Well it's Christmas and it's my 37th birthday.
2011 is going to come off as a year where I experienced the largest change in my life.
In the same year :
a) Downgraded from a semi-D to a 5 room flat.
b) Moved from the financial sector to join the worker's union.
c) Became a father to my daughter Clio.
It's one heck of a change.
On the upside, 2011 is the year I really started to live exclusively on my dividend income, paying off taxes, maid, wife, mum and personal expenses on investment income. Career-wise, I switched to a formal administrative management job role from that of a technical specialist with NTUC-ARU and gained three new certifications the CGEIT, TOGAF 9 and possibly the CRISC. For my writing, I really started producing books in the Kindle development platform writing a full-fledged RPG, two non-fiction books and in the next few days, my first fictional product.
On the downside, some things have changed this Christmas. In the past, Christmas meant Borders and spending time having coffee with my friends in Starbucks. These days, Borders is gone and I can't seem to get that holiday feel any-more because I get almost all my media consumption on my Kindle Fire. Even if Borders is still around there are the floods to contend with. Next year, we have to even say goodbye to Page One. I'm having some mixed feelings of the massacre of book-stores in Singapore, since I write e-books and own a lot of REITS, this makes me somewhat responsible for all this creative destruction in the book selling business.
And there is no rest for the wicked. Even right now, I'm in the middle of an escalation with Singtel. A we're having some network difficulties and Singtel has been sluggish in the holiday season to get the problem solved. If Singtel screws up, there goes my birthday celebrations.
So it's been a heck of a year.
If I survive this winter season with my sanity intact, I'll declare 100 days without a personal project so that I can can get my health back together.
Back to basics - Focus on work and family.
Growing your Tree of Prosperity is an introductory investment guide written specifically for Singaporeans who wish to take their first step towards financial independence.
Sunday, December 25, 2011
Saturday, December 17, 2011
Income Streams - Your Three Armies.
I like to use War as analogy in Finance.
We are in a constant state siege in Singapore. We have to battle foreign talent and meet tough expectations from management at work. Recently our public transport has almost become a war zone.
Sometimes, you can look at your income stream as your armies.
These armies move, fight and die like real soldiers. An income stream can be eaten up with the introduction of a big liability. Each income stream has its own powers and limitations, the same way some armies fight better on land, sea or air.
Here is a breakdown of the three armies I know :
a) Earned income
Like many of you folks, this is my largest army. Your earned income power peaks in your 30s and starts to wane in your 40s. But the good news is that earned income does not swing with the markets and provides a certain measure of security throughout the years.
However, know that this army will age as you hit your forties. As many mid-career professionals will attest, the job market is brutal to any man in his forties and by this time, he would be encumbered with multiple mortgages.
Wean yourself out of using this army for battle before you hit your fortieth birthday.
b) Portfolio Income
The power of my second army is a about 60% of my largest army. Your portfolio income starts small and can become stronger the more you save. Having skills in investing make this army even more powerful.
The problem with this army is that it is very unpredictable. Sometimes, this army fights well and many enemies can destroyed in the process. In bad times this army actually turns against you. This upcoming recession is likely to be very bad. No one has any idea how Europe will dig itself out of this mess.
This army is also likely to survive your passing and can be given to your children. It grows with time and can become unstoppable when you hit your 50s.
c) Royalty Income
My last army is very weak and gives me only $150 a month. This army is perpetual and is normally not likely to be subject to market cycles. The problem is that accumulating it is very challenging.
This last army can only be cultivated if you manage your time after office hours well and have to account for the large amounts of channel saturation. Almost anyone can write and float an e-book in Kindle.
A large amount of time is now spent cultivating my third army for battle. My personal wish is that this army eventually becomes my most powerful army upon retirement. This will require a book to hit the best-seller list internationally if it were to happen.
d) Combined Arms is possible
The armies fight together to achieve all your life ambitions. My first army is used to reinforce my second army in the forms of REIT purchases. I look forward to starting on commercial property in 2016. Proceeds from the second army fund my third army, eventually, I have to start a marketing budget once I get serious about the online publication of e-books which should have a website and twitter feed.
We are in a constant state siege in Singapore. We have to battle foreign talent and meet tough expectations from management at work. Recently our public transport has almost become a war zone.
Sometimes, you can look at your income stream as your armies.
