Tuesday, 13 November 2018

Stock Acquired! Facebook (FB:NASDAQ)

I bought some FB shares a couple of days ago!

So here is why I bought some FB shares @ $149.80.


Reach: Saying many people knows about FB is probably an understatement. According to FB, there are reportedly 2.27 billion monthly active users on Facebook as of September 30, 2018. Based on a world population of 7.53 billion people, it means about 30% of the world population uses Facebook. There are not that many companies that can claim to have 30% of the world population as users, many of them on a daily basis. Imagine the amount of data which FB is collecting from these 2.27 billion users on a daily basis! And what FB essentially sells is our data; to advertisers. So while it is free to use, we are essentially paying with our personal data, our likes, our comments and everything we do on FB. 
Diversification: I am not too sure about you, but I have heard a couple of times on the street or from friends and relatives, FB is passé already, now i am on Instagram! But did you know besides Facebook, FB also owns Whatapps (WA) and Instagram (IG), if you are not on FB, you are likely on Instagram and most likely you already use whatapps! So just how big are WA and IG? 

WA: In Jan this year, a Techcrunch article shared that there are 1.5 billion WA users who send 60 billion messages daily. 

IG: According to Techcrunch, as of June this year, IG has about 1 billion users. While FB do not report IG revenues separately, I am inclined to think it should be quite a sizable amount, considering the user base. While I have heard some people leaving FB for IG, no worries there if you are vested in FB! Besides, actually i do not think people really delete their FB account per se, it is just they use it less as compared to using IG. Going forward, IG will be launching IGTV, which essentially is IG version of Youtube. 
So if you added up the numbers, FB group has about 4.8 billion users. No doubt, many of these are double / triple counting as many users use all three apps. But the scale of it just amazes me personally at least. 

Stickiness: I have to say the FB / IG / WA, are extremely sticky. You just need to travel on the public transport in Singapore to see that. With everyone glued to their phones during their morning / evening commute, you can see that at least 70% of people are on FB app. Even in office, you can see the prominent blue bar of FB on many laptop screens! It seems like when people are bored, people will just turn to FB to fill up these gaps. Some might turn to reading the news or a book, but it seems to me that MANY turn to FB / IG / WA for their daily source of entertainment, news, videos, and communication. Though what I see is only in Singapore, I believe it is pretty similar in many developed countries in Singapore. 

In short, FB / IG / WA is very pervasive and very sticky, in Singapore at least, as well as many other countries, which is good for a company.


Concentration risk: While FB, WA and IG provide diversification, they are all social media platform related after all. If something drastic happens to the online social media platform, FB would no doubt be affected. Though at this point in time, I am unable to think of something like that could happen in the foreseeable future. 

One-off businesses: Advertisers are not sticky, they will bring their money to whichever medium is most effective. So there is no incentive for them to stay with FB related products if they find FB do not translate eyeballs to dollars. Advertising on FB is also relatively cheap compared to traditional kind of advertising so FB will need to continue to keep their customers base wide. 

Competing needs / wants of users and advertisers: Having advertisements on their platform are the main form of revenue generation for FB / IG, but at the same time, users can get pissed off if there are too many such ads. You might have already experienced it (I have) where the ads just auto play in the middle of the video you are watching and you have no way of skipping it. Many a times, i simply scroll down to the next video once the ad starts, not watching the rest of the video thereafter. [Important point here i scroll down and do not switch off the app altogether, so i am still in the FB app, dammit FB is sticky!]

Reputation as a social media behemoth: The fact FB is the number one social media platform in itself could be seen as a weakness when it become a magnet for almost all social media related problems / criticisms e.g. privacy leak, Mark traveling to Washington to answer questions on FB data mishandling, US election / Russia influence probe. All of which, could distract FB from their main business. 


Further business diversification: With the money and customer based, FB is able to diversify outside its core social media and online advertising business e.g. payments perhaps within it's Messenger / WA, similar to Wechat in China where this one app can do so much more than just sending message.

