Funny Encounter with Jeane

Recently, my youngest daughter, Jeane, learnt that babies come out from mummies' tummies from the new storybooks I bought her. Book such as 'Where do I come from?'.

As my brother's baby is staying together with her now, she also wants me to give her a new baby to accompany her. She told me she really wants to have another baby to play with her, so she kept asking me: "Mummy, when are you going to have a baby?" Then I told her definitely not so soon.

Thereafter, everyday, she will randomly touch my tummy, put her ear on my stomach and ask:" Mummy, do you have a baby in your stomach? When is your tummy going to grow bigger?" Whenever I heard such questions, I will realise kids are so innocent and adorable. No wonder parents always have their kids' interest in mind and do not mind spending so much on their kids nowadays. I can imagine how much love is showered on a child if he/she is the only child in a family.

Llast week, I went to KKH to buy her medication for the next three months. Then she called and I answered. She asked me where am I. I told her I'm in the hospital  buying her medicine. Suddenly, beside me, a baby boy burst out crying. Then Jeane asked me:" Mummy, is your baby coming out now?" And I laughed out loud with a duh "-____-" face.

Are you saving enough? The Rising Costs of an Overseas Education

TYPE in "college costs" on Google and get suggested search options like: "college costs too much" and "college costs out of control". If you are planning to send your children to further their studies overseas in future, this article would help you gauge if you are really saving enough.

Universities now face rising costs, and it's politically easier to charge international students more instead of making local students pay. Singapore has done the same, sharpening the distinctions between citizens, permanent residents and foreigners. Singapore parents who want to send their kids abroad will have to deal with ever-increasing fees and higher cost of living, especially in big cities like New York or London. The decision to opt for overseas education depends on financial ability, their children's own capabilities, and the course they are studying. It is not a light one to to make. 

Parents need to have sufficient resources and factor in generous estimates of how much the education would cost. Financially speaking, unexpected fee increases, exchange rate fluctuations, and other unpredictable circumstances such as parents becoming unemployed or falling ill can combine to make costs unaffordable for many families. You would have to make the smart decision on whether a local or an overseas education would be better for you and your child.

More information can be found in The Business Times

Lifetime claims limit might be removed in MediShield Life

Medishield Life, a new solution to assist Singaporeans for an affordable health care.

Everyone can be Financially savvy

Changing the way you  pay for your expenses can add up to extra savings. Get more out of your every dollar.

While Singapore’s year-on-year inflation eased to 1.5 per cent in December, many people still worry about the cost of living. Moderate inflation is considered to be a sign that a country’s economy is healthy, as this means that there is a steady demand for goods and services. This does, however, mean that household expenditure —  which includes items such as housing costs, food, recreational activities, transportation and healthcare — has increased over the years. The most recent report on the Household Expenditure Survey, published by the Ministry of Trade and Industry’s Department of Statistics in 2009, showed that Singaporean households spent a monthly average of S$3,764. This is estimated to be about S$4,358 today based on an average inflation rate of about 3.1 per cent per year from 2009 to 2013, also according to figures released by the Department of Statistics.

PLAN EARLY, PLAN AHEAD

Keeping these increasing costs in mind, it is important to start saving early. Most financial experts suggest putting aside at least 10 per cent of your gross monthly income.  

At the same time, your total debt re-payments, which include personal, education, car and housing loans, should not be more than 35 per cent of your monthly salary, according to MoneySENSE. While it may sound tough, saving money does not have to be a painful task. 

One way you can stretch your dollar is to cut down on unnecessary expenses like frequent restaurant meals or splurging on expensive items.

This is the 14th story in a 19-part collaboration between TODAY and POSB

Singapore expected to be No. 2 on ultra-rich list by 2023

next previous

SINGAPORE is tipped to have the second-highest number of ultra-rich people among the world's cities by 2023, a new report says.

London would be in the top spot, according to the Wealth Report released by property consultancy Knight Frank yesterday.

Singapore would also be the Asian city with the most people with at least US$30 million (S$38 million) in net assets in 2023, beating Tokyo to the top spot.

