Think positively

I quote from the Slice Of Life:

When was the last time you were reminiscing about a great time in your life and it made you feel terrible? When was the last time you were thinking about a painful event in your life and it made you feel good? These paradoxes exist because what you focus on is what you get!

With this in mind, the next time you find yourself in a less than desirable situation, be sure to find the positive side of it and focus your attention on that. Not only will you feel better about the situation, but also you will actually be in a better frame of mind to work through it. With this mind-set you will find yourself focusing on the solution rather than the problem.

The best way to control your focus is to ask yourself good questions. Such as "what can I find that is good in this situation?", "what have I learned from this that will make me more successful the next time?", or "how can I make this situation better?" By asking yourself effective questions, you will force your brain to look for and find a solution for what you can do to solve a problem and how you can make a situation better.

I've learned long ago that things never go my way. Never won a single prize in my life, and everything I do, I have to sweat for it. Always, whenever I feel down, I try to think of happy things. If that doesn't help, usually my baby will cheer me up. :p

Anyway, it's not good to be stuck in negative thoughts. It's never good for the mind and your body. Think positively, and you'll live your live happier.

Create, not compete

I quote from the Slice Of Life:

Creation, on the other hand, is about using your talents to produce things of value to society. Creation does not look at other members of society as benchmarks; it focuses on what we personally can achieve with what we have. Creation is about reaching inside to create abundance. This kind of spiritual abundance, not material abundance, is what brings about lasting joy.

When we compete, we're always comparing with others. Why make ourselves miserable? Instead, focus on creating based on what you know and have, and you find that you no longer need to compete, or compare with anyone.

Results always speak louder than talk!

Why do we need insurance?

First of all, need to clarify upfront that I'm not related to the insurance industry, and all these views is based on my layman understanding of insurance. I'm not really in the position to advise anyone on insurance since I'm providing the view from a layman perspective. I would encourage you to approach an independent financial adviser if you wish to purchase insurance. They should be able to explain it in much more detail, and the coverage needed.

Why do we need insurance and why is it related to retirement planning? I'm actually not talking about the normal term or life insurance here. It's the health insurance that I'm actually targeting. To me (subjective), in order of the most important insurance:

1. H&S (Includes medishield)
2. Critical Illness
3. Disability

In retirement planning, you will be formulating a plan to achieve a certain amount by the time you retire. Health is one risk that you should hedge because this risk is quite likely to happen (Insurance is all about hedging risks). Short hospitalization bills for small illnesses come up to slightly < $2,000 for a B1 ward. There might also be some illnesses that require you to be hospitalized quite regularly, and its recurring. Do not think that all illnesses can be cured completely. Big hospitalization bills... I will not mention here, but many people have lost their fortune over medical bills, especially over cancer. Critical illness is less likely to happen to you, but if it does, you can be sure its going to be a big drain on your financial resources. Some of the required treatments might also not be covered under the H&S insurance. Disability insurance is more to ensure that you have an income if you're unfortunately seriously injured and you're unable to work.

Some people might ask... I have a retirement portfolio. Why don't I draw on this retirement portfolio to fund my health needs? Retirement portfolio in reality, is really a long term plan. To generate returns, it's always the battle of risks vs rewards. High risk does not necessarily equate to high returns. However, over the long run (20, 30 years), the risks will become manageable (not disappear).

Withdrawing from the retirement portfolio will affect the returns substantially because the fundamental tool that the portfolio will be using is compound interest. Take away some of the capital, then there's not much you can compound on. If the economy is down, withdrawing from the portfolio will be like buying at a high price, and selling at a low price. Being sick is an expensive affair. It's even worse even if its a critical illness. This will adversely affect your retirement plan.

When you're near retirement age, it's also more likely that you will be sick more frequently. I'm sure no one wants to save for their retirement, to only spend it all on hospital bills. If you spend it all on hospital bills, what are you going to live on?

Even if you're not gunning for a retirement portfolio, I will still encourage that one should at the very least, get a H&S policy. In Singapore terms, that would be the Medishield. Currently, most of the insurers in Singapore have launched the as-charged Medishield. Meaning that once you pay a deductible (fixed) and a co-insurance %, the insurer will foot the rest of the bill, provided your illness is not part of the exclusion list. The Medishield (government or private) can be paid using our CPF. There are other riders on top of the shields that provide cash allowances per day, waiver of co-insurance, etc etc. However, the riders will require you to pay by cash. For more information, please approach your adviser or the respective insurers' websites.

