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.