Happy New Year!

CPF Changes from 1st Jan 2008

This is an update of the first phase of changes for the CPF for the year 2008:

CPF Interest Rates
The interest rate for CPF-OA will be 2.5% + 1% for the first $20,000 and 4% + 1% for CPF-SA and CPF-MA for the balance $40,000. Note that the extra 1% interest will be credited to the Special/Retirement account, and not the respective accounts.

The Special/Medisave/Retirement account (SMRA) interest rate will no longer be pegged to 4%. Instead, it will be pegged to the 10 year Singapore Government Security 12 month yield + 1%. The government will maintain a floor of 4% for 2008 and 2009. Note that without the floor rate guaranteed by the government, the interest rate for the SMRA would be 3.9% (2.9% + 1%).


Medisave Minimum Amount
Minimum amount in CPF-MA will be raised from $11,500 to $14,000.


Housing Withdrawal Limit
CPF Withdrawal Limit for purchase of private/HDB properties will be lowered from 126% to 120% of the valuation limit.


CPF Investment Scheme Ceiling Expense Ratio

Expense Ratios Criterion By Risk Categories (Based on median expense ratios of funds included under CPFIS as at 31 December 2004
Risk Categories	Expense Ratios Criterion (%) [Rounded off to the nearest 0.05]
Higher risk	1.95
Medium to High Risk	1.75
Low to Medium Risk	1.15
Lower Risk	0.65

Note that the sales charge ceiling of 3% was kicked in on 1st July 2007. If anyone realised why some of the funds have reduced their expense ratio, look no further for the reason.


This post I've written some time back is the summary of the changes to CPF. There would be a second phase of CPF changes on April 2008, which will include the CPF-IS changes, and the annuity. However, there seems to be a lack of news on the annuity portion. Will keep a ear out for it.

Know Yourself

I quote from the Slice of Life:

Many people look for meaning and joy in the external. They think that they'll be happy when they finally find a partner for life, get that promotion, become famous, become thin, get recognized for their work, or make loads of money.

They structure their lives based on the criteria determined by society. They become so preoccupied with meeting these criteria that they forget to listen to their inner voices, their natural instinct to create the life they deserve.

Being clear about who you are and what you want can be very empowering. The tiny box you used to live in becomes a world full of wondrous possibilities.

Knowing one's inner self is never easy. What we truly want, and what we need can be quite different. To survive in this world, I guess compromises sometimes have to be made. Knowing yourself, and being yourself might be sometimes out of our own control. I hope I can still hold out.

Meaning of Public Service

I quote a section of what David Marshall said back in 1994:

I’ve got nothing against money. I’d like to have money myself! I’d like to have a house and a garden and dogs and a car and a chauffeur but, look, I’ve got a flat. I’ve got a swimming pool attached to the flat. I’ve not even got a car but I use taxis. I have a dignified way of life without being wealthy.

I don’t see the necessity of owning a Mercedes-Benz and a swimming pool and a couple of mistresses. I think we’ve got our values all wrong.

You know $96,000 a month for a Prime Minister and $60,000 a month for a minister. What the hell do you do with all that money? You can’t eat it! What do you do with it? Your children don’t need all that money.

My children have had the best of education. In fact, I’m very proud of them. One of them is a senior registrar to two major hospitals in Oxford. Another of them is a consultant in European law to the Securities and
Investment Board in the United Kingdom. They’ve had their education. There are no complaints.

I never earned $60,000 a month or $90,000 a month. When I was Chief Minister, I earned $8,000 a month.
Look, what is happening today is we are encouraged to and are becoming worshippers of the Golden Calf.

We have lost sight of the joy and excitement of public service, helping our fellow men. The joy and excitement of seeking and understanding of the joy of the miracle of the living the duty and the grandeur. We have lost taste for heroic action in the service of our people.

We have become good bourgeois seeking comfort, security. It’s like seeking a crystal coffin and being fed by intravenous injections through pipes in the crystal coffin; crystal coffins stuck with certificates of your
pragmatic abilities.


I found this over at this blog. This has been what I've been dead against all this while. You're telling me you must pay market rates to a head of a charity? Then where is the spirit of giving? Without understanding the true mission of the organisation, can you lead it?

Likewise in the government, without the spirit of public service, I would rather the minister leave and go somewhere else if money is all they care about. Pubic service is not like private sector, where the focus is more on profit driven initiatives. The ministers have to remember that Singaporeans are paying them the salaries, not any other people. Do the ministers really know what happens on the ground? For some, I seriously doubt so, seeing some of the comments which can only be made by people who did not feel the ground. They have put themselves too far up, and has lost sight of the ground.

If you do not know how much the ministers are earning, you can refer to this post. Ridiculous!

The City View @ Boon Keng?

When I was passing by Toa Payoh, I saw a huge board advertising the DBSS @ Boon Keng. If my memory serves me correctly, its called The City View or something. It says its open for enquiries BUT, no price was stated. Don't tell me its really as per what I written in my previous post??

If its so, it will have the record of being the most expensive HDB in Singapore! Just imagine. Public housing... That pricing??? What on earth is HDB thinking???

Anyway for those really interested, Hoi Hup's website is here. The advertisement states that you can email them for enquiries.

More Taxis at the taxi stands

As predicted, after the taxi hike, everyone is shunning the taxis. When will they learn that the answer is not more surcharges, but a revamp on how fares are being calculated?? Why on earth would consumers want to remember there's an $x surcharge, xx% surcharge during peak hours, xx% surcharge after midnight, etc etc??

