09 January 2015

A Different Singapore for Financial Liberation without the Lure of Pension

Came across an article which talked about introducing some kind of pension system for the low income earners who have little in the way of CPF. It was suggested that this would only cost 1% of the government budget. I think this is a most slippery slope. 1% for pension is 1% less to spend elsewhere to build the nation. Would this truly help the low income or introduce the undesirable dysfunctional effect of social dependency we observe in some other countries? Personally, I am doubtful this is a good trajectory to take.

Start With the Young

Perhaps the journey has to move further back to the young. Can investment and financial awareness be introduced at an earlier age where it can be taught and introduced in a more compelling manner? Could it be weaved in into classroom Maths for instance?

Games could be another avenue. Are there any good ones to do so (see Wongamania)? The many popular ones are perhaps too cheesy or simplistic (Monopoly, Life). Robert Kiyosaki's Cashflow game is too tuned toward positive cash flow from property investment and perhaps too narrow. Not to mention expensive as heck! There are localised mobile apps like WhyMoolah. But I didn't find it particularly fun as it lacks a staying appeal.

As it is, it seems that more younger people are opening up trading accounts. A sign of greater interest and awareness? But chances are many may well be doing so to tikam tikam, looking for a quick "rush" and a quick buck. The likelihood that some will crash and burn is equally good. Hopefully, more will learn and shift towards a sustainable approach to stock investing.

Options for the Old: Housing and Tourism

Perhaps housing could also be structured a bit differently. If only our flats could be built with a lock-out unit that can be separately rented out? There were some attempts to do so but it doesn't seem to have proliferated. Every young family wants to buy their first home with the aim of expanding their humble home with children (and the provision for a maid?). But as the kids grow up, get married and move out, the home starts to get emptier and hollow. Instead of downgrading to a smaller home, wouldn't it be nice if a part of it could be locked off as a separate unit for rental, and hence provide a decent income stream for retirement to complement their CPF? It would also keep the older folks engaged. The possibility of social interaction with their guest is also a possibility.

The regulatory regime has to catch up to allow vacation rentals, a la AirBnB (see AirBnB - Sharing a Home for Rental Income). Legalise it so that the older folks can gain a rental income from vacationers. Would this have the dual effect of promoting affordable tourism in Singapore as well? Accommodation with a different touch, an option away from the sterile hotels. Of course, the concern is over the introduction of sleaze and crime if this is not managed well. Some form of inspection and regulatory requirements could well provide the mitigation.


Sillyinvestor said...

Hi Lizardo,

The Maths part of financial literacy is the easy part to teach, the value system behind it is tough.

Just like value investing, between learning some repertoire of valuation methods and having the temperament to invest. I think the temperament part is tougher.

Anyway, if those financial literacy courses I have seen in one school is any guide, I would rubbish it to the bin. I did mention doing such course for FAS pupils in my new school, even my P don't quite get what I am trying to do.

As for pension scheme, I saw it from a different angle. Right now, even with a highly conservative CPF system
That is AAA calibre, we have doomsayers and issue of trust, why start another? Because at the end of the day, it is the competitiveness of the economy that ensure out good retirement regardless of how much we have or what the scheme do, isn't it?

Look at Greece, I believe there are some, no matter how many or few, honest people who work their life saving for a pension that went up in smoke!

Let's hope the populist measure of regulating the tap of foreign workers can Really be offset by higher productivity. A U-turn is quite unpleasant but still better than sending the economy to the rocks. Can productivitu be forced upon employers? Is there better way than just incentive scheme?

I have no answers and not pointing fingers, I am
Not economist too. Just feel that it is starting to even shaken my confidence on the Once stellar economic management subject on the report card. The subject of social safety net has improved, let's hope it's not at the expense of economics

Lizardo said...

Hi Siilyinvestor,

Thanks for sharing your thoughts. It's really tough balancing the various factors given that every action creates multidimensional effects, sometimes unexpected consequences.

Values are really something else. It's as diificulty as an organization talking about changing its culture I think.

Singapore Man of Leisure said...


I am a fan of small government.

I think its precisely a lot of people "assume" big daddy will take care of them that there's NO INCENTIVE to explore financial literacy on their own.

It's a bit of paradox if people have to be TOLD how to save, what to invest, etc...

What we want are more people who are able to do critical thinking on their own ;)

Lizardo said...

I am ambivalent about big or small govt. But certainly agree on critical thinking. Individuals need to take an interest and want to do something. Rather just doing something to meet wants.Else want-tan.

secretinvestors said...

Hi Lizardo,

Great points there regarding the situation in Singapore. Like you, I agree that 1% pension is 1% too much. Probably its better to concentrate and invest in productive structural capacity that will yield long-term results of Singaporeans.

Lizardo said...

Hi secretinvestors,

Looks like we agree that something for the long term has a more sustained value.