Singapore-based financial blog that aims to educate people on personal finance, investments, retirement and their Central Provident Fund (CPF) matters.

Thursday, 7 July 2022

Inflation Impact on the F&B Industry





1. Inflation is Real


Based on the Singapore Government statistics, food-only inflation is 4.5% in May 2022 compared to May 2021.

Straits Times published an article on 21 June 2022 stating that inflation may double to 8.2% in the second half of 2022.

While these numbers may be staggering, the actual numbers might actually be far worse.

Because the reported numbers are what end-consumers are experiencing. 

But what is not reported as much is how much is being absorbed by the various importers, wholesalers, and F&B outlets.

Take it from someone who has been in the wholesale food product business for the past year, and I can tell you, that prices have been increasing insanely!



Recommended Read: What I Learnt During My 1-Year SGUnited Traineeship - Part 1


2. Price Increases


Over the past year, these are the price increases we as wholesalers experienced.

MSG: +47%

Dried Seaweed: up 47%

Dried chilli: +32%

Soya bean: +31%

Ee-mee: +31%

Plain flour: +28%

Cooking oil: +24%*

Instant noodle: +23%

Refined Sugar: +17% 

Salt: +14%

Various canned food: +5% ~ +10%

These are the more commonly used items by F&B stalls, although other more "niche" items also went up 5% or more.

I only included dried goods because that is the industry I am in.

But the numbers from poultry and vegetables are not any better.


*On a side note, cooking oil prices have fallen a bit recently, but it is funny how my petrol prices have not dropped. 



3. Cut F&B Outlets Some Slack


Cut the hawkers and coffeeshop stalls some slack.

If they raise your prices, understand it is not their choice.

A lot of my F&B customers who I have spoken to are all afraid to raise their prices because:

1) They get scolded by their customers for raising prices.

2) If they are the first to raise prices, customers will flock to their competitors. There is always more than one chicken rice stall in a given hawker centre, and it is a perfect competition scenario.


Prices had increased dramatically over the past year, and there are no signs of slowing down.

Because of war and covid lockdowns, 

1) Supplies like corn, wheat, and other raw materials are not being farmed, processed, or packaged, and that's causing a low-supply issue. 

2) Supply-chain is affected with docks closed or overwhelmed, leading to a lot of goods going out of stock due to delay or any available stock going to only the highest bidder.

3) Supply-chain issues also extend to containers, where there are goods to ship but no containers to load the goods onto for shipment. This is also another cause for "out of stock" or "higher shipping cost".


As an industry; importers, wholesalers, and F&B stalls have absorbed as much of the price increases as we can.

On a whole, the industry is surviving on breakeven levels or marginal profitability.

If a whole lot of items have increased by more than 5%, but inflation is only 4.5%, that means someone has been absorbing the price increase.

Hence, please do not scream at us if we raise prices, it just means we have reached a stage where we can no longer absorb the price increase.

We have families to feed as well.



4. The Consequences


Recently, several headlines of F&B stalls closing down have been trending on various social media platforms.

Source: Seedly

The few reasons for closing down that kept surfacing during interviews with them are intense price pressure for raw materials, labour, and rents.


As much as I am all for fierce competition for business, survival of the fittest, growing to achieve economies of scale, etc; please understand that if the industry consolidates to only a few major players instead of the current set of diverse players, prices will still go up because one, demand still outstrips supply; and two, buyers have fewer options to purchase from.



Recommended Read: Why You Should Max Your CPF Retirement Sum Early


5. What Can We Do?


1) For starters, we can be more understanding if prices have increased at the stalls that you eat or buy produce at. 

Not scolding us, or even understanding that the price increase is our last resort is a great motivation for us to continue what we are doing.


2) Continue to patronise the stalls you like, even if they have increased the price.

You may complain online that the bubble tea you drink has increased in price, but you will still buy it and not scold the person serving you at the counter.

Please do the same when you are buying from the other F&B stalls - especially if the stall owners are old uncles and aunties. 


3) Consider tipping if you can afford it, even at hawker centres or coffee shops.

