Saturday, November 30, 2024

Make Investing Great Again !

 



Let's discuss the US elections objectively when things calm down. This time around, I was less keen to see a Republican victory because I thought that Trump would acquiesce to Putin and bring tremendous suffering to Ukrainian civilians. Still, after reading some analysis, I don't know if Biden's vacillation and giving Ukrainians just enough to hold back the Russians is now a good idea. According to the Economist, the latest projection is that 2025 may see fighting cease at least once, which might be suitable for preserving lives. There will be some unhappiness that Putin will get to keep 20% of Ukraine, but there's a chance Ukraine is free to join the EU. 

So this now makes me ambivalent or even rather happy with a Trump victory!

Let's first look at how investors can tilt their portfolios. This central idea is that tariffs and deporting immigrants will exacerbate inflation in the US, so interest rates may be kept higher for much longer. This would be bullish for local banks but bearish for REITs. However, to what extent can Trump implement these policies? There are still some old-school fiscal conservatives amongst the American leadership, so I don't think an all-in strategy for local banks is a good idea. There has to be a mix between banks and REITs, and I prefer REITs right now, as REITs are the less popular investment choice. My pick is to go with the REITs with the lowest betas, in case the investor might be wrong. 

Hopefully, by year-end, I can pick up some high-dividend SDRs to diversify my dividends further from my usual CDP holdings. However, I'd like to know whether these SDRs will pay dividends on the payout date. I'm still quite old school and prefer to have my more static holdings under CDP because the money arrives in the bank account even if you are in a coma in a hospital. Only some enjoy waiting for the dividends to be credited into your custodian broker account, which requires a manual step to withdraw the funds. You feel less rich this way.

At the international stage, my trend-following algorithm is performing as projected by backtests, racking close to 20% gains in about 16 months. Trending ETFs are mainly US equities, gold, and crypto, but the algorithm miscalculated and was whiplashed by China tech, although losses are minimal. 

I won't talk solely about investing in the Trump era—given how unpredictable US politics will be, I'm likely to be wrong anyway.

By now, we have a clearer idea of why Trump won. 

The first reason is that despite no recession, Americans feel poor thanks to inflation. Flat-footed economists call this a vibecession. Like in Singapore, families are dealing with larger mortgage payments and lower amounts for discretionary spending. Almost everyone is out of the country, so you can feel richer in JB or even Kyoto, Japan. I spent more than $100 on movie tickets here this week. 

The second reason is a massive backlash against the woke ideology that Kamala stands for. You can feel it here in Singapore. Almost every middle-aged guy here is unhappy with identity politics in Marvel movies and computer games. Games like Concord and Dragon Age: Veilguard angered not just white male gamers in the US. I have gamers here ranting and raving about it. 

Elon Musk knew something when he gave a speech referring to "incremental political science majors" as the target of all this hatred. This resonated with my engineer identity during my working days when any work that had to be referred to the legal department would somehow delay my project or end up doubling the workload - after a vicious dressing down from an effete but legally trained bureaucrat soy boy. You want to punch that guy's face in, but you can't, so you build up a dividends portfolio instead and then find out how this bastard was trained. 

(Marvel should do my origin story.)

So, I'm very familiar with the kind of blue-collar anger in the US. You do the hard work, maybe build up a small business. Then these tenured social science humanities types start to label you a bigot from their ivory towers, then even want your video game character to do 10 push-ups when you misgender someone. 

Yes, logically, these assholes are all different people. Still, to some blue-collar conservative workers, they are all one person -  the humanities goth-blue-haired land whale feminist Marxist scum who want to defund the police - represented by a Democrat president elect.

Wouldn't you want to vote for Trump, too?

Following the new politics is now giving us older gamers a massive pay-off.

I look forward to hearing the screams of the blue-haired land whales that pollute the RPG space in Singapore if Elon Musk buys Hasbro and owns the D&D brand.

That will make me return to regular gaming because I know the exact kind of DM that spouts unnecessary anti-PAP slogans before a game. After all, somehow, to them, PAP is neo-liberals.

I will tell him: 

Opposition is for they/them. PAP is for you!





Sunday, November 24, 2024

Hobbies Update : Thank you for reaching out guys!

 


This might be a rambling post, but I'd first like to thank the readers and old pals who connected with me over the past week; as an extrovert, the conversations kept me sane, and I could enjoy myself while my family was touring Taiwan. My social diary was so active I could not start watching the DanDaDan anime, and I could not even download a single game from Steam, so this affected my hobbies, but I generally prioritise personal connections over games.

But I want to talk about one more thing before I run down the hobbies that I have at the moment. Recently, there's been some insight into the fact that ageing occurs in bursts. We tend to age a lot when we reach 44 years old, 60 years old, and then another burst at 78 years old. The effect is that those who reach 44 will have problems with their metabolic rate and might not be able to purge caffeine as quickly as before. Another impact from other sources is that our neurons fire less frequently, so we will find that time passes faster. These insights are recent, and I would probably not go for a third degree if I knew that my mind would slow down when I graduate. But all this will affect the way I view my hobbies moving forward.

Ok, let's rundown what stays and what goes:

a) Reading

Reading is so powerful that it is the hobby most women find attractive on dating apps, but to be fair, most of the stuff I read is not friendly to women. I have read a lot about finance, business, and self-help; there is nothing for me every year at the Singapore Writer's Festival. But as I slow down, I am now more open to more profound and shorter self-reflective books. In fact, every December, I will have a moratorium on non-fiction books to mop up books on gaming history, Japanese fiction, and the latest Korean genre of healing literature. 

