Portfolio/ Work Outlook 2020 & interesting reads (8th Jan)

Wishing fellow investors, friends and readers a HAPPY NEW YEAR 2020!

A few readers have started to gently remind me that I'm late for my blog post update! 😅 Would firstly like to thank all of you for your continued support and concern since I started investing in February 2018. Time flies, 2 years have passed in a blink of an eye.

tl;dr (Too long, didn't read) Summary:
1. Busy Dec Period: Taking a toll but Fruitful - 
Work, studies and relationship commitments have taken up considerable time.

2. Portfolio update: Outlook for next 2-3 years -
Investment portfolio is likely to take a backseat. Currently, I am gearing up for wedding/HDB. If you have any pro-tips regarding couple finance/ saving for HDB/Wedding, please do leave a comment/drop me an email! 😊

3. Work update: Performance for the year/ Career building - 
Career is at a stage it can go either way. I need to secure a promotion before the current boss moves on to his next post (2 years target, 4 years max). Overall secured a good performance this year and will have chance for further exposure.

4. Interesting reads and thoughts of KC
- Sing vs. Singh
- LV's success and why we should aim to go over to business side on a company as an employee.
- Sugar baby: Would you be one?

1. Busy Dec Period: Taking a toll but Fruitful

Work:
Indeed, December has been a crazy month with my work as I saw a ramp up of work activities due to my department trying to spend the allocated funds for projects.

Gatherings/Paktor (dating):
Christmas and New Year was also a great time to get together with friends whom I have not seen for some time to catch up as well as to spend time with our loved ones. I would like to thank my loved ones for being my pillar of strength and support. You know who you are! ❤️ And so, one colleague and a long time University buddy both invited me to their HDB. Co-incidentally, both are in Sengkang. And so, it kickstarted a HDB conversation between my partner and I. One thing I learnt was that renovations could be cheap(er) and your house turns out more unique/ customised if you do not go to the interior designer.

Night Classes:
My night classes are starting to take its toll on my body with packed classes in the evenings on most Mondays, Wednesdays and Fridays. I have to somehow last till end of March. Short term pain for Long term gain. Press on!!

2. Portfolio update: Outlook for next 2-3 years

My Priorities have changed: for the next 2-3 years, from being a single person to starting preparations for marriage. As a result, my portfolio savings goals is likely to take a hit. Something has got to give way so I will have to be more prudent in my daily spending to maximise my savings over this period.

This also means that I will have minimal capital to deploy and will have to be more prudent in screening my counters. First and foremost, the bottleneck would be savings and the main constraint is the limited amount of salary I have. It is either I spend less, save more or I increase my salary somehow.

I am also on the lookout for BTO but I am quite inexperienced in this aspect: if you have any opinion and good advice regarding HDB/BTO, feel free to drop a comment below or drop me an email. I would really appreciate it!

On my portfolio side, there is some speculation that AIMS Apac Reit would be in for a M&A: https://www.investingnote.com/posts/1778469. Meanwhile I would keep calm and collect my dividends.

Portfolio as of Jan 2020

	Stock name	Code	Entry price	Shares	Price	% Allocation	Type
1	FCOT	ND8U	1.4674	1000	1467.37	3.61	Base
2	FLT	BUOU	1.0712	2500	2677.88	6.60	Base
3	Singtel	Z74	3.3182	1000	3318.16	8.17	Base
4	APTT	S7OU	0.1631	10000	1631.4	4.02	Base
5	Vicom	V01	6.0340	500	3016.99	7.43	Base
6	SSB	Just for reference	1.0000	2000	2002	4.93	Base
7
8	Aims	O5RU	1.3800	3000	4152.48	10.23	Base
9	Cash				$22,333.06*	55.01	Cash
				Total Amount	$40,599.34	100.00

- Portfolio value is $42,318.06 at end of 2019.
- *$20,000 earmarked for wedding/housing fund. (expect my portfolio to take a hit)

Short Term Goal 2-3 years
Wedding/Housing Fund Target: (approx. $800 per month min.)

