As a follow up to my previous post titled "Better quickly obsoletes your job before your job obsoletes you!", I would like to briefly summarize the tactics to "How to quickly obsolete your job before your job obsoletes you", as follow:
1) When started working, save much more than you spend!
2) During the day, work you "work". During the evening, work on your "investment"!
Above are the 2 keys to being able to help you to be able to quickly obsoletes your job before your job obsoletes you!
The above is also the Solution to "Why you work so hard but you are still poor?"
You may ask: How much should you save from your salary?
Well, there is no hard core number or percentage, but the more the merrier!
To give you an example, when I started working, I saved 50% of what I earned.
5 years later, despite increase in my income, I kept my expenditure constant, and I increased the amount I saved to >70%!
When I have more money in my bank for rainy days, I started to spend more again and the amount I can save dropped to less than 50% (despite further increase in income).
I feel that average of about 50% is about the right figure because with 50%, for every year you had worked, you can afford to retire for 1 year! So theoretically, if you start working at 25 years old, and assume you can live to 85 years old, you would probably work for 30 years and by saving about 50% of your income, you can afford to retire at 55 years old and enjoy your retirement with no monetary worry for >30 years (assuming your return from your pot of fund is equal to inflation).
Friday, November 28, 2014
Tuesday, November 25, 2014
Better quickly obsoletes your job before your job obsoletes you!
The other day, I had a good discussion with my friend. He made a very good point indeed that I would like to share with the rest of you, that is:
"Better quickly obsoletes your job before your job obsoletes you!"
He was lamenting that while Singaporeans can now live longer and older, our job actually "obsolete" us sooner and earlier! What he meant by "our job obsolete us" is that we are more likely to get retrenched at an earlier age, and then subsequently unable to find a job that pays as much and is able to make use of our knowledge and expertise.
On the other hand, he said you would be pretty safe if you can "obsolete your job" by about 45 years old, which he means to say that you no longer need the income from your job to live and support your family.
He cited an example of a friend working in the hard-disk drive industry, and after getting retrenched at the age of about 45 years old, has not been able to get a full-time job that pays as much and able to make full use of his prior knowledge and expertise. He sent out several hundreds of resumes until he gave up because either he was judged as "over-qualified" or "too old" for the job or his experience is not relevant to the job, or the pay is so poor given the nature of the job that he give it a pass as it can't even cover his family living expenses (and taking up those job will jeopardize chance of him landing a good job in future). What did he end up as? Taxi driver! But the story does not end there - He was complaining that the taxi driver is being exploited and squeezed by the taxi operators with ever increasing high taxi rental charges while their taxi fare charges have been fixed!
According to my friend, many people in the middle-income families with no "connections" are finding themselves out of jobs at about 45 years old or thereafter, and having to resort to very large cut in pay when they take up another jobs.
However, those with "connections" are having a good time, with some apparently not doing much (if any) and getting paid several hundred thousands to millions of dollars a year!
So, his conclusion and advise to all of you out there is that "Better quickly obsoletes your job before your job obsoletes you!".
If you can't, then make sure you have the right "connection" so that people will give you jobs to pat your back! However, sad to say, having the right connection may have more to do with your family background / circle of friends and contacts and luck then the person's ability!
So, how can you "quickly obsoletes your job before your job obsoletes you"?
"Better quickly obsoletes your job before your job obsoletes you!"
He was lamenting that while Singaporeans can now live longer and older, our job actually "obsolete" us sooner and earlier! What he meant by "our job obsolete us" is that we are more likely to get retrenched at an earlier age, and then subsequently unable to find a job that pays as much and is able to make use of our knowledge and expertise.
On the other hand, he said you would be pretty safe if you can "obsolete your job" by about 45 years old, which he means to say that you no longer need the income from your job to live and support your family.
He cited an example of a friend working in the hard-disk drive industry, and after getting retrenched at the age of about 45 years old, has not been able to get a full-time job that pays as much and able to make full use of his prior knowledge and expertise. He sent out several hundreds of resumes until he gave up because either he was judged as "over-qualified" or "too old" for the job or his experience is not relevant to the job, or the pay is so poor given the nature of the job that he give it a pass as it can't even cover his family living expenses (and taking up those job will jeopardize chance of him landing a good job in future). What did he end up as? Taxi driver! But the story does not end there - He was complaining that the taxi driver is being exploited and squeezed by the taxi operators with ever increasing high taxi rental charges while their taxi fare charges have been fixed!
According to my friend, many people in the middle-income families with no "connections" are finding themselves out of jobs at about 45 years old or thereafter, and having to resort to very large cut in pay when they take up another jobs.
However, those with "connections" are having a good time, with some apparently not doing much (if any) and getting paid several hundred thousands to millions of dollars a year!
So, his conclusion and advise to all of you out there is that "Better quickly obsoletes your job before your job obsoletes you!".
If you can't, then make sure you have the right "connection" so that people will give you jobs to pat your back! However, sad to say, having the right connection may have more to do with your family background / circle of friends and contacts and luck then the person's ability!
So, how can you "quickly obsoletes your job before your job obsoletes you"?
What life-style you can afford with $1M to retire for 30 years?
Now, if you have S$1M now and would like to retire for 30 years, what life-style can you afford? How much money can you afford to spend per month as living expenses to last 30 years?
Well, based on my calculation, with S$1M now, you would be able to afford to spend S$3250 per month for 30 years (with 2% p.a. increase in allowance built-in)!
$3250 per month for a couple NOW (with 2% p.a. increase in allowance built-in) is really a comfortable living already.............
Assumptions I made are:
a) Average Investment return of 3% p.a.
b) Average Inflation of 2% p.a.