Any other areas they wish to venture into: Ok, i am a little hard pressed to think of other areas, but with the money and user numbers, FB does have a very good starting point to launch / venture into new areas complementary to FB.


Substitutes: FB is not the first social networking site created and it will not be the last. There was Myspace and Friendster before FB but FB have emerged top (at least for now), but going forward, no one knows which other new platform might pop up. But do not rule out FB buying them outright, like in the case of IG. Though anti-competition regulations might stop this from happening in future.

Privacy and new regulationsCambridge Analytica Scandal, new regulations being introduced on data privacy, e.g. The EU General Data Protection Regulation (GDPR). The GDPR can implement fines of up to 4% of a company’s annual revenue for data violation!

Cybersecurity: Holding so much data will make FB a prime target for cyber security attacks. If there was ever a successful attack, confidence in FB would drop tremendously and it reputation will definitely be affected adversely. [that said, this is also the same for all social media companies.]

Market saturation: Getting more users = more data to sell to advertisers. But market saturation will kick in (or already has) so FB will need to find new ways to increase membership e.g. digital inclusion initiatives that would bring the unconnected online. [likewise for all other social media companies to be as well]

Numbers, numbers, numbers (from Reuters)

GOOG:NASDAQ [quite attractive numbers as well, but net profit margin is lower and management effectiveness not as high as FB]

SNAP:NYSE [not quite a worthy comparison to FB, not yet anyway]

TWTR:NYSE [President Trump fave means of comms. I was quite surprised at Twitter's number actually cos they are quite attractive in itself per se. But maybe i am not a twitter user/ fan, i just feel 240 characters are no match for FB's suite of offerings.]

And so that is why I have invested in FB. 😉

Phew, doing up such a post took much longer than I thought it will need. But I am happy to have finally done up my first investment journal. 

I hope you find the above analysis useful and do let me know if you have any alternative views. Happy to discuss! 

Bye for now!
Frugal Singa

Friday, 9 November 2018

Today, i shall start my journalling!

Today, i shall attempt to start something which I had held off doing for some time, though i know that it is good for me. 

I will do up my first investment journal entry on a recent stock i bought (just 2 days ago actually.)

Many a times, when I buy a stock, like everyone else, I would expect it to rise for a number of reasons. However, sometime down the road, when the stock price is moving sideways or even downwards, I will start to doubt myself and wonder if this was the right stock to buy in the first place, what if I had bought Y stock instead of X stock, i would have made money, should i sell now etc. But hindsight is always 20/20. 

By keeping a journal, I hope it will allow me to be more committed to my positions and allow me to learn from my mistakes and hopefully able to replicate my wins! Writing the thought process behind buying a particular stock will allow me to understand and more importantly remember the reasons / motivations behind my decisions further down the road as well. And hopefully, I will emerge a better informed investor, by knowing more about my very own investment decisions. 

Before going any further, I just wish to share I am more of a (lazy) fundamental investor. As much as I wish to learn more about Technical Analysis and all their modelling, I have not found the time to do so and it just seemed pretty overwhelming to me, so I will probably never ever learn it. Therefore, my stock analysis might seem pretty primitive to some. But to me simple is good and well... simple enough for me. 😁 Lastly, I am also a long term (>5 years) investors, simply because no one can predict the market in the short term, but in the long run, the trend is usually upward, so the longer the term, the better your odds of making profits. 

And also because of this, it is also unlikely I will buy an obscure undervalued stock and watch it magically reach for the moon (not within a short time frame anyway). No doubt there are plenty of such multi-baggers in small / micro / med cap stocks, but I feel they are simply too high risk for me and I prefer to avoid them.  