Year	Year Start Value	Target Value	Actual Value
2020	$20,000	$29,600
2021	$29,600	$39,200
2022	$39,200	$48,800

Projections (since inception):

Road to Financial Independence
PROJECTION					ACTUAL FIGURES
Year	Age	Portfolio Projected 2%/yr	Current capital injection Rate/yr	Estimated Dividend 3%	Actual Portfolio at end of yr	Actual Capital Injection/yr	Actual Dividends
2018	31	$12,000.00	$12,000.00	$360.00	$15,941.59	$16,928.40	513.25
2019	32	$24,600.00	$12,000.00	$738.00	$42,318.06	$23,670.94	$890.54
2020	33	$37,830.00	$12,000.00	$1,134.90	$22,318.06 (Till Date) (-$20,000 for Wedding/HDB fund)	- (Till Date)	-  (Till Date)

Long term portfolio goals would stay as per the table under the Portfolio Update page. It remains to be seen how much I would be affected with the goals shift. 

3. Work update: Performance for the year/ Career building

My job transition has stabilised and it is time to think about improving my current skillset so that I can hopefully move up to the next level in my career.

I have been incredibly lucky to secure a pay raise and severance (previously retrenched) as well as a chance to travel abroad for business for exposure in my new employment.

Added responsibilities beyond current job scope (can be a double-edged sword):
The positive here is that my current boss thinks that I am performing well and turning out good results as compared to a few colleagues who are in a similar level to my role despite only being in my role for half a year. Consequently, I will have a chance to prove myself as I take on added work (tasks for the next level job) outside of the core responsibilities of my current role as well as more opportunities to gain exposure and experience.

The drawback is that I will definitely have less time for monitoring that market (which is probably fine since I will have less capital to deploy). And also, past experience at my old company where I was retrenched has taught me that things can change very fast, especially if my boss were to be changed by the management or re-located to elsewhere in the company.

I might lose favour and get stuck so I am under some pressure to push and secure for the promotion fast within 2 years. If I do not manage to secure this by end of 4 years, it would mean that I have got stuck because by then my current boss is likely to move on to his next post.

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4. Interesting reads and thoughts of KC (8/1/2020)

#1: Sing vs. Singh: Singaporeans vs. PRs?

Read More: https://www.todayonline.com/singapore/chan-chun-sing-and-pritam-singh-spar-parliament-over-data-distribution-new-jobs-among

Read More: https://www.todayonline.com/commentary/singapores-economic-growth-and-job-creation-have-benefited-citizens-more-foreigners

*Disclaimer: This is just my opinion and based on anecdotal experiences. I am not siding any political party, but more concerned about Singaporean's future and my own future as a Singaporean.

One of the major talking points that have caught my attention was this Sing vs. Singh showdown in parliament where our opposition is questioning and pressing our ruling party to inform us of the exact breakdown of Singaporeans and PRs in what is defined as "local PMETs"

This is a tough and a cold hard truth Singaporeans may have to face: Are Singaporeans these days so strawberry that we have to rely on policies to guarantee we get ahead in this supposedly meritocratic system?

But, if we go down such a path, it is dangerous because in the private sector, work quality counts. And in some cases, the work quality I have seen from some of my Singaporean colleagues really make it hard to justify putting them ahead of FTs in my various stints at a few MNCs. Many of the FTs I have worked with in MNCs have good exposure, turn out better work quality, better work attitude and are far more humble and open to learn than Singaporean colleagues.

I really feel that the government should release the statistics and let us draw our own conclusions. If we are failing, we need to know and we need a knock on our heads, fast.

#2: The Story behind Louis Vuitton

  

In my previous blog post, I shared this video (a documentary on LV's success I watched on my flight back):

Firstly, I gained a good understanding of branding and business models of a successful business that I find is commonly found in other businesses as well. Successful businesses often are able to charge premium for their products, create a good and loyal customer experience and while earning a high margin. From an investing point of view, a 40% margin would mean a highly profitable business.

A breakdown of LV's cost in a bag is as the picture above.