Reading healing fiction is weirdly practical because it addresses all the post-retirement identity issues that FIRE folks experience. 

I also have a new hobby, I'm now a book scavenger at the book drops in major regional libraries, and I'm always hunting for old books discarded by other Singaporeans. 

b) PC Gaming

I'm no longer a PC gamer. I will wake up to something like Baldur's Gate 3 that lets me experiment with weird D&D character builds, but otherwise, it will not play a role in my life anymore. But I love following the politics behind gaming, where gatekeepers are waging war against developers who are incorporating Woke and DEI values into franchises people love. I'm clearly on the side of the gatekeepers because I don't like getting lectured for having conservative values, so I sincerely enjoyed reading about the substantial business losses suffered by games like Concord and Dragon Age Veilguard.

I will be willing to get into games if I can convince my son to enjoy them with me. It's hard because he is 8, so the best he can do is assemble some simple Gunpla. I'm checking to see if I can get him into Warhammer 40k, paint some minis, and then roll some dice—anything is a lesser evil than brain rot from TikTok or YouTube. 

My peers have yet to successfully share a hobby with their kids, but I still want to try. 

c) Board, TCG and RPG gaming

Some old friends from my secondary school caught up with me, and we agreed to play the games we'd slowly collected over the past. However, we needed help finding folks to play with us. These are reasonably complicated games like Dune Boardgame, Legend of the 5 Rings LCG, and Battletech. If we can get a group of about 5, I promise to run D&D 2024 for them regularly. 

I was lucky because I doubted I could fit serious gaming into my life if I could not monetise it. But I game in my neighbourhood in Woodlands, so things might work out this time. 

Regardless of what game I play, I play the same way I play RPGs. I'm constantly on the attack and will recklessly charge someone if I know the rules. I don't believe in or engage in diplomacy. In L5R, I only play the Lion Clan. For Magic the Gathering, I only play black/red cards. In Battletech... I only know... DEATH FROM ABOVE!

I'm fun to play with because I tend to lose a lot. 

Thank goodness I don't invest like the way I game.

d) Trips to Johor

This isn't a hobby, but I might have more friends who can hit JB with me on a weekday to escape the cost of living in Singapore. Yesterday, I attempted to strike a fantastic chicken chop restaurant called It Roo near City Square. Then, I went to Aeon Tebrau to visit Tsutaya Bookstore before heading to a pasar malam at Tun Aminah. Now, I'm asking friends and relatives to devise a plan for Bukit Indah as we attempt a different crossing from Tuas.  

Sometimes, we are defined by what we don't do for hobbies. I no longer care about watching shows. If Disney produces more woke series like The Acolyte, I will cancel my subscription. I no longer buy comics for the same reason. I also watch fewer movies because Marvel is rethinking how to do superhero shows.


Saturday, November 16, 2024

Social Life Update : How to increase your happiness without using money.


It is time for another update as I reach my 50th-year milestone on Christmas Day. 

Today, I will talk about my social life, which has seen some tuning up recently. In 2024, as my energy and tolerance levels are dipping slowly, I've decided to create higher-quality engagements with a lower frequency. 

In other words, do more with less.

For many middle-aged folks, some social engagements add little value because the subject matter has stopped being attractive. Others may create a sense of negativity and unease, but we can get so used to them that we ignore them until they bring us down for days and permanently reduce our quality of life if we don't stop them. Lower energy levels mean disengaging from some lower-value-added activities and shifting the focus to more pleasant ones. 

This is the essence of decent ageing. A more tactical use of our time and attention, which we can default to our families.

The test is also quite simple: Does it feel better to engage in a new social activity? If it does not, then you should end the engagement as soon as possible. With time freed, try out engagements with friends you would not normally do without the spare time, and then test to see if the activities fit and feel better. 

Be open-minded to changes, and recycle your time somewhere else if you make the wrong move. 

One significant change is that I go to a Japanese Karaoke bar to sing for three hours nonstop once a month or so or when I get spare cash from government handouts. I will hog the entire karaoke because I tend to appear when there are no clients. Total damage is $44. I don't drink alcohol, just two bottles of Soda water. I am accompanied by friends who sing casually but generally prefer to be there to converse. I focus on my singing because I will qualify for Golden Age Talentime quite soon and don't want to get dragged into discussions about dividends, stocks, or legal matters.

Another change is that I've done some soul-searching about my D&D hobby, and I decided that my only motivation to run a game is if I'm paid to do so. For many years, the community has tolerated abusive Dungeon Masters who do it because it is a power trip—they get godlike powers over players who generally are doing better in life than they are. Still, players need to actually have a viable alternative. So, the professionalization of the Game Master is inevitable. We should pay good DMs at a reasonable rate. In support of that belief,  I've recently attended a delightful job interview to become a Professional Dungeon Master. Sadly, I did not get the job ( but it was probably the most enjoyable job interview I ever had), but I will look at this space aggressively as the skillset reinforces my work as a trainer and lecturer.  

Over the year, I have learned a few things about reducing social engagements and why it always works out for me. 

Because my media appearances always attract financially responsible people, the folks who invite me for dinner are generally okay, and I get to talk to people who have goals in life and are doing good things to improve their future. So, somehow, my social diaries always write themselves. 

