The case for having no Integrated Shield Plan

 

Ok, I need to close the loop for the last article for my mum's hospitalization. Thank you for all the well wishes and very important folks have read the last article after Investment Moats notified his bosses of my experience.

Before I proceed with my insights, I want to shed more light on my mum's Class C Ward stay. The top line cost is about $37k - 3 days high dependency wayrd + 27 days normal ward, government subsidies reduced it by $19k, medishield reduced by a further $6k and about $12k was deducted from my Medisave account. My final cash bill is a big fat zero, which was a hugely pleasant surprise for me as I actually prepared $6k from my cash reserves to pay off this bill. 

So my Medisave has been fully reloaded, the sums removed from cash reserve have been returned and dividends from Wednesday this week can be fully deployed to expoit the volatility from Trump's administration.

So my insight for today is the question of whether there is a case for having no Integrated Shield Plan or ISP.

For a start, I did not get into this position of having no ISP willingly. My bloodline has been deemed too expensive or impossible to insure, so I could not afford H&S insurance even if I wanted to in my 20s. But over the years, as I grew my portfolio, I watched premiums paid by peers skyrocket. Along the way subsidized Class C wards was what my dad used his entire life and prior to my mum's brain bleed, she is a cancer survivor. In all these cases, I was saved by a full-to-the-brim Medisave account and 1 year of living expenses uninvested in cash.

So I believe very strongly that there is a case for NOT having an ISP. But like buy term and invest the rest philosophy, we need to very clear that there is a price to pay to do so. 

The biggest problem is that there is no commissioned salesman who is willing to support my position, so please forward this blog to your friends to read.

a) Don't listen to your FA, we can absolutely rely on default Medishield

The first thing that we need to be aware of is that we can rely on default Medishield that allows us to go up to Ward B2 in a government hospital. And we don't need listen to fearmongering from financial advisors. At Woodlands Health, my mum's ward was 6 patients, there was a screen to watch Youtube, and air cooler exist. It may be more uncomfortable at older hospitals but I suspect older hospitals get better acute care. 

b) You need to be responsible for yourself and become your own insurer

While ISPs can be costly and you will have more sums for yourself, you will need to imagine what your peers are paying for their expensive Class A or private plans and set it aside for investing purposes. This is similar to the BTIR investment philosophy. You need this discipline to make it work but dividends from this portfolio can cover a greater of range of risks - my cash reserves have paid for my daughter's Invisalign and my mum's proactive angiogram. Try calling your insurer to pay for that. 

c) Rush towards Basic Healthcare Sum as soon as practicable. 

So one of the best moves a young guy can do is to keep moving CPF-OA to CP or RSTU until you hit your FRS. The second best move for folks with marginal taxes above 10% is to push as much of your earned income into CPF-MA until you hit a BHS or $75,500. 

The beauty of ths move is that it reduces taxes, secure 4% interest rate ( better than Chocolate finance ), and when it overflows, excess can be fed into CPF-OA or CPF-SA to give you more flexibility.

Obviously, you probably won't benefit from doing all this until after your 40s where weird operating procedures become the norm, but your future self will thank you for it.

Also, after a hospitalization, have the ironclad discipline to refill your CPF-MA, so that you are ready for the next medical crisis. 

Finally, we need to really see ISP for what it really is. 

It is not a product to hedge your medical expenses because the increase in premiums is so brutal every year after age 50. 

The ISP is a compensation plan: not just for the FA, but for the private medical doctor who has a heavy incentive to practice defensive medicine on you to rack up large bills that is paid by the insurer. But this will ultimately bite you in the ass as insurers are not dumb - they will raise premiums year after year and reduce claim benefits. So in the end - it's the healthy folks who buy these plans who are subsidizing the sick folks who make claims from it. 

ISPs has poisoned the well not just for private patients with ISPs for also for those without insurance. When some private doctors hear that I'm uninsured, they know that I will scrutinise each bill and each scan carefully so some will give me a "sian jee pua" kind of face.  

Anyway, this chapter should be closed after today. 

But life goes on, and a medical crisis is probably just around the corner for my household. 

 

   

Fiscal marksmanship and planning for medical expenses

 

I finally managed to get some information on my mum's hospitalization.

