article About Should I buy CPF Life? - (all-vga-corner)

WHAT IS CPF LIFE?

Singapore is not a welfare state and the government has no obligation to take care of your retirement and golden years after your retirement. The abolishment of the pension scheme (inherited from the British Colonial days) and the introduction of the CPF scheme simply tell Singaporeans that they must not depend on government's mercy if you are old and poor. Around 15 years ago, a few insurance companies introduce annuities policies for the retirees and many benefitted from the scheme with monthly payout of a small amount of money till they die. Due to the lack of financial acumen, those who did not take up this offer suffered now as they see their savings dry up after 20 years in CPF retirement or fixed savings accounts. The recent years of low interest rate on fixed deposits at 1% due to the turmoil worsens their woes. Inflation of prices on daily necessities shrinks their pool of retirement funds.
CPF LIFE aims to bridge the gap and offers this retirement vehicle in view of the increasing pool of retirees plunging into financial difficulties. CPF LIFE is definitely better than the Minimum Sum Scheme (MSS) which only last 20 years. In fact, it is replacing MMS and applies to those who are born after 1957 and have at least S$40k in the retirement account (RA). However, it arrives 15 years (compared to the private sector) too late and those who are already in trouble will not enjoy as much as their money has depleted over the years in fixed deposits. Those who are below 55 years will definitely benefit from this scheme. 30,000 residents (reported by TODAY) flooded to CPF and rushed to place over S$1.26 billion to buy CPF LIFE. But is this a good scheme? Is it suitable for you? Why 670,000 Singaporeans/PRs are not responding to this 2-month old call?

POSSIBLE REASONS FOR DELAY

Since 15 years ago, private firms are soliciting annuities policies and 71,000 are in force as of 2Q 2009. This tells us only 90% of residents are not aware about these policies, fail to see any advantages offered by these policies or cannot afford them. Indeed, there are 2 barriers of entry for these policies - a minimum sum (tens of thousands) is required and there is a waiting time (5 years) to collect the first payout. After working for many years and retire at 55, they can finally touch and feel their retirement money in the CPF. It is unbearable to part their hard earned money and tell them to wait 5 more years. Many choose to spend on their children or go for tours to see the world.
CPF LIFE eliminates at least 1 barrier for many concerned. You can buy any amount of annuities and those who are born before 1947 can get the first payout in less than 5 years. So we see a reshuffle of cards in the field of annuities and I hope private sectors will introduce better schemes soon. More offers and products in markets are always good for consumers. The promotion of such policies also benefits all residents with CPF Board pumping in more money to introduce what is the concept of "annuity" to many residents.
However, some just cannot afford to buy these policies as they are the sole income earner in the family. Sadly, many can afford but are not financial savvy to buy them. After all, to these folks, money is a sensitive topic and this quiet generation believes in keeping their money in trustworthy banks as fixed deposits over unit trusts, shares or other investment instruments. They fail to realize that their money suffer from inflation and depreciation over time. Let me tell you why.

CONCEPT OF PERPETUITY

Perpetuity (aka perpetual annuity or infinite annuity) refers to annuity that pays forever. "Forever" is a strong concept because it implies no time limit. As long as you are alive, you will receive monthly income from CPF LIFE based on a one-time fixed amount you buy previously. The only challenge for you is to stay alive and outlive others. This promises continuous income over fixed deposits concept. An example will better illustrate the concept of perpetuity.
Upon retirement, you wish to place S$10k in a bank which promises 2.5% yearly fixed deposit interests (current fixed deposit interests is 0.9% for S$30k). You wish to withdraw S$1k (at the beginning of every year) from the fund as yearly expenses. Using simple financial formula, you will exhaust S$10k in 11.32 years. For perpetuity, the present value (PV) for S$1k yearly withdrawal at 2.5% interests is S$40k. This is 4 times more the amount in an ideal condition. This simply implies that if you put S$40k in a bank which promises yearly 2.5% interests, you can collect S$1k forever or until you die, whichever is shorter. So you must live longer than 11.32 years to benefit from the perpetuity scheme. Eventually, the question to ask is not which scheme benefits you more how to live healthier and longer.