Disclaimer: While I enjoy picking stocks, I try as much as possible to avoid buying individual stocks as I am a believer in passive broad market tracking ETFs, so while I pick stocks, they do not form a majority of my portfolio. But sometimes, I gotta admit picking stock is just more exciting than ETFs. 💥

So my considerations when picking a stock actually just comprises a simple SWOT analysis and also a look at their profit margins, P/E, P/B, ROE as compared to their peers to decide if they are fairly priced at the point in time.

Given I am only starting my first stock journal entry, there might be further refinements to the above considerations. But without further ado, lets go to my next entry!

Feeling excited for my next post!
Frugal Singa

Wednesday, 7 November 2018

Raising a child in Singapore can be expensive, how about delivering a child into this world?

Singapore is an expensive place to live in. We has been dubbed the world's most expensive city to live in for the fifth year running. We are even ahead of New York, London and Los Angeles in the Economist Intelligence Unit's(EIU) Worldwide Cost of Living 2018 survey. Which really surprises me and possibly you, if you have ever stayed in New York for a while, either as a tourist or for work. 

No doubt, Singapore can be an expensive place to live in, just check out the cost of owning a car! But… as a citizen, I actually do not really think we are that expensive a place, at least for locals, to live in. There are certain assumptions in the survey that makes us the most expensive place for the 5th year running which I will share more about in another post. 

Meanwhile, I like to share a little about the delivery related cost in Singapore, based on our own experience.

Before going into the cost per se, I just like to share while having a little one does indeed incur cost, the joy you get from raising your little one will far outweigh this monetary cost by a mile, or more. There is nothing that can replace the joy you get from seeing your little one grow and become more responsive to your actions and words. No words can describe the joy… So I shall not waste more words trying to… 😀

Our delivery was generally uneventful, which was a great thing! Mama’s water bag started to leak in the middle of the night (2 nights before EDD) and we took a Grab down to NUH. We entered the delivery suite at around 4am and by 430pm, Little Singa (LS) arrived into the world! 

For the delivery related cost, I guess we have little control over what we will / need to consume. We heard of a couple of our friends who tried natural birth and then had to do an emergency cesarean when things were not going right, hence incurring higher cost. All we could do was pray to have a smooth delivery. In the 3-4 months prior to EDD, we did increase our frequency of long walks on weekends morning, hoping it will help provide a smooth delivery. Thankfully, things went as per planned and Little Singa (LS) was delivered naturally, with epidurial.

I know there are some who regard natural delivery without epidurial as a badge of honor. Some say the pain is the rites of passage for a mother, which I personally think is hogwash. We are not some tribal people who need to prove that we are man / mother so we undergo some genital mutilation / tattoo nonsense or deliver without epidurial. If you did not use epidurial and delivered naturally, good for you, you have high pain tolerance. But on the flip side, there is absolutely Zero shame to use epidurial during a delivery.

All mothers out there are amazing, no matter delivering with or without epidurial. Our gynae gave us a piece of sound advice: use epi if you need it, do not use if you feel there is no need. There is no badge of honor for you not using when you need it. The only one to suffer is yourself. While I admit to be pretty frugal (to stingy) sometimes, this was one occasion where I was more than happy to spend the money. I personally find tooth extraction a pretty scary thing already and I feel giving birth is probably 10x scarier! So yea, whatever that can help reduce the pain during this experience, so be it.

I feel it is also important for Papa to be there in the delivery suite to support Mama both physically (though not much the hubby can do physically) and mentally (more so in this area). That, and also to witness the arrival of your little one!

The moment when LS was delivered was simply surreal. Words cannot describe how I felt and I could honestly say there were tears of joy at the point in time. Despite LS being still slimy and all, there was nothing you could love more in the entire universal (sorry mama 😆).

