Thursday, September 14, 2023

Next week : Istanbul


After this round of training, I've decided to take a break and travel with some old friends to Turkiye. I will be flying off to Istanbul on Sunday morning. This is only the first trip in 2023. I will be heading to Osaka with my family in October. 

Just a couple of points for the curious :

  • The disparity between money changers and Revolut is enormous. I converted SGD 500 to 8500 Turkish Lira with a local money changer. When I used Revolut, I got 9843 for the same amount. I guess the trick is to minimise the amount of cash you must carry when travelling. 
  • There's almost zero probability that my group would not get scammed. Some tips I got include picking things that belong to someone other than you on the ground, even if it seems like you are helping somebody else. Taxis can drive halfway and then claim that their meters are broken. Shopkeepers wrap up stuff for you when you are making enquiries on prices. 
  • If the price is not too unreasonable, you should close the deal and move on without much drama. I will focus on buying as little as I reasonably can since I'm not a shopper anyway. 

For this trip, I may have overplanned, reading one travel guide and then giving myself a crash course on the history of Istanbul from the classical Greek era as the town of Byzantion to modern Istanbul. 

I'll catch you guys on this blog when I return!

Saturday, September 09, 2023

Letter to Batch 31 of the Early Retirement Masterclass

Dear Students of Batch 31,

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

First, I would like to apologise to the class for the lack of energy for my delivery.

Batch 31 concludes possibly one of the most challenging classes I ever taught. I started getting muscle aches and a sore throat from Day 1 of the class. I even visited the doctor that morning, but despite every medical precaution, my throat and cough kept progressively worsening. On the last day of training, I was literally on over ten kinds of drugs to mitigate my cold symptoms, my diabetic control and my hyperactive thyroid. 

Despite all this, we could still build a reasonably attractive portfolio that generated about 6.5% yields. And to do this when our equity risk premium is over 6%. This portends well for the portfolio's future – but you need holding power.

It would help if you held onto the portfolio until the time interest rates are seen to stop rising, which can happen soon before the end of this year. After that,  you can experience an upside when favourable circumstances arise. One possible scenario is when China uses the “bazooka” to stimulate their economy. Another is when some hope of peace appears in the Ukraine.

In the meantime, as you build your portfolio, expect some short-term pain as REITs continue underperforming against the STI index. Find solace in dividend payouts and see every downtrend as a bargaining opportunity whenever possible. Our stock selections in this batch do not contain much controversy, and I look forward to investing in your picks as soon as I find the liquidity to do so.

Lastly, I hope Batch 31 will participate actively in the FB group. I look forward to seeing you in the following community seminar slated for Sep/Oct 2023.

Hope to see you then!


Christopher Ng Wai Chung

Tuesday, August 29, 2023

Tan Kin Lian's results are consequential in this Presidential Elections


I am confident that Tharman will win the elections on Friday. 

Still, more importantly, Tan Kin Lian's results will be more consequential thanks to the attempts by significant opposition members to politicise this election. Even after TKL's dismal showing, I'm still receiving some reports that he will have diehard supporters because he sounds more like them than the other two candidates.

If you had only been in the echo chamber of PMETs, TKL is expected to lose its deposit, but if you have been following global trends that led to Trump's election and Brexit, you should refrain from writing off TKL's results so readily.

The book Head Hand Heart by David Goodhart may already influence our 4G leadership. The idea is that modern societies reward the cognitive elite too much, ignoring the needs of the people who rely on manual labour ( hand ) and the caring professions ( heart ). After being sidelined for many decades, folks who are not in the cognitive elite, namely non-degree holders, joined by private degree holders in our case, develop so much pent-up anger that they will vote for any cause that will destroy modern society as we know it. 

This is a problem we have known as RPG players for a while. If we invent a game where wizards are more powerful than fighters and clerics, the game will not be popular because it lacks game balance. Calls will be made to beef up fighters/clerics and nerf the wizards. 

Sadly, the book was able to define the problem but does not delve into possible solutions. If anything, Singapore is already ahead of the curve - SIT does not look like a research university but an attempt to build a lucrative industrial apprenticeship program for polytechnic students. Skillsfuture also enables folks to qualify for new careers within a lifetime. We need to give Lawrence Wong time to rebalance the different work-collars.

We need to relook at the consequences of too much emphasis on the cognitive elite if Tan Kin Lian scores more than 20% after this Friday. I can think of examples where some policies are so complicated that folks with average IQ may need help to grasp them well. 

The elected presidency is one such policy. Last night, we witnessed that even a presidential candidate, a student of RI and an actuarial scientist need to comprehend the limits of a President's power and be reminded by the moderator what the role of a President is all about.