"Singapore is growing in prominence (in the) wealth management sector and as a key regional financial hub," Ms Alice Tan, research head at Knight Frank, said at a briefing. "Over the medium term when (the ultra wealthy) want to look at other factors to invest or base themselves, they look at quality of life, education system, cultural similarity in other regions in Asia. So they start to see Singapore as one key bright spot."

She added that a conducive business environment and tax regime, political stability as well as the Republic's rising status as an important financial hub have underpinned Singapore's popularity with the ultra wealthy.

The report, based on a survey of 23,000 respondents each worth US$68 million on average, predicted Singapore will have 4,878 of these wealthy people in 10 years, up 55 per cent from last year.

New York would topple Hong Kong to take third place in 2023.

Although the report noted that Singapore is now in third place as the city that mattered most to these wealthy individuals, Hong Kong will leapfrog Singapore to take its place in 2024 because of its role as a gateway city to China.

"The main battleground is Asia, where a handful of locations are slugging it out in the hope of establishing a clear lead as the region's alpha urban hub," said Mr Nicholas Holt, Asia-Pacific research head at Knight Frank.

Asia was also tipped to be home to 58,588 people with more than US$30 million in net assets in the next decade, overtaking North America, while the number of billionaires in Asia will also surpass Europe's.

Separately, Singaporeans with more than US$30 million in net assets chose their home country as the most popular place to buy an investment property. This was despite seven rounds of cooling measures, and stricter financing rules.

- We have to start saving now and take charge of our wealth as well, regardless of how small an amount we have or start with. When we reach our retirement age, we don't desire to be the richest, to be among the private banking group, but we should strive to stay in the middle group wherever possible, and be part of the mass affluence group.
More information can be found in Straits Times Money

Singapore now the world’s most expensive city: Economist

SINGAPORE — Singapore has topped the Economist Intelligence Unit (EIU) list of the world’s most expensive cities to live in, according to the 2014 list released yesterday (this morning, March 4, Singapore time).

Singapore jumped five places from No 6 last year to top this year’s list after rising in the list in recent years. The city was ranked No 18 a decade ago in the EIU's Worldwide Cost of Living Survey.

The Republic’s strong currency, which has appreciated about 40 per cent over the past decade, combined with soaring utility bills and the high cost of car ownership contributed to Singapore’s rise in the list, according to the EIU. Singapore is also the most expensive place in the world to buy clothes.

Paris, Oslo, Zurich and Sydney also made the top five of the EIU list. Tokyo, the most expensive city to live in for 2013, fell to joint sixth place alongside Caracas, Geneva and Melbourne. At No 10 is Copenhagen.

“Improving sentiment in structurally expensive European cities combined with the continued rise of Asian hubs means that these two regions continue to supply most of the world’s most expensive cities,” said Mr Jon Copestake, the editor of the EIU report.

“But Asian cities also continue to make up many of the world’s cheapest, especially in the Indian subcontinent.”

Predominantly higher costs of groceries has been singled out as a reason for most Asian cities figuring highly in this year’s list, with Tokyo still at the top of the list for everyday food items.

The EIU’s Worldwide Cost of Living Survey, which is published twice a year, compares more than 400 individual prices across 160 products and services including food, clothing, household supplies, home rentals, transport and utility prices. All cities are compared against New York City as a base.

According to the EIU statement, the survey is meant to let human resource line managers and expatriate executives compare the cost of living in 140 cities in 93 countries, which would allow hiring companies to calculate a fair remuneration package for relocating employees.

Now, we really do need to start saving so that we will have enough money to afford the higher cost of living in Singapore when we get old.

More information can be found in TODAY online

CPF contribution rates for older workers, aged above 50 to 55, raised by between 1 and 2 percentage points

Mr Heng said any increase in employees' CPF contribution rates should go into the Ordinary Account, which many Singaporeans use to pay their housing mortgages.

In the long term, the labour movement wants to see a review of CPF contribution rates and ceiling.

This could be in the area of adequacy - looking at just how much a worker needs to save for retirement.

