Forget high living with CPF Life payouts

The Straits Times

www.straitstimes.com

Published on Jun 01, 2014

 

Forget high living with CPF Life payouts

To fund a comfortable retirement, you will need top-ups from your own investments

By Jonathan Kwok

There was quite a reaction from my friends after the Central Provident Fund (CPF) recently raised its Minimum Sum yet again.

We may still be decades away from retirement, but there was still some irritation over the idea that part of our money will be parked in some account that we can access only after various conditions are met.

The latest change announced last month raised the Minimum Sum to $155,000 from July 1, up from $148,000. This is the amount that has to be left in our account at age 55, so it means we can withdraw less.

I was the voice of moderation, as I pointed out the rationale behind the change.

The Minimum Sum has had to go up often in recent years for two reasons, I explained: People are living longer and things are getting more expensive.

No escaping from these realities.

The Minimum Sum is used to buy an annuity, called the CPF Life, which provides monthly payouts from retirement until you die.

A higher Minimum Sum means CPF Life payouts can increase to keep pace with inflation.

In fact, my concern is almost opposite from that of some of my peers who worry about money being locked away in the CPF account.

I am less angsty about not being able to use my money whenever I want to. Rather, I tell people that we should be worrying that the payouts from CPF Life will be too low for us to maintain our current lifestyles after we retire.

This system is meant to meet the needs of a lower-middle income retiree. So you will need to save and invest separately if you aspire to live a better life, taking an occasional holiday and eating at restaurants, for example.

I did some back-of-the-envelope calculations to get a quick gauge of how much a couple will need for their retirement. It turns out, you and your partner may need about $500,000 to $800,000 in stocks to provide enough dividends to supplement CPF Life payouts.

Savings and Investment Plan

First and foremost, we need to find out how much an above-average income family spends.

I took data from the Statistics Department's most recent household expenditure survey, which was released in December 2009.

The top-earning 20 to 40 per cent of households spent $4,532 per month, the report said.

I'll assume that our hypothetical go-getting couple fall in this range and do not want their living standards to drop after retirement.

But these figures presumably capture households at a time when they are raising children, who would have grown up by the time the couple retire.

So I assumed expenditure could be cut by one-quarter to $3,399.

How much of this can be covered by CPF Life?

A Singaporean man who turns 55 this year and has the CPF Minimum Sum of $155,000 will get a monthly payout ranging between $1,200 and $1,350 if he opts for the standard plan, said the CPF Life Payout estimator.

A woman's monthly payout will roughly vary from $1,100 to $1,250 as she is expected to live longer. The payouts will start when they turn 65.

Taking the lower sums, a husband-and-wife team will get only $2,300 per month from CPF Life, leaving them with a $1,099 deficit from their $3,399 expenditure. That works out to a shortfall of $13,188 per year.

If our hypothetical couple fail to make up the shortfall, they will need to cancel their hotel high teas and forget about travelling further than Johor Baru.

But surely our couple deserve better after slogging for decades in the rat race?

Fear not, a solution is present if they start saving and investing early in life.

I centred my calculations on using shares to meet retirement needs, though you can probably achieve the goal via an investment property. Assuming a dividend yield of 4 per cent, a $329,700 portfolio of stocks will be able to generate dividends of $13,188 per year. This amount will be able to meet our couple's shortfall.

Inflation with no drawdown

This simple calculation discounts inflation, however. As time goes by, things will surely get more expensive and you will need more money to maintain your lifestyle.

A 3 per cent inflation rate over 30 years will lead to annual combined expenditures eventually ballooning to $99,003 for our couple. If CPF Life payouts go up in line with inflation, this would eventually come to $66,992 per year for our couple.

But the shortfall for the couple's desired lifestyle would also have widened, and they would need a combined portfolio of a whopping $800,269 to generate enough dividends for that.

Inflation with drawdown

The previous scenario assumed that the couple would use only dividends from their shares and leave the entire capital to their beneficiaries after they die.

But one way to reduce the required amount is if they are willing to draw down on their stock capital after retirement. So their yearly payouts will consist of both dividends and a drawdown on capital.

After 25 years of retirement, they will have zero shares left but they would have needed a smaller amount to start their retirement with - $520,082.

