Where to go if you quit Singapore ?

One of the exercises in the recent workshop I ran was a simulation exercise to close off Day 1.

Workshop participants are invited to form groups to imagine leaving Singapore for greener pastures. As part of the exercise, each group of students will elect a target country. Students will then try to dig out economic data on the target country, make broad estimates on how much it would cost to live in that country and estimate how large a Singapore portfolio should be to generate passive income required to retire there. They will subjectively assess which part of the market cycle the country is in and then they will do some research on what kind of instruments in SGX will allow some proxy bets on that economy. Finally, they will also have to defend an asset allocation in the target economy should they wish to invest in that local market.

After populating the spreadsheet with figures they collected. I asked the class to vote for which country they would like to emigrate to the most after this discussion.

For this batch of students, Thailand won by a huge margin.

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	Melbourne	Thailand	Malaysia	Beijing
Median Income	$6,666/month	$378/month	$720/month	$1106/month
Median Expense	$2,800/month	$306/month	$679/month	$858/month
Portfolio size to retire	$850,000	$92,000	$203,700	$257,400
GDP Growth	3.40%	4.60%	4.20%	6.70%
Inflation	2.10%	1.62%	3.17%	2.30%
Unemployment	5.20%	1%	3.42%	3.83%
Business Cycle	Peak/Contraction	Expansion/Peak	Peak	Contraction
20 year Bond Earnings Yield	3.00%	3.32%	4.70%	N/A
Market Earnings Yield	2.87%	5.76%	6.23%	N/A
P/E Approach	17	17.36111111	16.06	13
Asset Allocation Plan (E/B/Cash/ Com)	60/20/10/10	60/20/10/10	30/60/0/10	80/20
Proxy Stocks in SGX	Singtel,	Thai Beverage, King Wan, Keppel Land	Dairy Farm, Silverlake, Top Glove	CMT, Mapletree North Asia.
Proxy ETF	Philip AP Div ETF	Thai Index UCITS	Malaysia ETF	CSI 300
Votes	6	12	9	1

I guess I will never really understand why the class still went ahead with choosing Thailand.

I warned them that national figures may not truly reflect how much a Singaporean Expat would need to live in a place like Bangkok and there are issues like law and order that need to be factored into when choosing to live in a new country.

Nevertheless this was the choice of the students after a lively discussion on whether the numbers made any sense. China, surprising, was found to be unattractive by my students.

Perhaps they found a Communist regime stifling.

If you were given these four choices, which country would you go to ?

Personal Update - Just Crossed the Rubicon !

After the high of completing my first workshop, I was confronted with another major dilemma in my life.

A company that has been interested in my job application from a year ago was finally able to offer me a job. Unfortunately, this meant taking on a contract role at more than a 30% pay cut from my last pay-check. This was a far cry from a fairly attractive offer last year but stupid old me wanted to be called to the Bar so badly, I was prepared to reject every job offer to meet my personal goal.

If I were any other 40 year old, common sense would say to take the job and then build up my career again in IT security. Most folks my age don't get a second chance. The law degree just makes me more overqualified to do operational IT work. I thought perhaps I can always manoeuvre myself to exploit my legal skills and slowly find my niche again. Furthermore, this is an attractive option because when combined with a light workshop schedule and my passive income payments, I would still rake in more than an MP allowance for at least the next 6 months.

The alternative is also extremely attractive but in a more subtle way.

Once a workshop is complete, maintaining the slides would take a few hours of polishing prior to the workshop. While I have slightly more work to do because I have a lot more skin in my student's portfolio, the biggest challenge is still trying to schedule more classes. Beyond that, all the work can be done from home or the Bloomberg terminal at the Central library. While the pay was not that high at the start, I can scale it at my own discretion. The upside is really up to the imagination of my and my business partners. This is the power of being a free agent.

In the end, I chose to see where this life as a workshop trainer could take me. This path is too intriguing, and I want to stretch it to its logical conclusion.

