Category: where2retire

cost@living: compare cities #retire++

Posted on by tiger40490

k_PPP

Q: why are some locations more expensive but salaries are lower across many sectors?

As of 2025, I can see that Beijing/Shanghai price levels are well above half of Sgp but not wages.

It’s crucial to decide which job sectors to exclude. For example, in SG we exclude large portions of the workforce.
… Answer: They are low-wage foreigners, often on WorkPermit. Their low-cost roles in the economy help subsidize the cost of many public services in SG.

Answer: salary tax and company tax .. is a cost to employer. Employers pass on the cost to consumers.

Answer: home ownership is crucial in controlling accommodation costs. Sgp government manages public housing for citizens and PRs

I was surprised that SG public transport fares are fairly competitive vis-a-vis Chinese cities, let alone American cities.
… Answer: governments subsidize public transport. However, private cars are very expensive in SG because government levy on the rich.

Raw or packaged food is probably cheaper in the U.S. but
… Answer: __Cooked__ food is truly low-cost in Singapore due to SEAsia’s street-food culture. Actually, a lot of hawker stalls are taken over by Chinese and Malaysian immigrants, who continue to keep the price level competitive

Repairs are the most neglected but non-trivial cost.
… Answer: in general SG labor cost is lower than U.S. but higher than many developing countries.

— eg: SG vs NYC… SG has higher GNI per capita but lower after-tax salary than HK or U.S. In terms of economics on the ground, I think it has to do with cost of living including rental and home price. https://www.mylifeelsewhere.com/cost-of-living/singapore-c5119/new-york-c3934 is fairly realistic, based on UGC. Their data is presumably more consistent among U.S. cities and U.S. states. Further, I suspect the database is U.S.-centric and possibly limited outside the U.S. Due to the UGC demographics, the data points reflect a lifestyle of a young expat, clearly less frugal than me. At a conceptual level, this site ses a “basket” to compare two cities. You an see local prices in local currency, and derive your own ppp-fx.

  • gas/transit-pass/taxi costs are realistic
  • raw foods .. NY costs are overstated
  • accommo .. expat exclub
  • childcare .. expat exclub
  • clothing (tiny part of CPI basket) .. expat exclub. No China brands!
  • — Personally, I feel slightly richer in Singapore than U.S. due to
  • healthcare, med-bx.
  • car ownership (forecast)
  • college cost (forecast),

Overall, U.S. feels like a high-cost, moderate-tax, low-welfare country. Luckily, nutrition, bicycle, clothing, gadgets, repair tools … are very affordable.

— eg: SG vs HK … https://www.mylifeelsewhere.com/cost-of-living/singapore-c5119/hong-kong-c4452

 

Temasek^MAS_OFR^GIC

Posted on by tiger40490

Q: given Singapore’s oversized reserve, does Singapore’s investment/asset-mgmt talent pool have adequate calibre?
A: I think MAS and GIC allocte large portions to external managers with specific expertise, and manage the allocation with control, periodic reviews and rebalancing. I feel China government is less likely to do that. (On a footnote, Temasek is somewhat differnet. It owns stakes in many government-linked companies.)

In contrast, Private money AUM in Singapore was about SGD 5T as in Singapore assets under management up 10% to $5.4 trillion in 2023; new debt issues rise 21% | The Straits Times

— based on Ravi Menon: How Singapore manages its reserves (bis.org)

Singapore’s reserves are held and managed in three distinct pots: the MAS, GIC, and Temasek.

MAS manages the OFR [official foreign reserve, SGD 500b as of mid 2024]. MAS is the most conservative of the three investment entities, with the OFR invested mainly in safe and liquid assets. Probably low-return. Out of the 3 pots, I guess only MAS fund can help defend the Singapore dollar, due to liquidity.

The GIC (well over USD 100b, possibly many times bigger) is a sovereign fund manager, managing the government’s foreign assets.  These assets are separate from the OFR. At GIC’s inception, part of the OFR was transferred from MAS to GIC, which was tasked to invest the reserves in a globally diversified portfolio of asset classes with a higher risk profile to deliver good long-term returns. GIC’s annual (dividend?) return contributes to the revenue of the government.