In brief, my mum had a bad fall and hit her head while under a regime of blood thinners. It led to bleeding in her brain, affecting the brain regions that cover speech and movement. I hospitalized her after she could not speak coherently. 

While that time was excruciating for me, my mum's recovery was speedy, and she was discharged after a month from Woodlands Health. The hospital continues to look after my mum via a mobile team of doctors and nurses.

I thought perhaps revealing my expenses could help other readers plan ahead for medical emergencies. My mum is a PR, so Medishield does not apply to her, but we stayed in a Class C ward. There was no surgery, but there was 4 days of ICU stay with teams of allied health professionals working on her speech and physical recovery. Now, I know that some folks might gloat and say that I did not pay for an ISP, but my mum had a history of high blood pressure, making it impractical for my family to insure her even when she was younger. 

I don't have a serious breakdown of the fees yet, but the CPF website already has some information. A $12,250 deduction has already been made to my Medisave, and I will likely receive a $6,050 bill much later, which I need to pay in cash. 

So, it is likely that my bill is slightly above $18,000. This is an outstanding deal as the Class C ward in Woodlands Health puts 6 patients in a room, and there are air cooling units in the ward and Youtube access. 

In the grander scheme of things, a $6,050 fee payable in cash is significant but not something that will break a family's back, although I suspect a Singaporean will pay way less. However, I decided to top up my Medisave immediately with our accumulated cash reserves, hoping we would be prepared for our next medical disaster. In the meantime, I get to compound at a rate of 4% and even get tax benefits.

One big lesson readers can learn from this is that, predictably, I know some parts of my family will question my decision to put my mum in a Class C ward. I don't understand why people keep asking my mum whether she can afford the hospital stay when I'm the guy ultimately responsible for finding the money to do it. The answer is simple - my mum is a PR who is not insured. Some relatives will try to demonstrate or insinuate their superiority because they can do it under private wards - I think as fiscally prudent people, we need to resist all calls for it. My medal of pride is that I'm by my mum's side in hospital 6 days every week because I need to teach in a Poly on Thursdays. 

Ask their kids whether they can do that.

So, we are our own insurance company, and we have a six-digit uninvested sum to deal with medical emergencies. If any family ensures a senior for price hospitalization right up to their 70s will pay so much in premiums, they would not have their Medisave constantly overflowing to their CPF-OA account, a privilege I enjoy. 

My family also regenerates this hospital bill via dividends in a matter of weeks and not even months - I just need my mum to lay off buying 4D and Toto expenses for a while - I don't issue CDC/Toto vouchers after our family's version of the pandemic.

This is the essence of fiscal marksmanship. 

If there are ways to be frugal, just do it, and don't bend under pressure. 

There will be plenty of expenses after hospitalization. I'm still paying about $300-$400 for monthly house calls, and I need to pay about $700 more for two months of physio. 

Penalising a family or government is unfair if they have a significant surplus. If anything, a person's Medisave should be reloaded as the next medical emergency will not be far away if seniors are in the household.  

   

About adult literacy in Singapore

 

I was supposed initially to talk about my mum's medical expenses, but the Singapore Government was not in a rush to bill us as they are wealthy this year. Even though I took the pains to configure my access to my mum's medical bills via the HeathHub app, I can't get billing information.

Instead, I'd like to discuss my work teaching Law at a Polytechnic. Some adjuncts have not renewed their contracts, so we have no guarantees that we will have (earned) income next semester. Naturally, some of my colleagues feel a bit nervous. It will seem more like a disappointment for me because I enjoy teaching pre-employment students, and I take the liberty to give them some extra material I deem essential to young adults, which I wish someone would have taken care of when I was in JC.  

One issue I was passionate about was the low Singaporean adult literacy skills reported on mainstream media. I wanted to verify whether this was the case in young adults. Before asking for more details on their books, I reminded everyone that reading is a hobby that women find attractive, even though I know guys tend to buy fewer books than women.

Most of my students read a non-academic book over the past 6 months. 

They could also tell me about the books they read.