Every cent counts and goes a long way in helping the industry stay afloat until the crisis is over.



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Friday, 1 July 2022

What I Learnt During My 1-Year SGUnited Traineeship - Part 1

About a year ago, I posted an article on what I've learnt during my 6 months as an SGUnited trainee.

It has been exactly 1 year since I left my 1-year SGUnited traineeship with a local bank to embark on a new career path.

And I finally have the time to sort out and list down Part 2 of everything I've learnt and experienced during the second half of my time at said bank.

Because it is so long, I am breaking it down into multiple smaller parts for it to be an easier read, and adding a more detailed story to every lesson.

Today's lesson is from a mistake I made a few months into the job.



1. The Story


I was a product officer in the local bank. 

Let's call my team "Team A". 

Several months into the job, I was tasked to run some spreadsheet analysis on a new initiative we were thinking of launching.

The spreadsheet contains the customers and their transaction data.

I was supposed to analyse the data based on a financial model/framework that was developed by another department in the bank.

Let's call that department "Team B".

I was told that I could ask a senior guy in Team B for help on the framework if I had any issues.

I soon ran into problems with the framework and started asking (more like spamming) the senior guy for help cause I had a lot of questions using the framework.


Eventually, the senior guy asked me what was I doing and why I needed to know all this information about the framework. 

I told the senior guy what my team was planning on doing and he asked if I could send him my spreadsheet for him to take a look at and help with my issues.

Without hesitation, I was like "Great!", and proceeded to send him the whole file.


The next day at work, my mentor called me and asked if I sent the whole file to the senior guy.

Below is a rough recap of the whole conversation.

Mentor: Did you send 'senior guy' the Excel document you were working on?

Me: Yup. 

Mentor: Aiyo! Why did you send him the whole file instead of just a few customers' data? 

Me: Why?

Mentor: This morning he called to scold our director cause of what we were thinking of doing.

Me: Huh? What we were planning to do will affect him?

Mentor: Ya, the program we were thinking of launching is something that will benefit our customers and our team's P&L. But the side-effect is it will negatively affect his team's P&L. Of course he will call to scold us.

Me: But net-net the bank still makes the same (or more) money and the customers will benefit more. Isn't it better? And this is just money moving from the right pocket to the left pocket.

Mentor: From the big picture, yes. But the reality is no, cause our P&L will affect our bonus. 

The next thing I know, I was off the program without any formal notice.

I was just tasked to do other stuff and never heard of the program again.

Either because Team A proceeded without me, or I had successfully single-handedly ended the program with my mistake (pretty sure it was the latter ðŸ˜…).



Recommended Read: Why We Still Need Insurance Agent


2. Lessons Learnt


With every mistake made, there were lessons to be learnt.

Here are some of them.


1) Don't disclose too much information

I didn't ask around to find out that the Team B I was speaking to, was the "competitor" team, and that I shouldn't have divulged too much information, 

Heck, I shouldn't even divulge too much information to another team, even if it is not the competitor team.

Sometimes, having a bit of secrecy helps, and this applies to work and personal life - you want to be careful who you are being transparent with.


2) There is no such thing as a 'One Big Family' organisation.

Even though we are in the same organisation, it is almost every department for themselves. 

There is no right or wrong to be "every department/team for themselves", it is just the way the culture is structured, and every organisation is different.

It is just that in order to survive in this particular culture, one has to position themselves nicely to avoid getting into the cross-fire.



3. Final Words


I'll end off this story with one of my favourite scenes and the second favourite quote from a movie that I like - Cold War, 寒战.

It literally explains what I did wrong.

Translation:

"Every organisation, every department, every role, has their own set of rules, written and unwritten. 

The first step is to always learn all of them. But most people are dead before they finished this step.

The second step is the find rules' boundaries are, and lines where when stepped on will trigger the rules' repercussions. Then try your best not to step on those lines. Learn how to play within those boundaries and you will be able to stay alive."


Needless to say, I was "dead" before I finished Step 1.

I didn't learn about the written and unwritten rules of the game I was in.



