Happiness and FIRE

 

When I made my first $100,000 and published my first book over a decade ago, the level of sophistication in self-help was not too high and I have to deal with this retort about why someone should accumulate so much money if he/she just wants to be happy in life. 

Now back then, I did not have Adlerian psychology or the DISC personality framework to break down the point raised, so I ended up reading a lot of self-help literature of happiness.  The problem with doing that in the 2000s is that there is little data on happiness and some authors thrive on writing useless drivel based on generalities derived from personal experience. 

We're now in the 2020s and I am happy to report that a team of academics have written The Origins of Happiness. This is not a book for the intellectually light-weight who thrive on the works of Deepak Chopra. You are more likely to enjoy this piece of work if you are mildly autistic because it is almost written in the same style as a book on factor investing. Instead of breaking down investment returns, it tries to ask the question of what makes us happy and even makes a case for policy changes. 

I leave the details to you guys to read the book. I want to focus on how I might change my approach to FIRE with insights on happiness.

a) Singles who FIRE may want to get married and then restart the FIRE journey as a couple

A significant number of FIRE aspirants are single, anime-loving guys, who do IT. As the study shows a significant shift in levels of life satisfaction when they become partnered. It may not be wise for a single person to try to maintain FIRE by staying single and keeping expenses low. The study even extends to old age and shows that loneliness is not just damaging to personal happiness but a major cause of death in modern societies.

Financially stable people make generally good matches, but I've been seeing a lot of single guys think that they are not financially stable enough. I think a guy who FIREs may be single for reasons beyond money. Like a friend said," Your fuck you money may just be a big FUCK YOU from the women who meet you. Got this amount of money also nobody want!"

It's harsh but can be true. 

b) FIRE should never be a reason to quit employment, although you are now free to change employer

What surprises me in the study is the effect of unemployment on life satisfaction that is disentangled from income. Unemployment can really your self-esteem and levels of life satisfaction. The effect is so high, rather than suggest minimum wages or Universal Basic Income, society may be better off creating jobs of last resort and making employment a basic human right. Another aspect that makes unemployment special is that it has a scarring effect. If someone is unemployed for a while, the unhappiness lingers even if he gets employed later.

I think the major takeaway is not to flip-table with your boss the moment you FIRE. A lot of unhappiness at work can be swapped away with a job shift may be at lower pay. If there is no dissatisfaction at work, maybe you should keep plugging to grow your investment income instead. More money does not hurt. 

c) Higher income makes you happier, but not significantly so

This aspect of the study is the most interesting. Income has a positive effect on life satisfaction, but it is so low that we're better off dealing with unemployment as a society instead. The regression models employ the logarithm of annual income and still, the effect on life satisfaction is small. Policy-wise, throwing money at hippies to make society less unequal does not do much for the happiness levels of the population. Better to give these hippies decent jobs. 

As such, I believe that the multiple degrees of FIRE like Barista FIRE or FATFIRE may not move the needle compared to the simple fact of being able to live on investment income to insure against an unemployment event. The additional boost to annual income hardly makes a dent on life satisfaction.

All in all, when it comes to everything about Life and Happiness, one simple rule to follow.

People are happy when they feel useful and needed by society. 

Don't lose track of this track in your FIRE journey. 

 

 

Why guys get defensive when women accumulate $100,000 at a young age

It's almost a tradition or a cost of entry for a financial blogger to talk about how they attained their first $100,000 as some kind of perverse freshman orientation into the world of financial blogging. I'm glad to played a small part in starting this trend when I authored Growing Your Tree of Prosperity over 15 years ago when I documented my own journey. 

When I turned my $100,000 into a self-published book and parlayed it into a feature on the Sunday Times, it was not cool. Some thread on EDMW racked up 128 pages with most postings from fellow Singaporeans cussing me for meeting my financial target.

Some folks want an idea of how my thoughts have evolved on this matter you can refer to the following links on my blog :

• In 2015, Budget Babe met the $100,000 challenge and I wrote about it here.
• In response to an increasing number of Deci-millionaires, I wrote an article on how to frame your thinking about this phenomenon here.

Back to the present day.

Denizens of the financial social media forums were given a treat when MissFITFI posted a video on how she accumulated $100,000 on her social media webpage. The thread racked up a firestorm of comments and, to an old veteran, I am now more interested in the folks who gave comments in the major finance FB forums. 

I would characterise responses to the following categories:

a) Well-wishes from the veterans and FIRE regulars 

Without applying any analytics, I noticed that there is small population of well-wishers. My personal guess is that those who are well-wishers have generally high self-esteem. 

These folks tend to FIREd many years ago and most already have families. If I make a guess, guys with daughters will be more encouraging when he sees a female financial blogger succeed. This is mirrored in the corporate world where leaders with daughters tend to be more willing to promote capable female employees.

Sadly, I think that well-wishers are a very small minority in this case.

b) Folks who wonder why they do not have $100,000 before they are 30  

Interestingly, I noticed through my own journey is that articles of this nature tend to trigger a lot of self-examination and a large number of these responses are personal justifications of why the person did not have $100,000 at before age 30. 

This is exceptionally interesting to me because in all cases, the original poster does not write an article to disparage other people but to just share one data point on their own journey. It is not in our pay grade to explain why some folks are not there. 

Adlerian psychology would be a useful framework at this state because most responses talk about things like because they served NS, could not get into a University as reasons. This is pure Freudian etiology at work. I would venture that NOT achieving $100,000 is a goal because most people have a GREEN personality and FIRE requires life adjustments that too uncomfortable and way worse for Millenials who do not have the same opportunities as older generations. No one who enjoys inertia and the status quo will ever go through the process of trying to obtain $100,000 before reaching 30. 

There is simply too much good food to eat and too many Thai discos to visit.

c) Misogynists, BBFA and assorted Gamergate beta males 

MissFITFI had a private conversation with me last night on why female bloggers tend to be targetted with more hate. After that conversation, I went to the other bigger forum to read the comments and it was really toxic as hell. Some guys were complaining that her presentation was too stilted, others criticised her portfolio. Worse, these guys are noob beta males because there were no real suggestions on ho to improve.  

My first reaction was that men generally can't handle a successful woman, so this is expected. Then I realised that those Millenial men probably don't hold back these days because of things like Gamergate. So I told MissFITFI that she's like an ace Fortnite gamer who just happens to be a girl and you can go read about the amount of harassment female gamers receive on the web.

Here's the thing on Gamergate. Social scientists discovered that elite male gamers are generally quite welcoming of female gamers into their communities. It is the lousy male gamers who find all sort of ways to put them down. 