Maybe it is because I drunk my own Kool-aid, I also have to be consistent with the material I teach. The life-energy exchange of a workshop instructor is generally very high compared to a full time worker. I get almost total autonomy to manage my work as I see fit. Imagine the cognitive dissonance if I had to explain why I opted for a poorer life-energy exchange to students and readers of this blog if I took the job for the financial security that I claimed on this blog that I don't really need.

I mean, what is financial independence, if,  at they end of the day, we still choose a day job in the end ?

Writing the email to tell the company that I have stopped pursuing the job was one of the hardest things I had to do professionally. It reverses the years of indoctrination that a man needs a job to stay relevant to the economy and to have a personal identity. At the back of my head, I felt that I finally took a gun and euthanised my old IT career that was pivotal to my financial independence today. My old school IT governance skills was like a loyal pet to me.  Even if I pick up IT skills in the future, it would be AI skills that can be weaponised in the financial markets and local courts.

It sounds cliche, but after sending out the email, I felt a sense that some burden had been lifted from me.

I no longer have to keep second guessing what kind of options will come my way and analyse how it would interfere with this new career of mine. I do not need to project my future salary and stress myself out on how I can multitask several jobs at the same time.

I can't recall where I read this but over-educated guys like me  need to stop thinking about our qualifications as real options - derivatives that become valuable if a special condition is being met. Some of these real options are always hiding out of the money, waiting for some smart career move to suddenly push it into profitable territory.

If you have a lot of qualifications, you have a complicated portfolio of options that you need to keep a watch-out for.

But we have influence and power over our careers that goes far beyond the power of someone who is long on a call option.

I think it is time to exercise an option and convert it into a stock on workshop creation. 

Beyond this, the markets will determine whether I've made the right move.

The Art of the Good Life #41 : The Illusion of Changing the World - The Great Men Theory

Can we really change the world ?

This chapter tells us not to subscribe to the "Great Men" theory. It is very tempting to believe that India needed Gandhi to become independent. Closer to home, it is very much harder to accept that Singapore can become the economic miracle without Lee Kuan Yew. But success is larger a series of interconnected events, and so, cannot be attributed to an individual.

How do we apply this to investing ?

I think the first thing we need to do is to start thinking about how much we hero worship the top investors.

Warren Buffett comes into mind.

It's pretty sickening to keep hearing Warren Buffett being quoted out of context.

Price is what you pay, value is what you get.
Be greedy when other people are fearful, be fearful when other people are greedy.

We make the mistake of taking the intentional stance. That things happen because there is an intention behind it.

But I think we're not even close to peak Great Men yet.

Once Jack Ma announced his retirement, I know that very soon, he will become very free to share his "wisdom" with this world. Make no mistake, Jack Ma is a communications genius and some of his quotable quotes are legendary. I was quite impressed when he talked about why we should be looking at TechFin companies in stead of FinTech ones. ( And yet some idiots tried to argue with me that his stint as an English teacher did not contribute much to his business success today. )

But rhetorical flourishes aside, Jack Ma is very possibly only qualified to talk about his experience as a businessman, specifically building up a B2B business like Alibaba. And yet, we get so excited when he talks about how he parents his kids and tells them that there is no need to top their studies.

Is Jack Ma a fantastic parent ?

Does Jack have anything useful to say to a startup engineer at Ayer Rajah Crescent who can't seem to get a match on Tinder ?

Probably not.

My friends and readers are much smarter. When you read something about love and relationships on this blog, people know that I'm trolling and read it for entertainments sake.

Rarely would my readers actively screen and backtest prospective spouses by choosing the venue they hunt for dates.

I am a workshop trainer now. Hear me roar !

During the past 2 days, I started on my new life as a Financial Workshop Trainer. Under the guidance of Dr Wealth, I was able to craft a compelling preview and managed to have a successful first run of the Early Retirement workshop with 33 students.