Second, with the extra time, I've been spending some weeks trying to understand why some of my genuine fans / high-paying customers have yet to actually invest in the financial markets, even though they are loyal customers who sign up for every course I run. This bothers me a lot, but I have invested weeks to finally get at least two guys to have a small portfolio running. ( Two guys are occasional colleagues, so I guide them, but they also buddy each other. It's a sound system, but I gotta think about scaling this. )

The first reason is that people are human beings with shifting financial priorities; a student wants to get a house, so he can only start after he has moved into his new place. Another reason is that even though modern brokerages are easy to use, they tend to send many warning messages due to compliance requirements, which is very intimidating to beginners. You need the courage to tell IBKR not to display this message again. The third reason is that investors need to trade off diversified portfolios for trading fluency. To get someone into the markets, you have to start with 2-3 stocks that cost less than $2,000 to trade but to do this, the trainer must caveat that this is not a diversified mix of counters and is just a confidence-building exercise.  Finally, the odds of succeeding rests upon the student's digital literacy, so if you get someone above 60, make sure he's an engineer before you agree to help. 

Anyway, my family is out on a trip this upcoming week, but I'm stuck with lectures I need to conduct; we'll see if my social calendar fills out this week. Let's use random chance for blog readers -  I'm available Mondays from next Friday until next week. 

Some loyal readers have reached out to me in the past. Let me know if you are free.



Saturday, November 09, 2024

Deeper thoughts about FATFIRE

 


This weekend, I will attempt to think deeply about FATFIRE, as I suspect that over the years, many millennials have reached their 40s and are well past their FIRE objectives. I am now trying to figure out what life goals to pursue next. As most of the folks who will play with early retirement are INTJ strategists, there is a range of other MBTI types like ENTJs ( which I am borderline ). 

The aim is to go beyond a goal-shifting exercise like ENTJs are prone to. Also, I want to acknowledge that I enjoy non-toxic work and interacting with younger people and investors. 

As I've alluded to in my latest YouTube video, financial independence is resetting your working life and trading off leisure time for work to maximise personal satisfaction. The point at which the marginal tradeoff of an hour of leisure to an hour of work produces zero increase in life satisfaction differs from individual to individual. Additionally, I suspect extroverts have a much larger point of equilibrium where marginal work = marginal leisure. I'm at about 15 hours a week on average and have a capacity of perhaps up to 21 hours - but getting back to conventional employment is impractical for me these days. I wonder if INTJs have the energy to work 20+ hours a week if they never have to work. Hence, there is a tendency for more ENTJs to go after FATFIRE.

Okay, once we've established my mental model, which is familiar to many economics majors, let's discuss how FATFIRE can redefine a new financial metric more creatively than simply the safe withdrawal rate. 

a) Safe rate of withdrawal

The conventional approach is to declare a comfortable lifestyle for yourself. If this is $10,000 a month, then a safe 4% withdrawal rate can be attained at a net worth of $3,000,000. It's easy, elegant, and quite suitable for singles. Critics can argue that this was tested to last about 35 years, but in practice, you can just lower your expenditure when things become non-ideal later. 

You are still retiring with a lot.

b) Sustainable, safe rate of withdrawal

For folks uncomfortable with ratcheting up the drawdown based on inflation, my models suggest applying a safe withdrawal rate of about 2.6% every year based on the prevailing portfolio size at the year of retrieval. The caveat is that you need a balanced ETF asset mix for this to work. 

The advantage is you never have to worry about hitting zero, as portfolio losses will lead to lower withdrawals on a bad year. However, this number also maximises your utility over time as withdrawals increase faster than the inflation rate, and your portfolio tends to grow faster.

Therefore, a portfolio of $3,000,000 will generate $78,000 a year, but it can potentially grow faster than the rate of inflation. 

The disadvantage is that you will always have money, so this is best for folks with children who can pass on a nice lump sum that will sustain them in the future. 

I don't see any point in making your nieces and nephews multimillionaires after you die. 

c) Every family member can FIRE

Another way to stretch the goalposts for folks with families is to enable FIRE for every family member. For a single person to FIRE at $2,000 per month, you need $600,000. A four-person family would need $2,400,000.

The benchmark may be lower than other forms of FATFIRE, but some may question whether it is wise to gift FIRE to your kids before they can earn a single cent in the industry. There's a lot of hypocrisy here, as many parents think spending thousands on tuition is justified to delay their retirement goals. 

d) Work until every family member is a millionaire

Finally, I want to share my new financial goals. Given that I do some work and am pretty happy with my life, reinvesting substantial amounts into my real estate portfolios, a simple and relatively visceral goal is to ensure that everyone in the household can be a millionaire. 

The resulting lifestyle is manageable, and there are plenty of things to do and accomplishments for the next generation. 

It is slightly more ambitious than (c) and provides me time to create a balanced mix of work and play without resorting to crass materialism in Singapore society. 

e) Become my definition of wealthy

Finally, I want to state my definition of a rich person. 

A rich person can live with dividends arising from dividends earned in the previous year. 

To live, do that with $2000 a month. A rich person would need about $600,000 of dividends in the previous year. At 5% dividends, his portfolio needs to be $12,000,000.

I'm nowhere close, but some folks in the social media space are there. At this stage, it's safe to assume that someone is finally considered wealthy. There's no real need to pontificate about safe rates of withdrawal or career choices at this level. 

Maybe one day, I can philosophize about being rich.