I also suggested to MissFITFIT that she never meets her guy critics. I recall an article interviewing successful women on why they do not like dating beta men who earn less than they do. It's not because they look down on them. It is because of the tendency for beta men disparage these successful women to buff up their own self-esteem making such relationships extremely toxic.

So, in summary, nothing has changed since I made my first $100,000 so future financial bloggers should be mentally prepared to receive brickbats when they talk about their journey. 

But I think they should do it anyway and monetise the eyeballs if they can. 

 

 

What, IMHO, is the most important thing about Entrepreneurship?

Just the other day, something funny happened to me. 

A few days ago, I was supposed to meet a friend for lunch at SMU, after meeting me, she asked me to do a quick video to answer twenty questions for her colleague. Naturally, I would do anything to promote my business, so I eagerly agreed. ( Having learnt that sometimes in life, it's often better to say YES than to say NO - unless it involves investing money. )

I was given a minute barely a minute to glance through the questions and then the recording began. 

It's probably not wise to share the details of the twenty questions discussed as it might be a pleasant surprise later if it ever sees the light of day, but I felt that if I had prepared for the event (like in radio interviews) I would have said something more politically incorrect.

The truth is that I'm probably not a coachable guy and basically run a single-person start-up. I do not know what capital I need because I have relatively strong cash flow even in a pandemic year and have always bankrolled myself. What I am looking for may not be something an incubator can offer - access to some high-converting groups to provide free finance talks that I cannot normally reach in my previews. 

( I've even highlighted that SAF regulars about to retire and SIA pilots are a demographic I would really like access to. )

So I thought perhaps I can share my opinions on entrepreneurship which I would have like to have said in a candid interview. I'm sure a seasoned startup entrepreneur might disagree with me, but given what I have seen so far, these are my thoughts at the moment.

The fact is that entrepreneurship and founding a start-up has such a ridiculously low rate of success, it can't possibly be the road to riches for the folks who are involved in it. I suspect some founders are founders because they are not employable like myself. Even though the successful cases do wind up billionaires or multimillionaires, startup founders are better off thinking about other forms of motivation.

So if the motivation is not about money, what other possibilities can a fledgeling boss strive for?

For me, I think it is about freedom and control - Autonomy from reporting to an overlord or kowtowing to someone like the rest of the folks who work as employees. To many Singaporeans, they think they work for idiot bosses. To validate this opinion, some Singaporeans should work for themselves to see whether they can do better. 

Now, if the motivation is about freedom and not billions, then the most important thing about entrepreneurship is not about a grand vision or a dream which I see too often when founders speak. I was stunned when I hear of founders who can barely even explain their business idea open their mouths to ask for a million dollars. 

Which planet do they come from? Who actually opens their wallet to these pitches? 

On the other hand, I have to sell each of my seminar tickets previews by preview. Building a working product that can sell takes years, and you need to balance a strong marketing campaign with a product that can solve a problem for your clients. The only way for me to ask for money is that I have the means to multiply it. 

So I think if you put a degree of emphasis on freedom, you'd think differently about the business you want to run.

I think if you ask for a $1M and actually do get it, I think the VC would want a degree of control over your performance. You will be using the money to hire people and, in a sense, be held responsible for their well-being. If you have a co-founder, you may have to adapt to their style and the reality is that equal distribution of labour will not happen between co-founders. This kind of arrangement has too many attachments. 

So I suspect I might not go far in my incubator because I have an Antediluvian approach to doing business. Even though I'm fairly profitable, my business is also too tied to my personality at the moment to scale properly. The business I want to conduct is a cockroach business and not a unicorn, it has to produce cash flow and sustain itself consistently. Bonus points if the costs are fully subsidized by dividend payouts.

Anyway, I hope I can turn up some speaking gigs soon. With a market recovery just about the corner, interest should be at an all-time high.  

 

 

Social Escorts can benefit from learning about FIRE

 

As it is the holiday season,  I've decided to change my reading diet into something less dry. I've chosen to read one of my favourite local authors - Gerrie Lim. Gerrie Lim wrote Invisible Trade, a book on the sex trade in Singapore, that still holds the record for the best selling book by a local author in Singapore. 

Scarlet Harlot in many ways updates the developments in the sex trade for the new Millenial generation. Even though some things about the oldest profession has not changed much, social media and streaming have changed in industry tremendously. 

I'm not very sympathetic to the lady author because she is young, foolish and so full of contradictions. She seems to think that she has more honour than her colleagues because she is less of a gold digger than them. Worse, she's fine in an open relationship but goes apeshit when her boyfriend invests emotionally in another woman. Relationship wise, I do not see any happy ending for her because she's bad at picking men.  

From a financial perspective, the book did leave one thing hanging. The author believes that by the time the book is published, she would have graduated and would have been out of the profession but the astute reader would have reasons to doubt this. Would an ordinary job really be able to sustain the lifestyle of a social escort?

Sex workers and social escorts who are genuine about leaving the profession should seriously consider joining the FIRE movement :

a) Sex work is really competitive

I was not surprised that there is so much bitching within the industry but I was stunned at the amount of competition. In the workplace, some engineers may get an MBA to get ahead. Social escorts need to continuous upgrade with plastic surgery. I expect this to come with some amount of physical danger. 

Doing cosmetic surgery should be analysed just like an investment with its ROI. In my opinion, an enhancement such as breast enlargement should only be done if it can lead to higher billings per hour. 

How to measure bang for a buck in plastic surgery is something that I would want to put my data science skills into good use. 

b) Sex work has a short career lifespan

Once again consider the lifespan of an engineering or computer science degree When you start work, technology will keep advancing and your career has a certain lifespan before your tech skills become obsolete. 

In many ways, sex workers have it much worse. I think interest from customers begins to wane in your 30s. An engineer still has some employment value at age 35, a sex worker has much fewer opportunities. In fact, Annabel Chong, a sex worker who put Singapore on the world map, transitioned from sex worker to a software engineer!

As such sex work must pay but must also account for a short career life span. By understanding how FIRE works, a sex worker can start early by replacing her income with something that lasts longer and more predictable. They can also live a more normal lifestyle that if easier to acclimatise to when they leave the industry.

c) Sex worker does get access to financial advice, but from dubious sources

According to the book, agencies bosses seem to encourage their social escorts to save, which I think is good advice, but this leads to the old conflict of interest between the agency boss and the social escort.  Agency bosses would be out of work if their particularly heavy billing staff would become financially independent, so I doubt they would ask their escorts to invest their money. 

This leaves NGOs and social workers to cover up the lack of financial know-how. I can imagine that if AWARE were to look for volunteers to do such good work, they would have ample volunteers. 