My focus of this post is more on highlighting that being sick, can and will affect your retirement. Don't think that you're now strong and healthy, and nothing will happen to you. Things always happen when no one expects it to. This possibility becomes higher when you get older.

Next post on my retirement planning series, I will be talking on how to fund our retirement.

HDB not building enough flats!

Just read another "stupid" news about HDB today. It was said that HDB is afraid that what happened in 1998 (over-supply) will happen again, so therefore, they are not building more flats.

Why this is "stupid":

1. HDB is suppose to be affordable housing. Therefore, one should not expect to make obscene profits on it. It's suppose to be affordable, and for us to have a roof over our heads. If the economy is doing well, property will also do well.
   
2. Over the past 3 years, we have many reports where couples get queue numbers of 4 digits, and most are first timers. The number of flats available is usually in the low 3 digits. Does that mean anything to HDB??
3. We have fights breaking out during the walk-in selection last year. Doesn't this tell anything about the demand for HDB flats? Instead of solving the problem, they disallow walk-in now! That's called delaying the problem, not solving it.
   

It's very ironical that the government is trying to promote more babies, and yet, through their "policies", they are actually discouraging couples from getting married and having kids. You can never win for all cases. One has to give.

They expected everyone got a raise like them?? Affordable housing? My ... ... ... ...

Savings is important

Savings is like the fuel to the fire. The more savings you put into a retirement portfolio, the more you will get in your portfolio. You might be able to generate 16% returns for 4.5 years consecutive, but it does not mean anything if you only have a capital of $1,000.

Example of 16% compounded returns for 4.5 years:
$1,000 = $2,000
$10,000 = $20,000
$100,000 = $200,000

Do not underestimate the power of compound interest. I'm sure you have heard the rule of 72. This rule is very simple. It simply calculates when your money doubles, given the returns (calculated in %). For example, if your fixed deposit gives you 3% per annum, your principal will double in 72/3 = 24 years, if you roll over the whole amount + interest every year. If you invest in a balanced portfolio of investments giving you 5% per annum, your principal will double in 72/5 = 14.4 years. See the difference?

Some people might say... Why talk about savings? I bank in my salary check every month. My bank balance increases every month. However, how many of us truly know how much we spend per month? If I ask you what's the % you spend on transport, and what's the % you spend on restaurant meals, can you give me an answer? If I ask you now to cut down on your expenses, do you know where to start?

Knowing your spending habits is important, for both the initial part of your retirement planning, and when you're finally withdrawing from it. By understanding your spending habits, you will be able to:

1. Know how much you save per month
2. Know how much of your spendings go to your needs, and how much spendings go to your wants
3. Budget, and invest effectively such that you'll be able to enjoy life now, and after you retire.
   

Yes, the last point is important. I for one never believe that we are only suppose to enjoy life after we retire. Retirement planning is also not an excuse for you to live like a hermit, and eat bread everyday for your 3 meals. If your retirement planning results in this, I think you need to review point 2. Cut down on your wants.

By knowing your needs and wants, you will be able to figure out just how much you really need when you retire? How much you spend on food? Do you need that car when you retire? Are you sure you need all those millions that everyone is saying?

The ballpark % of savings that you should have is roughly at least 20% of your take-home pay. I emphasize on the word take-home pay. Yes... The CPF money is our money, but look at the current trend now. Our "first world" government has been delaying the withdrawal age more and more. Previously it was 62, now it's 65, and its rumored to be 68 soon. For those who are still young, just imagine if they delay it until 70? What are you going to eat on if your retirement savings are stuck in the CPF? Not to mention that most of the money in your CPF will be invested in your home. There's really nothing much left in the CPF by the time you retire.

If you do not know how much you save per month, there are basically 2 ways, the basic and the advanced way. :)

Basic:
Note down all your withdrawals, Credit Card bills, Giro bills, etc. Anything that requires you to spend money. Do it on a monthly basis, for at least 12 months. You have to do it for a full year because there are some bills that are only paid in a certain month (e.g. IRAS, Insurance). Just spend about 15mins a month to note it all down. After which, use your annual salary + bonus, and calculate your savings %.

