Dangerous Myths about Retirement

With the current cost of living, a fair number of Singaporeans can expect to be happily retired. Maybe by the age of, say, 162. Now there’s any number of external causes you can blame for that: inflation, growing household debt, inadequate pension plan, etc. But some of the causes are self-inflicted…like these myths we keep believing:

On the upside, older people need less sleep. So they may actually be able to make it through a whole investment seminar.

1. I Will Spend Less as I Grow Older

Consider how most of us spend more during a weekend.
Without work, our brain has trouble processing how much time there really is to muck about in. This effect is magnified when you’re retired, since every day becomes a weekend. And according to the MoneySmart Science department (i.e. me when I’m playing with magnets) you can lie in bed watching TV till 3pm maximum, before your legs drag you out the door.
The boredom makes us take up new hobbies, go on vacation, socialize more, etc. And since retirees combat boredom every day upon retirement, many will spend more during their initial retirement years.
On top of that, the cost of healthcare and insurance will increase. Don’t assume that, just because the mortgage is paid up, the extra cash will cover the difference.
You also have to factor the cost of replacing stuff every three to five years: you’ll need cash for home maintenance, replacing your guitar / computer / TV etc. Tabulate the cost of all that, and you’ll realize even $1,500 a month is a dangerously tight sum to retire on.

2. The House Will Make Me Rich

Irony: Not wanting retirement homes near our flats, because we need their property value for retirement.

First, I’m going to make the assumption that you’ll have no problems selling the house and downgrading. This is already a huge stretch, since the thought of it causes most retirees to flip the hell out.
(Oh, you don’t see why? Wait till you’ve spent 25 years of your life paying off the house you live in, and which your children and grandchildren grew up in. See how you feel about selling then).
The good news is Singapore’s property values tend to head up over time. And at present,  the government has a $15,000 silver housing bonus.
The bad news is there’s no predicting what it will cost to buy a new house by that point; even a smaller one. No one can guarantee that your specific house will bring huge gains, whatever the condition of the country’s property market.
Now I’m not suggesting you’ll end up homeless (because if prices are bad, you can just keep the house and not sell). All I’m saying is, don’t count on getting rich when you sell the house. The profit margin may not be as huge as you imagine.
If you want to ensure a luxurious retirement, invest in other asset classes besides your house. You might also want to follow us on Facebook for the next 30+ years, as we track the state of home prices in Singapore.
(Hey, can’t blame a blogger for trying).

3. Saving Money Alone is Enough

The good news is grandpa stashed his life savings in this Milo tin. The bad news is it’s now worth less than the tin.

To understand why we no longer stuff money into Milo tins, let’s look at something called the Consumer Price Index (CPI).
The CPI is an annual gauge of how much the prices of goods have risen. So a CPI of 4% means that, over the year, the prices of everything went up by 4%. That’s why a cup of kopi cost your grandma about a cent, and costs you around $1.20.
Now, grab your wallet and check the dollar bills. You will notice that, despite the prices of everything going up, the numbers on those dollar bills are not changing to compensate.
In effect, the money you have is worth 4% less. And every year, Singapore’s CPI reaches around 3% to 4%. Over the course of 20 to 30 years, you can expect inflation (the CPI) to utterly destroy your wealth if all you do is save.
In order to be safe, you should aim to beat the CPI by 2%. So you need to invest the money, and fetch returns of about 5% to 7%. There are plenty of ways to do this, from insurance policies to ST Index funds. You can check out investment basics in our other article.
And incidentally, the cost to get started can be as low as $100 a month. (Try POSB, OCBC or Philip Securities)

4. Invest Only in Super Safe Assets to Ensure a Happy Retirement

Our mattresses are harder, heavier, and clang. So I know Dad read another retirement article.

In general, safer assets tend to have lower returns. Take, for example, a safe investment option like your CPF: the returns are guaranteed, but they only yield 2.5% for the ordinary account, and 4% for the special account. Likewise, bank fixed deposits tend to hover around 1%, even though they’re safe as fortresses.
(As to why those returns are low, see point 3 about the CPI)
In effect, your investment guarantees may just be guarantees of poor returns. A more reasonable approach would be to diversify your portfolio: mix low and medium risk investments. The riskier investments provide higher returns, while the safer ones offset any losses.
It’s worth talking to a stock broker or independent financial advisor about it. Right now, while you’re young.