At a personal level, starting this journey allows me to earn equivalent to about 60% of my previous take home pay which is significant more than how much a rookie lawyer can earn on a smaller/medium sized outfit putting more than 12 hours a day in a law firm. The effort after creation of the slides(which was actually super tiring) is only about 20% of a normal day job, so I have the capacity to grow my investment skills and pick up some AI capabilities in 2019.

After the course yesterday, I started to think about the problem of alignment of interests between a workshop trainer and participant. I think this is a significant gap that is missing from the current financial education landscape. I can fill this gap because I want to be consistent with what Nicholas Taleb has said about having "some skin in the game."

As a result of this, I wrote the following letter to all my workshop participants.

Here is the letter I sent to my course participants this morning. Unfortunately, to be fair to the participants, the valuable annexes to this letter cannot be shared on this blog.

Dear Students of Batch 1,

It’s been a great honour and privilege to be able to conduct a 2-Day Early Retirement Workshop for you.

This has been a very enriching experience for me and I’ve learnt a lot from you. This is no accident because we did not limit ourselves to just sharing some investment strategies. You were able to come up with something unique on your own throughout these two days.

One of the questions I have been asking myself since yesterday evening was how to align my success with yours and the answer came to me this morning as I had my first cup of coffee in my life after a 5 day break from my usual daily shot of caffeine.

As an instructor who has enough from passive income, it is my duty to ensure that I eat my own cooking with the profits I earn from this course. 

Since many of you were candid enough to share your living expenses data with me, I will also be very candid with you, because new I count you as a friend. On average, an instructor makes about $10,000 to $20,000 from running a course. So I can put $10,000 of my proceeds from this workshop into markets and leverage to the point whereby the amount of investments I have in my margin account will exceed my revenues earned from teaching you in this class.

And I will proceed to do so.

This is best way to ensure that I am able to eat my cooking and keep my workshop standards high. There is no greater honour than to put this money into  the portfolio you guys have painstakingly built  yesterday.

You will find the composition of this inaugural Batch 1 Portfolio in Annex A of this message. It has 8 counters and I will be using an equity multiplier of 2 when I construct this leveraged portfolio. Annex B contains the other pieces of useful information you have constructed over the last two days on Business Trusts.

It has been fun teaching you guys and co-creating new leverage portfolios together as  a class !

Christopher Ng Wai Chung

Let this be a signal that I have now arrived into this industry and openly challenge all financial trainers to put some more skin in the game to benefit their paying customer. Don't just invest in your own portfolio, if your students are meant to succeed after attending your training, you should be putting your money in their investment decisions.

The Art of the Good Life #40 : Other People's Shoes

Suppose you are doing your Reservist and you hear a story from Uncle Sam. Uncle Sam is one of the most popular specialists in the Brigade and always seems to be surrounded by men wanting to hear about his ridiculous escapades.

Today Uncle Sam describes a story of his last trip to Hong Kong.

In this last trip, Uncle Sam visited Temple Street and hired the services of someone who calls herself Mistress Akina (Based on 80s pop singer Akina Nakamori). After bringing her back to the hotel room, Mistress Akina first orders Uncle Sam to strip, and thereafter, she ties up  while simultaneously humiliating him about the small size of one of his organs.

When Uncle Sam is tied up in bed, Mistress Akina proceeds to climb on top of him and takes a nice long crap on his chest.

Philosophical question for the reader from this scatological anecdote :

Was Uncle Sam suffering throughout this engagement ?

This chapter in the book talks about the important of getting into someone's shoes and trying to empathise with them. I think this is an important point in the "FIREr vs Entrepreneur" debate raging in the FB group after Alvin Chow of Dr Wealth wrote an article on whether financial bloggers are suffering.

Over the years, I have faced my share of critics who reason that my approach to personal finance causes me a lot of suffering. This is as if they are speaking for myself. But the truth is that without really going ahead to cut down the savings and actually grow your wealth, you don't really know whether this journey is one of pain or pleasure (or both, in the case of Uncle Sam).

