Sunday, May 19, 2024

Better alternatives to Early Retirement


I had much to think about this weekend because we just had a secondary school reunion. I did not intend to attend the event initially because I didn't know how to pitch my "lifestyle choice" within such a short timeframe. I need to use mathematics to explain how I could foot off the pedal 10 years ago, and it might get as awkward as the last family gathering I had. But because my cohort over-ordered table tickets and folks talked about sharing the cost of unsold seats, I threw my hat into the ring because I was free that evening. I should catch up with my secondary school classmates entering their 50s this year. 

As it turns out, quite a few folks follow me on this blog, CNA's Money Mind, and my material on YouTube, so there's no need to explain it to them. Still, folks in their 50s are now contemplating whether they can just stop work, so I had to tell them not to do anything rash unless their investments exceed 300 multiplied by their monthly expenses. Even so, I told them about the awkwardness and the loss of personal identity I faced when I gave up on regular employment, and even turning myself into a lawyer did not fully solve that issue. 

But I did not prescribe too many specifics. My classmates are successful in the corporate world but stuck with the skillsets they have honed over the years. If they need to get out, I suggest they find something passionate about first. 

This brings me full circle to what I am currently doing with my life.

I'm actually doing some kind of reverse FIRE. 

In the past, I struggled hard to get my passive income to exceed my expenses with some legroom so that I could do something else with my life instead of just accepting what my workplace offered me. But I stayed on for 7 years after financial independence because I enjoyed my work. It took a stint out of the public sector work to make me throw in the towel, and by then, my dividends had exceeded my take-home pay. 

As business is terrible, I'm struggling to do the opposite.

I'm seeking part-time gig opportunities to supplement my business income and live on my earned income. This number is below my family expenses, including mortgage payments, so I must use up a small part of my passive income to keep everything sustainable.

Of course, I have set some ground rules for my work. 
  • It has to work where, psychologically, the positives of work outweigh the negatives. 
  • It should also not touch weekday office hours because I consider my daily afternoon nap and swim one of the biggest positives in my life. 
As it stands, this is a challenging goal. 

If I succeed, I can pay all my expenses with passive or active income. My active income will only be earned at night or over weekends, and my engagement with clients and stakeholders must be positive and make me look forward to doing the work.

So, I think I might be able to make this arrangement work if interest rates start going down before the end of the year and I add another gig to my current list of engagements. 

If rates stay higher and longer, I might have to bite the bullet and start selling my weekday time to meet my objective.

But I will miss the afternoon naps if I do that.

Wednesday, May 08, 2024

Deeper thoughts about FIRE


I just wrote a basic article on FIRE on the Dr Wealth website. You can read it here.

This article allows me to share miscellaneous thoughts on the topic that might not be appropriate for a primer on the movement.

a) Why did FIRE splinter into so many variants?

I had the same questions when I first read about Barista and Coast FIRE - both movements do not eschew the working world altogether, so they are short-cuts at best and half-baked ideas at worst. But I'm convinced that very few folks will complete the journey over time. FIRE influencers are overwhelmingly Tech or Finance professionals, and the MBTI personality type that dominates the movement is a rare INTJ type that is less than 5% of the human population.

So, some kind of moderation to create a form of FIRE for ordinary humans is inevitable. Even my challenge to ask my students to set aside $24,000 to generate an average of $100 a month in dividend income is quite challenging to some. 

b) Does FIRE threaten the financial industry?

If FIRE does not threaten the livelihoods of commissioned FAs, we are not doing FIRE correctly because we can save 2-3% in fees when we invest directly using a low-cost broker. I think the financial industry understands this point, and I'm detecting many "dog whistles" to that effect. 

An increasingly common strategy is to ask whether people make personal sacrifices regarding FIRE. Talking about some folks' relationships or appearance is also a low blow. Another approach is to "forgive" and "give permission" to others to start saving later in life. More complicated strategies will pick on a person's inheritance. 

It's all an attempt to convince folks not to start, but it ignores how much freedom a person can achieve with even $100 in passive income a month. 

c) Does FIRE threaten policymakers?

If done correctly, policymakers should actually promote FIRE. A severe practitioner will have to work really hard and maybe hold multiple jobs to get a credible portfolio running before they reach the age of retrenchment. 

There are certainly worse movements that are gaining more traction, such as the idea of lying flat.

d) What can policymakers do to make FIRE less attractive? 

Actually, policymakers threatened by this movement can take welcome steps to make FIRE less attractive in Singapore society. 

I can imagine myself continuing working on a statutory board today if some really toxic managers did not exist because I liked IT work, and I have no issues going to work even with a passive income of $20k+ a month. I'd like to hang out with friends in the office, too. 