Some people might have many many accounts, and it becomes quite hard for them to keep track of all their spendings. One way is that you designate an account as the expense account. Transfer a fix amount into it at the start of every month. See if there's a balance at the end of the month. Simple way of keep track of your expenses.

This method though only helps you in knowing how much you're spending in relative to your salary. It usually can't tell you the specifics, but it's good enough though for some people. I'm currently using this method and it helps me keep track of my expenses per month. I've been doing it for at least 3 years. Simple, and yet effective.

Advanced:
This method is more for people who really want to differentiate between their needs and wants, and how much they spend on each type.

It consists of the following steps:

• Keep track of all your receipts for everything that you spend on. Every single expense item should always have a receipt, or you issue your "own receipt".
• Designate 2 boxes. One labeled as needs, the other as wants. Put in the receipts accordingly
• At the end of the month, empty the boxes and calculate your expenses for your needs and wants. Continue doing this for at least a year.
  

This method actually surprises quite a few people because it reveals alot on their spending habits. Some people for example put restaurant meals as a need, instead of a want. At the end of this exercise, you will be able to in detail, know how much you spend, and where it goes to.

I don't think you will be able to keep doing this method forever. This is usually done only initially, for you to be aware of your spending. Once you're aware of it, you can revert to the basic method, or maybe you do not need to keep track of it anymore. However, it is good to review this again when something significant happens in your life, like marriage, kids, etc.

Nowadays, many of us live to quite a ripe old age. 80 years old is not really that uncommon now. Just imagine you retire at 65, and you need to live for 15 years more (assuming you know when you pass on). 15 x 365 = 5,475 days!

Knowing how much you spend will be useful in deciding how much money to reserve for your retirement portfolio, how much you need for your day to day activities, and how much you need to keep for emergency. This I feel is just the basics that we need.

Next, I will be writing on the dreaded word people do not like to hear... Insurance. :p

Argue with yourself

I quote from the Slice Of Life:

Tactic One: Know Your Enemy. In order to fight a good fight, you must spend some time getting to know your own thinking process. What are you saying to yourself? When a great idea pops into your head, what do you do with it? Many people diminish it until the good idea is but a mere memory. So listen close and hear what your personal inner critic sounds like.

Tactic Two: Talk Back. Isn't it strange that we won't accept someone else putting us down, but we are quite content to let our inner critic do us in? Quit being your own worst enemy. When you hear "I can't", disagree immediately!

Tactic Three: Write It Down To Size: Once you have learned to recognize the inner critic, and you've started talking back, keep it in its place by writing it out. This takes a little more time and a little more discipline, but in the long run you will come out ahead. Write down all the icky, finicky, frustrating stuff in your head. Write freely with no editing, no reading, and no rereading. Just get it out. Vent and complain!. Then you'll be rid of the emotional clutter that can keep you from succeeding. And don't stop with just the negative bits. Write out your affirmations as well - your strengths, your blessings, your hopes, your achievements.

Tactic Four: Be Nicer to Yourself: In other words, give yourself permission to be a little insane. Be better to yourself! It's high time you did! Praise yourself, give yourself treats, rewards for good work done, indulge your desires sometimes, look in the mirror and see what a beautiful person you are! Write down ten great things about yourself and read them everyday. Before long, you'll begin to see that you are right. You have amazing potential and superb ideas.

I guess we are always discouraging ourselves whenever the going gets tough. I'm also guilty of that. I guess that is why I started this blog. So I can read my thoughts, and hopefully learn from it.

The stage that is the hardest to get pass, is always yourself. Why must we always make things so difficult for ourselves?

Empower Others

I quote from the Slice Of Life:

We have the ability to assist another person in capitalizing on their full potential. This person could be your spouse, your child or co-worker.

How many thousands of dollars do people spend on motivational tapes, programs, workshops, coaches, and training seminars on learning how to make best use of our abilities? Most people want true fulfillment, in all areas of life.

Therefore, it benefits you and your loved ones to learn how to delegate.

The feeling is real good when you delegate to someone, and the person is able to do it good, and do it well. However, sometimes, you get people who just forgot that they need to do the job, or focus on something that is not the job that you've delegated. I really think that delegating is an art. Sometimes I really just want to do it all myself to avoid the disappointments I feel when the job cannot be done.

I should still try to delegate though. That's the only way forward. I can only do limited things by myself. I have to try to figure a way out on how to delegate effectively. Sigh... Sometimes I really wish that I'm back in primary/secondary school, where things are so simple. Oh well. Ganbatte...

