NDR 2019: New retirement, re-employment ages of 65 and 70 by 2030; higher CPF contributions for older workers.
What can happen on ground regarding re-employment is NOT within the control of Government. Re-employment is NOT mandatory. Your job can anytime be "redesigned" by your bosses to test your tolerance level. Uncle8888 was 60 yrs old man who has retired on 30 Sep 2016. 61 yrs old man who was re-employed on 2017 after 62 on yearly contract basis and his boss added value to his job by "redesigning" i.e. add more job roles! Hmm .. He "voluntarily" retired last year! The Moral of Story! Always plan for your own retirement well in advance i.e. at least one decade away from 65, the new retirement age!
SINGAPORE: Singapore will raise the retirement age and re-employment age to 65 and 70 respectively by 2030, alongside increases in the Central Provident Fund (CPF) contribution rates for older workers. This, announced by Prime Minister Lee Hsien Loong on Sunday (Aug 18), comes after the Government accepted "in full" the recommendations put forward by a tripartite workgroup studying the country’s ageing workforce.
--------------------------------------------------------------------------------------------------------- You can make withdrawals from your SRS account over ten years from the date of your first penalty-free withdrawal. Withdrawals are penalty-free only if they take place after the statutory retirement age that was prevailing at the time of your first SRS contribution. The statutory retirement age is currently at 62 Hmm .. SRS at 65! It will affect retirement income planning for those who wish to retire early than 65! Bom pi pi! More people can now FIRE before 65!
There is no free lunch in the market. When we leverage or indirectly "leverage" we have to pay premiums or interests.
Premiums or interests have been paid and every year these options have expired worthless for more than a decade and still counting. When we are wrong; we lost the cost of premiums; but when we are right when time comes. Hmm ... next batch of Golden geese that lay eggs for next decade or more! How much do these premiums add up?
Hmm .. interesting! Is there something with Maths below? Powerful ROC from leveraging? For example; if one has $110Kcapital to invest.
Without margin account: One can fully invest $110K for e.g. 7% dividend yield
Leverage on margin account : 1. One can invest $100K for e.g. 7% dividend yield. 2. Leverage $40K on margin account at net 3.5% dividend yield after offsetting 3.5% interests payable to broker. 3. $10K as cash reserve to top up margin call when necessary
Does leveraging on margin account to improve yield on own capital look fantastic? Really? Or something wrong with the Maths?
Often we are hearing FAs or vested interest telling us not to time the market but stay invested for long term. 1. What is actually market timing? 2. What is stay invested for long term? Uncle8888 has been staying invested for 20 years and definitely qualified to be classified as long term investor. No meh??? Why long-term investor cannot be timing the market? Wrong meh?
Is this long-term investing and timing the market mutually exclusive? You believe in FAs and Vested interest selling investment products? You don't time the market but stay invested for long term. Hmm .. they worry about redemption if you time the market??? Time the market and stay invested for long term is like this. No?
Stocks plunged Wednesday in the Dow Jones Industrial Average’s worst performance of 2019 after the bond market flashed a troubling signal about the U.S. economy.
The Dow dropped 800.49 points or 3.05% to 2,5479.42, its worst percentage drop of the year and fourth-largest point drop of all time. The S&P 500 fell 85.72 points or 2.93% to 2,840.6, while Nasdaq Composite declined 3.02% to 7,773.94. The Dow gave up the entire rebound from a sell-off earlier in August and fell to a two-month low.
The yield on the benchmark 10-year Treasury note on Wednesday briefly broke below the 2-year rate, an odd bond market phenomenon that has been a reliable indicator of economic recessions. Investors, worried about the state of the economy, rushed to long-term safe haven assets, pushing the yield on the benchmark 30-year Treasury bond to a new record low on Wednesday.
How about STI immediate reaction to DOW? SINGAPORE shares skidded when trading began on Thursday, with the Straits Times Index plunging 1.7 per cent, or 54.85 points to 3,092.75 as at 9am. By 9.13am, the benchmark index had slipped even further, losing almost 2 per cent, or more than 60 points. This comes after Wall Street stocks sold off sharply overnight as recession fears gripped the market. All three major US indexes closed down about 3 per cent on Wednesday, with the blue-chip Dow posting its biggest one-day point drop since October, after two-year Treasury yields surpassed those of 10-year bonds, a widely-viewed US recession warning.
On the Singapore bourse, decliners outnumbered advancers 131 to 18, after about 46 million shares worth S$64 million changed hands. Let see how STI closes today?
What is a lump sum investment? Definition of 'Lumpsum' Definition: A lump sum amount is defined as a single complete sum of money. A lump sum investment is of the entire amount at one go. For example, if an investor is willing to invest the entire amount available with him in a mutual fund, it will refer to as lump sum mutual fund investment. Who is most likely to advise that you do lump sum investing? FAs. No? Unlikely your close friend or relatives who are active investors themselves won't dare to suggest that you go and do lump sum investing?