If you want to blunt the impact of FIRE, we need to take further steps to make Barista FIRE a reality. More work from home, flexible work arrangements and a four-day workweek are a good start. I don't think you can remove the assholes from the government offices or any corporate HQ overnight, but creating a means to minimise contact with these people and creating outcome-based work objectives will help immensely. For me, the potential for AI is to require less middle managers so assholes will be stuck in individual contributor roles. 

Suppose a double-first from Cambridge prefers a life as debating coach rather than a path to say, the Admin Service, I'm not really interested in his choice of FIRE - I want to know specifically what kind of Ministry culture will drive him to freelance instead of becoming an Elite.  

e) Are there viable alternatives to FIRE?

Every successive generation of folks will reach adulthood and get their shit together at a much older age. They will also become more individualistic. This is a common trend from Boomers all the way to Gen Alpha. 

I'm seeing younger Millenials and Gen Z taking up a gap year after years of work to travel or do whatever they want. This is a viable alternative as they effectively separate their retirements into multiple parts and enjoy small bits of it when they are young. 

My generation will not do this because it can taint our resumes. 

But HR will be unable to do anything if every young Singaporean aspires to this lifestyle. Just like the CCP will note able to do much if every young person in China starts to lie flat. 

I actually love what young people are doing here when it comes to lifestyle design, I welcome credible alternatives to FIRE and love hearing about them. If done collective as a population, the working world can become a much better place even for older folks like me. 

Thursday, May 02, 2024

Strengthening the case for dividends investing


Interestingly, folks are still publishing books on dividend investing since most of the top-performing stocks in the US are tech stocks that give tiny payouts to investors. Daniel Peris is one of those rare authors who are still trying their best to push dividend investing in the US despite multiple decades of very ho-hum performance.

First, he admits that dividend investors have become underdogs in the US. He has, in fact, placed his bets that with higher interest rates, a new trend will emerge where US companies will eventually clarify their dividend policies and increase payouts to appease investors in the future. This is an incredible leap of faith, but he has great arguments for this.

When arguing for investing based on dividends, the first hurdle is Modigliani and Miller's Dividend Irrelevance Theory, which, over the years, has generated enough influence to get company bosses to dispense with dividend payouts entirely. Furthermore,  tax authorities who apply a different rate to dividends and capital gains taxation make this worse. Peris found academic arguments to counter M&M, citing the stability of dividends as a reason why it remains a good factor and putting M&M within the context of a different economic era where free cash flow is often negative.  

With the big argument out of the way, it's easier to understand why dividends have underperformed. A stock that returns dividends to shareholders retains lower earnings and would appreciate in price less than a stock that keeps its dividends or performs a buyback despite the same business performance. But there's a lot of pressure for growth investors to stay vested, as the lack of dividends means more volatility and a nasty drawdown if the growth thesis fails later. 

At the end of the book, I suspect that Peris is nostalgic. He wants the stock markets to return to an era where investors place their assets on well-run businesses and companies. In this current era, speculators bet on technology trends that push the markets higher and higher, allowing ridiculous PE ratios to take root in the US.

This is the same fantasy in the hot Japanese Anime Frieren. 

Frieren, possibly the best anime of late, invokes the same fantasies, where Fern uses only the basic offensive magics to defeat all the mages of this era. I had to make this reference as I just completed watching this series with my son. 

Strangely, the Singapore market is precisely what Peris desires. In Singapore, you find our local public companies being carefully focused on a good dividend policy and selling stocks at current PEs of less than 10. If you attend AGMs, that's what the boomer uncle investors really want. 

They just want to get paid and eat an excellent buffet simultaneously.

I am currently testing a few screens based on the book. There is some outperformance, but Sharpe ratios are around 0.5 at best. 

Always good to have a lab to test assertions.

Friday, April 26, 2024

Wisdom from "Useless" books

Folks who wish to read up on my financial insights will need to wait a while as I'm having multiple headaches trying to maintain my business, so I'm thinking about my finances a lot. It's just not something I can arrange neatly into a blog article at the moment, I might actually be in crisis mode. 

At the moment, I'm gradually tilting my reading into less practical territory. As I spend hours on a bus to teach evening classes in faraway lands, my reading speed has increased quite a bit, and I have to moderate the pace at which I read the helpful programming, finance, and law stuff I tend to be more obsessed with. Of late, I think that I'm getting some applicable "wisdom dividends" from the stuff I'm reading, so I'm sharing them here. 

a) The Way Home by Ben Katt

The first unusual book I read is The Way Home by Ben Katt. It's not easy to empathise with the author because I find his life very rabak. Imagine spending your entire life serving a Christian ministry, then having a mid-life crisis after experiencing the bigotry of your faith and feeling envious of peers who actually earn more because they built conventional corporate careers. The solution to this mid-life is worse, involving spiritual guides and vision quests and communing with a Jaguar spirit animal. Stuff worse than an RPG splatbook about D&D druids. 

