Wednesday, July 30, 2014

Creativity to reach out to the public

Recently, i've seen increased efforts by the Singapore government to reach out to the public with regards to CPF, Medishield life and even the pioneer generation package. The last video is the most surprising.

Firstly, there were various infographics done up by the Ministry of Manpower to let people understand more on the CPF system. One example seen below:

Secondly, there're advertisements by Ministry of Health on the new Medishield life:

The last one is a song on the pioneer generation package. This is what i just saw on TV awhile ago. Quite interesting i must say. It's in mandarin:

There's also a malay version to share on the Pioneer generation package:

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Wednesday, July 23, 2014

Treat CPF money as real money

There's a lot of perception out there that the CPF money is not real money. People generally are less careful with their CPF money as compared to the money in their bank account. Why do I say that? Let me give you some examples.

These are the common sayings about the CPF

  1. I want to use my CPF to pay for all my housing loan. Using CPF money to pay for a house is better than using cash to pay for a house
  2. I want to use the Medisave to pay for my hospital bills. Using Medisave to pay for hospital bills is less taxing to my current financial health
  3. I don't have to bother about the investments i make using my CPF money. When people ask me to invest in this fund using my CPF, i'm less worried about losing money. 

It is as though people believe that they would never see their CPF monies again and the government just wants to keep it all for themselves. Haven't you heard of your friends or relatives saying just use as much CPF as you can to buy a house? Better not leave your money inside the CPF? 

This is the sentiments that was seen and felt during the CPF protest at Hong Lim Park. Look at some of the placards which people wrote:

I can tell you truthfully that it is not just these people who are believing that CPF money should be released to them earlier. Even my friends and relatives around me have this believe as well. 

Behaviour perspectives on the CPF

During the IPS CPF forum yesterday, one of the panellist, Mr Donald low, made a presentation on behaviour perspectives on the CPF.  Mr Donald Low is a Associate Dean (Research and Executive Education) and senior fellow at the Lee Kuan Yew school of public policy. He said that: "People tend to focus much more on current consumption and discount their future interest heavily". This is why when you have a pay raise, there is always a tendency to spend more now than to save more now. 

He continued to say that "There is a two-selves problem. People often find it hard to imagine their future selves as themselves. Policies that involved delayed gratification, no matter how reasonable and rationally presented, tend not to be too well received." 

If you're at the age of 25 now, can you imagine yourself to be in your 70s? The below photo was shown on the slides being presented:

I bet none of us will think of how we'll be like when we're old. It is probably also why few of us will really think about retirement when we're in our 20s or 30s and some even up till 40s. More often than not, when you realise you need to plan for retirement, it may have been too late. Fortunately for these people who totally forgot that they need money for retirement, they have the CPF to fall back on. But, as i've said before, even with the CPF, most of them will have just the minimum to survive on. A few hundred dollars a month perhaps? Say good bye to the dream retirement of travelling around the world. 

Asset rich and cash poor?

This problem of asset rich and cash poor was discussed in the forum yesterday too. This reminds me of an article on straits times of an old man who lives in a bungalow but he has to eat bread everyday because he has no money to buy proper food for himself. There is an option to downgrade and live in a smaller flat so he can have some cash but it is easier said than done. It is an emotional decision to sell and downgrade and move to a totally new environment. 

The asset rich and cash poor is a result of over using the CPF for housing which leaves them little for retirement. This problem will continue to happen for future generations with our high housing prices now. 

Be prudent when handling your CPF money too. Treat it as your real money. If you want to have adequate funds for your retirement, start with the CPF. Understand how it works and make good use of the system such as taking advantage of the risk free interest rates which is given.

There has been a few useful info graphics that MOM has made the effort to come out with. One of it on CPF interest rates is as below:

Arm yourself with a little knowledge and it could go a long way for your life. Start retirement planning today!

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Tuesday, July 22, 2014

Forum on CPF and retirement adequacy

Those who follow me on my Facebook page would have known that i went for a forum on CPF and retirement adequacy earlier today. I would think in financial and retirement planning, CPF is definitely an important part to know and understand for Singaporeans. There are actually a few pillars on financial planning which i would leave it to another blog post later.

CPF minimum sum

Before i go into the key takeaways for this forum, let's take a look at some CPF members' statistics recently. In 2013, the median cash balances of CPF members' is $126,000. 50% of CPF members met the required minimum sum with 15% members pledging their property. This means in actual fact, those that met the minimum sum without pledging their property is only 35%.

