Friday, February 16, 2024

CPF investing is "dangerous"

[ Kyith of Investments Moats has pointed out an interesting point I was unaware of. While I know that RSTU up to FRS into CPF-SA exists, I was unaware that after age 55, you can RSTU up to ERS!

He also sought clarification on what I mean by the uncertainty of annuity payouts at age 65 when annuities are designed to provide fixed lifetime payouts. What I meant was that the uncertainty comes from not being able to predict annuity pricing before payouts begin. The CPF Life estimator is just a rough guide.]

What a historic day! What a landmark Budget!

I'm focusing on one significant CPF policy change: to make everybody's CPF Special Account disappear after age 55. The first effect is that CPF Shielding will no longer work, so folks trying to juice an extra 1.5% from retirement savings can no longer get assistance from a financial advisor. The second effect is that the compounding effect of 4% in the CPF-SA will render some of the 1M65 strategy useless.

You can refer to some of my previous posts and judge whether my articles are prescient on such matters.
A more detailed treatment of the available financial mitigations for someone over 55 years old will be posted on the Dr Wealth blog later, I just want to share some random thoughts on these changes.

a) What is the political cost of making CPF-SA vanish at age 55

The first thought I have in mind is the political cost of this move. I think the CPFB really wanted to replace the 4% with a variable rate tied to the 10-year bond many years ago but probably refused to make this move because they were concerned about angry voters. 

I think this policy is much milder because it largely impacts richer folks who have over $426,000 in the CPF system who are milking the 4% risk free. If the CPFB no longer owes 4% to many millionaires, they might be able to enact more generous policies for lower-income voters. 

b) CPF-Life is now a cognitive strain on financial decision-making

CPF Life is now very central to retirement planning.

As the 4% is now gone, folks have to decide whether to commit funds into the OA account that gives a measly 2.5% or park monies in the RA which converts to an annuity. I suspect this will engender a lot of anger in the future because CPF-Life payouts can change over time depending on when you use the Life estimator or reach age 65, and folks don't really know when they will die. I think this cognitive burden levied on the populace, while good intentioned, will cause a lot of unhappiness in the future. 

In a future Dr Wealth article, I will provide a framework about how much to put into the CPF-RA after age 55. I will also talk about investing to minimise the market risk whilst retaining at least a 4% dividend yield for a locally focused portfolio. The days of getting 4% risk-free are over.   

c) If you raise ERS to four times BRS, maybe you add a few new policies to make it easier to reach it.

The raising of ERS to 4x BRS is what baffles me. Many features that can speed up the accumulation of retirement funds switch off after you hit FRS. These features include the OA->SA transfer, and the Retirement Sum Top-Up scheme ceases to function once you hit FRS. The central problem of conventional retirement is that if I accumulated just the FRS, CPF-Life payouts would not be able to match the $1,421 in 2021 dollars required for a 65-year-old to live a dignified existence. There will be a $400 shortfall.

Extending the OA->SA transfer and RSTU to 3x BRS would help greatly for folks who want to attain retirement adequacy earlier in life, given that CPF is no longer burdened by the millionaire's CPF-SA accounts. 

The collective effect of this seismic change in CPF policy is that CPF investing is now highly "dangerous". You no longer have a risk-free 4% CPF-SA account after age 55. 

  • You still have a risk-free 2.5% account in the form of CPF-OA.
  • You can move the funds into CPF-RA but you take on the risk of uncertainty of CPF-Life payouts at age 65 which can be based on annuity pricing. You also don't know when you will die so you struggle with deciding which plan to choose. 
  • Finally you can invest in the equity markets and take on some market risk.

I'm actually pleased with these policy changes because it is going to be much harder to ignore our local stock markets if you want a source of returns denominated in SGD. This may actually provide a longer boost to SGX equity markets.

Wednesday, February 14, 2024

Happy Valentine's Day ! How can we stop the Enshittification of relationships in Singapore.


The word of 2023 is enshittification. 

Enshittification is a term invented by Cory Doctorow that describes the degradation in the quality of online platforms that function as two-sided markets. While the details are pretty specific about how it happens, the main culprit is Amazon, which operates by trapping customers into decent services like Amazon Prime, then raising prices and lowering standards in a bid to monetise for shareholders. 

I can stretch the definition by saying that dating platforms are two-sided markets (men and women), and young folks are very used to finding love on platforms like Tinder and Coffee Meets Bagels. 