Recommended Read: Why You Should Max Your CPF Retirement Sum Early


4. Bonus


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Monday, 20 June 2022

Get an Interest-Free Loan from Apple - with Extra Steps


Yes, this is a click-bait title.

But, it might also be an idea/solution.

This idea is from a random thought that flashed through my mind while I was stuck on the Apple website, thinking about which MacBook should I buy (which I'm happy to know if you have a suggestion for me -> M1 or M2 MacBook Air?).

Source: Apple



The Idea in 4 Steps


1. Pre-Sell an Apple product on a second-hand market.

2. Buy said Apple Product at a physical Apple store.

3. Choose the interest-free 24-month payment option.

4. Complete the second-hand market transaction.


Voilà, you just got a 24-month interest-free loan from Apple.


Recommended Read: Why We Still Need Insurance Agent


Case Study: iPhone 13 Pro Max Alpine Green 256GB


Source: Apple

It cost $1969.00 to buy it, or $82.04/month for 24 months (which works out to $1968.96, a 4-cents discount 😉).

Re-selling it on a second-hand market, one can earn back $1758.00.


It is a $211, or 12% discount.

If you think about it, it can sort of be interpreted as a 12% interest loan, but technically it is interest-free if you can sell it without offering a discount on the product.

Nonetheless, it is still cheaper than the 24% interest on your credit card, excluding the late fees or cash-withdrawal fees slapped on top of it, or a cashline loan.


Things to Note/Caveat:


1) Get something popular, it needs to be sell-able

You are buying a product. If you can buy it but can't sell it, you are stuck with an Apple product and a 24-month loan.

Typically, the more sellable/higher demand for the product, the lower the discount.


2) It needs to be high value

Because re-selling the product on the second-hand market requires some discount, if you bought something low value (a few hundred dollars) and need to sell at a steep discount (like a $100 discount), the difference will be vast and costly.


3) You need to have one of these credit cards

Source: Apple

The instalment plan is partnered with these banks. So it only works if you have one of these credit cards.

And, as you can see, there are also terms and conditions that need to be abided by, such as minimum spend.


Recommended Read: Why You Should Max Your CPF Retirement Sum Early


Conclusion

Take this idea with a pinch of salt.

This is not financial advice, might not even be a good idea for you.

It is not foolproof, it comes with its own set of risks, and maybe you might just be better off not doing it.

This might just be another case of good to know, but not to do 😉.

Most importantly, I hope this article made you chuckle a little.


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Sunday, 20 February 2022

Investment Stab 2022 Stock Market Predictions


Last year we made a list of 4 stock market predictions. 

Investment Stab 2021 Stock Market Predictions

So we will first review our predictions, then go over our 2022 predictions.



Review of 2021 Stock Market Predictions


1. US Stock Market Will End 2021 Higher (Correct)

The US stock market, represented most accurately by the S&P500, posted a total return of 28.7% for the year 2021.

The majority of that gain was from the increase in the index price, rising from $3764 to $4766. 


2. STI to Stay Flat for the Year (Wrong)

The Straits Times Index (STI) returned 9.7% in price appreciation, meaning a more than 10% total return if we were to include dividends.

That's anything but flat.

So we are wrong on this one.


3. Air Travel Will Recover (Wrong)

Well, we did not expect Omicron at the start of 2021, so I guess we got this wrong.

But, air travel did recover - slightly, given that there's more travelling now than a year before. 

Just that it is far from what we had expected - a near-full recovery.


Because we expected a recovery, we predicted that SATS will reach $5 by end of 2021.

That did not happen, SATS is still hovering at where it was a year ago, ± $4.00, though it closed 31st December 2021 at $3.89.


4. SIA Will Not Pass $5 By End Of 2021 (Technically Correct)

Singapore Airlines Limited (SIA) closed on 31st December 2021 at $4.99.

If we're thick-skin enough, we would say we got it right.

But it did break above $5/share in 2021, only to drop back due to Omicron.


