What $387m could do for the needy

In a report, Mr Leong Sze Hian reveals that "Only 3,000 people are on the Public Assistance scheme, which pays a paltry 360 dollars (267 U.S. dollars) a month" and that it was "last disclosed in Parliament that, in a year, 50 percent of applicants were rejected." It was also reported on CNA that the government will have spent S$386 million on the Youth Olympic. I shall not comment on whether I think the government should spend this amount of money to host the YOG. But I shall show what the same amount could have done if it were spent in another area, such as helping needy Singaporeans.

To put this amount in perspective, I shall use an example of what it can do for 3,000 persons on a sustainable basis if it were deposited in a CPF account paying 4% interests per year. Since the CPF is what most Singaporeans are familiar with, such an example should be easier to understand. At this writing, the CPF pays an interest of 4% per year for Medisave, Special and Retirement accounts, so I shall take this rate as the basis of my illustration. CPF members are allowed to make withdrawals from these accounts for a wide range of approved investment, healthcare and retirement income purposes.

In the following spreadsheet, we can see how much each of these 3,000 persons could receive in withdrawals every month if:
1) We start with an amount of $387m in the morning of 01 Jan, 2010
2) At afternoon, we withdraw 3.6% of the balance ($13,932,000) and pay it to the 3,000 persons once a month over the 12 months in 2010.
3) With this $13,932,000, we can afford to pay each person $387/month in the year, 2010
4) After making the $13,932,000 withdrawal, the fund is reduced to $373,068,000 at the end of the day, 01 Jan, 2010
5) At the end of the year, on 31 Dec, 2010, this balance accumulates interests of 4%, so it grows to $387,990,720
6) In the following year, on 01 Jan 2011, we make another withdrawal. This time, we withdraw 3% more than what we did in 2010. We withdraw $13,967,666. In subsequent years, we also increase our withdrawal by 3% over the previous year.
7) This allows us to pay each person $387.99/month in 2011. The 3% increment is to cushion the inflationary effects. In subsequent years, the monthly amount that each person may receive also increases in this way, by 3% over the previous year.
8) This fund can sustain itself if we assume an interest rate of 4% and a 3% annual increase in withdrawal and monthly pay-out. 100 years later in 2110, the fund size grows to $499,744,802, from the $387,000,000 it was started with in 2010.