The people who actually make the bag only earn the pie from 10% of the price of the bag. The sales person earns from the 50% pie, while the company takes in 40% profit. I find this a sobering thought now that I am in a business related function, having come from a technical background within my industry. Folks in the business side have far more chances for advancements while the manufacturing folks are often kept there (don't fix what isn't spoilt) as production managers in the manufacturing departments often try to keep things status quo.

I used to envision a career in Technical, but in most companies, Sales teams often have a louder voice and are the decision makers in the company. This is true for my current and previous company. Even if you make the world's best bag, it would be nothing if nobody knew about it and none of it gets sold.

Where would we want to be in a company? Think again.

I could be misguided by my own experiences but I would definitely want to leverage on my technical experience to try to gravitate towards sales/marketing functions and customer facing roles as I can already feel a considerable difference being employed on the business side.

#3: Sugar baby: Would you be one?

At this point... just want to put out the supposed "benefits" of sugar dating the lady got:

- HP laptop
- Pandora custom made necklace
- Hotel stays and private yacht trips
- Iphone
- ~ $3,000 SGD allowance
- Support daily expenses, pay for student loans

I'm rather speechless with this one. But I do think she is rather brave to be truthful about this. I think she has a day job that earns around $3,000 as well so I guess this gives her the ability to sustain the kind of lifestyle or dating she wants. I just can't help but wonder if this is an exploitation disguised as 'dating'.

Read More: https://www.businessinsider.sg/sugar-baby-relationship-sugar-daddy-what-its-like-2019-8/?r=US&IR=T

What do you think?

K.C.

If you like this post, you might like our facebook page as well. I'm also on Investing Note.

Related topics:
1. About K.C. What is my story?
2. My 3Cs to money/investing
3. Why you need to set aside money for savings first
4. Interview process cycle: How to increase your interview rates
5. My 2018 Year end review
6. I'm retrenched: 3 things to think about

7. Why I refuse to spend >15-30 minutes budgeting each month

Disclaimer: The views expressed, opinion and information in this article are strictly for informational purposes to encourage educational discussions only. It is important to conduct your own analysis before making any investment decisions based on your own personal circumstances. You should take reasonable measures such as seeking independent financial advice from professionals and/or independently research and verify the information that you find on "30 Year Old Investor" before undertaking any important investment decisions. No content on this site constitutes - or should be understood as constituting - a recommendation to enter any securities transactions or to engage in any of the investment strategies presented in our site content. We do not provide personalised recommendations or views as to whether a particular stock or investment approach is suitable to the financial needs of a specific individual. No representation or warranty expressed or implied is made as to, and no reliance shall be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained on this website. "30 Year Old Investor" shall not be liable whatsoever for loss or damages of any kind arising from the result of any use, reliance or distribution of the articles or its contents from information contained on this website. 

Nov Update: Sold Japfa, added AIMS reit and thoughts on company trip 😛

2019 has been a good year (overall) for me.
From being retrenched to getting a pay raise and new opportunities: I did get more busy with work and commitments but it would be best to capture down my thoughts while they are still fresh.

NOVEMBER UPDATE (STOCKS):
I have been purely focusing on my work which I have gotten up to speed. As a result, there were only 2 stocks that I have purchased from the period of late June up till November:

The two stocks are Japfa (SGX:UD2) and AIMS APAC Reit (SGX:O5RU). I will go straight to the point regarding the motivations behind getting these 2 counters. These 2 counters experienced some distress which caused their stock price to be "punished". The fundamentals of these 2 remained largely unchanged but was beat down due to short term reasons.

Japfa (SGX:UD2)

Source: https://www.businesstimes.com.sg/companies-markets/brokers-take-cgs-cimb-downgrades-japfa-to-reduce-after-african-swine-fever

For Japfa, in early March, there were already calls for it to be downgraded. This was on the backdrop of the African swine fever outbreak. This presents a crisis as fear whipped the stock down.

Source: Japfa website

Japfa's profile: Has 3 segments namely the Dairy, Animal Protein and Consumer food segments.

Japfa's dairy segment:

Source: Japfa website

Some of us might be familiar with the Greenfields label branding. That comes from Japfa. Japfa runs farms in China (over 72,000 imported Holstein cattle) and also farms and milk processing facilities in Indonesia. This caters to the needs of the region (Hong Kong, Singapore, Malaysia, Brunei, The Philippines, Myanmar and Cambodia) with Singapore as the distributing point.

