Big Daddy Volunteer CPF Contributions For You!

 

Big daddy good or what?

See?

By raising the CPF limit from $6K to $8K, some who are already doing voluntary contributions to CPF today can save the trouble in future...

Big daddy will ask your employer to do it for you!

Now that's service or what!?

Good, better, best!!!

As for those who are transferring their CPF funds out to bank fixed deposits or treasury bills, presumably there are better vehicles than CPF out there, be glad you can still transfer them out!

Think of those who want to preserve more take home pay to speculate in cryptos, options, futures, overseas properties, baseball cards, Hello Kitty collectibles, antiques, fine wine; etc...

Well, sorry. 

It's for your own good.

Why does big daddy need to raise the CPF limit?

To keep pace with inflation.

I see.

To hedge against an asset that loses its purchasing power over time, the solution is to accumulate more of it???

Nanti dulu...

 

Look Within To Determine Whether You Should Top-Up Your CPF

 

Warning.

Super long read. I'm not kidding!!!

It would be a pain if you try to read it on your mobile. 

More importantly, this post is not for casual reading. 

You need to face yourself in the mirror one. If not, it's pointless and just wasting your time...

If still interested, recommend you read it at home on your PC, notebook, or tablet when your mind is calm and rested.

Let's get the rules of engagement out of the way:

1.  I did not ask permission from the authors of the below blog posts to post the links here. Their posts were in the public domain. I not plagiarizing them OK!?

2.  Any bouquets or compliments should go to them directly. I "steal with pride", but I don't "steal" accreditation.

3.  If you don't agree or have problem with their writings, please deal with me directly. 

"Wait, wait! Let me get my maggi mee pot to protect my head first!

OK, send your sticks and stones my way. I'm ready!"

Read this before you top up your CPF

Very balanced post on CPF top-ups! One of the better ones out there...

It's written in collaboration with CPF. I saw the same post reproduced at CPF's website. 

Smart move by CPF! That's how you "Hong Lim" proof your ass!

Does Market Time Works Better Than DCA?

OK, Brian didn't set out to write about CPF; I bet he didn't know his post works great as unintended counterbalance to topping up our CPF!!!

If you're a snake oil financial advisor, you would use the same arguments from Brian to create FOMO (fear of missing out) with your clients, no?

"Don't be stupid lah!? Cash (and T-bills and CPF) will rot if you don't invest! See how much money you're leaving behind on the table long term!?

Even if you're the world's worst market timing Charlie Brown investor, you would still come out on top over "kiasi" savers hiding behing their so called "risk-free" Save More vehicles!"

Why snake oils so interested to help you get rich?

Because you can't make money recommending others to voluntarily top-up their CPF. But once bei kambings bite on Earn More vehicles, that's where you can start to milk and fleece through commissions and fees... Wink.

However, most don't see the "bait-and-switch" routine by some next level snake oils. 

It's like you advertise a super low price for a TV or notebook computer. Once your sales funnel got sucked into your showroom, this is where you start to upsell and cross-sell them all the bells and whistles! 

Ar ber then?

Ask those who walked into the showroom for 1M65, and walked out with 4M65. Kaching!

Trust but Verify

In my old job, I never trust a statistic that I've not personally manipulated myself.

Before I go on, let's poke holes in the 2 blog posts above.

Anyone who knows something about statistics will know we can data-mine whatever past data to suit our own thesis. 

 

Right off the bat I think those who are more well-read will find the Woke Salaryman's 10.7% annual return for S&P is a little too "snake oil". 

Let's use 8%. Including re-invested dividends.

As for CPF, anyone who use 5% or 6% is just showing they have very little money in CPF. 

Stick with 4%.

As for Brian's Cash returns, it's from a period of low interest rates in the States. Let's use 4%; same same as CPF.

Now you can generate your own "more conservative" statistics. What? You don't trust your own statistics?

How?

It doesn't change the fact that Earn More (not guaranteed and only a faith thing) will always beat Save More (guaranteed but no bragging rights).

That's a given.