The above figures were a bit worrying for me as the minimum sum of $148,000 in 2013 actually pays a low payout of about $1100. Those who do not meet this amount risk having a lower payout of even below $1000. Suppose they receive $1000 at age 65 currently and live till 85, is this $1000 still sufficient for them 20 years later? Do bear in mind that food prices, healthcare cost and other miscellaneous cost will definitely have increased 20 years from now. For those who receive a lower payout than $1000, it'll be even worse for them.

Do we need CPF at all?

Moving on to some questions that were posted during the forum:

1) More than 40% of women aged 25 and above drop out of the workforce which causes them to not have enough CPF savings for retirement. How do we address that?  That is also why some 50% of the population can't meet the minimum sum because they are not in the scheme at all.

For this question, there wasn't a direct answer to this issue. However, in my opinion, for those who're not working where they do not have any CPF contribution, they should actually plan for their own retirement instead of relying on the scheme itself. CPF allows members to voluntary contribute money into their CPF accounts if they would like to save for retirement. Whether they will do it or whether they trust the government with their money is another issue.

2) With the CPF system, does it mean that people will be less careful with their money and not plan for their own retirement since they think that CPF will take care of their retirement in old age?

For the next question, it was quite related to what Minister of manpower Tan Chuan-Jin's question to the audience. He asked us: "Some may say let them take care of their own money. Do we let individuals save for their own retirement or let the CPF do the job?"

It was said that statistics shows that most people underestimate how much they need for retirement. There is always a tenancy to consume more now than to save for the future. If saving money is a problem, we don't even have to talk about investment as its an even more complicated process than just saving money. However, investing is also an important part of retirement as we need to grow our money to prevent it from depreciating due to inflation. Try asking those who saved money in the past but did not invest and they will tell you that they still don't have enough to retire on.

Retirement planning is a complicated process. Most people do not have the knowledge or the time to manage their own money. That is also where the role of a financial advisor comes in. If everyone wants to manage their own money, then we do not need financial advisers any more. CPF works in a way that it helps to cater for our basic retirement needs. It has the savings portion, the investment portion where it pays a guaranteed interest rate and a medical portion where it helps to take care of our healthcare needs. With the Medishield life, it enhances the healthcare portion to another level.

CPFIS and the interest rates of CPF

"CPF monies are invested by the CPF Board (CPFB) in Special Singapore Government Securities (SSGS) that are issued and guaranteed by the Singapore Government. This assures that the CPF Board will be able to pay its members all their monies when due, and the interest that it commits to pay on CPF accounts.As the Singapore Government is one of the few remaining triple-A credit-rated governments in the world, this is a solid guarantee.The proceeds from SSGS issuance are invested by the Government via MAS and GIC, just as it invests the proceeds from the market-based Singapore Government Securities (SGS)." -Quoted from Ministry of Finance website

The above is how the CPF monies are invested as stated in MOF website. It was said by DPM and Minister for Finance, Mr Tharman Shanmugaratnam that GIC's 15 year annualised return is about 5%. However, we have to note that this return is not the return for investing CPF monies only. GIC manages all government assets and this 5% annualised return is for investing all assets that GIC manages. CPF is just a part of it. In simple terms, the returns for only investing CPF monies may be lesser. To me, CPF already offers an attractive risk free guaranteed interest rate on our CPF monies to the tune of 5% on the first $40,000 of our CPF SA account. It is impossible to find any other risk free rates as high as 5% in the market currently. Of course when interest rates increase in the future, CPF interest rates will increase as well as seen in the 1980s where interest rates were as high as 6.5% even on the OA account.

Of course, those who want to invest their own CPF monies can do so through the CPFIS. However, we have to take into considerations of the risk free rates of minimum 2.5% given to us. Are we able to beat this rate should we invest the money ourselves? It was presented at the forum that 85% of CPFIS earn less than 2.5%. Within it, there are cases of those who lost money. Interestingly, it was also presented by one of the panalist that CPFIS rules are mostly relaxed during the peak of a market. New products are also launched during that time which cause financial institutions to aggressively promote the products under CPFIS during a market cycle peak. This may have indirectly cause the poor performance in the CPFIS. Only 15% manage to beat the 2.5% risk free rate? That is quite low indeed.

That's all for my short post on the key takeaways of the forum. Thank you Institute of policy studies (IPS) for organising this and for inviting me to this fruitful session. There were many other questions and issues raised which I will not write today. Maybe some other day perhaps.

