10/26/2008

Why are Singaporeans not saving enough?

We have this marvelous scheme called the CPF. This is meant to take care of our savings for old age. We put in a big chunk of our earnings into this scheme, thinking that it would be enough. Now we all know that it will never be enough. Inflation is not the only thing that will eat away whatever we have put aside. That is why Singaporeans are constantly reminded to save, outside the CPF. What a joke! For the baby boomers, one of the most disastrous policy that affected their life savings was the liberalisation of the CPF on the belief that if you put money in the stock market, in the long run, you will be richer. It has been proven that it was a folly and many lost everything they had in their CPF. The stockmarket is not the stockmarket that we knew in the past. It is now a casino, without fundamentals. But what are the main causes to fail this great savings scheme? The biggest item that Singaporeans need to spend on is the flat or home. If we keep raising the property prices, mark to market, Singaporeans will end up saving just to buy a flat and be left with nothing. The younger Singaporeans shall give up hope of withdrawing any money from the CPF when they reach 55, or to receive anything when they reach 62. A big chunk of their money will be buried in the flat with the rest locked up in minimum sum and medisave. The CPF scheme is now a red herring. The Singaporeans are saving but spending at the same time. I should have called this saving scheme a myth.

11 comments:

Anonymous said...

I think it is now a lost cause trying to drum into the young to be thrifty. The spending habit cannot be reversed, whatever efforts they are putting in to teach the young to be financially responsible. So, with the CPF going to the house, and the government giving them the idea that the house is also an investment to cash in during bad times, the young are not duly worried about their future. It is only oldies like us who worried for them. The young are here today, spending without much savings, like the Americans. They will wake up one day to regret it.

Anonymous said...

"Why are Singaporeans not saving enough?"

Simple equation:
CPF + Interest = HDB + retirement $
1. CPF contribution rate is probably highest in the world already.
2. If retirement $ = 0, then CPF interest is too low or HDB is too high, or both (which is what I think).

Anonymous said...

In a sense, a lot of Singaporeans are living on borrowed money or to be exact, living beyond their means.

The trend has been a lot of young couples often opt for the biggest HDB flat available, often forgetting whether their combined income can see them thro' the worst times of their life and often got into their entire working life serving all kinds of loans : children loans, parent loans, car loans, credit card loans, holiday loans and not forgetting the basic HDB loan which they probably have to service for the rest of their lifes.

How do save if one is tied to a lifetime of such loans ?

Anonymous said...

Read in the ST today about Ms Lin under the article "young & unfazed". That is a typical Singaporean youth of today. God help us in 20 years from now. Glad many of us will not be here to see that day.

Anonymous said...

Who taught the oldies financial responsibility? Not the schools. Often it is our parents and the fact that they grew up in a less well-off society and during each recession they learnt the important lessons of financial control. Saving for a rainy day is always on their minds, good times or bad.

Those below 30 never lived through a serious enough recession, and they will find out what it means if this current recession is serious and prolonged. Such lessons are invaluable. Then they will remember.

Anonymous said...

How can they learn if whenever they stretch out their hands their parents oblige by giving whatever they want, just like Ms Lin?? She will never learn the value of money. They think that money grow on trees and all you have to do is stretch out and grab it. Easy money.

Anonymous said...

And she has the cheek to show her face on ST. I suppose she just went for the cheap claim to fame.

Anonymous said...

Because our Minister feels very rich every time he looks at his monthly CPF statement.

Half of the people agree with him. The other half think this might be true. The Government has not said that the people are not saving enough.

Anonymous said...

The stockmarket is not the stockmarket that we knew in the past. It is now a casino, without fundamentals.

The stock market is a musical chair, a casino and a beauty contest; has been so and will continue to be, always. Just becos a few more newbie analysts copied from each other notes to come up with impressive quantitative spreadsheets doesnt mean a market has fundamentals. Asian markets are ruled less by fundamentals than it is by momentum, when liquidity becomes an issue and redemptions the order of day, the market goes kaput.

Anonymous said...

i tot singaporeans are already one of the top savers in the world according to some official estimates. did you save enuff redbean?

redbean said...

got no money how to save?