There are a lot of unhappy people these days :
a) The single Singaporean man is unhappy that the government is not giving enough HDB grants for them to have flat ownership.
b) The petulent father of a boy genius who whines about Singapore schools being inflexible to their child's special needs.
c) The fat but fit father of three who hates being called up yet again for RT.
d) The artist who blames the government about not promoting arts enough for them to flourish.
e) The cat loving activist who crusades against the government's pogrom of cats in the neighbourhood.
This article will not talk about whether these folks are right or wrong. In every discussion, individuals are all capable of building sound arguments to promote their own political agenda. The problem arises when the governments makes the best decisions for the collective population when the people vote individually based on what municipal issues matters to them most.
I'm going to present my personal philosophy, you are free to criticize it as you wish. I respect my fellow citizen's right to complain, but i think that complaining is a highly inefficient exercise. Best leave this to those with time with their hands and nothing to prove ( I personally believe that being a Singaporean means that you have something to prove ).
My philosophy is that, fundamentally, Singapore is not good enough for Singaporeans. Singaporeans are also not good enough for each other.
But my philosophy is that actions also speak louder than words.
Singaporeans can, therefore, do the following to help themselves:
a) Vote properly.
Net liberals are always talking about voting properly. Please do so. If your party does not come into power then accept that majority still wants the status quo, respect other Singaporeans if they make a conservative choice again . Don't vote the party you don't like for economic stability and spend 5 years whining about foreign talent.
b) Vote with your feet.
As an investor, I really like our government policies on taxation, I can't help it when my dividends are taxed just once and pass over to me free of taxes in my account. Singapore happens to love investors. Low income taxes, high consumption taxes means that I can really preserve my wealth and have multiple sources of income. But I also sympathise with Singaporeans who are always whining about not having minimum wages and a welfare system. Governments around the world are competing for talent and there are governments around the world which have a tax and welfare program that suits your tastes.
Singapore is the country where you sell your right to freedom of speech for economic prosperity. Many other countries are not like this and they welcome talent too.
c) Vote with your capital.
A democracy is one man one vote. The genius scholar with 200 IQ gets one vote. The imbecile gets one vote. The nincompoop also gets one vote. That is rule for most political systems.
Economic systems run on a different set of rules. A person who has a 1000 lots has a thousand times more power than a person with one lot. he gets 1000 times more dividends every year. Regimes which are socially authoritarian but economically liberal will simply make it far more comfortable for people to be more concerned about economics than social ills.
Singapore is one such regime.
I think in summary, society does not deal every citizen with an even hand. You owe it to yourself to play your hand to the best of your ability. The YPAP dudes want you to blame your forefathers and your karma. Elite scholars want you to get out of their elite uncaring faces.
But I disagree.
I think it's better to forget your karma and forefathers and do well materially despite YPAP and the elite scholars based on some things which are difficult or hard to change here. When you succeed materially in Singapore, somehow the powers-that-be, who want to preserve their own capital, will begin listening to you.
Let me end with my take on living life in Singapore.
I was one of those guys who hated Chinese Language as my mother tongue. One semester when I was in NJC, I had straight As including GP, the only guy to do so but my parents were informed because i failed my mandarin yet again. I used to whine and bitch about ting xie and mo xie which sapped my my youthful energies away which would be better pursuing subjects which i was good at like maths and the sciences. All my complaints fell on deaf years. The son of an education minister ( an ethnically chinese education minister BTW ) in my time in JC actually did not need to take Cl2 and that made the experience much more bitter for me. After my AO level papers, I told my CL2 teacher that I had already given up after getting a D7, my priorities were to get CL2 behind me so that I can ace my university courses.
Chinese was as non-negotiable as NS in those days.
But look at what is happening today, massive changes country-wide in CL2 education.
The public news is that MM Lee admits he is wrong about CL2 and IQ because his daughter told him so.
I have a better explanation for this change.
I think that my generation X/generation Y Singaporean citizens are starting to realise that it is impossible to remain in Singapore if their children is going to be denied a university education because of Chinese grades. Frustrated with the political process, these Singaporeans are leaving with their human capital and CPF money to Australia and Canada. A thousand millionaires going to Australia means $1 billion of losses for Singapore.
That's gotta hurt the PAP. That will hurt any policy maker.
The government is changing because the economic losses are huge and Singaporeans are figuring out that voting with their capital remains the powerful leverage for political and social change.
So, no matter what you do, fellow citizens, do WELL, get rich. Do so amazingly well so that your capital matters to the people in charge.
When things improve, don't thank the powers that be, thank the fellow ex-citizens and quitters who did the painful deed by making a point by giving up their citizenships so that you can have a better Singapore.
Sunday, January 10, 2010
Thursday, January 07, 2010
The Singapore Plan.
I just want to take a short break to introduce the Singapore Plan.
i) Do well in school.
ii) Get a university degree in a professional field
iii) Get work in either the civil service or MNC.
iv) Get married.
v) Buy a HDB flat / Condo.
vi) Get a car
vii) Have kids
viii) Finish reservist / Grow old.
ix) Die before you become a burden to the government.
Powerful institutions exists to reinforce this plan from HDB loans to baby bonuses. People who deviate from this plan are on their own or labelled quitters or unpatriotic assholes.
A large component of this plan is also only possible with hefty loans or obligations.
I think a large part of wealth accumulation means breaking out from this plan and coming out with something on your own but that will be a post for another day.
Which brings us to this new idea called Lifestyle Design. I always believed that Singaporeans can come up with their own plan based on their own personal circumstances. This requires some effort in developing a Philosophy to Life, something which I'm currently developing for future books which I hope to launch.
i) Do well in school.
ii) Get a university degree in a professional field
iii) Get work in either the civil service or MNC.
iv) Get married.
v) Buy a HDB flat / Condo.
vi) Get a car
vii) Have kids
viii) Finish reservist / Grow old.
ix) Die before you become a burden to the government.
Powerful institutions exists to reinforce this plan from HDB loans to baby bonuses. People who deviate from this plan are on their own or labelled quitters or unpatriotic assholes.
A large component of this plan is also only possible with hefty loans or obligations.
I think a large part of wealth accumulation means breaking out from this plan and coming out with something on your own but that will be a post for another day.
Which brings us to this new idea called Lifestyle Design. I always believed that Singaporeans can come up with their own plan based on their own personal circumstances. This requires some effort in developing a Philosophy to Life, something which I'm currently developing for future books which I hope to launch.
Tuesday, January 05, 2010
Greek mythology, CPF and the Single man.
I just heard that a friend of a friend who takes the cake when it comes to being a pragmatic dude. When asked by my friend if he has a girlfriend or significant other, he replied that he is hesitant to make a solid commitment because the girl is too young and has too little in her CPF to assist him with home payments once he gets married.
Now I have heard of guys who are practical minded but I've rarely heard of man who may actually prefer an older spouse for her CPF monies. While I find his style too extreme ( thank goodness he is not Singaporean ), my wife likes to remind me about the way I gamed my CPF, so I'd like to share this with my readers here as well so that you can judge for yourself who is worse, me or this foreign talent.
When I was in my early twenties and very single, I was very afraid of falling in love with a Singaporean woman. There have been too many horror stories about Singapore women demanding an engagement ring costing 6 months of income to those of Singapore women who will only live in condominiums and wear LV handbags. I never dated seriously before and I was genuinely afraid of falling in love with one who will then proceed to suck all my hard-earned money away.
One of my biggest concerns is that my future wife would not be willing to live with my mum. Another worry is that being Singapoore women, they might want a 5-room flat rather than a 4-room flat.
So I thought of a strategy from Greek Mythology to find ways to prevent this from happening.
The Greek hero Odysseus wanted to listen to the song of the harpy, some kind of half-bird half -woman monster, but is afraid that he will be coerced to drown in the deep sea as this often happens to sailors who fail to resist the siren's song. So instead of donning ear plugs, he instructed his men to tie him up on the mast and told them not to untie him no matter how much he struggled and begged them to. Needless to say Odysseus became one of the few Greek heroes to be able to come back alive after hearing the song of the Harpy.
I figured that the best way to prevent such an occurrence is to game my CPF before I met my soulmate. It's easier to make a decision with your brain rather than your OTHER brain.
So I channeled all my CPF-OA dollars every year into my CPF-SA account. I will make a slight hair-cut profit from an unbeatable 4% interest and, as the process is irreversible, there is nothing my hapless, future girlfriend can do about the status of my own cpf. I've outsmarted my future,unknown girlfriend with one keystroke on my CPF website.
Soon enough, I maxed-out my CPF-SA and the government no longer allows me to contribute to that account. Instead, I was able to accumulate enough interest to match the CPF minimum sum as required by law.
Today, as I have no HDB flat, my CPF returns me about $8,000 a year in interest rate, higher than my tax rate. Some of my OA account investments give me about $1500 in dividends. I consider it a part of my fixed-income portfolio I intend to draw out from at the age of 55.
Well to end my story, I eventually met my wife who is'nt a Singapore woman and, guess what - actually has her own 4-room flat along with her sister. Obviously if her future boyfriend wanted to buy a home with her upon getting married, she would be unable to comply as well.
Clearly, life mirrors one's actions and deeds in interesting ways.
Now I have heard of guys who are practical minded but I've rarely heard of man who may actually prefer an older spouse for her CPF monies. While I find his style too extreme ( thank goodness he is not Singaporean ), my wife likes to remind me about the way I gamed my CPF, so I'd like to share this with my readers here as well so that you can judge for yourself who is worse, me or this foreign talent.
When I was in my early twenties and very single, I was very afraid of falling in love with a Singaporean woman. There have been too many horror stories about Singapore women demanding an engagement ring costing 6 months of income to those of Singapore women who will only live in condominiums and wear LV handbags. I never dated seriously before and I was genuinely afraid of falling in love with one who will then proceed to suck all my hard-earned money away.
One of my biggest concerns is that my future wife would not be willing to live with my mum. Another worry is that being Singapoore women, they might want a 5-room flat rather than a 4-room flat.
So I thought of a strategy from Greek Mythology to find ways to prevent this from happening.
The Greek hero Odysseus wanted to listen to the song of the harpy, some kind of half-bird half -woman monster, but is afraid that he will be coerced to drown in the deep sea as this often happens to sailors who fail to resist the siren's song. So instead of donning ear plugs, he instructed his men to tie him up on the mast and told them not to untie him no matter how much he struggled and begged them to. Needless to say Odysseus became one of the few Greek heroes to be able to come back alive after hearing the song of the Harpy.
I figured that the best way to prevent such an occurrence is to game my CPF before I met my soulmate. It's easier to make a decision with your brain rather than your OTHER brain.
So I channeled all my CPF-OA dollars every year into my CPF-SA account. I will make a slight hair-cut profit from an unbeatable 4% interest and, as the process is irreversible, there is nothing my hapless, future girlfriend can do about the status of my own cpf. I've outsmarted my future,unknown girlfriend with one keystroke on my CPF website.
Soon enough, I maxed-out my CPF-SA and the government no longer allows me to contribute to that account. Instead, I was able to accumulate enough interest to match the CPF minimum sum as required by law.
Today, as I have no HDB flat, my CPF returns me about $8,000 a year in interest rate, higher than my tax rate. Some of my OA account investments give me about $1500 in dividends. I consider it a part of my fixed-income portfolio I intend to draw out from at the age of 55.
Well to end my story, I eventually met my wife who is'nt a Singapore woman and, guess what - actually has her own 4-room flat along with her sister. Obviously if her future boyfriend wanted to buy a home with her upon getting married, she would be unable to comply as well.
Clearly, life mirrors one's actions and deeds in interesting ways.
Sunday, January 03, 2010
Why foreign talent will trounce your asses.