Above are realistic assumptions and hence totally achievable.
Given that average age of Singaporeans is 83 years old for men and 85 years old for women, if you have enough to retire for 30 years means that you can retire at 53 and 55 years old respectively if you are a woman/man !
Well, based on my calculation, with S$1M now, you would be able to afford to spend S$3250 per month for 30 years (with 2% p.a. increase in allowance built-in)!
$3250 per month for a couple NOW (with 2% p.a. increase in allowance built-in) is really a comfortable living already.............
Assumptions I made are:
a) Average Investment return of 3% p.a.
b) Average Inflation of 2% p.a.
Above are realistic assumptions and hence totally achievable.
Given that average age of Singaporeans is 83 years old for men and 85 years old for women, if you have enough to retire for 30 years means that you can retire at 53 and 55 years old respectively if you are a woman/man !
Monday, November 24, 2014
How much savings do you need NOW to retire with basic living in Singapore?
In my previous post, I estimated that the basic no frail cost of living in Singapore as of now for an old couple = S$1348 per month.
So, how much does a couple need to retire for 30 years from now if they just need S$1348 per month for living expenses and assuming investment return of 3% per year/annum (p.a.) on their capital and inflation of 2% per year? Note that my assumption has 2% p.a. increase in expenses built-in year after year (and not a flat S$1348 pm).
According to my calculation, the couple just requires a lump sum of S$420,000 to be able to retire now for 30 years!
Question 1: Is average investment return of 3% p.a. realistic?
A: Yes, 3% is already considered low. Don't forget Singapore Government gives 4% for your CPF Special Account and Medisave.
Question 2: Is average inflation 2% p.a. realistic?
A: This will depends on global economic situation and more importantly government's economic and monetary policy, especially when Singapore uses exchange as a tool to control inflation. Also, Singapore government has great control over medical costs via their economy of scale in operating all gov hospitals and polyclinics.
So, how much does a couple need to retire for 30 years from now if they just need S$1348 per month for living expenses and assuming investment return of 3% per year/annum (p.a.) on their capital and inflation of 2% per year? Note that my assumption has 2% p.a. increase in expenses built-in year after year (and not a flat S$1348 pm).
According to my calculation, the couple just requires a lump sum of S$420,000 to be able to retire now for 30 years!
Question 1: Is average investment return of 3% p.a. realistic?
A: Yes, 3% is already considered low. Don't forget Singapore Government gives 4% for your CPF Special Account and Medisave.
Question 2: Is average inflation 2% p.a. realistic?
A: This will depends on global economic situation and more importantly government's economic and monetary policy, especially when Singapore uses exchange as a tool to control inflation. Also, Singapore government has great control over medical costs via their economy of scale in operating all gov hospitals and polyclinics.
Comments on Goods and Service Tax (GST) and Wealth Tax
In my previous post titled "Why you work so hard but you are still poor?", I mentioned that:
"When taxes have been tweaked and/or new taxes implemented by the Government, we are seeing more and more of such taxes in the form of Goods and Services Tax (GST) or other form of "wealth tax". For example, recently Malaysia just introduced GST. On the surface, we were told that these are "wealth tax" that only taxes the people who are "rich", but really what you are seeing is that such taxes, instead of taxing the genuinely rich (the top 1% income earners and rich businessmen), these "wealth taxes" are targeted at the majority of the population and middle-income families so that they do not tax the genuinely rich so much."
In this post, I would like to give further comments on such Goods and Service Tax (GST) and Wealth Tax.
Give you an example to illustrate these so-called "wealth tax" or consumption tax: If the government wishes to rise $1 Billion in taxes from a population of 1 Million, they could choose to:
a) Raise the income tax of the top say 1% genuinely rich (top 1% income earners and big businesses) by collecting $1 Billion from the top 1% or 10,000 people, thus each of the rich paying $100,000; OR:
b) Raise the tax from the majority of the 90% of the population or 900,000 people, thus each of them paying about $1,111.
We are seeing more and more that government preferring method (b) in raising additional taxes!
On the surface, doing (b) seems fair, until we diagnosed the incomes of the various groups:
(i) Top 1% people earn at least $500,000 a year!
(ii) The rest of the people do not even earn $200,000 a year!
For the past 20 years, the top 1% people's income increases exponentially compared to bottom 80% of the people! This also seems to be the case in Singapore!
Example, the lowest income earners earn about $500 per month 20 years ago and now they only earn $1000 per month (after the introduction of minimum wages in Singapore!). Ops, sorry, should be "Progressive wages" as some hard-core PAP supporters would like us to call it. To these people, "minimum wages" like those in US and the West are bad, while Singapore's "progressive" wages are good! Really? We can investigate left and right and up-side down and the Singapore's "progressive wages" include "minimum wages" as a core component, so isn't this a form of "minimum wages"???
On the other hand, the top salary people have their salary increased from about $500,000 per year to a few Millions $ a year!
What about the general people, like the fresh graduates pay? Well, 20 years ago, a fresh graduate from engineering course can get a salary of about $2,200 per month. Fast forward now, the same fresh graduate can only get a salary of about $3,000 per month or an increase of about 36%.
And oh, I should not forget to mention that cost of basic living is like having gone up by >200% over the past 20 years!
After knowing these above facts, would you still think that raising taxes via method (b) above is more fair than method (a)? After all, for past 20 years, the top-income earners have benefited the most and obtained several hundred % increase in salaries from Singapore's GDP progress (including the top civil servants and Ministers) vs the bottom 80% or so, so isn't it fair to ask them to bear more? Instead, they received an incentive of their income tax being slashed from 33% to 20% as a result of introducing GST!