Japfa's consumer food segment
Japfa also supplies processed food with their own supply of poultry, beef and aquaculture farms to mainly the Indonesia market and also Vietnam.

Japfa's animal protein segment (the troubled one):

Source: Japfa website

Source: http://www.fao.org/ag/againfo/programmes/en/empres/ASF/situation_update.html

This is the troubled segment for Japfa:

The African Swine Fever (ASF) outbreak hit its swine business as Japfa engages in Swine feed manufacturing & distribution, GP-PS breeding, Commercial piglet production & distribution and Fattening of commercial piglets under JAPFA COMFEED VIETNAM LTD. CO. The ASF hit a host of asian countries from late 2018 and continued through most of 2019 as countries took action to control the outbreak with pig culling, legislation on illegal vaccines, movement control.

Source: https://www.straitstimes.com/asia/se-asia/indonesia-says-throw-eggs-away-to-support-chicken-meat-prices

Another stressed segment is its Poultry segment in Indonesia. Poultry prices and egg prices collapsed and the average retail price of chicken meat has plunged 25 per cent this year to 30,050 rupiah (S$3) per kilogram, the lowest since at least July 2016.

I entered Japfa on 21 June with EP of $0.535. From March onwards it was on a downtrend and headwind from the distressed segments played out. However it has since rebounded off in October. This was probably off the news Japfa posting revenue of US$952.2 million, with an 8.5% growth compared to US$877.4 million of the same period last year (despite the troubles).

Source : Japfa 3Q2019 Financial Results

One interesting point to note was that while overall Revenue increased, the operating profitability dropped significantly. As such I would expect it to start retracing, but this run could continue for a while through to the Chinese New Year festive periods.

Japfa Summary Action:
EP: $0.535  (10,000 shares) - 21 Jun 2019
Sold: $0.555 - 8 Nov 2019

Happy to sell for a small small profit to fund one of my overseas purchase since it was a relatively short term speculative position. (Short term because I think of myself as a passive long term investor) All that work for $150 gain, I know I know. lol. I admit I was okay to just breakeven given the backdrop of having to stomach it going down to 0.4X. More astute investors/traders among my circle added more when it went down further. I did not. So therefore, I still think my emotional side is not as disciplined in execution of trade plans. Hindsight is 20/20 as they say. But I'm happy to reduce losses from last year, no matter how small the amount is.

I was able to hold down on my EP even when it dropped to lows of $0.45 because of holding power. As I did not need the money invested I could afford to hold it until it turnaround. However, I did not expect it to continue in an upward trend as it is doing now (Short term uptrend intact). I would expect it to retrace at some point later on.

AIMS APAC Reit or AAreit (SGX:O5RU)

Source: https://www.businesstimes.com.sg/companies-markets/hot-stock-aa-reit-tumbles-68-after-bookbuilding-exercise

The case for AAreit is a more straightforward one. (Will not go into fundamentals of AAreit, but you may want to check out its website). The Trust mainly invests in a portfolio of income-producing real estate located across the Asia Pacific (industrial purposes, including warehousing and distribution activities, business park activities and manufacturing activities.)

According to a Business times article (16 Oct 19): "AIMS Financial, AA Reit’s sole sponsor, had placed out 70.3 million secondary units in the Reit at S$1.35 apiece, raising some S$94.9 million. It also represents an 8.8 per cent discount to the units' closing price of S$1.48 on Oct 15.

The placement units comprised 10.09 per cent of the total number of AA Reit units currently in issue. They were placed out to predominantly new investors, including institutional, sovereign wealth, family office and high net worth investors across the Asia-Pacific and Europe, the manager said during the midday break.

The secondary placement occurred via a bookbuilding process by Merrill Lynch (Singapore), DBS Bank and Maybank Kim Eng Securities on the same day."

New shares or old shares?