The next book I completed over the weekend is Daniel Pink's Drive.
http://www.amazon.com/Drive-Surprising-Truth-About-Motivates/dp/1594488843/ref=sr_1_1?ie=UTF8&s=books&qid=1262488994&sr=8-1
This book could well be the best piece of work on motivation so far and I recommend a read for anyone who wants to understand people develop the motivation to succeed in meeting their goals.
For particular importance to most Singaporeans is the concept of intrinsic versus extrinsic motivation. Extrinsic motivation is motivation by external factors like bonus payments, increments and various company perks. Intrinsic motivation is motivation by inner forces, such as the personal willingness to work because one wishes to master a skill or find meaning in one's life.
In the old industrial world, problems may be manual in nature so extrinsic motivation used to be effective. Pay a bonus to get more widgets manufactured and you'll likely have a more productive company.
In the knowledge-based economy, workers are there to solve complex problems which may require creativity coupled with some deep domain experience in something. In this economy, once fair wages are established, more extrinsic motivators actually lower the quality of the work and the focus becomes less that of problem solving but getting more rewards instead. All these findings have been proven in psychological studies.
After reading this book cannot help but start thinking about how disadvantageous Singaporeans put themselves in the workplace when competing against foreign talent.
Here's my train of thought.
Foreign talent willingly came over to our shores to seek a better life from their old regimes. They are unencumbered with mortgages. Many rent their homes here and saving a mere 20% of their take home pay may mean earning 6 months in living expenses back home. Working here itself is already the highlight of their lives so they are intensely motivated to work even for a small SME. They can bet their lives on their stint here because failure means that they just get sent home where everything is often 3 times cheaper anyway.
Singaporeans, on the other hand, desperately need to find meaning in their work and daily lives but are encumbered with mortgages, family upkeep and car loans. They need to retire here so their savings rate is generally not enough to have a reasonable retirement. A combination of rampant consumer and mortgage loans ensures that most Singaporeans are obliged to step into the workplace to get their jobs done. As a consequence of this Singaporeans are forced to go for extrinsic rewards and bonuses to keep on living their lives. Compounding the matter further is that our education does not really teach people how to accumulate money or develop a philosophy of life. For these things, Singaporeans need to be self-taught.
When you have a foreign talent population who can afford to be less motivated extrinsically against a local population who has no choice but to crawl into the office, you get exactly what is happening in Singapore today. Many local entrepreneurs like Adam Khoo have even started speaking out against Singapore workers, calling them fussy and less willing to make personal sacrifices for their companies. The Government is torn about the foreign talent policy because having foreigners keeps costs down and business people happy.
I think there are several ways for Singaporeans to turn things around:
a) You need to develop a new plan. The old plan : get a degree, get married, buy a flat and car, have kids then retire and die amidst a sea of consumer goods cannot work anymore with foreign talent in our shores. As foreign talent is unencumbered with costs, you cannot take on more debt and remain competitive at the same time. The workplace demands a dynamic worker who have little mental burdens to solve the most pressing problems for the economy.
b) Do not be afraid of unconventional solutions. If you are single and think that marriage is a financial burden, go ahead and cohabit once you find the right person. If you do not want kids to slow your career down, make that choice and stick with it until policy makers change the rules to make it easier to be a parent. The French have a natural replacement rate because they allow both fathers and mothers to take 9 month leave to look after their kids, Singapore will have to become that that sooner or later. So called old-fashioned Asian values will become a luxury for many of us who struggle to make a living everyday.
c) Once you become unburdened with a Singapore life plan, the tables get turned. You become more motivated to work complex problems and become and asset in the office. You do not need your boss to be always trying to manage you and can even demand better standards. You can set up your own business to hire cheap foreign talent, even compete with Adam Khoo!
But more importantly, you're on HOME ground.
When Singaporeans are as equally dynamic and motivated as foreign talent, Singaporeans can start kicking asses. You know your own home country, can get the best deals and have a network of fellow locals to pick on to meet your career and personal goals. Nothing gives you a bigger network than a stint as a reservist soldier.
But wait, there's more...
Unburdened Singaporeans have a large CPF stash. We can become mobile and attractive workers for any economy. Singaporeans can choose to uproot themselves to work in a different regime. You can work for a more relaxed economy like Australia or New Zealand and find ways to qualifyb for welfare, or you can join a cheaper economy, like retreat to East Malaysia to spend the rest of your retirement days paying in Malaysian Ringgit.
The fact that thousands of Singaporeans who cannot bear that existential angst are leaving the country forever speaks of the effectiveness of this strategy.
Choose the right regime and you'll not only have your savings, your entire CPF fund will be at your disposal.
Now is'nt this a dangerous idea?
http://www.amazon.com/Drive-Surprising-Truth-About-Motivates/dp/1594488843/ref=sr_1_1?ie=UTF8&s=books&qid=1262488994&sr=8-1
This book could well be the best piece of work on motivation so far and I recommend a read for anyone who wants to understand people develop the motivation to succeed in meeting their goals.
For particular importance to most Singaporeans is the concept of intrinsic versus extrinsic motivation. Extrinsic motivation is motivation by external factors like bonus payments, increments and various company perks. Intrinsic motivation is motivation by inner forces, such as the personal willingness to work because one wishes to master a skill or find meaning in one's life.
In the old industrial world, problems may be manual in nature so extrinsic motivation used to be effective. Pay a bonus to get more widgets manufactured and you'll likely have a more productive company.
In the knowledge-based economy, workers are there to solve complex problems which may require creativity coupled with some deep domain experience in something. In this economy, once fair wages are established, more extrinsic motivators actually lower the quality of the work and the focus becomes less that of problem solving but getting more rewards instead. All these findings have been proven in psychological studies.
After reading this book cannot help but start thinking about how disadvantageous Singaporeans put themselves in the workplace when competing against foreign talent.
Here's my train of thought.
Foreign talent willingly came over to our shores to seek a better life from their old regimes. They are unencumbered with mortgages. Many rent their homes here and saving a mere 20% of their take home pay may mean earning 6 months in living expenses back home. Working here itself is already the highlight of their lives so they are intensely motivated to work even for a small SME. They can bet their lives on their stint here because failure means that they just get sent home where everything is often 3 times cheaper anyway.
Singaporeans, on the other hand, desperately need to find meaning in their work and daily lives but are encumbered with mortgages, family upkeep and car loans. They need to retire here so their savings rate is generally not enough to have a reasonable retirement. A combination of rampant consumer and mortgage loans ensures that most Singaporeans are obliged to step into the workplace to get their jobs done. As a consequence of this Singaporeans are forced to go for extrinsic rewards and bonuses to keep on living their lives. Compounding the matter further is that our education does not really teach people how to accumulate money or develop a philosophy of life. For these things, Singaporeans need to be self-taught.
When you have a foreign talent population who can afford to be less motivated extrinsically against a local population who has no choice but to crawl into the office, you get exactly what is happening in Singapore today. Many local entrepreneurs like Adam Khoo have even started speaking out against Singapore workers, calling them fussy and less willing to make personal sacrifices for their companies. The Government is torn about the foreign talent policy because having foreigners keeps costs down and business people happy.
I think there are several ways for Singaporeans to turn things around:
a) You need to develop a new plan. The old plan : get a degree, get married, buy a flat and car, have kids then retire and die amidst a sea of consumer goods cannot work anymore with foreign talent in our shores. As foreign talent is unencumbered with costs, you cannot take on more debt and remain competitive at the same time. The workplace demands a dynamic worker who have little mental burdens to solve the most pressing problems for the economy.
b) Do not be afraid of unconventional solutions. If you are single and think that marriage is a financial burden, go ahead and cohabit once you find the right person. If you do not want kids to slow your career down, make that choice and stick with it until policy makers change the rules to make it easier to be a parent. The French have a natural replacement rate because they allow both fathers and mothers to take 9 month leave to look after their kids, Singapore will have to become that that sooner or later. So called old-fashioned Asian values will become a luxury for many of us who struggle to make a living everyday.
c) Once you become unburdened with a Singapore life plan, the tables get turned. You become more motivated to work complex problems and become and asset in the office. You do not need your boss to be always trying to manage you and can even demand better standards. You can set up your own business to hire cheap foreign talent, even compete with Adam Khoo!
But more importantly, you're on HOME ground.
When Singaporeans are as equally dynamic and motivated as foreign talent, Singaporeans can start kicking asses. You know your own home country, can get the best deals and have a network of fellow locals to pick on to meet your career and personal goals. Nothing gives you a bigger network than a stint as a reservist soldier.
But wait, there's more...
Unburdened Singaporeans have a large CPF stash. We can become mobile and attractive workers for any economy. Singaporeans can choose to uproot themselves to work in a different regime. You can work for a more relaxed economy like Australia or New Zealand and find ways to qualifyb for welfare, or you can join a cheaper economy, like retreat to East Malaysia to spend the rest of your retirement days paying in Malaysian Ringgit.
The fact that thousands of Singaporeans who cannot bear that existential angst are leaving the country forever speaks of the effectiveness of this strategy.
Choose the right regime and you'll not only have your savings, your entire CPF fund will be at your disposal.
Now is'nt this a dangerous idea?
Friday, January 01, 2010
Design Thinking and your Personal Finance
Ok, 2010 is going to be a new year. One of the things we're going to see this year is that this blog will have more regular updates. Because I read about 3-4 non-fiction books a week, a short article trying to apply the new concepts I picked up will be enough to keep you guys occupied for the year.
Let's start 2010 with something on design thinking.
Design thinking for business by Roger Martin is a nice work on rethinking about businesses and validates the importance of intuition and patience in product and business model design.
http://www.amazon.com/Design-Business-Thinking-Competitive-Advantage/dp/1422177807/ref=sr_1_1?ie=UTF8&s=books&qid=1262315101&sr=8-1
The most important in this book for is the concept of a knowledge funnel.
Knowledge always begins as a mystery to all of us. Then scientists and artists will attempt to convert these mysteries into heuristics or rules of thumb, which defines some patterns behind these mysteries. This process requires a lot of guesswork and can be very expensive to perform. Once a steady set of heuristics arise to define the mystery, engineers and accountants will attempt to turn these heuristics into algorithms. This process unlocks tremendous value and profit, but once an algorithm is built, competitive advantage is lost as algorithms run with reliable results.
The book acknowledges that many old business models run on reliability, which is to turn heuristics into algorithms but do not have an emphasis on validity, which is to craft heuristics from the mysteries around us.
The primary value of this book refines my own personal philosophy about seeking good work in the corporate world. I always encourage readers to seek jobs as symbolic analysts and move away from skills involving technique towards interpretation. The last thing you want to do is to stick around to invoke standard operating procedures everyday instead of crafting them for a living.
Maximal profits in this working world will be concentrated in two kinds of workers.
a) Symbolic analysts who have the power to convert heuristics into a reliable algorithm. This may employ Six Sigma, PMI to meet business results.
b) Designers and economists who predict the future by making guesses about how the future will be shaped and designing new models and products creating new markets altogether.
The next important value is that in the financial world, a lot of energy is spent coming up with new algorithms to consistently make money which eventually fail as markets gain a whole new level of efficiency. Finance is a special playground where there will always be mysteries and a good working heuristic and algorithm cannot be sustainable for too long. Just look at all the books on high frequency trading and hedge funds today.
A good investor thus, will always be trying to interpret the wisdom of financial markets with well crafted hypotheses, transforming them into an investment plan and then employing the feedback to understand the market wisdom further.
An investor is never infallible. An investor is an artist, scientist, engineer and accountant all rolled into one and he will still lose money to the markets every now and then.
Regards
Let's start 2010 with something on design thinking.
Design thinking for business by Roger Martin is a nice work on rethinking about businesses and validates the importance of intuition and patience in product and business model design.
http://www.amazon.com/Design-Business-Thinking-Competitive-Advantage/dp/1422177807/ref=sr_1_1?ie=UTF8&s=books&qid=1262315101&sr=8-1
The most important in this book for is the concept of a knowledge funnel.
