Monday, 11 October 2021

Too Focused On Opportunity Costs Can Drive You Mad!


Question: How often have you spotted Emperors not wearing any clothes?

I just spotted one recently.

So funny. 

Its about the so called "research" that if we use less CPF and more cash to service our housing loans, one of the examples (theory one of course) showed we could get our hands on a cool extra $800K from our CPF interests alone!

Its that easy! 

Just by not touching our CPF for housing loans!!!

Why stop there?

If we want to play Opportunity Costs "manipulation", I have more to contribute!!!

The CPF Ordinary Wage ceiling is $6,000 per month.

The maximum amount of mandatory and voluntary contributions that a person (employee or self-employed person) can make in a calendar year is subject to the CPF Annual Limit of $37,740. (Or $3,145 per month)

1. High Wage Earner/Corporate High Flyer

Let's say at age 30 you are earning more than $10,000 per month, imagine if big daddy only caps CPF contributions from the employer side, and no artificial salary cap from the employee side, how?

Isn't that easier? No need to do voluntary CPF contributions some more!

Think of all the CPF interests in hundreds and hundreds of thousands (maybe millions?) you are leaving on the table by not being able to max out your CPF contributions from employee side, in tandem with your salary growth, as a corporate high flyer!!!

Time to talk to your MP?

2. Old Fogey Savvy Long Term Successful Investor

This old fogey will advise his children - must invest! 

Why settle for a few percentage in CPF interests when he had enjoyed around 20% annual returns from investing with Warren Buffett's Bershire Hathaway stock for 3 decades and more?

Just calculate the obscene amount of money he would have left on the CPF table had he only saved and not put money to work for the past 30 years....


3.  Youths High On Cryptos

These youths must be scratching their heads, "Why settle for single or double digit compounding when we could have exponential compounding with cryptos?"

I mean crypto acolytes are counting 2 baggers, 5 baggers, 10 baggers in years; not decades!

Ah! Never trust any adults above age 30. They have no clue what talking them!

4.  Entrepreneurs that made it

Eh... If you became a billionaire overnight from listing your startup in HK or Nasdaq, or able to afford Good Class Bungalows in your 30s, never mind your business not listed yet...

I would think you have more exciting ideas swirling in your head than concerning yourself with "eating water melons all the way to the green bits"...


The Peanut Joke

Those of you who got study cost accounting may know this Peanut Joke.

If you haven't, I would strongly recommend you read the link below. 

Especially if you are into Fundamental Analysis that sort of thing:

Funny Story on Activity Based Costing

Knowledge is just potential energy; its power only when we know how to apply it! 


  1. Opportunity cost is a wonderful tool in the right hands.

    Provided we don't overdo it.

    For eg: Should we buy our own home? Or use the money to start a new business instead?

    I mean if the business succeeds, we can buy a Good Class Bungalow or several apartments! (Delayed gratification?)

    But if the business fails...

    Its like meditation.

    Be aware and conscious of Opportunity Cost when it appears in our thoughts.

    Then let it go...

    1. Seriously. I have problem in counting opportunity costs. How much is birds on hand is worth than those beautiful birds on the trees. Will these birds fly away when I walk nearer to catch them. Tough to think about it. Too focus can go mad. Not sure of real person real story?

    2. CW,

      Imagine making money with OCBC stock, then sad for if bought DBS, could have made more...

      Or passively invested in STI ETF moody moody because US S&P500 has outperformed big time for the past 10 years... (Mood cheered up a bit when comparing Hang Seng Tech Index for the past 6 months)

      The inspiration for my post was from a YouTube property guy (very prolific in media).

      Of course its all hypothetical examples he gave lah!

      He himself used CPF money to pay for his HDB housing loan... Wait! What?


      Its one of those, "Don't listen to what I do, listen to what I say!"

  2. This post got me thought of two shoes brand. Nike and Skechers.

    Nike for the youths(less than age 40?) Advocates Just do it!

    Skechers, you know for more comfort and support, leisure walking.

    1. Small Time Investor,

      Our own feet, who else know what shoes fit them best?

      Yet many prefer to ask others what shoes they "should" wear...

      Men normally have less footwear than ladies.

      Even so, we don't have one footwear for all occasions right?

      1. Slippers to hawker centres and coffee shops.

      2. Proper shoes for work.

      3. Attas shoes for weddings/funerals/award ceremonies.

      4. Track shoes for sports (or fashion only).

      Don't ask ladies why they need to have 20 to 30 pairs of shoes at home.

