's the purpose of our 10 years of primary and secondary education.

If you can't read, can't write, can't count, then you may want to jio me out for coffee. It will cost you though! 

For those who can, here's an excellent website from a professional fee-based financial advisor:

I'll guide you a bit - especially those who tend to miss the forest for the trees...

For those who have read other blogs or websites on the same topic, you may noticed there's a lot of discrepancies in IRR calculation between everyone!? Can you spot where's the frequent mistake made?

I'm not surprised. I've poked enough financial bloggers on their "home-made" versions of XIRR calculation! LOL!

Here's another thing to look out for. 

Beyond the numbers, see if you can spot which CPF Life Plan is murky and grey where your money is mixed with your neighbour's in a dark pool pretty much like those pension schemes.

And which plan is more or less like our current CPF system where my money is my money, and your money is your money? Only the tail end is pension scheme like.

You show me yours; and I show you mine

If you game enough, it would be fun to hear what's your chosen plan, or what you intend to choose when you reach age 65.

Do add in a few short sentences your reasons why.

Those who have already made their choices but have regrets now, it would be most appreciated if you can also share with us why you have changed your mind too.

Of course I'll show my choice and reveal my reasons why in my part 2 post. 

Tuesday 24 October 2017

Buy and Hold - Who sold you that idea?

Nope. Not going to tell you what to believe.

If you game for a simple exercise to test your conviction on Buy and Hold, do read on...

Have you bought an Investment Linked Policy before?

Your conviction on the suitability of the product for you must be strong, if not you would not have bought it, wouldn't you?

Fast forward to today when you are more financially literate. 


Almost all the hobbyist bloggers honest enough to admit they were dumb enough to buy ILPs have cancelled their policies. Even at a loss. 

Yes, ILPs are that toxic...


You have not bought ILPs before? Cannot relate? 

I try again.

Think of something you were so damn sure before. Anything. 

Then you had a big epiphany that you were taken for a fool all along... That epiphany "maciam" like believing the Sun revolves round the Earth and finding out it isn't so!

Now I ask you.

Your belief and conviction on Buy and Hold, was it based on your own track record?

Or was it based on your own research and self discovery?

Not likely right?

Can you remember who sold that idea to you?

Go back and ask that person whether he willing to sign a written guarantee to make you whole again if Buy and Hold results in a financial loss for you after 30 years?

He wouldn't dare, would he? Unless he is 70 years old. Wink.

Ask yourself why you so confident about Buy and Hold will make money in the long run when the person who sold you that idea isn't so convinced himself?

P.S.  Special thanks to Keith of Investment Moats for allowing me to "steal with pride" the above picture from his post at BIGS World where he is also the admin.

Saturday 21 October 2017

Budget Cuts, Austerity, and Giam Kanas

We may like to complain about SMRT's past folly on trying to "save" their way to profitability by "sacrificing" engineering and maintenance.

What about ourselves?

Are there expenses we should be "investing" on ourselves now?

Or do we wait till things breakdown and shit hits the fan before we grudglingly open up our wallets?

Talk to your grandparents.

See what they say?

They can share real life examples of being penny wise but pound foolish...

Remember the example of the container with rocks, pebbles, sand, and water?

Don't sweat the small stuffs.

Focus on the rocks.

And wear that nice shirt you've been saving for a special day... Mai tu liao...

Tomorrow may never come...

Wednesday 18 October 2017

Herzberg's Motivation and Hygiene Theory as applied to Save More and Earn More

Remember those management theories we learnt in school or at work?

Can still remember the hygiene and motivation factors?

Those forget or never took business courses can google first to refresh your memory before reading further.

When we talk about financial literacy, its a HUGE topic.

That's why if you alert, you can spot 2 main camps to catering to the needs of the SAVE MORE and the EARN MORE readers.

Hygiene and Save More

This would be the Suze Orman of the world talking about consumer debt like credit cards, housing loans, insurance policies, different bank account types, CPF; emergency funds, clipping coupons; etc.