Another area is to look at greater parity in contribution rates, between employer and employees, across all age bands.

The last time CPF rates were reviewed was more than 10 years ago, in 2003. Since then, contribution rates have either met or surpassed the targets set, across all age bands.

For example, the target set in 2003 was between 30 and 36 per cent for workers aged 50 and below. Today, it's at 36 per cent.

For workers between 51 and 55 years or age, the target was between 24 and 30 per cent. That has since risen to 32.5 per cent.

The employer's contribution rates have also remained below that of employees, with the widest gap also seen in the above 50 to 55 age group.

Mr Heng added: "We will have to continue to look at the new reality, what constitutes adequacy in this new reality and also the business considerations of competitiveness.

"We note that in the past, subject to those considerations, one-to-one contributions by employers and employees was possible in certain periods... but not always.

"So again we would want to discuss whether or not it's possible to contribute on par, where the considerations allow for it."

The last time employer and employee CPF contribution rates were equal, at 20 per cent each, was in 1997/98.

To lessen the burden on businesses, employer contributions were reduced, following the Asian financial crisis. 

More information can be found in CNA online

An Ex-CPF Employee Exposes the 3 Biggest Complaints Singaporeans Have About Their CPF Accounts

Few questions divide Singaporeans as much as this one – What is CPF used for? As you process your own answer to that question, chances are the words “retirement,” “housing,” healthcare” and maybe “Ponzi scheme” are running through your head.

But no matter what function(s) you think CPF serves, everyone faces the reality of having to pay their “dues” to keep the system going. That means contributing 20% of your salary (up to age 50) every month to a scheme that only benefits those who vastly surpass the current minimum balance of $148K. Sadly, more Singaporeans who have money in CPF and need it can’t even touch it.

An ex-CPF employee named “Brian” (who wishes to remain anonymous for very obvious reasons), who deals with the valid concerns of Singaporeans daily, was kind enough to help us shed some light on what Singaporeans complain about most when it comes to their CPF accounts.

Here are Singaporeans' 3 biggest complaints about their CPF accounts:

As CPF is not so flexible in allowing us to use the funds in it, we should try to avoid relying solely on CPF for our retirement. Retirement will not be sufficient if one only wishes to depend on CPF or government assistance.

More information can be found in Yahoo Finance!

Fun Reading

The iPhone turns 7, June 29
Yep, it’s been seven years since Steve Jobs introduced the first iPhone and changed the industry and our lives. There are now eight models and counting, and more are being purchased every day than there are babies being born.

Sky Lantern Festival, Feb. 14
Pingxi - Taiwan: Buy a one-meter (three-foot) lantern, write your wishes on it, light the candle and watch your hopes float to the heavens. As many as 200,000 lanterns are released over the remote mountain town an hour’s drive from Taipei. Centuries ago the lanterns signaled that it was safe to return to the village after a raid by bandits. Today they signal the end of the Chinese New Year.

Sky City scheduled for completion, June
Changsha, China: At 838 meters. or 2,749 feet, it will become the world’s tallest building, outstripping the incumbent, the Burj Khalifa in Dubai, by 10 meters. The Empire State Building reigned as the tallest from 1931 to 1973, and the Sears Tower in Chicago from 1973 to 1996. Since then, buildings across the Middle East and Asia have taken turns being tallest.

World Toilet Day, Nov. 19
It’s intended to raise awareness of the struggle faced by the 2.5 billion people who don’t have access to a proper, clean toilet. The organization Water Aid suggests showing solidarity by downloading a toilet seat template and sitting on it all day.

South-east Asian Property Market carries Growing Risks

What Next

South-east Asian banks will be tested as the eventual end of quantitative easing (QE) adversely affects local currencies, capital flows, financial asset prices, borrowing costs, and repayment capabilities of corporate and household borrowers. A rise in interest rates and cost of borrowing could prompt a surge in bad loans. This risk is particularly acute for property markets (rather than productive sectors) in such economies as Malaysia, Thailand and Singapore, where prices are at record levels, affordability is over-stretched, household debt stands at around 80% of GDP and debt service ratio is high.