The lesson from all these calculations is that it makes good financial sense to start preparing for retirement early. Without top-ups from your own investments, CPF Life will be able to provide only a basic lifestyle.

jonkwok@sph.com.sg

Copyright © 2014 Singapore Press Holdings. All rights reserved.

The Straits Times

www.straitstimes.com

Published on Jun 01, 2014

 

Which to go for - CPF Life Basic or Standard plan?

It depends on whether you prefer to collect payouts from age 65 or you want to wait until you are 90

 

By Goh Eng Yeow Senior Correspondent

 

Many of my friends in their 50s are facing a major concern - whether they have saved enough to last them through retirement.

For my parents' generation, the norm for a married couple was to raise a large family which would, in turn, look after them when they grow old. But times have changed, and many of us either have small families or stay single so we have to be financially secure to ensure our money does not run out.

But getting to our objective of financial wellness needs a careful strategy.

The cornerstone of any retirement planning should start with the savings we are accumulating in our Central Provident Fund (CPF) accounts. That at least ensures that we can still pay our monthly grocery and electricity bills when we are old and not working, if we have already paid for the roof over our heads.

Then how comfortable we want to make our retirement will depend on the other aspects of our financial planning such as squirrelling money away into a Supplementary Retirement Scheme (SRS) account or even buying a house for investment in the hope that property prices will keep going up.

Take a Singaporean who reaches 55. As a CPF member, he must set aside a Minimum Sum in his Retirement account from money in his CPF Ordinary and Special accounts. From next month, the Minimum Sum will be $155,000. Currently, about half of them meet this requirement.

Once he reaches 65, he will get a fixed monthly payout for about 20 years from the savings set aside in his CPF Retirement account. Between 55 and 65, the money in his Retirement account will enjoy an interest rate of up to 5 per cent per annum - which is far higher than what the banks are offering for fixed deposits.

But what happens if our Singaporean lives past 85 and the money runs out? It is not a hypothetical question as people are living longer. My parents are in their 80s and I have a 104-year-old aunt in Hong Kong.

Since last year, it has been compulsory for Singaporeans and permanent residents who turn 55 to be part of the CPF Lifelong Income for the Elderly (Life). Yet most of them are ignorant about its details. CPF Life offers two plans - Standard and Basic.

The Standard plan is essentially a traditional annuity scheme. People taking up this option will use the entire sum in their Retirement accounts to buy the annuity. They will get a monthly payout for the rest of their lives once they reach 65.

Wage-earners may like to opt for this plan since they are used to getting their salaries credited into their bank accounts every month. This ensures that when they retire and hit 65, the salaries they are used to getting will be partly replaced by the monthly CPF Life payout.

Calculations from the CPF Life Payout estimator show that a male Singaporean who turns 55 from next month and has the CPF Minimum Sum of $155,000 will get a monthly payout ranging between $1,200 and $1,350 if he opts for the Standard plan. For a woman, the monthly payout will roughly vary from $1,100 to $1,250 as she is expected to live longer.

Indeed, the norm for most of the 400,000 people who retire in Britain every year is to buy an annuity similar to CPF Life Standard.

One merit about CPF Life is that it is run by the Government. That removes the big worry of retirees as to whether their insurer is financially strong enough to withstand the next global financial crisis in order to keep making the monthly payouts.

But buying an annuity is a relatively new concept here and there are people who gripe about why they should have to buy one when it takes Herculean efforts to live past the age of 85.

One issue raised by a friend is the possibility of "mortality cross subsidy", whereby those unfortunate enough to die early effectively subsidise those who live longer than the average.

My reply is that the purpose of buying an annuity is to achieve some income certainty when we are old. Trusting our investments entirely to achieve that goal is too much like relying on the roll of the dice, given the regularity with which financial crises have been occurring.

Still, I am glad that CPF Life has another choice - the Basic plan - which gives a lower monthly payout and a higher bequest. Essentially, it works like a deferred annuity - an insurance product that is very popular in the United States.

Under this plan, a CPF member will have premiums deducted from his Retirement account to pay for the deferred annuity whose payouts will only start when he reaches 90. After he turns 65, what he gets is a monthly payout from his CPF Retirement account.

In essence, the CPF Life Basic works like an insurance plan for those with longevity concerns but who may have other sources of income. If he lives past 90, he will get a payout - and he does not have to worry about subsidising people who live longer than the average.