Is it fair to make the bottom rang income people pay more taxes when they are already making ends meet with ever increasing living cost inflation as a result of their Govt's own policy?
Singapore's GST is a very good example isn't it?
Before 1994, there is no GST in Singapore, and the highest income earners pay 33% income tax and businesses pay 30% corporate tax. The income tax is progressive, and about bottom 40% people pay no taxes.
Since introduction of GST in 1994, GST has been raised to 7% while highest income earners' income tax has been slashed from 33% to 20% while businesses now only pay 17% corporate tax (vs 30% before 1994). This has resulted in significant tax reduction collected from highest income earners and businesses, and this short-fall in taxes have been made up significantly from GST collection which collects taxes from 100% population in Singapore!
Note that Singapore's GST has no tax exemption for basic necessities (unlike those in other countries, e.g. UK, Europe etc), hence hitting the poor and the lower middle-income very hard!
For a comparison, for example in UK, basic living necessities (e.g. water, gas, and electricity), food necessities, medicine, children needs are all exempted from GST (in UK they called it Value-Added-Tax or VAT).
"When taxes have been tweaked and/or new taxes implemented by the Government, we are seeing more and more of such taxes in the form of Goods and Services Tax (GST) or other form of "wealth tax". For example, recently Malaysia just introduced GST. On the surface, we were told that these are "wealth tax" that only taxes the people who are "rich", but really what you are seeing is that such taxes, instead of taxing the genuinely rich (the top 1% income earners and rich businessmen), these "wealth taxes" are targeted at the majority of the population and middle-income families so that they do not tax the genuinely rich so much."
In this post, I would like to give further comments on such Goods and Service Tax (GST) and Wealth Tax.
Give you an example to illustrate these so-called "wealth tax" or consumption tax: If the government wishes to rise $1 Billion in taxes from a population of 1 Million, they could choose to:
a) Raise the income tax of the top say 1% genuinely rich (top 1% income earners and big businesses) by collecting $1 Billion from the top 1% or 10,000 people, thus each of the rich paying $100,000; OR:
b) Raise the tax from the majority of the 90% of the population or 900,000 people, thus each of them paying about $1,111.
We are seeing more and more that government preferring method (b) in raising additional taxes!
On the surface, doing (b) seems fair, until we diagnosed the incomes of the various groups:
(i) Top 1% people earn at least $500,000 a year!
(ii) The rest of the people do not even earn $200,000 a year!
For the past 20 years, the top 1% people's income increases exponentially compared to bottom 80% of the people! This also seems to be the case in Singapore!
Example, the lowest income earners earn about $500 per month 20 years ago and now they only earn $1000 per month (after the introduction of minimum wages in Singapore!). Ops, sorry, should be "Progressive wages" as some hard-core PAP supporters would like us to call it. To these people, "minimum wages" like those in US and the West are bad, while Singapore's "progressive" wages are good! Really? We can investigate left and right and up-side down and the Singapore's "progressive wages" include "minimum wages" as a core component, so isn't this a form of "minimum wages"???
On the other hand, the top salary people have their salary increased from about $500,000 per year to a few Millions $ a year!
What about the general people, like the fresh graduates pay? Well, 20 years ago, a fresh graduate from engineering course can get a salary of about $2,200 per month. Fast forward now, the same fresh graduate can only get a salary of about $3,000 per month or an increase of about 36%.
And oh, I should not forget to mention that cost of basic living is like having gone up by >200% over the past 20 years!
After knowing these above facts, would you still think that raising taxes via method (b) above is more fair than method (a)? After all, for past 20 years, the top-income earners have benefited the most and obtained several hundred % increase in salaries from Singapore's GDP progress (including the top civil servants and Ministers) vs the bottom 80% or so, so isn't it fair to ask them to bear more? Instead, they received an incentive of their income tax being slashed from 33% to 20% as a result of introducing GST!
Is it fair to make the bottom rang income people pay more taxes when they are already making ends meet with ever increasing living cost inflation as a result of their Govt's own policy?
Singapore's GST is a very good example isn't it?
Before 1994, there is no GST in Singapore, and the highest income earners pay 33% income tax and businesses pay 30% corporate tax. The income tax is progressive, and about bottom 40% people pay no taxes.
Since introduction of GST in 1994, GST has been raised to 7% while highest income earners' income tax has been slashed from 33% to 20% while businesses now only pay 17% corporate tax (vs 30% before 1994). This has resulted in significant tax reduction collected from highest income earners and businesses, and this short-fall in taxes have been made up significantly from GST collection which collects taxes from 100% population in Singapore!
Note that Singapore's GST has no tax exemption for basic necessities (unlike those in other countries, e.g. UK, Europe etc), hence hitting the poor and the lower middle-income very hard!
For a comparison, for example in UK, basic living necessities (e.g. water, gas, and electricity), food necessities, medicine, children needs are all exempted from GST (in UK they called it Value-Added-Tax or VAT).
Saturday, November 22, 2014
Why you work so hard but you are still poor?
When I was young, I have seen really hard working people, some even doing 2 jobs and working through week-end! We would want to think such hard working people would be rich sooner or later, but the facts tell us otherwise. In real life, many of such people are working hard to make ends meet, and they are still rather poor at the end of the day, having to work until they die to survive in Singapore! Why is this so?
I have come to the conclusion that hard-working is no longer the solution to getting rich because of the following global political and economic trend:
1) When a country's economy is in recession, their Central Bank now have a tendency to PRINT MONEY.
2) When money is printed, currency deflation/depreciation occurs. That is, your paper money CASH is worth much less than they normally are.
