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. 

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.

This is where I talk a little bit about my hobbies

 

I've been quite distracted lately, so I was unable to blog as often as I liked. My non-investment training workload has increased, and I've been busy preparing for new students. Now I'm focused on perhaps pivoting one of my investment courses, as sales were not good. 

Last week I tried to visit a fairly well-stocked game store, but after a number of days of discounted promos, the shop had closed for good. Lately, it seems that one of the big risks of growing old is actually outliving your hobbies instead of your hobbies outliving you. 

So today, I want to talk about how my hobbies rapidly change in 2023. 

a) Dungeons and Dragons may start its decline this year
 

On the surface, it's possible to be very bullish about D&D as a hobby as Baldur's Gate 3 was a resounding success, and this year is D&D's 50th year anniversary with a highly anticipated rule set. But Hasbro blew it with attempts to amend the Open Gaming Licence that made the game so popular in the early 2000s. Hasbro also had a brutal company restructuring last year, losing a lot of creative talent.  

At the moment, the game seems to be going through what the Linux operating system went through many years ago, it's splitting into many variants/distributions:

• Pathfinder was a fork of 3rd Edition many years ago, and now it has resurged with a remastered version that has created its own IP.
• Kobold Press is about to complete its version of the 5th Edition called Tales of the Valient.
• Matt Colville, a super charismatic DM, is now launching his own RPG that is very similar to D&D.
• Matt Mercer, who is a super successful voice actor who promoted D&D, is now showing off Daggerheart, a more descriptive and narrative system, to mixed reviews.
• Cubicle 7 just launched Broken Weave, a heavily altered version of 5th Ed that is focused on exploration and narrative play.

I'm following all these variants and backed them on Kickstarter. All I can say is that they are all good, so it can potentially split the fanbase into many different enclaves which can actually squabble with each other. 

In this sense, RPGing is different from finance. 

In finance, I prefer dividends investing, but I can dabble in crypto and growth because I benefit from diversification. In fantasy role-playing, some gamers need to be conditioned to hate an 'opposing' RPG system instead of another because the gaming group functions as a tribe. Otherwise, players can be lost to another group, or DMs will suddenly rug-pull everyone with a new ruleset and a steep learning curve.

b) The wargaming hobby may be what role-playing's final state will be like.

I bought this beautiful wargame, B-17 Flying Fortress Leader a few days ago. It is a board game for one player that simulates bombing raids over Germany. On the surface, the gaming concept is ridiculous. To appreciate the system, the player will need to read up on a dense set of rules and understand World History. After which, he moves pieces around the board alone, with no friends at all. In such a case, the obvious thing to do is to make this a computer game, but stubborn wargamers have only loved this genre with its tactile feel of gaming pieces, and this game is even in its second edition.

There is a wargaming community in Singapore. It is very tightly knit and consists of Gen X gamers, old millennials, and one or two curious Gen Zs. The availability of wargames is almost entirely driven by one or two zealous individuals who organise group buying of these games from Amazon or Noble Knight Games. Retailing of wargames died with a shop called Leisure Craft in Orchard Point in the 1990s. Many of us had fond childhood memories of that outlet. 

I suspect tabletop RPGs' endpoint in Singapore will be like the wargames community. Shops must pay rent and can only sell high-volume or high-margin items like collectable card games or miniature wargames. Fragmentation of the Fantasy Role-playing genre will render the current approach to playing RPGs in-store untenable as different pockets of players will have their own favourite ruleset. 

I already spent most of my funds on Kickstarter and DrivethruRPG, so I no longer need game shops here - but I'm also no longer a regular player as RPG gamers have evolved into a more woke and younger community with different social norms. 

So that's happening to me as I hit my 50s at the end of this year. I am still determining when I'll ever play D&D again as my business interests are expanding, and my children will get more attention from me. I still consider reading RPG rules a fundamental part of my personal identity and can talk about RPGs all day ( in a theoretical way, unlike investing ). I am slowly building up a collection of solitaire wargames, but I may never play them if they are highly involved.

I might have a way out of my kids developing a curiosity about my hobbies, which is almost impossible in an age of Roblox-like platforms, consoles and mobile gaming. 

Letter to Batch 33 of the Early Retirement Masterclass

Dear Students of Batch 33,

It's been a great honour and privilege to conduct a 5-Day Early Retirement Workshop for you.