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Related Posts:
1. All about CPF minimum sum and CPF life
2. Queries on CPF minimum sum - Pledging your property
3. Will we have enough CPF savings to retire on after using it for housing?

Friday, July 18, 2014

Will we have enough CPF savings to retire on after using it for housing?

We all know that housing prices are much more expensive than it was 20 years ago. When my parents bought our 4 room flat, it only cost $70,000. Now, the price is as high as $350,000. A young couple who buys a new HDB flat will most likely be paying about $280,000(after subsidies) for it. If they take a loan from HDB, the monthly instalment works out to be about $1100 per month. This have to be paid for the next 25 years. Assuming this couple buys the house at 27 years old, by the time they finish paying, they will be 52 years old which is very near the age where they will be allowed to draw out any amount of their CPF above the minimum sum.

Not sure about how the CPF works and what is the CPF minimum sum? Read my earlier post here: All about CPF minimum sum and CPF life

There were some concerns from the public out there which i've gathered:

  1. Will we have enough CPF savings to retire on after using a substantial amount for housing?
  2. Will we be able to meet the minimum sum by the time we reach 55? How much will the minimum sum be then?

High housing price leads to depleted CPF savings?

The CPF savings from the ordinary account can be used to pay for housing. I was curious whether youngsters my age will still have enough CPF savings to retire on after paying for housing for the next 25 years? How much CPF savings will we have by that time? So, i decided to do some calculations using a formulated excel spreadsheet i designed myself. 

Young person earning $3000 starting salary

Before i show the results of the calculations, there are some assumptions for the calculations:
  • Each person earns $3000 starting pay and starts working at age 25
  • 4% salary increment every year
  • Housing loan of $550 per person every month paid from CPF OA account (assuming cost of house is $280,000 and taking a loan of $252,000 for 25 years)
  • Husband and wife shares 50-50 of the cost
Let's say this person buys their house at age 27, this is what his CPF account would look like for the first 3 years:

On the third year, his CPF OA account is totally wiped out to pay for the first instalment of his house. 

The next few years are shown below:

The various different contribution rates of the CPF and interest rates have been taken into considerations. The first $20,000 of the OA earns 3.5% interest and thereafter 2,5% interest. The first $40,000 of the SA account earns 5% and thereafter 4%. The OA contributions rates are 23%, 21%, 19% and 13.5% for different age brackets and the SA contribution rates are 6%, 7%, 8% and 9.5% respectively. Also, CPF contribution is up till $5000 monthly salary. Any salary after that is not subjected to CPF contributions. For more info on CPF contribution rates, click here.  

With a 4% yearly salary increment, this person would have hit $5000 monthly salary at age 39. At the end of age 55, this person would have $198,408.63 in his OA account and $231,939.04 in his SA account. There is an additional medisave contribution which when exceeded the medisave minimum sum of $43,500 will be transferred to the SA account. This works out to be an additional $197,006.55. Total in OA and SA combined is $627,354.22. This seems like a decent amount at age 55. However, this is based on current conditions where the CPF minimum sum is at $155,000. How much will the CPF minimum sum increase to 20 years from now will be unknown. But even if the minimum sum increases to $500,000, this graduate would have no problem meeting it at age 55.

The above illustrations is for a young graduate who is assumed to have earned $3000 starting salary at the age of 25 and 4% salary increment every year. It does not reflect any bonus payments, retrenchment scenarios or whatsoever. Will $627k be enough to retire on 30 years from now? It may not be so. 

Young person earning $2000 starting salary

Let's bring it a step further by calculating for a person who earns a lower salary say $2000 and only 3% increment every year.

There is an interesting finding for a person who only earns a starting salary of $2000. This person will not have enough CPF savings to pay for the first 10% down payment of the $280,000 HDB flat until the age of 28. The down payment cost will be shared in a 50-50 ratio between husband and wife. 

At the age of 28, we can see the CPF OA account again goes to zero and remains at zero for the next 3 years till age 31. This is because, this person's CPF contribution to his OA is below $550. Thus after paying for the housing instalment, he's left with zero. In fact, he'll have to fork out some cash for that 3 years to pay for housing loan instalment.

The rest of his CPF savings until age 55 is shown below:

The verdict? This person who starts out with a salary of $2000 and 3% yearly salary increment will have $52,736.75 in his CPF OA and $167,429.75 in his CPF SA at age 55. There is an additional medisave contribution which when exceeded the medisave minimum sum of $43,500 will be transferred to the SA account. This works out to be an additional $123,535.19 in his SA account. Total available for retirement for him would be $343,338.04. 