Real retail. Real outcome. Real DIY. Real losses! Lynch provides insight on how to achieve exceptional results In an interview he gave to PBS, Peter Lynch discussed what is needed to achieve a track record similar to his. Even though the answer seems simple on the surface, it has many insights that are worth commenting on. Q: Was that your secret?
A: Well, I think the secret is, if you have a lot of stocks, some will do mediocre, some will do OK, and if one or two of 'em go up big time, you produce a fabulous result. And I think that's the promise to some people. Some stocks go up 20% to 30%, and they get rid of it, and they hold on to the dogs. And it's sort of like watering the weeds and cutting out the flowers. You want to let the winners run. When the fun ones get better, add to 'em, and that one winner, you basically see a few stocks in your lifetime, that's all you need. I mean stocks are out there. When I ran Magellan, I wrote a book. I think I listed over 100 stocks that went up over tenfold when I ran Magellan, and I owned thousands of stocks. I owned none of these stocks. I missed every one of these stocks that went up over tenfold. I didn't own a share of them. And I still managed to do well with Magellan. So there's lots of stocks out there and all you need is a few of 'em. So that's been my philosophy. You have to let the big ones make up for your mistakes.
Yes! Sometime we will play to win and also very determine to win! This is play to win : Retired As Pokemon Trainer Too! (2) Nowadays; he plays to pass time! Stuck at this level for a long long time and also don't bother anymore!
Cash: "Cash drag" is a common source of performance drag in a portfolio. It refers to holding a portion of a portfolio in cash rather than investing this portion in the market. How bad is cash drag?
Should he be guided by his past performance to look forward? Best : 12% CAGR Worse : 1.6% CAGR
Does cash drag and market timing a serious hit in his performance over the next 10 years? Current with cash drag : 6% CAGR Let see what happened when he looks back few years down the road. Let the data and the Maths do the talking!
Read? SGX (3) Read? Singapore Exchange Q4 profit up 24% on record derivatives revenue At a results briefing on Wednesday, chief executive Loh Boon Chye called 2019 "a year of records" for SGX. "The results validate our position as an international multi-asset exchange providing a single point of access into Asia," he said. Derivatives now account for 51 per cent of group revenue, up from 40 per cent in the 2018 financial year.
Step 4: Other fixed income for your emergency and medical contingency fund on top of whatever medical insurance you deem to be sufficient and practical for your personal medial lifestyle. People can be very damn funny. They may swear to be frugal and live their daily life in Ward C and choose the cheapest option available to prove that they are frugal; but they fall sick and thinking that they are going to die soon; then they want to choose the best and willing to pay for the best at high costs at Ward A. Strange!
When someone is telling you that he or she has a skin in the game and tell you to trust and believe! Do you understand the moral of story below? The Hen & the Pig Go To Breakfast A Hen and a Pig were sauntering down the main street of an Indiana town (yes, this is another shaggy dog story!) when they passed a restaurant that advertised “Delicious ham and eggs: 75 cents.” “Sounds like a bargain,” approved the Hen. “That owner obviously know how to run his business. “It’s all very well for you to be so pleased about the dish in question,” observed the Pig with some resentment. “For you it is all in the day’s work (Hen just sacrifices today's egg and tomorrow another egg coming). Let me point out, however, that on my part it represents a genuine sacrifice.” Get it? Are you losing an arm or a leg when you are wrong?
When Uncle8888 saw this article popping up as FB notification; his eyes opened wide! Walau! Mistake by retirees! He doesn't want to make this mistake too! Read? Almost all retirees make this mistake
Portfolio rebalancing is universally practiced — and rarely examined
Beware the conventional wisdom.
Retirees (and soon-to-be retirees) should regularly rebalance their portfolios, right? That advice seems unobjectionable, of course. It certainly is repeated often enough. But Humphrey Neill, the father of contrarian analysis, advised us to be skeptical of any advice that is almost universally repeated. He famously insisted: “When everyone thinks alike, everyone is likely to be wrong.” CW8888: Hmm .. so Uncle8888 re-balanced his portfolio based on 2 to 3 years forecast ahead of the market based on Investment Portfolio Management : Know enough, Know your yield, Know your riskand How I likely to avoid sequence-of-returns risk from my investment portfolio This will help to reduce the likelihood of bad draw-down on volatile assets during market low and greatly reduce the chance of asset price recovery.
The occasion to take a second look at rebalancing was my recent Retirement Weekly column, in which I reported on the long-term performance of numerous hypothetical retirement portfolios that involve regular rebalancing. Many of those portfolios performed far worse than expected, and rebalancing was the likely culprit.