I would instead argue that high octane entrepreneurs, super-FIRErs and BDSM enthusiasts have one thing in common : They belong to deviant subcultures that are misunderstood by members of the public.

Sub-cultures engage in conflict because of difference in what french sociologist Pierre Bourdieu would call a habitus. 

The habitus of a FIREr is that they dress and eat simply. A lot of their social capital is tied to the books they read and whatever investing strategies they have. Books FIREr's read include Your Money or Your Life by Vicki Robin.

The habitus of a entrepreneur, on the other hand, is that have have to dress well to hustle and sometimes rewards themselves with better food. Such a person might consider knowledge of finer restaurants part of their cultural capital. Entrepreneurs prefer reads like Gary Vaynerchuck or Michael Gerber.

But like two countries having different currencies without a formal exchange rate, the cultural capital of a FIREr may seem worthless to an entrepreneur and vice versa.

People will say all sorts of things about FIRErs. Some will say that they are denying themselves True Happiness. But these guys might not know that  FIREr is secretly laughing all the way to the bank getting thousands into their bank accounts in dividends every quarter.

[ Digression : For this weekend's class, one strategy backtest 31.28% with a semivariance of 15.93%. As there are no more previews left, if you want one of the last few seat for the lesson. Write to me private. I'll get you guys in touch with the organisers. ]

To ordinary people, life as a startup entrepreneur is harsh and they seem to hustle all the time. But these guys also have the great privilege of seeing their product ideas find validation in the market. I'm going through a journey myself, giving talks in previews and seeing if the audience dig my presentation enough to buying one of my programs and tuning the message if it falls flat.

As such, I think it a lot better to see Savers (High end FIRErs) and Strivers (Entrepreneurs) as the same side of the coin.

The opposite side of the coin is everyone else, folks who drift along the Singapore economy and accepts whatever society throws at them.

If they get upset, they can always activate their keyboards and pick on someone they don't like, like Nas Daily.

The Great Marriage Firewall of Singapore.

This came about because I had to tackle a conundrum with Government statistics.

Earlier on, I wrote in the last article that the median income was $2,699 in 2017. Kyith Ng of Investment Moats thought that this number was a tad low and another BIGS participant found another number that said $4,232 per month.

As it turns out, all the numbers are correct. $2,699 was median income of a household divided by the number of heads in a household. $4,232 is the median income of someone who contributes to the CPF. In practice what this means is that a family consisting of a couple with kids will typically see the husband and wife making about two times $4,232. Dividing this sum total but the number of folks in the household, including kids, this will results in a figure closer to $2,699.

This brings up an entirely new and interesting dimension to reading national statistics.

If you remained single and worked for a living, half of you will be able to earn $4,232. However, if you gotten married and settled down, after diving the income across all members of the household, you only have $2,699.

The price tag of being married is about $1,500 a month !

This great $1,500 firewall may be the reason preventing singles are getting married. Unfortunately, this is manifesting in ways which confuse citizens like the recent argument that you can make babies in small flats. It does not help that, recently in the UK, the game Fortnite is starting to appear in quite a few divorce papers - Some computer games are so good that a lot of guys are giving up family life to pursue a life of gaming instead.

This also changes the way we should engage our single friends. Yes, even those who are currently looking for someone to settle down with.

If I'm feeling trollish, I would challenge my single friends this way :

Whoever marries you would have to downgrade their lifestyles by $1,500 a month. What makes you so worthy that someone would choose to downgrade their salary by $1,500 in order to start a family with you ?

At an individual level, this is a high bar to cross - especially for men. Most men will simply try to work hard and reach an income above the median by at least $1,500 so that they can worthy.

It's like Thor slogging to become worthy for his hammer (only to have his hammer crushed by his evil sister).

It gets worse. Just remember not too long ago, I wrote about ITE graduates drawing $3,000 after a decade of slogging.