Will CPF minimum sum increase to $500,000?

We know that CPF minimum sum has been increasing yearly from 2003. During the CPF protest last week, it was said that the CPF minimum sum will increase to $500,000 and most young people would never get to see their money again. Is this possible?

The current CPF minimum sum is $155,000. Based on this, one can expect to receive about $1200 per month under the CPF life scheme. If the minimum sum increases to $500,000, all else remaining equal, one can expect to receive at least >$3600 monthly. This is quite a decent sum of money. However, we will not be able to predict the standard of living at that time. Prices of food may have doubled or tripled with your normal chicken rice at $8-$9 instead of the $3 we have now. The CPF minimum sum is increased for the same purpose of catering for a higher standard of living.

Singaporeans can't meet minimum sum?

If Singaporeans can't meet minimum sum, it's not because the minimum sum is too high. Rather, we should look at whether these people have enough to retire on? They may only be getting a few hundred dollars per month if their CPF savings is low. If they only depend on CPF savings to retire, then it'll surely not be enough. The sad truth is they may have to continue to work to an old age in order to just survive unless they have their children to take care of them. Many people suggest to let those people who don't meet the minimum sum to draw out more at age 55 instead of the current $5000 only. But however, if they are allowed to draw out more now, they will have lesser in the future. They may be able to retire now, enjoy for a few years then be forced to go back to work in their 60s again.

$2000 salary can retire comfortably?

The person in the above example with $2000 starting salary and 3% yearly salary increment can afford to retire with $340,000+. This doesn't seem like a lot of money especially when its 30 years from now. If this person knows that the CPF may not be adequate for him to retire on, he can start to have an alternative retirement plan for himself through his own private savings or even voluntary contributing cash into his CPF account. He can also consider transferring some amount from his CPF OA to SA to earn the higher interest rate of 4%. If he has investment knowledge, he can also invest his CPF money prudently under the CPF investment scheme(CPFIS).

CPF is a first line safety net. However, it may not be enough for some to retire on

Even with the CPF system, some people may still not be able to retire as seen in some of the cases in Singapore currently. The problem is people may rely too heavily on a system and leave retirement entirely to the CPF. They continue to spend all the money they earn without having any personal savings. If the government wants everyone to retire comfortably, they can raise the CPF contribution rates but they will not be able to do it easily. Even with the current low contribution rates, people are already making noise and protesting on it. I would think even the minimum sum is on the low side as with $1200 a month, it's not a lot of money.

Create your own CPF system

It is always prudent for us to plan for our own retirement aside from the CPF. If you want to retire earlier than 55 or 65, then plan it yourself. Create your own CPF system: "Personal Savings, Personal investment portfolio and personal passive income". This is the financial freedom system. A system we can all strive to achieve.

Lastly, curious to know how my excel spreadsheet looks like after all the calculations? Here's a sneak peek:

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Related Posts:
1. All about CPF minimum sum and CPF life
2. Return our CPF?

Sunday, July 13, 2014

8 Tips on how to save money to travel the world when you're young

Travelling the world need not be done only when you're retired. Many people dream of travelling the world when they have the money but it need not be the case. You can travel around the world even when you're young. When we're young, we have all the energy but not the money to travel the world. However when we're old, we have all the money but not the energy to travel the world. There's a solution to this. Here's 8 tips on how to save money, plan and execute your inexpensive free & easy travel the world dream.

1. Get Cheap air tickets
Air tickets are cheap nowadays thanks to the increased competition even on budget airlines. Fancy a $200 air ticket to Taiwan and $300 air ticket to Japan? These prices have been offered before and I've seen it at least 2 times if you're flying off from Singapore. The prices already includes taxes and it is 2 way with return inclusive. There's no longer a budget terminal in Singapore now so you can fly off from the comfort of Singapore's Changi Airport's main terminals and enjoy the facilities and shopping along the way.

The trick to cheap air tickets is to be in the know of promotions from airlines companies. You can sign up for their newsletter by email or follow them on their Facebook page. I personally got a $200 two way ticket to Taiwan just because i followed and liked the Scoot airlines Facebook page. There are promotions from Singapore airlines too if you're not fond of taking budget airlines. My friend got a ticket to Japan for $600 on Singapore airlines. Sounds good? The promotions are getting more aggressive as more competition arises. It's good news for passengers like us.