The most ridiculous surcharge was the peak hour surcharge. That only proves how detached the upper management (and the government for that matter) is on the traffic situation during peak hours. Based on that xx% surcharge, the meter will just keep jumping and jumping and the price of the fare could easily double in the traffic jam. They believe all Singaporeans got a raise and are all millionaires??

They are only interested in flogging a dead horse, maximizing their investments, and are not willing to think out of the box. Such is life in Singapore. No wonder people want to migrate away...

Inflation is up 4.2%!

Seems like the government always know when to announce bad news. When everyone's attention is on something else, like Christmas.

These are the Singapore inflation rates since July:
July: 2.6%
August: 2.9%
September: 2.7%
October: 3.6%
November: 4.2%

The average has hit 1.9% so far for the first 11months. That means full year inflation should hit more than 2.1% for 2007. That is more than what I have estimated in my previous post. Revising the estimates again, inflation for 2008 maybe around 3.8%. That's only the average inflation. Judging from the bad harvests and climate change, I see that food inflation might hit more than 5% next year if the world governments do nothing to stop this blatant exploitation of earth's resources.

Stagflation is fast becoming a reality. Boy I hate growing up.

Merry Christmas!

How do I withdraw from the retirement portfolio?

I have read many books that talk about building up a portfolio, but few actually teaches how to withdraw from a retirement portfolio.

Withdrawing from the portfolio is as easy as just adjusting your asset allocation. Some people advocate equities investing forever. However, there is one crucial point to take note. Equities investing is volatile. Look at the markets for the past few months and you'll see the effects. Going up and down 1000 points is very common for the major markets like HSI and DJIA for the past few months. After the great depression in 1929, the markets stayed down for 10 years. If you're 90% in equities and you retire in 1929, you may find that your retirement funds might not outlast you. Some people might say that the great depression will never happen again, but what happens if it does?

That doesn't mean though that you should be totally out of equities. Books that I have read talk about 20% to 30% in equities. Shifting the allocation is also quite simple. Assuming you have a portfolio of 70% equities, 30% bonds. In general, 5 years before your "retirement", you will start to shift your allocation more towards bonds. Assuming you wish to retire at 55:

Age 51: 60% equities, 40% bonds
Age 52: 50% equities, 50% bonds
Age 53: 40% equities, 60% bonds
Age 54: 30% equities, 70% bonds
Age 55: 20% equities, 80% bonds

Formula for shifting the allocation per year will be something like: (Equities allocation - 20%) / 5 years.

Why 5 years? That's because we'll never know when Mr Market is feeling well or unwell. Therefore, by sticking to the asset allocation and gradually moving towards the retirement asset allocation, we will still be selling high and buying low, and the retirement portfolio will still be growing. When you retire, it doesn't mean that you will withdraw all the money from the portfolio and start spending. It's always best if the retirement portfolio is still generating returns for you as you withdraw from it. In that way, it will last longer and it will have a higher chance of outlasting you.

Still using the example above, you will have 80% of bonds now. The question would be more like can this 80% bonds generate enough income for you to live for the rest of your life. If it does, congratulations. Your retirement will be carefree and you can enjoy life. :)

However if it doesn't, then it gets a little tricky. That means you will have to draw down your retirement portfolio while still keeping to your asset allocation. Still using the example of 20% equities and 80% bonds, you might want to withdraw 5% from equities and 5% from bonds into a money market fund. Note that your asset allocation is still 20% equities, 80% bonds.

After which, you withdraw your retirement income from the money market fund. This is assuming that the 10% you have withdrawn from the portfolio is enough to last you for 6 months. If its too little, or too much, adjust the % withdrawn accordingly. The lesser you withdraw from the retirement portfolio, the longer your retirement portfolio will last. Once the funds in the money market fund is getting low, just withdraw 6 months of income again.

Reason for withdrawing only 6 months of income is that you will want the retirement income to last as long as possible. By withdrawing as little as possible from the retirement portfolio, your portfolio is still able to generate returns for you, thus ensuring that the portfolio will outlast you.

There are of course many other ways of withdrawing from the retirement funds. The above example I feel though is the safest. Once we reach retirement age, I don't think we will want a heart attack whenever the market goes up and down. Simple philosophy in life is that we work to live, not live to work.

This "last post" sort of summarizes most of what I have read about retirement planning. I still do read books every now and then and will add on to this retirement planning topic as and when I read something interesting. Just to clarify again that these posts sort of summarizes everything I have read in the books. Thought that it might be interesting to some people so I "pen it down" here for all to see.

If you have other ideas, feel free to leave a comment. We can always have a healthy discussion. :)

One Step At A Time

I quote from the Slice of Life:

Every one of us has a unique set of talents. Before you deny this, examine more closely the person that you are. What do you love doing? What comes naturally to you? What are the good things that others say about you that you coyly brush off? You may think these things are insignificant, but each one of them can be built upon to make you a happier, more successful, and more fulfilled person. Millions of people have achieved success simply by doing what they do best and sharing it with the world.

Make a list of these strengths. Embellish them with the achievements you've made, the lessons you've learned in life, and the knowledge you've gained. Read the list every day and really meditate on them. Think about how you can build on your key strengths to produce better results.