Has enshittification occurred in these dating platforms yet? That's up to you to judge, but the stories of meeting weird guys who talk non-stop about crypto investing and fuck boys may point to a longer-term decline of such matching platforms. I also think such platforms are disadvantageous to charming talkers who may be charismatic but not visually appealing. 

So, in today's thought experiment, I will be speculating on what I would do to find a mate if I were in my 20s and single today.

a) Use dating platforms as a practice arena

I have described that dating is best done using the Secretary's Problem. Approximately 37% of the time is spent dating casually to determine your preferences. Dating platforms speed up the process of determining your preferences, I can cycle through multiple dates just to understand my preferences. 

The only difference is that I will set low standards, cast a wide net on these platforms, and reject women directly using WhatsApp instead of ghosting them. In return, every date should be pleasant, and I will read up online on what not to do during dates - like eat at Saizeriya, wear Decathlon from head to toe, or talk non-stop about shitcoins.

b) Focus on activities as a more serious arena for meeting good dates

Serious research into married couples shows a high correlation between couples on educational levels and political affiliation. With that insight, it may be wiser to ask questions about where folks with the same qualifications hang out other than work. I found my wife in a Japanese language school, but LLMs have made multilingualism less useful, so I need to think about alternatives if I am in my 20s and single again. I might have to join a book club or learn singing as a first move. 

I may also educate myself in BDSM - Business Development, Sales and Marketing courses because they have a more balanced gender mix. My usual coding and finance classes are not a place to find women. 

I might also seriously consider grass-roots work. I'm quite anti-woke, so hanging around in the community centre to hit on grassroots PAP women should work better than hooking up with a woman from opposition groups who might not be too sure which pronouns she uses.

If I date some woke-redistributive chick who is a fan of Teo You Yenn, and she knows the dating budget comes from dividends stocks, I'm not sure how she will react. 

c) Join a cult or some kind of religious group

If you think about it, religious groups are captive audiences where affiliation makes you a lot more attractive as a mate. Suppose I can get someone rated 6 in mainstream society; maybe joining a cult can get me someone rated 7 because she really has no other option except fellow cultists.

There was a stage in my life when I tried joining a fundamentalist Christian organization to meet women. The women are very single and very hot, but I baulked because I could not see myself in permanent bondage with a Christian cult for the rest of my life. 

I think if I can replay the script, I might go with a more mainstream group like the Roman Catholics or some kind of Buddhist organization. If I pick Buddhism, which is my most appealing option, I will pair it with my interest in Transcendental meditation, so I won't really struggle with a woman who is too devout. 

Now, all this assumes that I'm financially ok to start dating in the first place. I've always been quite strict about my dating life, prioritising financial freedom first. 

Girls should find me safe. I'm happy to pay for any date with money from my investment instruments.

Friday, February 09, 2024

The Year of the Dragon ! Huat ah !


I get three opportunities to think about my life every year. The first opportunity was on my birthday, Christmas Day. The second opportunity arises when considering the new year after the holiday season. Finally, about a month later, I got to use some Chinese metaphysics to think about my year ahead. I don't just contemplate my Tiger Horoscope; I'm born on the day and month of the Rat, so I need to think about that, too. The year of the Dragon would be, at best, so-so, but it is a year of change. I must proactively deal with some of my problems and grab each opportunity for 2024 to be good. 

This means that, for Tigers, financially, I can expect little gain. My real estate valuation will be meagre, as most capital gains have already been earned in 2023. While REITs will do well when interest rates start to fall later, this will happen quite late, and I'm not sure US Office REITs would have capitulated by then. I made bold moves on Keppel Pacific Oak REIT, and then they delayed their results until the end of February. This will hurt the value of my portfolio. 

Business-wise, it looks better for us. I'm stabilising my cash flow with more side gigs to deal with even lower revenue on my training business. The final result is fewer work hours than a full-time worker but more cash flow predictability. This arrangement also allows my health to get better. There should be some positive news and collaborations with new partners soon. 

I'm glad I have fought off any temptation to take on vanity mega projects; as I reach 50, I'm putting more time into simplifying my life. From my examination of the literature, pursuing a Simpler Life is complicated because it requires a deep analysis of our lives and priorities.

The School of Life series has something quite profound to say about friendship. Why do we need friends, and what should we expect from them? 