Surprisingly, the book broke my creative impasse, as I've run out of ideas to sell my course on operating and tuning your own robot advisors. Ben Katt's idea is to reimagine himself as a protagonist in his mid-life crisis hero journey, and I thought I could do the same in a future review. To do that I need to take a much closer look at Joseph Campbell's Hero of a Thousand Faces

If this does not turn my business around, it should put me in good stead when markets recover much later. 

b) It's Okay not to look for the Meaning of Life by Jikisai Minami

This is another unusual read which I was only willing to pay for because my son won some awards last year, and I brought up his Popular vouchers from him in exchange for fiat. 

The author is a Zen monk, but I thought he was a troll like me. The book starts out quite nihilistic, as he dismisses the need to have any meaning in life and then proceeds to argue that it's okay not to have hopes and dreams. ( And it's all well reasoned stuff )

Eventually, I warmed up to him as he shared some insights I couldn't get in Western works. 

His best idea builds on the theory that there is some kind of relationship that is neither friendship nor family. This is someone you can talk to about your personal problems for hours on end without violating personal boundaries or exacerbating existing tensions. A shrink cannot do this because therapy is expensive and based on the hour, and only rich people would hire a lawyer to do this.

This is where a religious figure can play the role. but the best part of the book warns against the religious figures we meet in our daily lives. A good spiritual advisor will not interrupt your questions, will not claim that they understand you, will not talk about money ( thus ruling me out ) and will not brag. Also avoid anyone who claims to want you to "become one with the universe".

 I devoured the book in two hours and I find Zen Buddhism refreshingly down to earth and kinda brutal in a kind sort of way.

c) A Travel Guide to the Middle Ages by Anthony Bale

So I got lucky with two "useless" books, I'm just sharing my next one which I have yet to finish. Some guy decided to piece together historical travelogues to imagine what a travel guide in Europe during the Middle Ages was like. 

I think it's a safe bet that I will enjoy this because it features Constantinople, which I visited last year. 

At the very least, it can become a useful sourcebook for my RPG hobby.

Something has to give to allow me to engage in more reads. I have already reduced my personal engagements due to the sheer volume of work that I fully intend to intensify all the way to 2025. 

The only casualty I have so far is that I'm reducing the amount of binge-watching. I'm just watching Frieren because my son has developed quite a liking for it.

Saturday, April 20, 2024

Friendly Career Update


Maybe I'm lucky this year, but I got some free training that is more useful to my freelance training business than the institution providing the training. Still, only because the training is meant for folks lecturing older teenagers, but my work involves training adults. But if free training falls into my lap, I will not squander it, and I've spent a lot of time reflecting on how I can improve my materials. 

The fundamental problem is that I think many educators specialise in pedagogy, but I earn a living doing andragogy, a shiny new word I just learned a couple of weeks ago about teaching adults. 

I suspect that many folks don't practice andragogy at the moment, so with enhancements to mid-career training coming online as an ersatz welfare system, I'm probably at the vanguard of another life-changing sunrise industry. If I ride the wave, it will not matter if dividends fall out of vogue; I will be able to sustain this career-lite knowledge-intense lifestyle until the markets get well again. 

Some points for myself as a parent and instructor paid by direct customers and now tax-payers :
  • The doctrine that says adults are more motivated learners is BS in a world where taking diplomas can earn a meaningful allowance. It falls to the instructor to motivate them to pay attention. 
  • ERM instinctively got it right five years ago with diagnostic assessments, online pop quizzes and real-time feedback via apps.
  • Coming up with a hook and a narrative is essential, although I need to improve myself at this. I only use previews in private-sector work where I have to sell. 
  • My peers don't like smart alecks in class, but I'm happy to trade away my boomers with smart alecks anytime because they often can detect poorly made lecture materials and sharpen your wits as a practitioner. 
  • If a class polls heavy introversion, they will often be very grateful if you give them online means to interact with the class materials rather than call them out to embarrass them.
  • At a personal level, I find it hilarious that I can now discuss high-falutin ideas like Bloom's Taxonomy and Gagne's 9 events with actual MOE trained philosopher kings. 
I'm doing my own bit at being a radical within the system. I'm injecting 2 to 3 slides on how adults can learn to study in my training program and tying it to my official materials. I openly tell my students to put their opinions on the feedback poll at the end of the semester. 

This explains why my blog is not getting updates as often as I would like. 

I'm finally feeling a good kind of busy where my work makes a difference and is remunerated accordingly. After attaining Financial Independence, I've searched for that mysterious "third gear lifestyle" that eludes many Barista FIRE practitioners. 