And you know what? Very often, the road to great success and happiness is simply achieving one small goal at a time. Nothing empowers us more than doing what we said we'd do. If let's say your talent is writing, then promise yourself to write one page a day. It's a small objective, but over time, you would have accumulated a hunk of work and improved on your writing in the process.

One step at a time.
Build on top on what you know.
Most importantly, believe in yourself.

Be Positive

I quote from the Slice of Life:

When we adopt a positive outlook, we strive to look for the good in every situation. We try to find the lesson, or at least the fun. We learn to laugh at ourselves, and even in the face of adversity. We recover faster and are back on track sooner. And because we tend to see the good in everything, we also experience more joy. That's why positive persons also tend to be happy persons.

You are what you think. That's why after a lousy day, an exhausting ordeal or after receiving bad news, sometimes all it takes for you to feel a whole lot better is a line from a song, a book or magazine, or a remark by a friend; a phrase that sums up what you're feeling but shows it in a wholly different light.

Being positive does help, and it helps you control the stress level. However, it's really hard to be positive all the time. Sometimes, I just feel like screaming. Oh well... Listen to the Chipmunks Bad Day. Somehow, I feel better after that.

Alvin and the Chipmunks

Updated 22 Dec 2007: Soundtrack

Updated 2 May 2008: Bad Day Acapella from YouTube

Saw the movie last weekend. I never had such a good laugh for sometime. It gets a little draggy towards the end, but overall, I love the chipmunks and the music, especially the acapella. Bad Day, Only You, Christmas Don't Be Late... I guess I always have a soft spot for acapella.

I did a search on youtube and I managed to find some of my favorite songs in the movie. I think I'll find time to go down to the store to see if there's acapella version for the soundtrack. Okay, there's no acapella in the CD. Bad Day, Only You, and Christmas Don't Be Late have unplugged versions for the first portion of the songs though, where you can hear the acapella. Here's a sampling of the songs from Amazon.

To date, there's no release of a Bad Day acapella from the movie. However, YouTube to the rescue. I still love that song from the movie.

Bad day acapella


Bad Day



Only You



Christmas Don't Be Late



Witch Doctor

Hady Mirza is the Asian Idol!

Hady Mirza is the new Asian Idol. I think not only Hady is surprised. Most Singaporeans should be surprised too. Out of all the countries, we have the smallest population.

Maybe it's the voting system. They have to vote at least 2 countries per SMS. Hady is known for his soulful singing, at least to me. He also has the charisma, and stage presence. Pity he didn't really dance much during the competition. I like his dancing too. Congratulations Hady. :)

This Asian Idol competition in a way provided me a chance to test out my Dell's battery life too. :p Wow... 4 and a half hours of battery life! I've also updated my Dell's post here.

US Housing Prices will fall by 47% by 2007

I was just reading an interesting book and realised that in 1989, Professor Mankiw and David Weil published an article entitled "The Baby Boom, the Baby Bust, and the Housing Market". In it, they concluded the title above, and stated that prices may reach lower levels than those experienced at any time in the past forty years (US).

Fast forward to now 2007... Look at the US Housing market now, and all the problems it faces.

Incidentally, Professor Mankiw is the chairman of President Bush's Council of Economic Advisors (as of 2005, publish date of the book). Why we never have such talent in Singapore? This is the kind of talent we need.

Re-evaluate your Priorities

I quote from the Slice of Life:

Examine your life schedule and re-evaluate your priorities. What's taking up your time and your energy? Are they productive? Are they improving you in any way? Are they things you enjoy or at least things that make you money or develop relationships? Are there any time and spirit wasters that you feel are your obligations? Be stringent with your evaluations and throw out the tasks that are not benefitting you.

And figure out how you're using your time. True, a day's hours are finite, but if you examine your daily actions, you'll find some things that take up more than their fair share of your time. For example, do you find yourself checking your email several times a day and typing out detailed, carefully-worded essays? Are you sending, re-sending, and forwarding your time

Identify other aspects of your life which may be wasting your time and energy. These are the little leeches sucking the life from you. Get rid of them, and refocus your priorities on things that truly fulfill you.

I guess this is what I do near the end of the year. I do not have New Year resolutions but instead, I do this kind of "house cleaning". This year, I find that it has been especially stressful for me. It's really time for me to re-evaluate what I've been doing for this year, and try to remove/lessen the stress portion.

I work to live, not live to work.

Dell Inspiron 1520

Updated 17 Dec 2007: Battery life
Updated 23 Dec 2007: Laptop Lid
Updated 6 Jan 2008: Dell Drivers Update from Dell Support Website
Updated 30 Apr 2008: Dell Drivers Update from Dell Support Website

After a long internal battle, I finally chose the Dell Inspiron 1520 over the MacBook Pro. Reason is simple... It's much much cheaper. I would still like to play some games so I will also need to get an additional copy of Windows if I get the MacBook Pro. I guess I'm not rich enough... Here's a review of my newest baby. :)

Anyway, these are the specs of my Inspiron 1520:

• Intel Core 2 Duo T7250, 2GHz, 2MB Cache, 800 MHz FSB
• 2GB (2 x 1GB) 667MHz Dual Channel DDR2 SDRAM
• 15.4" Widescreen (1280x800) with TrueLife, and Camera (Creative Live-Cam)
  
• Bluetooth 2.0
  
• 160GB SATA Hard Drive
• Internal 8X DVD+/-RW Combination Drive with Dual Layer write
• Nvidia GeForce 8600M GT with 256MB GDDR2 memory
• Intel Pro Wireless 3945 Dual Band 802.11a/g
• 8 in 1 Media card reader
• 9-Cell 85Whr Lithium Ion Battery
• Dell Large Nylon Case
• Windows XP Pro (With CDs and drivers)
• Microsoft Works 8.5

Total cost including GST: Less than SGD1,980. I would say I got a pretty good deal during the PC Show period (SITEX). I demanded the Windows XP Pro. :)

I bought it on Sunday from Funan. The laptop was delivered on the following Saturday, 1pm sharp (Delivery time was 9am to 1pm). Not bad. Judging that people had some bad experience with Dell, so far my impression has been quite good, even with the Sales people.