We did all the tests which the hospital required LS to do but there was the Newborn Metabolic Screening Programme which was optional, but we did anyway. I was hesitant to do this Metabolic Screening as it was very rare for the test to be positive (which is a good thing) and which means it will be a waste of money (cost approx. $150 if I did not recall wrongly.) Some parents might say this is small money for a test, but after hearing from all my friends who did the test for their newborn and 100% turned out negative, I was pretty sure the test would return negative (which it did) as well. The test essentially screens for rare but potentially serious disorders such as phenylketonuria (PKU), cystic fibrosis, and congenital hypothyroidism.

To be honest, the NUH bills were itemized but it was quite complicated and there were like interim bills and final bills a couple of week later, so I am actually not too sure of the final exact amount. I will usually look bills carefully and flag out any possible mistakes, but in this case, i think in the feel good moment of it all, we were just happy to pay the bills and bring Little Singa home with us! Besides, I like to think NUH will not overcharge us on purpose. 

All in, we paid about $2000 (cash) + $4000 (Medisave) for the 2 nights stay (One bedder) in NUH for natural birth. Notwithstanding, I note there are friends of ours who spend about $10,000 out of pocket when they deliver natural + e-cesarean. So the amount spent would definitely vary, depending on the procedures and level of complexity. But for a relatively straight forward case of natural birth for private ward class, I think an out of pocket cost of $2000 and $4000 from Medisave is still reasonable, given the quality of the medical care in Singapore.

What are your thoughts? 

Signing off for now!
Frugal Singa

Wednesday, 31 October 2018

And along came a little Singa...

Many things in life can and will happen along the way that forces us to update our financial plans e.g. getting a car, buying a flat, getting married, but most impactful (or longest term) of all, is having an little addition to your family. 😁

One plus year ago, being already not so young at 31 back then, both my wife (also 31) and myself felt we were ready to start a family, and wanted to try for a baby. 

Like many couples, we thought that it was be pretty easy. But it was not an easy journey, after many months of trying, visits to both Western doctors and TCM, we were fast becoming disheartened. 

When you see your peers getting pregnant one after another, it does gets to you. Facebook was a bane to me back then. People posting cheerful photos of baby bumps, new borns, full month celebrations. Call me selfish, but sometimes I just wished to quit FB or unfriend these (insensitive) people until I had my very own little one (or maybe forever). It is also along this line of thought that I do not really post much on FB, whether happy or otherwise occasions. Meaningful occasions are for family and loved ones to experience, not for the whole world to know how great your life is. Last, but not least, I also hope to preserve whatever little privacy we have left in today's world of social media. 

[If you, like us, have been trying to conceive without success, besides living a healthy lifestyle, exercise more, eating clean, stop alcohol and smoking, it might actually be a good idea to wean off / reduce your time on social media for a while because it does really get demoralising. Besides you are not missing much without social media.]

And so tried and tried we did. It got to a point where we had exactly Zero expectations when we did the test kit. After almost 7 months of trying and on the brink of giving up, we were stunned when we finally saw the two lines. It was pretty surreal and we both did not quite believe it. MS tested it again and the next day as well at the poly clinic. 

While I was physically at work that day, my mind was miles away when wife whatsapped the photo of positive results, certified by the doctor! The next few moments were simply amazing and I was totally feeling light headed. This was the additional line we have been waiting all these while and it was HERE!!

Daddy (Boys) being Boys after all, the first thing I actually thought of getting for Little Singa was his/her ride (stroller)!! Hahaha, not too sure but maybe all daddies' are hardwired that way? As it was our first born, we chose not to know the gender even when it was possible to do so. Both wifey and myself had no preference on the gender because we know we will love and protect him/her to bits, regardless. 

One of the thing we had to decide was the hospital / gynae for the regular check ups and delivery. After some research and asking parents friends for recommendations, we decided on NUH. While it was far from our place in Punggol, we were assured that the cost would be somewhat reasonable (being a public hospital) and they had excellent medical facilities (NUH being the other hospital, besides KK, that all private hospitals will direct newborns to for further procedures, in case of complications where private hospitals did not have the necessary facilities.)

