Growing your tree of prosperity
Growing your Tree of Prosperity is an introductory investment guide written specifically for Singaporeans who wish to take their first step towards financial independence.
Saturday, November 02, 2024
Interest in Personal Finance comes from understanding the Marshmallow Experiment
Sunday, October 27, 2024
Financial Update : Optimism on the horizon, but it's so hard to make things work this year
Before I begin, here's a link to a video I made with Budget Babe. Please support her YouTube channel.
Saturday, October 19, 2024
Is financial literacy considered cultural capital ?
Looking at the surface, I was unconvinced that financial literacy is cultural capital. It is basic knowledge that every Singaporean should know, but the finance industry has cultivated a team of commissioned salespeople to gatekeep his endeavour. Furthermore, rudimentary financial knowledge may subtly hint that you might be a commissioned financial advisor - someone that polite society should avoid in, especially in shopping malls and MRT stations.
Nevertheless, I was able to do some Googling to find out what constitutes culture. We can then apply some analysis to see whether this is true, tapping into ideas from sociologists like Pierre Bourdieu and Jean-Clauge Passeron.
a) Cultural capital can be embodied.
Sometimes, you can cultivate your cultural capital by joining a profession or being born into privileged circumstances. It's rare for someone outside the legal sector to "come alive to an understanding of" something or view something as "apposite". So, these vocabulary markers might hint at being someone from that sector.
Workplaces focusing on style rather than substance can be places of cultural warfare. An associate was shamed for loving K-pop and asked to watch Andrew Lloyd Weber instead.
A taxi driver taught me that he knows clients are poor if they speak in absolute numbers, like a watch costing $14,000, but wealthy clients who drop off at posh locales almost always speak in percentages, like a rate of return of 7%.
Whether financial literacy can constitute cultural capital will depend on whether some part of language use is considered "atas," and I don't think that matter has been resolved yet. No matter what some people say, talking about "safe rate of withdrawal" or "sequence of return risk" is not considered posh yet. I also think that dividends in Singapore have a stronger relationship with hawker food than Michelin fare, judging from the food pictures in the Dividends chat group.
b) Cultural capital can be objectified
This is irrelevant to our discussion, but owning something can be seen as cultural capital. Art objects often play this role because they are superfluous and costly.
Not all branded goods denote cultural capital, but brands like Hermes artificially create scarcity so that their Birkin bags can claim that role.
I believe books can signify cultural capital, but you really need to understand the genre to make this work for you. An old copy of Security Analysis by Graham and Dodd might say something about you, but only if it is a copy that is worn from use.
c) Cultural capital can be institutionalised
You can also gain cultural capital by getting some form of qualifications. This is the same reason parents want their kids to enter law or medical school; it allows their children to qualify for a different stratum of society.
For this to work, the qualification must be hard to attain. The CFA does this by failing 50% of candidates at every level, but I imagine the full qualification to become an actuary is even harder.
Exams should not be enough to be really valuable. The best professions have their own exclusive access in the form of guilds and a specific way of communicating with each other.
After this analysis, I don't think financial literacy is yet ready to be considered part of cultural capital. While being practical, claiming some rudimentary grasp of financial literacy is not something you wave around in a cocktail party. In fact, talking nonstop about crypto on a Tinder date is universally scorned by Singaporean women.
But cultural capital evolves over time. In the past, quoting Shakespeare might create an impression of cultural sophistication; these days, I think you'll be much cooler if you quote Game of Thrones or Dune.
At the end of the day, discussions like this should not really matter; if a reader wishes to develop and cultivate his cultural capital, he should simply make an effort to read more than his or her peers.
Read to make yourself more knowledgeable.
Read to be able to handle a magazine like the Economist.
The cultural capital will come with more literacy.
Saturday, October 12, 2024
What am I struggling with in my business right now?
As I approach turning 50, I will reflect on some of the challenges I have been struggling with. I'd like to start with the most complicated area of my life, so I'll discuss the earned income component of my life.
My earned income component has been the least successful area in my life. That also sucks up most of my life energy because I've always felt that it's an essential area of struggle. After all, it answers this question:
Post-FIRE, what are the possible career moves to enjoy a good income and quality of life?
Sadly, I don't have a better answer than anyone else after a decade, but I'm here to show everyone my working.
a) My training business
I'll forever be grateful to Dr Wealth because I found an alternative to the back-breaking legal career I initially planned after my JD. The first three years as a trainer brought me 2x my salary in my previous job and paid off my school fees in 6 months, confirming that this is a viable career. It also allowed me to develop skills I could not acquire in my earlier career. A seven-digit revenue for ERM, followed by an appearance on Money Mind, can't hurt my resume.