Look Within

All I've said above is actually bullshit!!!

That's left-brained stuffs. It gives the illusion of "precision" (10.7%), but when you think about it, it's all based on assumptions, faith, and pure straight-line extrapolation. 

Now try my right-brained voodoo.

You know yourself.

Are you always envious and very jealous when others do better than you?

Were you angry and upset others were selling their HDB flats for above a million? Nothing to do with you, but yet you super "buay song"...

Now imagine you managed to reach 1M65, would you be totally fine to see your peers hitting 4M65 because they used their CPF to make money in properties or stocks?

Or would you turn around and petition CPF is for retirement! Take away CPFIS and ban the use of CPF for 2nd property... (Sounds familiar to HDB is for living only?)

You "upgraded" from a bigger HDB flat in best location mature estate to a much smaller and more "ulu" location condo in suburbia. Why? You die die must have that "live in condo" label or badge...

Now to the flip side, I've shared I have a colleague who forever quit stocks after losing a "mere" $5K... 

The pain was that excruciating for him.

In our community, there's a blogger (he no longer blogs) whom I respect a lot. He also shared he went into a depression after losing money... Even harboured suicidal thoughts...

Thankfully he has moved past and recovered from his dark days.

During the 97 Asian Financial Crisis or 2008 Lehman meltdown, thousands (not hundreds) of investors ended their lives...

It's hard, but who will willingly admit they are made of porcelain or glass? 

I'm sure when we do risk profile surveys, we will prefer to "own self lie to own self" we are made of rubber or stainless steel....

How?

Does that help you to determine whether you should top-up your CPF?

You don't have to study psychology to know yourself.

If you haven't forgotten your literature from secondary school, all we need is to read yourself like we are reading a character from a novel or play. Wink.

That's all!

If official retirement age is 55 how?

 

Young that time, I witnessed 2 of my neighbours' fathers retired at age 55 as that was the official retirement age then.

I hit 55 this year.

I just had a "wu liao" (nonsensical) thought.

Imagine in an alternative universe, where we have high youth unemployment as economy "hentak kaki" (like in Taiwan?), and we don't have problems producing babies since that's the only "entertainment" when we don't have career aspirations as deterrent.

To make way for youths, everyone has to retire by age 55.

And you can take out ALL your CPF at age 55. You know, how it was meant to be when created by the founding fathers.

No CPF minimum sum, no CPF Life. 

How?

Would you be glad and happier?

Or would you suddenly feel a bit sheepish trash talking big daddy all these times?

Especially when you realise you don't do too well on your own... You prefer to have a pet owner - woof, woof!

 

Negative Yielding Instruments/Vehicles in Singapore (2022)

 

CPF.

Singapore Savings Bonds.

Singapore Treasuries.

Singapore Bank Fixed Deposits.

You get the picture.

In REAL terms of course!

You think why Big Daddy evaluate their shepherds like Temasek and GIC on a real rate of return after deducting the global inflation rate?

Fair right?

If not how to justify the shepherds' salaries and bonuses? 

It would be interesting to review GIC and Temasek's investment performance for 2022 next year!

What?

We are "amateurs"...

Cannot compare with professionals you say?

Wait a minute.

Something is off....

I thought it's about whether one is financially literate or not!?

Or are you moving the goal posts by changing the definition again?

Would Malaysians Voluntarily Contribute To Their EPF?

 

I mean their EPF dividends beats our CPF interest rates hands down:

EPF declares higher dividends for 2021

Before we proceed, have you noticed its dividends for EPF but interests for CPF?

It could be just semantics; no big deal. Or is it?

Are there any Malaysians here (former also can!)?

If the EPF dividends are 5%-6%, do you still feel the need to "invest" to Earn More? 

I mean Save More can oredi! No?

How is it in Malaysia?

Would a similar "1M65" movement gain traction over there?

Or would the more financially literate Malaysians prefer to weather the risk of capital loss by investing in Singapore dividends stocks for the same 5%-6% dividend yield?

Wait!

What do the more financially literate Singaporeans do?