Finally, I recommended a book for those who generally don't bother to read anything. Michiko Aoyama's What You Are Looking For is in the Library would be a great way to start, as it is about how reading oblique book references can lead to massive improvements in a reader's life. 

There are a lot of folks out there who want to apportion blame on why literacy rates amongst adult Singaporeans are so poor. I read about some literature teachers blaming our policy of de-emphasizing the humanities as the real reason this is happening. 

Examining and testing folks on English Literature is to blame because Singaporeans who need fiction to pass exams will not be intrinsically motivated to read. My first serious literature was shoved down my throat when I was 10 years old; it was Pride and Prejudice by Jane Austen, but still today, my belief is that once you understand Mr Darcy's cash flow from his estate, you don't really need to know about rest of the work. I also think it's very colonialist to force Singaporean teenagers to read books written by dead white men. 

I will never choose Shakespeare over Gary Gygax. What is the point of understanding Macbeth and the nature of human ambition when the 1st Edition D&D Dungeon Master's Guide already provides rules on the pentagram you need to draw to summon or entrap demons? Lady Macbeth can't fight a Type V Marilith demon. I read more than 95% of the Singapore population because I knew when I was 10 that digesting hundreds of pages of RPG rules makes me competitive in the RPG gaming tables and, subsequently, in some math/verbal exams. One of my greatest moments was seeing the word "necromancer" on my SAT verbal exams.  

Anyway, while we are on the topic of reading, I just completed the first arc of Brandon Sanderson's Stormlight Archives. 

The first arc of the series is contained in 5 brick-sized volumes. Reading it was a massive effort that took up much of my life. 

My motivation?

The Cosmere RPG based on this series generated $13M on Kickstarter, and I don't want to miss out on this new generation of RPGs.

Even fantasy has evolved beyond what my generation has enjoyed, like Dragonlance, Magician or Game of Thrones. This series ended up weaving concepts of mental wellness into a fantasy work. 

Sadly, I must teach myself to remain open-minded and enjoy this series. 

Five volumes are a serious investment of my time, and there are five more to go!

  

Three businesses getting disrupted right now.

 

Every time a semester winds down, I take stock of possible futures and think about the possibility of getting into new businesses with the skills I have developed. As it is too early to discuss the plans I hatched, I'd like to speak briefly about three businesses being massively disrupted.

a) Cinema business

Last year, when I figured out that Cathay Cinemas was not filming Deadpool and Wolverine, I knew that something was up. So, I was unsurprised that Cathay would have to shut down a few outlets, with Westmall Bukit Batok being the latest casualty. I doubt the issue is limited to just Cathay cinemas. 

Why does Gen Z or Gen Alpha need to visit a cinema when they can just watch a movie on Netflix after waiting for a while. Another issue is that recent superhero movies that consistently draw crowds are no longer as consistent as before, with Captain America drawing primarily a neutral reaction from audiences. 

I will continue to visit cinemas, but I will probably watch more Chinese movies in 2025 than Hollywood fare. 

b) Nightlife business

You have to admire Gen Z for figuring out how unwise drinking in the evenings is. 

I do engage in nightlife, but I'm a horrible customer; after paying a cover charge, I drink two bottles of soda water before hogging the Jap karaoke machine for the next 3 hours. What's recently new is that transport via taxi home is so expensive, it is cheaper to skedaddle home at 11.30pm, so there's public transport.

If everybody thinks like this, the nightlife scene is doomed, and we will see many watering holes leaving the market. If Singapore loses its vibrant nightlife, it will affect our tourism industry.

I hope it is not too late to lower alcohol taxes; I know of down-to-earth proprietors who do such work to put food on the table, and they are twice damned due to liquor taxes, and CDC vouchers cannot be spent in their establishments. 

c) Books

Of the three businesses, this one hurts me the most. I went to Kino today to observe the number of shelves vacated for a new cafe. The book space given up was quite significant, and even the finance and investment section now seemed much more minor. 

The situation in Singapore is that there aren't a lot of bookstores left to close down. The curation of bookstore shelves expands the selection of books I buy every month, although I buy a significant amount of physical and e-books every month. Game stores and bookstores are also great places to meet new friends - I would chat with anyone to find out what genres they like reading. 