These armies move, fight and die like real soldiers. An income stream can be eaten up with the introduction of a big liability. Each income stream has its own powers and limitations, the same way some armies fight better on land, sea or air.
Here is a breakdown of the three armies I know :
a) Earned income
Like many of you folks, this is my largest army. Your earned income power peaks in your 30s and starts to wane in your 40s. But the good news is that earned income does not swing with the markets and provides a certain measure of security throughout the years.
However, know that this army will age as you hit your forties. As many mid-career professionals will attest, the job market is brutal to any man in his forties and by this time, he would be encumbered with multiple mortgages.
Wean yourself out of using this army for battle before you hit your fortieth birthday.
b) Portfolio Income
The power of my second army is a about 60% of my largest army. Your portfolio income starts small and can become stronger the more you save. Having skills in investing make this army even more powerful.
The problem with this army is that it is very unpredictable. Sometimes, this army fights well and many enemies can destroyed in the process. In bad times this army actually turns against you. This upcoming recession is likely to be very bad. No one has any idea how Europe will dig itself out of this mess.
This army is also likely to survive your passing and can be given to your children. It grows with time and can become unstoppable when you hit your 50s.
c) Royalty Income
My last army is very weak and gives me only $150 a month. This army is perpetual and is normally not likely to be subject to market cycles. The problem is that accumulating it is very challenging.
This last army can only be cultivated if you manage your time after office hours well and have to account for the large amounts of channel saturation. Almost anyone can write and float an e-book in Kindle.
A large amount of time is now spent cultivating my third army for battle. My personal wish is that this army eventually becomes my most powerful army upon retirement. This will require a book to hit the best-seller list internationally if it were to happen.
d) Combined Arms is possible
The armies fight together to achieve all your life ambitions. My first army is used to reinforce my second army in the forms of REIT purchases. I look forward to starting on commercial property in 2016. Proceeds from the second army fund my third army, eventually, I have to start a marketing budget once I get serious about the online publication of e-books which should have a website and twitter feed.
Consider the transition to Entrepreneur slowly.
Read a while ago that ago that many start-ups are suffering in Singapore. They blow most of their capital to get a basic version 1 of their application only to make about $3,000 a month for a decent application.
I think this presents a great waste to our society. Entrepreneurship pays off only if someone becomes a success, otherwise, we have to account for the many folks who are forced to return to the job market that will probably discriminate against them.
Here's my alternative take on a safer way to become an entrepreneur :
a) Participate in the working world for a short, fixed time, like 5 years.
If you are a fresh graduate and have ambitions to do a start-up, why not bring your technical skills to a good employer and maintain your lifestyle as a start-up founder, another words, live like a poor undergraduate for the next 5 years or so.
b) Save 75% of your income.
Since you have a start-up mindset, why not just aim to save 75% of your income. This money is invested as future capital to generate passive income to live on.
c) Invest in 8-10% income assets
Invest your money at 8-10% yields. In 5 years, you will be able generate enough passive income to completely replace your expenses. In fact, you will have enough passive income equal to 30% of your starting salary even in the most pessimistic case. This will form the baseline for your lifestyle moving forward.
d) Devote your after-office time to build skills for a future start-up
These days, starting a business is very easy. With a developer account for iOS or Google or even in the future Windows apps marketplace, you can launch a free application to get users to pass you feedback to build a paid version of the app and hone your programming skills.
If you perform these 4 steps, you would be able to deal with the worse case scenario on the failure of your start-up as well as take baby steps towards building your company over 5 years.
As you will also accumulate working experience, you avoid the social stigma of being an unemployable start-up founder.
I think there is only one big weakness in this plan.
If you can work, invest and plan to start-up in your spare time, your company will probably want to find ways to keep you working for them for as long as possible. You may find jobs willing to pay you $10k a month at the end of your personal 5 year stint. This will make regular employment far too attractive compared to a start-up lifestyle.
Thus, you need to value your autonomy more than security to make this work.
I think this presents a great waste to our society. Entrepreneurship pays off only if someone becomes a success, otherwise, we have to account for the many folks who are forced to return to the job market that will probably discriminate against them.
Here's my alternative take on a safer way to become an entrepreneur :
a) Participate in the working world for a short, fixed time, like 5 years.