 

Nominal and Real Negative Interest Rates for Market Timing

 

For years now, those of us who have funds parked in plain vanilla bank savings accounts have been getting negative real interest rates - CPI higher than what the bank is giving us.

You think why there's so much interest in REITs, cryptos staking, and for the more risk averse ones - voluntary contributions to CPF?

However, it all fell apart this year 2022.

I mean making more than CPI is why we embarked on the Earn More path; having your funds suffering a -50% unrealised loss, or completely wiped out is not part of the plan to beat inflation!

Voluntarily contributing to CPF looks a bit awkward now that our Singapore's CPI is more than the CPF OA 2.5% interest rates... 

In case you didn't know, the Singapore Savings Bond now pays more than CPF OA!

Or course we can still transfer funds from our CPF OA to CPF SA, we just have to treat big daddy's 2022 annual CPI projection of between 4.5-5.5% as "transitory".... 

Repeat after me, "CPF cannot give negative real interest rates...CPF cannot give negative real interest rates...CPF cannot give negative real interest rates..."

Hang on a minute!

Suffering a guaranteed loss in purchasing power of 1-2% is way much better than -50% loss or losing everything!

You're 100% right!

Bet you thought this is a Save More dissing post! Au contraire!

That's why many Western Europe institutions and high net worth individuals have been parking funds at negative nominal yielding interest rates for some years now. Especially in Germany.

This is NOT supposed to happen; if we remember what we've learnt in economics.

Now you know why they have been doing so in 2022.

They are market timers.

Those who are suffering unrealised losses of -50% and more, don't you wish you had done nothing at all and shoved all your money under your mattress all these years?

Just like there's a difference between dividend investors and yield hogs, there are Tarzans (泰山) out there who may appear to be "Save More" with their risk adverse actions, they are in fact closet market timing "Earn More" speculators!

They are the true contrarians.

In bull markets, they slowly sell into the rally to raise cash. 

Then they WAIT to wash, rinse, and repeat.

As I've alluded to in my previous post Early Adopters and Laggards, it pays to monitor the other market participants out there. Wink.

Know yourself; know your opponents. (Our 5,000 years of Chinese wisdom power or what!?)

CPF Shifting Goal Posts - What's New?

 

Sometimes its just better to steal with pride.

Have fun reading this "lively" post at CW's blog:

Another New CPF Shifting Post Without Informing Affected Members

I would like to take a shepherd's and landowner's angle on the matter. 

As a landowner, I only care how much my shepherd makes or saves for me. Period.

So if a talented or sharp-eyed shepherd comes to me with a presentation to help me save millions by simply tweaking a few simple administrative rules, wouldn't I give this shepherd a raise or promotion!? 

That's the Save More way of scoring brownie points in the corporate world.

To encourage my fellow landowners to keep old muttons in their flocks as long as possible, I have to give them an "incentive" like lowering the landowners' CPF contributions to their old muttons after age 55.

But that would also mean there's a shortfall in the old muttons' retirement as a pay cut is a pay cut...

This is where the enterprising shepherd with his excellent proposal to "cheerlead" CPF voluntary contributions come in. Brilliant or what?

That would make up the shortfall in their CPF after age 55!

Reminds me of the 3 bananas in the morning; 4 bananas in the evening monkey story no?

That's the Earn More way of getting your boss's attention for the win!

When was the last time you did something like that?

Landowners will pay top dollar to get shepherds who can make or save money for them!

Wouldn't you?

Living On A Fixed Income for 30 years After 65

 

In my previous day job as part-time coach to the new potentials in our Leadership course, I often noticed highly educated people (especially those not from the Arts stream) like to do 2 things:

1)  Use excessive "precision" when non is needed.

2)  Like to express and rattle of numbers either to fudge, or to impress.

I had to nudge, poke, coach my mentees to use imagery with words, if they want to be understood better. 

Those of you who writes or likes poetry, you already know words work better than numbers when it comes to impressing the panties off girls!

I give you 2 examples.

In supply chain, we often spew off numbers in cubic metres how much this or that inventory is taking up our warehouse space... 