To summarise, I've never thought very highly about FATFIRE or the folks who keep harping about them. As an ENTJ, I know it's some sad excuse to postpone retirement or create some kind of barrier to convince INTJs that what they aim for is inadequate. At its base, it's just the simple idea that retirement is meaningless if you get more life satisfaction by trading off some of your leisure time with work. 

Happiness always contains a bit of entering flow from deep, meaningful work or personal accomplishments; I totally get that. However, financial independence is the essential ingredient for even realising that such tradeoffs are possible by leaving a toxic workplace and creating a career that suits your inclinations and investment of time. 


Saturday, November 02, 2024

Interest in Personal Finance comes from understanding the Marshmallow Experiment

 


Given enough time, I try to transfer some of the skills and resources I have to other domains of my work to become more effective at it. The basis for doing this is to simply read aggressively - a lot of readers do not give me enough credit for the sheer volume of books I read too well in my portfolio job roles.

First, when I started teaching in a tertiary institution, I knew I had some basic public speaking skills from many years of Toastmasters work. Above all, conducting training for adults who pay thousands to attend my workshop has also thickened my skin and forced me to address every question that can possibly be contemplated over the subject matter. Paid customers deserve the best answers they can get!

So, I did not come into Adjunct Law lecturing with nothing. I come with a distinctive style adapted from the private sector. I come with software subscriptions to make training more accessible and auditable. It's a personal competitive advantage. Slide creation, rapid diagnostics, and grammatical corrections all accompany what I'm paid to do. 

So now I have to perform the reverse operation. What work do I do in the tertiary institution, and what do I bring back into my investment training?

I learned some useful stuff in my transition into teaching in public - Bloom's Taxonomy and various teaching frameworks- which can be too theoretical and not really applicable when trying to convince folks to try dividend stocks in this age dominated by US tech stocks. 

But I think everything is slowly paying off, as I'm now trusted enough to teach fundamental business law to pre-employment students or 17-year-olds.

So, I've started reading about motivating young people, which I can use for my kids.

The essence of motivating 10 to 25-year-olds is to banish the idea that teenagers are lazy and incompetent adults who lack motivation. Instead, we need to see young adults and adolescents as folks trying to jockey for a position within their hierarchy in the search for status and respect. If we can find a way to motivate them to do something to look good in front of their peers, they may be more motivated and effective than adults. The hard part for lecturers is that we must adopt a mentor mindset and set high standards while giving high personal support. Being too strict can backfire, but mollycoddling them will also not work as well. 

How does learning how to motivate teens tell us about motivating adults?

It's hard in this industry. To understand how hard this is, readers need to independently google the marshmallow experiment; the idea is that children who can distract themselves and wait for the second marshmallow tend to do better as adults when they grow up because they know how to delay gratification. The problem for experimenters is that future attempts to replicate the experiment found that folks who can resist temptation came from wealthy families who may not be too keen to eat marshmallows anyway. I got my son into NUS to run the experiment, but they offered him some KitKat, which was not a big deal. If it was a coin token for an arcade game, it would be much harder for my kids to resist.

Anyway, the experiment was done for kids who can wait, maybe 20 minutes, for another marshmallow.

Imagine what happens when you do dividends investing in SGX. 

With PEs between 12 and 13, the long-term real rate of return is about 7+%. Applying the rule of 72, we can calculate that a dividend portfolio can double itself every decade.

So this is the problem with personal finance. 

We are asking folks to give up eating a marshmallow to get two marshmallows in 10 years. And we have to tell them that the second marshmallow is not guaranteed because of market volatility. There may even be an incident when you lose that one marshmallow you've held back for a decade.

The industry has invested in many ways around the marshmallow problem. The most effective way is to cherry-pick specific investment themes that are hot with high recent returns and then maybe convince folks that their second marshmallow is just 2-3 years away. 

How can folks like me flip the script?

One way is for me to get potential clients to consider this. 

If you set aside 12 marshmallows, you can get 1 every year. With 144 marshmallows, it's a marshmallow a month. 

Follow my approach, and you will drown in marshmallows, and you will end up diabetic like me.





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.



Today, I will provide a personal rundown of my financial situation, which I think is much more optimistic than my business update, which feels like Sisyphus pushing a rock up the hill. 

For folks who follow my blog, I'm one of those stubborn dividend investors who invest primarily in Singapore. We have suffered for many years as interest rates have started to increase. But even before 2022, SGX was not a dynamic place to park your money. There's even a word, "moribund," to describe it. 

For folks who understand why I'm this stubborn, I am animated by the simple idea that our cyclically adjusted PE ratio remains around 12-13, which gives me a rough estimate of long-term growth, natural growth of over 7%, the bulk of it coming from generous dividends. This 7% does not include inflation. After accounting for inflation, we can expect 10+% per year, but it takes a long time to experience such returns. Markets can experience mean reversion only if interest rates drop over the next few years and MAS starts acting on market reforms. With too many if's and but's, my technique has been a butt of jokes for many years. If it does not come from crypto bros, it will come from Chinese and AI investors. 

The critics will change, and we dividend investors will outlive them all. 

Still, the mistakes I made this year are pretty legion but tolerable:

a) Interest rates play is not as easy as it looks

Last year, I had some success putting a big chunk of my assets into local banks as I had evidence of our performance when interest rates increased. This year, I tried to move some banking assets into REITS in anticipation of lower rates, but this has been a frustration as DBS continued up and my REIT picks went down. I was cautious and only bought REITs with the lowest beta on STI, such as MINT and FCT, but I think I would do better if I sat on my hands.

