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. 

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. 

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

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.