Conclusion: 1.5/4 correct

I would say our prediction for the year 2021 kind of sucked, just like our personal stock picks for the year 2021.

2021 is probably just not our year 😥.

We get this wrong often, but our goal is to post our thoughts, views, predictions, and review them 1 year later to see which part in our analysis and thought process went wrong.


Recommended Read: Why We Still Need Insurance Agent


So here comes our 2022 stock market predictions!


1. US Stock Market Will End Higher in 2022


Based on historical data, the probability of a US stock market ending higher in a given year is 70%.

So by saying the market will end higher, we are 70% likely to be correct 😉.

However, the market can be up a lot (like last year), or up a little.

We predict that this year, it will be up a little (think less than 10%) because it's the second term of a US president, which tends to have muted returns for the stock market.




2. Amazon & Microsoft Reach New Highs



Disclaimer: I own shares in both of these companies.

My bet on these 2 companies reaching new highs is mainly because of my cloud bet.

Amazon owns AWS and Microsoft owns Azure, the 2 biggest cloud providers in the world.

As we continue to go digital and move the workload to the cloud because of Covid and work-from-home (WFH) arrangements, cloud usage will continue to grow at high growth rates (30%+ per annum).

What better way to capture that growth than to invest in the top cloud providers, especially since scale is extremely important in the cloud business.

PS: my personal bias is Amazon simplify because, with its stock price at USD3,000, there is potential for a stock split which would just make the share price more valuable than what it is currently worth (aka Google).




3. STI to Rise Sharply for the Year



Last year we predicted the STI to stay flat for the year because 40% of the STI weightage is in banks (DBS, UOB, & OCBC).

And because the US Fed Chairman had stated at the start of the year they will keep rates low until 2023.

A low-interest-rate environment is bad for banks' profitability, hence we did not think banks will do well, and hence STI will also not do well.

However, this year, the US Fed Chairman has announced it will do several rounds of rate hikes to curb rising inflation.

We expect this to boost the banks' profitability, leading to higher bank share prices, and thus higher STI prices.

We expect STI to rise more than 10% in total returns for the year.



Recommended Read: Why You Should Max Your CPF Retirement Sum Early


Conclusion

These are our predictions of what we think will happen in 2022.

We are not 100% sure we will be correct.

But we do think we probably will not be too wrong.


As always, do your own research, due diligence, own analysis, and invest according to your risk appetite.

We are not giving you recommendations, just our predictions.


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Sunday, 30 May 2021

Transfer CPF Money from Ordinary to Medisave Account


Correction: we made a mistake in our earlier article, and we have thus made the edits. We like to thank our readers for pointing out to us when we make mistake in our research.

Today's topic was suggested by one of our readers.

If you got any questions/topics you would like us to talk about, let us know via the comments below or via this form.

You asked us what are some of the pros and cons of transferring money from your CPF Ordinary Account (OA) to your CPF Medisave Account (MA).

Here is the result of our research.


Background


If would like to know what is your Medisave Account for, click HERE.

But, long story short:

Source: CPF

You can use it to pay for your medical bills, family members' medical bills, as well as pay for medical insurance schemes like MediShield Life.


Can it be done?


Long story short: NO

You cannot transfer funds from your CPF OA to your CPF MA.

But, you can top up your CPF MA in 2 other ways.

  • Voluntary contribution to all 3 CPF accounts (non-tax deductible)
  • Medisave Account only (tax deductible)


Recommended Read: Why We Still Need Insurance Agent


The Pros of topping up CPF MA


Why would anyone want to top up to their CPF MA?

So why would anyone want to transfer money from your CPF OA to CPF MA, here are some of the reasons.

1. Extra interest

CPF OA pays 2.5%+ interest per year

If you are saving money for your medical bills, you are probably stashing it away in some low-risk portfolio that gives less than 1% interest per year.

If that's that case, why not allocate a portion of it into CPF MA, which pays 4%+ interest per year.

Of course, you would still need to keep a portion of it in cash because there's a portion of your medical bills that still requires cash payment.

Just moving money from your OA to your MA gives you an extra 1.5% interest per year.