I can imagine half the financial blogosphere will be very enthusiastic about helping. 

Anyway, this is a fun trashy read for this holiday season. 

Let it be known that, with this review, now my blog is a strong supporter of Singapore Literature.  

  

Is optionality overrated?

 

In my previews, I get a lot of questions on whether I teach options. Apparently, the number of advertisement bombardments from investment instructors has created this impression that you need derivatives to have a comfortable retirement. 

I don't teach options, I consider financial engineered products optional (pun alert!) in retirement planning. But I see a lot of value in understanding optionality in your life. A lot of educational qualifications may be better positioned as a call option on your human capital rather than straight-forward equity bet. 

The above image is reproduced from summation.net. It discusses the spectrum by how much people value optionality in their lives and I agree with it whole-heartedly.

If you examine young undergraduates, there will always be two kinds of students. 

The first category of students knows what they want from a young age. They are aware of which degrees earn a good living and have slowly built up a profile to capture the upside from getting the qualification. When they get employed, they have a salary upside from A level qualifications as reflected by high salary over tuition fee of the qualification. That's a straight equity bet and degrees like engineering, accounting, law and medicine fall into this category.

The second category of students is less sure of themselves. They do not know what they want but they want to develop generalised skills like writing and critical thinking to be able to delay their decision making and react to industry changes upon graduation. These degrees behave more like options, they fall into the money when an industry is chosen. This is a call option and Arts, Science and Business degrees often fall closer into this spectrum ( although economics and finance degrees do not ). 

I don't want to discuss the relative value of general versus specialised degrees because this is easily resolved by googling POTS scoring within this blog. We can let the numbers and employment figures speak for themselves.  Fact is if you specialise in the wrong field, you may end up worse off than a generalist. Some computer engineers from NTU from my cohort is driving Grab today even though most PMET jobs out there have a technical component. Personally, I would not even hire them to polish up my Powerpoint slides.

If we position an educational qualification as something with real options embedded into them - then you have confront a few harsh realities out there regardless of how well humanities professors hawk their goods in success literature.

a) Buying options are not free, you have to pay a premium 

Options have a premium. The price of SMU Juris Doctor is high at $70,000. Way higher than an LLB for the same pay. Worse, the opportunity cost is closer to $500,000. I can't argue that my JD has embedded options at age 45, but I can argue that my JD is a wonderful mid-life crisis to have as it costs as much as a Maserati. 

Like me, some young people who study useless degrees and qualifications on their own savings will find their personal justifications on very shaky ground. This is worse if they are depleting their savings to do this.

b) Options may be out of the money

Some options may be out of the money. Suppose you specialise in Semiotics ( I have no fucking idea what that is, BTW).

I think having Humanity attain First contact with a superior alien race will boost the value of your qualification but, as it stands, you will have to review the salary scale and employment opportunities on qualification in Semiotics. Instead, your superior writing abilities and critical thinking skills are probably your best bet for now, the semiotics is just incidental to the development of value in your human capital. 

I've spoken about many private degree qualifications as being similar to Paper Thosai qualifications, that was too unduly harsh. 

Instead, I should reframe these qualifications as basically qualifications which out of the money - if you exercise this option, the difference from a diploma paycheck will not be too great to justify the expensive premiums you pay.

c) More Chaos can push Options into the money

Here's the best part of having optionality. Chaos rules and increases the value of embedded options.

If the economy goes into the shits and turns upside down or experiences 30 years of golden prosperity, your options can come into the money. 

Volatility increases the value of options! 

This brings the harshest truth about private and qualifications in a meritocratic and capitalistic society like Singapore. For chaos to ensue, the status quo cannot remain. Either we have rampant growth that pushes everyone to the stratosphere or have a societal collapse.

In such situations, the generalist will be able to overcome the specialist. The gap between a local and private degree holder will narrow.

And a lot of young punks I know have that kind of sentiment or desire - this is perfectly rational given the educational qualifications they have invested in. 

Finally, I really like the image shown above. The purest equity bet on human capital in Singapore is entrepreneurship. This is one specialised singular bet on the business that you are running. Meeting fellow founders in the SMU incubator, I am impressed and amazed at the level of risk-taking. 

I constantly feel a little inadequate on my own approach towards conducting business, which is to match cash flow with business expenses and expanding slowly. I don't even have an "ask" because I don't ever want to be in a position to give up equity. 

Clearly, I am a cockroach but these young businessmen have the potential to become unicorns. 

 

 

Are you leveraging enough in your lives ?

Todd Tresidder has written quite a number of books on personal finance and I was fortunate to find one copy on leverage in the Woodlands Regional Library. 

This is a very thorough treatment on the topic of leverage and I am pleased to report that financial leverage plays only a small part in this piece of work. Here are the different forms of leverage you can apply in your lives :

a) Financial Leverage

Financial leverage is basically borrowing money to invest in a portfolio or business. It is the only form of leverage that is double-edged. If things go your way, you will get out of the rat race much earlier but you can be ruined when things do not go your way.

b) Time Leverage

Time leverage is buying time from other people so that you can become more productive. Every business benefits from hiring employees or contractors. Tim Ferriss has spoken about using an overseas virtual assistant for quite a while. This is something I hope to do if my earnings can justify it.

c) Technology and Systems Leverage 

The question is whether technology platforms can make you more productive. I leverage Stocks Cafe for portfolio management and investment metrics and Pyinvesting.com for back-testing but I hope not to stop there. I'm slowly building a tool for crowdsourcing of qualitative data from my students to make my lessons more interesting. 

Alternatively, by creating SOPs, you are creating an asset in your company as a fresh new employee can execute your procedures without too much coaching. A good system prevents a lot of Green-personality employees from hoarding company processes to become indispensable to you. 

Every entrepreneur needs to remind their Greens employees that they will never be indispensable. 

d) Network and Relationship leverage 

This is about using who you know to get ahead in this world so it covers social capital. This reads more like a networking chapter but it does have its practical uses. I suppose it is harder to buy useful contacts and allies, you need to put in the time to cultivate these relationships and make it a point to be useful to others first. 

Creating a group of like-minded allies using social media is a good strategy.

e) Knowledge and Experience Leverage

This looks a lot like an exhortation towards lifelong learning but it is important to note that in a world of MOOCs, it is very easy to pick up concepts without the chance at application. 

After going through the list, the area of leverage I can most take advantage of is time leverage as I only have 24 hours to do and have more projects than I have the capacity to do them. My challenge is to find a way to figure out how to outsource my work to an assistant. 

Labour costs can be expensive in Singapore.

