I was interested. A few of my friends had gone down that path - it seems to be a good springboard out of Singapore and I always wanted to go NY. The big obstacle was the fees. I could just about afford the fees, but not the costs of living in NY. My friend pointed out that I had financed my undergraduate education via bank loans, and I can do the same with my postgraduate education. It is different, I retorted - the bank loan for my undergraduate education was interest-free until six months after graduation, by which time I was settled into a nice-paying job, the bank loan for this bears interest from the date of draw-down, and even a person as bad at numbers as I am know that you don't fool around with compound interest. I would have exhausted my financial reserves and gone into debt just to pursue a post-graduate degree. Pssh, my friend said, the starting pay of a new lawyer in NY is so high that you'll pay off the debt in no time. And he was right - even now, after six years of working experience, my pay is less than the starting pay of a NY lawyer in a big firm (even after their pay cuts and pay freezes). And in those days, it seems that law firms in NY were hiring anyone who breathes.
Still, I hesitated. I had just got out of debt at that time, debt that I did not incur, but which I still had to pay. I had a brother in university, who I was partially responsible for financially. I have semi-retired parents. Given the circumstances, to take a year off and then come out of that year in debt seems foolhardy. It was a difficult decision - the heart says, go. the head says, you can't. And there is no right or wrong decision on this - either way, a price must be, and is indeed, paid.
Looking back, as the consequences of the decision are now increasingly apparent, I am wistful, but I know that even if I can, I would not have changed anything.
We live with the consequences of our decisions, and all we can do is to smile, grimly or otherwise, and move on with our lives.
The article that inspired the ramblings above.
- Mood:wistful
This line by Jon Steward about what he assumes the press should be applies to Singapore too, don't you think?
I’m under the assumption, and maybe this is purely ridiculous, but I’m under the assumption that you don’t just take their word for it at face value. That you actually then go around and try and figure it out.
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- Mood:
thoughtful
Anyway, this is a lovely quote from an article I came across that sets out quite well what I always thought:
"In the world of finance, too many quants see only the numbers before them and forget about the concrete reality the figures are supposed to represent. They think they can model just a few years' worth of data and come up with probabilities for things that may happen only once every 10,000 years. Then people invest on the basis of those probabilities, without stopping to wonder whether the numbers make any sense at all." (emphasis mine)
I do not really agree that quants are the root of the credit crisis, or that we should pin the blame on one man who came up with a deceptively simple formula (I don't think it is simple, but that is just me). Heck, the root of this crisis, like all crisis is human greed, that blinds us to some fundamental truths. One thing I am glad about though is that this hopefully marks the beginning of the end of the blind faith in numbers.
- Mood:
frustrated
- Mood:
content
----------------------------------------
Auditor's one line report on Lehman Brothers Balance sheet:
'There are two sides to a Balance Sheet. - Left & the Right (Liabilities and Assets respectively), on the Left side there is nothing right… and on the right side there is nothing left '
- Mood:
amused
Anyway, I came across the article below from the Associated Press that tries to explain the same thing.
( The Case of the Disappearing Money )
- Mood:
groggy
A lady wants to buy Singapore Government Bonds, and was offered a structured product and told that is a bond????? Good grief.
http://theonlinecitizen.com/2008/10/mor
Anyway, the cab driver has this idea that the credit crisis will not affect Singapore. I asked him why and his view is that the Singapore government will ensure that everything will be fine, that none of our local banks will collapse etc. I dryly pointed out to him that Singapore is already in a recession and that people have lost their life savings in those structured products marketed by the very same local banks he is so confident in. He just shrugged my comments off and went on to talk about how the China banks will be in trouble because they hold so much US dollars. The blind faith is touching and an indication of just how much goodwill the government has built up with its people over the decades since independence. I hope, I really hope that the faith will be justified.
- Mood:
lazy
I don't like Coke Zero - it is sweet without the kick of real Coke.
( Of Ill-Health & the Lousy MAS Response to the Structured Products Debacle ... )
- Mood: exhausted
- Mood:
pensive
The US exasperates me and fascinates me - they are facing something that anyone who lived through the bursting of the Japanese bubble in the 1980s and/or the 1997 Asian Financial Crisis could have warned them about. And they did go through the dot-com bubble and Enron and WorldCom etc etc where greed overtook good sense right?
But hey, no, they are special, exceptional, blessed by God, the chosen people.. blah blah blah. Which is fine, if they want to bankrupt themselves, who cares? Except that the rest of the world gets dragged into the mess as well.
Still this US variation of the Nigerian Scam makes humourous reading (my boss sent it to our team, perhaps in a bid to improve morale, team bonding - who knows?). I get at least one email from one of these scammers a week, and to see the bail-out characterised in such terms... haha Enjoy!