The issue is that Ngee Ann City does not need a new cafe, given that there's a Paul and Killiney Kopitiam there. Still, I'm open-minded about whether Kinokuniya will build a cafe as a social space for book lovers. 

Book lovers must prepare for the eventuality that major bookstores like Kinokuniya may leave the CBD area and flee to the suburbs. In the worst case, you may even need to go to JB Tsutaya Books if you miss shopping for books in a big store. 

The $100 culture vouchers should be useable for locally published works, but most folks will buy assessment books with them. 

As my generation gets older, we would have to accept that the businesses we love will eventually come to an end. Gamers my age have seen the heartbreaking loss of Leisure Craft, Comics Mart and Borders. While many of these businesses are retail outlets where we buy stuff, these shops are also social spaces. 

I hope that in the grander scheme of things, the younger generation will have newer spaces to mingle and trade with each other.  

Happy Valentine's Day ! Keep working on yourself, ok ?

 

Sometimes, I ask myself why I keep doing Valentine's Day articles. Is it because some of my readers actually enjoy reading it?

So this year's Valentine's Day is a lot more challenging for me as I help my mum get used to living with us, so my day is filled with managing her medical appointments and preparing her medications. Simultaneously, I'm also adjusting my social life to this new reality, getting out and socialising only after I no longer have errands to run for my family. 

On Valentine's Day, the sadistic folks running this AI/Data Science training program sent me two assessment requests on Friday. I spent an hour taking an impromptu data science test, which was OK. The software engineering aptitude test would be a cakewalk, except I ended up taking one of the most complicated tests I had ever taken in my whole life. It was 20 questions for an hour, and interpreting a question alone could take up to 5 minutes. I ended up completing only 12 / 20 questions.

I came off with some newfound respect for professional conversion plans. If we want to stop looking at paper qualifications, companies need tough exams to determine who gets the job interview, and there's no better way than to not let anyone prepare for these tests. 

But that was not the end of my ordeal. I had to walk my students through a Tort Law exam and do the exam myself, as no one was willing to give me an answer key. The good thing about trying an exam that your students need to take is that it can uncover challenging issues that need deeper thinking, and I have to deal directly with issues like time management.

Only after everything was over could I contemplate what to write about for this year's Valentine's Day.

I don't have much to work with other than my observation that Valentine's Day is very low-key in polytechnics. There were some flower booths, but only the girls seemed interested. Guys avoided those places because they might have to pay for stuff. During my time in JC, there were loud song dedications to our various crushes and a great time to indulge in relationship scandals - which I enjoyed deeply.

Another piece of news is this one that went viral after a guy paid over a five-digit sum to a Vietnamese Bridal agency but could not get a Vietnamese wife. The agency owner argued that he vacillated most of the time and wasted much of the agency's time. The amount he spent on the agency could have at least gotten himself 200 shares of DBS, which is declaring bumper dividends this year. 

The common thread of these stories is why even bother expending so much energy on Valentine's Day when you can just keep working on yourself. 

Until my mum's hospitalization, I hung out at a clean Japanese K-lounge, which was way cheaper than places like Cash Studio. The owners are businesswomen who run clean businesses and just chat with clients. It would be nice if you could provide conversation to young single men. No specialised skill is needed - you just need compassion and empathy. I told the proprietor that they are in the therapy business - they can say common sense stuff that sometimes friends and family may not want to say to a guy.

In these establishments, I noticed a lot of young men complaining about singlehood. But I suspect they are not doing the right things - they like to fuss over young women, spend money on them, and turn into simps, but they don't seem to be getting any results. 

So, that leaves us with the problem of defining what it means to keep working on yourself?

It is to improve parts of our lives that are not directly about finding a mate.

Going to a gym and sculpting your body to look good to a mate is not working on yourself. But it might be if you build muscle to improve your health and extend your life. The two workouts differ from those of a physical training expert - one workout will enable you to wrestle a bear, and the other will attract bears to you.

Reading for self-improvement is another area, but it's more complicated as women put a decent premium on well-read guys.

Building up an investment portfolio is also an area where working on yourself, even if it's just to ensure that you can pay for food and transport without using your salary, will push up your ranks in attractiveness. 