From Chai Png to Haidilao

 

In case readers are not aware, I stopped being frugal when it comes to food quite a while ago. My 20s were basically all about eating chai png and the occasional vegetarian bee hoon breakfast to keep my expenses low but after I became financially independent, I started eating like a normal person again. 

Recently due to COVID-19, I have been eating rather well and as I can't restock Dr. Wealth's pantry after a successful run of my program ( a pre-COVD habit I developed), I decided to buy a meal for the Dr Wealth staff who supported me faithfully during this rally tough period of the business. Furthermore, this is not a personal expense but a business one, with mini-meeting included, I can go all out on the meal budget. Also, the fact that the STI has rallied and I am getting November dividends clearly made the expense negligible.

I've always wanted to eat at Haidilao but somehow could not because my pals do not like eating there when we have gatherings claiming that it is expensive. Instead, I eat at a lot of Mala outlets in Chinatown. 

My curiosity about Haidilao is two-fold :

• What kind of service and food offering makes it command such a high premium?
• Is the company worth investing in if we just see it as day to day business?

For the service, there were two points which I liked. I was served drinks and snacks while waiting for the table to prepared. The staff really behaved almost like air stewardesses and even informed me that someone else will take care of us when there was a change of shift. Sadly, I was not able to witness the manicure offerings for the ladies because of COVID-19 measures.

For the food, I can only say that it is generally of high quality. Beyond the iberico pork and sliced beef, the beancurd skin stood out as well as sausages made of flour and mozzarella cheese. Against common sense and warnings from the staff, I chose the most unique spicy beef tallow soup-base, which was not that easy to stomach but the food was really fragrant. I ended up retreating to the tomato and chicken soup base to reduce the pain on my tongue.

Beyond the bells and whistles, was the $75/pax worthwhile? For a business meeting, definitely. But for me, I'd prefer to eat at a cheaper outlet at Chinatown. I can forgo some snacks for a 50% discount on prices. 

But Haidilao may be decent as an investment, the management has systematised great service and have been able to scale it around the world. I can imagine the same business system delivering Swiss Fondue or shabu-shabu to other parts of the world. 

Still, I will convince my family for another meal. But I think no spicy soup base for me the next time round. Spiciness can be delivered via condiments. 

Random perspectives on emigration

I don't have very much to talk about today, I just want to share some friendly perspectives on emigration. I had an update from an old friend and I thought his experience was interesting. As it turns out, some of the folks I gamed with over a decade ago are no longer located in Singapore. 

One, in fact, had left for Australia. Personally, I was kinda glad he did so because he isn't a big fan of Singapore and, if he stayed, I thought he may be a target for radicalisation.  

But my old friend had a much more interesting story. 

He left for New Zealand after securing a job posting there and spent a year or so enjoying the suburban life there. He tells me that he lives in a small town of 50,000 and there's a game shop serving the Warhammer and D&D communities there. Even more impressive is that kind NZlanders open up their large homes to gamers on weekends and six to seven tables of gaming groups can be joined if you contact the community over social media. 

Sadly though, my friend was unfortunate as he was on a business trip in the middle of the pandemic lockdowns and was shunted out of the country. The company failed to renew his work permit but managed to transfer back to Singapore. 

The whole process seemed demoralising and his family no longer wishes to settle down in NZ. A lot of money was wasted as he paid NZ taxes and contributed to their economy before failing to get his PR there. My friend tells me that when his family is ready again, he will attempt another country but this time his wife will insist that it would be Asian with Japan as a number 1 choice.

The second story is more interesting. A top data scientist friend is planning to come back to Singapore from Japan after spending many years in Japan. I really look forward to his return because somehow I think we can think of some interesting project to do together as we have mutual interests. 

The trigger is also the pandemic. After living in Japan for quite a while, my friend feels that he is not getting enough for the taxes he pays and it is much better to get back to Singapore where we get to save or spend more of the money we actually earn. 

For every course I conduct, students are invited to assess the feasibility of living in a foreign country with dividends picked up from REITs and other income investments. Over the months I have witnessed the power of our dividend stocks powering retirement plans in foreign countries, sometimes enabling retirement lifestyles in Western countries if students are able to stomach some leverage in portfolios.

Our paper exercise does not capture the difficulties and adjustments needed to settle down in a foreign country and pay taxes that we Singaporean PMETs will never get used to. In the case of NZ, you need to work for at least a decade before you can be entitled to a pension. 

If you have emigrated or are planning to emigrate, do share your perspective with me. 

I'm now sitting pretty in Singapore, but I will always be prepared to go in case my children can't make it in a highly-strung society like this.

ERM Community Webinar - 24th November 2020 7.30pm

 

On 24th November 2020 at 7.30pm, the ERM Community would conduct another Community webinar that is open to the public. We will be doing one such session every quarter where we showcase some of the more advanced concepts to share with our graduates. 

For the session on coming Tuesday, we will cover the following :

• ERM students are taught traditionally to buy and hold dividend counters. We will examine how to employ a data-driven TA trading methodology can be used to minimise regret. This will be reinforced by a demo by Ivan Fok of Pyinvesting.com to show how his tool can assist in this regard. 
•  An update on the ERM along with some concerns on the possibility of underperformance for the next 3 months as investors go risk-on. 
• There will be a 1-hour presentation that will rehash the presentation made to Republic Polytechnic entitled "Financial Independence!". This is a motivational presentation for absolute beginners on how to win the game of life.  

You can sign up for the talk by following this link.

Money is the Modern Equivalent of Monkhood

There is a spiritual dimension of Financial Independence Retire Early or FIRE that mirrors Eastern Religions that is hinted in Naval Ravikant's Almanack which I would like to explore in this article.

First I'd like to explore two concepts :

a) The Lesser Wheel of FIRE

The Lesser Wheel of FIRE is what we would typically associate with the FIRE movement - you have a history of basic expenses that you hope to care of with your investment income. When your investment income begins to cover your basic expenses, you gain Nirvana-like freedom from the capitalist world and it opens up whole new possibilities in lifestyle design. 

For REDs, you can start a business for world domination. For the rest, it can range from a cessation of corporate ambitions, farming entire salary to stock portfolios, or leaving the workforce entirely for personal hobbies if you are Green.

In many cases, investment income continues to rise after financial independence. Adherents to the Lesser wheel of FIRE may improve their quality of life and spend based on what was lacking during their FIRE pursuit, normalizing expenses to that of a normal Singaporean.

It is difficult to go beyond The Lesser Wheel if you conduct retirement courses because the bulk of the aspirations of Singaporeans probably stop here.

a) The Greater Wheel of FIRE

I tried hinting at the existence of the Greater Wheel of FIRE in many speeches I made in the past. The pursuit of the Greater Wheel is to strive for total independence from material wants. It is theoretically possible that a person not goes beyond quitting a day job, future increases in investment income come without an increase in expenses. 