My re-examination led me to a new study that exhaustively analyzed rebalancing. It found that rebalancing improves performance only if the markets behaving in certain specific ways. And they don’t always do so.
The study, “Strategic Rebalancing,” was written by Campbell Harvey, a finance professor at Duke University and a consultant to Man Group, the U.K.-based investment management firm, along with three employees of that firm: Nicolas Granger and Sandy Rattray, chief investment officers, and Otto Van Hemert, head of macro research.
The traditional promise of rebalancing, of course, is that it boosts returns. By constantly selling marginal portions of assets that have outperformed, and buying more of positions that have underperformed, you in effect are buying low and selling high. In the process you also are reducing your risk.
Notice carefully, however, the implicit assumption behind these promises: An asset that has underperformed in one period is likely to perform better in the next, and vice versa — reversion to the mean, in other words. That is not always the case.
Consider the 2007-2009 financial crisis. The stock market fell for six calendar quarters in a row, with its losses getting progressively larger as the crisis unfolded. A strategy of frequent rebalancing would have magnified losses rather than reduced them. (See accompanying chart.)
Notice further that even when you’re right about reversion to the mean you can still lose money when rebalancing. You also have to get the right rebalancing frequency. If you rebalance quarterly, for example, you implicitly are assuming that one quarter’s outperformer will be the subsequent quarter’s underperformer. If you rebalance at a yearly frequency, in contrast, you’re assuming that reversion occurs at that longer frequency.
Unfortunately, there is no consistency to when reversals occur. Sometimes they occur at monthly frequency, but other times not. The same is true for quarterly and yearly time horizons.
To illustrate the inconstancy of reversal frequency, I turn to a statistic known as the correlation coefficient. It ranges from a theoretically maximum 1.0 (which is what it would be if the market’s direction in one period was always the same as its direction in the subsequent one) to a minimum of minus 1.0 (which would be the case if the market’s direction in one period was always the opposite of its direction in the subsequent one). The table below shows what I found upon calculating this coefficient over every 10-year period since 1896 for the Dow Jones Industrial Average DJIA, -1.23% :
Highest 10-year trailing coefficient since 1896Lowest 10-year trailing coefficient since 1896
No wonder rebalancing doesn’t always improve performance.
Now, the researchers found that in most cases an incorrect rebalancing assumption leads to only a modest drag on portfolio performance. Where regular and frequent rebalancing really costs you is an extended bear market, such as the 2007-2009 financial crisis.
Fortunately, the researchers identify a solution: Combine rebalancing with a momentum strategy. Such a combination works because the assumptions behind a momentum strategy are the opposite of those underlying rebalancing: Momentum works to the extent that trends persist, in contrast to the trend reversals assumed by rebalancing.
You might think that it’s impossible to combine the two approaches, but the researchers came up with several ways. One, which is relatively sophisticated, allocates 10% of the money otherwise invested in a rebalancing strategy to a futures-based momentum strategy. (Interested readers are directed to their study for details of this 10% momentum/90% rebalancing strategy.)
Another rebalancing-momentum combination strategy that is more easily implemented uses a momentum signal to delay when rebalancing takes place. This is what the researchers call “strategic rebalancing.”
Otto Van Hemert, one of the study’s authors, described this approach in an interview: You simply delay any rebalancing transactions so long as the stock market is trending downward. It matters relatively little whether you define the trend by looking at the trailing month, quarter or year; the idea is that “you sit out the negative trends” by not rebalancing. Once the trend reverses, you then rebalance.
How much benefit do you derive by following these modified rebalancing strategies? Van Hemert says that the options- or futures-based momentum-plus-rebalancing strategy reduced portfolio drawdown by an average of 5 percentage points during major bear markets. Strategic rebalancing—the strategy of using momentum to delay rebalancing—didn’t perform quite as well historically, but still reduced drawdowns by 2 to 3 percentage points.
The only bear market over the last six decades in which these modified rebalancing strategies didn’t reduce drawdowns, Van Hemert said, was the 1987 crash. That’s because it was over almost as soon as it started. That’s not been the case for most bear markets, he added, which is why these modified strategies reduced drawdowns in the other major bear markets of the last six decades.
While acknowledging that bear markets in the future could all end up being like the 1987 crash, Van Hemert said he has his doubts. That’s because, in the event of a black swan event, it is unlikely the market can “digest all the pain right away.” Far more likely is that “unimagined bad effects keep popping up.” This is what happened in the subprime mortgage crisis, Van Hemert reminded us, when its adverse consequences “rippled throughout different sectors of the economy one by one.”
And, just to repeat, to the extent future bear markets are more extended and drawn-out affairs, delaying rebalancing will markedly reduce your drawdowns.