5. Retirement Happens at 62, I’ll Think About it Later

Candles

We’re giving him one candle for each year in the company, so make sure the fire department’s on standby.

Retirement happens when you have attained financial freedom.

Some people retire at 62, some people retire at 70, and I know a lucky few who retire in their 30′s. If you start to manage your finances as early as possible, you don’t have to base everything on your CPF draw-down age. And even if you don’t aim to retire at 30, there can be no harm in understanding how others have managed it.

When you insist on thinking of 62 as the magic age, you tend to put off your financial education. You don’t bother learning about stocks and bonds, you don’t build your emergency fund, you don’t invest, etc. You take the all too common route of blissful ignorance, and panicking only after your 40th birthday.

Don’t do it. Regrets aren’t worth a damn, and you don’t want to find yourself hauling cans to a recycling centre at 62 because you started planning too late.

 http://sg.finance.yahoo.com/news/5-dangerous-retirement-myths-singaporeans-160000367.html

Preah Vihear Temple: Disputed Land Belongs to Cambodia [A study in UN/ASEAN conflict resolution]

Preah Vihear temple: Disputed land Cambodian, court rules

Cambodia should have sovereignty over most of the disputed land around the Preah Vihear temple on the border with Thailand, the UN's top court has ruled.

The International Court of Justice in the Hague said Thailand must withdraw troops from around the hilltop temple.

But it did not give Cambodia all the disputed land, saying it had no jurisdiction to rule on a hill nearby.

Both governments welcomed the ruling, with the Thai prime minister calling on her people to accept the verdict.

In a televised address, Yingluck Shinawatra told Thais that both countries would work together to achieve peace.

Her Cambodian counterpart, Hun Sen, also addressed his nation, repeating a promise to work with Thailand to keep the border peaceful and "not do anything that will lead to tension".

"This is a significant step forward... towards a peaceful resolution," he said.

The BBC's Jonah Fisher in Bangkok says the ruling was a qualified victory for Cambodia, and the two sides will now have to negotiate.

The 900-year-old Hindu temple is perched on a cliff in Cambodia, but more easily accessed from the Thai side.
Fears of violence

The long-standing rift has previously led to clashes between the two nations, which both lay claim to the land.

A 1962 verdict by the court declared the temple to be Cambodian, but did not rule on the area around it.

Cambodia sought a clarification of the ruling two years ago, after fighting erupted.

Delivering the judgement, Peter Tomka, president of the International Court of Justice, said the court had decided "that Cambodia had sovereignty over the whole territory of the promontory of Preah Vihear".

"In consequence, Thailand was under an obligation to withdraw from that territory the Thai military or police forces or other guards or keepers that were stationed there," he said.

Both sides agreed to withdraw troops from the disputed area in December 2011.

On Saturday, the chief of Cambodia's military forces on the Thailand border called an emergency meeting after Thai aircraft were seen flying low around disputed land near the temple.

However, Cambodian regional commander General Srey Deuk told the BBC he expected no problems with the Thai military after Monday's verdict.

He said no troop reinforcements had been brought up to the temple.

But fears remain about possible violence in border villages, stirred up by nationalist groups.

One Thai nationalist group, the Thai Patriotic Network, has said it will reject any judgement from the ICJ, according to The Nation newspaper. The group has already petitioned the court to throw out the case.

The territory has been a point of contention for over a century.



The decision to award the temple to Cambodia in 1962 rankled Thailand, but the issue lay largely moribund due to Cambodia's civil war, which only ended in the 1990s.

It came to the forefront again when Cambodia applied for Unesco World Heritage status in 2008, which it won - angering Thai nationalists. Both sides began a build-up of troops in the area.

The ICJ ruling is an interpretation of the 1962 judgement and cannot be appealed.