Another Business Times article said on the same day: "The placement came after AIMS exercised the call option relating to the 70.3 million units, which were previously held by AIMS' former joint venture partner AMP Capital Investors and its affiliates."

https://www.investopedia.com/terms/s/secondaryoffering.asp

According to investopedia, "There are two types of secondary offerings. A non-dilutive secondary offering is a sale of securities in which one or more major stockholders in a company sell all or a large portion of their holdings. The proceeds from this sale are paid to the stockholders that sell their shares. Meanwhile, a dilutive secondary offering involves creating new shares and offering them for public sale."

Since the 70.3 million units were previously held, they couldn't have been new units. (therefore technically, non-dilutive) but it got punished nonetheless.

Of course, if we were existing holders, this feels like a "dilution" although it is not as they sold it cheaper than valuation. But since I did not hold any shares, the "punished" stock presented a rare buying in opportunity - with the fundamentals unchanged.

AAreit Summary Action:
EP: $1.38 (3,000 shares) - 18 Oct 2019

I do think that this stock can be held down for the longer term. I wanted to buy 6,000 shares but as usual of my plan sizing, I will buy half. This is also in line with my aims to keep a certain amount of cash.

Update: AAreit also offered a DRP (reinvestment plan) to give out recent dividends at the price of $1.368. (current trading at 1.44) which I will subscribe for this time.

Stock monitoring at the moment:

I am looking at Mapletree NAC Tr (SGX: RW0U) and HongkongLand USD (SGX: H78). This is because with the situation in Hong Kong, this stock has similarly been "punished".

Source: https://www.businesstimes.com.sg/companies-markets/mapletree-nac-trust-says-damaged-hong-kong-mall-still-closed

However, I would likely adopt a "wait and see" attitude as I don't think the situation is likely to dissolve itself soon. This kind of events are usually rare and the scale of disruption to this is far worse that that of AAreit (considered mildest) to Japfa (a mid term crisis brought about by ASF and poultry prices' demand and supply).

MNAC, for example has fallen from recent highs of 1.46-ish to current levels at 1.14. Not all "punished" stocks present good opportunities and we need to do our homework to determine if they are short term fall or long term fundamental changes. (Think lippo malls as a result of their sponsors and Indonesia government's tax law changes in the past)

Company trip 2019

This year has been overall a good year and there is really little for me to complain about. During the early portion of the year, my old company was facing headwind so there was little work to do. Eventually, when the retrenchment axe came, I was able to secure a new job opportunity that started within 2 weeks after my old employment ceased. With it came along an increase in pay and brand new opportunities to learn. Thank God it all worked out in the end.

My heart is full of thanksgiving as also because as a result of the retrenchment, I made friends with a local SME CEO (I went for interview at his company but accepted another offer) whom I could really click well, and in come sense, what he shares about his challenges and mindset really inspire and intrigue me. I'm also humbled that he does not consider beneath him to make friends with me or share his thoughts. (I'm just a poor young man from a poor background, trying to find his way in the marketplace today)

My current work comes with its own set of challenges as well. However, I think all in all, after interaction with so many colleagues, my boss and supervisor are generally very supportive in terms of work. The culture at work is also a very positive one.

The question of "doing just enough" or "beyond call of duty"

One thing that constantly comes to mind is this: How do I grow in my career and also breakthrough?

From my exchanges with my seniors and the CEO friend, there are generally 2 types of workers (doesn't mean low value workers earn less, in fact some can earn alot but are comfortable):

1. The low value worker:
- Does only what is required of him/her
- Very comfortable and not willing to do more
- Will NOT lose an arm or limb for the company
- Brings lesser value to a company as they may not be very good at their primary tasks or their job doesn't require skilled or niche labour. (anyone can do their work)

2. The high value worker:
- Will do beyond what they are required of
- Willing to partake in challenges with the company
- Will sometimes put company interests ahead of self (workaholics)
- Bring more value to the company as they are good with their primary tasks but also able to offer a wider range of experience.

It is not surprising that with the waves of digitalisation, many PMETs find themselves retrenched. This is because they may earn alot and think they know alot, but fail to pre-empt and adapt to changes in this new economy. I would like to think that we ought to want to be the high value worker rather than the low value worker.