Year	Balance on Jan 01	Withdrawal Amount on Jan 01, starting with 3.6% of $387m (increases by 3% pa)	Withdrawal distributed to 3000, each gets this mthly)	Balance after Withdrawal	Balance plus 4% interests on Dec 31
2010	$387,000,000	$13,932,000	$387.00	$373,068,000	$387,990,720
2011	$387,990,720	$13,967,666	$387.99	$374,023,054	$388,983,976
2012	$388,983,976	$14,003,423	$388.98	$374,980,553	$389,979,775
2013	$389,979,775	$14,039,272	$389.98	$375,940,503	$390,978,123
2014	$390,978,123	$14,075,212	$390.98	$376,902,911	$391,979,027
2015	$391,979,027	$14,111,245	$391.98	$377,867,782	$392,982,494
2016	$392,982,494	$14,147,370	$392.98	$378,835,124	$393,988,529
2017	$393,988,529	$14,183,587	$393.99	$379,804,942	$394,997,140
2018	$394,997,140	$14,219,897	$395.00	$380,777,243	$396,008,332
2019	$396,008,332	$14,256,300	$396.01	$381,752,032	$397,022,114
2020	$397,022,114	$14,292,796	$397.02	$382,729,317	$398,038,490
2021	$398,038,490	$14,329,386	$398.04	$383,709,105	$399,057,469
2022	$399,057,469	$14,366,069	$399.06	$384,691,400	$400,079,056
2023	$400,079,056	$14,402,846	$400.08	$385,676,210	$401,103,258
2024	$401,103,258	$14,439,717	$401.10	$386,663,541	$402,130,083
2025	$402,130,083	$14,476,683	$402.13	$387,653,400	$403,159,536
2026	$403,159,536	$14,513,743	$403.16	$388,645,792	$404,191,624
2027	$404,191,624	$14,550,898	$404.19	$389,640,726	$405,226,355
2028	$405,226,355	$14,588,149	$405.23	$390,638,206	$406,263,734
2029	$406,263,734	$14,625,494	$406.26	$391,638,240	$407,303,769
2030	$407,303,769	$14,662,936	$407.30	$392,640,833	$408,346,467
2031	$408,346,467	$14,700,473	$408.35	$393,645,994	$409,391,834
2032	$409,391,834	$14,738,106	$409.39	$394,653,728	$410,439,877
2033	$410,439,877	$14,775,836	$410.44	$395,664,041	$411,490,603
2034	$411,490,603	$14,813,662	$411.49	$396,676,941	$412,544,019
2035	$412,544,019	$14,851,585	$412.54	$397,692,434	$413,600,132
2036	$413,600,132	$14,889,605	$413.60	$398,710,527	$414,658,948
2037	$414,658,948	$14,927,722	$414.66	$399,731,226	$415,720,475
2038	$415,720,475	$14,965,937	$415.72	$400,754,538	$416,784,719
2039	$416,784,719	$15,004,250	$416.78	$401,780,469	$417,851,688
2040	$417,851,688	$15,042,661	$417.85	$402,809,027	$418,921,388
2041	$418,921,388	$15,081,170	$418.92	$403,840,218	$419,993,827
2042	$419,993,827	$15,119,778	$419.99	$404,874,049	$421,069,011
2043	$421,069,011	$15,158,484	$421.07	$405,910,527	$422,146,948
2044	$422,146,948	$15,197,290	$422.15	$406,949,658	$423,227,644
2045	$423,227,644	$15,236,195	$423.23	$407,991,449	$424,311,107
2046	$424,311,107	$15,275,200	$424.31	$409,035,907	$425,397,343
2047	$425,397,343	$15,314,304	$425.40	$410,083,039	$426,486,361
2048	$426,486,361	$15,353,509	$426.49	$411,132,852	$427,578,166
2049	$427,578,166	$15,392,814	$427.58	$412,185,352	$428,672,766
2050	$428,672,766	$15,432,220	$428.67	$413,240,546	$429,770,168
2051	$429,770,168	$15,471,726	$429.77	$414,298,442	$430,870,380
2052	$430,870,380	$15,511,334	$430.87	$415,359,046	$431,973,408
2053	$431,973,408	$15,551,043	$431.97	$416,422,365	$433,079,260
2054	$433,079,260	$15,590,853	$433.08	$417,488,407	$434,187,943
2055	$434,187,943	$15,630,766	$434.19	$418,557,177	$435,299,464
2056	$435,299,464	$15,670,781	$435.30	$419,628,683	$436,413,831
2057	$436,413,831	$15,710,898	$436.41	$420,702,933	$437,531,050
2058	$437,531,050	$15,751,118	$437.53	$421,779,932	$438,651,129
2059	$438,651,129	$15,791,441	$438.65	$422,859,689	$439,774,076
