Infographics SG-financial advice (Cover) (6)

Is Ride Hailing Or Buying A Car More Economical In Singapore?

The high costs associated with owning, running, and maintaining a car make it a luxury in Singapore. However, more people are choosing ride-hailing platforms services over having a car, as these services like Grab and Gojek gain popularity.

When would it be more cost-effective to buy a car in Singapore than to ride the cab every day?

Singapore is renowned for its expensive cars. In 2017, the average cost of a car in Singapore was over S$106,000, making them 4-5 times more expensive than those in the US or Korea. Singapore holds the unenviable title of having the highest car prices globally, largely due to factors like the Certificate of Entitlement (COE) system and various taxes.

In light of these exorbitant costs, the question arises:

Is it genuinely more cost-effective to rely on ride-hailing services like Uber and Grab instead of owning a car in Singapore?

A recent analysis conducted by the Value Champion challenges the conventional knowledge, revealing that the daily expenses associated with ride-hailing might be comparable to the overall costs of buying a car.

According to the research, owning a Car = Riding on Grab or Uber = S$15,000 to S$16,000 of Cost Per Year

A survey by the Land Transport Authority of Singapore found that the average car travels about 17,500 km annually, or about 4 trips of 12 km each. Considering that the most common car in the country is the Toyota Corolla Altis 1.6, driven by an average person. This specific vehicle gets 15.4 km/liter (6.5 liters per 100 km).

In the study, the following major expenses are taken into account in order to determine the cost of owning this car and driving 17,500 km annually: the purchase price (S$104,995 / 10 years), the annual car insurance premium (S$900, assuming a 50% no claims discount), the annual maintenance cost (S$600), the road tax (S$740), and the cost of gasoline (S$2,341). This adds up to an approximate annual cost of S$15,000 for personal vehicle ownership.

Please be aware that while these factors can differ significantly from person to person.

On the other hand, 4 factors were accounted to calculate the equivalent cost of using grab or uber in Singapore: number of trips, base fare, Grab and Uber’s cost per mile and cost per minute. In the study, they assumed 1,460 annual trips, which is about 4 trips per day and 12 kilometers per trip, which is the average for private cars. Furthermore, they assumed that a distance of 1 km can be covered in an average of 1.2 minutes, or an average speed of about 50 km/h (the average speed on expressways is 60 km/h, and the average speed on arterial roads is 30 km/h). The combined cost of both services came to about S$16,000.

Cost Analysis:

Upfront Costs:

The high cost of obtaining a COE and additional taxes makes purchasing a car in Singapore a substantial financial commitment. Ride-hailing, with its minimal entry barriers, appears to be the more financially accessible option. However, when spread over time, the daily expenses of ride-hailing services may closely align with the upfront costs of car ownership.

Operational Costs:

While ride-hailing eliminates maintenance, fuel, and parking expenses, the per-ride charges can accumulate rapidly. Surge pricing during peak hours or adverse weather conditions can significantly impact the overall cost-effectiveness of using ride-hailing services. Car ownership, with its fixed monthly costs, may prove to be a more stable and predictable financial investment over time.

Depreciation and Resale Value:

Singapore’s high car prices also mean rapid depreciation, especially considering the limited lifespan of COEs. Ride-hailing users, however, are shielded from concerns about the depreciation of a personal asset. With this, the long-term financial outlook for car ownership might be more favorable than buying a car.

Environmental Considerations:

Sustainability:

With an increasing focus on environmental sustainability, the type of vehicles used for ride-hailing becomes a crucial factor. Some ride-hailing platforms offer eco-friendly options, aligning with Singapore’s green initiatives. However, the overall environmental impact of a fleet of ride-hailing vehicles versus individual car ownership remains a subject of debate.

Congestion and Urban Planning:

The convenience of ride-hailing services might contribute to reduced traffic congestion, aligning with Singapore’s urban planning goals. On the flip side, owning a personal vehicle provides the flexibility to travel without relying on the availability of ride-hailing services.

Conclusion:

It’s essential to note that the comparison between owning a car and using Grab involves considering both the fixed and variable costs associated with car ownership versus the pay-as-you-go mode of ride-hailing. The specific costs can vary based on individual circumstances, such as the frequency of car usage, preferred vehicle type, and personal preferences.

The decision between owning a car and opting for ride-hailing services involves a careful evaluation of economic, environmental, and practical factors. The annual costs, estimated between $15,000 and $16,000, bring both options to a level playing field, challenging preconceived notions about the affordability of car ownership.

The allure of ride-sharing extends beyond financial considerations. The added benefit of being a passenger instead of a driver during your commute cannot be overstated. With the freedom to relax or be productive while someone else takes the wheel, the value of time becomes a tangible asset. While waiting for a ride may introduce a slight inconvenience, it’s a small price to pay for the comfort and convenience offered, especially when compared to the routine trek to and from a parking lot.