Analysis

The financial and property markets in South-east Asia have been major beneficiaries of QE between November 2008 and 2013. Even though South-east Asia's growth has been stronger than in the United States and Europe, much of it is driven by a modest rebound in exports and strong growth in domestic consumption, which in turn has been fuelled by 'easy money' and cheap credit.QE has not only worsened income distribution, as the rich benefit most from financial asset inflation, but also led to misallocation of capital (rising inequality poses challenge).

Household Loans

Between 2008 and 2012, in the five largest South-east Asian economies household loans constitute the largest category of bank credit. This is especially true for Malaysia, Thailand and Singapore, where household debt-to-GDP ratio has reached 83%, 80% and 77% respectively. Meanwhile, household incomes have not grown by as much, stretching household debt-servicing capability. Malaysia has the highest ratio of household debt to disposable income at 140%, with Singapore at 105%. The largest component within household loans is housing, followed by car and credit card. Together with loans to the construction and real estate sector, the exposure of banks to the property sector far outweighs that to the productive sectors such as manufacturing and trade. Hence, household and property sectors are more vulnerable to a credit crisis than the productive sectors.

Mortgage Risk

Most household loans have gone to financing housing mortgages. Housing loans account for 48% of totals loans in Singapore and 27% in Malaysia (not including loans from shadow banks). In a period of low to negative interest rates, huge amounts of funds have flowed into the property markets, much of that amount borrowed:

• The housing market is no longer simply a market for end users, i.e. housing as a means of consumption. Housing has become primarily an asset class for investors and speculators. This has provided the momentum for double -- even triple -- digit escalation of house prices in certain markets.
• Housing affordability indices (the ratio of average house price to average annual household income) in many South-east Asian countries are highly stretched, some reaching double digits.

A rise in interest rates would hit borrowers badly as most housing mortgages are preconditioned on an adjustable rate. All these pose significant risks to the banking system and the economy.

Therefore buying property using bank loans might be risk now, if we have high housing mortgages. Though many people are renting out their apartments to finance the loans.

More information can be found in the OXFORD Analytical

Retire through buying or selling of property

This is one of the easiest money earning method which my husband likes. I believe many of the older generations have benefited from this boom in property prices over the years, including many of their future generations who will be taking over their properties. 

I have a friend's father who bought a landed property around Eunos area at $60,000 in the old days. Now the property is worth nearly $2 million after 50 years passed, which means my friend will get an inheritance worth $2 million or more in future.

For me, I bought a 4 room flat in 2007 at $180,000. Then I got a 5 room flat in 2013 at $510,000. Property prices have soared so much over a short 6 years, though we won't be expecting an increase for the moment with the many cooling measures put in place by the government. I even heard the trend is CUV (cash under valuation, negative COV) now.

My husband's friend, who is a property agent, told us that we should not keep a house longer than 5 years. He said it's not worth paying for the full interest for 30 years. So my husband and I painted a scenario where we will upgrade and sell our house every 5 years. And for every transaction, we will have a profit of $50,000 (never put too high to be realistic and applicable for both HDB flats and EC). Pretend we have another six 5 years before we downgrade our house to get a smaller flat for two of us, we would have a profit of $200,000. So it will be $100,000 each after sharing. 

So with my property profit of $100,000, if I retire at 65, and if I want to have $1500* every month, and if I live for another 20 years, I would need another $260,000 to retire. Imagine if I use normal savings with 1% interest per annum, I will need to save around $715 per month for 30 years. I won't count the CPF monthly output as the amount will be too small, so the CPF output will act like a mini bonus instead. 

One thing we have to be mindful when investing property is that we must be prepared for uncertain risks as there's always a possibility the property bubble will burst one day.

*Based on a projected minimum amount for future basic needs without any major health issues, anything less will be bread and butter everyday

Basics of Investing

Why invest? Can't we keep our money in a biscuit tin?

Many Singaporeans realise the importance of saving but have reservations about investing. Investing is often regarded as: “gambling”; “too risky”; “only for the rich”; “only for those about to retire”; “too complicated “; “not necessary”. While misleading, such reservations also deter us from investing. We then forgo the opportunity of growing our savings.