2. Get cheap accommodation
Apart from the airfares, accommodation will be your next biggest expenses for travelling. Try to plan at least 1 month ahead of your travelling date to compare hotel prices in the country you're visiting. If there are recommendation from friends or family members, it'll be even better as often they will get you the best budget deals with good quality. The last thing you want to have is to find a cheap room but you don't enjoy it at all.

If there are no friends or family members to recommend hotels to you, you can actually still search it easily on the internet. Websites like offer the best hotel deals which i use all the time to compare and source for good and affordable hotels. They actually rate the hotels in terms of the reviews they received from guests who stayed at the hotel before. There are pictures of the hotels clearly shown and also they collect guest reviews and feedback of the hotel services, room conditions and even the breakfast that they serve. Reading the reviews of other hotel guests gives you a good idea of the service you would expect from the hotel when you get there.

Zuji Singapore offers all in one airlines and accommodation packages. They have a package to Bangkok for 3 days 2 nights for $300 per person. This includes a 2 way air ticket by Singapore airlines and 2 nights stay in a 3 starts hotel. They also have 4 day 3 nights packages to Vietnam at $300 per person also. Of course these packages are promotional items and is only limited for a period of time. Make sure you sign up for their newsletter too.

So, its easy to find the best hotel deals. Just search the areas you are going to visit, sort the hotels by reviews and compare the prices. Then, read the reviews, see the pictures and the locations and decide if you want to stay in it. Every time when i follow the above, all the hotels i stayed in are what i expected it to be.

3. Get familiar with the city on the first day
You need to know where you're going so you don't waste too much time and money. It is important to stay in the city near the airport on your first and last day. The first day is to get familiar with a foreign country and to plan your necessary routes out of the city for later dates. Set aside one day in the city and stay overnight there. You will be able to get your needed train tickets for the next day, a public transport concession card and all other stuff that you need.

For your last day, it's better to end back at the city and stay the night which is near to the airport so you got enough time to pack your luggage and enough time to reach the airport. You don't want to end up rushing to the airport and in the end still miss your flight. If that happens, it'll be a holiday ending in disaster as you'll not only have to fork out extra money to take the next flight home but worse still spend the next few hours or days staying at the airport with absolutely no comfort.

4. Get prepared in advance
Before you even travel on a free & easy trip, make sure you do your research a few months before your travel date. Google is your best friend in searching for suitable itineraries, places to visit and how to get there. You'll most probably find some blogs where other people wrote on their own personal overseas trip. Some are kind enough to list down the places they visit, the transport they took and even the cost involved. This will greatly help you to budget for your trip and save money in the process.

5. Get on the local public transport
To me, travelling is about experiencing the local culture. The best way to experience that is to get on the country's own public transport system. You'll see adults getting to work, children going to school all on the bus and trains in that country. I still remembered i took a public bus from Taiwan's airport to the city and along the way, many adults were getting on the bus to get to work. It does feel weird to see local people going to work while i'm here on my first day of holiday.

Public transport is also the most cost efficient way for you to travel. Some countries do have discounted rates on public transport such as Taiwan where you can buy their concession card at any train stations. In Japan, they have the rail pass specially for tourists. You just have to pay a fix rate and you can travel unlimited on selected trains and bus services. How cool is that?

6. Get to the local food centre and restaurants
Tourist places have tourist prices while local places have local prices. When you're looking for food, avoid the tourist areas as the prices will most probably be marked up substantially. Find the local food at the small alleys or where you see mostly local people. Chances are the prices will be cheaper too. Also, food will be more authentic at these local places compared to tourist destinations. It's like would you rather have a meal at Singapore Zoo or would you have a meal at a local hawker centre if you're living in Singapore?

7. Get to the right places to shop
Shopping is what most people would do especially if you have ladies travelling with you. However, you do not need to buy everything you see in that country. It'll be foolish to buy something of the same type and brand with the same prices in your home country. Not only you waste the money but you also waste the strength to carry the item you bought all the way back home. Unless it's much cheaper or it's something you would not find back home, you should probably give it a miss.

8. Get the right currency
Changing your home currency to a foreign currency may sometimes be confusing. Most of the time, you'll see either more zeros or less zeros as compared to your local currency. If you changed your local $1 for $10,000, make sure you do not mistaken it as $1000. If not at the end of your trip, you'll realise you spent 10 times more than what you actually planned for. It's a complete disaster.