      We'll never get it.

      That's also the reason why women in general are "better" investors than men:

      Women know what shoes go better with which outfits for DIFFERENT occasions!!!

      Men think in black and white binary terms; women fuzzy and clear as mud.

      Its all about feelings!?

      And the markets are nothing more than mass emotions ;)

  3. Smol,

    For people like us, the most obvious opportunity cost is full-time work versus being a bum, er I mean FIRE'd. LOL.

    I can't believe the number of times having to face rolling eyes & disapproving looks from people when I tell them I'm happily unemployed.

    Govt will be the first to be pissed off if too many citizens become like us.

    Bit like what's happening in US now. Maybe they're discovering it's more lucrative to mine & trade cryptos? :P

    1. Spur,

      I know how you feel.

      To be able to "retire", I think we need to have some "spirituality" or be "philosophical" about life ;)

      I mean if we always focus on money, we'll either ownself frighten ownself, or never be "free"...

      Always seeking to be "taken care of" by others... A gilded cage is stall a cage.

      Like you've said, the opportunity cost of us not working till age 65, just the opportunity cost in CPF forgone will get some people upset and incredulous!?

      And we have not even calculate the interests on CPF yet... Yeeks!

      You think why I cheer entrepreneurship in youths?

      Imagine if majority of youths just started work already want to FIRE at age 35!?

      What would be the future of Singapore if everyone thinks like that?

      Then we should not complain about foreign talents coming in to replace our youths who "retired" at age 35 ;)


    2. I also like to cheer entrepreneurship in youths, even though I have no moral authority to do so. Nothing wrong with urging youths to be better than who I am, particularly if they have got what it takes and have capacity to survive failures.

      It's hard to be "free" if a person is bothered by mainstream news like "Family of four needs $6,426 a month for basic standard of living in S'pore, says study". One can be "free" once he has enough. Only he knows what is enough for himself. It can be less than $6.5k or even more than $12k, if he has more family responsibilities.

    3. hyom,


      Just as long we don't go overboard with "If you think you, you can!" hyperbole, our cheerleading is like preaching to the choir boys.

      Its cool.

      Crash got sound will take care of the rest.

      The majority will fail for the few to succeed.

      Reality is harsh.

      Yes, imagine a family of 4 happily living on $6,000 per month only to be "pitied" and told they are living below the basic standard of living?

      Then only to be told by another group that no, no. The assumptions used by the first group were "wrong"...

      Nothing has changed for the family of 4.

      Just other people's perception of them through their own coloured lenses.

  4. Hi SMOL,

    Yeah, if we have to grind down the opportunity costs for every financial decision then we would probably be too paralyzed to do anything.

    Not all opportunity costs can be measured in monetary terms either.

    Different circumstances and different times can also result in different cost outcome of opportunities.

    Time - the biggest uncertainty. Anything can be a big "WHAT IF" when we consider time...

    1. Rainbow girl,

      You know I've warned girls to stay away from cheapo guys right (I'm the thrifty one in my family)?

      Well, there are guys who asked the girl to return back all the gifts and meals paid for during a breakup!?

      There's no such thing as "opportunity costs" for these precision in 2 decimal places guys.

      They want the funds back to "reinvest" on another girl ;)


      The breakup girl should celebrate!

      Imagine if she had married the guy!!!

    2. Hi SMOL,

      Although I don't see how your reply relates to my initial comments, it is one interesting "food for thought".

      How would we know that the guy is "cheapo" during dating when he showers the girl with gifts and paid for all the meals?

      The girl will only know AFTER they have broken up (ask the girl to return back all the gifts and meals) or gotten married (when he decides to stop paying), there he shows his true colours isn't it?

    3. Rainbow girl,

      You girls know. Your intuition is much stronger than ours ;)

      The problem is when some of you ignore your intuition and do the "Buy and Hope"...

      He'll improve once we get married...

      I can change him for the better...

      Yah, right...

      The opportunity cost for a woman in a failed or relationship going no where is TIME.

      And this is me agreeing with your initial comment ;)

      Time is the MOST expensive opportunity cost of all...

      That's why I'm a cheerleader to youths chasing rainbows.

      Want to do something burning in your heart? Do it now. "Mai tu!"

      If youths say they'll act AFTER hitting this goal and that, AFTER FIRE, AFTER their retirement at ag 65; that meant its all little lies...


      How can it be important or a real passion when it can wait...


    4. Yup... if not now then when?



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