Like all businesses, that golden era appears to be over as interest rates begin to go up, but I enjoy the work of investment training a lot. It has even made me a much better investor now. Once I started coding my investment advisors and using AI to generate analyst reports, I could tolerate the work even as a sideline that generated a small allowance.
Nevertheless, my training business will be in an existential crisis in 2025. I will either need to make adjustments and change the price point of the courses, or the business may need more time to justify the time I spend on it.
b) My role as an adjunct lecturer in a tertiary institution
To preserve my training job and to earn a more stable income, I spent the year taking on an adjunct lecturer role in a tertiary institution teaching adults Corporate Law and Legal Technology. The value of doing this is exposing myself to life with a more conventional role with the skillsets I developed at Dr Wealth.
The initial plan was to introduce a more stable income to my fluctuating revenues without giving up my business. I would also need a "barbell" strategy in my earned income strategy: a volatile and high-earning job and a stale one that even pays a bit of CPF.
But this job has its own set of challenges. Contract renewals are done in drips and drabs, so you cannot project your income with certainty a semester moving forward. I was initially unhappy that I was only retained for one subject next semester, but as more contracts arrived, I was too happy to complain about being overbooked.
Payment platforms can be improved, and you often wait an additional month to be paid.
Nevertheless, after a year of struggle, during which unhappy and sometimes entitled adult students often yelled at me, I can now sell more weekly lecture hours.
The system is not designed as a leading source of income, but it's okay if you have a day job and plenty of passive income.
Is a portfolio career easy compared to a conventional one?
There have been moments this year when I wanted to quit everything and start looking for a conventional job ( likely in AI ) because there were moments when I was just doing administrative unpaid work just to keep this portfolio career machine running.
The numbers need to look better as well. I'm averaging $4k+ when my basic family expenses are close to $6k a month, so some digging into my dividend income was necessary in 2024. But this is easily the worst year of the decade, and I've already rebounded from 2023.
But from another perspective, this is a massive win because many post-FIRE folks complain about needing a real career identity, which we are primarily conditioned to do in Singapore. When people ask me what I do, I tell them I teach investing classes over the weekends, but I'm also a law lecturer at a local institution. Afternoon swims, fooling around with my kids, and meeting folks for coffee when they have a work break doesn't hurt.
If I sound very theoretical right now, I'd like the more savvy readers to recall Coarse's theorem about the firm in Economics. Firms are hierarchical structures that prefer to contract work that can be well-defined to someone else who can do the job better.
My Dr Wealth work is something society contracts out to me to perform. I'm subject to the same business forces and cyclicality as every other entrepreneur. My work with a public institution puts me in a complicated bureaucracy, where a bulk of my work is administrative in nature, just to get the system working.
There may be no way out if you want a portfolio career.
You must have a passive income flow, actually a large one, to avoid going crazy.
Saturday, October 05, 2024
Insights from my volunteering work at Raffles Institution in 2024
a) When I entered the classroom, the kids updated each other that Iswaran had been sentenced to 12 months. I got the news from them because they actively monitored it throughout the day, whereas I wondered why the bubble tea in the school canteen was so expensive at $4! They must be trained well to be intrinsically motivated to follow current affairs. At their age, I'm more interested in who the current WWF Heavyweight Champion was. ( Those days, it was always Hulk Hogan or The Ultimate Warrior. )
b) The first really great question was whether knowing some kind of URA 15-year master plan can lead to the possibility of buying houses that increase in value over time. I was stunned because even I didn't follow the master plan when I bought my EC. To answer the question, I explained that knowing public information may not lead to outsized gains because other people see the information as well, which I had to explain second and third-order thinking to the audience.
c) The second impressive question was whether introducing Central Bank Digital Currencies or CBDCs would be a bullish or bearish indicator of cryptocurrencies. It was not designed to impress because students thought about both scenarios in painful detail. I told him I didn't know the answer, but I am more inclined to agree with his argument that transparency in digital currencies will drive grey and criminal use cases to employ existing crypto or Monero even more fervently.
I have graduated with 700+ students in my ERM class, and my students include PhDs in finance, board directors, and MAS regulators. I can't get the high-level Q & A participation like what I get from these 16-year-olds.
This gives readers an idea of why I always make some room in my schedule when RI contacts me.
But that should not stop other schools. I've also been dying to do a pocket money survey on ACS and Chinese High.
Saturday, September 28, 2024
Three guaranteed ways to make people hate your content in personal finance.