Infographics SG-financial advice (Cover) (6)

Why Working Longer Is a Bad Retirement Plan

Working longer, as in extending one’s career beyond the traditional retirement age, is often seen as a smart financial strategy. After all, it allows us to save more, delay tapping into our retirement funds, and keep a steady income stream. However, working longer is not always a wise plan, you can’t count on it as a strategy.

When it comes to retirement age, there’s a big gap in expectations versus reality. There’s a possibility that we retire earlier than planned — due to factors beyond our control, such as poor health or job loss.

Health and Well-being Concerns

The idea of working longer assumes that one’s health and vitality will remain consistent throughout our extended career. Unfortunately, as we age, our physical and mental well-being may deteriorate. This can result in decreased productivity and job satisfaction, making our latter years of career less enjoyable and fulfilling. The stress and demands of work can take a toll on our overall well-being, potentially leading to burnout and health issues.

Stifling Personal Growth

The pursuit of working longer can hinder our personal growth and exploration. Retirement presents an opportunity to focus on one’s passions, hobbies, and interests that may have been neglected during the working years. When we delay retirement, we miss out on the chance to explore new avenues, travel, and spend quality time with family and friends. In essence, we are sacrificing the experiences that make life rich and meaningful.

Impact on Job market

Working longer may have unintended consequences for the job market. The longer we stay in the workforce, the fewer opportunities there are for younger generations. This can lead to increased competition for entry-level positions and reduced upward mobility for younger workers. It also hinders the transfer of knowledge and experience from older to younger generations, which is crucial for organizational growth and development.

From a societal perspective, working longer can strain pension and social security systems. As more people delay retirement, the financial burden on these systems increases, potentially jeopardizing the financial stability of future retirees. This, in turn, may lead to policy changes or reduced benefits for those who need them most.

Conclusion

In conclusion, while working longer may seem financially prudent, it can come at the cost of personal well-being, hinder opportunities for personal growth, affect the job market, and strain social support systems. While there are cases where extended careers make sense, it’s essential to consider the broader implications and explore alternatives for a more balanced and fulfilling retirement. Ultimately, one’s golden years should be about enjoying life, pursuing passions, and spending time with loved ones, not just working to accumulate more wealth.

1

Saving for Retirement: 3 Reasons Why It’s A Loving Investment For Your Future and Family

Retirement is often viewed as a distant destination on life’s journey, a time when you finally get to relax and enjoy the fruits of your labor. However, it’s more than just a personal milestone; saving for retirement is an act of love. It’s a gift to yourself, your family, and future generations. In this comprehensive article, we will explore three compelling reasons why saving for retirement is a profound and selfless act of love.

1. Ensuring a Secure Future for Your Loved Ones

One of the most powerful reasons to save for retirement is to provide financial security for your loved ones. Imagine a future where your children and dependents don’t have to worry about your financial well-being. By taking responsibility for your retirement savings, you ease the burden on those you care about.

Relieving Financial Stress: As you age, the last thing you want is to become a financial burden on your family. Saving for retirement ensures that you can take care of yourself, reducing the stress and pressure on your loved ones.

Leaving a Legacy: By saving wisely, you can leave a lasting legacy for your descendants. It’s not just about passing on wealth; it’s about gifting them a sense of financial security and responsibility. Your retirement savings can fund their dreams, education, or future endeavors.

2. Providing Peace of Mind for Yourself and Your Partner

Retirement savings aren’t just about others; they also benefit you and your partner. The sense of security that comes from financial preparedness can greatly impact your emotional well-being and your relationship.

Emotional Well-Being: Knowing that you’ve saved for retirement brings peace of mind. It allows you to focus on living your life to the fullest without the constant worry of financial instability.

Strengthening Relationships: Financial stress can strain relationships. By securing your retirement, you’re demonstrating your commitment to a worry-free future with your partner. It’s an act of love that can foster trust, happiness, and a deeper connection.

3. Leaving a Legacy for Future Generations

Saving for retirement isn’t just about maintaining your own lifestyle; it’s about creating opportunities for future generations.

Passing on Wisdom: Your retirement savings represent a lifetime of financial decisions and learning. Sharing your knowledge with your children and grandchildren is an invaluable gift. It empowers them to make wise financial choices, continuing the cycle of financial well-being.

Supporting Future Dreams: Your savings can fund your family’s aspirations, whether it’s starting a business, buying a home, or pursuing higher education. By ensuring financial stability, you enable your loved ones to chase their dreams.

Conclusion

In conclusion, saving for retirement is more than a financial endeavor; it’s an act of love. It provides financial security for your loved ones, peace of mind for yourself and your partner, and leaves a lasting legacy for future generations. It’s a gift that keeps on giving, fostering happiness, trust, and financial well-being within your family. So, start saving today, not just for yourself, but as an act of love for those you hold dear.