You have transcended materialism. 

I'm not at this level, I may not even be at the Lesser Wheel because my life-energy exchange is so high, it would be irresponsible to my future generations if I stop my training work. My children may not be able to have a career that is a more optimal life-energy exchange. 

The Greater Wheel does not stop spinning until investment income reaches infinity. The highest need is to have no need for anything at all beyond daily survival. 

Still, I have a few rough ideas on developing this level of FIRE to this level of proficiency: 

• Break the contradiction between frugality and hedonism - If you have cold baths for a week, a hot bath will feel good. I take cereal with yoghurt for lunch so that dinner feels a lot more enjoyable. 
• Having children to inherit your wealth will lessen the desire to spend it down - Imagine being single and have over $10 million, you may not have the years to enjoy it till the end. Children solve that problem because it is natural for human beings to want to benefit their loved ones. 
• Personal accomplishments, not material goods, should form a bedrock of your identity - If you have your self-esteem tied to personal accomplishments and not material goods, you will have fewer wants that can be attained by spending money.
• Observe folks who study the Humanities - There was a joke that says that with a liberal arts degree you can be philosophical about the fact that it attracts such low salaries. You can be philosophical without a liberal arts degree.
• Leave one material weakness - If you know what you truly like and spend on it out of passion, you would come very close to reaching the ideal of the Greater Wheel, spending on everything else is superfluous. Don't feel bad if you have a weakness of PS5 Games. But avoid watches as they can cost a king's ransom. 

If you explore the duality of the Lesser and Greater Wheel, Money actually becomes a new kind of Monkhood. 

I'm not spiritual, but I have the potential to pursue a pecuniary form of enlightenment. 

Singapore's problem is encouraging Lifelong learning for "Green" personalities

This week I did something unthinkable in my 20s - I switched universities just before completing a course specialization. 

As it turned out, I no longer wish to pursue my studies in Digital Marketing. The University of Illinois has a decent program on Coursera but the material was too macro and high-level for me. I just wanted to bring more readers to this blog and then figure out how to start a better social media campaign. To continue this agenda, I will continue by reading some technical texts on content marketing. As I dislike marketing and prefer Dr.Wealth to handle the bulk of it for me, I prefer to keep this kind of selling to a minimum.

EDHEC Business School, however, has a program that is just designed for my skill level in Investment Management Python. The program dives deep into financial programming and expects students to be proficient in programming. This program is designed to be just challenging enough for me. 

For a Dominant RED personality like me, I take charge of my learning and will jettison any project that no longer gives me any ROI. My current course allows me to develop insights and improve my web app with new features every day, so my product grows in functionality and I grow in developing market insights on local stocks. If you study under a MOOC under Coursera, you should be familiar with thousands of ambitious RED and super smart BLUE personalities hustling to get their scripts marked, many from India and Sri Lanka. 

Singapore's policy-making cannot about REDs unless it is to get REDs to create jobs - something we'd like to do because it gives us some minions to boss around. 

I think Singapore's lifelong learning problem deals with GREENs. The steady, warm and accepting citizens that are the majority in Singapore. How can you convince unambitious GREEN folks who are contented into becoming unhappy, discontented, or worried enough to sign up for a program. 

There are many dimensions to the problem that is not within my pay grade to solve :

a) The first problem is that the majority of human beings hate programming which is where the best paying jobs are at the moment. Some startup guys can even know when someone gives up on Computer Science - at the point recursion or pointers is being taught. During my JC days when computer science was an A level subject across all JCs, the dropout rate for the first three months of JC ( even in a top JC ) is about 50%. 

b) GREENs may take the easy way out even if they come from the right industry. You hardly hear of 40-something guys talk about Tensor Flow or Keras, but there's always a way to escape via project management, AGILE, Enterprise Architecture or Scrum qualifications. Stuff that does not involve copious amounts of mathematics that is in high demand today. Mickey Mouse bullshit that does not add value to the world today. 

c) The only time a GREEN gets desperate to upgrade is when he gets retrenched, then all the years to pick up foundations for harder skills are lost. Government struggles with this group because they cannot fit into the jobs available in the market at the moment. 

So here's the thing : If the government fails or sees it as something beyond their pay grade, the private sector picks up the slack. 

Here is one thing I know: My course has a very BLUE/RED dominance.  It is, after all, fairly rigorous for a fun weekend that could have been spent in a zoo. I know my constituency -  ambitious RED guys want more money to push their ambitious into the investment and business realm, they are here to improve their own investment models, not to pick a new one up from me. The analytical BLUE guys want the tools to secure their portfolio so they can sleep better or sound more intelligent in their analysis. 

RED wants FIRE to kick ass. BLUE wants FIRE so they can stop their asses from getting kicked by REDs in the office.

If I follow the industry, I think I can make myself 2x richer if I shift my focus to GREENs. Just water down the course and promise a tool to generate a portfolio at the press of a button. Just teach folks how to press the button, then triple the price and focus on legal disclaimers. Focus on motivation, creating a subjective feeling, and engender a ruinous desire for money. Any simple TA strategy will do, the important thing is that you feel good about yourself. 

I know - I can rent a Lambourgini and stop wearing bermuda on weekends replacing it with suspenders and a bow tie. My motto should have been "Shake Leg your way to Retirement". 

Does that sound familiar?

You know what prevents me? 

I'm not a saint, so it's not my conscience. 

What stops me is the fact that my community will then be full of GREENs Jonesing for stock tips every day without really develop the wisdom to disagree with me every now and then. 

It's not a community. It's a cult. It's the reason why you guys hate all these Youtube guru videos. 

If you think about it, what the fuck is the discipline of marketing all about?

Having slogged painfully at my Digital Marketing Certificate, I think that marketing is all about getting  data from GREENs over and over again using cookies, so you can fuck GREENs by making them unhappy and inadequate because they are too lazy to know any better. 

We know that the majority of humankind is bogged down by personal inertia, they are agreeable and naive, why don't we track their movements on the web and hit them when they are most vulnerable? 

Let's show them a sportscar and make them feel bad for not having one!

I actually think it started with Procter & Gamble, where I learnt how to be a loyal employee. How to make housewives envious so they buy detergent. Hence Soap Operas! 

Now bloody copywriters are telling me to tell the angry customer that the reason they fail is that they're not diligent in following my formula. I think this disclaimer works if the customer is GREEN, the argument that they are not diligent will almost be universally true. You did not do enough qualitative research or read 10 years of financial reports, that is why you lose money.