2. Has a cap

Your MA savings is subjected to a cap, known as the Basic Healthcare Sum (BHS).

As of 2021, the BHS is set at $63,000 for those 65 years old and below.

Any amount that is in excess of your BHS will flow over to your

  • CPF Special Account (SA) - if you are below 55 years old
  • CPF Retirement Account (RA) - if you are 55 years old and above
Source: CPF

So, technically, your CPF MA money is not a bottomless pit where money keeps going in without any way to take out unless you are hospitalised

Your CPF MA will reach a cap, after which money will flow into your CPF SA or CPF RA, where it can be withdrawn (if other conditions are met of course 😉)

For more information on the BHS, click HERE.


Recommended Read: Which Chinese Zodiac Has the Best Financial Outlook for 2021?


The Cons of topping up CPF MA


Here are the cons of topping up your CPF MA.

While you will get higher interest by making the transfer, there are also cons associated with it.

Here are the cons of transferring money from your CPF OA to CPF MA.

1. One-way street

You cannot un-do the top-up.

Once the money is in your CPF, it's going to be very hard for you to withdraw it out (except if you meet the various T&Cs).

Once you transfer from your CPF OA to your CPF MA, you cannot transfer it back from your CPF MA to your CPF OA.

2. Potentially no tax benefits

If you do a top-up via the Voluntary Contribution (VC), then there is no tax benefit.

However, if you do a voluntary CPF MA-only top-up using cash, the amount that you top up is tax-deductible. But, it will be subject to your maximum personal income tax relief cap.

However, if you transferred it from your CPF OA to CPF MA, there is no tax benefit.

3. Less cash

If you kept cash in your pocket, you can use it any way you like. 

Pay for a mortgage, pay for a holiday trip, pay for medical bills, anything!

But once you put it into CPF, the things you can use it for will be subjected to limits and restrictions.

Topping up cash into your CPF MA, while will earn you higher interest, will restrict you to using it only for medical purposes and nothing else.

Some day down the road if you realised you need extra cash to pay for a home downpayment, you cannot withdraw it from your CPF MA to pay for the downpayment.

3. Less ways to use your funds in CPF

If you kept the money in your CPF OA, you can use it for housing, education, insurance premiums, and other purposes.

But if you transfer the money to your CPF MA, you can only use it for medical purposes or to pay for medical insurance premiums.

If you are currently paying your home loan using CPF, if you make a transfer to your CPF MA and cause your CPF OA to have insufficient funds to pay your monthly mortgage, then you might have to pay your mortgage in cash.

In which case, it might be better if you just top up cash into your CPF MA (since this is tax-deductible) while paying your mortgage is not.


Recommended Read: Closing my Standard Chartered JumpStart Account


Conclusion


There is no one-size-fits-all solution.

For example, if you got sufficient funds in your CPF OA to pay your mortgage, and would like to grow your CPF MA faster and maximise the interest you are earning from CPF, then you can consider making the top-up.

But, there is no hard-and-fast rule. 

Whether or not to top-up cash into your CPF MA depends heavily on your circumstances.

Whether or not to transfer the money from your CPF OA to your CPF MA, depends heavily on your circumstances.


Recommended Read: What I Learnt 6 Months into My SGUnited Traineeship


New Product Launch (Beta)


We are building a new platform to help you find people to share your family plan subscriptions with. 

We help you find, match, subscribe and collect payment so that you don’t have to.

Convenience for you:

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We like to know what you think about this service.
Let us know in the survey below what you think, and to be notified once we officially launch the product. 😉

SURVEY


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Monday, 17 May 2021

Why We Still Need Insurance Agent

This is probably another one of our controversial articles, where instead of being our usual self and bash insurance agents, we are going to write about why we genuinely think they are important and should still exist. 

It is a common perception that insurance agents have a bad reputation - mostly because of their pushy, aggressive, and questionable sales practice.

Most of us would probably rather go to a dentist than meet an insurance agent.

And as much as we want to think they are not what we want or need, they definitely play an important role in our financial roadmap!

