Singapore Advance GDP Estimates for First Quarter 2008

Advance GDP Estimates for First Quarter 2008

Gross Domestic Product at 2000 Prices
(Percentage change over corresponding period of previous year)

1Q07 2Q07 3Q07 4Q07 2007 1Q08*
Overall GDP
7.0 9.1 9.5 5.4 7.7 7.2

Goods Producing Industries
Manufacturing
3.9 8.6 11.0 0.2 5.8 13.2
Construction
14.4 22.4 20.1 24.3 20.3 14.6
Services Producing Industries
7.7 8.6 8.5 7.7 8.1 7.6

* Advance estimates

1. Economic growth picked up pace in the first quarter of 2008. Advance estimates1 show that real gross domestic product (GDP) rose by 7.2 per cent on a year-on-year basis in the first quarter, faster than the 5.4 per cent gain in the final quarter of 2007. On a quarter-on-quarter seasonally adjusted annualised basis, real GDP expanded by 16.9 per cent, after declining by 4.8 per cent in the previous quarter.

2. The manufacturing sector is estimated to have expanded by 13.2 per cent in the first quarter, compared with a 0.2 per cent growth in the fourth quarter of 2007. This was largely due to a surge in the output of the biomedical manufacturing cluster, following its contraction in the previous quarter. The rest of the manufacturing clusters also enjoyed better performance in the first quarter with the exception of the transport engineering and precision engineering clusters whose growth moderated.

3. The construction sector is estimated to have grown by 14.6 per cent in the first quarter, after a 24.3 per cent gain in the preceding quarter.

1 The advance GDP estimates for first quarter 2008 are computed largely from the first two months of the quarter (i.e. January and February 2008). They are intended as an early indication of the GDP growth in the quarter, and are subject to revision when more comprehensive data becomes available.

4. The services producing industries are estimated to have grown by 7.6 per cent in the first quarter, similar to the 7.7 per cent in the previous quarter. Financial services continued to be the fastest growing among the services sectors.

5. The preliminary GDP estimates for the first quarter of 2008, including performance by sectors, sources of growth, inflation, employment and productivity, will be released in May 2008 in the Economic Survey of Singapore.

MINISTRY OF TRADE AND INDUSTRY
10 April 2008

GENTING International has awarded a $340 million contract to Singapore-listed Low Keng Huat

Hard Rock Hotel contract awarded

By ARTHUR SIM

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GENTING International has awarded a $340 million contract to Singapore-listed Low Keng Huat (S) Ltd to build the Hard Rock Hotel at Resorts World at Sentosa (RWS).

Rock on: It will also have conference facilities, more than 20 meeting rooms and a large ballroom with seating for 7,300 guests
The latest construction award brings the tally of construction contracts to over $1 billion.

The Hard Rock Hotel will be the first and only such hotel here. It is also one of six hotels at the $6 billion RWS development.

Expected to open in early 2010, the Hard Rock Hotel will have 360 keys (rooms), including nine suites and 351 rooms.

It will also have conference facilities, more than 20 meeting rooms and a large column-free ballroom with seating for 7,300 guests.

Michael Chin, executive vice-president of projects at RWS, said that Low Keng Huat was selected from a tender exercise which drew 'several bids'.

He added that the construction of the resort is entering a new phase in which the superstructures such as the hotels will be built.

'Low Keng Huat's proven track record and expertise in building construction and property development, especially in hospitality-related sectors, were the key factors in our selection,' Mr Chin said.

One of the challenges in the construction of the Hard Rock Hotel will be the ballroom.

Low Keng Boon, managing director at Low Keng Huat, said the difficulty in constructing the ballroom lies in the fact that it is completely column-free, without the support of beams for a foundation.

With a floor area of 6,500 sq m and at a height of 11m, Mr Low explained that extremely large trusses will have to be specially manufactured to withstand the weight of the entire structure.

RWS will have some 1,800 rooms, spread across its six hotels of varying themes. Topping the list are Maxims Residences, Hotel Michael and the Hard Rock Hotel.

BT: Analysts staying upbeat on construction stocks

Business Times - 07 Apr 2008

Analysts staying upbeat on construction stocks

By LYNETTE KHOO

DESPITE the upward cost spiral of raw materials such as steel and granite, analysts believe strong orders from both the public and private sector will underpin the construction sector.

In its 'Building Blocks for Growth' investment seminar over the weekend, OCBC Investment Research highlighted the growth prospects in the sector to its preferred clients, pointing to the string of contracts pouring into the local construction sector from public projects to re-invent Singapore as well as jobs from the property sector.

