Saturday, April 14, 2018

Managing your Attentional Capital or Focus

Today I went over to Starhub to re-contract my mobile phone into a SIM only contract. By doing that I resolve a painful problem I have been facing since I started work in a law firm - I have two devices that employ mobile data that I bring to work, a mobile phone and a tablet. For months, I have been exceeding my data usage by 4Gb and have been spending $200+ on telco expenses every month. So today was the expiration of my contract so I rushed over to switch to a SIM only plan with 16Gb of data allowance.

The conversation was amusing. The sales executive tried to bait me by telling me that I am losing a $100 phone voucher when I refused to get a new phone. I told him that because I used so many extra Gigs of data, I am a good customer of Starhub and I need to stop being a good customer starting today. He then said that I will lose my double data allowance once a year is up. I then told him that by then, I may choose a new Telco by then as there would be four players in Singapore.

I wanted to tell him to stop up-selling so I told him that I'm a Starhub shareholder and I appreciate his up-selling efforts but I'm minimising what I pay to his company to him moving forward.

The conversation then veered into investing and we started to talk about Starhub dividends. I told him that he was stupid for not investing in Starhub because of the 6% yields he's likely to get and that if there is a drop in dividends he would be the first to know because he would be facing more customers like me who are either bailing out or cancelling a plan. The rest of conversation is about how to open a brokerage account and get started to make more money from his company.

That look on his face when I told him that his company pays me better than a bank deposit was priceless.

Even more amusing was that I ended up selling to him.

Ok... This is a pointless story.... I am rambling... All I wanted to say on this blog post is that we need to conserve our attentional capital or focus.

Singaporeans are lucky compared to Europeans and Americans in that very little attention needs to be paid on taxes because out taxes are quite low. Beyond that, life is pretty complicated on this island.

Here are some examples :

a) We spend too much of our time thinking about CPF which is a confusing monster of a scheme because it covers retirement, education and housing.

b) Property ownership takes up too much of our time as well because the asset enhancement depends on our attitude to foreigners and how we prioritise the needs of home owners versus home buyers. I keep getting into Whatsapp chats where people just speculate about property movements and talk about stupid condo launches. But no one ever talks about tolerance of foreign labor which will drive prices moving forward.

c) We have to consider our educational needs - you can't buy a private degree anymore in Singapore because HR departments will hardly consider the degree worth the paper it is printed on. Replacing this is the possibility of developing skills using Skills Future Credits.

d) There are also other endless distractions that we need to think about : telco expenses, insurance expenses and credit card rewards.

If your personal finances rely on so many moving parts, it simply means that smarter and more conscientious citizens will have an edge in society. They simply can take advantage of more schemes to generate more revenues and savings. Just now, I was teaching my single friends about the Entertainer App, something I picked up from Budget babe's talk last year.

For the folks who are not that smart, you would have to prioritise what area to focus on and stop majoring in minor things. This is why I wanted to stop paying for a mobile phone plan and separate my data plan from the gadgets peddled by telcos. For that same reason, I absorbed the risk of floating rates for my mortgage so that I don't have to keep monitoring which fixed rate plans are the most advantageous ones out there. I have been using the same DBS VISA Classic card since I started work and have never asked for a fee waiver in my life. All my card rewards go into paying the annual fee and Popular vouchers.

As life becomes more complicated, the one rule to follow is to simply follow the money.

If the STI ETF provides a return of 3.5% and you backtested an equal weighted portfolio of STI components give out 5%, a $100,000 shift in your portfolio nets you an extra $1,500 a year. If you can backtest a REIT Strategy that gives 10%, then you can earn an extra $6,500.

That's $6,500 every year after you tilt $100,000 away from the STI ETF.

For those starting out, a well executed job switch may net a 20% increment.

No amount of optimisation of your telco bill or credit card rewards can generate extra revenues like that.