3) When currency deflation occurs, living cost inflation happened. The person can afford less and less or have to pay more and more for a living.
4) Currency deflation also suppresses interest rate, and your paper money CASH do not get much return in terms of interest earned (negligible compared to living cost inflation).
5) People who resort to working hard (and not smart) tend to be doing jobs that do not get much salary appreciation in this new world knowledge-based economy (not even fresh graduates in Singapore!). Their wage increase cannot catch up with living cost inflation.
6) People are living a longer life, and yet without being able to make much more and save much more for comfortable retirement (vs the escalating cost of living)!
7) When taxes have been tweaked and/or new taxes implemented by the Government, we are seeing more and more of such taxes in the form of Goods and Services Tax (GST) or other form of "wealth tax". For example, recently Malaysia just introduced GST. On the surface, we were told that these are "wealth tax" that only taxes the people who are "rich", but really what you are seeing is that such taxes, instead of taxing the genuinely rich (the top 1% income earners and rich businessmen), these "wealth taxes" are targeted at the majority of the population and middle-income families so that they do not tax the genuinely rich so much.
8) The above vicious cycle continues!
I have come to the conclusion that hard-working is no longer the solution to getting rich because of the following global political and economic trend:
1) When a country's economy is in recession, their Central Bank now have a tendency to PRINT MONEY.
2) When money is printed, currency deflation/depreciation occurs. That is, your paper money CASH is worth much less than they normally are.
3) When currency deflation occurs, living cost inflation happened. The person can afford less and less or have to pay more and more for a living.
4) Currency deflation also suppresses interest rate, and your paper money CASH do not get much return in terms of interest earned (negligible compared to living cost inflation).
5) People who resort to working hard (and not smart) tend to be doing jobs that do not get much salary appreciation in this new world knowledge-based economy (not even fresh graduates in Singapore!). Their wage increase cannot catch up with living cost inflation.
6) People are living a longer life, and yet without being able to make much more and save much more for comfortable retirement (vs the escalating cost of living)!
7) When taxes have been tweaked and/or new taxes implemented by the Government, we are seeing more and more of such taxes in the form of Goods and Services Tax (GST) or other form of "wealth tax". For example, recently Malaysia just introduced GST. On the surface, we were told that these are "wealth tax" that only taxes the people who are "rich", but really what you are seeing is that such taxes, instead of taxing the genuinely rich (the top 1% income earners and rich businessmen), these "wealth taxes" are targeted at the majority of the population and middle-income families so that they do not tax the genuinely rich so much.
8) The above vicious cycle continues!
4 pillars of Global Economy, 3 splattering
The 4 pillars of Global Economy I reckoned are: US, Europe, China, and Japan.
However, while US is still recovering from recession, and China is slowing down, Europe is in dormant and Japan is now in recession!
However, we don't need all 4 pillars to be flying to make money from investment, we just need to identify the one with back-burner and invest our money and bet on it!
So, most of my money now I now bet on US stocks and US$.
I have set aside some money for investing into European stocks and China stocks.
Japan? Forget about it! Chance of it recovering over the long-term is slim indeed!
However, while US is still recovering from recession, and China is slowing down, Europe is in dormant and Japan is now in recession!
However, we don't need all 4 pillars to be flying to make money from investment, we just need to identify the one with back-burner and invest our money and bet on it!
So, most of my money now I now bet on US stocks and US$.
I have set aside some money for investing into European stocks and China stocks.
Japan? Forget about it! Chance of it recovering over the long-term is slim indeed!
Friday, November 21, 2014
Abenomics could not save Japan from structural deterioration
Much has been touted about Abenomics, the aggressive monetary stimulus and flexible fiscal support and structural reform introduced by Japan's Prime Minister Shinzo Abe. However, I do not think highly of Abenomics, and Abenomics could not save Japan from structural deterioration, for 2 main reasons:
1) Aggressive monetary stimulus will not save Japan:
How much a country can print money without significant monetary depreciation and significant capital outflow to safer heaven is premise on how confident people are in the country.
If US print money, there is unlikely to be significant capital outflow because US is still the world's strongest super power, and the US$ is the world's internationally traded currency.
However, the same cannot be said for Japan.
2) Structural reforms is difficult for Japan:
Japan is facing very serious aging problem, with a higher and higher percentage of its population being too old and unable to work as time goes by. This will result in significant taxing and burden on the younger working population, and it will come a time when thing just snapped. I don't think Sales tax will save Japan because while it raises additional revenue for Japanese government, it will lead to more hoarding of money and repercussions.
The long-term future for Japan is grim indeed. I will not want to be holding Japanese assets, be it Japanese Yen or Japanese stocks.....................
-----------------------------
PUBLISHED OCTOBER 06, 2014
Abenomics: Roadmap to corporate reform
Abenomics reforms could bring significant corporate improvements that rekindle interest in Japanese equities. By Hiroki Sampei
LAST year was a great year for Japanese equities. Investors returned to the world's third-largest economy on a wave of euphoria surrounding Prime Minister Shinzo Abe's bold ambition to drag Japan out of a deflationary stagnation that dates back to 1990.
The first two arrows of Abenomics - aggressive monetary stimulus and flexible fiscal support - were highly successful in building initial enthusiasm around Japan's economic outlook, triggering a sharp rally in the Japanese stock market.
However, enthusiasm has given way to scepticism in 2014, and investor unease was exacerbated by a worse-than-expected fall in quarterly gross domestic product (GDP) after the increase in consumption tax in April 2014.
Japan's stock market has been a relative laggard year-to-date amid mounting concerns over whether Abe can deliver on his all-important third arrow of structural reform.