CIMB-GK analyst Lawrence Lye reiterated his 'overweight' rating on the sector in his report dated April 4.

Last year's brisk construction activities brought total contracts awarded to a new record high of $24.5 billion, breaching the previous peak in 1997 of $24.4 billion.

The Building and Construction Authority (BCA) is projecting that some $23-27 billion worth of contracts will be awarded this year.

But analysts are also pointing to the challenges ahead for this sector. Recent downside risks are emerging in the form of higher raw material costs. The upward pressure on prices of construction materials such as steel is further exacerbated by increased global demand for building materials.

'The strong growth in Asia has also buoyed demand for most building materials,' OCBC said in its report. 'In Singapore, the growth in construction demand in 2008 is likely to be broad-based, stretching from residential, commercial, industry to the civil engineering segments.'

Escalating construction costs are leading to higher breakeven prices, Mr Lye of CIMB-GK said, estimating that the construction cost for an average luxury condominium development is at least $450 per square foot.

Another sticking point is coming from the easing of residential property prices, he added. This has recently been reflected in the delay in property launches, lower transaction volumes, as well as the lower-than-expected prices for en bloc sales and aborted en bloc sales.

Mr Lye noted that rising property prices over the past few years have prompted many non-traditional property developers, such as construction companies, media and publishing companies and hotel groups, to jump into the fray to capitalise on quick profits.

The success of these 'newbie developers' hinges on their ability to speed-to-market - to sell their properties quickly before the market turns down and prices fall to below their costs.

But the tide is now turning against them, given the US sub-prime problems in mid-2007 that have led to a substantial weakening in consumer sentiment, and escalating construction costs since early 2007 when the Indonesian government started the export ban on sand and granite to Singapore.

'With continued rising construction costs exacerbated by higher steel prices, these construction companies-turned-developers are likely to be saddled with properties that are below current benchmark prices,' Mr Lye said.

While expressing caution on such companies, Mr Lye recommends that investors focus on pure-play construction companies or specialist contractors. His top picks are Holdings, Tat HongTiong Woon Corporation and CSC Holdings.

OCBC is initiating a 'buy' rating on Pan-United Corp and upgrading its call on Tee International to 'buy' from 'hold'. It does not have a rating for the sector yet.

Warren Buffett

1943: (13 years old)

Buffett filed his first income tax return, deducting his bicycle as a work expense for $35. [21]
1945: (15 years old)

In his senior year of high school, Buffett and a friend spent $25 to purchase a used pinball machine, which they placed in a barber shop. Within months, they owned three machines in different locations.
1949: (19 years old)

In 1949, he was initiated into Alpha Sigma Phi Fraternity while an undergraduate at the Wharton Business School at the University of Pennsylvania. His father and uncles were also Alpha Sigma Phi brothers from the chapter at Nebraska, where Warren eventually transferred.
1950: (20 years old)

Buffett enrolled at Columbia Business School after learning that Benjamin Graham and David Dodd, two well-known securities analysts, taught there.
1951: (21 years old)

Buffett discovered Graham was on the Board of GEICO insurance at the time. After taking a train to Washington, D.C. on a Saturday, Buffett knocked on the door of GEICO's headquarters until a janitor allowed him in. There, he met Lorimer Davidson, the Vice President, who was to become a lasting influence on him and life-long friend.[22]
Buffett graduated from Columbia and wanted to work on Wall Street. Buffett offered to work for Graham for free but Graham refused. He purchased a Sinclair gas station as a side investment, but that venture did not work out as well as he had hoped. Meanwhile, he worked as a stockbroker. During that time, Buffett also took a Dale Carnegie public speaking course. Using what he learned, he felt confident enough to teach a night class at the University of Nebraska, "Investment Principles." The average age of the students he taught was more than twice his own.
1952: (22 years old)

Buffett married Susan Thompson.
1954: (24 years old)

Benjamin Graham offered Buffett a job at his partnership with a starting salary of $12,000 a year. Here, he worked closely with Walter Schloss.
Susan had her first child, Howard Graham Buffett.
1956: (25 years old)

Benjamin Graham retired and folded up his partnership.
Buffett's personal savings are now over $140,000.
Buffett returned home to Omaha and created Buffett Associates, Ltd., an investment partnership.
1957: (27 years old)

Buffett had three partnerships operating the entire year.
Buffett purchased a five-bedroom, stucco house on Farnam Street for $31,500.
Susan was about to have her third child.
1958: (28 years old)