Another policy is CPF Life. To make an informed choice between the Basic, Standard and Escalating plan, a citizen needs to understand the concept of an annuity and forecast his lifespan to minimise regret. Do we need three flavours of CPF Life? If you are an Oxford PPE, you can deal with 27 flavours of CPF Life, but even three flavours may be too much for ordinary citizens. 

Suppose you look specifically at what makes Singapore successful. In that case, the scholarship system that allows the PAP to cherry-pick the best for their own ranks is one factor that keeps government expenses, corruption, and inflation lower than in other OECD countries. 

If I were an opposition supporter, dismantling this scholarship system would be one of the surest ways to level the political field, more consequential than dismantling the GRC system because this is like the supply line that feeds the PAP army. The opposition can manipulate Hands and Hearts to vote for them to make this happen because they have been sidelined for so long. Tell me this: Has anyone ever celebrated when you parachute an army general into the C-Suite of a GLC?

Goodhart's book influenced Lawrence Wong because he has alluded to the head, hand and heart triad before in his speeches, but I'm afraid that Singapore may not have done enough.

A non-degree holder PAP MP has not existed for quite a while. The last was Charles Chong. Discrimination against non-degree holders in politics is current and more egregious than race or gender. If Tan Kin Lian wins big this Friday, we may need to reserve one seat for a non-degree MP in a GRC to ensure their views are heard. 

Imagine a country where none of our Ministers have children studying in our Polytechnics or ITE.

Whenever a policy recommendation is made, it will always be one made for "other people's children".

Anyway, I might be wrong, and TKL loses his deposit on Friday, but I think we should still heed Goodhart's warning and bring balance to the head, hand and heart triad before angry Singaporeans start to vote to merge with Malaysia. 

Like we learn from the West, when you spurn the heartlands, they may stop voting based on their best interests and start voting based on your worst.

There will be no dividends for me to collect after that.

Saturday, August 26, 2023

Financial Lessons from Presidential Candidate Ng Kok Song


My vote for this upcoming presidential election is obvious - I will vote for Tharman. It's essential to send out a message that in a multi-racial society, an ethnic Chinese citizen can vote for an Indian leader regardless of what the ruling party says about Singapore not being ready for a minority PM. I'm also a realist who believes that India's economy will be very dynamic compared to that of China, which has been mismanaged by an autocratic Communist Party, and having a symbol that is ethnically Indian is for the greater good of Singapore as we build further commercial inroads into India. ( A Suzhou Industrial Park in India? )

But while my head is with Tharman, my heart goes to Ng Kok Song, who has not only tried his best to bring dignity and environmental friendliness into his campaign but has given so much down-to-earth financial advice to folks following his campaign. My wife has signalled her intention to vote for Ng, and I fully support her decision.

I will probably write a lengthier article on Dr Wealth Blog elaborating on this advice, but I will list what has been shared here and grow this dynamically as I get more snippets of wisdom from Ng. 

Here goes :

  • Points out that public speaking and communication skills are the most important to develop and may need to improve in schools. This is closely followed by financial literacy.
  • Family finances can be managed well if run just like a professional portfolio.
  • Sharply identifies saving money as the most critical skill in personal finance. 
  • The way to invest is to prefer a diversified portfolio of assets across different asset classes.
  • Your time horizon needs to be extended for investment to bear fruit.
  • The expected returns for a diversified portfolio are a nominal 7-8% for decades.
  • You need to keep expenses low, hinting that ETFs are the best way to go ahead for retail investors. ( FAs will never admit this ! )
  • The whole point about managing finances is "optionality", the power to leave a boss who is terrible to you. 
  • Alluding to the duality of wealth generation in Singapore. You must do well in your investment portfolio and supplement it with residential property. 

Readers are free to chip in if I miss out on anything.

Of course, any discussion on Ng must discuss Sybil Lau, his fiance, who attracts much attention because she is 30 years his junior. My favourite quote from her is this :

" For lack of a better word, I'm financially independent. "

Folks tell me that some auntie networks say Sybil is a gold-digger who wishes to marry a 75-year-old fund manager. If you dig into her background, she is much wealthier than him. This reflects the power of a financially independent woman. Ng is eloquent and very much an intellectual, so Sybil has found a soul mate.

I wish for Ng to continue engaging with the public even after his campaign for the Presidency is over. Of course, I'm interested in more than just his views on finance. I'd like his views on love and relationships as well. Remember this - He's loyal to his first wife until the end.

Of course, BBFAs and Useless caste members are probably tempted to vote for that THIRD GUY. Now, it is made more popular because of the statement issued by AWARE.