One bad thing though was when it came, it only came with 1 partition. The only way for me to repartition it was to reformat it. Anyway, these are the steps to re-format it:

1. Reboot with the Windows XP Pro CD provided (Boot from CD - F12)
   
2. You will see 2 partitions. One is a FAT32 partition. Do not touch this partition. It's for the Dell Media Direct (Watch movies etc without loading Windows)
3. Delete the original NTFS partition and create your own partitions. You can only have a maximum of 3 partitions, including the Dell Media Direct partition.
4. Install the drivers with the Drivers CD provided. There will be an application launched after putting in the CD. Just install the drivers/applications one by one. Note that by default, they do not show you the Mousepad driver. That driver is useful so better install it. Just search for all and you'll be able to see it.
   
5. Install the WebCam CD if needed (I don't think its really necessary though).
   
6. Install the Dell Media Direct software. You will need to re-install this. Otherwise, your Media Direct software will not work.
7. There is also 1 application missing from the original installation, which is the Dell Support Center. You can download it from http://support.dell.com (Not really necessary). You will need to install .Net Framework 2.0 though.
8. Do your Windows patches.
9. Update your TS-L632H D300 D400 DVD firmware (Critical), Dell Direct Media, GeForce (Video), Sigmatel (Audio),Wireless drivers, Mouse drivers, and Dell BIOS A07 from Dell's Support Website.
   
10. Defrag your harddisk (Took me more than 6hours)

If you notice, there is no recovery CD, at least for Windows XP Pro. I've gotten all the individual CDs. Not a problem for me though...

Why did I say the mousepad driver is necessary? Look at the photo below:



Notice the arrow downwards and sidewards at the mousepad? Yes... That's the mouse scrolling area. Basically if you need to scroll down, just move your finger downwards slowly. If you want to see the bottom of the page, just swipe your finger downwards, or vice versa for the top of the page. Same for horizontal scrolling. Cool right? :p

Near the bottom of the laptop, there are also quick switches for your volume.

From the photo, you can also see the Home button near the power button on top. That's the Dell Direct Media button. You press that button instead of the main power button, it will load the Dell Media Direct instead of Windows. Load time is about 10-15 seconds I think. You can watch movies, videos, listen to music, etc. Below is a photo of the Media Direct (You can launch it in normal windows):


Yes I know... It looks like FrontRow. :p

There's also a handy switch on the left hand side of the laptop to disable your wireless (Wifi and Bluetooth), or search for wireless connections. Push it towards the O to disable the wireless, and push it towards the >> (which will bounce back to the | ) to activate the "WiFi catcher".

Basically, from the boot up time to the login prompt, it took about 30 seconds (Latest patches). I would say its quite ok, although my MacBook is faster. :p Oh well... Have to lower my expectations. According to sources, Windows XP SP3 will make the system faster. :D

I have not tested the battery life yet, but will update it when I do. I've tested the battery using the wireless 802.11g, with Bluetooth software disabled. Consistent surfing around with a few windows, no chance for the laptop screen to dim. My battery lasted a whopping 4 and a half hours before going to hibernation mode. Wow... It may be due to the 9 cell battery. That's by far the best battery life I ever had for a Windows laptop. My MacBook lasted 5 hours though. :p

Another surprising thing about this Dell is that it's surprisingly not so hot. I've actually worked on the Dell for 4 and a half hours on my lap. It was warm, but not uncomfortably hot. This is one advantage over the MacBook. The MacBook is hot! You can never work on your lap with the MacBook.

All in all, I'm quite okay with it. The keyboard is nice to type on, and it's much faster than my Fujistu 900MHz with 256MB RAM. :D Dell now comes with different colors. Mine is Midnight Blue. My girlfriend wanted me to get the green one though. :p

Two things to take note though. The speakers are located at the bottom of the laptop. Weird location, but the sounds seems to be quite good if your table is wooden. :D Another is that the laptop catch does not seem to latch on tightly. When you move around with the laptop, you can sort of feel the lid moving back and forth. Not really a problem for me because I treat this laptop as a desktop replacement.

Now, if only I have time to play games...

Income divide encouraged by government!

Updated 16 Dec 2007: Comments based on SM's speech

I think that the PAP is trying to help the oppositions by giving them more ammunition. They have always been talking about the growing income gap and guess what? Its encouraged by them. At times of inflation of up to 5%, where all basic food necessities prices are rising, they gave themselves a 4% to 21% hike in pay!! So tell me... Who is encouraging the income gap??