I can't do that because my customers are smart. They know that they may lose money. But their only guarantee is that their trainer is leveraged so he stands to lose more, so he has tried his best.

So, maybe instead of listening to a copywriter ( who probably imbibed the same drivel from the 1990s Internet Marketers ), maybe you can bet on the portfolio customers have built and try to make a living out of that.  

Republic Polytechnic Talk : After-Action Review

At 4.30pm yesterday afternoon, I gave a 1-hour talk to students of Republic Polytechnic. This talk was attended by a decent number of lecturers, adult-learners and possible a smaller cohort of actual RP students, as the talk was voluntary, numbers are not big - the audience was between 30-40 attendees. If you measure that against my previews - I often get over 100 attendees every week. 

Here are my thoughts on that event :

a) On hindsight, the material should have been more technical as I had a fairly savvy crowd

I think the idea when we came up with the program was because 50% of RP students were on financial assistance, but here is what I learnt from giving out free seminars: If attendance for the talk was made voluntary, only the most self-motivated and moneyed students will volunteer to attend, and the quality of the questions asked would be of the highest quality. 

As such, I feel bad after Q&A because I should have prepared for a more technical talk. I had very good questions on robo-advisors, derivatives and one required an in-depth discussion on why standard deviation matters in measuring portfolio performance.

If I do get a gig with Singapore Polytechnic next year, I will stop pulling punches.

b) That single best martial arts manual for Singaporeans

One question that took me off guard was which book to read to get to grips with investing in the Singapore markets. I recommend several books in my preview but I struggled to recall the title that answers the question. In fact, I think I got the author wrong in my talk yesterday. I said "a book by Ben Fok" who has a few decent book, but it should have been Fong Wai Mun. 

Anyway, the book is here :

Fong Wai Mun taught my MSc cohort in 2001 and I recall my classmates saying that his exam was quite formidable. Other than that Christopher Tan book I gushed about in this blog but was seriously outdated, Fong Wai Mun and Benedict Koh's textbook is still used in local universities. 

This is the closest thing to a beginner's manual for local investors. 

c) How to become a millionaire at 30 

My favourite question came from a plucky RP student who said that he wants to become a millionaire earlier than me at age 30 and ask me what advice I would give to him. 

He does not know that as a troll myself, I love entertaining troll questions:

I told him that I was unqualified to answer as I made the first million way after that age in my late 30s. But I told him that I have a few educated guesses. 

My first answer is to join sales. Sales is a tough job that does not rely on educational qualifications and being in the top 20% of the sales pyramid can command salaries several factors that of a degree holder. I did remind the audience during my talk that 80% sales professionals earn next to nothing so they have to be outgoing and really like interacting with people to be top 20%. My second answer is to start a business and aim to IPO or exit before his desired age. 

No, I did not ask him to sell drugs.

For members of the public who are curious about the talk I gave to RP. 

On 24th November 2020 7.30pm, I will be repeating that performance to my ERM Community. 

You can sign up on this link here.

Personal Update - Several projects I am working on

 I did not manage to really enjoy a short one-week break I had last week due to a nasty bout of gout on my right knee. Nevertheless, I was able to advance a few items on my agenda :

a) Talk with Republic Polytechnic

My secondary school talk with Springfield Secondary has been enhanced by about 25% and will be performed with the Republic Polytechnic audience tomorrow. I was told that several lecturers and adult learners will be attending the talk, so I eagerly await the participation from lecturers. For folks who do not want to miss out on the performance, I will be conducting an ERM Community Webinar on 24th November to members of the public. 

More details will arrive on the blog later.

b) Retirement Simulation Tool launched to ERM Alumni

I guess an Early Retirement Masterclass would not be very much if alumni do not have retirement planning tools, so I deployed a tool to simulate and calculate the rates of retirement success if the student can provide information on their retirement portfolios. Use of the tool requires some training as users need to know not just the risk-return characteristics but the program accounts for skew and kurtosis as well. 

The ERM program already employs a significant number of bespoke tools I wrote using Python, Django and Streamlit :

• Simple Stock Analysis Tool.
• Retirement Simulator.
• Qualitative Data Crowdsourcing Tool ( For me to conduct classes )

The problem is that I currently use the free hosting on Heroku so the tool is not even close to final. I intend to migrate to AWS once I get the yummy $5,000 computer credits from Amazon. I suspect many founders would be unable to exploit this perk since larger startups may already be hosted in a different provider. 

c) ERM Preview attendance is off the charts 

The market recovery is not the only thing that's happening. I think investment course previews are having a mini-resurgence on its own. I will be having a preview tonight, so if you are interested just Google "ermintro" and take the first link to come to my talk tonight.

With the US elections over, the bulls are back and I expect students of all my latest to do well especially those with leverage. 

d) My journey with an incubator has begun

Last week I attended my first session with SMU's Incubation unit, I would be getting my meeting with a mentor this week and I will be mostly focused on admin matters like getting my Pte Ltd company set up.  Hopefully, some government funding should not be too far away as I would like to launch more retirement planning tools for my community. 

The aim would is to launch tools to replicate a significant portion of what a professional advisor can do for my community to strengthen DIY investing and retirement planning in Singapore.

Different Personalities in FIRE

 

The idea of this article started when I having a shit. 

I was using the Coursera iPad app and attending lectures on Digital Marketing by the University of Illinois and wondering to myself what excuses other 40-somethings have when it comes to reskilling and Skills Future when you can actually attend university lectures and even complete some quizzes which taking a crap in the toilet. This led to other crazier ideas, like whether someone can actually debug a computer program or compose legal documents while making some brownies in the outhouse.

The book Surrounded by Idiots by Thomas Erikson added an extra dimension to my thought experiments. For years, I have heard of a personality profiling system called DISC but no literature was accessible in the bookstores. This book was the first one that brought this simple personality profiling system into popular business non-fiction medium.

I suppose from the DISC personality profile, people who attend university lectures while taking a shit can be pigeon-holed into folks with the "Dominant" personality. Folks who are Dominant or those with a Red personality are also the same kinds of people who will wonder why other people are so inefficient and will not consider writing computer code or even make submissions to the court while bombing Hiroshima in the privy.

But maybe this blog should not be fixated with the topic of shit, let's leave that to some forums with commissioned financial advisors and instead focus on how the DISC personality profile can be applied to FIRE. 

a) Dominant - Red personalities

A secondary reason I joined the public sector was that they are willing to water thousands of tax-payers dollars on profiling the personality of civil servants. My friends knew I was Dominant but no one could figure out my secondary mode, so I eagerly jumped at volunteering to coordinate a vendor to test my department. I was sorely disappointed to find out that my secondary mode - was also Dominant! This led to the conclusion that working for the government is really bad for my mental health. 