We first went the public route for the first few regular check ups before signing for the Antenatal package (approx $900 for senior consultant) at Week 22. With the package, it meant that all future consultation were covered and we could stick with the same gynae through out. Milestone scans were also included in the package. The key benefits for going private are shorter waiting time, more comfortable waiting areas and the same gynae each time. Before week 22, while on public route, some of the doctors which saw to us were housemen, aka trainees doctors. Nothing wrong with that but sometimes we just felt more assured with a senior consultant. 

Our consultation sessions with the gynae were quick, barely 10 minutes and we were out! That is of course great news, cos that meant that Little Singa was growing well. 

Source: NUH

One other key factor why we chose NUH was because of the possibility to downgrade to Public in the event your newborn needs to be admitted to NICU. A1 NICU daily ward fee was almost $650 which we could ill afford in the event it was necessary. Wifey requested for a single bedder so we going for A1 but in the event if NICU was needed, we could try to request to downgrade perhaps to B1 or even public, subjected to means-testing. If you were to go to private hospitals, you will not be able to do this downgrade within their hospital as they do not have public wards. 

Source: NUH
This above essentially summaries the start of the whirlwind 40 weeks to the arrival of Little Singa. Happy to share more in future posts. Do stay tuned!

[After note] Since the delivery of Little Singa more than a year ago, i also had the chance to visit friends / relatives who delivered at other hospitals, e.g. TMC and MA, and i felt that we made a right choice with NUH. Personally, I felt that NUH nurses were more pro-breast feeding, less $ driven and were more patient in general. But that is just my personal observation. 

Would you also be welcoming a little one soon? Feel free to reach out if you need more information, and heartiest Congratulations in advance. 

If you are still trying for a little one for a while now, pls do not get discouraged and try, try and try again. One fine day, you will be rewarded for all the hard work. All the best now! 

Bye for now!
Frugal Singa

Tuesday, 30 October 2018

Frugal Singa becoming Frugal Tai (Nan) for a week!

Together with Little Singa and Mama Singa, Frugal Singa took a week long trip to Taiwan recently! This was little Singa's second overseas trip, but first with only both Mama and Papa. Her first trip was a little easier as it was with grandparents as there were extra hands then.

Thought that it was a good idea to share a little on our trip and what was overall a great experience on a conservative budget. 

Air tickets
Ever since we had little Singa, we were inclined to fly full-fledged airlines as we did not want to pay for every little thing which we may require on board, so we went with Singapore Airlines. 

We bought our tickets about 6 months before our trip and it cost about $1000 for 2 adult tickets and 1 infant, pretty alright I feel. For curiosity sake, I looked at budget flights and after adding in all the extras, the prices were pretty similar to SQ. As a bonus, SQ had entertainment(!), which we hoped that we could catch some shows on this 5 hours flight, provided Little Singa allowed us to. It was really tense the first time we flew with Little Singa as we were afraid she would feel uncomfortable and cry her lungs out and we would get death stares 😒 from other passengers. I totally feel parents flying with babies now. 😐 Happy to share now that both Mama and Papa managed to catch up on some movies on the flight. 

Taiwan - Taichung
Upon landing in Taoyuan Airport, we took the 2 hours airport bus transfer (approx. S$25 for 2 pax, Little Singa was free) to our Taichung Airbnb accommodation. We decide to take the airport bus transfer instead of (HSR) train simply because it was seamless, unlike HSR where you needed to change train to get to Taichung Central. 

We stayed in Xitun District. The airbnb we booked was really really reasonable. We stay 3 nights and it cost us $140. Yup, less than $50 a night. Amazing value. While it was just a basic small room, it was clean and centrally located (Xitun District) as well as near Feng Chia Night Market. For cities accommodation, I typically look for a central location more so than the other amenities. 

