[21]S$900k: CpfLife^college reserve 鱼与熊掌

 


This sum is just a symbolic sum, not an accurate forecast

  • CPF-Life ERS (enhanced retirement sum) may grow to SGD 450k when my wife or when I turn 65.
  • typical top college fees may grow to USD 400k/student when my kids enroll, which will happen before I turn 65.

Q: since I can’t save enough for both purposes, which one would I sacrifice? I like this type of sharp questions that focus our mind on the real priorities.

A: short answer — sacrifice college funding. Top U.S. college is like branded products, catering to the affluent.  There are many high-quality but inexpensive colleges including NUS. If your focus is quality of education (rather than FOMO, halo, vanity…), I don’t think my kids would receive the very best educatio only in a prestigious college. As explained in many blogposts, prestige is based on research not quality of education.
A: college cost is consumption whereas CPF-life is buying an annuity.
A: My sis and Zeng Sheg both agree to let the kids stand on their own feet at that age…

— liquidity

CPF-life money is committed i.e. locked in. For better liquidity, I may need to consider leaving part of the 700k in my rental properties

College funding is zero liquidity — not an investment with a liquidation value.

— student loan

In Singapore, my kids can get interest-free loans. It’s best to let the kids repay the loan, with whatever partial assistance I can provide.

— bare-bones ffree

Q: looks like I am not really financially free?
A: my earlier analysis of bare-bones ffree was based on $0 college funding. In reality, I may earmark some SGD 200k for college. Zeng

As stated elsewhere, there are some macro risks to derail my ffree, esp. risks affecting my properties. We have to live with them.

Therefore, bedrock of my financial planning is career longevity including dev-till-70.

livelihood n Maslow’s hierarchy@needs #w1r2

See also

  • maximizing potency is a focus study (blogpost) using the Maslow pyramid as a framework. It provides concrete examples of Esteem, Self-Actualization etc.

This diagram from wikipedia is a better diagram than the pyramid. In poverty (left end), physiological and safety needs dominate. Sometime in our adolescence, belongingness [ social inclusion/acceptance, exclub/FOLB …] tend to dominate, when the lower needs go “underground”. Fairly soon, esteem_needs become dominant. This phase often lasts indefinitely and is seldom , if ever, overtaken by self-actualization needs for most individuals.

— livelihood .. as defined in my blogposts are mostly about 1) safety 2) belongingness, love (family). Esteem_needs are not strictly livelihood. If you draw a vertical line somewhere in the graph, you may notice a ranking in terms of “needs intensity”. Unlike the pyramid, the higher needs are more intense.

  • yellow above lime[safety] above orange[esteem] and green[physiological] … is the “standard” hierarchy of livelihood needs in rich cities like SG, U.S. or perhaps the upper middle class in some Chinese cities.
  • yellow above orange[esteem] above lime[safety] above green[physiological] .. the hierarchy of livelihood needs for my peers

— safety needs in my observation .. include retirement inflation, medical inflation, clean air, sanitized safe housing,,,, as described in livelihood[def2] x-class #S.Liu . As such, it is usually above (i.e. more important more intense) than esteem_needs

My T_defense tag collects many non-trivial reflections of safety concerns.

— esteem_needs .. Maslow noted two versions of esteem_needs. The “lower” version of esteem is the need for respect from others, and may include a need for status, recognition, prestige, and attention. The “higher” version of esteem is the need for self-respect, and can include a need for strength, competence, mastery, self-confidence, independence, and freedom.

— Q: when middle-class immigrant parents work so hard to send their kids to a branded college, how does Maslow theory explain it?
Esteem_need is One element .. like a badge of honor. It satisfies the (lower and higher) esteem_needs of parents more than the grown child.

My fundamental belief — a luxury college education only slightly enhances the grown child’s capacity to meet her own livelihood needs. However, many parents overrate that education-as-enhancement , like it would transform the child into a higher human being… a major misperception. I think many of these parents feel their own socioeconomic status is not in the upper class (上层社会 exclub) but a branded college education would raise their offspring into upper class.

I had first-hand experience (3 years!) in an expensive college. I know my fellow graduates are not fundamentally higher than lesser-known college graduates. A good high school would provide a more conducive environment during the formative years, but by age 18, most kids already know what they want, and won’t be highly influenced by the local culture of the university. A branded university does help the graduate get into good companies.

— Self-actualization .. left a vague impression on me even though I once read it extensively in my school (college?) days. I even photocopied the relevant chapters of his book. This need is elusive and ivory-tower.

 

designerLabel≠2x better Quality

Many Asian parents are not affluent enough to choose luxury designer labels but they act differently when it comes to college selection.

These middle-class parents don’t have 5 million net worth that enable them to afford a 250k “designer label” college education where the quality thereof is only marginally higher. However, the stereotypical Asian middle-class parent often chooses to spend like the upper class on education. They go for the most luxury they can afford.

“Prestige” is Kyle’s term. I call it “branded” as it’s similar to any /luxury designer label/. Designer labels marketing message usually includes something like “Yes we are priced well above the second tiers, but quality is what you get.

Some Asian parents seem to consider branded college as 5x the quality of a 2nd tier college. Is that true? At a branded university, quality of education is often superior but there’s no objective numerical multiplier like “2 times better”. Spent 250k on top college but your kid outshone by colleagues is my most elaborate illustration of the quality paradox.