Knowledge always begins as a mystery to all of us. Then scientists and artists will attempt to convert these mysteries into heuristics or rules of thumb, which defines some patterns behind these mysteries. This process requires a lot of guesswork and can be very expensive to perform. Once a steady set of heuristics arise to define the mystery, engineers and accountants will attempt to turn these heuristics into algorithms. This process unlocks tremendous value and profit, but once an algorithm is built, competitive advantage is lost as algorithms run with reliable results.
The book acknowledges that many old business models run on reliability, which is to turn heuristics into algorithms but do not have an emphasis on validity, which is to craft heuristics from the mysteries around us.
The primary value of this book refines my own personal philosophy about seeking good work in the corporate world. I always encourage readers to seek jobs as symbolic analysts and move away from skills involving technique towards interpretation. The last thing you want to do is to stick around to invoke standard operating procedures everyday instead of crafting them for a living.
Maximal profits in this working world will be concentrated in two kinds of workers.
a) Symbolic analysts who have the power to convert heuristics into a reliable algorithm. This may employ Six Sigma, PMI to meet business results.
b) Designers and economists who predict the future by making guesses about how the future will be shaped and designing new models and products creating new markets altogether.
The next important value is that in the financial world, a lot of energy is spent coming up with new algorithms to consistently make money which eventually fail as markets gain a whole new level of efficiency. Finance is a special playground where there will always be mysteries and a good working heuristic and algorithm cannot be sustainable for too long. Just look at all the books on high frequency trading and hedge funds today.
A good investor thus, will always be trying to interpret the wisdom of financial markets with well crafted hypotheses, transforming them into an investment plan and then employing the feedback to understand the market wisdom further.
An investor is never infallible. An investor is an artist, scientist, engineer and accountant all rolled into one and he will still lose money to the markets every now and then.
Regards
Happy New Year to all readers !
Here's wishing all readers a Happy New Year.
2009 has been a fairly good year with the market recovery starting as early as March. I remember listening to an colleague who was talking about the recovery being fake and markets taking a double-dip thereafter, I resolved to pump all my income into the markets further because I've always believed that its the darkest before the dawn.
Well, the bets paid off and i look towards 2010 as the year where I seriously build-up an equity portfolio to complement my portfolio of REITs and business trusts.
Currently my equity portfolio is still quite weak with about $30,000 spread over the dividend stalwarts SPH, M1, Starhub and Singapore Post. I expect accumulating $20,000 more and looking for another good blue chip before June before really pumping more into small cap dividend stocks which yield 6% or more.
Looking for such companies is like searching for a needle in a haystack, my watch-list so far has about 9 such counters, they are too risky to warrant an investment of more than 2% of my portfolio.
All in all, 2009 has reinvigorated my confidence in my strategies of yield accumulation and I hope that by balancing my earning, savings and investing rate, I'll be off the rat race before the age of 40 with a net-worth over $1 million.
Regards
2009 has been a fairly good year with the market recovery starting as early as March. I remember listening to an colleague who was talking about the recovery being fake and markets taking a double-dip thereafter, I resolved to pump all my income into the markets further because I've always believed that its the darkest before the dawn.
Well, the bets paid off and i look towards 2010 as the year where I seriously build-up an equity portfolio to complement my portfolio of REITs and business trusts.
Currently my equity portfolio is still quite weak with about $30,000 spread over the dividend stalwarts SPH, M1, Starhub and Singapore Post. I expect accumulating $20,000 more and looking for another good blue chip before June before really pumping more into small cap dividend stocks which yield 6% or more.
Looking for such companies is like searching for a needle in a haystack, my watch-list so far has about 9 such counters, they are too risky to warrant an investment of more than 2% of my portfolio.
All in all, 2009 has reinvigorated my confidence in my strategies of yield accumulation and I hope that by balancing my earning, savings and investing rate, I'll be off the rat race before the age of 40 with a net-worth over $1 million.
Regards
Monday, December 28, 2009
What is the ROI of a spouse ?
A story has been going around that an ordinary Joe took his girlfriend to a jewellery outlet and got her to choose an engagement ring. The ring she chose cost him eventually close to $30,000. Apparently the single men who heard the story were a little upset because this dude did something to "spoil the market". As a consequence, some friends are asking some tough questions to bait lady friends on facebook to define what's the ideal ROI of a spouse.
I think this question has intellectual merit and we can apply the three approaches to fundamental analysis to answer this question.
a) Discounted cash flow.
One way to define the value of a spouse would be to project the future cash flow he/she can generate for the family. In such a case, even if a spouse contributes $500 to the family a month, at 5% interest, the spouse will easily be valued at $120,000. That does'nt even consider the cost of housework in the case of women or some DIY around the house for men. In such a case, the ROI can be extremely high. If you believe that spouses are each other's possessions, the value of human capital when marriage occurs is priceless and that dude is justified in paying $30,000 for an engagement ring. The lady in return will probably have to spend about $100,000 in lingerie in preparation for the big wedding night.
b) Comparative method
Another way to value the spouse is to compare with other people their valuations and employ historical precedence to perform valuation. In such a case, some guys are justified to say that the dude overpaid because many people pay less than $5,000 for an engagement ring. Extremists may even cast blame on the lady because she chose the ring and was exploiting the dude towards her own ends.
c) Sum of parts method.
A most cynical method which is still valid would be consider the amount of finances that can be extracted if a marriage fails and both spouses will try to pick out whatever is left. In such a case, given the Women's Charter, many wives will be given a negative valuation but husbands may have positive valuation because the judgments typically places men at the losing end in a divorce settlement ( this is somewhat changing with recent rulings ). This method is extreme but has valid use for people who may have failed in marriages before or come from broken families themselves. If you use this valuation method, the lady should have been the one paying for the engagement ring and not the poor dude.
Now in fundamental analysis for stocks, three methods will generate numbers which are rather close to each other and can facilitate decision making. SPH can be $3 using one method, $4 using another and $5 using the third. But if SPH is trading at $6, you know that you can avoid it. Applying this towards a spouse will reach conflicting solutions, so perhaps an ROI analysis is not the right answer.
My conclusion...
Personally, as a dude who was a single man longer than a married man, I think we men have a lot of insecurities. I used to get upset when some other dude drives a girl home in a phallic symbol otherwise known as a car. Instead of getting upset, I should have been focusing on making myself more attractive as spouse material myself. And that focus is by pursuing my ambitions and meeting my goals. That's what men fundamentally are : economic units to facilitate the rearing of successful and productive children.
And the discipline of fundamental analysis does have its merits in spouse-hunting.
Please bother to do your due diligence. Get to know the family and understand your target sufficiently well so that you can tolerate their flaws. If the woman is neurotic and gets all ape-shit over small matters, don't expect a happy or productive marriage moving forward,DTMFA. Same goes for the man who is deadbeat and only goal he meets is to stay alive.
Regards
I think this question has intellectual merit and we can apply the three approaches to fundamental analysis to answer this question.
a) Discounted cash flow.
One way to define the value of a spouse would be to project the future cash flow he/she can generate for the family. In such a case, even if a spouse contributes $500 to the family a month, at 5% interest, the spouse will easily be valued at $120,000. That does'nt even consider the cost of housework in the case of women or some DIY around the house for men. In such a case, the ROI can be extremely high. If you believe that spouses are each other's possessions, the value of human capital when marriage occurs is priceless and that dude is justified in paying $30,000 for an engagement ring. The lady in return will probably have to spend about $100,000 in lingerie in preparation for the big wedding night.
b) Comparative method
Another way to value the spouse is to compare with other people their valuations and employ historical precedence to perform valuation. In such a case, some guys are justified to say that the dude overpaid because many people pay less than $5,000 for an engagement ring. Extremists may even cast blame on the lady because she chose the ring and was exploiting the dude towards her own ends.
c) Sum of parts method.
A most cynical method which is still valid would be consider the amount of finances that can be extracted if a marriage fails and both spouses will try to pick out whatever is left. In such a case, given the Women's Charter, many wives will be given a negative valuation but husbands may have positive valuation because the judgments typically places men at the losing end in a divorce settlement ( this is somewhat changing with recent rulings ). This method is extreme but has valid use for people who may have failed in marriages before or come from broken families themselves. If you use this valuation method, the lady should have been the one paying for the engagement ring and not the poor dude.
Now in fundamental analysis for stocks, three methods will generate numbers which are rather close to each other and can facilitate decision making. SPH can be $3 using one method, $4 using another and $5 using the third. But if SPH is trading at $6, you know that you can avoid it. Applying this towards a spouse will reach conflicting solutions, so perhaps an ROI analysis is not the right answer.
My conclusion...
Personally, as a dude who was a single man longer than a married man, I think we men have a lot of insecurities. I used to get upset when some other dude drives a girl home in a phallic symbol otherwise known as a car. Instead of getting upset, I should have been focusing on making myself more attractive as spouse material myself. And that focus is by pursuing my ambitions and meeting my goals. That's what men fundamentally are : economic units to facilitate the rearing of successful and productive children.
And the discipline of fundamental analysis does have its merits in spouse-hunting.
Please bother to do your due diligence. Get to know the family and understand your target sufficiently well so that you can tolerate their flaws. If the woman is neurotic and gets all ape-shit over small matters, don't expect a happy or productive marriage moving forward,DTMFA. Same goes for the man who is deadbeat and only goal he meets is to stay alive.
Regards
Saturday, December 19, 2009
Some "difficult" personal ideas
I would say that most of my friends are intellectual with a little bit of a liberal bent. In this article, I want to showcase some of my ideas and beliefs which may not be easily acceptable by mainstream folks. The aim is to welcome disagreement and possibly improve on some of these ideas.
Here they are in their pristine state:
a) Defining a purpose in life is a waste of time.
Everyone when facing some difficulty or stress may reach some point in time when they start to question if they are on the right path. This indecision can lead to rash action. Work stress two years almost drove me into contemplating the teaching profession. I look at what happened and realized that if it's your job that's a problem, you find a new one preferably with better pay and hours. It may not even be the industry sector or the company that's giving trouble. It may just be the unreasonable assholes that you worked with.
If there really was some purpose in one's life. Then God or some creator would have made proctologists solely for the aim of looking down someone's rear end. A better approach would be to figure out one's marketable strength and failing which, take action to see if some strengths may surface in the process.
b) The Asian approach to education is the right one.
I want my kids to go through the Singapore system because unlike the Western approach, the Asian system defines the syllabus and grants self esteem only to the people who can master it. The western approach doles out self-esteem in the hopes that mastery occurs. The consequences are that the folks who survive the Singapore system are more unassuming and readily gain an appreciation that they can carve out something valuable for themselves with the right effort and sacrifice.
i) Confident and capable people are best.( But can you keep them? )
ii) Capable people who are not confident are good loyal workers.
iii) Incapable people who lack confidence are willing to learn and can be taught.
iv) The most destructive people out there are incapable people who are brimming with bravado and confidence.
c) Success comes from the constant leverage of rare unique advantages and can be unfair to people without them.
Suppose we take wealth out of the equation and look at intelligence and talent, even with these traits, life does not dole out talent and intelligence to everyone. Liberals may want to be kind to people who are born smart enough to succeed but they are hypocrites when they apply the same guilt trip to those who make it through personal resources and even family wealth.
The age of people coming from a small kampong and then going into RI and then becoming a Minister to rule benevolently over us plebeians is over. It's not something I proud of but Legal and medical schools are full of folks who don't come from HDB homes.
People put too much blame on governments and social institutions when they don't meet their own benchmarks for success. I think this is inefficient. It's better to look into our own personal advantages and then pimp it to maximum effect. We owe it to ourselves to play our cards towards maximum effect.
So if you are the bosses son, i think you should just take over and run your business well. The guy from the heartlands may be leveraging on his superior intellect and charm to take your share of the economic pie. And the scholar Admin Officer wants you to pay your taxes too.
d) The Singapore Dream is dead.