One thing you will notice about Taichung is that they do not have metro systems like Taipei. So... we tried out their buses instead. We were initially a little hesitant (esp with Little Singa with us) but after trying out once, we felt they were pretty easy to figure out and the best thing is the rides were mostly FREE (up to 10km, i think). 

So long as you have their EasyCard, you can use their buses. You can purchase the EasyCard at their MRT stations and convenience stores. All you got to do is to tap when boarding and alighting, simple as that. If you, like us, visit the usual attractions in Taichung, it should be mostly free rides! Google map was our best friend when it came to figuring out what buses to take, it also provided the bus schedule so you know when the bus is arriving or if you should take an alternative bus route.

In Taichung, we visited the following main attractions:

1. Rainbow Village- As it was a little out of the way, we took Uber to the Rainbow Village. Uber pricing was rather reasonable. It had free entry, not a big place, you can easily cover within half hour or lesser. There was not much shelter there though and weather was hot when we visited. Big effort by a former soldier, now Uncle, who painted the village red, literally :P We managed to get a photo with Painter Uncle (for a small donation) while we were there as well. Amazing to see what could one person do and save the village when he set his mind on it. 

2. Feng Chia Night Market- Huge Huge night market with a lot of food stuff mainly. It was fun to soak in the hustle and bustle of the night market. We did not managed to buy much stuff here, other than street food and more bubble tea. We do not usually drink bubble tea in Singapore, but we just kinda let loose while in the Land of Bubble tea! There are bubble tea shops at almost every corner we turned. 

3. National Taichung Theater- We did not watch any play/musical there as we were not keen. We just popped by to check out the building and there are interesting shops at the atrium selling quite cool wood work related stuff though they are a little pricey. There was also a cafe if you like to sit and watch the world go by. 

4. Wu Pao Chun Bakery Taichung Store- This is a famous Taiwanese bakery, who's baker / owner won an award in the bread category of the 2010 Bakery Masters competition in Paris. The award winning Taiwan longan with red wine bread was available for sample as we queued to enter the shop. It was quite nice as it was warm and has tinge of wine in it. You can buy this bread for about S$16, though it was nice, we felt that the loaf was too big for us to finish and instead bought some other type of bread. And if you are keen to taste their bread, you can entire travel to Taiwan or wait till 2019 when Singapore will get its first Wu Pao Chun bakery at Capitol Piazza. It is a joint venture with Breadtalk. I bet it will not be cheap once it arrives in Singapore, given its reputation and rental at Capitol. But its always better to taste something in its "most original" state, in Taiwan!

5. Chun Shui Tang (Original Store)- If I am not wrong, CST is the one which started it all. Bubble Tea that is. The pearls are made in house and are really chewy and delish! Ate some side dishes (nothing really special) there and of course we had to order their original bubble tea (large size!), think it cost about $6 for 500ml! Super Shiok!! The tea was also quite refreshing and had a pleasant after taste. That said, i am inclined to say there are no bad bubble teas shop in Taiwan, but then again I am no bubble tea connoisseur. So perhaps its reputation (one who started it all) and atmosphere (dinning in its original store) added points to the bubble tea experience. 

6. Miyahara Ice Cream. Its main attraction to me was its design, both interior and exterior. As the place was a former eye hospital, they renovated the place and keep some of basic structures and added lots of other intricate details. Miyahara has a huge, unique range of ice-cream flavours from teas, fruits to yoghurts and 17 different types of chocolates. The toppings were interesting, ranging from cheesecakes, pineapple tarts to almond crisps and more. We dined in as it was a hot day and we wanted to rest our weary feet. We did not realise that there was a minimum spending of 380twd (S$17) per pax. While it is not exorbitant, it was still rather pricey for Taiwan standards. Besides we had not intended to eat so much desserts but had to try anyway to meet the min spending. The staff were excellent and attentive though. And the toppings for the ice cream were cool! 
These were the main attractions we visited in Taichung, after which we visited CingJing, Jiu Fen and Taipei. Hope to share more in future post on the other locations. 