The government like to compare themselves to the rest of the world. Why don't they compare the minister salaries?? Look at the table below for salaries of world leaders (Source - Yahoo):

Salaries of World Leaders
Country	Title	Name	Approximate Salary
Bolivia	President	Evo Morales	$21,600
Great Britain	Prime Minister	Gordon Brown	$375,222
France	President	Nicolas Sarkozy	$346,000
Germany	Chancellor	Angela Merkel	$318,000
Ireland	Prime Minister	Bertie Ahern	$434,000
Japan	Prime Minister	Shinzo Abe	$248,500
Russia	President	Vladimir Putin	$81,000
Singapore	Premier	Lee Hsien Loong	$2.05 million
United States	President	George W. Bush	$400,000
United States	Vice President	Dick Cheney	$208,575

If the government is serious in addressing the income gap issue, look no further than their own house. I don't mind if you hike the salaries of those civil servants in the bottom rung, but the ministers?? 2million to 3million annual pay??? Instead of using the money to help the lower rung people, they use it to give themselves a raise when they are already the highest paid ministers in the world! Why on earth do we pay our taxes for??

Look at the table below... It speaks for itself. The party is shooting themselves in the foot. Table from theonlinecitizen (Click on the table for a bigger picture).



Even if they wish to retain talent, the ministers should not be going for the job just because of the pay. I hope they remember what happened to T T Durai the other time in NKF. What he did was not right in a charity setting, and he lack the "charity touch". Likewise, if you retain a minister because of the high pay, and not due to the willingness to serve, then the minister is staying for all the wrong reason, and I rather the minister leave.

The reason why they want to be a minister is important! This is standard 101 in any interview. Why do you want to join? Join because of the high pay??? I'm sorry but if I know of such a minister, he/she is not going to get my vote. It's not like the ministers are paid "peanuts".

3 Basic Steps to Change

1. Aware of the need for change
2. Ready and willing to change
3. Take action

Very often, most of us are stuck in the 1st step. I meet many people in my course of work and one of the problems I have is on change management. Many people cannot take the first step. Trying to persuade them to take the first step is very hard because to many, change is scary. The fear of the unknown.

The trick is to look at it 1 step at a time. That means evaluating the first step initially on its own, without thinking ahead (to the 2nd and 3rd step). Many of us have this habit of thinking ahead. Not good if you're easily scared by the unknown.

Once you accept that the change is needed, only then can you start the ball rolling. Easy to do? Of course not. The first step is always the hardest. In fact, the easiest step is actually the last step. However without change, we would still be living in our kampung days, with ox carts and stuff. :)

Ganbatte...

4 Basic Steps on the Jorney of Life

I quote from the Slice of Life:

Step One - Be prepared to look at yourself and admit that every bruise, every fall is all your doing.

Step Two - Surrender, let go of the idea that you should control every event, and have faith that everything you ask will be given to you.

Step Three - Sit down every day and write. Start a journal and every day record the events of the day, paying attention to your reactions to events, experiences, and people. Classify your reactions for what they were, whether they be anger, jealousy, resentment, joy, love, or self-pity.

By identifying your reaction and classifying it as your reaction to an event, you will come to see why you are acting as you are. Why you would react angrily in a situation that does not require anger; your own feelings and responsibilities.

Step Four - Ask why. "Why do I become angry in that situation?", "What is my deeper hidden feeling about this type of situation?". Start recording your "why's" in a separate book. In this book, record all your experiences and incidents of your past and how you reacted to them.

When things happen and we blame it all on someone else, most probably it will happen again because you deem everyone else is wrong except yourself. It always takes 2 to tango...

Discount Rate Offers to Banks

Seems like the Feds, together with Bank of Canada, Bank of England, European Central Bank and the Swiss National Bank will be launching some temporary term auction facility that banks can use to secure loans at the Feds discount window rate of 4.75%.

Finally after 4 months, I hear something that is being done right, which is to address the liquidity problem. This should solve the short term liquidity problems the banks are facing. The sub-prime mess should start to stabalise from now on. However, I still don't like the cutting of the benchmark rate. They should have just cut the discount rate to 4.5%, and announce this term loan auction together, without cutting the rates. This would definitely be what I expect from a "inflation" hawk.

Oh well... Markets should start to normalise just in time for Christmas. However, the sub-prime mess is still not over. The degrade of the risk management of banks is appalling. Looks like I can't even trust banks. Maybe I should just trust my pillow or something.

Inflation hawk does it again!

Yes. The "inflation hawk" does it again. Rates have been cut to 4.25%. Discount rates cut to 4.75%. Cutting the benchmark rates would have absolutely no effect because the problem now is investors are not willing to lend the money due to high risks! You drive down the rates, but investors are not willing to lend out due to the high risks. What's the use?? This like giving panadol to someone having a stomach ache.

With this kind of "inflation hawk", I think we're in for a lot of trouble with regards to inflation. I'm still of view that the US now is thinking that if China/Japan does not appreciate their currencies, then they will depreciate theirs. I see the signs there since US started actively pushing China to appreciate their currency.

Now is no more the age of traditional warfare. Wars are now fight economically. In fact, I think I'm seeing an "economic world war" right now. However, I rather an economic world war than a real war.

Walk away

I quote from the Slice Of Life:

Do you have the power to walk away from potentially-explosive situations? Are you able to postpone defending yourself to another more appropriate time? Can you conserve your cool and avoid saying or doing something you'll regret later?

Because when you care too much about winning in such situations, you lose. You're the one who feels the pressure, you're the one who seems antagonistic and defensive. It will be hard initially, but practice walking away and you'll understand just how powerful it can be in defusing explosive situations and even persuade others to see things your way.