Wednesday, April 10, 2024

Will FIRE's enemies grow stronger?


It's been a tough stretch and I've not been writing as much as I wanted to. This week, I've been attending training, which has benefited my trainer role. Over the weekend, I've got another run of courses to conduct. Last week, I was fortunate to participate in the Seedly Personal Finance Festival.

I'd just like to pen my thoughts on personal finance because recently, we've seen a few high-profile retirements in Singapore.
  • First is a Rice Media report on 31-year-old Ashish Kumar, a top scholar who quit Ministry work to run his debate coaching business.
  • Next is gold medallist Joseph Schooling retiring from the competitive swimming arena.
  • Finally, my favourite comedian actor, Henry Thia, talked about reducing the number of acting projects and entering retirement mode. 
While I've yet to follow the recording of our Manpower Minister, it seems, from third-party mumblings I have yet to confirm, that Tan See Leng is also suggesting that people find greater meaning in their work instead of doggedly pursuing financial independence. This intrigues me because for a Minister to say something, the scholar machinery needs to come up with and vet the speech's contents.

It points to the possibility that our local elites are becoming more familiar with our subculture.  

Finally, for my own panel on Saturday, we can clearly see that financial institutions are struggling with the idea that FIRE is catching on with Millenials and Gen Z. I can only inform readers to look out for the recording of my session and see the results for themselves. I sense an attempt to paint FIRE as a great sacrifice, and folks who do this are missing out on a lot of fun in life. This conveniently skips the consequences of not at least trying FIRE out, which tends to be the subject of many financial discussions in the past.

So, my question for readers right now is: Is Financial Independence such a dangerous idea that both the public and private sectors are concerned about its adoption among the masses?

I won't comment in detail as I'm waiting for Seedly's recording to come out. I want to hear the speeches myself.

I imagine that if FIRE came under the government's radar, parallels would be drawn with my poet friend Gwee Li Sui's Op-Ed in the New York Times, which drew a rebuke from the PMO for promoting Singlish. 

Finally, I'll share something I decided not to say on the Seedly PFF as it might become misunderstood. Initially, I wanted to paint the FIRE movement like the Fremen in the Dune 2 movie. Many of us are finance fanatics who have truly optimised our financial resources, like the way we recycle water in our stillsuits. 

If you tangle with FIRE, you might be tangling with a bunch of financial zealots. 

Friday, April 05, 2024

A question of Two Apples


I've been keeping up with this blog less than I liked because I am entering a busy stage in my life. This week, I did a webinar with Havend, with whom I signed an Introducer contract. I'm also involved in a Seedly panel tomorrow on FIRE. Next week, I have an entire week of training to attend, where I'm actually the student, which should be fun. This means fewer updates in the next few weeks. 

I am writing articles now that I should have written weeks ago. 

If you can catch this movie YOLO, I suggest you do so because it's one of the rare gems coming out of China that is neither patriotic nor involves loads of CGI. In fact, it is one of the more motivational movies out there that successfully captures the angst of modern China.  

One fairly sweet moment in the movie concerns the philosophical question that was directed at the protagonist :

If you have two apples, one large and one small, and your friend wants an apple from you, do you give up the big or the small apple?

If you are most folks, you might give up the small apple and keep it for yourself. This preserves the Big Apple for enjoyment, but some folks are inclined to give up the bigger fruit because they see themselves as caregivers. 

The movie reveals that the protagonist sees herself as the kind of person who would give up both apples, to which her dad replies that this would mean that she would have friends. The scenes following that revelation were quite heartbreaking to the audience.

I don't want to spoil the movie, but from my point of view, anyone who gives up both her apples sees herself as a martyr—someone who actively sacrifices her own personal interests for others. This is an inherently unsustainable position, very antithetical to Ayn Rand's ideas.

Interestingly, scenarios where no apples will be given to the friend are missing from this philosophical discussion.

In what situation does this friend deserve a single person anyway? That may turn on whether this person is a giver or taker of apples in the first place.

For me, my default position is that no apples will be given. 

Apples should be earned. 

But folks like me who refuse to give up a single apple will naturally be the villains or bad guys in every movie. 

But I don't care because I might be very good at utilizing my apples. I can bake an apple pie for my family and preserve some apples for rainy days. More importantly, I plan to plant the apple seeds, and a generation later, my descendants can have their own apple farm. 

Whether my descendants will give up, and apple for their friends will be moot because they will have enough apples to feed the whole town. 

All because I started out by refusing to give my apples away. 

The Mainland Chinese would obviously want to celebrate the sacrifice of their women and immortalize it in a movie. 

Still, it does boil eventually to what you plan to do with your apples. 

Socialism with Chinese characteristics may not align itself with Capitalism with Singaporean characteristics.