Doing more sometimes is the way to learn new things and discover that we can actually excel beyond our comfort zones. Without displaying that we are capable of much more and being comfortable in our roles, we cannot possibly hope for advancements in our careers.

Yup, I know. Some of us are thinking, work life balance, family and etc.

But this is where I feel we lose out to foreign talent (of our own excuses and choice to become comfortable) because they are far more hungry than us Singaporeans. If we were bosses ourselves, would we hire Singaporeans?

This is the thinking point. Having gained the exposure to overseas colleagues and organisations to see how they operate or work, I just don't see how Singaporeans can hope to win against the competition unless we buck up in our own attitudes and mindset. Are we just another 打工仔, and a low value one at that? The globalised world presents the sort of competitiveness not present in our parents' baby boomers era: someone from the other side of the globe can easily replace your work today either via outsourcing or totally come to Singapore to take over us.

I see how hard my current boss at his 50s work. I see how some people have moved into better roles (with more responsibilities) because they showed that they can do more. I also see people who are very comfortable with what they have, being okay to work 8-5 and go back to their families daily.

Don't get me wrong though, I think this is down to personal opinion and there is nothing right or wrong about being comfortable. Some are perfectly fine with it. But to me there is the danger of being retrenched later on because we don't see the danger until it is too late. (Having been through one is painful enough, even at age 30)

Moreover, if we think we should be paid more, are we delivering more value than what we are being paid for?

Summary thoughts

I will want to work harder now that I am still single not married with family commitments. (Edit: someone reminded me I'm attached, so I should not put myself as single). 😂

As my young (early 40s) global division manager said, always be open and try things, even when we think we may not like them or think we couldn't do them - because we can simply be wrong about it and could end up liking it. He himself was asked to do something he didn't like but he excelled in it and the interest grew over time.

Keep an open and learning mind. Yes, that's what I would do. Be proactive. Do beyond what we are told to. Be hungry. Do what people tell you that you cannot do.

p.s. I also watched a documentary on LV on my flight back which is very interesting as well. Which I will blog in another post on why I think we should try to move towards business side as an employee (below is a breakdown of LV's cost and margin)

 

Until Next Time,

K.C.

If you like this post, you might like our facebook page as well. I'm also on Investing Note.

Related topics:
1. About K.C. What is my story?
2. My 3Cs to money/investing
3. Why you need to set aside money for savings first
4. Interview process cycle: How to increase your interview rates
5. My 2018 Year end review
6. I'm retrenched: 3 things to think about

7. Why I refuse to spend >15-30 minutes budgeting each month

Disclaimer: The views expressed, opinion and information in this article are strictly for informational purposes to encourage educational discussions only. It is important to conduct your own analysis before making any investment decisions based on your own personal circumstances. You should take reasonable measures such as seeking independent financial advice from professionals and/or independently research and verify the information that you find on "30 Year Old Investor" before undertaking any important investment decisions. No content on this site constitutes - or should be understood as constituting - a recommendation to enter any securities transactions or to engage in any of the investment strategies presented in our site content. We do not provide personalised recommendations or views as to whether a particular stock or investment approach is suitable to the financial needs of a specific individual. No representation or warranty expressed or implied is made as to, and no reliance shall be placed on, the fairness, accuracy, completeness or correctness of the information or opinions contained on this website. "30 Year Old Investor" shall not be liable whatsoever for loss or damages of any kind arising from the result of any use, reliance or distribution of the articles or its contents from information contained on this website. 

Invited by NTUC to a Retirement Adequacy/CPF Group Discussion

Update 1/9/2019:

- It's now my 1.5 months in my new company and everything is stabilising so I have time to blog again!
- I am now keeping net cash and not adding more positions at the moment but focusing on savings.

KC have had some feedback that he is quite "Lor-so" (Slang "Long-winded") and it is difficult to read for some readers. Going forward, KC will definitely try go as to point as possible and to explore telling visual stories through short comics or picture. Sorry this will still be a long article.