If you are a fresh graduate and have ambitions to do a start-up, why not bring your technical skills to a good employer and maintain your lifestyle as a start-up founder, another words, live like a poor undergraduate for the next 5 years or so.
b) Save 75% of your income.
Since you have a start-up mindset, why not just aim to save 75% of your income. This money is invested as future capital to generate passive income to live on.
c) Invest in 8-10% income assets
Invest your money at 8-10% yields. In 5 years, you will be able generate enough passive income to completely replace your expenses. In fact, you will have enough passive income equal to 30% of your starting salary even in the most pessimistic case. This will form the baseline for your lifestyle moving forward.
d) Devote your after-office time to build skills for a future start-up
These days, starting a business is very easy. With a developer account for iOS or Google or even in the future Windows apps marketplace, you can launch a free application to get users to pass you feedback to build a paid version of the app and hone your programming skills.
If you perform these 4 steps, you would be able to deal with the worse case scenario on the failure of your start-up as well as take baby steps towards building your company over 5 years.
As you will also accumulate working experience, you avoid the social stigma of being an unemployable start-up founder.
I think there is only one big weakness in this plan.
If you can work, invest and plan to start-up in your spare time, your company will probably want to find ways to keep you working for them for as long as possible. You may find jobs willing to pay you $10k a month at the end of your personal 5 year stint. This will make regular employment far too attractive compared to a start-up lifestyle.
Thus, you need to value your autonomy more than security to make this work.
Sunday, December 11, 2011
What should a ceramics manufacturer know about artificial insemination ?
I was reading the Innovator's DNA, a book about innovation in companies. It had a very interesting story about a ceramics manufacturer that borrowed a technique in artificial insemination to create a new kind of ceramics which was lighter and harder than other industrial ceramics that can be manufactured at that time.
A lesson which can be learnt from that story is that many problems found in one industry can be solved by looking at the best practices of another industry.
Of course, given the complexity of most problems, it's very possible for a person to make the mistake of thinking that only a generalist is able to solve the most pressing issues faced by everyone today. We would need to create a new generation of polymaths or self-proclaimed know-it-alls who know how to inseminate cows and make ceramics at the same time. The consequences in our education system is too hard to bear.
Why does a secondary school student need to know history, english literature and geography at the same time ?
Actually, this is not necessary.
The solution to the problem was found because someone in the ceramics industry was curious enough to attend scientific conferences and had an inkling that a similar problem was solved years ago by artificial insemination experts. He simply managed to convince some experts to provide consulting to the R&D department of the ceramics manufacturer.
The moral of the story is this :
a) With your limited resources, develop a broad based skill-set along with one or two deep specializations. This T-shaped profile is vital to make a living in this world. The specialization needs to be taught, but a broad based education can be earned on your own spare time.
b) Since you are not likely to know everything. You need to network and be able to tap into a web of relationships to solve your most complicated problems. Of course, to benefit fully from this network you should be ready to help the others solve key problems with your area of specialization as well.
Another-words, if you have to choose between being a polymath or actually having friends, it's possibly wiser to choose the latter.
A lesson which can be learnt from that story is that many problems found in one industry can be solved by looking at the best practices of another industry.
Of course, given the complexity of most problems, it's very possible for a person to make the mistake of thinking that only a generalist is able to solve the most pressing issues faced by everyone today. We would need to create a new generation of polymaths or self-proclaimed know-it-alls who know how to inseminate cows and make ceramics at the same time. The consequences in our education system is too hard to bear.
Why does a secondary school student need to know history, english literature and geography at the same time ?
Actually, this is not necessary.
The solution to the problem was found because someone in the ceramics industry was curious enough to attend scientific conferences and had an inkling that a similar problem was solved years ago by artificial insemination experts. He simply managed to convince some experts to provide consulting to the R&D department of the ceramics manufacturer.
The moral of the story is this :
a) With your limited resources, develop a broad based skill-set along with one or two deep specializations. This T-shaped profile is vital to make a living in this world. The specialization needs to be taught, but a broad based education can be earned on your own spare time.
b) Since you are not likely to know everything. You need to network and be able to tap into a web of relationships to solve your most complicated problems. Of course, to benefit fully from this network you should be ready to help the others solve key problems with your area of specialization as well.
Another-words, if you have to choose between being a polymath or actually having friends, it's possibly wiser to choose the latter.