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(25-01-2013, 05:38 AM)HitandRun Wrote: (24-01-2013, 09:03 PM)specuvestor Wrote: So the CPF scheme has no margin of error. Yet you project a most optimistic scenario. As value investors we are always concern about downside which is why we demand a margin of safety. Your empowerment scenario will have devastating impact on the last 30 years of the population in aggregate, especially when we see from CPF figures that on aggregate, CPF investors lose money. And policy makers have to look at aggregate impact, because resourceful individuals will find a way out.
I have no argument with that. There will always be dumb investment decisions (myself included) and the government needs to protect these people from their own money (or is it the other way round?) lest they come crying for more handouts. But why should it be a zero-sum game? Having protected / preserve the minimum sum, shouldn't the government allow more successful CPF members to chart their own future?
The current CPF rules allows members to invest 100% of their OA in property on LEVERAGE. Any profits (less imputed interest) can be withdrawn, tax free. Members cannot do that for stocks! From a investment point of view, shouldn't the government be more agnostic or at least treat all types of investments equally?
Do other valuebuddies not try to maximise the amount they can invest in stock using CPF? If a member has $100k in the OA. Let's say he invested $35k in a stock at $5. Within a year, the stock climbed to $10, i.e. he has almost $70k in stocks. However, if he so decide to sell his stocks away to take profit, he will realise that he can only maintain a much smaller portfolio. Bottomline => member gets punished (with a smaller portfolio) for being successful.
On the other hand, if one loses money on the stock investments, let's say the stocks value get halved, i.e. portfolio has shrunk to $17.5k. I suspect that once the member sells his investments at say $17.5k, he would be able to use almost $29k for stocks investments again. Bottomline => member gets "rewarded" (with a bigger portfolio) for being a bad investor.
Don't you think the rules are crazy?
Sell and buy, ask dealer to offset the trades?
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Quote:From a financial planning point of view our life is split 30-30-30 years, 30 years of "human capital investment", 30 years of accumulation and 30 years of retirement spending. Effectively what it means is every year of earnings is supposed to last us TWO years. Ironically this problem is brought about by longevity. It was less an issue in the past because it was more like 15-15-15 just a century ago.
i agree to the above to some extent. Isn't it the more one has to learn to invest well with whatever resources one can muster? Because how many among us can earn, "every year of earnings is supposed to last us TWO years"?
There is a saying, "If you don't have to take the risk, you don't have to invest. How true is it in real life?
So i and many people have no choice but to take the RISK.
Shalom.
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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25-01-2013, 10:20 AM
(This post was last modified: 25-01-2013, 11:01 AM by HitandRun.)
(25-01-2013, 09:14 AM)egghead Wrote: I don't quite get the above. For the former, if he sells, shouldn't he end up with $135k and therefore $47.25k for investment?
Correct lor. So the net impact is stocks portfolio declines from $70k to $47.25k.
Quote:Sell and buy, ask dealer to offset the trades?
Hmm.....can this be done? I'll check with my broker.
The trades cannot be offset  ...
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OIC. I thought you meant he will end up with less than someone who did not manage to grow his investment.
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(25-01-2013, 10:20 AM)HitandRun Wrote: (25-01-2013, 09:14 AM)egghead Wrote: I don't quite get the above. For the former, if he sells, shouldn't he end up with $135k and therefore $47.25k for investment?
Correct lor. So the net impact is stocks portfolio declines from $70k to $47.25k.
Quote:Sell and buy, ask dealer to offset the trades?
Hmm.....can this be done? I'll check with my broker.
The trades cannot be offset...
Depends on when the stock limits are computed i guess... whether it's when withdrawn from CPF to investment account, or is it when transfer from investment account to broker...
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(25-01-2013, 11:46 AM)smallcaps Wrote: Depends on when the stock limits are computed i guess... whether it's when withdrawn from CPF to investment account, or is it when transfer from investment account to broker...
Thank you for indulging me. And if you think what I have pointed out is lame, there is an even bigger obstacle.
Let's get back to the example that I have pointed out:
Month 0
OA Balance: 135k (of which 35k is profits from stock investments)
Amount Available for Stocks: 47.25k
Assume Member buys 30k worth of stocks during the month
Month 1 (1 month later)
OA Balance: 105k
What will be reflected as amount available for stocks?
I assure you, it is not 17.25k but a mere 6.75k!!!
I'm not kidding ...
