Personal Finance
Stop worrying about CPI
By Singapore Man of Leisure  •  December 22, 2012
Recently, it’s fashionable to talk and fret about the increasing CPI statistic – but what has that got to do with you personally?
Do you understand what and how CPI is measured? (Count me in as those not knowing what talking me if a reporter were to ask me the same question that I’ve asked you!) 
For those interested, you can visit this: Consumer Price Index Education Corner
Remember, it’s just a statistical average.
It’s a world of difference between the below same CPI “average” of 5%:
1)      (4 + 6) / 2 = 5
2)      (-5 + 15) /2 = 5
Yup, the same CPI of 5 can mean totally different to two different individuals – depending on your lifestyle, age, and means.
For example, looking at the IT and electronics sales, I swear it’s a deflation out there! I am amazed that we can get the big screen TV, the super-doper notebook, and a whole plethora of home appliances at prices that were lower (with more bells and whistles thrown in) than 3 years ago… What inflation? 
But if we talk about cars and property, I bet for the buyer-to-be, the inflation pain felt is much much more than the published CPI! What do you mean inflation has slowed from 5% to 4%? 
The Young 20 & 30s
Hey! At your age, you should be enjoying life! Don’t be in a hurry to grow old!
I know. Most of us don’t have “scholarship” and “pension” from mom and dad. So must think and fend for ourselves (hurray!). 
Your worry could be about an increase tuition fees. Looking at CPI won’t offer solutions. 
Some of the smarter ones study hard so they qualify for scholarships and/or bursaries. The practical ones work part-time or give private tuition.
The enlighten “lost” ones may question whether it’s better to work first and come back to school once they have figured what they want to do in life? Hey! Maybe you discover what you like to do don’t need a degree? (I suspect these young ones will make better investors or more likely to strike it out on their own one day)
For the working ones, you may dream of owning a car. Inflation or no inflation, the better question is perhaps how financially literate are you?
Should you buy a new car or a used 2nd hand car (pre-owned is such a rubbish word; just like quantitative easing)?
Or instead of paying off a car loan in 7 years, what if you skip buying a car and after saving for the same 7 years, you now have a “meaningful” capital to start your investing or trading journey? Aren’t you better off than those cynics who “complain” you need money to make money? And that’s after working for 10 odds years…  
Yes, life is about a series of decision points.  
Housing you asked? 
Worry that you can’t afford the place of your own? Come now. You know and I know Singapore is one of those few metropolitan cities where you can afford a place of your own just by working a few years. Note: I say it’s a place of your “own” and not a place of your “dreams”!  
For those of modest means, perhaps you would like to apply the tried and tested 2 bites of the HDB cherry and hop to the private condo route?
For those with private banking support from mom and dad, you can do whatever you want! Your process is much shorter; but the pleasure is a bit like sex without foreplay. Huh? Ladies out there would understand me. Just ask them. We can’t have everything!
Whether you are single or married, you have 3 broad options:
a)      Live with mom and dad (I better don’t make jokes as I now living with mom)
b)      Rent (You have no chains on your feet but if rent increases...)
c)       Buy (The bank owns you until you pay off your indenture…) 
We won’t know whether this big ticket decision we’ve made is wise until much later in life… 
Retirement 60s
If food and transport prices are a major concern of yours in your 60s, I guess your main concern is more about the ability and opportunity in working after 65.
For those “luckier” ones, I guess your main concern may be the escalating medical costs. If you have left your private medical insurance decision till now, it will cost you for your procrastination…  You didn’t think your generous company’s health and dental benefits will end the day you retire?
Yes, this is the time all the decisions you have or have not made in your past will come flooding back. Please don’t take it out on CPI. 
For those who are asset rich but cash poor, a little bit of inflation does wonders to your net worth. You have more options than your compatriot who is asset light and cash rich – who maybe now sweating hard to find “investments” that can beat inflation. 
It’s not fun to have spent all your working life “saving” and not getting yourself financially literate by getting your hands wet or burnt – now in your 60s, a misstep here can be fatal… 
Mid-life 40s and 50s
No, I’ve not forgotten us. But at this stage of our life, CPI or inflation could be the last of our concerns. 
This is the time where we are more concerned about non-financial stuffs. 
Like whether we should get a divorce?
It’s the time about affairs and lusts... 
Or whether we should get married and tone down on the focus on career? You are tired…
Some will decide to strike out on their own. If not now, we know we never will!
We question whether we have turned out to be what we envision ourselves when we were young. That’s perhaps why some make mid-life career switches.
We ask is this it?
Are we happy?  
Who cares?
I am not saying inflation or deflation expectations are not important. But empty talk and grousing about CPI will not solve anything.
I repeat: life is about a series of decision points.
It’s what we choose to do or not to do that really counts. 

Singapore Man of Leisure (welcome to my blog; just google it!)
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