In some cases, it may look like "earn more", but its not.

For eg, it we switch to this so and so bank account, we can "earn" an extra 1% in annual interest if we can make ourselves jump through hoops...

Or if we accumulate XXXX miles, we can travel for free!

The saddest example must be for the minority who thinks life insurance is a sort of "investment".  Especially those who bought life insurance policies for their child. This is the equivalent of believing the Earth is flat...

Don't get me wrong. Save more is important!

When a person can't manage the hygiene factors well - like having out of control credit card debts, over insured themselves with junk policies, little to no savings which means living hand to mouth - there is no foundation to speak of. 

So if anyone wants to embark on their jouneys towards financial freedom, this is where to start first:

Clean your own backyard!

Motivation and Earn More

To some, there's no need to focus on Earn More. 

This is especially if you are risk averse; and the mere thought of losing just $10K will give you ulcers and sleepless nights...

Look, if you can save $50K per year, in 20 years you will be be a millionaire!

And that's with ZERO tailwind support as in interest rate yield! And ZERO risk of capital loss. OK, purchasing power that's another story... (where got free lunch one?)

Although it will be over my dead body before I make any voluntary contributions to CPF, I can perfectly empathise with those who do. 

However, when we mention financial freedom, the majority legion out there will readily admit the first thing that comes to mind is to EARN MORE money!

That's where tons of ever so helpful "Samaritans" out there are ever so eager to share their wisdom with you, and to help you get rich like them!  (But if they not rich themselves...)

Different snake-oils peddling their own poison of choice. 

Be it properties, equities, options, CFDs, forex, and what not! 

Even helping you to be your own boss/entrepreneur to be an internet marketer. Tip: smarter students of such courses will in turn market their own courses on how to make money from internet marketing... That's how you make money from internet marketing! LOL!

Remember when companies were still using the classifieds for job recruitments in the 90s? Saw those insurance and property agents recruitment ads that promise to help you be a millionaire if you join them? Now you know why your agent is so interested in your financial well being! 

Why the proliferation of "help"? And why do most people gravitate towards these "help"?

That's because anyone with a few years of investing experience knows:

Investing is not saving

Monday 16 October 2017

7 reasons to get a car in Singapore

1.  To get girls.

2.  To get babes.

3.  To get "chio bu".

4.  To get sexy ladies.

5.  To get convent girls.

6.  To get gorgeous women.

7.  To get materialistic gold diggers.

Sunday 15 October 2017

Why I don't...

Why I don't visit the barber? 

No hair. I'm bald. 

Why I don't date guys?

I love women!

Why I don't drive a car?

No licence. 

Why I don't ride a scooter when I got licence?

No baxxs. And its much more comfortable to go on dates in a cab.

Why I don't trade Options?

I don't understand the Greeks :(

Why I don't buy and hold?

Got raped by markets before...

Why I so stupid?

Yeah hor... Mom! Why I so stupid hah? Did you drop me when I were a baby? Don't lie!

Thursday 12 October 2017

How to seduce customers to voluntarily pay their annual CC membership fees

Remember a time several years ago when financial bloggers and bleeding heart people were sharing in forums how to "save" money by calling your credit card companies and asking for waiver of the annual membership fess?

I guess the message was so successful that it was "understooded" no one pays our credit card annual membership fees. Those who do are either so rich they couldn't be bothered, or they are "bei kambings" who didn't know better...

Imagine if you were working in one of these credit card companies. How to turn this situation around as each dollar from these annual membership fees will go straight down to the bottomline.

We can't be throwing good margins away, can we?

Must give props to the marketing person who came up with "rewarding" customers with frequent flyer miles whenever they voluntarily pay up their credit card annual membership fees!

Of course the miles you get would not be enough to qualify for any free trips directly!

