Thursday, August 15, 2019

When your Singapore Dream dies, what will you do ?

A man in his 40s experiences the coming of the Autumn of his life. His parents are getting old and his children still need his support. He also has to deal with a tougher working world as he has less energy to spend at work.

My dad has just been discharged from hospital and my mum is struggling with post-hospital care-giving. For the past few days, I have been helping out to buy to medical equipment to make my mum and our helper's life easier. We bought a commode, a ripple bed, and expect the delivery of a back-rest next week. My parent's home has been turned into a make shift hospital. Delivery of adult diapers will now be a regular event at my household.

Autumn is no longer a time of earning money aggressively. All the #YOLO and personal growth will suddenly take a back seat and you will be forced to play a game a defense.  Consequently, my single-minded focus on money will naturally shift to focus on time for loved ones.

I am grateful for a good summer because I was able to earn a decent amount of money and invest it well. But now, I am entering Autumn and increasingly I will have to look into playing defense and put the welfare of my family above that of my career. 

To visualize the coming of Autumn quantitatively, the Ministry of Manpower publishes data on median salaries broken down by educational qualifications and gender for our review. This gives an idea of how our Singapore Dream will unfold as we grow older. But more importantly, it also tells us when we will be expected hit our peak earning years and when the Singapore Dream begins to die.

This can provide some insight into how long we can sustain our break-neck career trajectory and when we should start planning to give up on the Singapore Dream.

a) Degree holders earn more but plateau much earlier.

If I did not leave the corporate world, I would have under-performed my peers with degrees when it comes to salary and earned income. Fortunately, I was "outsourced" early in my career and did not drink the "career ladder Kool-Aid" drunk by many corporate executives. I knew the music would end early for engineers of my generation. The CECA agreement signed in 2005 was the death knell for many local IT professionals, but as an outsourcing professional, I saw it miles away.

You can see that degree holders in Singapore do rather well and can earn up to $10,000 per month at age 45 after which they start to decline. This corresponds very clearly to the retrenchments we are seeing in the economy and it basically means that after age 45, there is nothing much to look forward too.

b) Diploma holders earn less but can extend their careers much longer.

I read elsewhere that Diplomas and Trade schools are designed by society to increase a population's conscientiousness and this is clearly reflected in the career longevity of Singaporean diploma holders. Diploma holders have salary trajectories that continue to trend up until they can receive their CPF money.

Perhaps this is a testament to our need for worked with genuine skills and not middle management administrative skills. We have to keep this up for the middle class, give them something to look forward to right up to their first CPF payout.

c) Post-Secondary qualifications without a diploma earn less and peak earlier.

This reinforces my theory that a diploma is useful for nation building and results in the longest (but not highest earning) careers. Qualifications such as A levels are not really useful or helpful to society and it is better to get a diploma than to be a  glorified clerk in some office.

All this means something for readers of this blog who are primarily Singaporean degree holders.

Here's what kind of lessons we can all draw from this simple graphing exercise :

a) Gen X needs to get off your high horse NOW

Is a 1.8L car better than a 1.6L ? What kind of condo will be proof that you have finally arrived ? Which luxury watch is better Lange & Sohne or Patek Phillipe ?

These are the stupid and inane questions Gen X bother themselves with everyday.

Once you realize that your earned income peaks at 45, you will see the importance of getting off your high horse. You have to find ways to stop increasing your expenditure further at age 45. Setting aside some cash reserves for retrenchment should also become a priority.

The biggest threat to your life is the hedonic treadmill. You have become accustomed to a life of a PMET with a car and a condo but such a lifestyle needs a high maintenance. The downgrade needs to begin immediately upon reaching 45, hopefully before you get retrenched.

Maybe you can start by reducing purchases from Cold Storage and start shopping at Sheng Siong.

b) Invest to maintain your salary trajectory

I don't think there is any shame upping your savings to 50% of your take home pay if you make $10,000 a month - it would just equalise you to the same standard of living as a diploma holder of the same age.

Saving 50% can mean creating an investment portfolio that can provide dividends that will continue to provide increments beyond 45.