Not all Reds get to lead in organizations. We just end up getting frustrated at the navel-gazing, inertia, and cheap talk in most organizations. Ultimately Red's strength is that thought and action are the same things. This is also their biggest weakness in FIRE.

One of the things I had to acknowledge even after concluding my FIRE journey is that regardless of my 5-digit monthly investment income, I will always somehow do better by exerting my effort to make more money. Some simple truths are obvious, labour is cheap and amenable to leverage at a more profitable rate in a serious pandemic - hence my joining of the SMU startup incubator in the search for interns.

On the other hand, I still have some really bad Red habits when investing in the markets, many which I am happy to admit but will not teach my students because rookies cannot afford to be so cavalier about investment research:

• Generally, I prefer to buy the stock before I start my research on it.
• Also, I hate long drawn discussions on details like the WALE of REITs, the profile of REIT lending preferring to "spray and pray" a REIT sector which I expect to out-perform. I favour broader statistical odds of a portfolio of 10-15 stocks. I currently have 60-70 stocks and I can't track them all.    
• I really hate long-drawn arguments about safe withdrawal rates, I prefer to aggressively attack the problem head-on. One Python program is one page long and takes half a day to write, maybe another day to host on the cloud.  If there's a weakness in my methodology, I debug and amend in 20 minutes tops. Then everyone in my community can figure this out on their own with my tool.

In summary, I can move very fast but can be a disaster where the details matter. 

This is the primary reason why I actually fear becoming a real lawyer. One tiny clause can get me into trouble with a client. I spent my training contract worrying over comma placements and documentation.

I suspect Reds will not like FIRE that much because they may prefer to run their own companies. FIRE also involves a degree of number crunching that reds may not have the patience for. My initial attraction to FIRE was because I was competitive and thought an additional income can put me silently ahead of my savvier colleagues even if they get promoted earlier than me. 

b) Influence - Yellow

Yellow personalities are eternal optimists and the best salesmen in the group. They are often the most popular folks in any click. You can identify the Yellow guy when the Hokkien Peng calls him "Siao eh ! Ho bo? " My best buddy is Yellow and I suspect yours is as well. Yellow is often extremely eloquent and persuasive.  

Unfortunately, pathological versions of Yellow can be exasperating for Reds like me. They can't keep to time and, when they start talking, you will not be able to get a word in. Worse, hardly any conclusion can by when a group of Yellows come together to make a decision. Extreme Yellow personalities are least likely to able to maintain their attention span in an investment class and even if they spend thousands on it, would not have the discipline to carry out FIRE. 

I had a quintessential Yellow friend who was well-loved by everyone but his personal life was a thick mess because he attracted a lot of drama. He passed away some time ago because he could not maintain his medical regime. We miss him a lot today, but we have to admit what a train wreck his personal life was.

Yellows probably make better investment trainers than Reds because of their charisma and personality, but this may not be in the investment realm because investment requires a basic level of numeracy and discipline. If I scale my business, I will ensure that I maintain my syllabus and hire a Yellow to conduct the lessons. 

Students probably will enjoy the classes until they realise that the instructor has money problems of his own.

c) Compliance - Blue

Holy shit, Blue guys can be intimidating because many end up being my customers and fans. Where Yellow is all about the Oral, Blue is all about the Anal. 

If you want to audit someone, hire a blue. If you want audit matters resolved, hire a red. 

Make no mistake, Blue is the color of FIRE. If someone FIREs early, my bet is that he is primarily blue. 

Blue guys are natural accountants. I teach Factor investing with Z-Scores and I can spot a Blue student  a mile away. The Blue guy wants more investment factors into his model, he may want to toss PB, PE and PS factors into his model at the same time. He also wants to adjust factor weights in Z-Score calculation. One of the ways I catch up with Blues is to use my leisure time writing Python programs to answer the questions they pose which cannot be answered by experience or by hand, which often are the most challenging intellectual questions I grapple with. 

That being said, Blues can be crippled by their inability to make decisions when investing that are often time-bound. By the time you are 100% sure that a REIT is safe, the RED would already have Parkway Life and Keppel DC REIT at 2x leverage in his portfolio and laughing at the Blue's shitty yields. 

My customer base is strong Blue and I lose a lot of sleep to keep them happy by repeatedly updating my preview and lecture materials. It's thanks to the blue audience customer feedback of my course has gone from 6-7 to about 8-9 over the past few years.

d) Steadiness - Green

And then there is a deep forest of Green that dot the entire population. Green is a stable, supportive and sincere part of the population and forms the largest number of your colleagues. 

Nothing much can be said about Green because they make the bulk of your acquaintances, the world would be a horrible place if we're all Reds and Yellows, it is the Greens and Blues that keeps systems running and are happy and content with the status quo.  

The problem with Greens and FIRE is that Green's often lack drive and ambition. FIRE requires a ramp-up of adrenalin at earlier parts of your life so that you can ramp down earlier but Greens will argue that they already feel quite relaxed now. 

It is very difficult to overcome the inertia of Greens, but the question is whether do we truly want to?

One of my priorities is to hire some administrative support to improve the design of my slides and keep an eye to attention and I think I should be finding a Green to be my first employee. I am very afraid of hiring a Red to my team. It's always some guy with poor paper qualifications who keep wondering why is he surrounded by so many idiots and why I can't run my business properly. 

All this being said, an investment course would keep in mind to consider Greens when marketing themselves. A very ultra-Green pal told me that my course actually has a fairly decent component for "lazy" investors and walked me through how he would employ his learnings in practice without doing a single minute of stock analysis, I added his feedback to my previews and manage to improve conversion rates. Maybe this is something I need to look deeper. 

Let me end by sounding out a note of caution. 

Humanity is fairly diverse and the simplest personality profiling techniques used by academics involve five factors like Conscientiousness, Agreeableness, Open-minded, Neuroticism and Extroversion. If you can reduce a friend to one out of four pigeon-holes, you are running into the bias of stereotyping. The context determines which personality a person adopts - just try observing your Green friend turn Red after getting retrenched if he has a mortgage.

I suppose the idea of rapidly positioning someone into one of four neat categories is something a Red like me would love because it is just such a better use of my personal time. 

FIRE parallels in other domains of self-help.

 

One of the things I picked up from Naval Ravikant's Alamanak is that there are parallels of FIRE in other domains of self-help. To assist the reader of this blog to do this, you need to understand financial independence from two key processes that determine its success :

• A reductive process you apply to expenses. 
• A multiplicative process you apply to assets via compounding. 

