I wish to respond to Geoffrey Kung’s letter “retirement fund should be risk-free”
(ST 8 August 2013)
Risk-free assets, such as short term government bonds currently provide a yield
that is lower than inflation rate. Over the long term, there is a risk that the
retirement savings will be eroded by inflation.
For long term investors, it is more appropriate to invest in good quality shares
which have historically provided a yield that is higher than inflation. This is likely to
continue in the future.
Mr. Kung seemed to worry about the chance of a loss in shares, if a person were to retire
at the time when the market is down.
There is no need for the retiree to liquidate the investments at the time of retirement. If so,
where does he or she invest the money that has been taken out?
It is better to remain invested in the good quality shares and to draw down from the savings
a monthly sum that is needed for the living expenses. This draw-down can come partly from
the dividends paid on the shares and, if necessary, by the sales of small quantity of shares at
If the market is bad, this will affect only the small amount that has to be liquidated and not
the remainder of the shares that are invested for the long term. The concept of dollar cost averaging
works after retirement as well, and it applies to the monthly sums that have to be withdrawn.
It is more important for the investor to diversify the investments, so that they are not badly affected
by the shares of a few companies that performed badly. A good way to achieve diversification
is to invest in an index fund, such as the exchange traded fund that is created to track
the Straits Times Index of 30 shares. The index fund has a low management expense.
A long term investor, who is invested in a diversified fund, should not worry about
the short term volatility of the stock market. They should look forward to the dividends
paid out regularly on the invested shares, and the long term growth of the shares.
Tan Kin Lian
Financial Services Consumer Association
You can get a business card, provided by your company, only if you are in a marketing or senior position and that may happen several years after you start work.
Don't wait so long. You can create a Facecard now, i.e. the online version of the business card, while you are a student or have just started work and have not yet got an official business card.
You can send this card to your friend or business contact. They can keep it in their virtual contact box. Your details will be automatically updated when you move to a new job or change your email or contact numbers.
Build up your network of contacts now. This may come in very handy in the years to come.
Ex President Nathan is getting the top National Day Award, Order of Temasek (First Class) for exemplary service to the nation.
I have mixed feelings.
I know President Nathan to be a fatherly, friendly and humble person. So, I am happy that he is recognized for this award.
I also share the views of many Singaporeans, that he was paid quite handsomely for his service as President - perhaps more than $40 million over the two terms. So, it is not the same as voluntary or meritorious service to the nation.
It would be nice for ex-President Nathan to donate a large part of that generous salary to a charitable foundation?
Or, for the Government to give a similar, but posthumous award, to former President Ong Teng Cheong?
These two gestures could do a lot to bring the people of Singapore together again.
This thought went through my mind when I read the Straits Times headline, "Govt to play bigger role in building fair and just society".
Reading through the key points of PM Lee's message, I like the following actions:
1. Help children from less well-off family get off to a good start from pre-school
2. Help elderly cope with health care cost
3. Help every family own a HDB flat.
Equally important are the recognition that
4. Jobs are less secure and wages are rising more slowly or even stagnating
5. Families are working harder
6. Parents worry for their children's future
7. Country must remain united and get its politics right.
PM Lee still has to overcome a big credibility gap. Many people have said, "We heard this kind of nice words before, but nothing much had changed. How do we know that you are really serious this time?"
What is the most important single thing that he can do, to overcome this credibility gap?
He has also missed out a few sacred cows that are the root cause of the economic and social problems faced in Singapore. What are they?
To solve the unemployment problem, we need a better way to manage our human resources. This has to be done at a national level.
Here are my ideas:
1. Those who are unemployed will register in a government managed website. They will be accessed for the type of work that they are capable of doing and the hourly rate of pay that are appropriate for the job.
2. Employers can tap into this pool of workers and employ them at the indicated rate. These employers will enjoy a wage subsidy from the government of 30% for a period of 12 months.
3. If the employer is still not profitable, the employer can apply for extension of the wage subsidy for another 12 months. The aim is to ensure that the employers can continue to keep these workers, and that the workers can enjoy a rate of pay that is appropriate and adequate for the job.
4. Over time, this may create a fair market for labor, where the rate of pay and terms of work are adequate for the workers and affordable for employers. It is better than the uncertain market conditions that is faced today.
I believe that there will be weaknesses in my proposed system, and look forward to contributions on how to make it more robust.
Here is another example of an investment scam, sent to me by an investor.
Quote: I was introduced to a 2 year saving plan in Dec 2010. I invested $30,000 in company J (recommended by my friend) and received $400 each month for 12 months. Company J stopped payment due to "GST problem".
I asked for the balance of my invested sum to be returned to me. Company J issued a cheque that is post-dated 6 months later. I banked in the cheque on the due date and was told that there was no money in the bank account.
I lodged a complaint to the Commercial Affairs Division. There were many other victims out side the office of Company J, but they did not lodge any police report. There was no news from CAD abut their investigation.
I got into this problem as it was recommended by a friend, who worked as an insurance agent. I trusted my friend and did not check the background of Company J. Unquote:
I created my Facecard and sent to the friends and business contacts. Several of them created their Facecard, including those who has been out of touch with me for a few years. I get to know of their latest occupation and contact numbers, and also their latest e-mail address. When they make changes in the future, I will automatically be notified of the latest information, without the need for my to update the record. This is the advantage of Facecard. You can create your card now at www.cfacecard.com and send them to your friends.
here is a difference between general education and individual consultation.
For general education, you can read any blog (which is free) or spend a few dollars to buy a book or attend a talk.
For individual consultation on a problem that is specific to your personal situation, you have to see an adviser or expert and pay the consultation fee. This does not come free.
There are many people who do not wish to spend a few dollars on a book or talk, and expect to get individual advice for free. Many of them end up getting the wrong device given for free by people with a vested interest to sell the product.
The consumer ends up with a bad investment decision that will cost them a large sum of money. In some cases, they lose all their money through an investment scam.
This problem will continue to persist, as long as people continue to be gullible, have a mindset to get free advice. You can describe them as "Penny wise, pound foolish".
There is a strong take-up rate of the new 2 room HDB flats by singles. This is a no brainer.
If there is a big pool of ready buyers with money, and a subsidized flat is being offered, e.g. through a large cash or CPF grant, it will surely attract many buyers.
While most applicants need it for their own occupation, some may use it as an "investment" to earn rental income. I do not know the details of how the investment opportunity may work, but I will not be surprised if some of these devices are uncovered in time to come.
The positive side is that the new measures will take off the pressure on resale HDB flats. I expect the prices of resale flats to come down, and that will be good for most people - except the speculators.