Mr. Tan,
What are your view on the inflation in Singapore. Are we experiencing just a little inflation of 1~2% or it is higher? I feel that transportation and health care costs are increasing but I am unable to pin-point how it is reflected in the inflation rate.
REPLY
The method used to calculate the inflation rate, or consumer price index, is probably not satisfactory. This applies to many countries, not only Singapore.
The key drawback is the time delay in capturing the changes in the price. For example, many people already see that rental rates, for housing and offices, have already increased. But it affects only people who rents the property and whose leases have come up for renewal. The full impact may take a few years to be fully reflected in the inflation rate.
A better method is to reflect the changes in the prices more quickly, but it requires a different approach. Who wants to decide to make this change? The statistician will follow the traditional method (which was devised a long time ago), unless there is a decision taken by a visionary leader.
Inflation is already higher than the reported 5% for early next year.
ReplyDeleteRight now we are experiencing at least 25%-50% hike for some of the basic necessities. If they constitute more than 50% of the basket of goods usually used for computation of the CPI, the 5% would not taper as it is believed, it may go up.
Is our economy over heated?
If you talk about property, it has shot through the roof (30 to 50%)in less than a year, based on the transacted data of some specific areas I monitored, both HDB and private. But this was never mentioned in the news or anywhere. What's in the news is usually overall or average trends which maybe very much lower eg 5 to 10%. I think the same can be said of some other things eg economic growth, where some sectors are left behind despite official overall 7 or 8 % growth. Same for income or income gap. So when you have an overall rosy picture as painted by the media, the specific realities may be very different and also not highlighted. It happens even in a small place like Singapore.
ReplyDeleteMany ordinary folks are unaware of what inflation can do to their life saving.Insurance agents don't tell them either.If they do,the products they are pushing will not be attractive anymore, especailly endowment and whole life products with cash value. This is irresponsible and unethical.The ordinary investors who trust them are usually poor people and who need a lot of help but unfortunately and unlucky to have insurance agents who eye the commission instead of minding their financial affairs. Imagine they are no better than preserving their poverty at best. The saying that rich get richer and the poor get poorer is indeed true. The insurance agents perpetrate this distribution of wealth.
ReplyDeleteMr. Tan, inflation is spiraling upwards, is it good to invest in fixed return plan, like NTUC growth policy?
ReplyDeleteAn adviser told me that investing in this plan will expose my investment to a lot of risk, like inflation which is expected to go up beyond 5%,lock in which renders me helpless and loss if I liquidate early, and 4% return not guaranteed.
He advised me to invest in unit trusts or ILPs which carry risk but controllable risk and liquidity and higher return than NTUC growth policy.
I ask because an agent from NTUC is 'pestering 'me to invest in growth policy; she is telling me about free insurance which i don't need at all. I am focusing on my retirement.
I wait for your comment before taking action. I will look for an adviser who can help me with this and not one who is only interested to sell me something.