Teaching this batch of students has been much more challenging than teaching earlier batches because we decided to transition to Quants Café as our back-testing tool. The tool is less than six months old, and I decided to transition into this when I can adequately perform the backtests to create stock screens for the program. Today's exercise raised some inadequacies in the new training materials, including more video materials and explanatory notes over the next few weeks. I will prioritise training videos and a lab sheet to make training future batches much easier.

Beyond the training in using the tools, the class has also created a very tight portfolio consisting of only 14 stocks. It brutally rejects most blue chips in favour of small caps and REITs. The final yield is exceptionally high at 7.48%.

The situation for the ERM portfolio will improve beginning around Q3 2024. It does not make sense that such a well-run city-state has its equities priced at a PE of around 10. For another, the situation involving REITs will likely turn around once the Fed begins lowering interest rates.

The conversation with the students is also something that keeps me going. I was unaware that the tourism momentum in Singapore has legs because Bruno Mars will be conducting a concert here in a few months. Discussing what authorities and companies are doing about scalpers is fascinating. As mundane as such discussions might seem, they paint a bullish picture of our local economy that justifies our tight portfolio that made two hospitality trust picks.

Lastly, I hope Batch 33 will participate actively in the FB group. I look forward to seeing you in the following community seminar slated for Q2 2024.

Hope to see you then!

Christopher Ng Wai Chung

Three improvements I hope to see for the CPF system

 

Now that the chatter about the CPF changes has died down, it's time for me to develop a wish list for the CPF Board. I have tried to make it as reasonable for the CPF Board to do this, given that the disappearance of the CPF-SA after age 55 would free up some fiscal room to give more for CPF members.

Here's my wish list :

a) Make CPF-Life scale linearly with premiums.

There is a progressive element to CPF-Life payouts that discourages folks from putting more money into the CPF-RA. The CPF-Life payouts per unit premium paid are higher for lower sums committed to the program. This is to provide more retirement assistance to those with less savings.

This policy will no longer be necessary if we provide more top-ups to lower-income groups. ITE graduates who enter Poly already get increased amounts in their accounts. 

The middle-income groups need to feel they are getting a fair amount from participating in CPF Life; otherwise, they will think they are subsidising other citizens when they engage in risk-pooling.

b) End the hypocrisy around the Retirement Sum Top-Up Scheme. Give us something we can use.

The RSTU is a powerful avenue to reduce personal income taxes for high-earning professionals. However, the government will disable RSTU once the member accumulates the FRS to curb too many advantages to the wealthy. But that's not the end of the story; at age 55, RSTU makes a comeback, and you can do it until your CPF-RA reaches the ERS. 

This whole system is dumb because the significant earning years do not entitle most professionals to benefit from RSTU. Thanks to completing CPF-OA transfers every year, I personally reached FRS in my CPF-SA in my early 30s. For the folks who can use RSTU again at age 55, they may no longer have a career that can benefit from tax benefits anymore. CPFB folks seem real niggardly to enact a policy like this. 

With such a high bar to reach 4xBRS, the CPFB may throw a dog a bone and allow RSTU to keep accumulating until ERS. A maximum contribution of $8,000 is a little every year, and CPFB should also have a policy that benefits PMETs, given that we're throwing money at ITE grads to enter Polytechnics. 

c) Have a CPF-Life scheme that pays married couples until both pass away.

 

With so much emphasis on marriage, starting families and having children, it's ludicrous that the CPF-Life scheme does not have an annuity program that continues paying to support the other spouse after the member spouse passes away. 

Of course, if an annuity is designed to pay until both spouses die, the monthly payouts can be calculated to be much smaller by design. Still, I would undoubtedly prefer a fixed payout, at least for my wife, after I pass away. 

Do note that folks with young spouses will get tiny payouts in such a case. This is all set by actuarial tables anyway. 

I want this so much that I'd happily sacrifice that stupid political compromise, the Basic Plan, to make it happen. An alternative would be to allow CPF-RA transfers between spouses. 

Anyway, these are my suggestions to the policymakers. 

Feel free to discuss how feasible they are. 

Update on my crypto positions

 

I have written several crypto articles on this blog over the past year. You can find them here and here.

This morning, as ETH hit over $4,000, I decided to exit all positions in ETH as I've managed to derive a significant amount of returns since I have a leveraged position in ETH in Compound V2. I clumsily closed my leveraged positions since I owed some DAI, then moved the ETH off-ramp on the Gemini exchange and converted the money to SGD. The losses from transaction fees were high, and I lost about $1k in the process, but the money is safely back in my bank account in SGD, and I made some excess funds for my trouble.