I only tried it a few times and its really not easy to do. However, it sure is effective, depending on the person you're facing. This is not recommended in the business settings though. For the personal side, I would say it gives a chance for both sides to "cool" down and think it over logically, with an open mind. Open mind is the keyword.

By not pushing, both sides have time to think. Sometimes, you might get surprising results.

No Service Level for MRTs???

I really do wonder. Is there any service level that is set by the government for MRTs? I find that the service level has been going downhill all the way.

Some of my main complaints:

• You need to have super eyesight in order for you to find out when the next train coming. Furthermore, most of the time it is showing advertisements instead of the time
• Singapore a multi-racial country?? Someone forgot to tell them to the MRTs. I've noticed that they have recently re-recorded their announcements. And guess what? Only English.
• I noticed that everytime when it rains, the MRT becomes very stuffy. Why? I think the train drivers think that since its cold, they can turn down the aircon. What they don't realize is that once you turn down the aircon, there is not enough ventilation. Therefore the whole MRT becomes very stuffy. If its during peak hour, good luck
• Train frequency. Enough said.
  

They want to know what is first class?? Look no further than HK. First class?? My ....

Way of thinking

I quote from the Slice of Life:

A habit of thinking and acting spontaneously rather than from fears based on past experience. This means that you begin every task with a clean slate. Like an actor on stage, your previous scene has already transpired. Whether or not you stumbled on some words or gave it a lacklustre rendition, it's over. Period. You cannot go back and do the scene again. All you can do is give your next scene your best shot. Thinking about your performance in the last scene only preoccupies your mind with something you can't do a thing about and will likely adversely impact your next scene.

The freedom to enjoy each moment, unencumbered by regret or resentment from what's past or fear of what's to come. The past and future are an illusion, as they say. The only "real" moment is Now. If you can't savour the most of it, whatever it is, then you're wasting the moment. And it won't come back. So forget about how you quarreled with your partner last night, how obnoxious you thought he or she was... today, remember that ultimately, you're in love with each other, you have this beautiful new day to enjoy together, so do it.

Do not judge themselves negatively. By "negatively", I mean in a way that is unconstructive and masochistic - that is, consistently saying to yourself "That was a dumb thing to say!" or "That was a stupid thing to do!", "You're so unattractive!" or "You never do anything right!" - you know, making shallow, sweeping statements about yourself without assessing the situation or making a commitment to do better next time. A self-worthy person knows that frequent self-beration gradually breaks down a healthy ego until the brain starts to believe these crippling remarks. The body soon begins to obey what the brain believes in and subconsciously instructs the body to do.

Our brains seem to be hardwired to make ourselves miserable. It takes a conscious effort to try to pull ourselves out of it. We cannot be successful everytime, but we must try.

Asset allocation is the key to stable growth

If you're in for super high returns, then I can safely say that you do not need asset allocation. Asset allocation is all about managing risk between asset classes. When you manage risk, returns will also correspondingly go lower.

In general, I would say there are only 4 kinds of asset classes: Cash, Bonds, Equities, and Alternate investments. I've mentioned the few asset classes in my previous post here. There are lots more asset classes some people has come up with, but the reason why I summarize it into these 4 classes is because these 4 classes are not really co-related. That means if equities are down due to a recession or bad market conditions, cash and bonds might rise because most investors are moving towards safer, and less volatile assets.

There are 2 kinds of asset allocation. The macro, and the micro view. Macro view will be the distribution of the 4 asset classes. General rule: The safer your portfolio is, the lesser the returns. For those who can stomach high risks, you can see allocation like 80% equities, 15% bonds, and 5% cash, that might give you 10% per annum compounded. For those who wants to play safe, you can have something like 50% equities, 50% cash, that might give you 5% per annum compounded. It all depends on how much risk you're willing to take.

As we all know, the devil is always in the details. For micro view, it will be more complicated. There are mainly 3 types of asset allocation for the micro view for equities and bonds:

1. By Country
2. By Sectors (Not really applicable for bonds)
   
3. Combination of the above
   

Combination is by far the most complicated where you set target allocation on the sector itself, and within that you'll sub-divide it to countries, or vice versa.

Sector allocation is to sub-divide your investments according to the business type. For example, if you have 80% equities, you might sub-divide it like 20% consumer goods, 20% conglomerates, 30% finance, 20% manufacturing, 10% REITs. Most often though, the costs will be high because indexing is usually by country, and not by sectors. However, people has argued that sector allocation is the safest way because different sectors co-relate different due to the different business nature. As you can see, I have put REITs under equities allocation. I do not agree with the books that I should put REITs as a separate class by itself because it is just in essence, a risky Fixed Deposit that gives higher payouts. REITs prices also goes up and down together with the market. Payouts will also depend on the economy, which is in a way related to the market.

Country allocation is by far the most popular. For countries, there are also different methods to go about in it. For example, some like to first sub-divide it into local market, emerging market, and foreign market. So you might get an allocation that is 40% local, 20% emerging, and 40% foreign. After which, you further sub-divide it again to the individual countries. So with 40% foreign market, you might like to divide it into 50% US, 50% Europe, for example. Within that 50% US, there might be big cap companies, mid-cap companies, small-cap companies and REITs. Indexing is the most preferred way for asset allocation by countries.