Believe it or not, many places can be visited at below $1000 per person. I went on a 8 days Taiwan trip at only $705 per person. You can read my previous post on my Taiwan trip here: My 8 days Taiwan trip all under $800. I'm thinking Japan can be travelled to at below $1000 also. That's if i manage to get the $300 airfare when the next promotion comes. The dream of travelling the world when you're young can be a reality. Now how about you? What are some of your travelling saving tips?

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Related Posts:
1. 8 days Hanoi, Halong Bay and Sapa trip at $600

Tuesday, July 8, 2014

Taking risks without killing yourself

Risks is always associated with investing and business. People view the stock market as risky and also starting a business as risky. These people may often be your parents or even your colleagues and your friends.

Most young people like risks while older people prefer to avoid risk and go for stability. Young people may like to drive recklessly and speed on the road thinking it is fun. Young people may speculate in stocks trying to make a quick buck. They may also want to start a business.

Risks cannot be avoided and there's a saying that without risk, you won't be successful. Stepping out of your comfort zone is taking risk. But here, i'm not talking about this kind of risk that will propel you upwards. I'm talking about the risks which will kill you either emotionally, financially and hopefully not physically.

The risk that kills

"You have got to keep trying, and if it doesn’t work, you always can revert back to what you were doing before". - Jack Ma. 

The above phrase is written by Jack Ma who founded the popular internet company: Alibaba Group. He's one of the billionaires in China. His words are an inspiration to whoever who wants to be successful like how he has done it but if used wrongly, you can be in deep trouble.

Most people know starting a business is risky. You may end up losing money and then you really have to revert back to what you were doing before. In fact, most businesses fail before they succeed and thus you have to keep trying. But, if you take on too much risk the first time, you may not even have a second chance to try. Let me explain further.

Let's say 2 young persons wants to start 2 separate businesses. Let's call them Dick and Harry. Dick wants to start his business which requires a capital of $100,000. However, Dick only has $10,000 in his bank account so he borrows from friends, relatives and strangers. These strangers can be banks, financial institutions or even loan sharks. Dick manages to get the $90,000 and starts his business even though he has no prior experience.

Harry on the other hand wants to start a business which requires a capital of $30,000. Harry already has the $30,000 in his bank account so he has no problems coming out with the money. Harry starts his business also with no prior experiences.

Both businesses fail and they were forced to close it down. Dick loses the $10,000 which he has initially and is another $90,000 in debt. He has no choice but to go back to his 9am-6pm job which earns him $3000 a month. Harry is more lucky. He loses the $30,000 which he has and does not have any debt. He goes back to his 9-6 job and earns the same $3000 a month.

In 1 years time, Harry manages to save $20,000 and starts another business with 2 other partners. However, in the same one year, Dick only repaid $20,000 debt and is still $70,000 in debt. He wants to start another business but has no capital. He tries to borrow from his family but they did not lend him. He turned to his friends but they did not trusted him. He cannot get any loans from banks as he has a bad credit report. Dick continues working for the next few years just to repay his debt.

In the story above, both businesses failed but one is able to try a second time while the other cannot. The situation for the latter one may have been worse such that he may fall into depression, lose his confidence and may even commit suicide. This is the risk that kills.

Leverage increases risk

Leverage is using money which you do not have. It is the most common cause of bankruptcy. Leverage can increase your potential for making money but will also magnify your potential of losses. In the investing world, these can be derivatives such as Options contracts, Futures contracts and also CFDs. The popular Forex trading also uses leverage. By using these leveraged instruments, always know the risk that you're taking. If you trade too big and can't control your stop losses, then it's indeed very risky.

In business, leverage is simply using borrowed money to do business. If you borrow too much and the business fails, then you're in deep trouble. Instead of borrowing money to start a business, try forming a partnership to chalk up the required capital. In this way, you're not the only one taking the risk entirely.

Avoid the risk that kills

To be successful, you need to take risks. But, learn to take calculated risks. To finish a race, you have to stay in the race. If halfway you're forced to leave the race, then you have no chance at all. As long as you are still in the race, you can fall and stand up again and carry on. You will still finish the race. Remember the story of the tortoise and the hare in a race which you probably heard in school? The tortoise won the race even though it was much slower than the hare. The hare was faster but decided to take a nap halfway. It's like a person who thinks he's fast and forgets to manage risk. Sometimes, slow and steady wins the race.

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Sunday, July 6, 2014

Is Singapore still the same SG as before?