THE CPF LIFE'S OFFER

In the offer, there are 4 plans to choose from. The majority chose to buy the LIFE PLUS PLAN while one-third signed up for the LIFE BALANCED PLAN. The differences lie in the payouts to beneficiaries and a compromise between waiting time and premiums. Each has its own merits. The other 2 extreme plans are the LIFE BASIC PLAN and LIFE INCOME PLAN which promises the lowest and highest monthly payout respectively. The former is unattractive to many while the latter targets unmarried individuals with no friends, siblings and children. Interestingly, the difference in amount between the payout is insignificant for small amount (<S$67k) and we are talking about differences of maximum S$60/month for a maximum payout of S$440.
LIFE-BONUS (aka L-Bonus) is thrown in to encourage those born before 1963 to take the plunge. Those qualified will enjoy up to S$4k in bonus payouts if they join before a specific date.

AN ILLUSTRATION

Nothing beats an illustration. For the benefit of those above 62 years old and still hesitating about buying CPF LIFE, I shall offer you alternatives in choosing whether you should buy CPF LIFE.
You are a Singaporean male born in 1 Jun 1947. You have missed your chance to buy the annuity policy when you are 55 years old when you withdrew your CPF account 7 years ago. You do not qualify for L-Bonus as your Annual Value of Property (AV) is more than S$11k. You are interested in the LIFE PLUS PLAN and you found out that your monthly payout after you join LIFE is between S$56 to S$60. So is this plan better than depositing S$10k in the bank which promises 2.5% yearly interests without fail?
SCENARIO 1: FIXED DEPOSIT
Using financial formula to calculate N (periods), we derive that it takes 18.5802 years to exhaust your full savings. This means you will be broke in Jul 2027 if you withdraw S$56 monthly from the bank.
SCENARIO 2: CPF LIFE PLUS PLAN
If you choose LIFE PLUS, you will collect S$56 monthly till you die. To win over scenario 1, you need to stay alive after Jul 2007 which is very possible given that you are forecast to live till 2039 according to the statistic provided by the World Bank for Singaporeans. If things go according to plan, you will enjoy 12 more years of annuity over scenario 1. Therefore, it is not too late to jump into it now.
SCENARIO 3: OTHER INVESTMENT?
So what is the interest rate which can beat Scenario 2? Using financial analysis on perpetuity, if the investment vehicle can offer more than 7.2% of annual interests, it is a better choice over LIFE PLUS PLAN. In addition, this investment must continue to produce > 7.2% of annual dividends without fail forever.

CONCLUSIONS

It is encouraging to see that the government is stepping in to assist Singaporeans in their retirement planning. However, the financial burden of meeting the annuity payouts will lie in the continuing efforts of making money from the sum collected from the retirees. In view of the ever changing landscape of the financial worlds, it will be a challenge to meet up with the promises if global recession or hyper inflation hits Singapore. Having said that, I welcome any request to do the above 3 scenarios for you if you can provide the following details:

1. Date of Birth;
2. Desired amount to invest in CPF PLAN; and
3. The expected monthly annuity.

The above are simple financial analysis for your consideration only. We hold no responsibility if the data we provide are erred or misinterpreted.

article About Before you upgrade your phone� - (all-vga-corner)

Evolution of Technology

Technology engulfs us both slowly and silently. We carry technology with us in our cell phone and sleep with it. Little do we know that this small piece of device is packed with many features that change our lifestyles. You know how to use a mobile phone but you just don't know how to make it works better for you.
Real life stories about expensive phone bills frighten many of us. To avoid paying more, many choose to terminate core features of the phone or disable these features to make sure they don't chalk up their bills. Essentially you just defeat the purpose of getting the latest phone in the market if your sole purpose is simply making voice calls and sending SMSs.
Some may argue that they "reserve" these features and will use them during critical moments. My question is how do you know if they are working during those moments and how much you know about using the application?
Many of my friends show off their new phones boosting many new features like GPS, WIFI, push mail, full QWERTY keys, LCD screen, vibrating touch and feel, 10M pixel camera, elegant look etc and etc� but they don't have a data plan. If you are happy driving a Ferrari in a congested car park, follow their footsteps. Many will laugh at you inside their heart if you notice the smile at the corner of their mouth.
So how can you avoid becoming the next clown?