Like the guys in Poly, folks are sensing that male attractiveness is status-based, and we guys are rated in a curve against other guys. So, instead of signalling our attractiveness with inconsequential gifts, it's better to work on ourselves and build up our status to make a better play for a mate in the future.

So this year, for Valentine's Day, my message is to work on yourself. 

Do you plan for higher taxes in the future?

 

If you read books by US financial planners, you will find a massive gap in financial planning skills between local and overseas. My general impression is that books from the US can be pretty technical, and a lot of it goes into details like tax planning and coping with their social security systems. In contrast, Singapore financial planning books are clearly written by commissioned salesmen. If you compare the font size alone, you will conclude that our local sales folks have very little to say.

I actually blame the folks who set the CMFAS papers here. Those who take the paper can develop a reasonably deep understanding of a complex financial product like an Accumulator. Still, they don't examine candidates on concepts like standard deviation, much less create a sense of terms like skew and kurtosis.  

The Guru Gap goes way deeper than what local experts do when it comes to tax planning. In the US, it's not enough to avoid taxes via legal means; retirement planning based on the safe rate of return should also account for future taxes. This is actually quite prudent and logical in the US because financial planners believe that the US government's fiscal spending is not sustainable, and everyone needs to anticipate higher taxes on dividends and capital gains in the future.

So, my thought experiment for readers is to ask themselves this question : How will Singaporeans be taxed decades down the road when its time to retire and start spending our CPF-Life money ?

I'm going to attempt to answer the question here, but do chip and share your views because I don't think I have any expertise beyond the readers of this blog :

a) Income Taxes might actually drop

For a start, I don't think our government, with a budget surplus every election term, would want to penalise folks who put in a hard day's work in this country. So, the worst-case scenario is to maybe introduce a new tax bracket of 24% above an income over $640,000. And this is not done to balance our books; it is done to make society more equal. 

In fact, I think the non-tax bracket should be raised to $30,000 because starting salaries are so much higher today that we should be giving lower-income folks a bigger break.

Will this affect financial planning for retirees? That is unlikely, but if I'm right, you can put more money into SRS so that you can withdraw larger sums when you reach 63 years of age.

b) Wealth taxes

Singapore is a wealth hub, so taxing Singaporeans over their wealth is tantamount to killing our golden goose, but the government has an alternative to wealth taxes in the form of property taxation. Wealth taxes are popular and potentially can create a more equal society. As land is scarce, Singaporeans will happily tolerate a higher property tax provided that the taxes are small compared to the increase in the value of their property. But property taxes are extremely unpopular for folks who are asset rich and cash poor, like my family before I showed my dad how to invest for dividends.

I predict that the best mechanism for property taxation is to just elevate the Annual Value for each property. And bigger punishment will be confined to folks who own non-owner occupied houses. 

I project giving up 2 months of rent to tax authorities every year for folks who own a second residential property.

c) Investment taxation

Although it might sound self-serving, I doubt the government will not touch capital taxes or dividends as our stock market is not booming as much as our property markets. However, one area we need to be constantly vigilant about is the tax-haven status of REITs. Every five years, the government will need to review whether REITs that give out 90% of income as dividends can do so tax free. The next review is 2025.

If the review concludes that this tax status will end, REITs will then be subject to 17% corporate taxation - that is one piece of bad news. The second risk is that REITs will no longer be required to give out 90% of their collections, so some REITs will start to retain more of their earnings resulting in a bigger hit to your DPU. Done abruptly, this will tank the REITs markets for sure and destroy the many years we've spent to build out our hub status. 

Imagine losing 20-25% of dividend payouts if this occurs. 

(This has always been one of my ERM training slides although I never want it come true.)

Financial planners and bank relationship managers will be so happy if this occurs, because it means the end of many FIRE journeys. I doubt anyone will do professional financial planning like this, so please diversify your assets betweens banks, REITs, business trusts and blue chip businesses. 

d) GST

I actually believe that the government is not done even after raising GST to 9% and giving out vouchers to the poor to offset a drop in their standard of living. There is a certain savage beauty of GST in that it will hit anyone who buys something, as even a tutor who fakes his income tax statement still needs to pay 9% when he buys something from NTUC Fairprice. A small increase is also extremely consequential and can fund so many more social initiatives. We've also invested in an entire architecture of CDC vouchers to surgically target the recipients of future welfare schemes.