Buffett had five partnerships operating the entire year.
1959: (29 years old)

Buffett had six partnerships operating the entire year.
Buffett was introduced to Charlie Munger.
1960: (30 years old)

Buffett had seven partnerships operating the entire year.
The partnerships were: Buffett Associates, Buffett Fund, Dacee, Emdee, Glenoff, Mo-Buff, and Underwood.
Buffett asks one of his partners, a doctor, to find ten other doctors who will be willing to invest $10,000 each into his partnership. Eventually, eleven doctors agreed to invest.
1961: (31 years old)

Buffett revealed that Sanborn Map Company accounted for 35% of the partnerships' assets.
Buffett explained that in 1958, Sanborn sold at $45 per share when the value of the Sanborn investment portfolio was $65 per share. This meant buyers valued Sanborn at "minus $20" per share, and buyers were unwilling to pay more than 70 cents on the dollar for an investment portfolio with a map business thrown in for nothing.
Buffett reveals that he earned a spot on the board of Sanborn.
1962: (32 years old)

Buffett's partnerships, in January 1962, had in excess of $7,178,500 of which over $1,025,000 belonged to Buffett.
Buffett merges all partnerships into one partnership.
Buffett discovered a textile manufacturing firm, Berkshire Hathaway. Buffett's partnerships began purchasing shares at $7.60 per share.
1965: (35 years old)

When Buffett's partnerships began aggressively purchasing Berkshire they paid $14.86 per share while the company had working capital (current assets minus liabilities) of $19 per share, this did not include the value of fixed assets (factory and equipment).
Buffett took control of Berkshire Hathaway at the board meeting and named a new President, Ken Chace, to run the company.
1966: (36 years old)

Buffett closes the partnership to new money.
Buffett wrote in his letter “unless it appears that circumstances have changed (under some conditions added capital would improve results) or unless new partners can bring some asset to the partnership other than simply capital, I intend to admit no additional partners to BPL.”
In a second letter, Buffett announced his first investment in a private business — Hochschild, Kohn, and Co, a privately owned Baltimore department store.
1967: (37 years old)

Berkshire paid out its first and only dividend of 10 cents.
1969: (39 years old)

Following his most successful year, Buffett liquidated the partnership and transferred their assets to his partners. Among the assets paid out were shares of Berkshire Hathaway.
1970: (40 years old)

As chairman of Berkshire Hathaway, began writing his now-famous annual letters to shareholders.
1973: (43 years old)

Berkshire began to acquire stock in the Washington Post Company. Buffett became close friends with Katharine Graham, who controlled the company and its flagship newspaper, and became a member of its board of directors.
1974: (44 years old)

The SEC opens a formal investigation into Warren Buffett and one of Berkshire's mergers.
1977: (47 years old)

Berkshire indirectly purchases the Buffalo Evening News for $32.5 million. Anti-trust charges brought.
1979: (49 years old)

Berkshire began to acquire stock in ABC. With the stock trading at $290 per share, Buffett's net worth neared $140 million. However, he lived solely on his salary of $50,000 per year.
Berkshire began the year trading at $775 per share, and ended at $1,310. Buffett's net worth reached $620 million, placing him on the Forbes 400 for the first time.
1988: (58 years old)

Buffett began buying stock in Coca-Cola Company, eventually purchasing up to 7 percent of the company for $1.02 billion. It would turn out to be one of Berkshire's most lucrative investments, and one which he still holds.
1990: (60 years old)

Scandals involving Greenberg and Gutfreund appear.
1999: (69 years old)

Buffett is named the top money manager of the 20th century in a survey by the Carson Group, ahead of Peter Lynch and John Templeton.[23]
2002: (72 years old)

Buffett entered in $11 billion worth of forward contracts to deliver US dollars against other currencies. By April 2006, his total gain on these contracts was over $2 billion.
2004: (73 years old)

His wife, Susan, passes away.
2006: (75 years old)

Buffett announced in June that he would gradually give away 85% of his Berkshire holdings to five foundations in annual gifts of stock, starting in July 2006. The largest contribution will go to the Bill and Melinda Gates Foundation.[24]
2007: (76 Years old)

In a letter to shareholders, Buffett announced that he was looking for a younger successor or perhaps successors to run his investment business.[25] Buffett had previously selected Lou Simpson, who runs investments at Geico, to fill that role. However, Simpson is only six years younger than Buffett.
2008: (77 Years old)

Buffett becomes the richest man in the world according to Forbes.[26]

Economist: Wall Street's crisis

Wall Street's crisis

Mar 19th 2008
From The Economist print edition

What went wrong in the financial system—and the long, hard task of fixing it


THE marvellous edifice of modern finance took years to build. The world had a weekend to save it from collapsing. On March 16th America's Federal Reserve, by nature hardly impetuous, rewrote its rule-book by rescuing Bear Stearns, the country's fifth-largest investment bank, and agreeing to lend directly to other brokers. A couple of days later the Fed cut short-term interest rates—again—to 2.25%, marking the fastest loosening of monetary policy in a generation.