I believe that the Basic plan will appeal to the financially literate and to the self-employed who may not have much CPF savings.

That, in a nutshell, sums up CPF Life: The Stan-dard plan offers an annuity scheme similar to what retirees in Britain opt for. The Basic plan is commonly adopted by US retirees. Choose wisely.

engyeow@sph.com.sg

Copyright © 2014 Singapore Press Holdings. All rights reserved.

Me and My Money - Teacher preaches rules of wealth

Teacher preaches rules of wealth

Canadian educator caught investment bug early in life and wants to share secrets

The Sunday Times 25 March 2012

By Joyce Teo

When Canadian high school teacher Andrew Hallam was in college, he worked at a bus depot during the summer, and met a 47-year-old mechanic who was a millionaire.

The latter suggested to the young man that he should choose a job that he loved doing, rather than choose a job simply because it paid well. And that he could earn a middle-class income and still become a millionaire by his 40s or earlier if he learnt about investing his money.

That meeting piqued Mr Hallam's interest in investing, which has become his lifelong passion.

He even considered getting into money management in his early 20s. 'But it occurred to me that I would benefit at the expense of my clients. Did I want to do the best for my client or myself?' he asked himself. In the end, Mr Hallam, now 41, chose teaching.

He came to Singapore eight years ago to take up an English teaching position at the Singapore American School but has switched to teaching personal finance this year.

He recently published a book Millionaire Teacher: The Nine Rules Of Wealth That You Should Have Learnt In School.

Having read about 400 finance books since he was 19, Mr Hallam says: 'There are all these academically irrefutable premises but the financial service industry doesn't want you to know them. I want to help people out there.'

He is married to Pele, also a teacher at the Singapore American school. They have no children.

Q: Are you a spender or saver?

I'm a saver. People on middle-class salaries can amass wealth, but I don't believe they can do it if they are big spenders, especially while they're young.

My wife and I save roughly 70 per cent of our annual income. We invest all that we save, and we spend the rest. I'm not as thrifty as I used to be. I spend most on food (mostly organic fruit and vegetables), travelling and massages. We both enjoy a massage at least once a week.

In order to grow wealthy, I think there's a rule of thumb that applies nicely: Never borrow money to buy a depreciating asset. A car is a depreciating asset. But over time, a house is an appreciating asset. Many people try to look wealthy before they truly have money.

Plenty of people borrow money to buy fancy cars and live an extravagant lifestyle, but most of those people are living well on borrowed time.

Q: How much do you charge to your credit cards every month?

I don't know what percentage of our spending we charge to our credit cards. But I do know that I've never paid a penny in interest to a credit card company. Credit card companies hate guys like me!

Q: What financial planning have you done for yourself?

I determined my financial planning by asking myself how much money I would need if I wanted to retire in a given year.

I figured out what kind of portfolio I would need to allow for that kind of income, and I made an estimated adjustment to cover the rising costs of living. It's all about cash flow.

Studies have shown that if you have a diversified investment portfolio of, say, $100,000, its real worth is $4,000 a year. In other words, you can sell 4 per cent of your portfolio each year and have a strong likelihood that you'll never run out of money.

This 4 per cent rule is a fairly standard one.

I knew that if I could live off 4 per cent of my portfolio, I would be financially free. That doesn't mean that I would quit work and lie around all day. But it did mean that I could choose to work or not work, in any given year. This can certainly reduce the blood pressure.

I diversify my money across international stocks and Canadian bonds and I rebalance my assets. I have 60 per cent in stocks and 40 per cent in bonds as I want my bond allocation to equal my age.

Most college endowment funds and pension funds do the same with the rebalancing of asset classes but it's not easy for most people to do - psychologically.

I own just three low-cost index funds - a total US stock market index, a global stock market index and a Canadian bond market index.

I have medical insurance, but no other insurance. I think the best insurance of all is to have no debts, and enough money saved to live off it.

Q: What advice would you give to investors?

Two things significantly reduce many people's portfolio returns:

•They often chase 'what has done well lately'. This is one of the worst pursuits an investor can take part in.


Studies show that if a particular unit trust has, for example, returned an average of 10 per cent a year for the past 20 years, the average investor in that fund, for that duration, would have made only 7 per cent a year.