-----------------------------
1) Aggressive monetary stimulus will not save Japan:
How much a country can print money without significant monetary depreciation and significant capital outflow to safer heaven is premise on how confident people are in the country.
If US print money, there is unlikely to be significant capital outflow because US is still the world's strongest super power, and the US$ is the world's internationally traded currency.
However, the same cannot be said for Japan.
2) Structural reforms is difficult for Japan:
Japan is facing very serious aging problem, with a higher and higher percentage of its population being too old and unable to work as time goes by. This will result in significant taxing and burden on the younger working population, and it will come a time when thing just snapped. I don't think Sales tax will save Japan because while it raises additional revenue for Japanese government, it will lead to more hoarding of money and repercussions.
The long-term future for Japan is grim indeed. I will not want to be holding Japanese assets, be it Japanese Yen or Japanese stocks.....................
-----------------------------
PUBLISHED OCTOBER 06, 2014
Abenomics: Roadmap to corporate reform
Abenomics reforms could bring significant corporate improvements that rekindle interest in Japanese equities. By Hiroki Sampei
LAST year was a great year for Japanese equities. Investors returned to the world's third-largest economy on a wave of euphoria surrounding Prime Minister Shinzo Abe's bold ambition to drag Japan out of a deflationary stagnation that dates back to 1990.
The first two arrows of Abenomics - aggressive monetary stimulus and flexible fiscal support - were highly successful in building initial enthusiasm around Japan's economic outlook, triggering a sharp rally in the Japanese stock market.
However, enthusiasm has given way to scepticism in 2014, and investor unease was exacerbated by a worse-than-expected fall in quarterly gross domestic product (GDP) after the increase in consumption tax in April 2014.
Japan's stock market has been a relative laggard year-to-date amid mounting concerns over whether Abe can deliver on his all-important third arrow of structural reform.
-----------------------------
Japan has fallen into recession (yet again)!
I read the news 2 days ago that Japan has fallen into recession (yet again)!
There has been much talk and hooray about Japan Prime Minister's Abenomics and his 3 arrows. But for all of those, Japan is now in recession once again!
I have been quite negative about Japan PM's Abenomics because it does not solve the fundamental structural problems facing Japan.
There has been much talk and hooray about Japan Prime Minister's Abenomics and his 3 arrows. But for all of those, Japan is now in recession once again!
I have been quite negative about Japan PM's Abenomics because it does not solve the fundamental structural problems facing Japan.
Thursday, November 20, 2014
Estimated cost of basic living in Singapore for a retiree
Below is my estimated cost of basic living per month for a retired couple (no frails) as of now:
* Food (cook at home, with occasional eat out) = $400.00
* Transport (bus and trains only, should be much less for retirees) = $150.00
* Utilities (electricity, water, gas, sewage) = $100.00
Communications (mobile phones subscriptions & internet) = $98.00
* Clothings and footwear = $200.00
* Medical insurance & expenses (assume the rest covered by insurance) = $400.00
* Some frails and luxury = $0.00
* Rental costs = $0.00
Total per month per couple = $1,348.00
Or: $674 per person.
Note: Rental costs is $0 because I assume the couple has a fully paid property.
So, it seems that the basic cost of living in Singapore for an old retired couple is indeed very close to the CPF Life payout of just 1 single individual (as of now)!
* Food (cook at home, with occasional eat out) = $400.00
* Transport (bus and trains only, should be much less for retirees) = $150.00
* Utilities (electricity, water, gas, sewage) = $100.00
Communications (mobile phones subscriptions & internet) = $98.00
* Clothings and footwear = $200.00
* Medical insurance & expenses (assume the rest covered by insurance) = $400.00
* Some frails and luxury = $0.00
* Rental costs = $0.00
Total per month per couple = $1,348.00
Or: $674 per person.
Note: Rental costs is $0 because I assume the couple has a fully paid property.
So, it seems that the basic cost of living in Singapore for an old retired couple is indeed very close to the CPF Life payout of just 1 single individual (as of now)!
Tuesday, November 18, 2014
Carl Icahn loses $40 million on Hertz’s stock in one day
Should you follow famed investors to buy and sell stocks?
Think about it again, after reading below news.............
Carl Icahn loses $40 million on Hertz’s stock in one day
By Tomi Kilgore
Published: Nov 14, 2014 5:02 p.m. ET
Bloomberg
Being right doesn’t mean making money.
Carl Icahn was right, that Hertz Global Holdings Inc. needed to do something about accounting issues and shareholder value. But being right cost Icahn about $40 million on Friday, and it was almost a lot worse.
Hertz’s stock HTZ, -4.58% slumped $1.04, or 4.6%, on Friday, after the car rental company said it would have to restate its 2012 and 2013 results, after previously announcing it would only restate 2011 results, as it continues its investigation into accounting issues. The stock bounced sharply in the final three hours of trading, to pare losses of as much as 14% at its intraday low of $19.55.
Icahn Associates, the car rental company’s biggest shareholder, owns 38,800,000 shares, or an 8.48% stake in Hertz.
In a regulatory filing over the summer, Icahn indicated he bought the stock because he thought the company was “undervalued.” But he also said he wanted to speak to Hertz’s board of directors about a host of concerns, including shareholder value, accounting issues, operational failures and a lack of confidence in management.
Hertz’s announcement Friday may vindicate Icahn’s concerns, but at a price. He lost $40.4 million in market value on Hertz’s stock Friday, if his holdings remained the same. At the intraday low, he was down as much as $123 million.