It was a Herculean effort, and it staved off the outright catastrophe of a bank failure that had threatened to split Wall Street asunder. Even so, this week's brush with disaster contained two unsettling messages. One is analytical: the world needs new ways of thinking about finance and the risks it entails. The other is a warning: the crisis has opened a new, dangerous chapter. For all its mistakes, modern finance is worth saving—and the job looks as if it is still only half done.

Rescuing Bear Stearns and its kind from their own folly may strike many people as overly charitable. For years Wall Street minted billions without showing much compassion. Yet the Fed put $30 billion of public money at risk for the best reason of all: the public interest. Bear is a counterparty to some $10 trillion of over-the-counter swaps. With the broker's collapse, the fear that these and other contracts would no longer be honoured would have infected the world's derivatives markets. Imagine those doubts raging in all the securities Bear traded and from there spreading across the financial system; then imagine what would happen to the economy in the financial nuclear winter that would follow. Bear Stearns may not have been too big to fail, but it was too entangled.

Gordian conduits

As the first article in our special briefing on the crisis explains, entanglement is a new doctrine in finance (see article). It began in the 1980s with an historic bull market in shares and bonds, propelled by falling interest rates, new information technology and corporate restructuring. When the boom ran out, shortly after the turn of the century, the finance houses that had grown rich on the back of it set about the search for new profits. Thanks to cheap money, they could take on more debt—which makes investments more profitable and more risky. Thanks to the information technology, they could design myriad complex derivatives, some of them linked to mortgages. By combining debt and derivatives, the banks created a new machine that could originate and distribute prodigious quantities of risk to a baffling array of counterparties.

This system worked; indeed, at its simplest, it still does, spreading risk, promoting economic efficiency and providing cheap capital. (Just like junk bonds, another once-misused financial instrument, many of the new derivatives will be back, for no better reason than that they are useful.) Yet over the past decade this entangled system also plainly fed on itself. As balance sheets grew, you could borrow more against them, buy more assets and admire your good sense as their value rose. By 2007 financial services were making 40% of America's corporate profits—while employing only 5% of its private-sector workers. Meanwhile, financial-sector debt, only a tenth of the size of non-financial-sector debt in 1980, is now half as big.

The financial system, or a big part of it, began to lose touch with its purpose: to write, manage and trade claims on future cashflows for the rest of the economy. It increasingly became a game for fees and speculation, and a favourite move was to beat the regulator. Hence the billions of dollars sheltered off balance sheets in SIVs and conduits. Thanks to what, in hindsight, has proven disastrously lax regulation, banks did not then have to lay aside capital in case something went wrong. Hence, too, the trick of packaging securities as AAA—and finding a friendly rating agency to give you the nod.

That game is now up. You can think of lots of ways to describe the pain—debt is unwinding, investors are writing down assets, liquidity is short. But the simplest is that counterparties no longer trust each other. Walter Bagehot, an authority on bank runs, once wrote: “Every banker knows that if he has to prove that he is worthy of credit, however good may be his arguments, in fact his credit is gone.” In our own entangled era, his axiom stretches to the whole market.

A question of priorities

This mistrust is enormously corrosive. The huge damage it could do to the world economy dictates what must now be done first. No doubt, there are many ways in which financial regulation needs to be fixed; but that is for later. The priority for policymakers is to shore up the financial system. That should certainly be done as cheaply as possible (after all, the cash comes from the public purse); and it should avoid as far as possible creating moral hazard—owners and employees should bear the costs of their mistakes. But these caveats, however galling, should not get in the way of that priority.

To its credit, the Fed has accepted that the new finance calls for new types of intervention. That is the importance of its decision on March 16th to lend money directly to cash-strapped investment banks and brokers and to accept a broader array of collateral, including mortgage-backed and other investment-grade securities. If investment banks can overcome the stigma of petitioning the central bank, this will guard them against the sort of run that saw Bear rejected by lenders in the short-term markets. Henceforth, the brokers will be able to raise cash from the Fed. The Fed is now lender-of-last-resort not just to commercial banks but to big investment banks as well (a concession that will surely in time demand tighter regulation).