Investors would have added more money when the fund was 'doing well' and they would have added less money or even sold some of their investment when it underperformed. In essence, they would pay a much higher than average price for the units of the fund.

Such behaviour, over the long term, can be the difference between amassing a $500,000 account and a $1 million account. But this behaviour is very common.

•Most people also pay investment fees that are too high. I pay roughly 0.09 per cent each year for my exchange traded funds. But most people in Singapore pay roughly 15 times that amount if they invest in actively managed unit trusts.


Most people still get drawn to a fund because of its strong historical returns, ignoring the academic evidence suggesting that portfolios of low-cost funds, over a lifetime, have much higher statistical odds of outperforming funds with higher expenses.

Q: Moneywise, what were your growing-up years like?

I grew up in Kamloops, British Columbia, Canada. My dad was a mechanic and I was one of four kids. If we wanted something material, after the age of 12, we had to earn the money to pay for it ourselves. My parents bought me underwear and socks until I turned 15. I was really on my own, although I was still under their roof. My parents didn't have a lot of money, but it has worked out well for me.

The Chinese suggest that wealth doesn't last three generations. The generation that works hard and succeeds wants to make life easier for their kids. So they buy things for them and essentially weaken them.

Children of the affluent grow up with expensive expectations. They're typically the same people who borrow money to buy depreciating assets. And this results in the beginning of the end.

I know that if my parents did the metaphorical heavy lifting for me when I was young (by giving me money or buying me things), I would not have developed the financial muscles I have today.

Q: How did you get interested in investing?

I started to invest when I was 19 years old, after meeting the millionaire mechanic, so I've given myself plenty of time to apply Einstein's Eighth Wonder of the World: compound interest.

Twenty years ago, I started investing a minimum of $100 a month and I increased that every year.

I also read finance books, of which two of the best are The Four Pillars Of Investing by William Bernstein and Common Sense On Mutual Funds by John C. Bogle.

Q: What property do you own?

I don't own any property. I like the thought of buying property when it 'isn't performing well'. For this reason, I wouldn't buy property in Singapore today.

I bought an acre of oceanfront land on Vancouver Island in Canada, during a mini recession in 2002. Property prices hadn't moved much in a decade, so I bought it.

Then when people started piling into property, prices soared and I sold it for three times what I paid, in 2007. It cost just $147,000. I sold it for $484,000.

Q: What's the most extravagant thing you have bought?

I bought a 1974 Mercedes-Benz for $3,000 in Canada and then spent another $7,000 restoring it. The car was cheap by Singaporean car standards, but it was my most extravagant purchase to date.

Q: What's your retirement plan?

I believe that I'm financially independent now. My portfolio is worth roughly $85,000 a year (based on the 4 per cent rule).

But I have no plans to retire. I love teaching at the American School. You know that you've found the perfect vocation when your job doesn't feel like work. My job is so much fun.

Q: Home is now...

A rented four-bedroom apartment at Dairy Farm Estate.

Q: I drive...

My wife's 2003 Mazda 3.

joyceteo@sph.com.sg

Banking - Overdraft facilities cost consumers $30 billion dollars

We Paid Almost $30 Billion in Overdraft Fees in 2011


Read more: http://moneyland.time.com/2012/01/03/we-paid-almost-30-billion-in-overdraft-fees-in-2011/#ixzz1iT75PvEF

They called it the “$39 cup of coffee.” At many banks, customers were automatically — often unwittingly — enrolled in overdraft programs that would permit debit purchases to go through even if it would overdraw their account, to the tune of up to $35 a pop. But a year and a half after new Federal Reserve rules kicked in to protect consumers from these automatic fees, we still forked over a collective $29.5 billion in overdraft charges for the year. What went wrong? Banks pocketed some serious cash from overdraft fees, according to research company Moebs $ervices, Inc. A decade ago, these fees were a $23 billion business. But once banks realized the magnitude of this revenue stream, they started pushing the envelope. In 2009, overdraft fee revenue hit an all-time high of $37.1 billion.

The Fed stepped in with its new rules in July 2010, requiring banks to get customers’ permission before enrolling them in a program that would let them overdraw when paying with a debit card. Banks asked for that permission, but according to Susan Weinstock, director of the Safe Checking in the Electronic Age Project at the Pew Charitable Trusts, they presented the question in such a confusing way that consumers often didn’t know which option they were getting. “We are concerned that there’s still a lot of confusion out there,” she says.