There is no Singapore dream anymore. Americans got the idea right when they say that you only have the right to pursue your happiness. Getting happiness is never guaranteed.
You get married, then have children to get some discount to buy ownership in a HDB for 99 years is a lie to keep you a slave for the system. After a while you get sick and die surrounded by consumer goods that you don't really need. Consumption now generates most of government taxes.
The same liberals who are against my measures of extreme austerity are feeding the government Admin office scholars with their own consumption taxes.
That's not a dream. It's a nightmare of epic proportions.
We have the freedom decide what's best for ourselves, politically, socially and economically. My methods to replace paid income with passive income to gain personal freedom is only a small partial solution to this grand equation.
When an army of capitalist shareholders descend upon our GLCs and start voting blocks with our dollars, this should be the battlefield that we are preparing for. With enough shares, we can end the "amakudari" in the corporate world in Singapore.
A democracy will arise from capital ownership. That is my Singapore dream.
Here they are in their pristine state:
a) Defining a purpose in life is a waste of time.
Everyone when facing some difficulty or stress may reach some point in time when they start to question if they are on the right path. This indecision can lead to rash action. Work stress two years almost drove me into contemplating the teaching profession. I look at what happened and realized that if it's your job that's a problem, you find a new one preferably with better pay and hours. It may not even be the industry sector or the company that's giving trouble. It may just be the unreasonable assholes that you worked with.
If there really was some purpose in one's life. Then God or some creator would have made proctologists solely for the aim of looking down someone's rear end. A better approach would be to figure out one's marketable strength and failing which, take action to see if some strengths may surface in the process.
b) The Asian approach to education is the right one.
I want my kids to go through the Singapore system because unlike the Western approach, the Asian system defines the syllabus and grants self esteem only to the people who can master it. The western approach doles out self-esteem in the hopes that mastery occurs. The consequences are that the folks who survive the Singapore system are more unassuming and readily gain an appreciation that they can carve out something valuable for themselves with the right effort and sacrifice.
i) Confident and capable people are best.( But can you keep them? )
ii) Capable people who are not confident are good loyal workers.
iii) Incapable people who lack confidence are willing to learn and can be taught.
iv) The most destructive people out there are incapable people who are brimming with bravado and confidence.
c) Success comes from the constant leverage of rare unique advantages and can be unfair to people without them.
Suppose we take wealth out of the equation and look at intelligence and talent, even with these traits, life does not dole out talent and intelligence to everyone. Liberals may want to be kind to people who are born smart enough to succeed but they are hypocrites when they apply the same guilt trip to those who make it through personal resources and even family wealth.
The age of people coming from a small kampong and then going into RI and then becoming a Minister to rule benevolently over us plebeians is over. It's not something I proud of but Legal and medical schools are full of folks who don't come from HDB homes.
People put too much blame on governments and social institutions when they don't meet their own benchmarks for success. I think this is inefficient. It's better to look into our own personal advantages and then pimp it to maximum effect. We owe it to ourselves to play our cards towards maximum effect.
So if you are the bosses son, i think you should just take over and run your business well. The guy from the heartlands may be leveraging on his superior intellect and charm to take your share of the economic pie. And the scholar Admin Officer wants you to pay your taxes too.
d) The Singapore Dream is dead.
There is no Singapore dream anymore. Americans got the idea right when they say that you only have the right to pursue your happiness. Getting happiness is never guaranteed.
You get married, then have children to get some discount to buy ownership in a HDB for 99 years is a lie to keep you a slave for the system. After a while you get sick and die surrounded by consumer goods that you don't really need. Consumption now generates most of government taxes.
The same liberals who are against my measures of extreme austerity are feeding the government Admin office scholars with their own consumption taxes.
That's not a dream. It's a nightmare of epic proportions.
We have the freedom decide what's best for ourselves, politically, socially and economically. My methods to replace paid income with passive income to gain personal freedom is only a small partial solution to this grand equation.
When an army of capitalist shareholders descend upon our GLCs and start voting blocks with our dollars, this should be the battlefield that we are preparing for. With enough shares, we can end the "amakudari" in the corporate world in Singapore.
A democracy will arise from capital ownership. That is my Singapore dream.
Wednesday, December 09, 2009
So this is what people call a "dangerous idea".
It's only this afternoon that I stumbled upon another conversation taking place in the Channel News Asia forum. The remarks about me and about my wife are pretty cruel but I really can't help having a big smile on my face after reading the exchanges. Discussion about my investment method and savings regime has reached 21 pages all thanks to one guy who just could not stop making personal attacks against me.
I'm starting to suspect that this guy is a my friend or a bookstore owner who is covertly helping me drive sales. It's actually hilarious how a person can get so pissed off with my article so much.
See for yourself:
http://forum.channelnewsasia.com/viewtopic.php?t=301530&start=0&postdays=0&postorder=asc&highlight
Well I'm done defending myself so today I'll try to guess why people are so heated over my appearance on the papers. Let's just assume that this guy is not some IT engineer I released out of contract years ago ( hey, when you lead a team of 100+ engineers, you do these things every now and then... ).
What makes my ideas 'dangerous' and so offensive to some people:
a) Singapore is actually a welfare state.
If someone who is not a career high-flyer can generate dividends to cover living expenses. Welfare is not only possible, it can be paid even while you have a job. Singapore's low tax rates and single tier dividends taxation allows investor a chance to buy freedom from the need to remain employed. This means that if one can sustain himself indefinitely, he may be able to demand better treatment from his employers or even buy time to take a political stand. $2,000 a month is a small figure but consider how difficult it would be to get the government to give you $2,000 in this country. Someone has shown that this is possible in this little red dot.
b) People who are in the upper 20% bracket can spend at the lower 20% bracket.
I won't reveal my income but I'm comfortably in the upper quintile of earnings in Singapore. My expenses are well in the bottom 20% quintile of expenses. The idea that a Singaporean can reject material consumption yet excel in accumulation is not something people are comfortable with. For one thing, folks like me hardly contribute to the Consumption variable in national GDP.
Some may find it unnatural and perverse to do it. It's almost like an "alternative lifestyle" the fundamentalists are complaining about. I reject material consumption for security. I reject goods for experiences. And I really like what I do.
c) Fundamentally most Singaporeans can do this if they are willing to focus on it.
Our society want to perpetuate the Singapore Dream that only scholars get rich, buy big cars and achieve self-actualization because they have above average intelligence or have Ivy league qualifications. Otherwise, you have to be a rich business man, take risks in the markets or be an excellent salesperson who hit the MDRT every year.
I am none of the above.
I'm just an IT guy who has a mildly decent salary, who invests about as well as anyone else and actually, can save money only slightly better than my peers as many working class Singaporeans can live on much less than I have. I might be special because I can do all three slightly better than others all at the same time.
This means that most people know deep down inside that all this is possible which I think explains why people overwhelming think that my news coverage was undeserved and nothing special to harp about.
Anyway, to that very fierce critic. I am going to offer a fig leaf of peace. Write to me with your name and address, not only will I promise not to sue you ( I don't work that way ), I will in fact send you a set of all three of my books for the excellent marketing I've been getting so far.
I'm starting to suspect that this guy is a my friend or a bookstore owner who is covertly helping me drive sales. It's actually hilarious how a person can get so pissed off with my article so much.
See for yourself:
http://forum.channelnewsasia.com/viewtopic.php?t=301530&start=0&postdays=0&postorder=asc&highlight
Well I'm done defending myself so today I'll try to guess why people are so heated over my appearance on the papers. Let's just assume that this guy is not some IT engineer I released out of contract years ago ( hey, when you lead a team of 100+ engineers, you do these things every now and then... ).
What makes my ideas 'dangerous' and so offensive to some people:
a) Singapore is actually a welfare state.
If someone who is not a career high-flyer can generate dividends to cover living expenses. Welfare is not only possible, it can be paid even while you have a job. Singapore's low tax rates and single tier dividends taxation allows investor a chance to buy freedom from the need to remain employed. This means that if one can sustain himself indefinitely, he may be able to demand better treatment from his employers or even buy time to take a political stand. $2,000 a month is a small figure but consider how difficult it would be to get the government to give you $2,000 in this country. Someone has shown that this is possible in this little red dot.
b) People who are in the upper 20% bracket can spend at the lower 20% bracket.
I won't reveal my income but I'm comfortably in the upper quintile of earnings in Singapore. My expenses are well in the bottom 20% quintile of expenses. The idea that a Singaporean can reject material consumption yet excel in accumulation is not something people are comfortable with. For one thing, folks like me hardly contribute to the Consumption variable in national GDP.
Some may find it unnatural and perverse to do it. It's almost like an "alternative lifestyle" the fundamentalists are complaining about. I reject material consumption for security. I reject goods for experiences. And I really like what I do.
c) Fundamentally most Singaporeans can do this if they are willing to focus on it.
Our society want to perpetuate the Singapore Dream that only scholars get rich, buy big cars and achieve self-actualization because they have above average intelligence or have Ivy league qualifications. Otherwise, you have to be a rich business man, take risks in the markets or be an excellent salesperson who hit the MDRT every year.
I am none of the above.
I'm just an IT guy who has a mildly decent salary, who invests about as well as anyone else and actually, can save money only slightly better than my peers as many working class Singaporeans can live on much less than I have. I might be special because I can do all three slightly better than others all at the same time.
This means that most people know deep down inside that all this is possible which I think explains why people overwhelming think that my news coverage was undeserved and nothing special to harp about.
Anyway, to that very fierce critic. I am going to offer a fig leaf of peace. Write to me with your name and address, not only will I promise not to sue you ( I don't work that way ), I will in fact send you a set of all three of my books for the excellent marketing I've been getting so far.
Monday, December 07, 2009
Make critics your most powerful resource
Because the article resonated very much with me after that round of very negative responses from the Internet, I shared an article from Tim Feriss with the people in my Facebook. You can find the link here :
http://www.fourhourworkweek.com/blog/2009/11/25/the-benefits-of-pissing-people-off/
The basic lesson from the article is that while pissing people off may not be the right thing to do. Doing the right thing will always piss some people off because you simply can't please everyone. It's very easy to attract jealousy and envy from family, friends and members of the public once you succeed in doing something remarkable. The author wants to encourage people to banish the fear of being criticized and exhorts the reader to succeed anyway.
Very rare in success literature is the story of the revenge entrepreneur. Revenge entrepreneurs succeed in overcoming ridiculous odds because of the cruel barbs from the people around them. A business man's success may be due to his father-in-law who always felt that he was not good enough for his daughter.
I want to consider extending this article to derive a set of principles which makes success even easier.
a) Do consider the merit of the critics claims.
As much as we'd hate to, some critics can get you to confront the weaknesses in your approach and can teach you some humility. Some valid forms of criticism can help you refine your strategies and approaches. In the field of finance, a good critic challenges your assumptions with counter-examples of stocks which failed and forces you to examine more variables before you buy and sell. A good feedback to show that you're not sufficiently diversified can be translated to thousand of dollars in investment returns.
b) For the critics who do not add value, give them what they deserve.
Once we're done with the objective feedback, we are left with the hordes of critics who just want to bring you down because it makes them feel good about themselves. For this class of critics, consider the very attractive pay-off of showing them that they are wrong. A lot of critics who are not objective enough have a lot of personal insecurities, I suspect many may think that your success is their failure.
Since these critics are probably out to hurt you, why not return them the favor ?
Hurting critics who do not provide objective feedback can be fun. No. It should be MADE FUN.
IMHO, a critic is hurt most by a builder's success. The more critics you have, the more you can prove wrong. You will need to construct a psychic pay-off that derives pleasure from proving your critics wrong. To motivate myself, sometimes I say,"Man ! I can imagine the look on their faces when they see this ! Oh they will be sooooo flabbagasted when they read about this..."