What's a better way to express these cubic metres?

What if I say we have around 30 x 40' containers of inventory instead?

Even if you never worked in supply chain before, you have seen a 40' container on the road right?

Isn't it easier to visualise 30 of these containers sitting in your warehouse than some abstract numbers in cubic metres?

What if I write in my report it cost us millions in customer returns annually?

Shrug.

We have billions in sales.

How to instill a sense of urgency in your communication?

Now if I write our customer returns is equivalent to the annual sales of 5 retail stores, I'll bet top management will take notice!

Can you imagine day after day, month after month, year after year, 5 of our stores are selling nothing but total crap to our customers!?

When it comes to retirement planning, lots of numbers are just thrown around casually.

Inflation, expressed in CPI numbers, is a number many like to parrot out of context, as if inflation affects everyone EQUALLY... (No, it does not)

If you are depending totally on CPF, and to be precise, CPF Life for your retirement needs after 65, that's a good example of what's it like to be on a "fixed" income. Its the closest to the pension schemes of other countries.

Now let's say you are blessed with long life like lao lee and Mahatir - you believe you can last till age 95.

That meant you'll be living on a relatively "fixed" CPF Life payouts for the next 30 years. 

I know, some of you want to be cute by saying we can choose the CPF Life Escalating Plan. Sure. But how many of you will really chose that plan? (Got you!)

Friend, if you can live till 95, ALL 3 CPF Life plans are same, same lah! Remember the monkey story of 3 bananas in the mornings, 4 in the evenings?

CPF Life sucks if we "up lorry" early. Period.

The trick to squeese blood from stone is live to 100 and beyond!

How to visualise what's life on a fixed income for 30 years?

For old fogeys age 50 and above like me, easy!

Just use our take home pay 30 years ago. 

Now imagine if we never had any pay increments or any promotional pay raises for the past 30 years.

How?

If you take home pay was $10K per month 30 years ago, even after all the price increases all these years, life is good right? Still got left over for wine, women, and song!

If its $5K per month, I mean its still tolerable right? Maybe downgrade a bit from condo to HDB lifestyle as we get older? 

But to the average university graduate, I think take home pay $2K per month 30 years ago is more common. 

Hey! That's around the monthly CPF Life payouts if we decide to tap the CPF Enhanced Retirement Scheme at age 55! 

Well, there you go!

That's a better way to visualise how CPF Life payouts of $2K monthly would be like for you from age 65 to 95.

What?

Not what you thought you needed? 

Well, better to realise it now than wait till you're 65!

For the past 30 years, did your life get better financially?

What did you do?

See?

You already got the knowledge and the tools to help you decide!!!

What vehicles to ride, which path to take. Wink.

No? 

You are stuck financially like you did 30 years ago. Still earning the same $2K monthly.

$2K monthly was new graduate's pay 30 years ago. Now $2K can qualify for Workfare.

Workfare is government subsidy for low income earners... 

(Eh, this $2K can be a metaphor, not only used literally)

Insanity is doing the same thing over and over again expecting a different result,

 

  

Big Daddy's (Not Invisible) Hand Over Property Versus Stocks

 

When we invest or trade Singapore stocks, we don't have to worry about big daddy coming out with equities "cooling measures" to curb the perceived rapid speculative price appreciations right?

No free lunch.

That also meant there's no one to ring the bell at a stock market top...

Which is why in a bear market, the percentage losses is always far greater for stocks over properties. I guess this is not news to old fogeys out there. Wink.

Contrast this to Singapore's properties.

The moment when things get exciting, big daddy not shy to remove the punch bowl to the dismay of all vested interests....

Singapore property investors can't be blamed if they're envious of their counterparts in Hong Kong; US; Australian; and Canadian cities. Their property prices can shoot to the sky and stay there at their lofty levels for years.

That's until they crashed.

That's when Singapore property investors take comfort although we also have our property "crashes" and bear markets, we have less to fall from giddy heights...

Less alcohol from punch bowl, less hangover the next day.