People often view investments as being very risky. In fact, investing is all about maximizing the returns on your savings using various kinds of financial instruments. Some of the more common types of investments are:
• Fixed Income Securities (Bonds)
These are debt instruments issued by either the Government or corporations to raise funds. Investors (lenders) are usually repaid the original investment amount at maturity. When you hold a fixed income security, you will also receive interest (or coupon payments) periodically.
• Equity Investments (Stocks or Shares)
Equity is a form of ownership in a corporation. An investor's stake in the corporation depends on the number of shares he owns as a percentage of the total number of shares issued by the corporation. Shareholders have the opportunity to benefit from capital appreciation of the shares and may receive dividends.

• Unit Trusts
A unit trust is an investment fund managed by a professional investment manager. It consists of investments in one or more of the three basic asset classes - cash, bonds and stocks.
• Investment-Linked Insurance Plans
An Investment-Linked Insurance Plan (ILP) is an investment fund managed by a professional fund manager, which has an added insurance component. Similar to unit trusts, ILP offers different investment objectives to suit the risk appetite of policyholders.

BASICS OF INVESTING
1. Identify your investment objectives and time horizon.
2. Consider the risks you can bear and your expected returns.
3. Decide on an appropriate asset allocation. This means how you allocate your savings among various asset classes including property, stocks, bonds and cash.
4. Consider how you can diversify your investments.
5. Conduct your own research to choose the right professionals who can help you with your investment.
6. Consider the transaction costs of your intended investments.
7. Monitor your investments closely and review your investment objectives periodically.

Not putting all your eggs in one basket is a sensible rule for investors. You diversify by spreading your investments over different securities in various asset classes. The asset allocation decision is one of your most important investment decisions. To do that skilfully, you will have to define your investment goals, time horizon and risk tolerance.

Time is a lever that increases your ability to grow your savings. The earlier you start investing to meet your financial goals, the more you can exploit the power of compounding. Time is also one of the most important factors in determining how much risk you should take. This is another reason to begin investing early.

More information on investments can be found in the MoneySENSE

Getting Ready to Retire_Race Starts

Wow, I've been too busy with my new job that I completely don't have the time to share information on my blog for a long time. Now, I finally got some time to do it after I settled down in my job. I would like to give a big thanks to all readers for your continuous support all this while. 

Recently, I am busy thinking which will be a better way to start my retirement savings, since I have most of my personal protection covered. 

Maintaining healthy finances as you approach 65 is just as important as getting regular medical checkups. Do you know how much you need to have saved to live comfortably after retirement?Most people are "saving blindly. Most of my friends think they'll need less than 70% of their pre-retirement income. But my financial advisor, Joseph, told me that I should plan on at least 80% to 90% of what you're making now to keep up with the standard of living I have now.

Jeff Currie, another online financial advisor, offers this quick assessment of financial readiness: "no debt, a good pension that includes health insurance benefits, good savings and low expenses. All of these factors can lead to a person retiring early. In most cases, the early 50s is about the most realistic and early I have seen. It usually involves an inheritance to boost a person's normal assets."

Therefore, I've started discussing my retirement options together with Joseph to have a better understanding of the many options available in the market. Examples of the more popular channels are through CPF, investment, higher-interest bank savings, fixed deposit, savings/retirements plans by insurance companies/banks, and buying & selling of properties etc. Slowly, I will need to decide which are the ones I will prefer to adopt for my retirement planning.

Choosing a good financial advisor is important. As tax laws, savings options, and benefits become more and more complicated, it's almost impossible to understand your options on your own. You'll navigate the confounding waters of retirement planning better with an experienced guide. "Hire a planner before you retire, someone who'll look at your whole financial picture, from wills and trusts to insurance and advance medical directives. Your best bet is a certified financial advisor, who must pass an examination and live up to a code of standards and ethics.

The sooner one starts, the more time we will have to explore our retirement options and take any necessary corrective actions.