Friday, October 05, 2018

How to start a war in the financial blogosphere.

The major fracas going on in the financial blogosphere right now started this week when Suze Orman told the Internet why she hates the FIRE movement. You can access that interview here.

This got me thinking about how a pitched battle can occur within the local financial blogosphere here.

Here are my thoughts on how to spark a war in out blogosphere :

a) There are industries here that should really hate the FIRE movement

The Singapore FIRE movement irks people for many reasons.

I can imagine that commission sales agents who sell insurance, active fund managers or even MLM folks will have many good reasons to really hate us.

We have collectively sustained a grass-roots campaign to warn readers about investment products that comes with high costs and we have devoted many articles on how to choose an investment product without any industry bias.

This lack of bias is forcing some institutions to become more honest when dealing with folks who buy financial products.

b) Whoever attacks the FIRE community needs to be very rich.

We are quite used to the many skirmishes in the blogosphere which makes the community quite anti-fragile. FIRE advocates are generally dismissive of small time folks who launch minor attacks like question the Buy Term Invest the Rest philosophy which have been a point of conflict for eons. We know that the folks have personal interest arguing for the traditional "high commissions" approach as they are defending their rice bowls.

What we have not seen so far are folks who have a net worth above $5 million dollars who publicly question the FIRE philosophy. Folks at this level of net worth have the confidence to launch a much more credible assault. Part of the problem is that we are conditioned not to disagree with rich people in Singapore.

So I predict that whoever sparks this conflict will be in the fairly affluent high net worth category.

c) Can the "Suze Orman attack" succeed ?

The Suze Orman attack employs a brutally simple strategy.

Simply get a rich person to tell everyone in Singapore that having $2 million or more is not enough to retire on. Then back it up with possible examples of personal disasters that can befall anyone : terminal illness, escalating medical expenses, university fees, etc. The richer the person sharing the message, the higher the bar is conveniently set. In short,  the rich person is telling that he/she has met this target, but you have not, so you better keep working because you don't deserve to retire.

There is an objective way to blunt this attack.

The Household Expenditure Survey of 2013 says that a retiree household's median expenses is $1,700 but experiences a fairly high inflation rate of 5.5% every year. Now suppose you intend to retire in 20 years time, you will expect to spend around $5,000 every month after compounding 5.5% for 20 years. But this is for an entire household so this covers the expenses of a married couple.

Let's say you are single. This means that you need $2,500 per month in 20 years time or $30,000 a year. This would be only about $750,000 of investible assets in about 20 years time applying the safe 4% withdrawal rate.

There are several factors going in your favour. CPF Life can give about $1,000 a month if you have your minimum sum kept with CPF, it can provide some buffer for you provided that you use a new escalating pay-out plan. So this means that you have a nice buffer in 20 years time.

So suppose you have $750,000 right now and you can already live on your dividend pay-outs, would it be safe to shift to a job you like and stop working for a stifling corporate environment ? After all, folks who like the FIRE movement prefer to think about financial independence over retirement planning.

I think that is a reasonable thing to do. After all, the average net-worth of a Singaporean is around $400,000 which is higher than the median at around 60th percentile. So $750,000 is already a significant sum. Can you retire after hitting $1M even if 20 years have not passed ? Very possibly !

So we can conclude that whoever attempts a "Suze Orman Attack" would have to condemn a large swath of Singaporeans into a lifestyle of permanent and never-ending employment, almost tantamount to a lifetime of slavery !

This includes the current households of elderly who are already retired !

d) The question of whether someone deserves Financial Independence

I'm also thinking about ways to attack the FIRE movement beyond attempting to scare folks into working forever by setting an artificial bar to retire in peace.

One possible attack is to simply question whether a person deserves FIRE in the first place.

There might be a series of moral arguments against the FIRE movement.

Does a person really benefit if he gets a cash flow to retire from the workplace and spend the rest of his life playing computer games and binge watching Netflix ? Does society fare well if a significant portion of the population were to just retreat from the workplace once they can subsist on rental income ?

FIRE may have a significant impact on life decisions. In the US, cit was found that couples with children have a net worth 25% lower than couples without children. Will FIRE advocates sacrifice kids for their financial success ?

Not everybody will seek part time employment or make their lives more meaningful. A significant number will just want to fuck off from participating in society completely. In China, the Fei Zhai Kuai Le movement exists to promote this sense of happy mediocrity. What kind of society are we trying to build if FIRE is co-opted to this new age philosophy of striving to be mediocre but happy ?

Even as a fervent FIRE advocate myself, I believe very strongly that a significant part of the population does not deserve financial independence because of how meaningless their lives will become once the golden hand-cuffs disappear.

So, if someone develops this line of argument of attack against the FIRE movement, I would spend a significant amount of time listening to them, sometimes offering some examples of my own experience. It is significantly better than fear mongering.

Maybe at the end of the day, Suze Orman just wants attention by attacking the most successful sub-cultures you can find on the Internet today.


  1. Hi Chris,

    Quite an intriguing post. Let me share my insights.

    I am of view that there is no need to bother on all these views made by external parties. One will have different circumstances and hence there will be different approaches in navigating the way to FIRE if he/she desires to do so. The way in which the fear caused by the said individual, is indeed unfounded for. You have previously quoted a few good examples in which a peasant can retire with ease with simple lifestyle.


  2. But we want folks to share such views because things will definitely get more interesting !