Having "paid" for these "free" miles, it would be a "waste" to let them expire worthless. What would any "sane" people do? Of course spend more to save more!

Now the credit card companies' vendors have vested interests to promote "free" miles too! You scratch my back; I scratch yours. Wink.

Of course for this Jedi trick to work, you first need to pay opinion leaders to write aspirational stories how they can have a jet-setting lifestyle, flying all around the world just with their - yes, repeat after me - "free" frequent flyer miles!

And then the wannebes will parrot on the same message down the line - this time really for free as they were not paid a single cent by the credit card companies.

Why they do it? Herding momentum mah! If other bloggers blog about it and you don't, you'll be left out! 

And their bei kambing followers will monkey see, monkey do.

I'll give you an example of these Jedi tricks we used during my snake-oil corporate days.

Recently, I booked a 5 days trip to Chiang Mai, Thailand for this coming January 2018.

Normally I would stay in a hostel as I like the mingling with strangers at the common area.

This time, despite being a dinosaur and all, I registered for the airbnb website to see what's it all about. 

Interesting. I can get an apartment room for $25 a night. So for 4 nights it would cost me $100 plus plus (booking charge and cleaning fee)

Amex and airbnb very fast!

Straight away I received my first junk email offering me a $50 discount for my first booking if I paid with Amex.

The fine print catch is I have to minimum spend $200.

I am sure some people out there will "upgrade" their apartment to $50 a night for 4 nights to qualify for this "$50 savings" from Amex.

Wait. You intend to spend $100. Now you've spent $150... Someone got Jedied! LOL!

Nah! I deleted the email.

This $50 off promotion would really be "free" if I had intended to stay 10 nights or I had intended to book a $50 per night apartment. 

Next time people try to convince you to spend more to save more, what would we do?

Sunday 8 October 2017

How You Living? Power speech by Dr Rick Rigsby

Sometimes, different world, different culture, we discover values and ideas quite similar to ours...

Mark Twain - I never let my schooling interfere with my education.

I guessed I've led a similar path. 

It never fails to amaze me during my corporate days to find the number of graduates who stopped learning the moment they left school. And they wonder why we never put them on our list of "potentials"...

Same goes for our financial freedom community. Some think just reading 1 to 2 books, attend a few workshops, and they are ready.... If you think like that, just visit STE's blog and look at his private library. And CW mentioned he has almost read all the books on investment in our public libraries.

If you want to bring a knife to a gun fight, nobody stopping you!

Aim low and hit it.

On second thought...

I think I'll stop and let you fill in the blanks yourself.

How you living?

This is especially true for those in their 40s and above.

1/3 to 1/2 our lives are gone now...

Have you run out of excuses yet?

Thursday 5 October 2017

Is this not Concentration Risk?

During my early investing days, one of the biggest corporate failure (and fraud) in the US was Enron.

Enron went into bankcruptcy late 2001.

One interesting but sad footnote was that quite a few Enron employees lost their life savings for they had invested heavily into Enron shares...

They exercised the stock options they were given and piled into their own company's stock when Enron was flying high during the bull market.

Now beside losing their life savings, they are out of a job when Enron collapsed... Double whammy!

This Enron example was used by many financial advisors to warn clients never to go all in with such a risky concentrated bet - buy stocks in the same company you worked for.

However, try telling that to the employees of Apple, Amazon, and Facebook who bought their company's stocks. Shouldn't they have an edge over outside minority retail investors? I mean the company you worked for, do well do bad, you don't know?

Its a dilemma isn't it?

Whether to be a Koala or Panda bear specialists who only buy nothing but Singapore stocks - live in Singapore, work in Singapore. What? Me worried?

We should have an advantage since we are Singapore born and breed right?

Homebase advantage! 

Or maybe we should diversify our stock investments at least regionally, if not globally?

I remember my insurance agent had left the industry for teaching just after the Asian Financial Crisis of 97, and the replacement agent for my orphan account met up with me and tried to "sell" me the wisdom in investing in an insurance-linked fund that invests in the US and Europe.