(MORE: Customers Fight Back Against Overdraft Fee Tricks)

The $35 fee option became known as overdraft “protection,” and banks sent scary-sounding letters warning customers that if they didn’t sign up for it, their debit cards could be denied by a merchant. “One thing that came out of those focus groups is that people are confused about what opting-in is,” Weinstock says. Many people think that choosing the bank’s “protection” means that they won’t be charged an overdraft fee, whereas the reverse is actually true. Research conducted by the Center for Responsible Lending came to the same conclusion.

Another reason so many people are overdrawing their accounts — even after being warned of the risks — is because of “float,” according to Mike Moebs, CEO of Moebs $ervices. When people used to pay for groceries or other purchases with checks, it would often take a couple of days before that money was withdrawn from their account. If a customer got paid on Friday and wrote a check on Thursday, there was a pretty good chance they’d be in the black again by the time the store cleared their check.

Today, it’s another story. “Ultimately, float … has virtually been eliminated in check processing system in past seven years,” Moebs says via email. In 2001, the median float — that is, the amount of money being processed at any given time — was $8.8 billion. Now, it’s not even $400 million.

(MORE: A Bank Heist, Committed by the Banks)

Finally, banks are still making almost $30 billion from overdraft charges because the amount they charge when a customer overdraws their account has risen steadily. After five years during which the median charge was $25, it’s inched up since then. In 2011, the median overdraft fee was $29.



Read more: http://moneyland.time.com/2012/01/03/we-paid-almost-30-billion-in-overdraft-fees-in-2011/#ixzz1iT6r02WQ

Suze Orman Offers Four Tips on How to Save (and Spend) Your Money

"Are you afraid?" asked Suze Orman. "Are you afraid when it comes to your money? Well, you should be." The lively personal finance expert and host of CNBC's The Suze Orman Show appeared at Chicago Ideas Week (CIW) last night, where she was interviewed by CIW founder Brad Keywell before an auditorium full of people who admitted, via raised hands, that they were racked with credit card debt, that they struggled to pay their mortgages and that they had no idea what a municipal bond was.
"How is that possible?" asked Orman, astonished. "Why aren't we teaching personal finance in school?" (A municipal bond, by the way, is a bond issued by the local government; income from it is often—although not always—exempt from income tax.) At Chicago Ideas Week, Orman offered a no-nonsense, tough love type of financial advice that says if you can't afford something, don't buy it. Here are some of the ideas she had: (See a Q&A with Suze Orman on the death of the American financial dream.)
Idea No. 1: You can't wait for the market to save you.
"The real estate market isn't going to come back until at least 2023," Orman predicted. "If you can't afford your home, you need to figure out what to do. You have to make a plan and that plan can't be that the market will save you." Similarly, if you see a house on the market that looks like a good deal, don't buy it. "Don't you dare," said Orman. Unless, of course, you can easily put 20% of the money down and pay the property taxes, mortgage and insurance comfortably with your current salary—and your job is secure. Then, as long as the house will be your primary residence, go right ahead.
Idea No. 2: Pay in cash
If you pay for something in cash, you won't have debt. It's as simple as that. If you have credit card debt, pay that off as fast as you can. (See Suze Orman in the 2010 TIME 100.)
Idea No. 3: Men need to stop pretending they know more about financial planning than they do. "Men are financial fakers," said Orman. When she worked as a financial planner, she said, married couples would come in for advice and "when the wife got up to go to the bathroom, I'd lay out this very complicated, totally made up plan for the husband. I'd say, 'You do this, and this, and this—are you following me?' and the husband would nod and say, 'Yes, Suze. To the letter.'" Then when the wife came back, she'd ask the husband to explain it to her and he couldn't. "Of course he couldn't! It wasn't a real plan!" Orman says that even today, men feel pressure to pretend like they know what they're doing. "That's how Bernie Madoff happened," she said. "One guy told another guy, who told another guy, who told another guy, and not one of them knew what they were doing." Women, on the other hand, have no problem asking someone to explain an idea to them again.
Idea No. 4: Save money.
This was a weaker point in Orman's talk because she didn't explain how people are supposed to save money. Orman recommends having eight months of savings in the bank so that if you find yourself without a job, you can still pay your bills. That's a nice idea, but many people can barely pay their bills now; how are they supposed to save money? "If you lose your job, how are you going to continue to pay those bills?" Orman counters. That's a good point, but it still doesn't explain anything. Becoming financially secure can sometimes be harder than you think.