It's your vote and your right to spend it as you wish. But INCELS could learn something from Ng because he's found love even when he's about to get into his 70s, which many INCELS can't even smell in the prime of their lives.

Monday, August 21, 2023

Are Dividends the best form of Mental Wellness ?

Thanks to a face-to-face Dr Wealth event last Saturday, I've forgotten how much I enjoyed speaking to a big crowd. Talking to an audience gives me a "high", and sometimes I get "high" and disable my filters. So occasionally, I make utterances that might be highly controversial or offensive. For those utterances, I hope that history will never remember them, but sometimes my words resonate with the audience, and I get a spontaneous ovation. 

One utterance that worked well with the crowd is that "Getting dividends is mental wellness." I had a crowd of Millenials, Gen X and Baby Boomers, so out of the blue, I simply decided to critique Gen Z's obsession with mental wellness because Gen Z's obsession with mental wellness distinguishes Gen Z from older folks. There are very few Gen Zs to offend in an investment talk on a Saturday afternoon. When discussing mental wellness, I suddenly uttered that getting dividends is a form of mental wellness, and the crowd erupted in applause. 

This is all unscripted because it was a spontaneous Q&A, and I've since calmed down, so it's time to critically examine this idea. 

For a while, I've always been very amused with how Buddhism entered the West. It did not arrive as a religion but as a psychology because white people, who were becoming more individualistic and less religious, began to discard religious dogma for the inner tranquillity of meditation. 

Similarly, I can imagine what Gen Z have to deal with today. Social media is full of falsehoods like "girl maths" and weirdoes proclaiming that dividends investing is dangerous. If Gen Z wishes to approach investing as a field of study and means of wealth accumulation, like my students, they would have to deal with quite a lot of information. For example, they need to know what a standard deviation is. As I've discussed with many groups, this will always benefit INTJs and ISTJs more than any other personality type. 

From the quantitative perspective, dividends investing has many competitors. Even AUM-based advisors want to wean you off dividends for their mean-variance-optimised ETF portfolios. If you use maximum drawdown over March 2020, dividends investing is dangerous. If you use Beta, it's safer than some market indices. Dividend investing cannot win in every part of the market cycle. 

But from a self-help perspective, dividends rule. 

Dividends put money in your bank account even if you are in a coma or have negligible emotional intelligence. When I was pretty "high" on Saturday, I read many self-help books over the years, like How to Win Friends and Influence People, and the Power of Positive Thinking. Still, only when I started getting dividends was I able to attain the peace of mind and happiness I craved because I had the freedom to FIRE a toxic employer.

Of course, every idea has its limits. 

I hope I don't come across as dismissive of some Gen Zs who really have clinical mental issues, dividends can't solve a mental illness directly, but they can pay for therapy and medication. Also, many Gen Z struggles with regular employment as they are young, so their first dividend is still quite far away.

For Gen Z, we need to develop something more relatable. 

I play Baldur's Gate 3 on GeForce Now and pay about $9 monthly for 10 hours of priority gaming. If you visit any page on the Straits Times Index ETF the current dividend yield is 4.13%. 

We take $9 x 12 months and divide by 0.0413. We get $2,615. By setting aside $2,615 to buy Singapore's largest blue chip companies, you effectively get a perpetually "free" essential subscription to GeForce Now, which is covered by dividends payouts. 

I'm glad face-to-face seminars are finally back. 

Hope to see more readers at our next event.

Thursday, August 17, 2023

FIRE lifestyle with Baldur’s Gate 3


My next course is still sometime away so I’ve been playing a lot of Baldur’s Gate 3 in the meantime and don’t have very much to share on this blog. It looks like I will be spending at least the next 100 hours or so to complete this game. 

If any of your are wondering, I’ve paid for an early access of the game over two years ago but I did not play the game very seriously then because it was incomplete. When the game launched officially about a week ago, I was furiously getting rid of older games on my machine to make way for this monster of a game which takes up over 100GB of space on my PC. Even after installation, the game ran very slowly on my old laptop and the gameplay was very bad even in the lowest quality settings.

Fortunately I have pals who are in the gaming industry and they told me to subscribe to this cloud based gaming platform called GEForce Now, so now at $9 a month my PC gets to behave like one with a high end GPU unit. 

This is where FIRE becomes useful, if you can set aside $2700 into diversified mix of global ETFs of different asset classes, $2700 will allow you a sustained subscription of $9 a month at a withdrawal rate of 4%. You can use the 60/40 portfolio, or you can use local dividend stocks.

