12/30/2008

Who is richer?

Things are not what they are today. What you see is not really what you get as many factors come into play. A person in Malaysia or Indonesia may own 2 or 3 houses but each costing $100k or $200k. A Singaporean may own just one HDB flat with a value of $700k. Who is richer? And the picture could change if the person owning 2 or 3 houses actually got them fully paid up or owes the bank a small loan. The Singaporean could be tied to a $500k loan and need a steady income to service that loan. And add to this, the cost of living in the neighbouring county is relatively that much lower than here. A dollar there could buy so much more. Who is richer?

What is Sinking Fund for?

Quek Soo Beng’s letter in the Today paper yesterday asked some pertinent questions about the Sinking Fund and the Town Councils Act and role with respect to the fund. For all intent and purposes, the money collected from the residents in the form of conservancy charges etc and placed in the Sinking Fund is for the purpose of maintaining the estate. It was never meant to be used for investment purposes. Should the Town Council intend to invest the money, the main concerns will be capital preservation and not risking it for higher returns. The provisions of the Town Councils Act may be give the wrong impression that it is expected of them to use the Sinking Fund for investment. This unintended function of the Town Council may lead to situations where the main function of the Sinking Fund be forgotten and with the residents contributing unnecessarily more money to it. When the Town Council sees its role as investing the money collected, then there is no limit as to what is enough in the Sinking Fund. And when there are profits from investments or when the Sinking Fund is bloating with excess, there will be no requirement to return the extra fund to the residents. And for all purposes, the residents may be expected to contribute more and more, for investments and more returns, and for the building up of a bigger reserve. It is therefore very important that the purpose of the Sinking Fund be made very clear, ie., to set aside enough money to maintain the estate. And when the amount is sufficient, then it should stop collecting or increase the conservancy charges. The collecting of conservancy charges is not for fun or for the purpose of keeping for rainy days or for investment. When there is a need for more money for estate management, the fees may be raised accordingly. For expediency and contingency purposes, Town Council may want to set aside a little more as a reserve. This amount too must be spelt out. Otherwise the reserve can be for 20 years or 100 years.

12/29/2008

How I wish....

With so many frauds being disclosed, with so many people losing their fortunes, it is sad that the only person they could point the finger at is Madoff. What about all the thieves that have enriched themselves all these years in the financial industry? The auditors, the regulators, the CEOs, etc etc? Are they all innocent? How I wish America is a communist state today. You know what the communists did to the thieves that plundered and stole the people's money? They either decapitated them or shot them in a firing squad. But with a justice system that pays big money to the lawyers to find someone guilty or to defend the thieves and make them innocent, there will be no natural justice but the justice of money and power.

National pride versus national honour

Watching the football match between Vietnam and Thailand was like watching two nations battling for honour and national pride, and not just for money or for personal glory. These are the simple things in countries that are still 'backward' and not ruled by money. The people will do anything to defend the honour of their countries without asking how much is in it for them. There are money involved for sure. But they will not trade national honour for money in such a game. Sometimes for sophisticated and modern countries like ours, we tend to sneer at their simplicity. We may even find it amusing for them to be sweating their guts out just for some national glory but not for the millions which they could demand in view of their talents. These talented players should join the commercial leagues where all the monies are and their talents be duly rewarded. The rich countries will be most willing to pay for their talents to play, to win or lose depending the the bets on the table.

Time to cash out

HDB is building more 2 rm flats for the baby boomers who are hitting the 60s. Nice thought and nice planning. Since the late 60s till the 80s, HDB probably have built flats for a whole generation baby boomers and see them grow, settle down, raised families and now time to retire comfortably into their golden years. The baby boomers were the most successful generation of self starters, stepping out from a time when poverty was the norm. Many are living in bigger HDB flats and private properties. With children having their own families and leaving the roosts, some may want to cash out and live on the gains from their inflated assets. Typically they would have bought their HDB flats for between $20k to $40k and could now sell them for $400k or more. Neat profit. If a 2 rm flat costs $150k, there is still plenty of money to live by, provided they qualify for the purchase if they have not used up their two bites of the cherry. The good news is that there will be many of these bigger flats available for the young to pick up. The bad news is that these young couples did not have the same opportunities as the baby boomers, where the prices of flats were relatively low to their income. The cost of flats to the baby boomers was about 20 or 30 times their monthly salary, on one pay packet. A $400k flat today will be about 400 times that of a $4k monthly income or 200 times that of a $8k combined income. It looks like HDB lives on one cycle, taking care and planning for the baby boomers. The subsequent cycles or new generations will have to take care of themselves. Or maybe they are being taken care off by having better quality flats to suit their sophisticated lifestyles.