Read more: http://www.time.com/time/specials/packages/article/0,28804,2096504_2096506_2096751,00.html #ixzz1aiZ9vlXp

Crucial to name caregiver while mentally competent

Only 1,038 people have appointed caregivers under the Mental Capacity Act since its implementation in March last year. -AsiaOne

Sat, Oct 08, 2011
AsiaOne

The Office of the Public Guardian (OPG) is increasing measures to raise awareness of the need to name a caregiver before one's mental health declines in old age.

The Straits Times reported that Acting Minister for Community Development, Youth and Sports (MCYS) Mr Chan Chun Sing led by example yesterday by appointing his wife to take charge of his welfare should anything untoward happen to him.

Speaking to about 1,000 people at the Grand Copthorne Hotel yesterday, Mr Chan also reiterated that caregiving is "becoming a prominent issue" in the context of an ageing population like Singapore's as we are "one of the fastest ageing socieities in the world".

As of Oct 1, only 1,038 people have appointed caregivers under the Mental Capacity Act since its implementation in March last year.

The act allows people above the age of 21 to make a "Lasting Power of Attorney" as long as they are deemed mentally sound by a doctor or lawyer.

Here is the full text of Minister Chan Chun Sing's speech.

The Honourable the Chief Justice Chan Sek Keong


Mr Richard Magnus, Chairman, Public Guardian Board

Members of the Public Guardian Board

Distinguished Guests

Ladies and Gentlemen

Good afternoon.

Thank you for taking the time to join us at this forum today to discuss a very important and pressing issue.

It is the issue of caregiving within the framework of the Mental Capacity Act; that is, caring for those who have lost the capacity to make their own choices and decisions.


We are honoured to have in the audience, members from the legal fraternity, healthcare, grassroots and social service sectors, and members of the public who are caregivers or proxy decision makers for someone who has lost his mental capacity.

It is heartening that this forum has attracted such a wide spectrum of participants, from the Public, Private and People sectors.




This reflects the nature of caregiving for a vulnerable category of individuals - one which is community-based, involving multi-agencies and individuals who all play distinct, yet equally important roles that contribute to the well-being and protection of individuals in need.

Caregiving is becoming a prominent issue in the context of an ageing population like ours.

We are one of the fastest ageing societies in the world. Our rate of ageing is projected to rise from an average of four percent per annum in 2000-2011, to six percent per annum from 2012- 2020[1].

With longer lifespan, we will have a higher proportion of Singaporeans living to ages of 85 and beyond.

As the incidence rate of dementia increases with age, we can expect a higher portion of elderly developing dementia in the future.

By 2020, one in 12 Singaporeans above 65 years of age is likely to develop dementia, compared to one in 20 currently[2].

A fast ageing population will present unique and diverse challenges relating to the care of individuals with diminished capacity.

Besides professional caregivers, most, if not all of us, will play the role of a caregiver, in varying degrees, at some point in our lives.




What then are our roles and responsibilities as caregivers; particularly in relation to those who depend on us to decide and act on their behalf?

The Mental Capacity Act, which came into effect in March 2010, now provides a legal framework for the care of persons lacking capacity.

There is also a Code of Practice, which was drawn up to provide information for the general public, specifying basic guidelines and highlighting best practices in caring and making decisions on behalf of a person without capacity.

Decision-makers include caregivers, nurses, doctors, donees of a Lasting Power of Attorney (LPA) and court-appointed deputies.

These guidelines emanate from the basic social value of respect for the dignity of all individuals which is a key tenet in the Mental Capacity Act.

An important guiding principle within the Code of Practice is the concept of 'best interests' 'Best interests', is a familiar common law concept. But many will likely ask how this can be exercised practically in relation to caregiving for those without capacity.

Let me illustrate how this concept of 'best interests' is practised from the experience of Ms Joyce Soon who, for the past eight years, has been the primary caregiver for her mother who suffers from Alzheimer's disease.

Joyce will be sharing her caregiving experience at one of the sessions later.