Driving these processes is, first of all, will-power or the ability to delay gratification. You need to put in some mental effort to motivate yourself to save money to commit to the reduction of anything in life. Secondly, you need some open-mindedness and knowledge to multiply your money better. This requires a degree of risk-taking and trying out new stuff. 

Because you seldom find a combination of willpower and open-mindedness in the same person, this is probably why so many folks fail in the self-help domain. It is also the reason why authors and trainers can thrive in these areas: demand for training and books is perennial but it seldom leads to people being able to solve their own problems completely. 

Here are two areas that I still struggle with  :

a) Health and Nutrition

I am still recovering from a nasty gout attack that struck my right knee for the past few days. A week ago, I went to meet a few friends in the pub and had a really nice $17 ribeye along with some alcohol. The result is over a week worth of pain and a $50 medical expense. If I can exercise the same discipline to FIRE as health and nutrition, I would not have to go through all that suffering. 

Intermittent fasting the equivalent of budgeting in FIRE. You reduce your intake of food to 8 hours out of every day and get to burn fat the rest of the 16 hours. This led to a 0.5 point improvement in my blood sugar. 

While you can't grow your nutrition, you can multiply the variety of your food intake. This, I do not do well in my life right now because I think a diabetic at my age should find a way to get better nutritional supplements. What prevents me is the sheer amount of MLM and corporate-sponsored research out there that confuses a lot of issues. 

Personally, I hope this matter will be resolved soon with a proper meal replacement like Soylent which can be a hit with hacker types in the US. This is almost the equivalent of a nutritional robo-advisor.

b) Knowledge and Meditation

 I can tell that Naval Ravikant is a really spiritual guy because he promotes meditation a lot.

Meditation is the reduction of stray thoughts. As someone who failed in picking up meditation quite a few times in my life, I am aware that this is something that requires quite a bit of self-discipline. This is possibly something I need to pick up again soon. It's getting harder to keep my mind clear as I always have a financial programming problem I have to solve every day. 

The second process is of course reading and the accumulation of knowledge. Reading is probably the most important skill in the modern world, but I see many problems even with folks who self identify as voracious readers. In this sense, we should try to aspire to what Navikant or Munger does which is to multiply the mental models that you have. Over time, you will have a number of models in your toolbox to tackle life situations - it can compound your personal effectiveness. 

Doing this is hard. You have to read stuff out of your usual comfort zone or you may disagree with politically. I have issues even with financial experts who read only finance books - you get this tool blabber on and on about Warren Buffett but lack the historical depth to know that richer folks like Jacob Fugger exist.

Reading opens the mind.

These days, I find my own personal disdain for English Literature unsustainable once I realised that the obsession of Mr. Darcy by Victorian era chicks was due to the passive income he derives from Pemberly Estate. Sometimes when I mention this to English Literature types, I do not know they are impressed or totally disgusted by my ability to reframe their holy religion solely in solely monetary terms. 

The trope of female hypergamy is so big I wonder why this is not taught to boys in secondary school. 

The Mr Darcy of the Past is the Christian Grey of the modern era. 

 

The Final Word on the Safe Rate of Withdrawal

This is going to be a rather abstract post on the safe rate of withdrawal because too much ink has been spent on this problem. 

I think the bigger tragedy is that too little code has been written to address this issue.

As of this week, I have been able to inch closer to resolving this for retail investors by combining several programs I wrote on Python. 

Here's how I think the issue can be resolved once and for all:

a) Define a retirement portfolio that generally works and is uncontroversial.

This can be done by any advisor. I did this with a 50/50 portfolio of VT and AGG. A large global equity ETF combined with a US Govt Bond ETF.

Once we have defined this, we can look at historical returns. In such a case, we programmatically find out the statistics of using such a portfolio over the past 10 years. My program output looks like this.

The numbers are not too bad for a 50:50 Stock:Bond fund. Even better, the period coincides with a recovery from the 2009 recession so it's not too different from the current climate. 

b) Generate a probability distribution function with the same statistics as the numbers obtained.

This is the hardest part of solving the problem. 

If we assume that returns are normally distributed, we will not be able to account for the skew and kurtosis (fat-tails) of financial markets. I was googling for an answer and managed to find a function that can do that on Python. 

However, mathematicians are warning that it can be inaccurate, but I'm an engineer and not a mathematician and really don't give a flying fuck.

Source-code is attached. It was a bitch to debug the code done by the original guy. 

import numpy as np

from statsmodels.sandbox.distributions.extras import pdf_mvsk

import scipy.interpolate as interpolate

def generate_normal_four_moments(mu, sigma, skew, kurt, size=100, sd_wide = 3):

    variance = sigma*sigma

    f = pdf_mvsk([mu, variance, skew, kurt])

    x = np.linspace(mu - sd_wide * sigma, mu + sd_wide * sigma, num=1000)

    y = [f(i) for i in x]

    yy = np.cumsum(y) / np.sum(y)

    inv_cdf = interpolate.interp1d(yy, x, fill_value="extrapolate")

    rr = np.random.random(size)

    return inv_cdf(rr)

The pdf turns out to be really unlike any distribution of a balanced portfolio proving that mathematicians are not really jiak liao bee and are worth listening to, but such are the limits of what can be done using Python at the moment:

c) Build 1000 imaginary portfolios and see how many are successful and how many fail.

Once the pdf is defined, the question comes from generating 1000 portfolios with random returns from the probability distribution function. I start with a capital of $100,000 and I spend the withdrawal rate every year for 40 years but subject the capital to randomly generated VT:AGG market returns.

An example set at 5% withdrawal rate looks really pretty.

From the analysis, in 1000 alternate universes, 982 can sustain a VT:AGG portfolio with 18 fails, failure defined as a portfolio 80% lower than the starting value ( < $20,000 )

Clearly, spending 8% is asking for trouble :

There are a lot of problems employing this approach and I'm not sure whether professional tools actually have a way to resolve it :

• If you take a 20-year backtest, the return statistics of the retirement portfolio changes too drastically and can impact the number later. 
• Mathematicians say that it is not straightforward to generate a PDF with four moments of return, variance, skew and kurtosis. So the function call itself is suspect. 
• No one really withdraws a percentage value. Your cost of living is likely a fixed number. 

I don't know how professional tools do it, looking at some spreadsheets on the web, it may sample from actual historical data. This can be a problem for local folks trying to retire using Netlink Trust and ABF Govt Bond Fund which does not have a historical track record. 

But with whatever I have, I should be able to launch a web app for my community to play with soon. 

But right now my stand does not change, if you don't feel secure, aim for a withdrawal rate of 3.5%. The field of mathematics and computing may not be ready to solve your problem.