Q and A

A row over territory around the 11th Century border temple of Preah Vihear continues to strain ties between Thailand and Cambodia. The BBC looks at the background to the dispute.

Who owns the temple?

The Hindu temple was awarded to Cambodia by a 1962 ruling at the International Court of Justice, which both countries accepted at the time. Thailand does not officially claim ownership of the temple - the dispute is over the area surrounding it. Thailand says the ICJ ruling did not rule on the border, only on the temple itself.

The geography of the area makes sovereignty a particularly complicated issue. The temple is perched on top of a cliff, hundreds of feet above the Cambodian jungle. It has direct transport links to Thai towns and cities, and tourists can visit the temple from Thailand without the need for visas.

In fact, until 2003 access from Cambodian territory was possible only via a gruelling hike through jungle and mountains. In 2003 a road opened connecting a Cambodian town to the temple.

How long has the dispute been running?

The temple has been at the centre of a border dispute for more than a century. Maps drawn by Cambodia's French colonial rulers and Thailand (or Siam, as it was then known) early in the 20th Century showed the temple as belonging to Cambodia, but in later decades Thailand said the maps were not official and were therefore invalid.

The ICJ granted the temple to Cambodia in 1962, but the decision rankled Thailand. The dispute was largely moribund for decades as Cambodia plunged into a civil conflict that lingered until the 1990s.

The issue escalated again when Cambodia applied for it be listed as a Unesco World Heritage site in 2008. Thailand wanted it to be a joint Thai-Cambodia listing, but eventually withdrew its objection. The decision enraged Thai nationalists and both sides began a build-up of troops in the area.

In April 2009, soldiers exchanged fire across the disputed border. More serious trouble flared in February 2011, when at least eight people were killed in several days of fighting. The violence moved westwards to another set of temples in April, before shifting back to Preah Vihear, as widespread clashes forced tens of thousands to flee.

Is anyone trying to sort out the dispute?

In February 2011 Cambodia took the case to the UN Security Council, which then referred it to regional bloc Asean. Indonesia, as then-president of Asean, led mediation efforts. Both sides said they would allow access to Asean monitors.

However, Asean could do nothing to prevent further fighting flaring up again in April and talks between the leaders of the two countries failed to break the deadlock.

In April, Cambodia returned to the ICJ and requested it clarify its 1962 ruling. In July, the ICJ designated a demilitarised zone around the temple and ordered troops from both countries to leave the area.

Hearings at the ICJ began in April 2013. The court is set to rule on 11 November 2013.

Why is the temple so important?

The Hindu temple was built mainly in the 11th and 12th centuries, by the same Khmer civilisation that built Angkor Wat. The Khmers dominated the region for five centuries. As Cambodia has a tragic recent history of genocide and civil war, politicians often look to the glorious distant past to inspire nationalist sentiment.

And Cambodian nationalists often use Thailand as a bogeyman to stoke nationalist fervour - charting a litany of wrongs such as the successive Thai invasions that helped destroy the once mighty Khmer empires and rendered the country defenceless against French colonial conquest in the 19th Century.

Thailand also took advantage of the chaos during World War II to occupy large chunks of western Cambodia, including the temples at Angkor Wat. It was forced to hand them back when the war ended.

The Thai military often treated Cambodian refugees who fled the civil wars of the 1970s and 80s harshly - and Thailand backed the remnants of the Khmer Rouge in their struggle against the Vietnamese occupation, so helping prolong the civil war.

On the Thai side, the Khmer civilisation profoundly influenced Thai culture, and there are many famous Khmer-style temples in Thailand. In recent years, a powerful nationalist lobby allied to the military has helped drive a more muscular foreign policy agenda in Thailand.

The temple is also only one of several areas where the two countries disagree on where the border is. The maritime border is the subject of a dispute - and one which affects the development of oil and gas reserves in the Gulf of Thailand. The two sides had reached agreement on joint development, but the deal was then scrapped by the administration of former Thai Prime Minister Abhisit Vejjajiva.

http://www.bbc.co.uk/news/world-asia-pacific-12378001

For a deeper understanding: download http://www.slideshare.net/LloydYeo/preah-vihar-conflict-pb