One tip for those who are planning to travel to Taiwan, you can visit their Tourism office (30 Raffles Place, #10-01 Chevron House, Singapore 048622) with your air tickets and at least one night accommodation as proof to collect some freebies / gift (offers changes from time to time). The current gift (till 30 Nov 2018) is a Taiwan Fruit Picking Voucher. 

Signing off for now...
Frugal Singa

Friday, 26 October 2018

Droplet - Just what in the world...

Two days ago, NTUC Income launched their Droplet Insurance Plan- It is essentially insurance for your Grab rides on Rainy days. Yup, you read it right, insurance for your Grab ride in Singapore. 

Source: droplet.sg

My initial thoughts were... seriously WTH... I would give it to them if they launched this plan on 1 April but nope, it was launched on 24 Oct 2018. They are dead serious. 

There is a dedicated website for Droplet and not like a sub-page of Income web site (which might be so also because this could be a real joke and they did not wanna implicate Income website). A search on "droplet" on Income website also strangely yields no results (at least till today). Perhaps their website is not updated yet.

My initial thoughts were WTH, my thoughts now are still WTH! What were they smoking when they came up with this insurance plan? Are there no other areas they can think of to insure? Anyway, in an article, Income did shared "Droplet is a blue-sky response to consumers’ pain point – surge pricing due to rain – when they book a ride on ride-hailing platforms."

[Anyway, this post, like every other post in Frugal Singa is solely my personal opinion and based on my own usage of Grab rides so we can always agree to disagree.]

So this is how it works...

Source: droplet.sg

Commuters will need to buy the insurance at least a day ahead i.e. you cannot buy for the day itself when you wake up and see the dark gloomy clouds outside your window and decide to sleep in and Grab in for work. 
Buying it earlier (couple of days in advance) also means you will pay lesser but the max you pay is $9.60 a day (buying one day before). There is a minimum coverage of 2 days each time you buy i.e. minimally it will cost you $19.20 unless you bought it in advance.

Droplet will pay up to 60% of your trip fare if it is raining at the point of your pickup. 

On their website, Income robots will ascertain whether it was raining at the date, time and start location of your ride using their database of weather records gathered from NEA. Personally, I really do not know how does this will work out. If it was indeed raining heavily when you boarded but their Robot / database say nope, then its your words against theirs, which is not a very good position to be in, especially when it comes to insurance. 

Perhaps you should take a video of yourself boarding Grab and show its pouring outside or on the Grab app, it will indicate that "Raining Ride" (both are quite ridiculous actually). 

You can submit unlimited number of ride claims a day but there is a claim cap of $50 a day. Only Grab rides are covered for now, other smaller ride hailing platform e.g. Ryde, Tada rides are not covered, but there are plans to extend to others by the end of this year. 

If we run some numbers, assuming you pay $9.60 a day, and Droplet covers up to 60% of your rainy Grab ride fare, i.e. you would be "better off" so long as your ride is >$16, which is actually quite common in itself. 

But question is, how many rides do / can you really take within the rainy period? Since you need to buy at least 2 days worth, you will need to spend a min of $19.20 which if you only take one raining day ride, it needs to be >$32 to be "better off", which is a little less common. And also, we typically take a cab to a place, spend some time there and when we leave, rain might have already stopped which also means your insurance cover has "ceased". 

Last but not least, if you need to plan ahead i.e. buy Droplet in advance, wont a better alternative is for you to arrange a Grab Hitch (zero surge pricing) ahead? As a Grab passenger and user of Hitch, I am quite happy with the % of acceptance of Hitch rides request. Best thing is Hitch fare cap of $15. Admittedly, some of your hitch request might go unaccepted, but likewise, some of the days you buy insurance cover for will not rain as well. 

Overall, I feel Droplet is a really strange and "uncharacteristic of Income" type of plan. 