For Cash allocation, it's more straight forward. There are only a few types. Treasury Bills/Bonds (T-Bills/T-Bonds), Money Market Funds, and Fixed Deposits. Usually, you would like to make sure that your cash allocation is liquid, and which you can draw in short notice. Cash allocation is important because for investments, it's always looking at it for the long term (10,20,30 years). Investors usually try their best not to draw on the portfolio before the compound interest can do its magic. Therefore, the only place where they can draw their cash is from this cash allocation. Some for example might put their 6 months emergency cash in money market funds withdrawable in a few days, and the rest in money market funds and T-Bills.

There is not hard and fast rule for alternate investments, because they are varied, and can range from wine investment, to property investment. I introduced a new entry to it, called job investment. :D

Some might ask... What's all the point for putting a fixed % in all these asset allocation? This is because of the popular quote: "Buy low, Sell High". Let's say your allocation is 50% Singapore, 50% US. US allocation suddenly tanked to 40% due to the subprime crisis, so the allocation became 60% Singapore, 40% US. By shifting 10% of Singapore back to US, you're in essence selling high (Singapore), and buying low (US). That's the whole idea of asset allocation. It tries to bring the emotion out of investing.

For asset allocation, its not recommended to keep monitoring it. Some do it maybe once or twice a year. Furthermore, they do not immediately re-allocate the allocation. For the same example above, let's say the allocation has changed to 55% Singapore, 45% US during your half-yearly review. If your variance buffer is 5%, you will do nothing. Only if it varies for more than 5%, then you will start re-adjusting your allocation. Some though, like to re-allocate whenever something happens to the global economy. It all depends on preference. The point of not looking at it often, is to keep costs low. It's no use getting 10% per annum, but 5% of it will be for expense. It'll be alot of work for nothing.

It's recommended to do a big change to your asset allocation as you grow older. Reason is that as you become older, your risk profile will change. You will have a family, commitments, and wish to leave the rat race. Therefore, some people might gradually shift their allocation. Some might shift from 80% equities, 20% bonds, to maybe 20% equities, 80% cash after maybe hitting 50 years old. Equities are quite volatile and you would not like to retire when the economy is going towards a recession, with 80% equities.

There are lots of books on asset allocation. If you're looking for more details, it'll be best to borrow or buy these books. I'm basically just summarizing what I have read for future reference. :) My "last" post on this retirement planning series will be on how to withdraw from your retirement portfolio. This will in a way relate to asset allocation.

I just hope I have the time to write it. :)

Will the inflation hawk do a NATO again??

Next Tuesday is the last Fed meeting for the year. Currently everywhere is pricing in for a interest rate cut. Will the inflation hawk do a No Action Talk Only again??

If he is truly an inflation hawk, then interest rates should stay for the market, and for Earth to have a breather. There is already a severe strain in the limited resources we have and many of the infrastructure to cater for this demand is not yet ready, especially for food and energy. Lowering interest rates again will spark a hike in demand for this already strained resources.

It will come a time where 2010 is where the great stagflation will take place, which will affect every single economy. I really hope that this is not the case. I hope that there's only a cut of 50 basis point for the discount rate, with no change to the main benchmark rate.

Sometimes, good policies need not necessarily be popular ones.

Pre CPF Annuity Report Update

News just reported what I would say a pre-teaser to the CPF annuity. I would say there are 2 main points:

1. Return of "capital" if your payments do not exceed the amount that you have put in
2. Flexible starting of withdrawal age to start from 65 years old.
   

The annuity will cost more due to these changes.

I would say cost aside, that these changes are quite positive and would work with the general public. However, I feel that feedback from the ground should have been considered first before making such an announcement. There will not be such negativity if all the reactions from the common people has been taken into account.

Anyway, based on this new information, I would guess that the annuity would be based on something like the Medishield. Most probably there would be 3 plans:

1. 85 years old withdrawal age, with return of capital.
2. 75 years old withdrawal age, with return of capital.
3. 65 years old withdrawal age, with return of capital.

Plan 3 will cost more than Plan 2, which will cost more than Plan 1. Payout will be the same across the 3 plans. That's just roughly what I think would happen, to keep things simple.

This is all just a prediction. The full details are not out yet, but I think the purpose for telling us this information is for them to feel the ground. Most probably the details will come out before the new year.

For now, I will not update my CPF changes summary here since nothing has been cast in stone.

Again it happens!!

I hate it when it happens. Yes... Someone again put words into my mouth, and its the same person again mentioned in my previous post.

This is getting irritating. Why don't people just clarify first before jumping into conclusions based on assumptions??!?!?!?

Regulator and Regulated. Singapore has plenty!

Few days back, I have read an article remarking that there shouldn't be cases where a regulator is also regulated. Thinking back... Singapore has plenty examples of a regulator being regulated. In my previous post, I have stated many examples where our government is a substantial shareholder of many of our utilities, telcos, property and transport. Now maybe you understand why our fares and bills never go down, but is forever going upwards?

Sure... They can say that they have a separate board, with someone to check them. Looking at it from another point of view, can you let a CEO of a public listed company sit in the renumeration committee?? Just by this existence of a regulator in a regulated company, there's already a conflict of interest, and it should not be there. Even our stock market is not spared. SGX is both a regulator, and being regulated...

Transparency?? Yeah right...