If you say something positive, unless you are as cute as Moo Deng, the pygmy hippo, you will not likely get much traction or eyeballs. Love and positivity are not monetizable, but hate is a different matter altogether. If you write something that can make people hate you, you might get somewhere in the race to turn eyeballs into revenue.
Based on what I know, there are three consistent ways to make people hate you in the personal finance space:
a) Claim to have $100,000 before you are 30
Getting $100,000 before age 30 is like a coming-of-age ceremony for financial influencers. For folks of my generation, this is not an easy target to reach; you need a reasonably solid job as a professional or a salesperson to have a decent shot at meeting this target. Over the years, thanks to inflation and higher starting salaries, $100,000 before 30 has become more accessible.
But the hate has not changed over the years. I got a fair bit of attention, which did quite well for book sales in 2005 and even garnered 100+ pages of discussion on YPAP BBS and EDMW forums if I recall correctly. However, the vitriol against female influencers was much higher than what I experienced with Budget Babe and MissFITFI.
I suppose commenters are more concerned by why they CAN'T get $100,000 by age 30 and seem to have some kind of defensive mechanism when faced with women who can do it. It's like gatekeepers in the computer gaming space - they are primarily incompetent male gamers.
b) Claim to be retired early
The most ridiculous public censure against someone who claims to be early retired was directed at Rebecca Lim, the TCS 8 actress, when she did an advertising campaign with NTUC Income.
Once your audience is fed up with hearing about your $100,000 net worth, your next move is to claim that you have retired early. This attracts much more vitriol, as many fellow citizens feel stressed and imprisoned by their day jobs. They last want to know someone who can retire early in Singapore.
I actually see a system of defences to deal with folks who claim to be retired early. The first is to pick on your status as a single person or someone married without kids. Reminding financial influencers that they are single makes people feel better about themselves. Investment Moats and AK71 seem to be criticised quite a bit for this.
Another approach is to examine retirement status with a fine-tooth comb. You may not be considered fully retired if you are taking your foot off the accelerator in your intense professional job. Ashish Kumar still does some debate coaching on the side, and I receive revenue as a trainer and lecturer—work that I enjoy.
Finally, people will inquire about your investment strategy. Most will only be satisfied if you can show that you can live entirely on your passive income. If you have a mix of ETFs, you need to have a safe withdrawal rate to convince people how robust your plan is.
Claiming retirement in your 50s does not receive as much brick-bats. I just want to take this opportunity to congratulate CoryLogics for retiring recently at 54.
c) Insult the national religion of Dividends Investing
Dividend investors are having a great time right now as interest rates are down again. The dividends chat groups are full of fabulous food pictures posted by folks celebrating their dividend payouts. In many ways, Dividend investing is like religion in Singapore. We have rituals like a thanksgiving through food posting on Telegram, a religious doctrine on sustainable free cash flows, and a congregation of worshippers in dividend-paying company AGMs. And dividends are a miracle of Singapore capitalism - money appearing in your bank account without you lifting a finger tax-free.
Therefore, it is perfectly logical to attract eyeballs by insulting people's religion. Just say that dividend investing is suboptimal or irrelevant. Kelvin Learns Investing is the latest guy to do this (link), which has created quite a lot of unease in the dividends chatgroups.
I just reviewed the video and found that it actually motivates dividend investing!
His arguments against dividends are weak and a rehash of Modigliani and Miller, which many of us know. He also cherry-picks examples to make his case and rarely assesses dividends as a factor in factor studies. His arguments become very persuasive when discussing the advantages of dividend investing, which was littered throughout the video. I hope everyone will not be too hard on Kelvin, as he needs eyeballs to make money and does not disapprove of dividends all that much.
My views on dividend investing obviously clash with many others, but you can read about them here.
Finally, I don't include blogs designed by financial advisors to get angry eyeballs in my discussion. That's so good; it should be a business model in an MBA textbook. The blog I miss the most is Money Maverick. Since he no longer has an FA license, it's not as maverick as before.
Financial influencers who want eyeballs should stick to my three-stage formula for getting attention on this social media space.
Sunday, September 22, 2024
What kind of mumbo jumbo is Financial Independence, Retire Meaningfully ?
- How transparent are our investment fees when we buy a product? Can we find the full amount on a website, including trailer fees?
- What are the standard deviation and Sharpe ratios accompanying the latest results for these funds?
- Given our risk appetite, based on Merton's Share, what is our allocation for each asset class?
- Can a Monte Carlo simulation show us the probability of success of our retirement plan?