This new research would be important to bear in mind at any time, but especially now if you think there’s an above-average chance of an imminent major bear market. If so, then it would especially behoove you to put in place now a modified rebalancing strategy.
Last week; Uncle8888 went back to his ex-office cafeteria to have kopi with his ex-colleague who will retire next week at 60. Official retirement age is at 62 and can be re-employed till 67. Why retire early when we can still work for a few years to build up fatter retirement fund? For one simple reason? Yes, we may love our job; but we may not love the workload throws at us especially during the tail end of our career on stagnant salary. We seriously like to slow down; but the work environment may not allow it. That is the dilemma! Yes, we can deliberately slow down our works; but we will become liabilities to the team. One day; our bosses may have no other choice; but find ways and means to get rid of this liabilities in their team. Like this ex-colleague explained. As employee one day we have to retire or "force" to retire so we might as well plan to retire on our own term. Here another real life example of employees planning many years well ahead for their own voluntary retirement and then has the option to retire on their own term. Uniquely Singapore way of retirement - CPF OA, CPF Life and dividend income. But no SRS! Hmm ... steady! Walau! No FB too! Lagi steady!
Spur21 July 2019 at 13:46:00 GMT+8 Usually any drawdown is taken from the least volatile asset i.e. cash then bonds. Not ideal to drawdown from equities unless size of equities is >= 30X annual expenses.
We have to be realistic with retirement income for life as not every one can afford Fat FIRE or Fat retirement. For Lean FIRE or Lean retirement; we have to be very cautious over sequence-of-returns risk. Like it or not; long-term investing for income is a Game of Capital size and investing strategies. For Lean FIRE or Lean retirement; there is little room to recover from any large draw-down at market low.
Case 4 : She took 6 months no pay leave and went back to work to fulfill the one month notice for retirement. During her 6 months no pay leave; she managed to find some other activities to pass time and survived the six months test. Update for Case 4A : Last year at 59; he took few months no pay leave to test run. Next month; he will early retire @ 60. CW8888: It is wise to test run your retirement for a few months on no pay leave to see how effective you can burn your plenty of spare time without job responsibilities and tasks.
Read? Bye Bye Before Retirement??? Life can be unexpectedly shorter while we plan decades ahead for our retirement; so we must remember to spend some of our money for the present too. Money not spend by us is not ours but belongs to others. Just heard one ex-colleague at age of 39 who is single had stroke last night and in ICU on life support. His family decided to let him go tomorrow. Read? Life Is Fragile And Can Be Unexpectedly Shorter!
Assuming 2.5% annual inflation rate from 2020 to 2032. Uncle8888 has more than 12 years or up to 2032 at age of 75 over the next market crash to deploy significantly his war chest to achieve his net worth asset allocation through this strategy of know enough, know your yield, know your risk.
TEMASEK Holdings on Tuesday reported a one-year total shareholder return (TSR) of 1.49 per cent for the 12 months ended March 31, 2019, reflecting market volatility as it warned of lower returns expectations for the longer term amid weak global growth.
This compared with the 12.2 per cent TSR posted in the year-ago period, with TSR a compounded and annualised measure that includes dividends paid to its shareholder but that excludes its shareholder's capital injections. Compounded over 45 years since its inception in 1974, annualised returns stood at 15 per cent.
The Singapore investment firm's net portfolio value grew to S$313 billion, up from S$308 billion a year ago on a Sing-dollar conversion basis, it said in its annual report released on Tuesday.
During the year under review, Temasek shifted into divestment mode, divesting S$28 billion in assets, and investing about S$24 billion in the same period. Temasek had guided a year ago that given the market outlook, it may recalibrate and slow its investment pace over the next nine to 18 months.
Temasek received dividend income of S$9 billion from its portfolio.
Do this! Walking your path, your way! Absolutely free and easy! Some prefer to join walking group or form walking buddies. Uncle8888's ex boss who has retired last year also found his walking buddy to walk on every Tuesday morning.
2.5 years have passed without earned income from full-time employment; and the cash flow is still healthy without any asset draw-down to supplement household expenses! So there is no urgency to deploy war chest for more investment income to fund household expenses! Know enough, Know your yield, Know your risk (Ha ha Know Your Yield , Know Your Risk)
Last updated : 15 Sep 2018
I am 62 yrs old uncle living in HDB heartland who has achieved financial independence @ 56 and finally retired @ 60 from full-time job as employee on 1 Oct 2016.
Single household income since 1995 with three children. Eldest son and daughter are now working and youngest son still in his 3nd year Uni in SUTD.
I have been doing long-term investing and short-term trading in Singapore stock market only since Jan 2000 so I am that Panda or Koala in the investment world; but I am still surviving well in the wild.
I am now executing my Three Taps solution model to maintain sustainable retirement income for life till 2038.
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