Of course he would, wouldn't he?

The old diversification mantra... See? If a Singaporean investor had invested in a global stocks fund, his losses for 97 AFC would be mitigated as US and Europe stocks were doing relatively OK.

No, I didn't bite. 

And thank goodness for that! 

2 years later, we had the Nasdaq crash of 2000...


Sunday 1 October 2017

Peter Lynch's 6 Types of Stock Plays - as applied to SPH, ComfortDelgro, and Singpost

During my time "anyhow hantam" stocks from 1999 onwards, Peter Lynch's books were the rage. Everyone was Peter Lynch this, Peter Lynch that.

Retail investors were enamoured with the fabled 10 baggers.

Which makes sense. It was a time of outsized growth and multi-baggers in technology stocks! Tech is it!

No one were mentioning Warren Buffett... Warren Buffett who? 


Peter Lynch had a simple and quite useful classification of stock plays:

1.  Slow growers

2.  Fast growers

3.  Stalwarts

4.  Cyclicals

5.  Turnaround

6.  Asset plays

No, I'm not going to explain what those mean. You go read the book yourself!  

(Or read other blogs who love to provide summaries on summaries of a book. If you photocopy a photocopy of a photocopy of an original, what do you get?)

Its more fun to apply the above 6 stock classifications into real Singapore stocks which quite a lot of old timer Singaporean retail investors like to own.

Let's take SPH, ComfortDelgro, and SingPost.

10 or 15 years ago, these 3 stocks can be classified as either Slow growers or Stalwarts right?

Retail investors include them into their portfolios to add stability and enjoy the dividends as income. Even when there were big tsunami waves as in 1997 Asian Financial Crisis, 2000 Dot-com crash, and 2008 Lehman event, these 3 stocks will always bounce back.

I mean people still read the papers, take public transport, and send mails by post right?

But something interesting has happened.

Notice the overall market as in STI index is still in "bullish OK mode" but the above 3 stocks are down quite a lot. Some even close to bear market territory as in 20% down from their recent highs...

For those who own these 3 stocks, do you still classify them as Slow growers or Stalwarts?

Evidently you do from the way you are averaging down. If lower you would buy even more!

OK, for Stalwarts I still can accept the argument (grudingly); but for Slow growers?

I mean slow growth still means there must be some growth either in revenue, profit, cash flow, earnings per share, dividends per share right?

For the Stalwart fans, I have some "wu liao" (nonsensical) questions to ask you:

1.  Of course you stiil buy the papers in hard copy form. But do your children and grand children buy newspapers in hard copy?

2.  If you own a business or in charge of HR/marketing/advertising for a firm, what's you share of the advertising budget in print today compared to 10 years ago?

3.  Ask your younger family members, do they use Uber or Grab more than taking taxi recently? I not going to ask you. You cheepskate frugal giam kana - you walked.

4.  Just kidding! While we still are on the topic of saving money, when you shop online because you frugal you, how were your purchases from Qoo10 and Lazarda delivered to your house?

5.  Have you been receiving more e-statements from banks, brokerages, CPF, utilities, etc. Of course its to go green and save trees and all. But wait... If more corporations do that...

6.  How much to send a normal letter by mail these days? Hang on a minute! When was the last time you licked a stamp!?

If the reasons we buy into a stock is because of a Slow grower or Stalwart play were no longer valid... What do we do?

Lower we would buy more?


I mean if its an Asset play or Turnaround play, that's another story. 

But buying in as a Slower grower or Stalwart and hoping its an Asset or Turnaround story, that's making it up as you go along...

Using hope as a strategy is in the same arena as using voodoo, astrology, or feng shui for investing.

Can't say they don't work as they do work sometimes... But its like pissing in the snow on a dark winter's night out in the widerness. 

We know we are making a difference; its hard to tell though.


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