Since Aug. 20, when Icahn’s holding were disclosed, the of Icahn’s holdings have been slashed by $335 million.
Keep in mind that Hertz announced on Sept. 8 that its chairman and chief executive at the time, Mark Frissora, was stepping down “for personal reasons,” and said on Sept. 11 that it would add three Icahn representatives to its board of directors.
But Icahn isn’t the only one that believes Hertz will be able to turn things around. Analyst Christopher Agnew at MKM Partners said Friday that after a meeting with management, he was impressed with their understanding of the Hertz’s issues and with their roadmap on how to deal with them.
He reiterated his buy rating on Hertz’s stock. His $33 price 12-month target implies a 52% gain from current levels.
Think about it again, after reading below news.............
Carl Icahn loses $40 million on Hertz’s stock in one day
By Tomi Kilgore
Published: Nov 14, 2014 5:02 p.m. ET
Bloomberg
Being right doesn’t mean making money.
Carl Icahn was right, that Hertz Global Holdings Inc. needed to do something about accounting issues and shareholder value. But being right cost Icahn about $40 million on Friday, and it was almost a lot worse.
Hertz’s stock HTZ, -4.58% slumped $1.04, or 4.6%, on Friday, after the car rental company said it would have to restate its 2012 and 2013 results, after previously announcing it would only restate 2011 results, as it continues its investigation into accounting issues. The stock bounced sharply in the final three hours of trading, to pare losses of as much as 14% at its intraday low of $19.55.
Icahn Associates, the car rental company’s biggest shareholder, owns 38,800,000 shares, or an 8.48% stake in Hertz.
In a regulatory filing over the summer, Icahn indicated he bought the stock because he thought the company was “undervalued.” But he also said he wanted to speak to Hertz’s board of directors about a host of concerns, including shareholder value, accounting issues, operational failures and a lack of confidence in management.
Hertz’s announcement Friday may vindicate Icahn’s concerns, but at a price. He lost $40.4 million in market value on Hertz’s stock Friday, if his holdings remained the same. At the intraday low, he was down as much as $123 million.
Since Aug. 20, when Icahn’s holding were disclosed, the of Icahn’s holdings have been slashed by $335 million.
Keep in mind that Hertz announced on Sept. 8 that its chairman and chief executive at the time, Mark Frissora, was stepping down “for personal reasons,” and said on Sept. 11 that it would add three Icahn representatives to its board of directors.
But Icahn isn’t the only one that believes Hertz will be able to turn things around. Analyst Christopher Agnew at MKM Partners said Friday that after a meeting with management, he was impressed with their understanding of the Hertz’s issues and with their roadmap on how to deal with them.
He reiterated his buy rating on Hertz’s stock. His $33 price 12-month target implies a 52% gain from current levels.
Monday, November 17, 2014
Should you follow famed investors to buy and sell stocks?
Following my previous post, now I bring to your attention about a 'huge mistake' on an investment made by Warren Buffett - Tesco PLC, the UK's largest supermarket chain.
You can read the news on Tesco at this URL...
However, it is even more surprising to know that Buffett is selling Tesco after its share price has fallen by more than 50% this year to GBP1.90. Is Buffett expecting the stock to fall further? Should you sell (if you own Tesco stock) or should you buy instead (acting in opposition position to Buffett)?
What is my experience and take?
No, I don't follow famed investors to buy and sell stocks.
Usually by the time you see the news, it usually means you are too late! You will be buying near the high end or selling near the low end (before buying or selling dries up and the rebound comes)!
You can read the news on Tesco at this URL...
However, it is even more surprising to know that Buffett is selling Tesco after its share price has fallen by more than 50% this year to GBP1.90. Is Buffett expecting the stock to fall further? Should you sell (if you own Tesco stock) or should you buy instead (acting in opposition position to Buffett)?
What is my experience and take?
No, I don't follow famed investors to buy and sell stocks.
Usually by the time you see the news, it usually means you are too late! You will be buying near the high end or selling near the low end (before buying or selling dries up and the rebound comes)!
Sunday, November 16, 2014
Hedge fund titan Dan Loeb reports Alibaba stake, dumps AIG
Below is the news I recently read recently:
"Hedge fund titan Dan Loeb's Third Point LLC picked up 7.2 million shares of Chinese e-commerce giant Alibaba BABA in the third quarter, a stake worth $639.7 million as of Sept. 30, according to a regulatory filing on Friday. Funds are required to disclose long positions in 13F filings with the Securities and Exchange Commission 45 days after the end of each quarter. Alibaba marked Loeb's largest new stake, equal to 7.3% of his portfolio, according to Whalewisdom.com. Dow Chemical DOW remained Loeb's largest position at 22 milion shares, with a Sept. 30 market value of $1.154 billion. Loeb also acquired 4.5 million shares of Ebay EBAY worth $254.8 million, while unloading his entire 6 million share stake in American International Group AIG as well as entire stakes in Hertz HTZ and T-mobile."
So, question: Should you follow famed investors to buy and sell stocks?
"Hedge fund titan Dan Loeb's Third Point LLC picked up 7.2 million shares of Chinese e-commerce giant Alibaba BABA in the third quarter, a stake worth $639.7 million as of Sept. 30, according to a regulatory filing on Friday. Funds are required to disclose long positions in 13F filings with the Securities and Exchange Commission 45 days after the end of each quarter. Alibaba marked Loeb's largest new stake, equal to 7.3% of his portfolio, according to Whalewisdom.com. Dow Chemical DOW remained Loeb's largest position at 22 milion shares, with a Sept. 30 market value of $1.154 billion. Loeb also acquired 4.5 million shares of Ebay EBAY worth $254.8 million, while unloading his entire 6 million share stake in American International Group AIG as well as entire stakes in Hertz HTZ and T-mobile."