That's something Singapore stock investors/traders found out the hard way - crash got sound!

   

There's another interesting difference. 

When stock market crashes, other countries may manipulate intervene by propping their local stock markets.

Japan is doing directly with their central bank buying ETFs of Japanese stocks. While US and Europe support their stock markets indirectly through "money printing".

We? 

But when it comes to Singapore properties, its not always about property cooling measures... People often forget we do have property boosting measures! 

Let's take the more obvious one like in 2005:

• The relaxation of foreign ownership rules on apartments

• An increase of the maximum loan-to-value ratio from 80% to 90%

• A reduction of cash down payments from 10% to 5% for home purchase

• Allowing non-related singles to use their CPF to jointly purchase residential properties.

 

Then there's the Upgrading and Asset Enhancement for HDB flats. Remember those?

How about big daddy's policy on foreign talents and immigration? 

Population 10 million?

And my favourite of all, HDB subsidies for BTO flats and all those housing grants and what not! 

(Imagine if I buy Singtel or DBS stocks, I can get a grant for staying near my parents!)

So there you go!

You want to drive without speed limits, without annoying big daddy reminding you to wear seat belts, you choose that path.

You like big daddy's warm and reassuring hand holding your bxlls palm, you go that way.

Just know that BOTH paths can equally make, or lose a lot of money.

What?

You don't want to lose money ever?

Well, there's always CPF... (just don't call it investing OK?)

Is Property A Good Inflation Hedge?

 

Well, if you ask old fogeys likes us, those with 30 or more years of life experience after school, the answer is crystal.

Especially for those of us that have benefitted from the past asset enhancement exercises and price inflation appreciation of the past decades.

Together now, "Thank you Mr Shorty!"

But to someone just starting out in your 20s, it can be confusing as there are conflicting messages from all over the place...

Have you read the article below from our nation building institution?

More People Couldn't Fully Repay CPF After Selling Property in 2020

Its like looking at a glass of water with ice cubes - we see what we want to see...

If people can't repay CPF together with the accrued interest of "only" 2.5%, do you think their properties have beaten inflation?

Eh?

Like that might as well use cash to pay property loans and let our CPF money earn that sweet sweet 4%?

Wait a minute. Not so fast!

Read carefully. Its for year 2020! (Its driving using the rear view mirror)

In the article, there's this paragraph:

"In the whole of 2020, private home prices gained 2.2 per cent while HDB resale prices rose 5 per cent."

5%... That beats CPF's 4%; now that's a start! 

Sorry to private property owners though... (But no one crying for you; count in money you still beat HDB heartlanders hands down)

And next sentence below the above mentioned paragraph:

"Flash estimates for last year (2021) showed that private home prices climbed at a faster pace of 10.6 per cent while HDB resale prices surged by 12.5 per cent.

It changes everything! Doesn't it?

That's not what the headline suggests right?

What do you think?

Come this July 2022, want to bet CPF will report more people are able to repay their CPF after selling their properties during 2021?

What's the take away?

1.  Read the actual article! Not just the headlines... LOL! (I know, I know; reading is hard)

2.  Market timing is real. (You can call it Luck if you prefer)

3.  To find a hedge against inflation, you have to first have an opinion (gasp!) on what's the future inflation rate going forward...

Last Nov 2021's CPI is 3.8%. We'll have a 2% increase in GST this year...

If you believe we'll continue to have relatively low inflation rates between 1-2%, then certain vehicles may make sense.

But if you believe the inflation rate would probably range between 3-4%, then certain vehicles will be out... Wink. 

There's a reason why big daddy evaluates GIC and Temasek performance after discounting the global inflation rate.

No worries if you are a koala bear/panda as you buy Singapore local/local properties and stocks only. Just use our domestic CPI figure can oredi! 

4.  Trust but Verify. Do you own thinking. Decide for yourself. Take responsibility.

 

Why 1M65 CPF Acolytes Always Count In Money...

 

Noticed something funny?

When you see Earn More retail "investors" share their end of year portfolio returns, its almost always in percentages.