This is why I hate trading. 

b) China bazooka turned out to be a damp squib

The other dumb move was minimal but very stupid. My trend-following algorithms flagged momentum on China technology stocks, so I took a mere $600 position on CQQQ; it leapt 25% and initially then dropped precipitously. It's actually negative today. I seldom act on ETFs and parked about $500 each on MPACT and CLCT to see whether there is a rebound. I was wrong on all counts, and every position is negative today. The central narrative that China is a communist country that does not respect business acumen and private property remains true today.  But let's see how this plays out over the next year.

I don't think SGX investors will see the end of jokes. If we sink lower, we'd be made fun of by folks who invest in Bursa Malaysia, which had an excellent year of IPOs. 

But what about actual numbers?

Capital gains-wise, my net worth in SGX (This includes my legacy positions and partly ERM student positions, which are up with IRR of about 3%.) dipped slightly, about 9%, over the past 6 years. Still, I've also directed my funds into SRS, CPF, and home mortgage equity to optimise my taxes over this time. My net worth never really experienced a down year - all this while we spent money as a family with large sums spent on tuition. While Singapore stocks dipped or stayed flat, real estate prices spiked, and CPF returns stayed steady with a slight appreciation of interest rates. This is a testament to the common sense of local dividends investors - most of us have homes that appreciate value and locked CPF funds. We've never been one trick ponies.

So 2024 has been shaping out to be a great year; the market portfolio is up six digits, and I doubt home prices will retreat much, even with cooling measures. I still have this crazy ambition to make every family member in my household a millionaire over the next few years. We're close, but I need just one year for the markets and my business to succeed simultaneously. 

If it's not 2025, it'd better be 2026.





Saturday, October 19, 2024

Is financial literacy considered cultural capital ?

 



I will see whether I can try to blog twice this week, as this discussion has some merit. I was told that in the mainstream press, someone said that demonstrating financial literacy is a signifier of cultural capital. In some parts of Singapore, it can be quite a "flex." I thought I would delve deeper into this issue because I'm deeply interested in alternative forms of capital, like social or 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

 




While I can still give pro bono financial seminars, I would do my best to present to any secondary school willing to have me. Even so, only Raffles Institution has a systematised programme to invite speakers from around the country to talk about special topics like Finance as part of their Gap Semester programme, which targets 16-year-olds exempted from doing the O levels by being ultra-smart. Picking someone to speak in another secondary would require a lot of red tape, and perhaps my slides, which do have controversial material, would not pass the scrutiny of the more orthodox educator.

However, Raffles Institution thinks that my material is acceptable for their students, so this is the fourth time I'm conducting "Millionaires of a Better Age." In 2024, I was invited twice due to the positive feedback from the students themselves. 

This time, I have to be careful as some folks managed to find my blog, so teenagers will be reading my posts these days. 

Firstly, I tried using the very crude MBTI survey tool I built myself for my investment courses and found that the smartest teenage boys tend to be INTJs/INTPs. They are incredibly logical, and some may not be as conscientious as the RI brand name would imply.  



Next, I wish to address something strange that happens when I openly talk about volunteering in RI. I get brickbats from social media, implying that I am helping the rich get richer. I agree—teaching dividend investing will always give the folks with more investible capital an advantage. But it is unfair to talk about this when I volunteer in RI because I've been asking around to help even in my own secondary school. 

There's no system for me to do a similar programme elsewhere because O level preparations are more important.

I have, in RI's defence, conducted a survey on pocket money they receive. 



The majority get about $100-$200 monthly, so parents can decide on pocket money based on this data. Do note that there will be outliers. I detected two whales who get over $500 monthly, but about 4 have very little pocket money. 

The savings data is also quite interesting.


Except for the same two whales (maybe they were from ACS Primary), most teenagers find it hard to save money.

Finally, folks must remember why presenting ideas to intelligent teenagers can be rewarding. Some specific points in this latest encounter left a deep impression on me.

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. 

At this juncture, just to entertain readers, let me share the stupidest question I ever got from someone 2-3 years older than the RI youths who study in a tertiary institution I will not name on this blog. The question was," You are a millionaire, but I want to make my first million earlier than you. Can you teach me how to do this?" I was stunned like a vegetable for a moment at how dumb this was; I could only mutter, "Maybe you can do some sales job because of the unlimited upside." Even today, I pray that the person who asked me this was a troll, not an idiot. 

I can't, honestly, coach someone on something I cannot do myself.

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.

 



In the age of Social Media, there is no such thing as bad publicity. 

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 ?

 


What is particularly heartwarming for dividend investors who own banking stocks is that they have surged as interest rates decline. This surge represents meaningful attempts to offset lower net interest margins with wealth management fees. As an investor in all three banks, I believe in this thesis, but I maintain that investing in REITs for the next year or so is better. Based on my backtests, rising interest rates favour banks, and lowering interest rates favour REITs. 

I can't help but detect attempts by banks to move very gingerly into FIRE territory recently, but it seems that positioning a banking product as an aid to FIRE is a tough sell, given how stingy the movement is when it comes to investment expenses. 

But lately, I disagree with the idea that FIRE can be supplanted with FIRM - the Financial independence, retire meaningfully movement. As a bank stock investor, it is puzzling to me how this can meaningfully raise wealth management fees. 

It also is a veiled attack on our movement that warrants a firm response. 