So, question: Should you follow famed investors to buy and sell stocks?
Saturday, November 15, 2014
Transparency needed for CPF Life - What is the actual payout and how is it computed?
After playing with the CPF LIFE Payout Estimator at this URL for a while, I am still none the wiser as to what is the actual CPF Life payout for each individual and how that payout figure is calculated.
I was told that the actual CPF Life payout amount is at the low end of the range given by the CPF Life Payout Estimator Calculator. If so, could we also assume that the bequest amount is likely to be at the low end of the range as well?
Until CPF Board becomes transparent with the actual CPF Life payout and how the payout figure is calculated, we can only rely on the figure told to us by our friends and relatives, which leads us to the conclusion that CPF Life payout sucks!
I was told that the actual CPF Life payout amount is at the low end of the range given by the CPF Life Payout Estimator Calculator. If so, could we also assume that the bequest amount is likely to be at the low end of the range as well?
Until CPF Board becomes transparent with the actual CPF Life payout and how the payout figure is calculated, we can only rely on the figure told to us by our friends and relatives, which leads us to the conclusion that CPF Life payout sucks!
Moderation and thrift count in retirement
Another interesting article on typical Singapore's retirees expenditures can be read at this URL...
To summarize, some interesting facts are:
* Retirees spend a few thousand dollars at the most each month; more typically, the amount is a moderate $1,000. Perhaps, needs are simpler when one is older. The statistics debunk a fashionable assertion that "even $1 million is not enough to retire on" or that you must target to have retirement income which is 70 per cent of your last drawn income.
* Even for the wealthiest who spend $2,000 a month, they do not need millions in the money pot - just a $600,000 blue-chip and bond portfolio giving a 4 per cent yield, for example.
* Whether future retirees can spend as little as the current batch is a question mark.
* In absolute terms, the typical retired person spends little, but is buffeted by considerable inflation.
* According to the report, individuals in typical retiree households spending $720 a month experienced a 5.3 per cent inflation rate in the last 10 years.
* CPF Life, assuming a full 2015 Minimum Sum of $161,000, provides a monthly income of about $1,300 a month for life from age 65. But at a 5.3 per cent inflation rate, a typical retiree's spending will balloon beyond $1,300 a month after just 12 years.
* The inflation rate of 5.3 per cent is also more than what most conventional insurance instruments can match, or even what the CPF itself provides.
* On average, retiree households in four-room flats spend $1,500 a month, but get $1,230. Those in five-room flats spend $2,000 a month, but get $1,800. Those in three-room flats, condominiums and landed properties spend less than what they get.
* Another interesting tidbit is that retirees living in three-, four- and five-room flats are earning about $200-300 a month in investment income.
* Thus, for the current batch of Singaporean retirees, the picture does not look grim by any means. They are likely to have some resources, in the form of their flat or investments. They are thrifty and do not spend much.
* Still, a large proportion of retiree households' support comes from relatives and friends not living with them, presumably their children; the social fabric is still strong. Contributions from relatives and friends not living in the same household amount to $300-700 a month for most retiree households.
To summarize, some interesting facts are:
* Retirees spend a few thousand dollars at the most each month; more typically, the amount is a moderate $1,000. Perhaps, needs are simpler when one is older. The statistics debunk a fashionable assertion that "even $1 million is not enough to retire on" or that you must target to have retirement income which is 70 per cent of your last drawn income.
* Even for the wealthiest who spend $2,000 a month, they do not need millions in the money pot - just a $600,000 blue-chip and bond portfolio giving a 4 per cent yield, for example.
* Whether future retirees can spend as little as the current batch is a question mark.
* In absolute terms, the typical retired person spends little, but is buffeted by considerable inflation.
* According to the report, individuals in typical retiree households spending $720 a month experienced a 5.3 per cent inflation rate in the last 10 years.
* CPF Life, assuming a full 2015 Minimum Sum of $161,000, provides a monthly income of about $1,300 a month for life from age 65. But at a 5.3 per cent inflation rate, a typical retiree's spending will balloon beyond $1,300 a month after just 12 years.
* The inflation rate of 5.3 per cent is also more than what most conventional insurance instruments can match, or even what the CPF itself provides.
* On average, retiree households in four-room flats spend $1,500 a month, but get $1,230. Those in five-room flats spend $2,000 a month, but get $1,800. Those in three-room flats, condominiums and landed properties spend less than what they get.
* Another interesting tidbit is that retirees living in three-, four- and five-room flats are earning about $200-300 a month in investment income.
* Thus, for the current batch of Singaporean retirees, the picture does not look grim by any means. They are likely to have some resources, in the form of their flat or investments. They are thrifty and do not spend much.
* Still, a large proportion of retiree households' support comes from relatives and friends not living with them, presumably their children; the social fabric is still strong. Contributions from relatives and friends not living in the same household amount to $300-700 a month for most retiree households.
Friday, November 14, 2014
S&P500 index and US$ climbing up...
As mentioned some time ago, I am quite bullish on S&P500 index and US$ (vs S$). I am glad to be proven right with the S&P500 index now 2039 and US$:S$ = 1.2991. This is very important because I am putting my money where my mouth is.......
Thursday, November 13, 2014
Fed rate: Fed's long-run equilibrium rate is now 3.75%
It is interesting to read that 3.75% is now Fed's new norm or new long-term equilibrium rate as follow:
"The new Fed forecasts suggest that at the end of 2016 the U.S. economy will be at full employment, with inflation slightly below 2%. Despite that robust outlook, the Fed's projected median fed funds rate for the end of 2016 is just 2.85%, nearly 1% below its stated long-run equilibrium rate of 3.75%. Fed Chair Janet Yellen attributed this to the "lingering effects" of the global financial crisis."