Temasek (SGD 400b in Nov 2022) is another state-owned equity investor. More than a quarter of Temasek’s portfolio is invested in Singapore, with the rest invested in 1) Asia and 2) global markets.  Compared to MAS and GIC, Temasek is further out on the risk-return spectrum. I suspect that Temasek doesn’t have a statutory duty to pay annual dividends to share holder (i.e. the SG government). Such an obligation would limit the level of risk capital in the fund.

— Temasek 2022 .. based on https://www.channelnewsasia.com/business/temasek-holdings-net-portfolio-value-crosses-400-billion-first-time-annual-review-2803921

  • 63% in Asia
  • 27% in SG
  • 22% in China .. #2 country allocation
  • — by sector
  • #1 sector: 23% financial services
  • #2 sector: 18% telecommunications, media and technology
  • #3 sector is transportation and industrials (energy and resources)

Unlisted securities (52%) registered 16% IRR over 20Y. These are often the most risky, unestablished businesses.

— CPF money and GIC.. demystified and clarified in every S’pore dollar is backed by hard asset #ownership.

PPP, Int$ #Sgp^PEK

Posted on by tiger40490

k_PPP

This bpost is about PPP and cross-border comparison, based on https://en.wikipedia.org/wiki/Gross_domestic_product#Cross-border_comparison_and_purchasing_power_parity

Intuitively, we compare two countries’ GNI by converting both amounts to USD. This is the standard comparison but ignores regional price differences. For example,

  • SG is expensive for car owners than most countries.
  • U.S. medical and medical insurance (“services”) costs are higher than most countries.  Tristate rent is expensive. Suppose your basket is dominated by rent and medical, then using FX rate to compare U.S. vs SG incomes will ignore the high-cost of the U.S. Suppose your U.S. after-tax income of 120k is 20% higher than SG (S$133k=USD100k). The lightly (i.e. 20%) higher income in the U.S. looks like 20% higher quality_of_life.

There’s an alternative exchange rate .. the ppp-fx. Using ppp-fx, the slightly higher income in the U.S. may translate to lower quality_of_life than the S$133k in SG.

Specifically, if  someday ppp-fx of Int$/SGD becomes 1.0, then S$133k salary in Sgp has equal purchasing power to USD 133k in US. It would provide (or buy) you a richer quality_of_life than the USD 120k salary mentioned earlier.

( Naturally, we adjust our “basket” and avoid the locally-expensive products like cars in Sgp and medBx in US. )

Using ppp-fx, the same basket would cost the same amount of Int$ in any country. This sentence sounds concise but is unclear. If you observe real world prices and compute an aggregate “basket price” in local currency, then use ppp-fx to convert the basket price into Int$, then the Int$ basket-price would be identical across all countries. Note Int$ has parity with USD, for some theretocal reason.

https://en.wikipedia.org/wiki/International_dollar and https://data.worldbank.org/indicator/PA.NUS.PPP?locations=SG-US  tabulate the latest ppp-fx rate of every currency vs the Int$. Int$/USD = 1.0.

  • Int$/RMB = 3.64 meaning Rmb 3640 and USD 1k have equal purchasing power locally.
  • Int$/SGD = 0.8 meaning SGD 800 and USD 1k have equal purchasing power locally.
  • Int$/MYR= 1.54 meaning MYR 1540(=SGD470) and SGD 800 and USD 1k have equal purchasing power locally. Therefore, Singaporeans go to JB for shopping and entertainment.

PPP theory is all about normalizing regional price differences but PPP is inherently entangled with FX. That’s why I call it ppp-fx.

  • lower costs in Greece relative to Denmark (all in eurozone) can’t be resolved using ppp-fx. Similarly, cost difference between Shenzhen vs inland China is not resolved using ppp-fx. Instead, you need cost-of-living index.
  • PPP-fx is useful for cross-currency comparisons of two salaries.
  • PPP-fx is also useful for GNI comparison
  • Don’t use BeyondCompare as a main component of a ppp basket. Such a basket is likely to produce a ppp-fx similar to the FX rate.
  • The Big Mac exchange rate is one simple example of ppp-fx. You can find readable illustrations.