Signing off for now...
Frugal Singa

Tuesday, 23 October 2018

CPF- Thinking out loud on using CPF for HDB and its opportunity costs...

In Singapore, it is really common to use our CPF-OA funds to pay for our house, both down payment and monthly installment whether bank or HDB loan. 

In fact, when taking up a HDB loan in the past, buyers would have to wipe out their CPF-OA balances to pay for their flat before they can take up the HDB loan. This changed August this year when government announced that buyers who are taking HDB loans, could keep up to $20,000 in their CPF-OA and get the HDB loan. I personally feel this added flexibility is good thing for flat buyers. 

I believe many of us (typical young couples) take on this mindset when deciding to use CPF-OA for our housing loans: "Since i cannot touch my CPF funds, at least not until 55/65 years old which is a good 30-40 years away, I might as well spend it on the biggest house i can get. Besides, monthly installments can also be serviced using CPF, so its akin to zero cash outlay, so why not?" I admit that was also my mindset back then. 

However, when I recently started to take the time to understand the CPF scheme more, I started to question my decision taken 4-5 years ago, because using our CPF monies for HDB will affect our retirement funds. 

Our CPF-OA earns us 2.5-3.5% interest while our CPF-SA earns us 4-5% interest and because we are young when we buy our flat, the runway for compounding is really really long at that point in time. 

Assuming after the recent change that allow us to keep $20,000 in our OA, this $20,000, if left in OA for the next 30 years will double to about $42,000 and that is us not lifting a finger, no additional top ups, zero effort on our part. 

If we are confident enough that we really will not need to use this $20,000 in our OA, we can transfer it to our SA which will earn us at least 4% (5% on the first $40,000, which is likely the case given young adults SA is unlikely to have that large an amount in SA), we will have quadrupled our $20,000 to about $85,000, which is simply WHOA to me. Likewise, this is zero effort on our part, all we need to do is to transfer this $20,000 from our OA to our SA. Granted, this $20,000 is effectively "useless" to us for the next 30 years because SA funds is primarily for our retirement and cannot be used to do much except do certain investments before we turn 55. 

Besides not compounding in our own OA, one more drawback from using our CPF-OA for our housing is the accrued interest incurred which we need to refund to CPF when we sell our HDB. When I log into my CPF account, I am able to see that I have about $5000 accrued interest incurred to date which means that I will need to refund this $5000 into my CPF when I sell my HDB, in addition to the principal which I borrowed from my own CPF. 

Source: CPF

It seem like a double whammy to me. When I use my CPF to buy my HDB, besides forgoing the 2.5-3.5% interest rate, I am now required to earn more on my own (whether from selling the house in future or otherwise) to pay back to my CPF in future when i sell my HDB. 

As I had only used about $50,000 back then, the accrued interest does seem manageable for now. However, if you had used a large portion of our CPF, e.g. $500,000 OA to pay off your HDB flat. You will need to refund the accrued interest of about $140,000 into your CPF if you sell your place after just 10 years. This accrued interest will only increase the further down the road you go as it compounds (against you!). So if the above scenario couple had plans to sell their HDB to unlock some value in their home by selling it, the cash they could get back is greatly reduced from the accrued interest. 

Notwithstanding, I note many of us (me included) would not have been able to afford the HDB down payment without touching our CPF. However, I feel that for our monthly installments, we should try, to the best of our ability, to pay in cash. Unless, we are confident that we can use the cash to earn us more than 2.5-3.5% consistently through the years, in the long run (which is actually not an easy thing to do), it would good for us to be prudent when using our CPF for our housing. 

When we are in a financially comfortable enough position (saved a little after perhaps 5-6 years in the work force), we could consider doing a voluntary refund of the housing amount withdrawn. So we can actually pay back CPF on our HDB loan even if we do not sell our HDB. By doing so, we will stop the compounding against us, and for it to work for us instead! 

Frugal Singa

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