10 ways to make better decisions

I quote from the Reader's Digest December 2007 edition:

1. Don't fear the consequences
2. Go with your gut
3. Consider your emotions
4. Play the devil's advocate
5. Keep your eye on the ball
6. Beware of social pressure
7. Look at it another way
8. Don't cry over split milk
9. Limit your options
10. Have someone else choose
    

For the details, I suggest you buy the magazine. I'm a regular reader. :) They have many interesting articles for this December 2007, one of which is on how are we affected by noise pollution in our everyday life.

Anyway, these 10 ways I feel are determined by looking at the psychological standpoint. We're always second guessing ourselves and doing stupid things because we think this might happen, etc. I guess sometimes we have to take a step back and just think about it, and sometimes we just have to just jump right in.

Like what some Singaporeans like to do.... Cheeoooooooonnnnnggggggg ah!!!!!

Why is there no Oracle for Intel Mac?!?!?

The Intel Mac has been out for some time. However, since Oracle 10g, there has not been a single version out for Intel Mac! The only version out for Oracle 10g is for PowerPC. There's also no Oracle Express out for the Mac!

I really wonder if the Mac base is really so small such that it's not worth it to fix a version for it. I thought since its the Darwin core, which is UNIX base, pushing out a version for the Mac Intel should be a piece of cake.

Oh well... Looks like I have to keep recommending Postgresql now for Mac.

Free Backup utility in XP

Do you know that Windows XP provides a backup utility that will help you backup your information? Few people know of the hidden program. By default, this will be installed in the Windows XP Professional.

However, I understand that for Windows XP Home, it will not be installed by default. It will be in the XP Home CD though. You'll have to search for it. I think that there is a ntbackup.msi in the CD. This I cannot confirm because I'm running Windows XP Professional. There is a Microsoft KB article here that shows you where to get the file.

Basically, this utility is called ntbackup. It helps you backup your information directly to a file, or to a recordable CD/DVD. You are also able to do scheduling of backup jobs, if needed. This has the bare basics of backup, which I think is sufficient for a normal user.

To run the application, do the following:

1. Goto Start > Run
2. Type: ntbackup
   

That's all to it. If you feel adventurous, use the Advanced mode. Otherwise, just follow the wizard.

Embrace Changes with your eyes wide open

I quote from the Slice of Life:

The mind is like a child. Its intelligence will always include some primal remnants that equate change to death, discomfort to death, and discipline to death. It must be trained and given guidance by a loving but firm spirit in order to fulfill its true purpose.

For our greater good, we have to let the spirit control the mind. Every week, try adopting one life-enhancing practice consistently. You'll find that when the spirit takes control in these instances that the mind will protest - it will try to persuade you that it's too difficult, that it's better to have things status quo, that you need your fixes to soothe the frustrations of life.

Change is something that most of us is resistant to. It's quite seldom that you see people embracing change readily. However, not all changes are good. Although its good to embrace change, embrace it with your eyes wide open. Not all changes are for the better. I guess that's the reason why people are so afraid of changes.

But still... No change, no innovation. Without change, I won't even be writing in this blog. :D

Domestic consumption is the key

I do not understand why somethings that are stone cold obvious to me, but yet no one is acting on it.

We have the big US and Europe companies complaining about China not buying more goods from their respective countries. First of all, have they look at their respective practices before they made the claim that China is intentionally keeping their currencies low?

The big MNCs are setting up factories in China because of only one reason... It's cheap. The labour cost is much cheaper than setting it up in their domestic countries. However, it seems that the people in China that are hired by these big MNCs are paid the China market rate, which barely covers inflation in China. If these people are paid minimally, how on earth can they afford the goods imported from Europe and USA?

The CEOs and upper management of these big MNCs will then reap big bonuses and salary hikes for the perceived better operational performance. They will in turn use these bonuses to buy more imported goods, which comes mostly from where? China.

On the other hand, the workers in China will still toil for these big MNCs, with no such salary hikes and bonuses. I have not read any news where MNCs give big bonuses to the lower rung of the hierarchy. These china workers will just worry about their day to day living, and would not even dream of buying US and Europe goods.

Now from this viewpoint, who is at fault now for causing the trade imbalance? I won't say China is not at fault for causing part of the problem due to the export tariffs, but they have gradually eliminated most of it. China imports have grown, but not as much as China exports. I could only see one conclusion from this, which is that the China workers are not paid well enough to afford US and Europe goods.

I understand that the whole point of outsourcing is to lower costs, but one must always look at the bigger picture. You treat the workers well, share the profits, and in a way, the profit will come back to you. This will increase domestic consumption, and it will lead to a virtuous cycle.

This problem in a way also applies to Singapore. I do not need to mention who is the biggest consumer of services here. However, look at the tender bid amounts for projects and you know that they are cutting corners. They cut corners with the domestic businesses, thereby boosting their own bottom line. After that, they complain that Singaporeans are not spending enough to raise domestic consumption. This is .... .... If they stop giving big bonuses to their upper management and start to give more to the lower rung, and they are willing to pay for quality work, then we won't have this domestic consumption problem. It's not that we do not want to spend, its because we could not afford to at all! It doesn't help that those "people up there" seems to be very detached from what's happening at the ground level. Yet, they said that they cannot figure out why is there an income disparity! Come on man.... It's obvious why!

This blaming game reminds me of the previous conversation I had with someone in Jakarta, which I have posted here. Sadly that's the way of life, where almost everyone only thinks for themselves. With these kind of mentality, there will be no more innovations for the next decade.