I was feeling nostalgic listening to some old national day songs late into the night. This brings back memories of when i was still in school. Good old simple days in the 90s. Then i remembered its going to be Singapore's 49th birthday in about a month's time. As a Singapore based blog, i shall do my part in promoting the Singapore spirit. Haha

Here's the national day theme song in 1999:

Now 1999 where was I? Oh i remembered, i was in primary 5. Those days in school we had to sing along the national day songs on every national day celebration. There's also this thing called the Sing Singapore. I believe they still do that in school now. It has been 15 years since that time and the songs still bring back memories of times in school. There is also a strong national identity.

These days, I've been seeing a lot of unhappiness with the government and more and more protest at Hong Lim park. Maybe all these were there all along but just that i didn't notice until i grow up now? Or did it just happen recently? Have the Singapore spirit dwindled down over the years because we have developed so much? 

To me, no matter what, Singapore is still a home where my family and friends are. It is a place i'm born and grew up in. It is a place of good memories. Singapore has developed over the years and has changed a lot. It was not easy for us to be where we are and we should always remember how tough life was back then. Of course i didn't went through the tough period but at least heard from my parents and grandparents. 

The popular national day song: Home

A country is built on its people. It's all about relationships. I hope Singaporeans can stay as united as ever and this is our home. When we travel overseas, we will always have a sense of belonging to our home country and feel good when we come back. 

Remember the song Count on me Singapore? The lyrics are meaningful until now. 

"We have a vision for tomorrow, just believe, just believe
We have a goal for Singapore, we can achieve, we can achieve
You and me, we'll do our part, stand together, heart to heart
We're going to show the world what Singapore can be
We can achieve, we can achieve"
"There is something down the road that we can strive for
We are told no dream's too bold that we can't try for
There's a spirit in the air, it's a feeling we all share
We're going to build a better life, for you and me
We can achieve, we can achieve"

I was helping out at the Singapore youth Olympics games a few years ago while i was serving national service(NS). The Olympics games was a proud moment for Singapore to showcase itself to the world. I could feel the dedication of the organisers and the performers for the opening and closing ceremonies. It was a once in a lifetime experience. A lot of effort was put into the games itself. Let's be proud of our country and there will certainly be greater things ahead. We can all make a difference together.

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Friday, July 4, 2014

How to save money the automatic way

Do you find it difficult to save money? Everyone of us know we need to save at least some money but somehow, some of you may find it difficult to save up. Maybe you need to save up for your wedding, for your honeymoon, for your new house or even just saving up for rainy days or retirement but you always fall short of your target. How can you make saving money easier and perhaps on a automatic mode?

If you're saving up manually, it's very troublesome. You have to monitor your budget and control your spending, you have to be disciplined and consciously to put aside an amount every month. It's so troublesome that many of us give up halfway. The good news is, all these can be eliminated.

Automatic saving using technology

We live in a world where everything connects together instantly. Information travels at the speed of light and is available everywhere. We can use this technology to automate our savings plan.

For example, let's say you are aiming to save up $25,000 for your wedding and another $25,000 for your new house, this adds up to an amount of $50,000. Does it seem a lot to you? In fact, this is the minimum CASH which you'll need if you want to get married and buy a house in Singapore.

This was written in my previous posts:
How much money is needed to get married and start a family in Singapore?

Now, don't be afraid of the figure. Let me show you how to automate the saving process to lessen your burden.

Step 1
Open up a new savings account. This can be a joint savings account if you'll like to save as a couple. Can be from the same bank or different bank. It doesn't matter.

Step 2
On your existing savings account (which you credit your salary into), set up an Internet banking account if you have not then login and add a new payee for fund transfer.

Step 3
Set up a standing instruction to transfer a fixed amount to your new savings account which you just opened. You can select the fix date which you want to transfer and select the transfer frequency to monthly. Every month on your selected date, that amount will be transferred automatically.

Step 4
Just sit back and relax and your money will grow automatically. You're on your way to your savings target without having to think much about it.

A word of caution

It is easy for you to set up an automatic savings plan with internet banking but however, it is also easy for you to withdraw and transfer out the money from your savings account. After you make the decision to save, remember to never never use the money in your new savings account for any expenditure. Perhaps you can put it into a short term fixed deposit account after it has accumulated a substantial amount of savings to prevent you from drawing out too early.

Also, when you have lesser cash, there is a tendency you will use your credit cards. If you can't control your spending, then using credit cards may make you even worse off than before.