Even if that solves Wall Street's immediate worries over liquidity, it still leaves the danger that recession will lead to such big losses that banks are forced into insolvency. This depends on everything from mortgages to credit-card debt. These, in turn, depend on the American economy's likely path, the depth to which house prices decline and the scale of mortgage foreclosures—and none of these things is looking good. Goldman Sachs's latest calculations, which suppose that American house prices will eventually fall by 25% from their peak, suggest that total losses will reach just over $1.1 trillion. At around 8% of GDP that is not to be sniffed at. But it includes losses held by foreigners, and “non-leveraged institutions” such as insurers. Goldman expects eventual post-tax losses for American financial firms to be around $300 billion, just over 2% of GDP, or about 20% of their equity capital.

The rebuilders' dilemma

That suggests a serious problem, but not a catastrophic banking crisis. And with the world awash with savings, banks ought to be able to raise new capital privately and continue lending. Unfortunately, things are not quite so simple. It would not take many homeowners to walk away from their debts for the losses to grow rapidly. Also, bank shareholders may prefer to cut back on lending rather than raise new equity. That would suit them, as equity is expensive and dilutes their stake. But it would not suit the economy, which would be pushed further into recession by sudden cuts in leverage.

By lending money to more banks for longer against worse collateral, the Fed hopes to stem panic and buy time. It wants Wall Street's banks to assess their losses and strengthen their balance sheets without the crippling burden of dysfunctional markets. And it hopes that cheaper money will ease that recapitalisation, inject confidence and cushion the broader economy. But that lingering risk of insolvency means that the state needs to be ready to take yet more action.

One option is to keep on intervening as events unfold. The other is to shock the markets out of their mistrust by using public money to create a floor to the market, either in housing or in asset-backed securities. For the moment, gradualism is the right path: it is cheaper and less prone to moral hazard (ask investors in Bear Stearns). Yet it is not easy to pull off—again, ask Bear Stearns's backers, who could possibly have been saved had the Fed begun lending to brokers sooner. If the crisis drags on and claims more victims, gradualism could yet become more expensive than a more ambitious approach.

Something important happened on Wall Street this week. It was not just the demise of a firm that traded through the Depression. Financiers discovered that they had created a series of risks that the market could not cope with. That is not a reason to condemn the whole system: it is far too useful. It is a sign that the rules need changing. But, first, stop the rot.

CSC: INSTALL FOUNDATION PILES FOR WORLD'S LARGEST RENEWABLE BIO-DIESEL PLANT $33M

PRESS RELEASE
CSC TO INSTALL FOUNDATION PILES FOR WORLD’S LARGEST RENEWABLE BIO-DIESEL PLANT

SINGAPORE, March 6, 2008 – Finland’s Neste Oil OYJ is building the world’s largest renewable bio-diesel plant in Tuas and has commissioned one of CSC Holdings Limited’s (“CSC” or “the Group”) wholly owned subsidiaries to construct the foundation for the facility.

When completed the bio-diesel plant is capable of converting renewable feedstock like palm oil into some 800,000 tonnes of bio-diesel annually. The contract for the foundation work is worth approximately S$33 million.

Work at the site will involve the installation of a large number of driven piles and some civil engineering work and is scheduled to commence in early March and be completed by the end of the year.

CSC is delighted and honoured to work with Neste Oil to construct the foundation for this esteemed project and looks forward to securing more of such exciting contracts in the future.

This contract adds to CSC’s list of foundation contracts for projects in the energy related industries and enhances the reputation and track record of the Group.

In addition to this contract win, the Group has also recently secured several other foundation engineering, geotechnical investigation and instrumentation jobs worth approximately S$30 million collectively. These include works at the proposed Woodsville Interchange, the ITE campus at Bukit Batok and public housing development at Sengkang.

With these recently secured contracts amounting to S$63 million, the Group’s order book now stands at approximately S$435 million. Most of the projects are expected to be completed within the next 12 months.

BT: Freedom at 44

Business Times - 03 Mar 2008

Freedom at 44

Last week, we discussed how retiring young and rich can be an attainable goal if one plans early and invests wisely. Today, we run a personal letter from RONALD HEE, who shows it is possible to become financially free as a hardworking salaryman, without needing to rob a bank or be a corporate high-flier

To the graduating class of 2008:

YOU are entering a world of amazing possibilities - possibilities that people of my generation barely believed would be possible. The world is, quite literally, your oyster. You also enter a world fraught with challenges and dangers, and ever rising costs of everything.