Why do we need retirement planning?

Had a chance to read some books the past 2 weeks while I was away (yes, that was why my blog seems to be devoid of posts :p ). I guess I would summarize what I read into my blog for my reference later. Note that I read the books from a layman perspective, and I do not have any in-depth training for economics.

Why do we need retirement planning? One word. Inflation. Price of a good/service will not cost the same in the future. A simple example. 20 years ago, I can get a bowl of wanton noodles for $1.50. Now, it costs $3.00. The price of a bowl of wanton noodles increased 3.55% compounded, annually. The 3.55% is called inflation.

That was also the reason why I was so frustrated previously about the government's high-handed way of forcing us to buy annuities. I've written about it previously. Just imagine... You put in a sum of money into this annuity at 65 years old, which will only pay me $200-$300 20 years later. We are now talking about $200-$300 in today's dollars now. For those people who are not yet 65, can you imagine how many years we are talking about? Anyone can guess the cost of living when we are 85 years old? Give you a hint... The government recently just said inflation might hit 5% 1st quarter of 2008 (just compound the inflation rate until 85 years old).

One can say... I put money into my savings account every month. What's the interest we get for our bank savings account? 0.25% to 1.x% per annum. See the disparity between the savings rate, and the inflation rate? The inflation rate is hovering around 2.7% to 2.9% since the increase of GST in July.

Therefore, retirement planning is important to all of us, and we should start planning right here, right now. The earlier we start, the more we can save for retirement. There are many financial planners/advisers that are trained in this area. However, my aim for reading up on this is so that we can guard against advisers that might want to take us for a ride, and treat us as their retirement planning (There are good planners and advisers out there by the way).

Will talk about the most important part of retirement planning in my next post on retirement planning. Savings... :)

Ease impact of food prices? How?

I refer to the recent claim by Mr Lim Boon Heng to ease the impact of high food prices on the people. As usual, the statement was made, without any links on how can this be done.

Frankly, I see no way of easing the impact. Singapore controls inflation by strengthening our currency. However, Singapore cannot strengthen it too much because this will affect Singapore businesses. A strengthened currency equate to lesser profits for companies here, especially those that sell their goods overseas, but expenses are in SGD.

They could go by subsidies to the poor. But then again, the qualifying income for subsidies have not kept pace with the standard of living, and many people are actually squeezed, but do not qualify for subsidies. It's especially tough for those who have children. Furthermore, the household income used for qualifying for subsidies is outdated, and it does not take into consideration how many members are depending on that household income.

Not to mention that the rise of standard of living was started by?? *drumroll* The government insistence on raising the GST.

Anyone who takes a slightest interest in world news will know that climate change is big news, and there are bad harvests around the world. Oil shortage has been evident since last year, US short-term view of using ethanol as their solution to energy which resulted in lesser farmland for food, and recently, 20%-30% increase of standard food items like flour, wheat, cooking oil, and now maybe even rice. All these can be derived since last year as the signs are all there. Yet, the government increased the GST.

They have also said that they want to tackle the problem of the growing income gap. What did they do? Give raises to the highest paid ministers in the world. That's tackling the problem?? If you want to tackle, you should give raises to the bottom rung civil servants first, not to the ministers.

Anyway, I'm going off topic. Back to easing the food prices. There's a world shortage of food and resources now. The growing economies of China and India does not help the food prices at all. Inflation will go up, and with the standard savings deposits rate of 0.25% p.a. here, we already have a problem of eroding purchasing power.

Food prices is just the least of problems. I'm curious on how they are going to resolve this problem. Well, the government just had a raise, so they better show that the raise is worth it. We based our system on meritocracy remember? You guys got a raise, so live up to that responsibility.

No Slides for Oracle OpenWorld in China?

Updated 21 November 2007: Refer to comments on how to download the slides for both Oracle OpenWorld held in Shanghai and US. There will be a small link on top for you to download the slides. Thanks kianhui for the links.

This is weird. I received an email long ago saying that I could download the slides that they presented in Oracle OpenWorld in China. However, up to now, I could not figure out how and where to download these slides. I've also emailed them regarding it, and no reply.

Oh well... Luckily I took notes. This further cements my view that Sun Tech Days is much better organized than Oracle OpenWorld.