I think these two perspectives towards your critics will have the potential of generating a virtuous circle of success and prosperity for you. You succeed in a minor way, attracting a small pool of critics. By incorporating their feedback and developing a relentless passion to prove the rest wrong, you create the drive for your next success attracting even more powerful critics against your cause.
The only downside of this approach is that you might actually begin to enjoy pissing off your critics after waves and waves of success making you seem much like an unreasonable person. But I think at the end of the day, progress comes from the unreasonable man.
No, even better..,.
Progress comes from a builder who steps on the broken psyches and dreams of his most vicious critics.
http://www.fourhourworkweek.com/blog/2009/11/25/the-benefits-of-pissing-people-off/
The basic lesson from the article is that while pissing people off may not be the right thing to do. Doing the right thing will always piss some people off because you simply can't please everyone. It's very easy to attract jealousy and envy from family, friends and members of the public once you succeed in doing something remarkable. The author wants to encourage people to banish the fear of being criticized and exhorts the reader to succeed anyway.
Very rare in success literature is the story of the revenge entrepreneur. Revenge entrepreneurs succeed in overcoming ridiculous odds because of the cruel barbs from the people around them. A business man's success may be due to his father-in-law who always felt that he was not good enough for his daughter.
I want to consider extending this article to derive a set of principles which makes success even easier.
a) Do consider the merit of the critics claims.
As much as we'd hate to, some critics can get you to confront the weaknesses in your approach and can teach you some humility. Some valid forms of criticism can help you refine your strategies and approaches. In the field of finance, a good critic challenges your assumptions with counter-examples of stocks which failed and forces you to examine more variables before you buy and sell. A good feedback to show that you're not sufficiently diversified can be translated to thousand of dollars in investment returns.
b) For the critics who do not add value, give them what they deserve.
Once we're done with the objective feedback, we are left with the hordes of critics who just want to bring you down because it makes them feel good about themselves. For this class of critics, consider the very attractive pay-off of showing them that they are wrong. A lot of critics who are not objective enough have a lot of personal insecurities, I suspect many may think that your success is their failure.
Since these critics are probably out to hurt you, why not return them the favor ?
Hurting critics who do not provide objective feedback can be fun. No. It should be MADE FUN.
IMHO, a critic is hurt most by a builder's success. The more critics you have, the more you can prove wrong. You will need to construct a psychic pay-off that derives pleasure from proving your critics wrong. To motivate myself, sometimes I say,"Man ! I can imagine the look on their faces when they see this ! Oh they will be sooooo flabbagasted when they read about this..."
I think these two perspectives towards your critics will have the potential of generating a virtuous circle of success and prosperity for you. You succeed in a minor way, attracting a small pool of critics. By incorporating their feedback and developing a relentless passion to prove the rest wrong, you create the drive for your next success attracting even more powerful critics against your cause.
The only downside of this approach is that you might actually begin to enjoy pissing off your critics after waves and waves of success making you seem much like an unreasonable person. But I think at the end of the day, progress comes from the unreasonable man.
No, even better..,.
Progress comes from a builder who steps on the broken psyches and dreams of his most vicious critics.
Thursday, December 03, 2009
Finance, Philosophy and You.
One element missing in tertiary education in Singapore is that we are not trained to develop a viable philosophy of life. Many of us, myself included, focused on securing a good MNC job upon graduation so our grades, CCAs and networks before landing our first job was almost entirely focused on job seeking.
Philosophy is important in lifestyle design as it forms the foundation of a viable rule of thumb in all our personal affairs. Mature philosophies, constantly challenged by life's realities, can hone our personal effectiveness as we review and tune our approach towards the way we live.
Good rules of thumb then evolve into heuristics which then become algorithms and finally become codified into a plan of action. Codes are actual blueprints for positioning our investments and managing our careers. This forms the foundation of design thinking, a new new thing in management consultant speak today.
My position as a finance writer is not so much as to give you a finance philosophy but to guide you through the development of your own financial philosophy. As you prosper and gain confidence in your own abilities and performance, I reap good karma and you can, in turn teach me something about making more money.
The next snippet can be found in the last chapter of my latest book "Sowing the Seeds of Prosperity".
The Prosperity series philosophy
Like all finance books, this books captures the essence of money management in its own unique way. It is just one way of looking at money in this world. Perhaps changes in technology will render these ideas obsolete but if I am asked to summarize all my life’s works it will be as follows.
Earning
Cultivate your human capital to maximize your earnings. This can be done by taking a your education seriously. In the workplace, strive to constantly add value and adopt a strict Calvinist work ethic no matter how secure your personal finances are. Recognize that workers have to move up the value chain from mechanical work to high level problem solving work for their clients to remain relevant in this fast paced society.
Saving
As Aristotle had once said, those who are obliged to work cannot possibly be considered free at the same time.
If possible save 100% of your take home pay and live on your dividends. Live on a tight budget and see it as a challenge to derive the maximum pleasure from the simple things in life. Rigorously track your progress on expenditure reduction and never make hasty purchasing decisions. Study the efforts of the media in inciting the consumer to spend more and learn to poke fun at this consumer society.
Investing
Build financial capital one step at a time. Employ conservative instruments for capital preservation and income first and then gradually move into equities as you get more comfortable with investing. Reduce sales charges by moving first into low expense unit trusts, then to ETFs and finally into picking your own stocks. Match investments with your financial intelligence and read about the best financial strategies from masters like John Neff and Benjamin Graham.
Diversify your investments whenever possible. There is only one Warren Buffett in this world and you are not likely to be him.
Protection
Segregate investment from protection. Stick to a term life policy whenever possible for 5 - 10 years worth of income. For added protection, review your Medisave protection and pick up some disability insurance. Avoid policies which claims to give un-guaranteed bonuses and minimize your commissions to the agent while maximizing your sum assured.
Gifting
Give if you can but protect the interests of your family first. Have a will or a trust and understand the pains that come from poor succession planning. Wealth is often a great source of pain for families of the recently bereaved, you need to manage this while you are still alive. Give directly to the human capital of your children by investing in a good education, financial capital is secondary if they can learn how to look after themselves.
Philosophy is important in lifestyle design as it forms the foundation of a viable rule of thumb in all our personal affairs. Mature philosophies, constantly challenged by life's realities, can hone our personal effectiveness as we review and tune our approach towards the way we live.
Good rules of thumb then evolve into heuristics which then become algorithms and finally become codified into a plan of action. Codes are actual blueprints for positioning our investments and managing our careers. This forms the foundation of design thinking, a new new thing in management consultant speak today.
My position as a finance writer is not so much as to give you a finance philosophy but to guide you through the development of your own financial philosophy. As you prosper and gain confidence in your own abilities and performance, I reap good karma and you can, in turn teach me something about making more money.
The next snippet can be found in the last chapter of my latest book "Sowing the Seeds of Prosperity".
The Prosperity series philosophy
Like all finance books, this books captures the essence of money management in its own unique way. It is just one way of looking at money in this world. Perhaps changes in technology will render these ideas obsolete but if I am asked to summarize all my life’s works it will be as follows.
Earning
Cultivate your human capital to maximize your earnings. This can be done by taking a your education seriously. In the workplace, strive to constantly add value and adopt a strict Calvinist work ethic no matter how secure your personal finances are. Recognize that workers have to move up the value chain from mechanical work to high level problem solving work for their clients to remain relevant in this fast paced society.
Saving
As Aristotle had once said, those who are obliged to work cannot possibly be considered free at the same time.
If possible save 100% of your take home pay and live on your dividends. Live on a tight budget and see it as a challenge to derive the maximum pleasure from the simple things in life. Rigorously track your progress on expenditure reduction and never make hasty purchasing decisions. Study the efforts of the media in inciting the consumer to spend more and learn to poke fun at this consumer society.
Investing
Build financial capital one step at a time. Employ conservative instruments for capital preservation and income first and then gradually move into equities as you get more comfortable with investing. Reduce sales charges by moving first into low expense unit trusts, then to ETFs and finally into picking your own stocks. Match investments with your financial intelligence and read about the best financial strategies from masters like John Neff and Benjamin Graham.
Diversify your investments whenever possible. There is only one Warren Buffett in this world and you are not likely to be him.
Protection
Segregate investment from protection. Stick to a term life policy whenever possible for 5 - 10 years worth of income. For added protection, review your Medisave protection and pick up some disability insurance. Avoid policies which claims to give un-guaranteed bonuses and minimize your commissions to the agent while maximizing your sum assured.
Gifting
Give if you can but protect the interests of your family first. Have a will or a trust and understand the pains that come from poor succession planning. Wealth is often a great source of pain for families of the recently bereaved, you need to manage this while you are still alive. Give directly to the human capital of your children by investing in a good education, financial capital is secondary if they can learn how to look after themselves.
Wednesday, December 02, 2009
Response to the recent Internet criticism
Since my article came out in AsiaOne, I've been subject to quite a hefty amount of criticism from readers. You can find the article and comments here :
http://forums.asiaone.com/showthread.php?t=25593&page=2
I will attempt to address the address the criticisms here :
a) I am a scrooge.
My dividends currently afford me a lifestyle like a fresh graduate professional who spends all his income. While lower than the typical median income earner, I can hardly call it a scrooge lifestyle. I am very possibly a scrooge during my single days because I simply did not have expensive hobbies and kept my full expenses to about $1,100 every month after giving my mum an allowance. As a married man, my dividends provide a modest stipend for my wife, I continue to give some money to my parents and I have enough left to take public transport and feed myself.
b) My parents are rich.
That's a relative term. My parents bought landed property and paid off the loan in the 70s. In the 80s they ran a pet shop. Revenues were variable but rents were fixed. The business folded in the early 90s. My dad took up work as a production operator and my mum washed dishes in a canteen. Life was hard but only in that sense and I apologize if this statement was misinterpreted. People who think that success can only be bestowed upon people who spent their childhood without water and electricity may be disappointed that I do not fit that mold. We were hardly rich.
c) How I funded my way through university.
I borrowed from my dad's CPF and paid back every cent. I started out $22K in debt, paid everything off in 2 years and then I could not just build a portfolio, I could even pay for my Masters degree course as well.
d) I do not enjoy life.
Well I do enjoy life. But there is no way I can prove it.
What I cannot apologize for:
a) I do not have a balanced life.
Guilthy as charged. I'm a son and husband, hold a full time job, author books, manage a portfolio and have to constantly upgrade by getting Microsoft certifications and some financial credentials. I remember taking 21 exams in 2001, some IT, some finance, had to even read two languages French and Japanese to remain competitive.
b) I am an only child and will stand to inherit landed property.
I am not responsible for my parent's family planning style. I have inherited nothing yet and my dad can always sell off the house in the future. I fail to see how this can be an advantage in the field of investments.
c) I live with my parents.
They are not getting any younger. Who is going to look after them in the future?
A minor note on the numbers and skepticism regarding my stock strategy :
a) To accept that you can have $24,000 annually from a $250,000 portfolio, you have to believe that some stocks give can give about 10% a year. There is'nt a lot of stocks which do this but they exist.
b) The payout is generated by a few key stocks which yield more than 10% and a smaller proportion which yield less than 10% for diversification purposes. This portfolio may not be well-diversified even if I have about 20 stocks in my portfolio.
c) I am aware of the high risk of the strategy and is currently diversifying with stock which yield 6-8% but have better growth opportunities.
http://forums.asiaone.com/showthread.php?t=25593&page=2
I will attempt to address the address the criticisms here :
a) I am a scrooge.
My dividends currently afford me a lifestyle like a fresh graduate professional who spends all his income. While lower than the typical median income earner, I can hardly call it a scrooge lifestyle. I am very possibly a scrooge during my single days because I simply did not have expensive hobbies and kept my full expenses to about $1,100 every month after giving my mum an allowance. As a married man, my dividends provide a modest stipend for my wife, I continue to give some money to my parents and I have enough left to take public transport and feed myself.
b) My parents are rich.