Before I begin, let me understand how FIRM works, given that no formal definition exists. The idea is that leaving the workforce early can lead to loneliness and even early death. Therefore, it is better to take a more conventional approach and save about 10% of your income to reach retirement later. While not explicitly stated, the person is invited to use a financial institution to do the strategic allocation for you so that you can focus on your day job and hobbies.

Here are my points for readers contemplating FIRM, an approach endorsed by financial institutions, versus FIRE, a grassroots movement of many who own financial institutions.

a) Does FIRM imply that FIRE aspirants live a life devoid of meaning?

As the incoming DBS CEO has a prestigious Oxford PPE degree, she might know what a false dichotomy is. The question is whether, if I live on 10% of my income, my life is somehow less meaningful than that of someone who lives on 90% of their income. Is saving inversely tied to meaning?

Over the years, there have been FIRE folks who have adopted a Stoic philosophy of life. They might be environmentally conscious and find that this extreme form of frugality gels with their outlook on life. 

Asceticism can be a life a lot more meaningful than conspicuous consumption.  

Some early retirees can be way more philosophical than many bankers; I can name Ashish Kumar as a gentleman who has developed his own approach to early retirement, which is a little more sophisticated than most relationship managers I know.

b) The dangers of conventional and late retirement cannot be underestimated.

I recently lost two friends, both aged 49. One was overworked as he was a warrior at the frontline of the COVID-19 battle. I felt that his aggressive cancer diagnosis came from the toxic and political workplace he worked in. He was manipulated to confront his incompetent supervisor, and in revenge, his job scope grade was quietly shrunk without his knowledge. The second was an unemployed IT professional who took his life about 2 months into his new job. He was despondent and withdrawn after losing his previous job. It was difficult for me to attend two wakes in a single week. 

As my friends died, there was simply no justice for what they endured at work. 

I've done a lot of work at this level; if we track PMET salary data, we can expect a 5% increment when we start work until age 45 when it mysteriously tapers off. This is also the age when Gen X faced the largest amount of ageism; if we take the risk of ageism and retrenchment seriously, we must confine the buildup of our dividends portfolio to be complete before entering this age of chaos. If we shuffle our feet and start planning late at age 35, then at $2000 monthly savings compounded to $500,000 within a decade, we will need an impossible 14.1% return to meet our deadline. 

Planning for retirement is not mathematically feasible for most Singaporeans, given what's waiting for us in the workplace in our 40s. 

I was a pioneer of the FIRE movement because I started work around the time of the Dotcom crash, and I saw the outsourcing wave affecting a lot of senior engineers of my generation. Now, AI is expected to replace some of the headcounts. 

c) Financial institutions may not dare to talk about specific performance that can enable retirement to actually happen

While there is much sturm and drang about how meaningless our lives are, we are not getting the specifics. We need to get under the bonnet and know how our investments behave.
  • 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?
If financial institutions could meaningfully discuss numbers and probability, we would have a better idea of which model suits us better. 

So, what can you do as a reader?

Wealth management marketing will evolve as interest rates drop. If you see that FIRM will occupy the minds of many who read about it, the solution is simply buying local bank stock. 

For example, if DBS can credibly raise the dividends from 54cts to 60cts a quarter, there's still room for a 6%-paying blue chip. As it has endorsed a message that challenges the existential meaning in my life, I should demand 60cts in 2025, right?

In fact, use your CDP, and you can attend an AGM every year—and you may yet fight for a sumptuous buffet spread!

No management fees, no capital gains or dividends taxes. 

Maybe in next year's Seedly festival, I get to debate this topic live in front of everyone!

If you're not investing, it's fine. 

Don't let a financial professional tell you whether your life has any meaning. This is something you can figure out yourself. 









Saturday, September 14, 2024

Letter to Batch 35 of the Early Retirement Masterclass


Dear Students of Batch 35,

It's been a great honour and privilege to conduct a 5-Day Early Retirement Workshop for you.

The markets have finally become bullish after a long wait since March 2022, and the community portfolio has begun to experience a remarkable recovery. I will not try to be too enthusiastic and rejoice too much; instead, I will let the market speak for itself. Still, we have repeatedly shown that this recovery is just the beginning and that there is plenty of equity risk premium for Singapore investors.

It should also be noted that this batch of students' portfolios is 7.28%. As the batch size is small, we have created a very focused portfolio consisting of 12 stocks. We have built a barbell-like structure that combines low-volatility investments with higher-risk instruments that produce double-digit yields.

This course has reached another milestone. Students are given practice sessions on using large language models to generate analyst reports. The community will receive samples of reports on BRC Asia and Kimly. The final investment decision incorporates analysis from both ChatGPT and brokerage houses.   

These automated investment reports still need to be improved further, but ERM is now poised to benefit from future improvements in artificial intelligence. I can confidently say that we are no longer tied to analyst reports from brokerage houses and can now generate reports on local stocks that are not covered by investment analysts.

Lastly, I hope Batch 35 will participate actively in the FB group. I look forward to seeing you at the following community seminar, which is slated for Q4 2024, having not done one for so long as we have been preparing to use LLMs in this programme.

Hope to see you then!

 

Christopher Ng Wai Chung

Friday, September 06, 2024

My Psychology of Spending

 


I've just completed Money on Your Mind by Vicky Reynal. It is one of the rare books that talks about money but does it from a completely different angle. The author is a financial psychotherapist, so she proposes that we look at our financial habits from a psychological perspective. Perhaps some kind of childhood trauma drove some of us to overspend or be overly stingy. 