There are three answers to this:
  • Friends understand what we go through and give us a sense of normality despite our struggles and idiosyncrasies. 
  • Friends help us clarify our vagueness and help us understand ourselves better.
  • Friends ease us out of our defensiveness and point to a way out in a non-humiliating way. 
My problem with this framework is that if I apply it to my life, I may have no friends at all, and I would not be a particularly good friend to others either, so I can't complain.

This may reflect the metaphysical struggles of a Tiger facing massive changes this year. You have to put in more effort for the folks who can meet this high bar, but then you need to try to meet this bar yourself. It takes a lot of effort and personal development to do this. Doubly hard for ENTJs.

But a slight tilt in this direction will result in massive changes in your social life that will pay dividends for the rest of your life because loneliness is an epidemic in modern societies. 

I will be headed to Malaysia this CNY, I will resume blogging when I come back next week.

Huat ah !

Monday, February 05, 2024

Discussing the hypocrisy around inherited money


For a meaningful discussion, I'd point you to this lovely comic strip by the Woke Salaryman on inheriting nothing. While I do not fully agree with this strip, I am a loyal fan and want to put in some additional points of my own on the issue of inherited wealth.

Before I begin, I want to remind readers that Vicki Robin, who invented FIRE, was heir to great wealth and was somewhat of a hippie.

a) You will always inherit something, whether you like it or not.

One major problem with modern society today is the non-recognition of non-financial capital. Some folks think it's uncool to inherit wealth from their parents. Still, it's ok to inherit conscientiousness and high intellect from professional parents who engaged in assortative mating. In some other cases, folks who inherited the social and cultural capital from their parents still have the gall to call themselves self-made men.   

I don't think you can ever disentangle yourself from your parents. In my case, I've prepared myself to manage my family's money since I was a kid - it was obvious, I had no siblings and lived in landed property. 

But I don't feel bad because I inherited diabetes as well and need all the help I can get. 

b) Wealth itself can change a person's mindset, and it's not always for the worse.

When I was an undergrad, as an only child, my parents let me use $600 every month. That was a princely sum 25 years ago and my dad kinda made sure I knew it. In those days, I was quite bad with my money, but  I always spent it to make myself more competitive. I bought all my engineering textbooks first-hand and I was too lazy to zap the books in the NUS library. I paid excess cash for certification exams and got my MCSE and various Toastmasters awards in my final year of Engineering school, which was helpful in those days and this discipline made it easier to tackle the CFA a year later. 

But truth be told I had no savings then. 

Here's the thing about the magical $600 my mom would give me every month. I felt comfortable spending all of it and knew I was spoilt. So when I started work, I felt no inclination to spend above $600, so I lived like a spoilt undergrad rather than an insecure status-conscious young professional. In fact, when I discovered my personal version of FIRE in my mid-20s, all I needed was $120,000 to get me $600 a month on 6% dividends. And if I just spent $600 a month, it would be super easy to get there with a few increments. 

Then, becoming a millionaire would be easily achieved if I saved every cent I earned at work. 

c) Wealth paradigms upgrade with every added digit to your portfolio

I'm clearly not for disinheriting my kids. I intend to do the opposite and give them a reasonable-sized portfolio to play with when they are still young and dynamic. 

This is because I'm well aware of the kind of mindset when dealing with sums of money and don't want my kids to start a "low level" in this MMORPG called Singapore Life. 

  • Until you hit $10,000, you tend to think more like a gambler; some of you make momentum trades to make a decent amount to buy maybe a better meal, or you keep your cash in a fixed deposit. A lot of crypto bros start at this level. 
  • At $100,000, a 4-6% dividend flow becomes meaningful enough for you to commit to a proper stock portfolio to at least get a dividend income. $400 a month is consequential. This is why I believe that a $100,000 "bribe" to get kids to pass the CFA III exams is something every parent should consider if they can afford it. 
  • At $1,000,000, you will gain enough incentive to operate using different asset classes and may become more interested in volatility and standard deviation. At least because it's painful to lose your millionaire status.
  • I suppose beyond $10,000,000, you will expand your horizons towards more private equity or look into wealth preservation through fixed income. Philanthropy probably also starts here. 

All this being said, I can still sympathise with folks who glorify their lack of a financial inheritance. 

I grew up in a landed property estate and spent my childhood being bullied and shot at using plastic air rifle pellets by ACS boys. I suspect the animosity against inherited wealth comes from meeting assholes who stand to inherit plenty of money. In my case, my bully had a wealthy newscaster/publisher, Doyenne's mum, who could buy him a foreign degree.   

But also, like the Woke Salaryman, I guess bullying from ACS boys has also made me more resilient.