Saving money is easy

Set a target amount you want to save then set up the automatic savings process. If you want to save $50,000 in 2 years, set up the standing instruction to transfer about $2000 monthly to another savings account. After that, everything is automatic.If all goes well, in 2 years time you'll see $50,000 cash inside your account. Make your new savings account as inaccessible as possible so you cannot withdraw any cash out from the ATM. Only leave the money you can spend on your usual spending account. Try it and see if it works for you. It has worked out well for me so far.

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Related Posts:
1. Financial planning with your needs and wants
2. 35 and totally broke or $100K savings by age 30?

Wednesday, July 2, 2014

Get free $60 cash with Dash - by Singtel and Standard Chartered bank

Who doesn't like free money when it's given out? I just signed up for a new Dash account and was instantly given $10 cash deposited inside my account. To get another $50, you just have to put in $8000 into the newly opened Dash easy savings account by 31 July and $50 will be credited to your account by 31 August 2014. Another thing is the savings account lets you earn higher interest rates up to 1%. It is currently at 0.3% and is still going up. Opening the account can be done easily and entirely through your phone. Don't even have to go down to the bank. Just download the app from Apple's app store or Android's play store.

What is Dash?

They have been aggressively marketing this and i've seen the whole MRT train filled with posters of it. Dash is an innovative mobile money service created by SingTel and Standard Chartered. Yes, the Telco is gaining its foot into the financial industry. Dash lets you send cash to friends, spend at shops and cabs all on your mobile phone. The savings account also lets you save at higher interest rates up to 1%.

I think this is just the beginning of what is to come in the future. When it gets more popular and more retail shops and businesses accept this form of payment, it will definitely revolutionise the way we pay for the things we buy or the services we engage. The idea is to make money easily accessible without the need of an ATM. 

Currently Dash partners includes:
ComfortDelgro Taxi
KOI cafe
Pizza Hut
Prime Taxi
Singtel Shop
Topshop Topmen
Dorothy Perkins
Ben Sherman
and a few others...

As mentioned earlier, open an account and you will get a complimentary $10. Don't need to go down to the bank or mail in any documents. Everything can be done on the app itself including uploading of your NRIC. For more information, please visit

This video gives a good overview of how Dash works:

*Disclaimer - This is not a sponsored post. This is what I have personally signed up for and tried it itself. 

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Tuesday, July 1, 2014

A night of experience with Japanese food

I have written on the Japanese economy and invested in Japanese properties. Today, I had the experience with Japanese food and find out why they are so popular even in Singapore.

My first stop was at Ramen play which sells amazing Japanese ramen with one of the best soup I've ever had. This concept was brought from Japan to Singapore by the well known BreadTalk group. BreadTalk is a very successful business with its restaurants and bakeries positioned almost everywhere in Singapore. I've ate at its the popular Din Tai Fung, bought bread from its BreadTalk bakeries and also had breakfast at toastbox before. Ramen play is a first time experience for me.

I ordered a double soup cha su ramen for $12.80. The presentation of the ramen was fantastic. With the lighting in the restaurant positioned in the right place, the noodles seems to be shining directly at me.

Can you see the bowl shining out?

The restaurant was quite packed at dinner time. Business is fairly good. There is no doubt about the quality of the food but of course the price is a bit pricey. But if you compare to other restaurants such as Ajisen, this is actually quite competively priced. So far, I've been impressed with all of Breadtalks' business concepts. They indeed focus a lot on quality which has gained them many loyal customers and a good brand name. No wonder their share price have been constantly rising. Those who've invested in the company in the early days probably are laughing away till now. 

The next stop was an experience in a place called the ministry of food. Similarly,  they also had a Japanese theme concept restaurant. I only had deserts there and these are the food I ordered to be shared with a friend:

A green tea shake and a red bean shake. Apparently, Japan is famous for their green tea and red bean. 

Red bean paste with Japanese dumplings and green tea ice cream

Ice cream with assorted fruits and Japanese Kanten Jelly

Ministry of food is a Singapore based company which started in 2006. The restaurant is fully packed even at 9pm. Their business is really good. They have a good environment for you to relax and chill in. Their menu really have a lot of deserts to choose from. I think I counted over at least 20 different deserts. However, price is not cheap. For that few deserts, it was already $34. 

That's all for my once in awhile indulgence. June is a month of bonus and pay increment for me. I also just got a small promotion on my job. Another good news is I'm already half way towards my 100k target by the age of 28. Even after all these indulgence, my financial state is still healthy and I'm still on track. 

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