That's a relative term. My parents bought landed property and paid off the loan in the 70s. In the 80s they ran a pet shop. Revenues were variable but rents were fixed. The business folded in the early 90s. My dad took up work as a production operator and my mum washed dishes in a canteen. Life was hard but only in that sense and I apologize if this statement was misinterpreted. People who think that success can only be bestowed upon people who spent their childhood without water and electricity may be disappointed that I do not fit that mold. We were hardly rich.
c) How I funded my way through university.
I borrowed from my dad's CPF and paid back every cent. I started out $22K in debt, paid everything off in 2 years and then I could not just build a portfolio, I could even pay for my Masters degree course as well.
d) I do not enjoy life.
Well I do enjoy life. But there is no way I can prove it.
What I cannot apologize for:
a) I do not have a balanced life.
Guilthy as charged. I'm a son and husband, hold a full time job, author books, manage a portfolio and have to constantly upgrade by getting Microsoft certifications and some financial credentials. I remember taking 21 exams in 2001, some IT, some finance, had to even read two languages French and Japanese to remain competitive.
b) I am an only child and will stand to inherit landed property.
I am not responsible for my parent's family planning style. I have inherited nothing yet and my dad can always sell off the house in the future. I fail to see how this can be an advantage in the field of investments.
c) I live with my parents.
They are not getting any younger. Who is going to look after them in the future?
A minor note on the numbers and skepticism regarding my stock strategy :
a) To accept that you can have $24,000 annually from a $250,000 portfolio, you have to believe that some stocks give can give about 10% a year. There is'nt a lot of stocks which do this but they exist.
b) The payout is generated by a few key stocks which yield more than 10% and a smaller proportion which yield less than 10% for diversification purposes. This portfolio may not be well-diversified even if I have about 20 stocks in my portfolio.
c) I am aware of the high risk of the strategy and is currently diversifying with stock which yield 6-8% but have better growth opportunities.
Tuesday, December 01, 2009
The finance of self-publishing.
It may be possible that some folks might want to know if self-publishing can be turned into a profit generating enterprise. Here's some numbers to show you that it's not a viable source of income. Writing is a great way to crystallize your thoughts and commit yourself to a regime. It also gives you some credibility that can reinforce your resume.
In summary, benefits are largely indirect unless you can parley your fame into a seminar or some training courses, then books can be a source of income from back room sales and training fees.
My first book, "Growing your Tree of Prosperity" ( Still available at Borders Wheelock place and Kinokuniya at Bugis ) is priced at about $18. My cost price is about $6200. Author's margins are low at about 40%. So my profit per book is $1. I used a publisher to do the rest of my work and although they did an admirable job, my book had no editing and my distributor then did not formalize a distribution contract. These were learning experiences for me. Despite the bad grammar, my first books sold well and people still write to me to talk about it.
My Second book, "Harvesting the Fruits of Prosperity" ( All Kino and Borders outlets ) has to be priced higher at about $24 as it was a bigger book. My cost was lower about $5,000 because this time I hired my own cover layout and editing so margins were higher. The book was a lot more abstract with more powerful investment ideas and had professional editing. But this book has yet to break even. Perhaps the cover looked too much like a cookbook or people actually wanted to read "Singaporean English".
My third book, "Sowing the Seeds of Prosperity" ( Available almost everywhere ) is priced at about $21 and this time, I did my own cover design and layout. As I only paid for editing and printing, I was able to reduce my costs to about $3,800. This time, I wrote an entry level book with the readers in mind and kept financial intelligence to a unique framework. This time, I think I got the margins right.
All in all, its hard to predict how my books will fare over the next few weeks. Hopefully the added exposure in the media will help spur sales and I see Popular bookstore starting to give my books better shelf space.
You guys can do the maths, most local authors should not print too many copies as it would be hard to sell them all off and the margins are razor thin with $5 being the best case scenario.
Book royalties will generally not make you rich. You are far better off trying to invest your money in the markets for better returns.
In summary, benefits are largely indirect unless you can parley your fame into a seminar or some training courses, then books can be a source of income from back room sales and training fees.
My first book, "Growing your Tree of Prosperity" ( Still available at Borders Wheelock place and Kinokuniya at Bugis ) is priced at about $18. My cost price is about $6200. Author's margins are low at about 40%. So my profit per book is $1. I used a publisher to do the rest of my work and although they did an admirable job, my book had no editing and my distributor then did not formalize a distribution contract. These were learning experiences for me. Despite the bad grammar, my first books sold well and people still write to me to talk about it.
My Second book, "Harvesting the Fruits of Prosperity" ( All Kino and Borders outlets ) has to be priced higher at about $24 as it was a bigger book. My cost was lower about $5,000 because this time I hired my own cover layout and editing so margins were higher. The book was a lot more abstract with more powerful investment ideas and had professional editing. But this book has yet to break even. Perhaps the cover looked too much like a cookbook or people actually wanted to read "Singaporean English".
My third book, "Sowing the Seeds of Prosperity" ( Available almost everywhere ) is priced at about $21 and this time, I did my own cover design and layout. As I only paid for editing and printing, I was able to reduce my costs to about $3,800. This time, I wrote an entry level book with the readers in mind and kept financial intelligence to a unique framework. This time, I think I got the margins right.
All in all, its hard to predict how my books will fare over the next few weeks. Hopefully the added exposure in the media will help spur sales and I see Popular bookstore starting to give my books better shelf space.
You guys can do the maths, most local authors should not print too many copies as it would be hard to sell them all off and the margins are razor thin with $5 being the best case scenario.
Book royalties will generally not make you rich. You are far better off trying to invest your money in the markets for better returns.
Sunday, November 29, 2009
What is a retirement plan ?
Responses to my article have started on http://www.wallstraits.com/wsforum/showthread.php?tid=1719&page=21. I have tried my level best to respond to the feedback but I think the point on retirement plan is worthy of mention in this blog.
Retirement means a lot of things to many people.
Some people think that it's time to travel. Others think that it's time to stop work and start smelling the roses. To some folks, it is a time to spend the rest of their lives minding their grandchildren.
Reality is that many Singaporeans are unprepared for retirement. Many have too little cash assets and have to struggle along with the $300 from the CPF Board along with some allowance from their children.
In a research article by Moshe Milevsky and Chris Robinson entitled "A sustainable spending rate without simulation". A retiree should be spending no more than (Average return - Variance of returns + Constant inversely proportional to median future lifetime). In English, if you have an equity portfolio returning 9% and a variance of 4%, you should not be using more than 5% of your principle capital every year.
I would like to offer my definition for financial independence, which I think would make a better proxy than a retirement plan:
Financial independence is a state whereby your investment/passive/royalty income exceeds your personal expenses.
When your passive income exceeds your expenses, you are doing fine because you may be able to starve off job loss for years without eating into your principal capital. To ensure that retirement is possible, simply spend within your dividend yields and reinvest part of it such that you can live on about 4-5% of your capital every year.
But at the end of the day, retirement is not the point, you can be fully prepared to retire but a good life design to me is one where you can do something that you enjoy EVEN MORE INTENSIVELY. To many other people, it may be more time with grandchildren, but to me, it can be work.
Good investment management does not automatically earn you your happiness. It earns you the freedom to decide what you want to do with your life. And with that freedom, you can even choose to retire, not to retire, or even work harder.
That choice is yours.
Retirement means a lot of things to many people.
Some people think that it's time to travel. Others think that it's time to stop work and start smelling the roses. To some folks, it is a time to spend the rest of their lives minding their grandchildren.
Reality is that many Singaporeans are unprepared for retirement. Many have too little cash assets and have to struggle along with the $300 from the CPF Board along with some allowance from their children.
In a research article by Moshe Milevsky and Chris Robinson entitled "A sustainable spending rate without simulation". A retiree should be spending no more than (Average return - Variance of returns + Constant inversely proportional to median future lifetime). In English, if you have an equity portfolio returning 9% and a variance of 4%, you should not be using more than 5% of your principle capital every year.
I would like to offer my definition for financial independence, which I think would make a better proxy than a retirement plan:
Financial independence is a state whereby your investment/passive/royalty income exceeds your personal expenses.
When your passive income exceeds your expenses, you are doing fine because you may be able to starve off job loss for years without eating into your principal capital. To ensure that retirement is possible, simply spend within your dividend yields and reinvest part of it such that you can live on about 4-5% of your capital every year.
But at the end of the day, retirement is not the point, you can be fully prepared to retire but a good life design to me is one where you can do something that you enjoy EVEN MORE INTENSIVELY. To many other people, it may be more time with grandchildren, but to me, it can be work.
Good investment management does not automatically earn you your happiness. It earns you the freedom to decide what you want to do with your life. And with that freedom, you can even choose to retire, not to retire, or even work harder.
That choice is yours.
Me and my money article out today.
Nov 29, 2009
me & my money
Investment strategy pays dividends
Savvy investor gets $24,000 a year in dividends and that covers his basic needs
By Lorna Tan, Senior Correspondent
Mr Ng Wai Chung is a senior associate in IT governance at Singapore Mercantile Exchange. He invests almost his entire salary in stocks, which he monitors daily. He and his wife, quantity surveyor Pang Yoke Loo, live with his parents. -- ST PHOTO: JOYCE FANG
Imagine having a payout from your investments that more than covers your monthly expenses.
Canny investor Ng Wai Chung is in this happy position at the age of 34.
Mr Ng, a senior IT manager - and an author of investment books - achieved this a year ago. But rather than retire, he stays in full-time employment.
His investment income stream is the result of a plan he set in motion three years ago. That was when he decided to sell his investments in unit trusts and buy stocks that pay high dividends.
'Today, I am able to yield about $24,000 a year on my investment portfolio, enough to cover my expenses in most months," he said.
This enviable portfolio consists of real estate investment trusts (Reits) and shares that yield high dividends, such as mainboard-listed Singapore Press Holdings (SPH). Dividends are the portions of profits which a company distributes to shareholders.
Mr Ng has an engineering degree and a master's in Applied Finance from the National University of Singapore (NUS). He obtained the latter part-time while working.
The senior associate in IT governance at commodity and futures exchange Singapore Mercantile Exchange has published three books on finance: Growing Your Tree Of Prosperity (2005), followed by Harvesting The Fruits Of Prosperity (2007), and this year, Sowing The Seeds Of Prosperity. They are available in bookshops.
Mr Ng is married to quantity surveyor Pang Yoke Loo, 31. They have no children.
Q: Are you a spender or saver?
Very much a saver. In most months, my expenses are paid fully from my investment income, which arrives every quarter in the form of dividends. However, I dip into my work income for discretionary expenses, such as a trip to Korea. I can save up to 100 per cent of my salary in some months.
Q: How much do you charge to your credit cards every month?
I have only one credit card. I use it to save money by making purchases over the Internet. Normally, my credit card charges do not exceed $500 monthly. I try and pay the bill even before I receive the statement. I withdraw about $400 from the ATM about twice or three times a month.
Q: What financial planning have you done for yourself?
I invest 80 per cent to 100 per cent of my take-home pay directly in the stock market.
I had about $130,000 in my stock portfolio early this year; this has grown to $250,000 from capital gains as well as monthly cash injections from my savings. I have about 20 counters.
About half my portfolio consists of business trusts like Cityspring Infrastructure and Hyflux Water, or shipping trusts such as First Shipping and Pacific Shipping which, on average, give dividend yields of about 10 per cent. The rest are Reits like Suntec and Cambridge, which give me similar yields.
With the economic recovery, I'm focused on channelling my income into income stocks like SPH and Singapore Post, which will give me about 7 per cent yields. I have also invested about $30,000 of my Central Provident Fund savings in stocks such as M1, StarHub, Lippo Mapletree Reit and Cambridge Reit.
Q: Moneywise, what were your growing-up years like?
My financial habits were shaped mostly by my years as a kid hanging out in my parents' pet shop at Shaw Centre in the 1980s. Life was hard. My parents were at the mercy of the landlord and the consumer. As an adult, I crave job and income security. I am very averse to debt.