But that’s not all, the irritating thing about GEForce Now is that after 10 hour of usage, I would have to queue to get a gaming rig. This queue can be long and I can wait for maybe an hour to gain access to a rig. FIRE allows me to play Baldur’s Gate during office hours when the queues are very short. So I’m quite happy to say that I finally have some leisure time during other people’s office hours. 

Finally, what do I think about the game as a D&D fanboy.

Well, for starters, Baldur’s Gate 3 is inspired by D&D but it is not exactly a D&D game, that honour would go to a game called Solasta. But I think BG3 is an excellent CRPG and any attempt to make it more like the TRPG would lose more fans. Some things that annoy me is when my Paladin cannot smite a monster with the butt of my pole arm and when I make attacks of opportunity, but BG3 makes it up to me with magical items that will be considered broken in the TRPG.  

Sunday, August 13, 2023

Some simpler personal finance moves for your consideration

I thought I should share with everyone what I've been up to recently when it comes to Personal Finance. I'm no expert in doing these moves and I welcome any reader to share tips and tricks to make the moves more optimal. 

What triggered these moves is a conversation I had with my mum. Taking a page off Marie Kondo, I felt that there are very few objects left by my dad that had actual sentimental value and have enough financial value for me to keep for my children, as I have no use for these antiques, it would be much better if my mum liquidated them into cash for herself. Specifically, we intend to turn them into local equities that produced a steady dividend income. Also, my mum's getting old, and it would not be a wise idea to hire a maid with so much valuable stuff lying around the house. 

Off the bat, I desired to keep my parent's Rolex collection for my kids, and everything else can be gotten rid of. This is an easy decision to make as I'm an only child. 

So this is what we did:

a) We liquidated my dad's coin collection

We started with my dad's coin and notes collection. We first started with getting a ballpark valuation on Carousell and noted down a range each coin sells for and we agreed that buyers should pay about 80% of the valuation. We were pleasantly surprised that gold coins can maintain their value with the spot Gold price, but everything else is unlikely to bring in much. My mum is fortunate enough to have a $5 British Borneo note that fetched $350, a fraction of its worth on Carousell, but overall we managed to get the 80% valuation we asked for for the whole batch. 

What we've learned is that pawnshops will take in gold coins for the gold value, but specialist coin shops at People Park's centre will pay more for the vintage value of the coins. Don't visit the stalls selling coins because they don't have the money to pay for your collection anyway.

If you are lucky, the person buying the coins will give you a lesson on antiquated notes. In some years where the production of coins is very low, even a 10-cent Malaysian Sen can fetch hundreds of dollars.

Otherwise, I think you should not treat your coin-collecting hobby as a money-making enterprise.  

b) We deposited coins that are strewn all over our home

The next step is much harder, over the decades, we have not been managing our spare change very well and we have accumulated over 10kg of SG coins at home. This is a horrible state of affairs. 

So we decided that we would take a financial hit ($0.015 per piece) and deposit everything to the DBS coin deposit box nearby. 

Prior to making the deposit, we took away the $0.50 and $1 coins because my kids can use them in school over time. We still ended up with a huge bag of coins we have to push to the bank. 

The coin deposits are surprisingly hard to use as they had a limit of 1000 coins per session. In hindsight, I thought I should have bought a toy spade to shovel the coins into the machine. We ended up entering the passcode to the bank card about 10-12 times. 

Even after paying all costs, we liquidated $700. I estimated the operation costs us over $100 which did not feel all that clever in hindsight. 

I think we were too eager to clear the space for the coins. I already use a lot of spare change when I go to Sheng Siong but clearing the pile will take years.  

You can refer to this link for better hacks.

c) I deployed a new script to abuse scammers

This one is unrelated to the others, but a friend boasted that he was able to really piss off a phone scammer by asking the scammer whether his mum was proud of him becoming a con man. I decided to pick up a few unsolicited calls to speak to them.

True enough, there was always a Malaysian Chinese guy asking me whether I know him. I deployed the script and just kept asking whether his mum knew what he was doing and whether she was proud of his line of work. After some needling, the scammer went berserk, began to scold Hokkien vulgarities and hung up on me. 

Some friends have since offered new ideas like claiming that I was owed money by the scammers, but I can only execute those scripts when I am targeted by them again. 

This has become so fun, I have started looking forward to scam calls. 

In summary, the moves I made on liquidating our assets added a five-digit sum to our bank accounts. Even if I put them into a super stable counter like Parkway Life REIT, that's an additional $300+ every year. 

We are nowhere close to getting the job done, as I have to review my dad's stamp collection next, which will be a colossal headache.

For folks keeping Magic the Gathering Cards for future generations like me, you would also have to think of a future where your kids may not want to inherit your collection and advises you to liquidate before you pass it on.