Look into the eyes of Technology

If you confine yourself to making voice and sending SMS, Philips Xenium series is your best upgrade choice which boosts standby time of up to 30 days. It has no gimmicks like GPS, 3G or WIFI and squeezes its battery life to extend your calling time. So stop wasting time to shop around for other phones. Else, your 2G mobile is good enough till you are ready.
Now, if you are seriously wish to upgrade your phone and explore some new features, get ready to pay for data plan else read the earlier paragraph again. Many are tapping into data use and someone wrote about paying only US$23/month for iphone bill. So, the future is now.
I have earlier mentioned how to select a suitable mobile phone for broadband. Read about the technology and decide a phone which suits your lifestyle. Bear in mind the battery life and your budget in hand.
Next, do sign up for a suitable mobile broadband plan with your telco. You may wish to consider my earlier article on the BEST mobile broadband plan in Singapore. It is outdated but you may wish to read for your reference.

Myths on features in mobile phone

There are also many questions about the features which many are shy to ask around. I hope to disperse these myths which cloud your minds:

1. WIFI is chargeable
   WIFI is free if you connect to a network which is free. For example, when you are at home or when you have access to wireless@sg in McDonald etc. Many WIFI network are private which requires password authentication. For example, you are in a Malaysia hotel which they may charge you RM25/day for using WIFI. The limitation of WIFI is the range of up to 100m in open space and privacy related issues.
2. GPS is NOT FREE
   If you have a built-in GPS in your mobile phone, it is 100% FREE to use GPS above the sky and locate yourself anywhere in the world. You only need direct connection to the sky. If you wish to have more features such as navigation and locating friends, read my earlier post on installing a suitable GPS application on your mobile phone.
3. Data use is very expensive
   In the past, you are right to say so but with the revise of plans by telcos and the increasing amount of users, the charge is reasonable. For pure data users, you may wish to refer to my earlier post on the mobile broadband plans available in Singapore. In exhibition, you may enjoy 50% discount and pay only S$19.36/month for M1 V2 for unlimited data use. For data plan over your voice plan, the minimum is adding S$10 to your existing plan.

Will my monthly bill costs much more?

It depends on your lifestyle and the data plan you choose. In any case, you should not be charged more than S$37 for unlimited use in Singapore.
If you make frequent international calls, having a data plan may actually help you to save more. You can tap on into skype for voice calls, msn for messaging and push mail for email exchange. You buy time and accessibility with data plan while you are on-the-road. You need not rush back home or office to check email and you can reply messages via msn on the street.

5 critical considerations

1. If you are a business and serious user, select a 3.5G phone with 7.2Mbps instead of a 3G phone with only 0.384Mbps of transfer speed. 3G is nearly 20 times SLOWER than 3.5G. The latter usually come with S$0 plan catering for students and budget users. You just have to pay more for a 3.5G phone and S$0 phone expresses itself clearly on its price tag.
2. Next, get a phone with good battery life by comparing their standby and talk times. There is no point in having a phone with low juice unless you only wish to satisfy your ego by driving a Lamborghini for 10m.
3. You have to compare data plans offered by different operators as some are simply not suitable for you. Questions to ask yourself are: Are you able to afford unlimited data plan? What applications do I need in my new phone which requires data plan? For instance, real time push mail requires unlimited data plan for businessmen while normal user may stick to pop mail for a periodical mail download.
4. Bundled plan offers incentives for consumers. If most of your family members and friends are using M1, it makes sense to join M1 as you may enjoy 3 free call numbers. For starhub hubbers, you enjoy further discounts for your maxOnline, maxTV and mobile lines. For Singtel users, MIO may be attractive due to the overall package. No matter which plan you choose, there is a binding contract of 2 years else a heavy penalty will be imposed.
5. Lastly, omit those features that are not needed in a phone. For example, do you really need a 12M pixel camera phone? Get a Canon or Nixon DSLR camera at S$1,299 with tons of features to take great photos instead. After all, phone is for making call and not for photo shots. 3M or 5M pixel is good enough for an average Joe.

article About Avoid 5 myths when you DIY a PC - (all-vga-corner)

It is time to upgrade my 5 year-old Pentium 4 so I hunt around for good bargain and update my desktop knowledge again.
My budget is S$1000 for a mid-performance desktop. After reading some materials and reviews on DIY desktop, I like to share with you my experiences in avoiding the 5 myths in DIY.