Q: How did you get interested in investing?
In my final year at NUS, I picked up Robert Kiyosaki's book Rich Dad, Poor Dad. This spurred me to pursue financial programmes like the Chartered Financial Analyst. Armed with investment know-ledge, I took to writing books to present my financial ideas from the perspective of a non-commission agent.
When I stock-pick, I find out first how much in dividends have been paid out over the past year. I used to aim for 10 per cent but have now lowered this to 6 per cent to 8 per cent. I check if there are any red flags raised by auditors. The free cashflow (operating cashflow minus capital expenditure) must exceed dividends declared. This ensures a company can sustain the dividends. Once the yield drops to, say, 4 per cent, I switch to a better counter. I monitor my portfolio daily.
Q: What property do you own?
I am an only child; I live with my parents in Woodlands - my dad picked up a single-storey semi-detached house in the early 1970s for $70,000. The current value is estimated to be $1.6 million. I do not own any property.
Q: What's the most extravagant thing you have bought?
My iRex Digital Reader 1000S which allows me to download electronic books for easy storage and reading. It cost $1,400. I save 60 per cent to 70 per cent compared to buying the actual books.
Q: What's your retirement plan?
None, if I can help it. Work is a function of ability, and not one's state of financial independence. My personal expectation is to increase my investment income by about $6,000 a year for each year of gainful employment. The rest largely depends on whether I can continue to remain employed and whether my health will allow it.
Q: Home is now...
The semi-detached house in Woodlands.
Q: I drive...
Sometimes I drive my wife's recently purchased weekend car, a white Hyundai Avante.
lorna@sph.com.sg
--------------------------------------------------------------------------------
Book spurred interest in money management
'In my final year at NUS, I picked up Robert Kiyosaki's book Rich Dad, Poor Dad. This spurred me to pursue financial programmes like the Chartered Financial Analyst. Armed with investment knowledge, I took to writing books to present my financial ideas from the perspective of a non-commission agent.'
MR NG WAI CHUNG
--------------------------------------------------------------------------------
WORST AND BEST BETS
Q: What has been your worst investment to date?
I had a very painful experience investing in McArthurcook Properties Securities Fund. I accumulated about 108,000 shares through 2007 and last year, and its yield was initially about 30 per cent. The price plummeted to 16 cents, from $1, when the recession hit. And last year, it stopped declaring dividends altogether. I exited in October last year at a loss of about $40,000.
Greed and my obsession for yields created an aversion to letting go of this. I learnt that I should not let my stubbornness get the better of me.
Q: And your best investment?
At the bottom of the market some time last year, I invested about $5,000 in Capital Retail China Trust at 60 cents per share. It had a dividend yield approaching 15 per cent. I have since doubled my money as the price is now $1.18. Most of my high-yielding counters have been doing well since December last year. My entire portfolio has almost doubled in size since early this year.
me & my money
Investment strategy pays dividends
Savvy investor gets $24,000 a year in dividends and that covers his basic needs
By Lorna Tan, Senior Correspondent
Mr Ng Wai Chung is a senior associate in IT governance at Singapore Mercantile Exchange. He invests almost his entire salary in stocks, which he monitors daily. He and his wife, quantity surveyor Pang Yoke Loo, live with his parents. -- ST PHOTO: JOYCE FANG
Imagine having a payout from your investments that more than covers your monthly expenses.
Canny investor Ng Wai Chung is in this happy position at the age of 34.
Mr Ng, a senior IT manager - and an author of investment books - achieved this a year ago. But rather than retire, he stays in full-time employment.
His investment income stream is the result of a plan he set in motion three years ago. That was when he decided to sell his investments in unit trusts and buy stocks that pay high dividends.
'Today, I am able to yield about $24,000 a year on my investment portfolio, enough to cover my expenses in most months," he said.
This enviable portfolio consists of real estate investment trusts (Reits) and shares that yield high dividends, such as mainboard-listed Singapore Press Holdings (SPH). Dividends are the portions of profits which a company distributes to shareholders.
Mr Ng has an engineering degree and a master's in Applied Finance from the National University of Singapore (NUS). He obtained the latter part-time while working.
The senior associate in IT governance at commodity and futures exchange Singapore Mercantile Exchange has published three books on finance: Growing Your Tree Of Prosperity (2005), followed by Harvesting The Fruits Of Prosperity (2007), and this year, Sowing The Seeds Of Prosperity. They are available in bookshops.
Mr Ng is married to quantity surveyor Pang Yoke Loo, 31. They have no children.
Q: Are you a spender or saver?
Very much a saver. In most months, my expenses are paid fully from my investment income, which arrives every quarter in the form of dividends. However, I dip into my work income for discretionary expenses, such as a trip to Korea. I can save up to 100 per cent of my salary in some months.
Q: How much do you charge to your credit cards every month?
I have only one credit card. I use it to save money by making purchases over the Internet. Normally, my credit card charges do not exceed $500 monthly. I try and pay the bill even before I receive the statement. I withdraw about $400 from the ATM about twice or three times a month.
Q: What financial planning have you done for yourself?
I invest 80 per cent to 100 per cent of my take-home pay directly in the stock market.
I had about $130,000 in my stock portfolio early this year; this has grown to $250,000 from capital gains as well as monthly cash injections from my savings. I have about 20 counters.
About half my portfolio consists of business trusts like Cityspring Infrastructure and Hyflux Water, or shipping trusts such as First Shipping and Pacific Shipping which, on average, give dividend yields of about 10 per cent. The rest are Reits like Suntec and Cambridge, which give me similar yields.
With the economic recovery, I'm focused on channelling my income into income stocks like SPH and Singapore Post, which will give me about 7 per cent yields. I have also invested about $30,000 of my Central Provident Fund savings in stocks such as M1, StarHub, Lippo Mapletree Reit and Cambridge Reit.
Q: Moneywise, what were your growing-up years like?
My financial habits were shaped mostly by my years as a kid hanging out in my parents' pet shop at Shaw Centre in the 1980s. Life was hard. My parents were at the mercy of the landlord and the consumer. As an adult, I crave job and income security. I am very averse to debt.
Q: How did you get interested in investing?
In my final year at NUS, I picked up Robert Kiyosaki's book Rich Dad, Poor Dad. This spurred me to pursue financial programmes like the Chartered Financial Analyst. Armed with investment know-ledge, I took to writing books to present my financial ideas from the perspective of a non-commission agent.
When I stock-pick, I find out first how much in dividends have been paid out over the past year. I used to aim for 10 per cent but have now lowered this to 6 per cent to 8 per cent. I check if there are any red flags raised by auditors. The free cashflow (operating cashflow minus capital expenditure) must exceed dividends declared. This ensures a company can sustain the dividends. Once the yield drops to, say, 4 per cent, I switch to a better counter. I monitor my portfolio daily.
Q: What property do you own?
I am an only child; I live with my parents in Woodlands - my dad picked up a single-storey semi-detached house in the early 1970s for $70,000. The current value is estimated to be $1.6 million. I do not own any property.
Q: What's the most extravagant thing you have bought?
My iRex Digital Reader 1000S which allows me to download electronic books for easy storage and reading. It cost $1,400. I save 60 per cent to 70 per cent compared to buying the actual books.
Q: What's your retirement plan?
None, if I can help it. Work is a function of ability, and not one's state of financial independence. My personal expectation is to increase my investment income by about $6,000 a year for each year of gainful employment. The rest largely depends on whether I can continue to remain employed and whether my health will allow it.
Q: Home is now...
The semi-detached house in Woodlands.
Q: I drive...
Sometimes I drive my wife's recently purchased weekend car, a white Hyundai Avante.
lorna@sph.com.sg
--------------------------------------------------------------------------------
Book spurred interest in money management
'In my final year at NUS, I picked up Robert Kiyosaki's book Rich Dad, Poor Dad. This spurred me to pursue financial programmes like the Chartered Financial Analyst. Armed with investment knowledge, I took to writing books to present my financial ideas from the perspective of a non-commission agent.'
MR NG WAI CHUNG
--------------------------------------------------------------------------------
WORST AND BEST BETS
Q: What has been your worst investment to date?
I had a very painful experience investing in McArthurcook Properties Securities Fund. I accumulated about 108,000 shares through 2007 and last year, and its yield was initially about 30 per cent. The price plummeted to 16 cents, from $1, when the recession hit. And last year, it stopped declaring dividends altogether. I exited in October last year at a loss of about $40,000.
Greed and my obsession for yields created an aversion to letting go of this. I learnt that I should not let my stubbornness get the better of me.
Q: And your best investment?
At the bottom of the market some time last year, I invested about $5,000 in Capital Retail China Trust at 60 cents per share. It had a dividend yield approaching 15 per cent. I have since doubled my money as the price is now $1.18. Most of my high-yielding counters have been doing well since December last year. My entire portfolio has almost doubled in size since early this year.
Tuesday, July 07, 2009
Singaporeans, defend thyselves for goodness sake !
Seems that Malaysiakini.com has a number of anti-Singapore articles out on the Internet. One problem I see on the web is that many Singaporeans hate the PAP so much, they fail to distinguish an attack on the country from an attack on our style of governance. As such, articles on Malaysiakini are greeted not so much as outrage by our own citizens but its saddening to see that Singaporeans are cheering Malaysians on when they write nasty articles about our country.
Today, I would not dispute the facts behind these recent articles because its possible that they are true but I would rather challenge the conclusion that came out of it, these articles attempt to demonstrate that Singapore must be quite a terrible place to be because of the plight of our poor. But to be fair, we have to ask ourselves if a society without poverty exists and whether the author of the article chose to examine his own society before casting that rock against ours.
When positioning ourselves in front of criticism, sometimes its helpful to look at recent studies from neutral parties to assess how good or bad a society can be. One example I would like to quote is a recent study done by the folks here :
http://www.happyplanetindex.org/learn/download-report.html.
The Happy Planet Index is broken down into three components.
In the first component, life satisfaction, a survey which measures how satisfied Singaporeans are, Singapore scored 7.1. The only place in South Asia or East Asia which did better was Hong Kong at 7.2. Malaysia was behind us at 6.6. Another words, based on a survey done by a third party, Singaporeans are generally more satisfied than Malaysians.
The second component, life expectancy, Singapore scored 79.4 versus Malaysia's 73.7. So in such a case, not only are we more satisfied with our lives, we live longer as well.
Of course, many netizens will remind us that Singapore lost to Malaysia in the third component which measures our ecological footprint. It would take a lot more resources to sustain Singapore than Malaysia per unit acre - a fair result given that we're five million people crammed on a little red dot. Singapore's score of 4.2, while larger than Malaysia's 2.4, is much smaller than the US which is at 9.4 or even Hong Kong.
I welcome netizens to go through the website and share with us more findings and expose more biases in the study but I urge Singaporeans to remind ourselves that we're much bigger than our government. Criticising the PAP and Singapore is our job and I might even say that its our duty. But when foreigners criticise us, we should react in a measured and objective manner that preserves respect between two neighbours.
When our nation is attacked or criticised, it's up to us and not PAP to defend us but our own fellow countrymen.
Today, I would not dispute the facts behind these recent articles because its possible that they are true but I would rather challenge the conclusion that came out of it, these articles attempt to demonstrate that Singapore must be quite a terrible place to be because of the plight of our poor. But to be fair, we have to ask ourselves if a society without poverty exists and whether the author of the article chose to examine his own society before casting that rock against ours.
When positioning ourselves in front of criticism, sometimes its helpful to look at recent studies from neutral parties to assess how good or bad a society can be. One example I would like to quote is a recent study done by the folks here :
http://www.happyplanetindex.org/learn/download-report.html.
The Happy Planet Index is broken down into three components.