2060	$439,774,076	$15,831,867	$439.77	$423,942,210	$440,899,898
2061	$440,899,898	$15,872,396	$440.90	$425,027,502	$442,028,602
2062	$442,028,602	$15,913,030	$442.03	$426,115,572	$443,160,195
2063	$443,160,195	$15,953,767	$443.16	$427,206,428	$444,294,685
2064	$444,294,685	$15,994,609	$444.29	$428,300,076	$445,432,079
2065	$445,432,079	$16,035,555	$445.43	$429,396,525	$446,572,386
2066	$446,572,386	$16,076,606	$446.57	$430,495,780	$447,715,611
2067	$447,715,611	$16,117,762	$447.72	$431,597,849	$448,861,763
2068	$448,861,763	$16,159,023	$448.86	$432,702,739	$450,010,849
2069	$450,010,849	$16,200,391	$450.01	$433,810,458	$451,162,877
2070	$451,162,877	$16,241,864	$451.16	$434,921,013	$452,317,854
2071	$452,317,854	$16,283,443	$452.32	$436,034,411	$453,475,787
2072	$453,475,787	$16,325,128	$453.48	$437,150,659	$454,636,685
2073	$454,636,685	$16,366,921	$454.64	$438,269,765	$455,800,555
2074	$455,800,555	$16,408,820	$455.80	$439,391,735	$456,967,405
2075	$456,967,405	$16,450,827	$456.97	$440,516,578	$458,137,241
2076	$458,137,241	$16,492,941	$458.14	$441,644,301	$459,310,073
2077	$459,310,073	$16,535,163	$459.31	$442,774,910	$460,485,906
2078	$460,485,906	$16,577,493	$460.49	$443,908,414	$461,664,750
2079	$461,664,750	$16,619,931	$461.66	$445,044,819	$462,846,612
2080	$462,846,612	$16,662,478	$462.85	$446,184,134	$464,031,499
2081	$464,031,499	$16,705,134	$464.03	$447,326,365	$465,219,420
2082	$465,219,420	$16,747,899	$465.22	$448,471,521	$466,410,382
2083	$466,410,382	$16,790,774	$466.41	$449,619,608	$467,604,392
2084	$467,604,392	$16,833,758	$467.60	$450,770,634	$468,801,460
2085	$468,801,460	$16,876,853	$468.80	$451,924,607	$470,001,591
2086	$470,001,591	$16,920,057	$470.00	$453,081,534	$471,204,795
2087	$471,204,795	$16,963,373	$471.20	$454,241,423	$472,411,080
2088	$472,411,080	$17,006,799	$472.41	$455,404,281	$473,620,452
2089	$473,620,452	$17,050,336	$473.62	$456,570,116	$474,832,920
2090	$474,832,920	$17,093,985	$474.83	$457,738,935	$476,048,493
2091	$476,048,493	$17,137,746	$476.05	$458,910,747	$477,267,177
2092	$477,267,177	$17,181,618	$477.27	$460,085,558	$478,488,981
2093	$478,488,981	$17,225,603	$478.49	$461,263,377	$479,713,913
2094	$479,713,913	$17,269,701	$479.71	$462,444,212	$480,941,980
2095	$480,941,980	$17,313,911	$480.94	$463,628,069	$482,173,192
2096	$482,173,192	$17,358,235	$482.17	$464,814,957	$483,407,555
2097	$483,407,555	$17,402,672	$483.41	$466,004,883	$484,645,078
2098	$484,645,078	$17,447,223	$484.65	$467,197,856	$485,885,770
2099	$485,885,770	$17,491,888	$485.89	$468,393,882	$487,129,637
2100	$487,129,637	$17,536,667	$487.13	$469,592,970	$488,376,689
2101	$488,376,689	$17,581,561	$488.38	$470,795,128	$489,626,934
2102	$489,626,934	$17,626,570	$489.63	$472,000,364	$490,880,378
2103	$490,880,378	$17,671,694	$490.88	$473,208,685	$492,137,032
2104	$492,137,032	$17,716,933	$492.14	$474,420,099	$493,396,903
2105	$493,396,903	$17,762,289	$493.40	$475,634,615	$494,659,999
2106	$494,659,999	$17,807,760	$494.66	$476,852,239	$495,926,329
2107	$495,926,329	$17,853,348	$495.93	$478,072,981	$497,195,900
2108	$497,195,900	$17,899,052	$497.20	$479,296,848	$498,468,722
2109	$498,468,722	$17,944,874	$498.47	$480,523,848	$499,744,802
2110	$499,744,802	$17,990,813	$499.74	$481,753,989	$501,024,148

Using the above assumptions to illustrate, with $387m, we could provide 3,000 needy people with a monthly income of $387+3% increment every year perpetually.