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(25-01-2013, 01:44 PM)HitandRun Wrote: (25-01-2013, 11:46 AM)smallcaps Wrote: Depends on when the stock limits are computed i guess... whether it's when withdrawn from CPF to investment account, or is it when transfer from investment account to broker...
Thank you for indulging me. And if you think what I have pointed out is lame, there is an even bigger obstacle.
Let's get back to the example that I have pointed out:
Month 0
OA Balance: 135k (of which 35k is profits from stock investments)
Amount Available for Stocks: 47.25k
Assume Member buys 30k worth of stocks during the month
Month 1 (1 month later)
OA Balance: 105k
What will be reflected as amount available for stocks?
I assure you, it is not 17.25k but a mere 6.75k!!!
I'm not kidding ...
Yep, I guess that's CPF's conservative way of computing... 30k cost is accounted for but with market value of 0.
From my experience, still can earn a respectable return from CPF stocks despite all these rules. Agree though that a lot of possible profit was lost due to the limits but i guess i would rather profit less than a lot of other people lost it all.
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26-01-2013, 12:37 PM
(This post was last modified: 26-01-2013, 12:37 PM by specuvestor.)
(25-01-2013, 10:17 AM)Temperament Wrote: Quote:From a financial planning point of view our life is split 30-30-30 years, 30 years of "human capital investment", 30 years of accumulation and 30 years of retirement spending. Effectively what it means is every year of earnings is supposed to last us TWO years. Ironically this problem is brought about by longevity. It was less an issue in the past because it was more like 15-15-15 just a century ago.
i agree to the above to some extent. Isn't it the more one has to learn to invest well with whatever resources one can muster? Because how many among us can earn, "every year of earnings is supposed to last us TWO years"?
There is a saying, "If you don't have to take the risk, you don't have to invest. How true is it in real life?
So i and many people have no choice but to take the RISK.
Shalom.
Increasing risk without understanding return is a major fallacy of modern finance 101 that has been taught to the new cohorts. I have heard so many money managers chase beta and risk without considering returns, as they assume returns will come if they add risk. Risk and return are related but not absolutes, the paradigm is incorrect.
It is not just about income when we look at sustainability. It's also about expense.
Before you speak, listen. Before you write, think. Before you spend, earn. Before you invest, investigate. Before you criticize, wait. Before you pray, forgive. Before you quit, try. Before you retire, save. Before you die, give. –William A. Ward
Think Asset-Business-Structure (ABS)
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(26-01-2013, 12:37 PM)specuvestor Wrote: (25-01-2013, 10:17 AM)Temperament Wrote: Quote:From a financial planning point of view our life is split 30-30-30 years, 30 years of "human capital investment", 30 years of accumulation and 30 years of retirement spending. Effectively what it means is every year of earnings is supposed to last us TWO years. Ironically this problem is brought about by longevity. It was less an issue in the past because it was more like 15-15-15 just a century ago.
i agree to the above to some extent. Isn't it the more one has to learn to invest well with whatever resources one can muster? Because how many among us can earn, "every year of earnings is supposed to last us TWO years"?
There is a saying, "If you don't have to take the risk, you don't have to invest. How true is it in real life?
So i and many people have no choice but to take the RISK.
Shalom.
Increasing risk without understanding return is a major fallacy of modern finance 101 that has been taught to the new cohorts. I have heard so many money managers chase beta and risk without considering returns, as they assume returns will come if they add risk. Risk and return are related but not absolutes, the paradigm is incorrect.
It is not just about income when we look at sustainability. It's also about expense.
Well put. i always try my best to understand the risk of an investment before i invest. The times i did not do my "homework" well enough were the times i lost a lot of my money.
And of course Expense > Income=Kaput. Always, there is no ifs and buts. 
WB:-
1) Rule # 1, do not lose money.
2) Rule # 2, refer to # 1.
3) Not until you can manage your emotions, you can manage your money.
Truism of Investments.
A) Buying a security is buying RISK not Return
B) You can control RISK (to a certain level, hopefully only.) But definitely not the outcome of the Return.
NB:-
My signature is meant for psychoing myself. No offence to anyone. i am trying not to lose money unnecessary anymore.
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Seems like the 'hotness' of singapore property launches pales in comparison to those in Dubai:
http://www.bignewsnetwork.com/index.php/...in-disgust
12,000 queue up for just 280 apartments !?! Queue 3 days !?!
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