In the first component, life satisfaction, a survey which measures how satisfied Singaporeans are, Singapore scored 7.1. The only place in South Asia or East Asia which did better was Hong Kong at 7.2. Malaysia was behind us at 6.6. Another words, based on a survey done by a third party, Singaporeans are generally more satisfied than Malaysians.
The second component, life expectancy, Singapore scored 79.4 versus Malaysia's 73.7. So in such a case, not only are we more satisfied with our lives, we live longer as well.
Of course, many netizens will remind us that Singapore lost to Malaysia in the third component which measures our ecological footprint. It would take a lot more resources to sustain Singapore than Malaysia per unit acre - a fair result given that we're five million people crammed on a little red dot. Singapore's score of 4.2, while larger than Malaysia's 2.4, is much smaller than the US which is at 9.4 or even Hong Kong.
I welcome netizens to go through the website and share with us more findings and expose more biases in the study but I urge Singaporeans to remind ourselves that we're much bigger than our government. Criticising the PAP and Singapore is our job and I might even say that its our duty. But when foreigners criticise us, we should react in a measured and objective manner that preserves respect between two neighbours.
When our nation is attacked or criticised, it's up to us and not PAP to defend us but our own fellow countrymen.
Friday, July 03, 2009
Alternatives to Emigration for Unhappy Singaporeans.
SM Goh has, once again, brought up the issue of emigration amongst our citizens. There is sufficient finger pointing on the web on how the PAP has socially engineered our society into one which does not value our citizens. The aim of this article is to neither support nor oppose the main thrust of what the web is feeling collectively but to acknowledge that it is within our control to do something about this without taking the drastic step of giving up their NRIC cards.
Here's some suggestions on what I think can be viable alternatives to emigration:
a) Adopt alternative benchmarks.
A lot of emigration arises from feeling insecure as Singapore is perceived to have a very small group of winners versus a collectively larger group of losers. Winners get comfortable jobs in the civil service, live longer lives and have more autonomy and life satisfaction. One way of coping with this is to develop an internal benchmark on what success really is. While you may not excel in the area of achievements, you may excel in relationships or have attained a higher level of spiritual attainment. while you may not be a scholar, you may a very successful raid leader in WOW managing a number of players that a company director would envy.
b) Understand some advantages of being a Singaporean.
Singaporeans are stressed out at work. Local managers are sub-standard and a lot of bad management practices is inculcated during NS. But Singaporeans have low taxes and can save more money. Very few societies makes it so easy to gain access to maids to look after children and estate taxes are no longer a burden for those who wish to pass along money to future generations.
c) Leverage on the free lunches in Singapore.
There are free lunches in Singapore. Ridiculous low income taxes are one. Low corporate taxes and subsequent negligible taxes on dividend income is another. Singaporeans can use it to their advantage provided that they do not make the mistake of over-consuming too much and paying too much GST and subsidising the civil service through paying COE and road taxes. Getting from one point to another in Singapore still costs less than $3 if you plan your journey well and use public transport.
d) Stop thinking about what others feel about careers and family.
A lot of pressure comes from sabotage from one's own family. Many Singaporeans are comfortable being single as it is a very efficient arrangement. Others get married but never have children as they want to take advantage of dual incomes. A lot of stress disappears if you live your life the way you want to. So what if a relative thinks that being single and not having kids is abnormal? if you want to be a couple, have one kid or no kid but you want to travel 4 times a year, so be it.
Anyway, I'll do a post on this item again and examine some other suggestions but keep the feedback coming.
Here's some suggestions on what I think can be viable alternatives to emigration:
a) Adopt alternative benchmarks.
A lot of emigration arises from feeling insecure as Singapore is perceived to have a very small group of winners versus a collectively larger group of losers. Winners get comfortable jobs in the civil service, live longer lives and have more autonomy and life satisfaction. One way of coping with this is to develop an internal benchmark on what success really is. While you may not excel in the area of achievements, you may excel in relationships or have attained a higher level of spiritual attainment. while you may not be a scholar, you may a very successful raid leader in WOW managing a number of players that a company director would envy.
b) Understand some advantages of being a Singaporean.
Singaporeans are stressed out at work. Local managers are sub-standard and a lot of bad management practices is inculcated during NS. But Singaporeans have low taxes and can save more money. Very few societies makes it so easy to gain access to maids to look after children and estate taxes are no longer a burden for those who wish to pass along money to future generations.
c) Leverage on the free lunches in Singapore.
There are free lunches in Singapore. Ridiculous low income taxes are one. Low corporate taxes and subsequent negligible taxes on dividend income is another. Singaporeans can use it to their advantage provided that they do not make the mistake of over-consuming too much and paying too much GST and subsidising the civil service through paying COE and road taxes. Getting from one point to another in Singapore still costs less than $3 if you plan your journey well and use public transport.
d) Stop thinking about what others feel about careers and family.
A lot of pressure comes from sabotage from one's own family. Many Singaporeans are comfortable being single as it is a very efficient arrangement. Others get married but never have children as they want to take advantage of dual incomes. A lot of stress disappears if you live your life the way you want to. So what if a relative thinks that being single and not having kids is abnormal? if you want to be a couple, have one kid or no kid but you want to travel 4 times a year, so be it.
Anyway, I'll do a post on this item again and examine some other suggestions but keep the feedback coming.
Tuesday, June 30, 2009
What is the best possible response towards Elitism ?
We can find Orang Asli in Malaysia, but in Singapore, there are plenty of Orang Atas.
Coming in a little late in the game, I noticed that a fire-storm has been brewing because a blogger called Intellectual Snob has managed to offend the sensibilities of Singaporeans worldwide. ( http://theintellectualsnob.blogspot.com/ )
Well it does not really matter that this so-called snob has been exposed as an NTU undergrad. What matters is that snobbery and elitism is very real in Singapore and no amount of finger pointing at government scholarships will change humanity's tendency to benchmark themselves and build hierarchies to dominate others. Wallstreet in New York will always have their big-swinging dicks, the French have their Enarchs so it comes as no surprise that Singapore will have it's elite group of Mandarin scholars.
If you think being riled by a blog is bad, I can imagine that many readers may have snobs within the family. An aunt of mine, until recently married to a pretty big shot in Singapore, made a Freudian slip during a karaoke session and declared her children a different "kettle of fish" from us inferior cousins. That's part of Singapore living, my mum tapped rubber for a living when she was 14 and now her sister has given birth to a different "kettle of fish". ( My mum had a big argument with me today over this article, I agreed to present the facts more accurately, she actually started tapping rubber at the age of 14 )
As an engineer, I want to focus on Elitism and what we can do about it, rather than parcel out blame on Singapore society, here's how I think we can react to this:
a) Understand that its inherent in human beings to strive towards superiority.
Striving for superiority is likely to be an evolutionary adaptation. Our ancestors had to look good to attract a mate. Males needed to hoard food and and hunt to attract females. Needless to say, we evolved to become a pretty competitive species on this Earth.
b) Do not dehumanise a group of people based on the actions of a few bad hats.
No matter what you face at work or at home, there will be good scholars and civil servants that work hard to sustain their families. We fail and lose out on a great friendship if we lump them along with the Wee Shu Mins in Singapore society. Give folks the benefit of the doubt and act only when your self-esteem comes under direct assault and don't heap scorn unnecessarily.
c) Build up your self-esteem in this harsh society.
The Singapore education system focuses less on self-esteem and more on skills excellence. No wonder graduates from an American-style of education are louder and more confident if only at first glance. With this realisation, we have to adopt the policy of setting small goals and succeeding in them to bolster our own self-confidence. We have to read widely and understand the weaknesses of our own education systems and supplement them. MIT has released their lectures to the world at large so there's no excuse for not being able to get a top flight education.
d) Find areas where you can excel in
You don't have to limit your success in academics just because the government chooses scholars based on this criteria. You can excel at building great relationships, spiritual attainment, superior craftsmanship or even by getting the best loot on World of Warcraft. The key is to enjoy the journey and when doing something you like, try to get into a state of Flow and be immersed in your work.
e) Seek financial independence
Okay, I'm a finance writer, what else can you expect? Financial independence is not a state of being wealthy, it simply means generating enough investment income to cover basic living expenses. When this state is achieved, you begin to make peace with your ambitions. You become more effective dealing with people because you strive to get your objectives met and not to simply cover your ass at work.
I'm sure many readers will be able to come up with better ideas on how we cope with elitism and the pain of dealing with the so-called Elites.
Do enlighten this small Frog graduate from NUS and share your ideas with all.
Coming in a little late in the game, I noticed that a fire-storm has been brewing because a blogger called Intellectual Snob has managed to offend the sensibilities of Singaporeans worldwide. ( http://theintellectualsnob.blogspot.com/ )
Well it does not really matter that this so-called snob has been exposed as an NTU undergrad. What matters is that snobbery and elitism is very real in Singapore and no amount of finger pointing at government scholarships will change humanity's tendency to benchmark themselves and build hierarchies to dominate others. Wallstreet in New York will always have their big-swinging dicks, the French have their Enarchs so it comes as no surprise that Singapore will have it's elite group of Mandarin scholars.
If you think being riled by a blog is bad, I can imagine that many readers may have snobs within the family. An aunt of mine, until recently married to a pretty big shot in Singapore, made a Freudian slip during a karaoke session and declared her children a different "kettle of fish" from us inferior cousins. That's part of Singapore living, my mum tapped rubber for a living when she was 14 and now her sister has given birth to a different "kettle of fish". ( My mum had a big argument with me today over this article, I agreed to present the facts more accurately, she actually started tapping rubber at the age of 14 )
As an engineer, I want to focus on Elitism and what we can do about it, rather than parcel out blame on Singapore society, here's how I think we can react to this:
a) Understand that its inherent in human beings to strive towards superiority.
Striving for superiority is likely to be an evolutionary adaptation. Our ancestors had to look good to attract a mate. Males needed to hoard food and and hunt to attract females. Needless to say, we evolved to become a pretty competitive species on this Earth.
b) Do not dehumanise a group of people based on the actions of a few bad hats.
No matter what you face at work or at home, there will be good scholars and civil servants that work hard to sustain their families. We fail and lose out on a great friendship if we lump them along with the Wee Shu Mins in Singapore society. Give folks the benefit of the doubt and act only when your self-esteem comes under direct assault and don't heap scorn unnecessarily.
c) Build up your self-esteem in this harsh society.
The Singapore education system focuses less on self-esteem and more on skills excellence. No wonder graduates from an American-style of education are louder and more confident if only at first glance. With this realisation, we have to adopt the policy of setting small goals and succeeding in them to bolster our own self-confidence. We have to read widely and understand the weaknesses of our own education systems and supplement them. MIT has released their lectures to the world at large so there's no excuse for not being able to get a top flight education.
d) Find areas where you can excel in
You don't have to limit your success in academics just because the government chooses scholars based on this criteria. You can excel at building great relationships, spiritual attainment, superior craftsmanship or even by getting the best loot on World of Warcraft. The key is to enjoy the journey and when doing something you like, try to get into a state of Flow and be immersed in your work.
e) Seek financial independence
Okay, I'm a finance writer, what else can you expect? Financial independence is not a state of being wealthy, it simply means generating enough investment income to cover basic living expenses. When this state is achieved, you begin to make peace with your ambitions. You become more effective dealing with people because you strive to get your objectives met and not to simply cover your ass at work.
I'm sure many readers will be able to come up with better ideas on how we cope with elitism and the pain of dealing with the so-called Elites.
Do enlighten this small Frog graduate from NUS and share your ideas with all.
Monday, June 29, 2009
Word Cloud for Sowing the Seeds of Prosperity
Well here's what the word cloud for my third book looks like courtesy of the www.wordle.net website.
Friday, June 26, 2009
Cover Page of Sowing Your Seeds of Prosperity
After much thought about keeping the prices of my book affordable and lowering the break-even rate, I have attempted to give myself some lessons on cover design. Here are the results of weeks of back-breaking effort.
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