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TL;DR Summary

1. Many Singaporeans probably do not have enough to retire. Whose responsibility is it?
2. Retirement age and Re-employment age is increased as with CPF contributions for older workers to help to bridge that gap.
3. The possible "backfires" to the policy changes: Unwilling employers and unwilling employees. How will the government convince them otherwise? We won't know the effects till years later.
4. CPF's liberalisation over the years have allowed Singaporeans to enjoy some benefits at the cost of our retirement. (This has to be managed carefully)
5. Stay away from money detriment habits!
6. Personally, I feel that we ought to take ownership of our own financial plans, and not expect the handout from the government. Learn about the systems in place and how they can benefit us.

Hereby, I would like to ask and encourage fellow readers to contribute your comments/complaints/feedback/suggestions to the discussions. Who knows? Someone who has a say in policy making might be reading. (We hope)

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Recently, because of this blog "30yearoldinvestor", I had the chance to take part in a small focus group organised by the NTUC on the topic of "CPF, retirement and re-employment ages". (Special thanks to J from NTUC for inviting me).

I will just talk to myself about my own opinions. I think the talk essentially was trying to answer a question:

How much does a Singaporean need to retire adequately? (Consequently, is the Govt and CPF doing enough?)
Note: This post represent solely my own opinions and are not affiliated to any organisations. Yea, it is NOT a sponsored post.

In the recent NDP rally, Our Prime Minister spoke of raising the retirement age and re-employment ages progressively from now till 2030. Firstly, I can imagine it to be quite an unpopular policy given the older folks and business owners I have spoken to. But the government seems quite positive about this so let's hope they are right. My foreigner boss actually credited our government for thinking so far ahead of time saying that usually governments only care about the next election.

Definitions (if we still do not understand what it means for us):

1. Retirement age:
Employers are not supposed to terminate us unfairly due to age below the retirement age. The minimum retirement age is 62. This will be raised to 65 by 2030.

2. Re-employment age:
While we are employed, employers must offer re-employment to eligible employees who are turning 62, up to age 67. This will also be raised to 70 by 2030.

These are enforced under the [1] RETIREMENT AND RE-EMPLOYMENT ACT (CHAPTER 274A) to protect our rights. For accuracy, please visit the site.

First of all, it will take some convincing for employers to continue to employ elderly workers (whose CPF contributions will now also be on par with the younger folks). This could translate into additional business costs for companies. Is there any incentive for business owners to align to this policy? (e.g. tax rebates etc for a % of elderly Singaporeans hired?)

Source: CNA NDR 2019: From retirement age to climate change, here are 9 things you need to know

A few older folks I have spoke to also do not want to work until so old (In their words: Wa lau, work till die meh?). Many are working not because they want to but they have to to make ends meet. There is some disparity here from the narrative that older workers want to work longer.

Another pressing concern is that as an elderly, we may get retrenched in a better job prior to 62. Therefore many will not be holding jobs that make them eligible for re-employment.

This is perhaps better illustrated by this graph taken from the Report by MOM on the [2]Labour Force in Singapore 2017:

In 2017, the number of elderly (>60) employed rose to 14% from 6.1% in 2007.
We somehow have to shift that curve towards the (rather exaggerated) brown one.

The policy changes sounds good on paper (nice in theory), but time will tell if they really pan out as we imagined. Let's hope that it is not too late by then.

Now, this is where the other tool called CPF comes in.

So, What is CPF? Can eat one?

Since CPF was started in 1955 by the British and our first self-governance's Chief Minister David Marshall [3], it has become a much different instrument for Singaporeans. Our living standards have improved, but so has our cost of living. As such, many people start to feel that CPF may not be adequate for citizen's retirement needs.

In my understanding, CPF originally was only meant for catering to the retirement needs of old and aged Singaporeans through enforced savings but has since started to cater for a range of things. (we shall not go into specifics here but just to illustrate that it has evolved with time)

4 major things we can now use CPF for:
1. Public Housing since 1968 [4]
2. Healthcare needs: Medisave started in 1984 [5]
3. Investing for higher returns in 1986 (later became CPFIS) [6]
4. Education for tertiary education (self/children) since 1989 [7]

For full list of timeline changes to CPF, refer to here.

