CPF Life Payout Comparison: The more you buy, the more you lose

Usually as a end consumer, when we buy insurance products or anything, the more we buy, the more value we get. For example, the premium for a $100K product is usually higher per $100K the premium for a $200K product. In other words, typically, we tend to get a discount when we purchase more value of the same product.

However, based on the estimated payout on the CPF website on the CPF life package, it appears to be otherwise. Meaning the more we pay, the best payout we get in terms of ratio wise as compared to the lower package:

With Reference to CPF website: https://www.cpf.gov.sg/members/schemes/schemes/retirement/cpf-life
Correct as on 24 Jun 2017

	Basic Retirement Sum (BRS)	Full Retirement Sum (FRS) = 2 x BRS	Enhanced Retirement Sum (ERS) = 3 x BRS
Contribution Amount	$83,000	$166,000	$249,000
CPF Life Payout estimates	$700 - $750	$1,280 - $1,380	$1,860 - $2,000
Why are we not getting this?	N/A	BRS x 2: $1,400 - $1,500	BRS x 3: $2,100 - $2,250 FRS / 2 x 3: $1,920 - $2,070
Reduction in payout per year	N/A	BRS x 2: ~1 mths of payout	BRS x 3:~1.5 mths of payout FRS / 2 x 3: ~0.4 mths of payout

Conclusion based on the above computation and analysis:

As you can see from the above illustration, we would have been losing a lot of value year on year should we take up anything above the Basic Retirement Sum scheme. It's not just the case for FRS vs BRS. Even ERS vs FRS also comes with a slight reduction in payout per year.

As it's a compulsory package that I must take up, I would definitely try to go for the Basic Retirement Sum instead of any other plans seeing that the higher values are definitely not worth my time and money. Especially, I'm definitely never going to topup for the enhanced plan as it would be totally crazy for me to throw my money into something I know for sure the returns is not worth it.

I would say that if they had come up with better full / enhanced retirement sum scheme where I'm getting what my money is really worth, I would have taken up a higher scheme if I do have enough in my CPF in the future. For now with the current payout scheme available, it's definitely not my cup of tea. 

If you are able to get better returns than what our government have to offer and do have a property to pledge, I would strongly recommend the same for you.

P.S. Please come up with something that actually makes more sense if you do want us to take up the higher than basic retirement sum scheme.

Comments on Chicken and Duck Will Soon Part Ways

I noticed that there's a new Dian Xiao Er restaurant at Changi Airport Terminal 3 and was pretty glad that it finally opened! So I went there for dinner because I didn't get to eat during lunch haha.. You might find this article weird but please do read on.. I really wasn't off the topic here..

The duck tasted nice as usual which is still one of my favourite duck dish. :D

The fried buns looks kind of disfigured but still it's very tasty as usual and it's served a lot faster than the Tampines branch, where we usually need to queue just to visit the store.. 

*Notice: there's usually a queue at other outlets

So I was wondering if Dian Xiao Er was actually listed in the SGX and I found out that it used to be part of the other famous restaurant's group - Soup Restaurant. And it's now no longer part of the business as the couple who owned Dian Xiao Er had decided to buy over the rest of the shares during a court dispute... Read the article on "Duck Chain No Longer in the Soup" for more details.

Basically, the couple who started Dian Xiao Er had bought back their "baby" and this means that soup restaurant group will become richer in cash but in return, may get less profits / earnings in return. So effectively, the main earnings that the group is going to have in future will mainly be just from soup restaurants itself. From what I noticed, the dip in the share price now as compared to when the incident occurred is very minimal. 

I had no vested interest in this company but I felt that if you do invest in them, do be aware of this incident and take a closer look at their next upcoming quarterly report for better updates. Depending on the rate of the main Soup Restaurant chain's expansion, the impact of the separation might not be very big. So let's see what happens when the next report is made available.

Lesson from One Up On Wall Street

I'm still reading the book - "One Up on Wall Street" by Peter Lynch. My progress isn't exactly very fast as it feels like I really need to just sit down and read my books in order to have more take away lessons learned from the various books that I had read so far.

So the main lesson I learned from this one was that we should open our eyes bigger and observe the little things that's happening around us. Because any common person on the street can actually spot a good company at a much faster rate than the big investment firms, provided we are observant enough to spot them.

With this interesting fact and lesson learnt, I suddenly had this idea of looking up the company behind the things that I liked and enjoy and see how it goes from there. :) I can't help but think that I really had neglected this blog again for quite sometime and hope to be able to keep up once again. Let's hope this really works out.

It's like me and one of my best friends enjoyed shopping at Robinsons or John Little Sale. In fact the both of us had the Robinson's credit card, we will receive the mailer on their sales and will visit their sale at least 3-4 times a year. So I went to look up for Robinson's share only to discover that they are delisted in Jun 2008. Read more on that Channel News Asia Article.