So i think a savvy financial planner should factor for at least a 10% GST in the future with a corresponding increase in the cost of living for a 65 year old.

Of course, as my readers are smart, they are free to have a different projection about future taxes, but I hope it impresses on everyone that projecting higher taxes in the future should be something a true blue financial advisor will do, but sadly why should they? 

They are just people licensed to sell you more financial products.

Happy Chinese New Year of the Snake !

 

I've spent most of my Chinese New Year accompanying my mother at Woodlands Health, and I'm happy to say that she has recovered most of her speech. She still needs physiotherapy and may be moved to a community hospital for more intensive rehab. Consequently, this is the most peaceful CNY I have ever had as I converted the ward into my tiny office space to work on a new project, mark students' scripts, and prepare for my next round of previews next week.

As it is traditional and very apt to talk about metaphysics every Chinese New Year, my Chinese horoscope reading has been spot on. 

For folks wondering why this blog becomes superstitious every New Year, I have my own philosophy regarding Bazi and the Stem and Branch system of the Chinese zodiac. The first concerns the limitations of my mathematical models - even if I can predict a crash based on financial metrics, too much hinges on black swan events that economic models cannot predict, like the pandemic. I have never met a Bazi master who recommends forgoing birth control, for example. Secondly, zodiac readings are almost universally conservative and never encourage making bad life choices. Finally, I prefer Joey Yap, who is very English-educated and likes to put a positive twist on my reading even though everyone's favourite Ch 8 horoscope uncle has rarely given me anything good for the past 5 years. 

In other words, I don't treat Chinese metaphysics any differently from other astrological models like the MBTI, DISC, Emergenetics or the Enneagram. I use all of it to guide my life and deal with the uncertainty that risk models cannot capture. 

The new year has boosted my finances, with almost all my different strategies posting slight returns and the valuation on my real estate showing the most significant gains. Still, all these came with a personal price, as in addition to my mum's fall, my kids have fallen sick. All this is reflected by the Tiger Horoscope, as according to Joey Yap, we have six inauspicious stars against two excellent ones. 

So career and money-wise I should do quite well this year of the Snake, but I will face many personal and emotional challenges. One amusing star I need to deal with is aptly called the Curled Tongue, and the year is inundated with lousy luck involving my adult students. One entitled boomer has constantly disrupted my lessons and insisted that the syllabus and training materials reflect his expertise as an ACTA-trained professional - I'm preparing for the worst before the feedback report returns this semester. Another thuggish student with anger management issues has written to me stridently demanding I recommend him for the SUSS law program - I have relegated his email to my spam folder.

For folks who know my story, Chinese metaphysics led me to collaborate with Dr Wealth because I was told that I have an outstanding balance of elements except the ability to seek help from others, which has been holding me back my whole life. This year, I started working with a new partner to generate shorter (and cheaper) online training courses to drive more traffic to my main course previews. While I have grave doubts that this is monetizable, I'm impressed by the technical and influencer training I cannot replicate with a Skillfutures course.

This is yet another decision that came about purely because of Chinese metaphysics.

The background is that I was not really prepared to do something new or aggressive this year. Especially since my potential partner has a different but admirable goal: geo-arbitrage, where I prefer to work with local partners. Furthermore, because of capacity issues, I blew off another guy (a loyal reader of this blog) last year because I could not adequately quantify the value of the effort.

What changed the game was the advice I got for the Tigers in 2025. We're overwhelmed with unlucky stars in 2025, but we can turn the tide proactively and allow benefactors to assist us. This is one of the components of Chinese horoscopes that I like. If it comes out from a Bazi's expert's mouth, we might ignore them, but CEOs will pay millions if the same stuff comes from some Mckinsey consultant. 

Anyway, my latest partner is an ISTJ. If an ENTJ and ISTJ can't make money on a project together, they must be mentally ill, extremely unlucky, or both.

I've already put in a decent amount of CAPEX that would enhance my preview materials for ERM. 

I will announce this on my blog once we are ready to promote the product.