In our day, the options were limited, but inflation remained low most of the time, and there was job security. I still have friends who are in the same company since they graduated 20 years ago. For you today, inflation is roughly twice the interest the banks are giving you. You will probably change jobs every two to three years. And you can be fired from any of them at any time. Or, any company you work for could downsize or close down just when you least expect it.

So, for middle-class working Joes like us, does it mean that just to survive, we will be chained to our desks until the day we die - if we're lucky and not get replaced or downsized? Is financial freedom at the tender age of 44 - for you, 20 years of earning - an impossible dream? It really boils down to one simple formula. Earn more than you spend; invest what you save.

The first thing, of course, is to find a good job. There will be many, here and around the world. But don't rely on your company or your boss to take care of you. You have to take care of yourself, regardless of the profession you choose. Assuming you are not in the lucky handful who will inherit a fortune or get a job that pays you in the six figures, or win the lottery, the career you choose is what makes your path to financial freedom possible. But you have to plan that path.

Let's first look at the cost side of the equation. Buy what you need and some of what you want and know the difference. Do you really need a 200-inch high-definition plasma TV, complete with state-of-the-art home theatre system? And how many hours per day are you going to enjoy that system? Instead of spending tens of thousands on something you will use for a few hours a week, consider instead how that money could work for you.

One thing that surprises me about the younger generation is your propensity to spend on credit. Why buy things you don't need, with money you don't have? To impress people you don't like? Here's a crazy idea: Have the bank pay you interest for your money, rather than you pay the bank interest for their money. Twenty-four per cent interest? That's approaching loan shark rates. Always, always, pay your credit card bills in full. Can't afford to pay? Simple solution. Spend less. Be low maintenance.

At some point, you'd probably want to buy a car. With an excellent MRT and bus system, and taxis when you need them, is it worth getting a car? Unless you have a real need - you're a salesman, you have a family to ferry around, your child is sick all the time, your mum is old, your girlfriend will leave you otherwise - the reality is that a car is simply not worth it. Over 10 years, a $50,000 car will cost you about $130,000, once you factor in petrol, road tax, repairs, car payments and interest on the payments, parking tickets, a few minor accidents... Again, it's better for that money to work for you. (See Table 1)

Like most people, your biggest purchase will probably be a home. For most of us, our first home will be a government flat. Whether you buy public or private, consider buying something that you can continue to pay for, for at least six months, should you be suddenly out of work. If you don't mind the loss of privacy, consider renting out any spare rooms. It's not impossible for your rental income to match your mortgage payments.

Now let's look at the income side. Your basic fallback is your CPF account. Let's assume that by age 44, you've worked 20 years. Assuming an average of $1,000 a month, you will accumulate $240,000, not including interest. Invest it if you wish, but the main use of CPF should be to pay for your home, so your cash outlay is minimised. In 20 years, with $240,000, you could quite easily pay off your flat. With your spouse also chipping in 50 per cent for the flat, you should have more than enough.

If you've managed your expenses right, it's quite possible to save an average of $1,000 a month. This, of course, gets easier as you grow older and earn more. Put some away into a savings account as your rainy day fund, eventually building up enough to keep you going for six months or more. Put the rest in the hands of a good financial planner. This is someone who should be able to give you an average return of at least 10 per cent a year. The miracle of compound interest will yield you $756,030 at the end of 20 years, more than three times what you put in! (See Table 2)

It's now 2028. Twenty years have passed and it's your 44th birthday. You are into your second or third home by now, or maybe even have a spare house, each time either breaking even or making a small profit. You have a healthy CPF balance that covers basic needs. You've taken care of some health risks by buying insurance policies when you were young and they were cheap. And your investment portfolio is chugging along very nicely, yielding around $70,000 a year, without depleting your capital, so it's sustainable for the long-term. $70,000 a year is equal to a tax-free monthly 'salary' of $5,800. Not too bad.

CPF + savings + especially your investments = financial freedom. Work part time. Start your own business. Do something else that pays a lot less but fulfils you more, such as church or charity work. Become a beach bum in Bali. Or travel round the world for six months. Financial freedom means the freedom to make these kinds of choices.

So, my young friends, my wish for you as you embark on the next stage of your life is that you will plan from the beginning to be financially free. May you have the discipline and luck to accomplish it!

Ronald Hee, 44, is a freelance writer, and just a little shy of financial freedom