Today, we are going to be unconventional and write about the people we often mock about: Insurance Agents.

We will be explaining why we think we need insurance agents in our lives.


PS: we will be using 'insurance agent' and 'financial consultant' interchangeably in this article. In this article, both will mean the same, although there might be some difference in the real world.


Importance of Insurance



Insurance is one of the things that are important in ensuring that you can reach your financial goal and security.

It acts as the "protection" layer, protecting you and your family against expensive events like death, sickness, hospitalisation etc.

You will need it to cover these basic things like death, TPD, and hospitalisation, everything else can be "optional".

Optional include things like endowment, ILPs, etc, which are generally the higher income-generating products for the insurance agents.


There's nothing wrong with trying to sell higher-margin insurance to customers IF the customers need it.

Also, insurance agents have families to feed as well.

It is only wrong if they are not suitable for the customers, or if the customers are conned into buying them.

Kind of like buying the 256gb iPhone instead of 128gb.

It's a higher margin for Apple to sell the 256gb model but it really depends at the end of the day if the customer really needs it.


The problem with insurance is, we do not buy them automatically, because they are not life-threatening or required on a frequent basis.

If you starve, you will die; hence your stomach gives you the signal to go buy food and eat.

The problem with insurance is there is no such mechanism at play, and by the time you realise you need insurance, it's already too late.

If you realised you haven't left any money for your family to take care of themselves in the event of your early death, you cannot reverse and buy insurance to get the payout. 


Recommended Read: 9 Things I Learnt from my Internship at GIC


Importance of Insurance Agent



That's where the importance of an insurance agent comes in.

Because they exist, and because they contact ("force", in a good way) you to go through your financial roadmap, they are able to help you identify the gaps and give you the appropriate advice on how to get your financials on track (or at least ensure sufficient protection for you and your family). 


I studied finance and investment to know the importance of getting insured.

But for people who are teachers, engineers, doctors, or other professions that are not in the "money business", this is not an intuitive thing for them.

And so the most realistic way for them to get their financial roadmap on track is to get advice from an insurance agent.


I don't think people would wake up one day, suddenly realise they need to get $X amount of life insurance and proceed to buy one themselves. This just does not happen in real life.

Hence the importance of an agent is they literally force you to sit down, walk you through the whole roadmap, and plan your finances.


Recommended Read: Corporate Strategy 1: Rundle, Recurring Revenue Bundle


Dilemma of an Insurance Agent


Of course, insurance agents only make money if you buy policies from them.

And the money they earn from your premiums tends to drop after the first few years.

So for example, after you buy insurance from your agent, maybe they get 

  • First-year 10% of the premium as their commission
  • Second-year 5% of the premium as their commission
  • Third-year 1% of the premium as their commission
  • Fourth-year 0% of the premium as their commission

And since they have to do an annual review of your financial health, it makes sense for them to take that opportunity to either sell you a bigger plan (up-size) or sell you some other plans.

If they don't do that, how do they feed their families?

Furthermore, it's been proven that it's easier to up-sell and cross-sell to existing customers than to new customers.

So if not you, then who? 🤷‍♂️


But, there's only so much insurance one person need. Eventually, as a customer, you will no longer need any additional insurance.

However, to make ends meet, sometimes, some agents, would have to sell more despite already having enough, just like what Christopher said in his video below. 


Christopher went from being an insurance agent to starting a fee-based wealth advisor after a client told him "surely there must come a time whereby I have enough insurance."

Not saying that all insurance agents are like that, but you as a customer will eventually reach a point where you just have enough insurance. Then what?

Do you continue to buy more insurance to support your agent? Or do you stop buying what your agent suggests?


Recommended Read: Closing my Standard Chartered JumpStart Account


Conclusion


We think we still need insurance agents going forward (says the guy who was thinking of becoming one).

But there's only so much insurance one needs to get.

Eventually, we all just need to be able to say 'No' when asked to get more insurance.

What do you think?


Recommended Read: What I Learnt 6 Months into My SGUnited Traineeship


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