When the Terra Luna ecosystem broke down, I could round up some spare change to buy LUNC when it was selling for around $0.000027. You can find a historical record of my thought processes then here. While LUNC is now trading at about 7x my original value, I have previously farmed my LUNC and UST into the Mirror protocol and took in as much spare LUNC and USTC that it could spin off. I currently have about $8,000+ in the Terra ecosystem, but my money is not mobile, as I need 21 days to unstake most of my LUNC.

As far as I was concerned, while I was now sitting on some gains, the most enormous damage I suffered at that time was the effort lost in designing a cryptocurrency course. I can now escape with my course fees and some extra pocket money for the March holidays while keeping my millions of LUNA classics as funny money in the improbable event of a re-pegging of USTC.

As for where the funds are now, I've farmed it into the portfolio I manage under the All-Weather Portfolio, where just 8% is put into GBTC and ETHE. ETFs will be how I will take a position in crypto. There is now a more systemic approach to shift the funds out of crypto when the momentum slows down and becomes overtaken by another asset class. 

Here are some of the thoughts I have about cryptocurrency investing:

• I still think I left ETH early, but I am uncomfortable about some Dua Kang Cryptobros returning on the forums. They can have all the fun getting rich. 
• The gas fees in the ETH ecosystem are brutal in a bull market. This will force many investors to trade ETFs as trading fees are lower, and there is no need to manage wallets. 
• The regulatory regime is also tighter, and I can't withdraw my funds from Coinbase as DBS keeps flagging an error when I try depositing $1 to link it to the exchange. I off-ramped my funds in Geminii and lost a lot to transaction fees. 
• There's plenty of money to be made from regulatory arbitrage. As crypto ETFs slowly get approved, you can take positions to exploit the upswing. There's no real need to buy crypto and store it in your wallet anymore. A brokerage will do, but you must be an AI and enable complex leveraged products.

Finally, I currently have about $8,000+ in LUNC and USTC, but I am already sitting on fairly substantial gains. If the price remains high in 21 days, I might liquidate and farm the funds into the next LUNA-like investment. 

The closest trading idea I have is Keppel Pacific Oak REIT. It stopped paying dividends but still has a high tenancy rate. This could be a multi-bagger, but you must be patient and hold it until 2026. The odds of dividends returning from KORE are higher than USTC pegging. 

From Languishing to Flourishing

 

In this second part of my series on languishing, I focus on some of the remedies that can turn someone who is languishing into someone who is flourishing. 

First of all, I'd like to talk about two possible paths to flourishing :

• The external path is where we keep score and become good at something, like our jobs. We take the external approach when we do something to improve our social status. The external pathway is objectively rewarding, but you get diminishing returns as you age. 
• The internal path is all about meaningful personal change and ethics. As you get older, there are more opportunities to follow it, at least because the nosy relatives who judge you during the New Year family gatherings begin to disappear one by one.

I find the internal path harder to walk than the external one because I can keep score and compare with other people. But I am also aware that post-FIRE, there is now lower-hanging fruit for the internal path.

After that, the steps to flourish all seem like another self-help guide. I wish that future research could dive into more granular detail, but readers can look at the following for now.

• Learn something new - This is too easy thanks to Skills Futures, but my emphasis is to teach something new because the Feynman Techniques shows us that we can reach much higher levels of mastery when we teach something.
• Building Relationships - While the book says that quality matters more than quantity, I wish different personality types could use different strategies. As folks get older, they become better at ending relationships. If only there was more direction on how to do this. 
• Spiritual Practices - Another valuable opportunity, but this world is full of cults and scams. The question for non-religious folks like me is whether we can come up with ideas that go beyond meditation or yoga. 
• Finding Purpose in Life - Philosophy has relatively good answers to address the problem of finding meaning in life. 
• Play—The funniest thing I realised about this section is that play is supposed to allow a person to practice their imagination and break away from an obsession with achievement. But I've been gaming for so many years that I see long-time gamers flouting this rule continuously because competitive games give them that feeling of success that has eluded them in real life. 

I'm incredibly interested in learning new things for folks who read my blog. I'm also okay at building relationships and finding a purpose in life. I suck at Spiritual practices as I lack patience and have attempted meditation and yoga with almost no results in many stages of my life. I've reduced the amount of Play in my life as many gamers find inauthentic means of Flow and building fake achievements. 

Of course, the whole point of this self-audit is to open my mind again to previous failed attempts and try to do better, but with a different approach.

Finally, you can observe how every single point about flourishing does not involve much money at all, but FIRE can be an enabler as it gives folks time to figure out how to flourish.