But when Save More 1M65 CPF acolytes share their end of year CPF "returns", its ALWAYS in money as in dollars and cents?

Why?

To avoid the awkwardness and embarrassment when you noticed you're wearing the SAME shirt or dress as everyone else at a party?

In the immortal words of Oprah Winfrey,

"You get 4%, you get 4%; everyone gets 4%!"

LOL!

GIC versus CPF

 

GIC Celebrates Its Achievements

5% above global inflation?

Fair enough.

I mean its not Temasek.

When you read through the chronological history of GIC, some of you may see what I see:

1)  Great Market Timing Or What?  

Why did Mr Goh Keng Swee bother setting up GIC in the first place? I mean "risk-free" US 10 year treasuries were yielding above 10% in the early 80s!? 

Try figuring out what better long-term returns meant?

When GIC was setup during May 1981, was it blind dumb luck or was it great marketing timing as US bonds were near the bottom of its bear cycle?

2)  Baxxs Bigger!

Early 2000s GIC became more confident and mancho! Less reliant on cash and bonds?

No worries mate! I got it!

Pivot to more public and private equity and real estate!!!

Give GIC a Tiger!

3)  Passive To Active

To some, this may come as a surprise!

2010s to 2020s....

Isn't this the time when passive investing was beating the majority (75%) of active funds handily?

And Warren Buffett won his bet?

Wait. What?

  

I'm having a chuckle right now! 

Feels good.

My poke is safe!

   

Die lah! Your family of 4 don't earn $6500 per month...

Family of four needs $6,426 a month for basic standard of living in S'pore.

Let's round it up to $6,500 per month since I hate "precision" when its not needed.

Which means we can assume the man is making $3,500 and the wife makes $3,000?

(OK, OK. For feminists, we can easily say husband makes $3,000, while wife makes $3,500. There. Happy?)

If husband makes $6,500 per month, to have a better standard of living, the problem is easily "solved" by having wife go back to work. 

I mean their children are not babies right?

My time before maids were popular, when both parents work and children were left at home on their own, they were known at latchkey kids.

Now what happens if a family of 4 only earns $5,500 per month. And both husband and wife works. Die! Below basic standard of living!!!

How to overcome the shortfall of $1,000 per month?

What if I come "selling" the benefits of a dividend portfolio? 

I mean all this couple need is "just" have a $250,000 portfolio of dividend stocks that yield 5% per year. 

Problem solved!

Gee. Thanks!

Wait. 

How do this couple amass the $250,000 capital in the first place?

I mean first they have to increase their income to $6,500 per month, no? 

Unless you tell me the researchers got it "wrong"? $6,500 is not the basic standard of living? Its much lower?

To start saving, its only when their household income is above $6,500 per month before they can afford to save any surplus... Can we agree on this?

To save $1,000 per month, the couple have to increase their household income from $5,500 to $7,500 per month!?

And they would still need 20 years before they can have their hands on that "fabled" $250,000 capital to play the dividend income game!!!

Has anyone spotted the Elephant in the room?

If this couple can increase their earned income by $2,000 per month, is there still the need to wait 20 years for that dividend income!!!???

LOL!

What if the same couple meet the 1M65 people?

Would the 1M65 people awkwardly shy away from any families that make $6,500 and below per month?

Or would the 1M65 people still encourage voluntary contributions to CPF? 

I mean, man up! 

A little bit of austerity never killed anyone. 

Just take $1,000 from their current $5,500 per month and voluntarily contribute to CPF. The interests will compound and compound until...

Look! You both are already making so little mandatory contributions to CPF due to your low salaries... 

Cannot! 

Like that how to survive when you both retire???

No, don't live for today, we must live in the future! 

If we fail to plan, we plan to fail...

"Chotto matte"...

Pray tell how should this family of 4 survive on $4,500 per month again?

Giving advice is easy when the pin don't prick your own skin...

There's another "easy" solution.

Report on minimum income standards not an accurate reflection of basic needs

Well, that was quick!