Wednesday, January 24, 2024

How would you design your life if you are young again?


When a group of uncles meet up to have a coffee session, we talk about how we will live our lives if we can be in our 20s again. This is an exciting thought experiment, not because we think there's a better way to live your lives for Gen Z, but because it reflects what we think we did right or wrong in our own lives.

What is surprising is that even with two Gen X guys who have many similarities, we would have drastically different answers to what we would do if we were in our 20s again.

A friend, a successful IT professional and landlord, thinks that if he's given a chance again, he will cruise through his 20s. He would work a bare minimum and save money just to travel worldwide. For someone who is actually one of the hardest working IT professionals, he would lie flat and do the bare minimum just to maximise the experiences he can get from the world. He may not even start a family.  

My answer is opposite his. 

My 20s are all about my chaotic energy, which I can bring to the table. I would focus on a remote and output-driven job. Then, I will actively break the employment contract with HR to take on another remote job to get paid in crypto and stack at least two jobs to become over-employed. If I get caught and fired, I will still have another job that pays the bills. 

As I would have no time to spend my money, I would double down and try to reach FIRE before 30, and then I would either join the JET program to go to Japan or take a tourist visa to pick apples in New Zealand. Only after I travel out of my skin will I return to get a tedious, conventional 9-5 job to start a family. 

I invite readers of this blog to share how they would design their lives if they were in their 20s again. There isn't a need to consider whether Gen Z will find this approach feasible - Gen Z grew up in a much different environment.  

You'll be surprised at how much it highlights the regrets and achievements of your own life. 

Saturday, January 20, 2024

What about the JC Experience?


When the O-level results are released, it is typically not a good time for JC students because the media machine is subtly trying to play down the option of taking the A-level exams via the JC route. As I read the articles, they seem to have painted a very negative picture of the JC student. A childish imp who still needs to wear a school uniform. Someone who does not know what they want to do but has a parochial vision of what success is like in Singapore. And someone bereft of practical skills.

As I'm only really trying to understand the new education system as I now have a child in secondary school, the best I can do is offer some of the more significant experiences I had in NJC in the 1990s. Some of these experiences are good, but some are bad. Overall, they are exciting experiences I would not trade for anything else. 

Even today, when I was feeling down last year, my JC pals from Computer Science got me out for dinner to cheer me up. I even had one JC pal attend my classes last week, whom I had not seen for many years but is a loyal reader of this blog. As most of my clique went separate ways in University, I felt the only issue I had with JC was that it was too short. For folks from NJC, many of us come from neighbourhood schools and saw how an effectively run education institution feels for the first time.  

Here are some of my experiences in a nutshell:

a) A fairly uncharismatic guy was running for the JC council, but he had the misfortune of offending the girls from MGS and the convent schools. Because he wore blue pants for the first three months of JC. The ladies hatched a rumour that he loves lying about being an ACS boy. The story worked, and he got the lowest votes in the election, much to our amusement.

b) We had a school band that was much hated because the lead singer threw a throw into the audience. WTF!

c) A schoolmate of mine did not know what smegma was, that cheesy discharge below the folds of his penis. I told him to ask that girl who took biology in her subject combination. And he did.

d) My friend wrote a rant essay arguing that education is destroying the environment because of the amount of paper used. He was sent for counselling by the worried GP tutor, who thought he had finally snapped and dug himself into depression.

e) Someone slipped a science essay full of sexual innuendo into the school magazine, which had to be recalled. Students were reluctant to give up their copies, so teachers had to beg us to do so in class. The teacher in charge of the magazine was in tears. 

f) Sex education classes conducted by Mr. Clarke were so hilarious that they were better than some episodes of Monty Python. Unfortunately, he raised the bar for a generation of confused adults by talking about swinging from chandelier to chandelier.

g) A few top GP students decide to play a horrible prank on their GP tutor. They independently invented a Korean philosopher and attributed various quotes to him. Because multiple students did this and Google did not exist to fact-check Park Chun Mong, these guys got away with it. 

h) A student trolled Mr. Whitby so hard in class that he told him he said he'd quit and appointed the offending student as GP tutor for the next session. In the next session, Mr Whitby sat down as a student, and the student came prepared to conduct a tutorial session. It ended when the student pointed at Mr. Whitby and said, "Hey, who said you can dye your hair blonde?"