— Q: is cost level close between China and Sgp? Evidence suggests yes:

  • Int$/RMB = 3.64 meaning Rmb 3640 and USD 1k have equal purchasing power locally.
  • Int$/SGD = 0.8 meaning SGD 800 and USD 1k have equal purchasing power locally.

Therefore, SGD 800 and Rmb 3640 both have the purchasing power of USD1k (Rember Rule_1). If I convert SGD 800 to Rmb 4440 (2024 FX rate), I can buy “1.2 baskets” in China, since one basket cost Rmb 3640.

— Q: how does inflation affect ppp
A: inflation erodes purchasing power of every currency.
%%A: I think U.S. inflation doesn’t affect the Int$/USD ppp-fx. Suppose this inflation is stable. If China inlation far exceeds U.S. inflation, then Rmb purchasing power would progressively drop against USD

==== some fundamental but non-trivial concepts

Rule_1: “Purchasing power of 1000 units of a currency” is not a vague concept but a number, and always measured in local market.

It’s safe and realistic to assume a consumer has a USD denominated expense account.

Note the PPP-basket is an international standard basket, and distinct from each government’s CPI basket.

— personal quality_of_life (and national standards of living ) .. depends not only on your income but also the actual cost level. Abstract 🙁 Concrete example: Your after tax income, converted to USD, is identical between Sgp, Beijing, NY and Miami, but the same basket of “products” cost more in NY and less in Sgp. Therefore, your quality_of_life is higher in Sgp.

— Most products have location-specific prices. Beijing and Hebei are different locations.

Commodities like cude oil have no loction-specific prices. However, I’m more interested in consumer goods, which indirectly depend on commodity prices.

If your basket is mostly high-tech products like softwarer gadgets, then there’s no location-specific price. Indeed you can use FX  because iPhones, BeyondCompare etc are sold at the same USD price regardless of location.

However, in most people’s “basket”, high-tech products are a small portion. A big component of your basket can have a highly location-specific price.

Services as a type of “product” have location-specific prices. The BigMac is a famous example. Converted to USD, it is expensive in Switzerland and cheaper in SE.Asia.

subway^MRT: illustrating fiscal discipline

Posted on by tiger40490

Trigger: In the subway system, we can see evidence of the fiscal discipline and cost efficiency of U.S. vs SG. Adjusted for ridership, I suspect the budget is no higher in SG, but the quality is much better in terms of frequency, weekend /availability/, cleanliness, probability of delays, customer service, wear-n-tear of equipment,,,

Let’s look beyond the subway. Most Americans, rich or poor, get a lousy deal in terms of public service per tax dollar. U.S. corporations and individuals pay much higher taxes, but governments run deficits every year. Therefore, public debt increases every year to cover the deficit. Without enough data, I can only hypothesize that SG system is more judicious with public spending.

One exception to prove the rule — U.S. social security administration is efficient (according to various sources). Other public service providers are inefficient.

Americans rely on private transport much more than Singapore residents. Similarly, top American employers spend a lot to provide employees the “public” service that’s wanted but missing. In other words, private employers step in to cover the gap between public services and employees’ needs.

— government deficit .. Looking into the numbers, another reason for the excellent service/tax ratio in Singapore is the non-tax income to the SG government. That includes profit from government-linked companies, and sovereign funds.

I guess a less discussed reason is rEstate appreciation, which is stronger in SG. I guess that land sale revenue (to government) has grown over the decades. Also, many local rEstate assets are owned by government-linked companies, and these assets appreciate much faster than in the U.S.

artificial complexities ] US systems #legal

Posted on by tiger40490

eg: medical insurance is overcomplicated.

eg: personal credit report is not so bad but still overcomplicated

eg: US personal income tax and US medical billing systems are too complicated for most people. That’s why there are fulltime professionals to help folks understand and navigate the artificial complexities.

The poor can’t afford any of these professional help, so they lose out and become poorer.