The book had a very novel interpretation of Buffett's financial success. A common understanding of Buffett's fan base is that he got much of his economic acumen by modelling his father, a shrewd broker, so he set up a company after the Great Depression. But the book proposes a different interpretation - Buffett had to find solace in the certainty of numbers because his mum had a mental illness that caused her to explode in anger when Buffett was growing up. 

I like this interpretation a lot because I hated how humanities were taught to my generation in secondary school. We were made to memorise entire paragraphs of text, and the teacher gave exam tips to the girls in the uniformed groups who pleased him. I was driven to maths and science because there was certainty in scientific answers, and I had a field day arguing with my teachers that they got their answers wrong. During my time in secondary school, I never lost such an argument as I had A-level texts on my side. 

But I digress. 

For those who want to benefit from the book, you may need to examine your own behaviour and then go through the painful process of unpacking your personal experiences to explain why you behave this way. While I spend quite little compared to my peers, I can think of many folks in this FIRE space who need therapy more than I do. 

So, instead, I will share a bit about my approach to spending money. Different kinds of money evoke different levels of shame or guilt when I pay them. This may apply to some readers, but many of you may have a distinct hierarchy compared to me, and that's ok. It's quite challenging not to put our assets into different buckets, so some amount of feeling and emotion can influence the way we spend. 

a) Inherited capital

I find that inherited capital triggers the highest amount of shame or guilt when it is spent. It feels like my dad gave me a cow, and I've decided to bring it into the shed and blow its brains out. And I've never spent my inherited capital before. The thought of it is painful to me. 

However, I do sell and reposition that portfolio, even though I always buy slightly more than I sell. I don't think I'm stubborn enough to spend inherited capital if I'm faced with a life-and-death issue, actually.

b) Earned capital

Second on the list is most of my earned capital, blood money earned from effort in the past, which I have converted into stocks. I might have liquidated some stocks I bought a while ago to put a down payment on my condo, but I also feel terrible if I have to sell stocks to cover my expenses. 

c) Dividends - Inherited vs Earned

Most of my spending comes from dividends I get from my investments. I often do not spend all of it, but I have accumulated about a year's worth of expenses just so I don't have to pay (a) and (b). Even my dividends are categorised. I have dividends from earned income, which I'm happy to pay, but I used inherited dividend flows to build up cash reserves.

I have tapped into inherited dividends twice before, once for my mum's angioplasty and now once more for some dental expenses for my kids. I consider tuition expenses and enrichment justified to be tapped from this pool.

d) Salary

Fortunately for my sanity, I don't consider my salary "blood money" because my life is post-FIRE. I only earn because I have great business partners or the work is enjoyable. I'm not fast and loose, but I draw from my earned income first, then from my dividends. Excess is farmed back into dividend stocks. 

Please note that I no longer earn enough to pay all my family expenses and support my mortgage. This bothers me a bit, but I have plenty of dividends to cover the shortfalls. 

e) Rental income from Malaysia

When it comes to spending money at this stage, I let my hair down.

We have some rental income denominated in Malaysian Ringgit. It's like having a weird cow that produces chocolate milk that is so ugly that no one wants to buy it. We rush to drink the chocolate milk before it curdles.

My ringgit is the funny money that enables me to be generous with friends, and there's a greater urgency to just spend it away. Our tenant has been around for 30+ years, and the sums, while very small,  will replenish every month.

f) Government $$$ handouts and Academic vouchers

My kids are all right; we get vouchers for their academic performance. I will quickly buy the popular voucher from them with cash to buy books from the bookstore. I can often find an excuse to wipe all vouchers in one visit. 

Last month, I also received $200 in my bank account from the Singapore government. This is the most guiltless kind of money I receive every year, and I blew $100 on wine and backwards with fellow SGFI telegrammed a few days ago. Because I don't have rarefied tastes, spending $100 on wine that I can't differentiate from $20, brandless bottles is out of character for me - BECAUSE IT IS A LOT OF BAKKWA! 

Nevertheless, I had a great evening because this has been paid for by the Singapore Government.

I'm aware that all this I'm sharing is an example of mental accounting, but we are human beings, after all. 

I hope that readers will spend some time thinking about their own spending and various money-related neuroses after reading this article. 



Saturday, August 31, 2024

Rising against all challenges or floating through life?

 


What kind of life would you prefer to lead?

One possibility is to lead a life of challenges and obstacles, then grow and become a better person as you slowly overcome them.

The second possibility is a blissful life with few obstacles, and you float through your personal existence carried by a cloud.

Some folks pick the first because life seems like a roller-coaster ride, and it is an exciting choice. You are constantly being challenged and become a better person over time. But as I hit my 50s, I just want the rest of my life to be as blissful as possible, so I will pick the second scenario as far as reasonably possible. This is why I tell my friends that my preferred existence is to float through life on a cloud of dividend payouts. Then, my friends inspired me to prompt for the AI photograph shown above.

But sadly, we can't really control the circumstances of our birth or what kind of cards are dealt to us. My Malaysian Chinese pals start the day at 4 a.m. just to travel to study in the same secondary school as I do. These days, in the institution where I teach, colleagues half-jokingly tell me that the Malaysian Chinese and foreigners are the most punctual, with the most latecomers coming from Tampines.

So, if you are going through life blissfully at this moment, it's better to start planning for a change in your personal situation because change is inevitable. Very few of us will go through life without encountering problems. Sometimes, you get restructured, or your kids turn out neurodiverse, or an elderly parent develops dementia. 
 