Myth 1 � I must get the fastest processor or CPU

CPU is the brain of the system but the performance of the system depends on the teamwork of all other parts. The main reason why I do not buy branded desktop is because they always cut corners on those parts. The advertisement highlights the latest Intel i7 PC but they gives you only 2GB RAM or a IDE harddisk. If you like to sprint 100m with 10kg of extra weight or you have no idea what you are buying, you will fall into the trap. If you are aware of these bottlenecks, you will upgrade them and in the end, the cost is higher than DIY.
So what is a reasonable CPU speed for today's application for multi-tasking purposes? If you ask me for a DIY budget desktop, AMD Athlon 64 x2 5000+ or a Intel E7200 for good enough for general purposes and light gaming. Any extra is a bonus. Knowing the limitations and restrictions on hardware and software is important in selecting the components to get a balanced system for the money you pay.

Myth 2 � There is only a few branded motherboards, the rest are rubbish.

Motherboard is a critical part of all the components that connects to nearly all components. Many chase after branded motherboard during DIY. Branded motherboards are good due to their strong R&D team, quality and features offered. However, latest features are always implemented in the high-end motherboard so they are not strong in low- or mid-end motherboard in S$120-200 range. Adding to the cost of promotion, marketing and advertising, these low-end or mid-end branded ones lose out to less branded motherboards who positioned their high-end motherboard at the same price range.
Therefore, choose less branded motherboard instead of branded ones if your budget falls below S$200 unless you are going for the latest features.

Myth 3 � I want the highest video ram offered by the video card. The core is not important.

The current video RAM in a video card is usually 128/256MB. Some video manufacturers use a low-end video core but add 512MB ram as gimmick. Many rush to buy them ignoring what core processor it has. The truth is the core processor dictates the power of the video card and the increase in video ram offer <10% in performance. Unless you have a large LCD screen of 32", you need the high video ram for buffering.

Myth 4 � I want 2 video cards for best video performances

NVIDIA has SLI technology while ATI offers CrossFire technology. These technologies are used in overall 3D enhancement but are incompatible with each other. Tests have shown that two video cards can only improve the performance slightly (SLI has 20-30% improvement while Crossfire has 10-20%). With many motherboards with such technologies, many users buy another specific card to complement the on-board video. However, the price of video card has dropped significantly and it is cheaper to buy a dedicated video card instead of using the on-board video.
For example, if you have a 780 motherboard and wish to buy another video card, it is better to invest in a HD4850 instead of a HD3450. You will get 3-4 times the performance at double the price.

Myth 5 � Any accessories are good enough for me as long as they can be used.

Keyboard and mouse are the only contacts to the desktop and they indirectly affect our health and efficiency especially long period of use. The power supply regulates and stabilizes the power and helps you to save your monthly bill if you buy a highly efficient one. A good casing provides noise insulation, heat dissipation and prevents electronic static discharge and dust. It ensures a cool and quiet desktop. All these investments offer a good experience in using a PC in the next few years.

What is my final decision?

Below is my consideration after comparing the prices.
CPU: Athlon II x4 620 + Biostar TA790GX A3+
RAM: Kingston DDR3 1066 2GBx2
HDD: Western Digital 640GB, 32MB
Casing: Cooler Master 341
Power Supply: Andyson G480
DVDR: Samsung DVDRW
Video card: HD4850

 
Athlon II x4 620 is the new kid on the block. Comparing with Phenom x3 710, both consume 95W but Athlon II x4 620, without L3 cache, has 4 cores instead of 3. 4GB of Kingston RAM is more than enough for WinXP due to its memory restriction by the OS. BioStar TA790GX A3+ is the valued motherboard using 790 chipset with HD3300 build-in video. It supports AMD AM3 processor with support for DDR3 RAM. 640GB offers the best GB/$ ratio now so it is a default. Cooler Master 341 offers easy installation of components and Andyson G480 is 80+ certified. HD4850 offers the best bang for the bucks now if you are into heavy gaming. If the video card breaks down after the warranty expires, I can turn to the built-in HD3300 while I shop for another video card.

 
This system can also be used when I upgrade to Vista or Windows 7 in the future.