This is basically what the curve is trying to tell local professionals. After 45, your increments will come from increasing rents and dividend payments and not from salary increments.

c) If you are planning to emigrate, a plan to quit Singapore needs to be executed around age 45

45 is the peak of your earning power. By reaching this point, you have enjoyed and contributed everything you reasonably could to the Singapore economy. Now society wants you to step aside for younger people and will begin to value your skills less.

Being a global city, Singapore will always be a tough place to work. You can plan to quit by 45 so that you can transition and still remain on the upper part of a salary curve somewhere else. I have written about SIAMFIRE or retiring in Bangkok if you can't afford to stay in Singapore. There are also alternatives like Australia that pays blue collar workers well so you can go there for a kinder and gentler corporate culture.

Maybe for this National Day, you need to ask yourself how much more shelf-life you have and start planning for the inevitable. Our government has published excellent data for us to make our plans decades in advance.

What will you do when you plateau and the Singapore Dream dies when you reach 45 ?

[ NB : I will be 45 this coming Christmas. This data was a sobering wake up call to me. ]

Tuesday, August 13, 2019

MBA in a Nutshell #1 : Universal Business Formula

Image result for mba in a nutshell

If you want to summarize the running of a business into just one simple formula,  it should look like this :

1) Revenue - Costs = Operating Income
2) Operating Income - Tax and interest expenses = Net Income

There are only two ways for anyone to make more money in any business endeavour:

a) Increase Revenues

This happens only if I can get more customers to sign up for my program. One way would be to keep varying my marketing preview messages so that more potential customers sign up. Another way would be to increase the frequency of my preview talks.

There is also the possibility of adding more courses. The answer I have chosen for myself is to keep improving the value of the cost to justify fee increases.

b) Reduce Costs

It is much harder for me to reduce costs so I do avoid taking this route in my work.

Other trainers may try to squeeze in more students per class to keep costs down. What is unthinkable for me would be to look for a cheaper venue or reconfigure what students eat for lunch.

There are just four ways for a business to grow :

a) Sell old products to existing customers. Eg. Course refreshers for existing customers.
b) Sell new products to existing customers. Eg. Advanced Investment Courses.
c) Sell new products to new customers. Eg. Personal Finance Course for Millenials.
d) Sell old products to new customers. Eg. Previewing my existing course offering.

Most investment training products are about hawking established courses to new customers but my course material changes sufficiently for older customers to possibly want a refresher. ( As I am still quite new to this business, I have not started working on this arrangement yet.)

Maybe in about 2-3 years, I may consider an Advanced Investment Class to run a hardcore session for intermediate investors.

You can use this same framework to review businesses in your investment portfolio.

Can Netlink NBN Trust find new ways of generating revenue ? What about SPH ?
If not, how can they improve operational efficiency and reduce their costs further ?

Sunday, August 11, 2019

Stocks Cafe : A Nifty Portfolio Management Tool

It's quite hard to find a good collaborator in this field. Fortunately, my working relationship with Evan Koh has taught me all the good traits in a great collaboration partner.

I met Evan via my work with Dr Wealth, at that time I was not a trainer yet but I had noticed that Stocks Cafe is a really powerful tool for retail investors. After launching my program, I realize that there are psychological benefits of seeing dividends be taken into consideration when a stock goes ex-date. Evan is now a good friend, and I make a point to have coffee with him whenever he is back in Singapore. My business partner Alvin Chow describes Evan as a person whose values are firmly grounded in the notion of "adding value" and this shows in the sheer quality of features in his creation as well as his rock bottom price.

Stocks Cafe is one of the best tools to monitor a portfolio because it allows a retail investor to track incoming dividends. Dividends also arrive on Ex-date so that you do not need to endure the psychic pain of watching your portfolio shrink when it was shrinking because it was pushing money into your bank account. It also produces a lot of useful metrics on your portfolio like VAR.

Evan was kind enough to offer his $39 program at a discounted fee to my students (at $35) and offer me a small commission along with it. As a consequence of this collaboration, Stocks Cafe has become a major screening and portfolio management tool for students of my program who can get access to capabilities better than what Yahoo Finance can offer.

This positive synergy has also enabled me to start creating my first introduction to the Stocks Cafe platform which, I think, should benefit all readers of this blog.

Here it is :

If you like what you see here head over to and sign up on this platform !