( Read more... )- Mood:
stressed
A huge debate has arisen since the Prime Minister announced imminent changes to the CPF Scheme. Currently, how the CPF systems works is this:
- You put the prescribed percentage of your salary into your individual CPF account, where it earns a fixed interest rate (currently 2.5% for Ordinary Account and 4% for Special Account and Medisave Account). The amount in your Ordinary Account can be used for your own investments, educational expenses and housing expenses at any age.
- When you reach the age of 55, you get to withdraw everything you have saved plus the interest earned in your Ordinary Account and your Special Account, less a Minimum Sum (which should be around S$120,000).
- When you reach the age of 62, you can start to draw down on your Minimum Sum.
Based on his National Day Rally speech, and information given by Minister Ng Eng Hen, I gather the following:
- CPF Minimum Sum draw-down age will be postponed from 62 to 65.
- Not the entirety of the Minimum Sum can be taken out. Instead a smaller sum (minimum sum of the Minimum Sum?) must be set aside to purchase an annuity that will commence payment when you reach the age of 85.
- If you die before you reach 85 years of age, the annuity goes to the "pool" (i.e. to finance the annuities of the other people who lived till 85). Your heirs will not receive any part of that annuity.
- There will be a 1% increase for the first S$60,000 in your combined CPF accounts. However, only $20,000 of the funds in your Ordinary Account qualifies for the increase. The first S$20,000 in the Ordinary Account cannot be used for investments, but can still be used for education expenses and housing expenses. The extra interest will be credited to the Special Account.
- The interest rate for the Special Account will now be fixed to the long-term Singapore Government Bonds rate, instead of the current prescribed 4%.
There are a few things that I don't understand, and I am desperately hoping that the government will provide us with more information soon.
- If the first S$20,000 in the Ordinary Account earns a higher interest rate, then does that mean that when I use my CPF to pay for my HDB flat or my educational expenses, a higher interest rate will apply? For example, I now purchase a HDB flat using my CPF Ordinary Account to pay the monthly instalments of the bank loan. When I subsequently sell the flat, the amount taken from the CPF Ordinary Account plus accrued interest of 2.5% p.a. must be returned to the CPF Ordinary Account. Does this mean that I now have a higher interest expense?
- The current long-term Singapore Government Bond rate is around 3% to 3.3%. This means that effectively, there is a reduction in the interest rate for my Special Account and Medisave Account. The extra 1% on the first $60,000 merely restores the interest rate to the current 4% for the first S$60,000 of my CPF funds. How is this a real increase? Despite what Dr. Ng said, is there any guarantee that the long-term Singapore Government Bond rate will increase in future to 4%?
The part that really disturbs me is the way the government can simply change the rules on how and when we get our own hard-earned money. I am 28 this year, with slightly less than 30 years to go before I reach 55, and slightly less than 40 years to go before I reach 65. But is there any guarantee that I will get the money that I earned with my sweat and tears when I am 55, 65? Or will I be told, around the age of 40 (or horrors of horrors 50), that sorry - due to [insert whatever plausible reason the government can think of], we are increasing the age when you can withdraw your CPF?
The problem with this non-stop changes, be it rates of contributions or ages when the money can be taken out, is the utter uncertainty it creates and the havoc it wreaks on everyone's planning, be it for purchase of a home, or for retirement. How am I supposed to know how much I should set aside for my retirement if I cannot be certain when a substantial sum of money is going to be made available to me? How can I figure out what type of home I can afford if I do not know whether the CPF contribution rates are going to decrease? How can I top up my parents' Medisave account from mine when I do not know whether I have sufficient sums for my own future health care costs? This is ridiculous.
And the thing is this - Singaporeans will plan around this uncertainty (whatever the government may think, we aren't that stupid), and maybe in the process of doing so undo all the good that the government hopes to achieve with their changes to the CPF system. For example, why even regard the CPF as anything more than a home financing scheme, an education finance scheme, pay for your parents health scheme? Plan for your own retirement / health expenses using your own take-home salary and aim to take out as much cash as possible from your CPF account by financing your purchase of your home using CPF or to pay for your parents medical bills or your children's educational expenses. In other words, to the greatest extent possible, use the CPF for your current expenses instead of keeping it for your future expenses. And use the cash that you would have used for your current expenses to finance your long-term investments that should yield a higher return than 3.3%. The fact that this runs contrary to the whole basic idea of the CPF is irrelevant.
And of course, if a significant proportion of Singaporeans do that, the cash balance in the CPF accounts will never really increase. And if our government just looks at the CPF cash balances as an indicator of Singaporeans' preparedness for retirement, it will always be fretting that Singaporeans do not have enough to retire on.
There is of course another solution - I am not sure if it works though - emigrate, give up Singapore citizenship. It may just get CPF to release all your CPF funds. Hopefully.
- Mood:
nerdy
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