The "cloud" needs to be built with meticulous planning. So, even in good times, you need to "shake the box" and conduct "business continuity planning."

When circumstances are comfortable, you must actively find ways to improve and develop capabilities to deal with more significant problems in life. Financial education is an obvious answer, but some universal skills and talents will be helpful regardless of circumstances, like public speaking, entrepreneurial knowledge, psychology of personality, peak performance, and, to this day, some self-therapy skills. If your kids are happily enjoying a stable family environment like me, then find ways to stretch them. 

I've had a really awful 49th year. There is a Chinese belief that all 9th ages are challenging years. At 19, I was languishing in NS. When I was 29, my IT department was outsourced from P&G to HP. It was almost like a fall from Heaven. When I was 39, my career dramatically exploded when I got into two consecutive toxic work environments outside the private sector and pulled the plug. Now, at 49, my Graves disease returned, and I developed double vision and needed prism lenses. My business is still going through a bad patch, but I'm ramping up other sources of income through adjunct teaching work with very mixed results. 

In every scenario, my investment income came to the rescue. Luckily, I'm positioned well in the financial markets, and I expect a rigorous recovery from REITs as rates begin to fall. I can't even imagine how my private property can increase in value with loan rates falling across the board in Singapore. Changes in the LTV are justified in preventing a housing bubble from forming, but it will stop real estate prices from rising steadily. 

But more is needed. The year that follows is always about learning new things and reinventing myself. If my investment training business folds, I need to expand my capabilities, so I need to get back to school to get an ACLP to see whether there are future opportunities to train adults, this time aided by Skillsfuture credits. 

A cloud of dividends can take you to many places, but sometimes it's ok to get your shoes on the ground occasionally if only to build a bigger cloud.




Thursday, August 22, 2024

Does being in GEP raise the odds of attaining FIRE?

 


Of all the reforms proposed by PM Wong in this year's National Day Rally, the changes to the GEP system are the most polarising. Some GEP alumni on social media did not like the changes because they felt that leaving their primary schools allowed them to find a new group of friends they could fit into. Another group alleged that they were bullied so severely in the GEP program that they welcomed the new system to allow gifted kids to stay in their original primary schools.

Who is right? I don't know. 

But I might have an idea of who is wrong. 

GEP alumni should not be entitled to think that the government owes them a personal clubhouse to protect them from the world. Folks like me would have benefitted dramatically from friendships with GEPpers if I had had access to them earlier, so they should not have been taken away from us.  

Given that taxpayer money is being deployed to give them special treatment, the GEP is clearly a pipeline for the government to mould leaders in the future for the greater good.  If there is a secondary objective, I guess the aim is to create a superior breed of high-IQ citizens via assortative mating. The strategy must have worked, as the average IQ in Singapore is about 106, but worldwide numbers are about 97. The third reason is that all societies need to prevent the rise of anti-elite, intelligent people who can weaponise their intelligence to engineer a societal collapse. Therefore, GEP as a safe space for special needs students is an incidental side effect of the government policy.

But what do I know?  I'm not really here to engage in intellectual masturbation on this blog because I think there's undoubtedly a group of folks who blow a more giant load than me. 

I'm here to address a more straightforward question - does being GEP help attain FIRE?

To answer the question, I will divide the population into three groups, Normies—average Joes who probably have better things to do than read my blog. GEP-adjacents - like myself who passed a round of GEP testing but were not smart enough to enter GEP, and the GEP itself, Goh Keng Swee's attempt to make Plato's Republic a reality by breeding a future generation of Philosopher Kings to rule the country. 

To create a more straightforward analogy, 
  • Normies pleasure their partner with their fingers. 
  • The GEP-adjacent, maybe with just one standard deviation above the median IQ,  pleasure their partner with a feather. 
  • GEPpers, with two standard deviations above the median IQ, use the entire chicken. 
If we observe the other folks known to have attained FIRE, I do not see the same gifted traits of my GEP pals, who have strange, quirky obsessions, hobbies, and complicated fandoms.
  • Normies may write a love letter to their partners on WhatsApp. 
  • GEP-adjacent may use Shakespeare's Sonnets somewhere. ( I did use 116 on my wedding album sadly, no one caught it )
  • GEP will compose a poem partly in Klingon-Quenya-High Valyrian, apply a hash function to it, and then send the garbled text to their partners ( Ok, I'm kidding, but if a girl does this, she's a keeper )
I'm not seeing that weirdness on folks who think being cool is counting their dividends this quarter on their blogs. 

FIRE is the opposite of giftedness. It requires the obstinacy to shut off from consumerism and invest using simple means, often involving dividends, which is frequently not novel enough for brilliant folks.

But I suspect the FI forums might have many GEP-adjacent members. Moments ago, someone shared some questions about Physical Olympiads on the SGFI Telegram group. But this is the SGFI chat group, not the Dividends Investment group, an entire of good-natured uncles and foodies. 

Like Warren Buffett said, anything above an IQ of 120 is wasted if someone is looking at investments.  

Today, I had the pleasure of giving a finance talk to Sec 4 students at Raffles Institution; they asked me whether they should dedicate their careers and investments. I told them that if they did so, it would be a severe waste of the government's investment in them. 

They should be doing complex surgeries, saving lives, fighting complicated litigation cases, and engineering large M&As. 

However, dividend investing can be used to make money for them while they hyper-focus on their professional careers.