What if the basic standard level of living income, for a family of 4, according to big daddy's calculation is $4,500 per month?

(Big daddy gives a knowing nod and wink to the 1M65 people. Don't worry. I got your backs)

Problem solved!!!

Invite the researchers for "coffee" for stirring shit?

What do I think?

Well, I know my own feet, I don't need others to tell me what basic standard of living shoes I should wear. 

Who wants "basic" shoes anyway?

I want comfortable shoes. Wink.

There are some ang-moh bloggers who can retire to Phuket or Chiang Mai on $1,500 passive income per month. Tell the whole world they have achieved FIRE before age 35...

Then there are non-HDB heartlanders in our community who would treat any retirement incomes below $10,000 per month as "hardship"...

Its like asking others how much you need to retire?

Now that's a dumb question!

Earn More; Save More.

Do both!

But focus on Earn More if you need to prioritise.

Don't believe?

Show me countries, companies, families, or individuals that achieved prosperity through austerity?

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"...

Ding!

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! 

Inconvenient Truths About CPF Voluntary Contributions

Looking at the title of this post, and reading the CPF contribution rates below, can you see or guess where I am going with this post?

 

Its painfully obvious for those old fogeys that are older than me; I'll be 54 years young this year.

Let's start with a bit of foreplay to make things smoother for youths to appreciate. Wink.

Just look at the Employee Contributions Rates for now.

At age 55 and below, its mandatory (forced) that you contribute 20% of your pay every month to CPF - all the way to the CPF salary cap of course.

Eh?

Once you hit age 56 and beyond, you can contribute less and less? 

So when old fogeys age 56 and beyond share they are voluntarily contributing to CPF, are they?

I mean, they have to voluntarily contribute in dollar amounts beyond what they had previously contributed at age 55 to really meant its extra money into CPF right?

Remember, we are still looking just at the Employee Contribution Rates side of the equation.

LOL!

I think some of you know where I'm going with this.

Mind you, I am completely happy with the current Employee Contribution Rates setup.

I've always liked options.

Some don't. 

Ai yeah! Have to make decisions again!!!

Imagine in an alternative universe, we put the mandatory Employee Contribution Rate at 5%, and allow CPF members to decide how much extra they would like to voluntarily contribute to CPF up to a cap of 25%?

Just saying.

Nah. 

I don't think we are ready yet... 

I'm super impressed with the Swiss for rejecting helicopter money just for being a Swiss citizen,

One day when Singapore is ready for small government; not a nation of daddy's little girls and mama's little boys.

Maybe.

OK, enough foreplay. 

Let's do it!

Get ready for some pain though...

Now look at the Employer Contribution Rates column.

Pain right?

Especially for those of us old fogeys who tasted what's it like to have our employers contribute 25% into our CPF.

My only regret was that I was earning too little at age 16 to really benefit from the higher employer contribution rates then. I mean 25% of $500 is not the same as 25% of $2,000...

But its for our own "good".

I mean if we don't lower the employer CPF contributions (pay cut is pay cut), how can we be competitive? Wait recession how?

Wait a minute.

When CPF was first introduced, I would think there were smart people (scholars?) that did the math to come up with the 25%/25% formula for us to have enough after our retirements at age 55 right?

Did they just pluck the 25%/25% figures out from thin air?

OK, that was then. Now is now.

Especially when we are living longer, have higher standard of living, with ensuing higher inflation (HDB 1 million); and all the wonderful things that come with growth and longevity...

See the irony?

We moved the goal posts on CPF withdrawal age, increased the CPF minimum sum, introduced CPF Life so we can patch West wall with East wall; yet, as we grow older, our CPF contribution rates in percentages are going southwards... 

Even more interesting when compared to the initial 25%/25% contribution rates!!!

What gives?

Of course something has got to give.

They tried it with CPFIS. 

That's the Earn More option for CPF members with higher testosterone levels to close the gap.

That turned out "not fit for purpose"....

Got to feel sorry for big daddy.

He must be face palming himself and muttering, "My children can't do anything without me..."