Then and Now: I think we have already liberalised CPF's usage over the years to cover alot of things. 

I think you get the point that CPF has changed already been changed to "GiveUsBack" our money over the years so that we can use it to enjoy certain benefits such as to tend to our housing needs, education and healthcare needs. But, there is a catch. Because ultimately it is still meant for retirement, funds "borrowed" will have to be returned in some way...

So, is CPF enough for our retirement?

Going by current trends, it would be a yes/no. It depends on our own expectations and what kind of living standard one wants to sustain. I would say, it will probably be a No for me. That is why I have started my own planning ahead of time. I would think that CPF is like an additional tool I must understand and put into my own planning as well since we can't get rid of it. Might as well understand how it works and how it can benefit us.

What can the govt do to help us?

To be honest, after role-playing for about 30 minutes as the government in the discussion, I do think that it is not easy for the government to implement a one size fit all or be flexible in our arrangements to help everyone but also not to penalise someone for the mistakes of others so as to be fair (and therefore we become inflexible).

For example, assuming we become flexible for example to let someone take all their CPF out as per in the past. What do we do if these people spend all their money and come back to us? Would we then have no choice but to "punish" the people who managed their own money well to take care of those that did not? It would likely be unfair. I myself wouldn't want to be taxed unfairly to pay for someone who didn't plan for their retirement. Worse, if this is a social norm.

On a side note, I think the government must really take action in educating financial literacy in schools from young. Even at current tertiary education, we could start financial literacy modules that is compulsory for everyone. It can be a module that awards credits (but not graded, just pass/fail) as an incentive for students to take up. You might also want to host talks to engage the youths in universities about policies that are going to affect them.

What can we do to help ourselves?

For me personally, I have seen first hand how Gambling destroys family. At max, I think if the ocassional TOTO draw comes to $8m, buying $10 is acceptable. For a comparison sake, my own mum is a hardcore 4D/TOTO gambler who spends $600-900 per month on it. 😓

My general take is to STAY AWAY from savings detrimental habits such as excessive smoking, drinking and gambling. My smoker friends know that they spend a lot on cigarettes ($14 x 30 x 12 =  $5,040) if we smoke one pack a day. But they cannot help it. It has become a habit. You can go on a good holiday with that, but let's save that money.

Cultivate money saving habits instead. Most people cannot invest because they do not save much at all. We all live in an age where the society tells us to enjoy life here and now, in the present. We crave instant gratification. But there is power in delayed gratification.

How many of us will really plan for ourselves if CPF decides to give back our money today?

I am in a few investing chat groups and I would like to think that I belong to the more financial savvy group of people who actively plan ahead for our finances.

We would THINK that logically everyone would SAY they would plan their own. But, experience tells me that most wont take ACTION and DO.

-----------------------------------

In short, I do think that there are no quick fix to resolving retirement adequacy. Given a choice to depend on the government and leave it to doubt, I would rather take responsibility and ownership to ensure that I will have enough when my time comes (and incorporating CPF into that plan).


Until Next Time,

K.C.

If you like this post, you might like our facebook page as well. I'm also on Investing Note.

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References:
1. RETIREMENT AND RE-EMPLOYMENT ACT (CHAPTER 274A)
2. Labour Force in Singapore 2017 (2018, January 26)
3.  S.A Lee., J. Qian (2017) The Evolving Singaporean Welfare State SOCIAL POLICY & ADMINISTRATION ISSN0144-5596 DOI: 10.1111/spol.12339 VOL. 51, NO. 6, November 2017, 916–939
4. A flat every 45 minutes. (1964, August 31). The Straits Times, p. 10. Retrieved from NewspaperSG.
5. The impeccable logic of Medisave (2015, August 9), National Day Special 2015 | A toast to an improbable nation: 1984, The Straits Times
6. Cheong, C. (2005). Saving for our retirement: 50 years of CPF. Singapore: SNP Editions, p. 152. (Call no.: RSING 368.40095957 CHE)
7. Cheong, C. (2005). Saving for our retirement: 50 years of CPF. Singapore: SNP Editions, p. 153. (Call no.: RSING 368.40095957 CHE)