Therefore, this is a knowledge gap between the rich and poor.

counter eg: usReits are more complex than sReits, not artificially, but due to free-wheeling regulations, giving rise to many variations on the “theme” i.e. the REIT business model.

— eg: trespass and bathtub lawsuit experiences .. I had to ask in legal forums, collect evidence, find out consequences,

Legal systems are complicated in most countries (Singapore is slightly simpler) but in the U.S. there are way too many lawsuits involving ordinary people. I think many immigrants like me are inexperienced and scared of the complexities + consequences.

We are “covid-naive” in a country full of covid hazards.

GDP^GNI, PPP #w1r2

Posted on by tiger40490

k_PPP

See also

For a host country,

  • GNI .. value of everything produced inside the host country + the income its residents (PR? [1]) receive—whether it is earned at home or repatriated from abroad. “Repatriated” usually includes wages and property income
  • GDP measures economic output and income based on the location rather than nationality. GNP measures the output of host country’s residents regardless of the location of the actual underlying economic activity
  • GNP starts with GDP, adds residents’ investment income [profits, dividends..] from overseas investments, and subtracts foreign residents’ investment income earned within the host country.

GDP measures overall size, in terms of productive output, of a national (or regional) economy, within a physical boundary
GNI measures income earned by the nationals regardless of location. A national may have spent 0 or 1 year in the “nationality country”

Those are the high-level concepts. The actual subtractions/additions are important but sometimes imprecise.

— Corporate income .. is a complicated calculation … not discussed in depth here
Income earned by a MNC in a host country, but repatriated home .. counts as GNP of the home only, but GDP of host country only.

Example: Ireland has received significant foreign investment. Therefore for Ireland, there is a net outflow of income through multinationals. Therefore, Irish GNP is lower than GDP.

I think GNI doesn’t count MNC income. GNI looks at individual shareholders of MNC, specifically their overseas property income.

— GNI has largely displaced the GNP concept . See also https://databank.worldbank.org/metadataglossary/world-development-indicators/series/NY.GNP.MKTP.KD.ZG

I guess the key differences is foreigners’ income locally spent. https://www.thebalance.com/gross-national-income-4020738 shows a concise table. It shows that

  • A foreigner’s income is either locally spent or repatriated
    1. earned-n-spent amount by foreigners (in host country) is counted as GNI not GNP of host country
    2. remittance amount (back to home country) is counted as GNP/ GNI of the home country, and excluded from GNI/GNP of the employment country
  • GNP is nationality-based and doesn’t care about where the income is spent
  • GNI is more sophisticated, treating foreigners’ local spent income same as resident’s spent income

— [1] Do permanent residents count as a nationals of the host country? Minor question which doesn’t add real complexity.
However, I believe in theory every individual is counted as the national of one country. If an individual files tax returns in both SG and U.S., then the “systems” would not double-count the income and tax her twice.

 

relocate4retirement: 8practical questions #Forbes

Posted on by tiger40490

https://www.forbes.com/sites/davidrae/2018/10/10/move-in-retirement presents 8 practical questions to help you decide Whether to relocate when you retire.

Q2 is about staying close to loved ones
Q3: Rent or buy home after you relocate?
Q4 is about healthcare
Q5 is about pastimes and recreations
Q6 is about friends…. Kinda less important for me.
Q7: what’s wrong with where I call home now?

retirees do worry about inflation erod`nest egg

Posted on by tiger40490

https://www.cnbc.com/2021/06/07/heres-an-option-to-protect-your-portfolio-from-inflation.html  says CPI-inflation is a top concern as investors fret about the rising cost of groceries, housing, gasoline and other living expenses.

Q: Is this widespread in the U.S. or Singapore?
A: I have limited insight. I would assume this is a top concern among some retirees in _every_ country, but less in SG

We can look at realized inflation. One of the biggest complaints of Chinese citizens is inflation in everyday purchases i.e. CPI inflation (housing doesn’t qualify). SG is not bad as discussed in several bposts.

Q: is SGD 3k CRBR realistic?
A: I still feel confident.