Sometimes its good to know a bit of financial history to get the total overview.

If more CPF is good, better, best, wouldn't it be better to restore the Employer Contribution Rates back to 25%?

Cannot!

Buy you are most welcomed to voluntarily contribute from your Employee Contribution side anytime!

I see what you did there daddy!

LOL!

Too Young and Too Old for MRSS

 

Ai yeah! 

I'm too young and mom is too old to qualify for:

Matched Retirement Savings Scheme

Eh? 

Aren't I the one who abhor doing voluntary contributions to CPF?

Hello, its only $3,000 lah. 

If lockup $3,000 can get $3,000 extra for "free", why not?

I wouldn't say no to "free" money!

At my age, this "free" $3,000 will come mighty handy for future medical expenses.

Too bad mom don't qualify though...

You know what's interesting?

The article says 53% of CPF members qualify for this scheme.

I'll pause and let you sink in.

Do you see what I see?

The Path Towards Domestication

Dogs came from wolves.

Yes, its one of those examples where a "new" specie of animal is created by man, not the big guy upstairs.

It probably started with some weak, docile, or outcast wolves living off the scraps of man outside the camp fire. Over time, these wolves became so dependant on man that they willingly became man's best friend.

That's the marketing spin.

The reality is one is master, one is servant.



Go to our hawker centres and HDB estates. See the number of pigeons and mynahs living off our scraps?

Notice one thing?

Instead of soaring freely with their gift of flight, what do they do? 

There are no visible chains or shackles tied to their necks, but we know they are fettered.



One of my new evening walking route is the former railway track that has now converted to The GreenWay.

I often see lots of different species of birds living off the land here. Quite fun. From people watching to bird watching! 

Even the mynahs over here don't look the same as the ones that loiter around our hawker centres. Their plumage are in better condition. They chirp merrily.



Success is what you have to sacrifice to achieve it.

I guess some are willing to sacrifice their freedom and independence for it.

How to spot you have a pet mentality?

Easy.

I hope daddy and mommy will take care of me...

I believe the company will take care of me...

I rely on big daddy to take care of me...

Its always others doing the work and thinking for you, while you passive passive just reap the benefits. Look ma! No brains needed!



When the time comes, I'll take as much out as legally possible. 

Just putting it in writing so I can poke myself silly if and when I finally "capitulates".

And grandiose words like independence or freedom will be forever banned from my dictionary...

Meow.

Of course it will happen...

Those who volunteer to hand money to big daddy not affected. 

They probably wished big daddy would remove the cap. Then they can do lock, stock, and barrel! 

What can go wrong?


The rest of us not surprised. The sun rises from the East every morning right?


Unless you think things will get cheaper in the future.


Nah. Of course cost of living would increase. 

Wouldn't it be nice if education, transport, and medical costs can be like the switching of electricity providers? 

A 20% price reduction would be most welcomed!

Why I never mention housing?

Well, housing is like this. When we haven't got our own place, we hope prices would come down. But once we got our own properties, we'll sing another tune... You mean you want property prices to crash -20%?


Its all our fault lah!

Once upon a time in the 50s or 60s, people retire at 55 and die around 65. Your retirement savings only had to last 10 years or more. 

And if we go sell salted eggs at around 65, we won't have to suffer or worry about old age wear and tear medical problems and costs too! 

Life was much simpler then... 

Then everyone started to become like Dr Mahatir.

Be honest. If you take everything out at 55, you think it will last you till 95?


So its more whether you think you can do a better job in "ownself take care ownself", or let big daddy do it for you.

Before you take everything out or try to have as little as possible tied to big daddy (like me), remember big daddy has several advantages you don't have - if you decide to go the DIY route:

1)  Encourage more babies (have to wait 20 or more years; think of them as durian trees)

2)  Bring in more new citizens (working ones can contribute immediately; instant noodles)

3)  Encourage more to voluntarily contribute (can always move the goal posts later)

4)  Worst comes to worst, can socialise everything. There's always negative interest rates. 



And that's the essence really.

Can you ownself take care of ownself?