My understanding is that Fed's long-run equilibrium rate used to be about 5.5%...............
If Singapore's SIBOR rate follows the same trend as Fed rate, and Singapore's SIBOR rate previously was about 2.5% average over long-term, then Singapore's new norm or new long-term equilibrium SIBOR rate should be about 3.75/5.5 * 2.5 = 1.70% !!!!!!!!!!!!!!!
"The new Fed forecasts suggest that at the end of 2016 the U.S. economy will be at full employment, with inflation slightly below 2%. Despite that robust outlook, the Fed's projected median fed funds rate for the end of 2016 is just 2.85%, nearly 1% below its stated long-run equilibrium rate of 3.75%. Fed Chair Janet Yellen attributed this to the "lingering effects" of the global financial crisis."
My understanding is that Fed's long-run equilibrium rate used to be about 5.5%...............
If Singapore's SIBOR rate follows the same trend as Fed rate, and Singapore's SIBOR rate previously was about 2.5% average over long-term, then Singapore's new norm or new long-term equilibrium SIBOR rate should be about 3.75/5.5 * 2.5 = 1.70% !!!!!!!!!!!!!!!
Tuesday, November 4, 2014
US$ shows convincing sign of uptrend vs S$
The last time I mentioned that US$ is likely to rally against S$, the exchange of US$ to S$ is about 1.26. Now, the exchange is 1.291, or an increase of about 2.46%.
This trend is expect to continue................................
This trend is expect to continue................................
Sunday, November 2, 2014
Corning (NYSE:GLW) Q3 sales and earnings beat estimates
In October 2014, Corning (NYSE stock symbol: GLW) announced its results for the third quarter of 2014. It reported third-quarter revenue of $2.54 billion, an increase of 22.9 percent from the year-ago quarter. Also, core EPS grows 21%; and sales and earnings exceed expectations.
Third-Quarter Highlights
GLW earnings announcement for shareholders contain the following statements:
1) "We continue to work on a major initiative for our Life Sciences business, which we believe could become a large opportunity for us.".
2) "Gorilla Glass is receiving interest from the automotive industry for solutions that may reduce overall vehicle weight, improve gas mileage, and provide additional safety benefits. These new technologies may serve as the foundation for Corning's next growth surge".
3) "And with the anticipated conclusion of the current repurchase program this quarter, the board of directors has agreed to accelerate its evaluation of future share repurchases and dividend increases."
It had also recently been announced that Apple did not use Sapphire glass (from GTAT) for Apple iPhone 6. GTAT's Sapphire glass is a direct competitor for Corning's flagship product, Gorilla Glass.
Traditionally, iPhones have shipped with Corning’s Gorilla Glass as its protective cover glass. However, because of Apple‘s deal with GT Advanced Technologies, a manufacturer of sapphire crystal products and manufacturing equipment, there were rumors that the iPhone 6 would have a sapphire cover instead of Gorilla Glass.
While Apple has not explicitly mentioned the use of Corning’s Gorilla Glass on iPhone 6 or the iPhone 6 Plus, there have been indications that the iPhone 6 might have Gorilla Glass protecting its display.
The Likelihood Of Gorilla Glass On iPhone 6 Bodes Well For Corning. The fact that Saphhire glass is unable to replace Gorilla Glass is great news for Corning and their shareholders.
Third-Quarter Highlights
- Core sales were $2.6 billion, a 26% increase on a year-over-year basis. Net sales (GAAP) were $2.5 billion, a 23% increase on a year-over-year basis.
- Core earnings per share were $0.40*, a 21% improvement over a year ago. This marked the eighth consecutive quarter of year-over-year core EPS growth. GAAP earnings per share were $0.72.
- Corning’s LCD glass volume was up by high single digits sequentially, driven by retail sales of TVs and supply chain preparations for the upcoming holiday season.
- Year-over-year core sales in Corning Environmental Technologies grew significantly at 25%, and core sales in the Optical Communications segment remained robust, growing 7%.
GLW earnings announcement for shareholders contain the following statements:
1) "We continue to work on a major initiative for our Life Sciences business, which we believe could become a large opportunity for us.".
2) "Gorilla Glass is receiving interest from the automotive industry for solutions that may reduce overall vehicle weight, improve gas mileage, and provide additional safety benefits. These new technologies may serve as the foundation for Corning's next growth surge".
3) "And with the anticipated conclusion of the current repurchase program this quarter, the board of directors has agreed to accelerate its evaluation of future share repurchases and dividend increases."
It had also recently been announced that Apple did not use Sapphire glass (from GTAT) for Apple iPhone 6. GTAT's Sapphire glass is a direct competitor for Corning's flagship product, Gorilla Glass.
Traditionally, iPhones have shipped with Corning’s Gorilla Glass as its protective cover glass. However, because of Apple‘s deal with GT Advanced Technologies, a manufacturer of sapphire crystal products and manufacturing equipment, there were rumors that the iPhone 6 would have a sapphire cover instead of Gorilla Glass.
While Apple has not explicitly mentioned the use of Corning’s Gorilla Glass on iPhone 6 or the iPhone 6 Plus, there have been indications that the iPhone 6 might have Gorilla Glass protecting its display.
The Likelihood Of Gorilla Glass On iPhone 6 Bodes Well For Corning. The fact that Saphhire glass is unable to replace Gorilla Glass is great news for Corning and their shareholders.