Even though as an insider I know the quality of education is similar between NUS, UChicago or other colleges where my colleagues studied, I feel a deep fear that sending my kids to the smaller brand could damage their future.

  1. transportation tools like Cars are the #1 best example of prestige translating to quality, due to heavy wear-n-tear.
  2. Building materials also have substantial differences in quality.
  3. furniture has quality difference.

Pattern: the more physical/mechanical something feels, the more I believe in its quality. For learning, 达者为师. Best books are freely available.

Best teachers are often at lesser-known colleges. So if a lesser-known college employs the real leading experts in the field such as Doug Lea, Stoustrup, John Hull or the 古典文学专家 in 北师大, then parents get a better bargain in those colleges, in terms of access to teacher.

I feel my friend CSY is trapped in a rabbit hole, unable to take a step back.

branded uni %%insider advantage #Kyle,Sofia

A related ROI — gauging value@branded degree: a top-5 ROI@UChicago

One of the top 3 advantages of an insider — reduction in hazardous pressure to save up and push my kids for a branded college.

As Kyle pointed out, if we had not gone to UChicago or Columbia, I would have accepted the brainwash/propaganda and believed that branded colleges enrich a graduate’s life. Even with this first-hand experience as an insider, I still find it hard to resist the peer pressure from fellow Chinese parents. If I had not gained this insider insight, how much harder would it be? I would say impossible to avoid the brainwash and accept that these prestigious research powerhouses is actually poor value for money in terms of undergrad education.

Statistically, both Kyle’s career and mine count as two data points to support a high correlation between college prestige and career. However, if the survey asks me a binary question “Has your prestigious college education enhanced your career significantly?” we would say NO, but this crucial data is lost in the official statistics.

saving 百万.. In 2021, I told Sophia that one tangible gain from UChicago is the insider insight. This insight would help me save a huge amount (USD 500k+) on college.

The reality — U.S. top colleges are affordable only to the rich[1]. I know I’m not that well-off, so this saving will affect the quality of our family life [影响生活质量].

[1] For a modest family to get any scholarship from a Tier 1 college, you  have to compete with thousands of applicants and be really special. Selectivity is one in thousands. )

–I wrote to Kyle–
I feel both you and me have an insider’s assessment of the intrinsic value of a branded college — We know it is overvalued and not worth the money.

Similarly, there’s overvaluation of advanced financial math, including stochastic calculus. A few of my professors said as an insider’s advantage, they have a better appreciation of the limitations in the mathematics.

[18] 20 unbelievable bargains

Lookalike? Unlike ##G5 personal winn`bets: long-term impact@livelihood, this blogpost is not about big bets.

  • [u=unbelievable. I would not have entertained such a suggestion a few years earlier; unbelievable bargain; too good to be true.]
    • Defying my common-sense, becuase our intuition is completely unreliable in these cases.
    • These are often unexpected successes, and deserve in-depth analysis
  • [v= “undervalued” in terms of my subconscious valuation or market valuation, when I bought]
  • [h= top 5 heavy hitter]
  • [hh v] I “bought”SG early, when it was undervalued
  • — education
  • [h v] UChicago — the Nobel prize count lent prestige on my degree. My $cost and tcost was very high, but in 2013 the prestige was undervalued.
  • [h vv] Singapore universities — charge a fraction of the U.S. private universities but offer comparable quality.
  • — ccost (calorie cost)
  • [u] rice pudding
  • nonfat ice cream
  • [u] washed and heated baby carrot — tasty like starchy foods but very low calorie and high fiber
  • my lentils — whole box is 600 cal, extremely filling, whereas 100 gram of peanuts (1/4 of my 小金生 packet) has the same calories. Why the hell do I worry about my lentils?
  • — $cost (prices)
  • [uv] Malaysia (retirement) — offers decent healthcare and rental homes at a fraction of the U.S. costs. You would think quality must be questionable but reality could be completely different.
  • yoga classes — are SGD30 each or SGD 155/M. In the U.S. it’s $32×12+50 below USD36/M
  • fruits in Chinatown — sell at a fraction of supermarket price… You would think rotten, but mostly good.
  • —salaries
  • [u] According to my chat with the Macquarie support chap, a bright engineering fresh graduate like him in Singapore earns SGD3500/M or SGD 40k/Y but USD 120K pretax in NY
  • a 8Y+ programmer earns SGD 70k/Y but USD 150k pretax in NY
  • java job pays 20% higher than perl jobs and offer far more opportunities.
  • [u] Front office trading IT jobs pay higher than PWM jobs, sometimes less stress and many more opportunities. Unthinkable  in 2007.
  • — workload and stress
  • Qz job — pays no higher than MS job but 5 times higher stress partly due to perm job and limited job market in SG.
  • GS job — pays about half the 95G, Barc or citi jobs, but 3 times higher stress
  • — investments
  • [u] Some properties don’t appreciate much, with GRY 4%, but my BridgeRetail has guaranteed NRY of 7%. Too good to be true.
  • [h] My Blk 177 — property yields current rental income every year until 2010 and then gave a windfall.
  • [h] CPF-life — a real bargain compared to other annuities.