i) I got a bunch of classmates to cheat in a stock market game organised by the Economics Society. We wanted to demonstrate the intellectual superiority of Computer Science students, so we engaged in off-market transactions to consolidate winnings in one championship team - something organizers should have anticipated. There were many complaints, but we knew that the rules did not mention what we did was wrong. Eventually, we were disqualified for insider trading. The ruling needed to be corrected even by today's securities regulations. The president of the club was quite traumatised.

j) I was showing a junior from secondary school on campus when the joker of the senior year walked through the school gate. I told him, "This guy is the funniest guy on campus". At that exact time, that guy scratched his crotch and my junior burst into laughter. He came to NJC the following year. 

k) Some of us needed to gain access to JC facilities to participate in a Micromouse competition during the weekend. We climbed over a gate and broke into the college campus to prepare for it. My classmates will commit a crime to win a Micromouse competition.

l) At one point, students were spreading this rumour that a Physics teacher had a vasectomy over the school holidays. 

I should remind readers that NJC could have been a cooler place to study in 1991. We were labelled stoners by the CJC and ACJC folks. We even have installed a "Stone Garden" in the old campus. I hear of folks from my batch who experience a much more depressing NJC, one that gives more privileges to minister's children. In practice, though, I enjoyed my JC days as part of a crew of fellow lunatics in an asylum and still am grateful that I still have good friends from those two years.

Though we were hard-working as hell when it came to the crunch. I never experienced that level of kiasuism, dedication and conscientiousness until I went to SMU Law School many decades later. 

Thursday, January 18, 2024

Personal update on my eye health


I've been receiving a lot of messages from well-wishers, so I'd like to provide another update on my thyroid eye disease that has caused double vision and is now treated with special prism lens stockers on my spectacles.

After waiting for a few weeks, I was able to get treated by a government doctor at TTSH, and my previous update on my health has predicted totally different suggestions on what I should do next.

To recap, I panicked when I discovered that I was seeing double and took some urgent steps to get treated in the private sector. I spent a ridiculous amount of money to see three different ophthalmologists. Out of $3,000, about $1,700 was spent on an MRI; the only outcome was that I could get poorly made prism lenses to mitigate the issue. 

The suggestion from the private doctor was to get me into a hospital for three days and get an intravenous injection of steroids into my body. But this will be expensive as I steroids can interfere with my diabetic control and there's a possibility that I have to repeat this regularly if there is no improvement of my situation. I playfully suggested that my budget was only $50,000 as I do not have private insurance, and it seemed this option would blow my budget quickly. 

I consulted some doctor pals, and I was told that outpatient options are available, and this was likely suggested so that most clients with integrated shield plans would end up getting insurance companies to overpay for extra checks. In fact, a promising new drug called Rituximab exists that can help with my eye disease and would not wreak havoc with my blood sugar control. 

With $3,000 down the hole, I was not about to just submit one suggestion from a private doctor, so I booked an appointment with TTSH to see whether I could get a second opinion.

As I have guessed, once the incentives change, the treatment takes a 180-degree turn!

The government doctor considered my case extremely mild and gave me new lenses, fitted professionally after a lengthy process, which improved my eyesight dramatically from my previous lenses from the private sector. He instructed me to observe symptoms if they worsened but suggested no medical intervention. I would have gotten all this for just $275. My only disappointment was that the doctor still needed to attend a conference on Rituximab but promised that I would be considered if a trial was conducted locally.

In the end, I had to pick the option that was gentler for my wallet. Informally, the doctor told me I could do some eye exercises, so I started doing them to see whether they could speed up my recovery.

I do have a third option in reserve. I have two specialists in Malaysia I can contact to see whether I can get some out-of-the-box ideas, but this involves travel and risk. The idea that I can talk some Malaysian doctor into administering Rituximab is really tempting, but what if I get into trouble and need to enter A&E in a local hospital?

Anyway, I'm writing to warn of two extreme suggestions for treating my problem. One is to blow a large wad of cash, get myself hospitalized and take something that affects my blood sugar control with the odds of doing this again if nothing happens. The other option is to just let my eyes heal naturally. 

I wonder if both doctors can be correct.

Government facilities and staff to fit prism lenses to patients are vastly superior to what I experienced in the private sector. I even have evidence as to how badly cut my lenses were. 

( Just don't ask privately for me to share the identities of the private clinics. )

That may be why Benz Hui commented that HK doctors are terrified of Singaporean patients because they tend to do a lot of research before seeing them. 

If you look at my situation, what other alternatives do I have?