Joyce had initially placed her mother in a non-home environment in the hope that she would benefit from professional care.

However, she soon realised that her mother did not settle well there and looked depressed. She knew that this would only cause her mother's condition to deteriorate faster.

Hence, instead of making a decision that would likely cater to her own convenience, Joyce decided that in her mother's 'best interests', she should provide care for her in a home environment.

Joyce's experience and the options that she made for her mother's 'best interests' in this case may not be applicable to all caregiving situations given that each circumstance is unique.

Determining the person's 'best interests' should underpin all our caregiving approach for an individual without capacity.

'Best interests' as advocated in the new Mental Capacity Act is part of the protective framework to ensure that the needs and interests of the vulnerable in our society are protected.

It also provides an avenue for caregivers to account for any action or decision made on behalf of a vulnerable person without capacity.

In a fast ageing population like Singapore's, demand for caregiving is growing and continues to evolve.

While the Government continues to work with our partners to meet the needs of the vulnerable in our midst, the community plays an equally, if not more important role.





A successful country is more than the economic success it has achieved. The hallmark of a truly developed country is the compassion that its citizens have for the needy, disadvantaged and vulnerable amongst us.

I applaud each of you here who has contributed to caregiving, and play your specific roles whether at home or professionally. I hope together, we can make a positive difference in the lives of those in need.

Last but not least, I wish you a fruitful seminar. Thank you.

Psychology of Money

Why You Shouldn’t Buy Winter Clothes in Winter
By Gary Belsky & Tom Gilovich | September 23, 2011


In our first Moneyland post we advocated a “Wait and C” strategy for big financial moves, especially spending ones. Our basic idea was that many decisions, to the extent that they’re affected by hidden biases or impulses, would be improved with even a short amount of deliberation and discussion with knowledgeable and otherwise disinterested friends (the “C” stands for consult).

Well, some not-even-on-the-presses-yet research suggests that such a strategy will save you even more money than we suspected. To explain, we must first introduce you to a concept called “projection bias,” which details the way people routinely overestimate the extent that their future desires and needs will match their current ones. That is, we think we’ll love a certain kind of product, lifestyle or activity as much tomorrow as we do today, when in fact our tastes and needs will differ, sometimes significantly. This error in judgment has much to do with our failure to grasp how much we actually change over time, but other factors certainly play their part.

Exhibit A: Tom recently attended a talk at Cornell given by U. of Chicago behavioral economist Devin Pope, who’s in the early stages of a paper (co-authored with his brother, Brigham Young economist Jaren Pope) on the effects of projection bias in housing and car markets. It’s significant research, because much of the work done so far on the subject has focused on low- or medium-stake purchases, such as groceries and clothing. (Catalog shoppers, for example, are more likely to return cold-weather apparel if it was ordered when the local weather was especially chilly.)

(LIST: 12 Things You Should Stop Buying Now)

But it turns out that even major purchases are influenced to a greater extent than people realize by immediate circumstances and conditions. So houses with swimming pools fetch a premium when bought in the summer, while convertibles sell at a faster pace during that time. Likewise, four-wheel drive cars sell more briskly in the winter in general and during snowstorms in particular.

We know what you’re thinking: Duh! People also drink more hot chocolate in December. Well, yes, it’s natural for current conditions to affect current choices, especially when it comes to decisions with immediate consequences. But houses and cars are not impulse buys; they’re long-term investments. More crucially, if you like to swim you shouldn’t value the ability to do so in your backyard more in June than you do in February. But that’s exactly what happens, according the Popes’ research, to a degree that’s measurable and translates into real money. Similarly, you might predict that you’ll be thrilled with a rag top in springs and summers to come, but you’re less likely to imagine that will be the case if you’re pondering a car purchase in November.

(MORE: 5 Ways to Prepare for a Double Dip)

Our point here is not to chastise anyone for emotional purchases or throw a wrench into your long-term planning. Rather, we just want to offer further incentive for anyone and everyone to discuss major purchases with a trusted but disinterested party before pulling the trigger. It can’t hurt, and it could keep you from spending money you otherwise wouldn’t, or paying more for what you do buy than you otherwise would.

Read more: http://moneyland.time.com/2011/09/23/why-you-shouldnt-buy-winter-clothes-in-winter/#ixzz1ZDMucpUH