Thursday, August 08, 2019

Harsh truths about local degree programs #2 - The Final Word

Before I begin...

Ok, the first installation of this article went quietly viral. While there was no discussion on this blog, but the viewership hit the roof and it became one of the most popular articles this year. 

Before I get to the substance of what I have to share today, I'd just like to address the commonly encountered criticism of my article. Some folks argued that choosing a degree for vocational reasons undermines the spirit of learning. 

I think these critics need to check their privilege. 

Singapore degrees are vocational ! 

A substantial proportion of the Singapore population have degrees and it forms a major part of their Singapore Dream. A degree is no longer some kind of license to hide on top of an ivory tower so that you can intellectually masturbate to academic papers written on Phenomenology or 12th Century Zoroastrian writings.  In order for Singaporean's FIRE aspirations to be met, society must deem their academic qualifications to be useful. 

Also, the folks who defend their love of learning conveniently ignore the fact that a lot of working class Singaporeans take on loans to study for their qualifications. Many of such loans come from their parent's CPF ordinary account so paying back is a priority. I think they also exaggerate how much a degree plays into a person's identity - a complete education often involves a constellation of CCAs as well as networks that can give a person a social and cultural advantage throughout their entire lives. 

Even if critics can muster a stronger argument, the POTS framework remain a tool for folks who are aiming to FIRE at a younger age. If FIRE is your aim, then you need a degree that can put as much money in your pocket quickly so that you can build up a portfolio faster than your peers, so having a higher pay to offset your study loan takes priority.

That being said, we can now refine the POTS model into something that is a lot more useful than what was first suggested by Kristy Shen. 

First, I adjusted the minimum salary to follow the average salary of an A level graduate which is quite low at $1,600 a month. Once I do this, however, the three year non-honors degrees get a huge bump because school fees are much lower. 

(We even managed to get a situation whereby a non-honours Arts degree has a higher POTS score than an engineering degree, but an honors Arts degree fared worst !)

So the model can be improved further. For most practical purposes, salary information does not fully describe the usefulness of a degree. 

What's equally important is the employment rate of fresh graduates.

I took a stricter definition of an employment rate that only considers permanent employment in the Adjusted POTS calculation - this is due to my opinion that nobody chooses a degree just so that he can drive Grab or sell insurance. Most of us mortals seek employment in a steady job that pays a decent salary.

Also, the Nursing and Accounting degrees were introduced to make the table more useful.

Multiplying the original POTS score by the employment resulted in this table :

Once we introduce the employment figures, Medicine remains the choice only for the most dedicated A level students. Once you see the score for a medical degree, can you even blame our doctors for wanting to specialize instead of becoming a GP and serving the community?

Science degrees remain a horrible idea unless the government can intervene to subsidize these degrees more generously. The employment rate is also atrocious. We urgently need to come up with new jokes about our science majors becoming baristas and serving french fries in Singapore. We've been unnecessarily mean to humanities majors for far too long.

Music and the Liberal Arts remains the degree only for the hopelessly insane, woke or fabulously wealthy. Like I said on social media, Yale-NUS is not the same as Yale. The same way Lippo-Mapletree is not the same as Mapletree. 

Business, Accounting, Law and Computing remains decent choices for FIRE enthusiasts have an Adjusted POTS above 0.5 and I am quite glad that to see that Nursing numbers are not bad as well ! 

So cross your fingers, my BBFA friends ! 

One day some hot nurse might join our financial blogging community !

Wednesday, August 07, 2019

Online lecture and tool demonstrations

Today I started teaching myself Camtasia and Video editing so that I can start sharing free lectures to the public as well as online tool demonstrations I typically do "live" with my students.

This is my first attempt to show folks how to use a compound interest calculator.

From now on, things should get much more excited in the future.

If only I figure how to start making live videos !

Tuesday, August 06, 2019

New Column : MBA in a Nutshell

I never believed in the magical career-enhancing powers of an MBA. Even as a first year Systems Analyst in P&G, I was able to gain exposure from seniors and managers who built fantastic careers with their MBA qualifications but somehow I never saw myself getting one.

