yes sad in fact that we started contributing to our 棺材本from our
twenties onwards. but even some insurance has features that
provides for 后事. also, we can only accept whatever poor rates that
comes with such a loonng life insurances 30-60 years depending on
how long we live, since life insurances still come with death or
illness cover other than the cash value. for cpf, the cover is
eaten up.
for such a large amount, both the rate of return (normally
projected 3-5% pa) and death or illness cover can be
substantial at the end.
by allowing them to do what they want with 白金we gave to
ourselves from younger, we are also resigned to poor rates for
something that has NO liquidity. in insurance if we are
willing to accept low liquidity (we don't touch the money), we can
get rather high rates, not to mention other forms of
investments yet.
by doing a wiki on real interest rates, we know how much we are
shortchanged on our cpf. first, we are wiped out last year and this
year with inflation coming in at about 4%, next
regulatory risks which force us to accept whatever which may happen
to our account like annuity should warrant higher rates too.
______________________
The "real interest rate" is approximately the
nominal
interest rate minus the inflation rate (see Fisher
equation and below for exact equation). It is the
rate of interest an investor expects to receive after subtracting
inflation. This is not a single number, as different investors have
different expectations of future inflation. If, for example, an
investor were able to lock in a 5% interest rate for the coming
year and anticipated a 2% rise in prices, he would expect to earn a
real interest rate of 3%.[1]
Since the inflation rate over the course of a loan is not known
initially, volatility in inflation
represents a risk to both the lender and the borrower.
In economics and finance, an individual who lends money
for repayment at a later point in time expects to be compensated
for the time value of
money, or not having the use of
that money while it is lent. In addition, they
will want to be compensated for the risks
of having less purchasing
power when the loan is
repaid. These risks are systematic risks,
regulatory risks and inflation risks. The first includes
the possibility that the borrower will default or be unable to pay on
the originally agreed upon terms, or that collateral backing the
loan will prove to be less valuable than estimated. The second
includes taxation and changes in the law
which would prevent the lender from collecting on a loan or having
to pay more in taxes on the amount repaid than originally
estimated. The third takes into account that the money repaid may
not have as much buying power from the perspective of the lender as
the money originally lent, that is inflation, and may include
fluctuations in the value of the currencies involved.