The main reason why I refused to do an MBA was because I was contrarian. It did not make sense to pay top dollar when you can self-study the CFA for the fraction of the cost. I also did not believe that anyone should be made to study and take exams for flaky non-technical subjects like Marketing and Organizational Behavior. That's almost like trying to get a Certificate in Common Sense. I have since done worse, wasting hours of my life on Legal Theory and Philosophy in SMU when it is more productive watching paint dry and playing with my Pi Sai.

Another reason why I was confident I cold eschew the MBA were the many popular books that attempt to summarize an MBA program like 10 Day MBA by Steven Silbiger.

Today, I am still a sucker for MBA guides. My latest purchase was The Visual MBA by Jason Barron.

The next column on this blog will be based on Dr Milo Sobel's MBA in a Nutshell, following the tradition of previous columns, I will comb the book cover to cover over the next few months.

As the book only has eight chapters, I will take a super slow approach, crunching 3-4 pages at a time per blog article so that I can apply the lessons of an MBA course into my life as an investment trainer.

The best time to pick up business skills is when you are actually running a business so that theoretical ideas can be turned into practice. In essence, I am solving a big business case involving my Early Retirement Masterclass product offering.

Maybe this blog might even be able to attract a new kind of MBA candidate into its readership.

Considering that I don't have an MBA myself, this would be kinda ironic.

Sunday, August 04, 2019

Harsh truths about local degree programmes

One of the really powerful ideas in Quit Like a Millionaire by Kristy Shen is the idea that your first degree will be a major driver that determines whether you can become financially independent, so you need to choose your first degree carefully.

In her book, Kristy's thesis is the idea that you should never choose a degree based on passion - you should choose a qualification based on your grades, and what she terms the Pay over Tuition Score or POTS score.

So I decided to take her framework and shoehorn it to NUS degrees.

In my rethink of Kristy's POTS framework, the earning potential of a degree is equal to your first year's annual salary minus what salary you can credibly earn as an A level student. I don't have data on how much an A level student can earn, so I pegged it at $2,000 a month, about 20% below a diploma graduate. So in my formulation, POTS is the ratio of this earning potential of a degree over the school fees charged by the program. If you are a Polytechnic graduate, you may need to adjust the calculation based on a diploma holder's salary which is around $2,400.

To do this, I took whatever data I could from Seedly and did my best to construct a POTS spreadsheet for NUS degrees. My methodology is probably quite shoddy so you should do your own research and calculate the POTS of the course you want to take.

( I think POTS > 0.5 is a fairly good screen because you break-even after 2 years of work. )

If you review the data, you can see that actually most of the NUS degrees lead to decent outcomes. 

The most prestigious program that is Medicine obviously has a low POTS score because of the cost of all the cadavers and labs doctors need to get themselves trained. Nevertheless, the salary recorded was based on a first year registrar salaries and doctor salaries do improve very quickly throughout their careers.

The high POTS score for Law students can be deceptive. It's like the Hokkien saying goes "Ho Kuah Bo Ho Jiak". Good to see, but not good to eat. To rub salt into the wound, Law can't even match the POTS of a Computing degree where all the whiz kids and the action is these days. 

I'm also glad to declare that Singapore is not the place where we make fun of Humanities graduates.  NUS Philosophy graduates do not end up becoming Starbucks baristas. The POTS of an Arts degree is relatively high compared to Business and Science degrees. 

The real whipping boy of NUS is in fact the Science faculty. Perhaps a Science degree needs to be cheaper if we want more folks taking STEM degrees - their starting salaries really suck. 

I think the degree to really avoid is the Bachelor of Music that actually has a score that actively destroys the value of an A-level student. You can go for this degree if you can get a full scholarship or come from the High SES families of District 10. 

Also, I simply cannot imagine why anyone would pay the full fee for NUS-Yale Liberal Arts program. Starting salaries are a joke, fees are ridiculously expensive, and don't get me started on the 'woke' brainwashing that comes with it. Yes, maybe some of these guys will end up in management consulting or investment banking, but shouldn't that be reflected in the average salaries?  

At this stage, I have refrained from calculating the POTS of private degree for polytechnic graduates, this is something I leave someone else to do. I would be surprised if any private degree program will pass my screen of POTS > 0.5. 

Feel free to try and report your results.