At a policy maker level, this number is a huge national disaster because when we scale up the numbers, people do tend to be quite rational when making lifelong decisions.

On one hand, singles have a lot going for them these days. Why should single men bother with dealing with the choosiness of single women when they can have endless treats on Netflix and Steam.

Similarly, why would single women give up their financial autonomy for a media income guy? 

The Great Marriage Firewall of Singapore is the biggest policy challenge in the future. This will be surely be exacerbated by technological disruption which will see a generation of single men lose their jobs and then retreat into their tiny flats to Fortnite until they expire from old age. 

That Starbucks Kerfuffle...

This article is a response based on the series of spirited debates over this article on the Dr Wealth website :

https://www.drwealth.com/how-to-save-money-in-singapore/

I thought I should share a few insights on this issue because at least one guy on the BIGS FB group has threatened to stop reading Dr Wealth for good, and I am working to contribute an article myself sometime next week and don't want to lose fans when I start.

For a start, Starbucks has become some kind of whipping boy by personal finance experts thanks to David Bach who came out with the concept known as The Latte Factor. After a while, as an occasional customer of Starbucks, I think that personal finance experts misrepresent Starbucks selling proposition. Starbucks is selling a new kind of space that is neither home nor the office. By paying the price of a latte, you get to park yourself there and use their wifi. Part B Law students typically hang out at Starbucks to go through their tutorial notes before an evening lesson in a law firm. So the $7 you spend is more than merely a cup of coffee, you are buying a place to work. If company employees want a more informal meeting area to discuss matters, sometimes Starbucks is the only choice.

Putting that aside, I think some Singapore statistics would be helpful to resolve the technical issues of the debate.

A median salary of an individual in Singapore is not too high.  The median income per individual is $2,699 in 2017. This is merely $2,306 after adjusting for employer's contribution to CPF. Take home pay after CPF is only $1,844.

If we divide a household expenses of $4,699 by the number of members of the household, we get a rough estimate of the expenses of an individual which is about $1,400. These numbers are date so we adjust by inflation to get about $1,430.

This means that the average Joe in Singapore can save about $400 a month or 21% of take home pay - not bad given that books from the US typically encourage a person to save only 10% of income.

I think the major sticking point of the article is this : Marcus incorrectly plays down the effects of saving $2,190 in a year. This is actually quite large from standpoint of the average Singaporean, this is almost a 50% increase in savings.

The argument that the extra $87.60 saved every month from the STI ETF is also poorly argued because forgoing Starbucks earns a cumulative $87.60 every year. After two years of denying Starbucks, it becomes an extra $175.20 and you have $4,380 extra money in your portfolio or war-chest. Furthermore, an investor also does not have to limit himself to the STI ETF. For example, a portfolio consisting of equal weights of all REITs can return 10%.

The second half of the article is a contradictory mess.

Marcus goes on to advocate saving 10% and investing 10% of your income, but the median Singaporean seems to be already doing that. If the median income Singaporean can indeed, save $2,190 from forgoing Starbucks, he would be saving close to 30% of his take home pay which puts him in a much better fiscal position than this proven method that Marcus proposes. Of course, I think it would be hard to find someone who spends his 10% of his take home pay on Starbucks coffee.

Instead, I would position a disciplined Singaporean saver as someone who can set aside 30% of his take home pay as a rookie. iI you are, in fact, a Starbuck addict who spends 10% of your take home pay on Frappucinos, it's time to get back to kopitiam kopi or buy an espresso machine.

Right now, I cannot go on to unravel more logical inconsistencies in the article which I'm sure many readers would be able to do so if they read the article a few more times. But I think we should be nice and congratulate Marcus because he succeeded beyond expectations to get folks into a passionate discussion about the need to maintain fiscal discipline. This is only his second writing stint with Dr Wealth.

Please give him a chance.

Are you a free agent or a prisoner ?

[ Workshop preparation at the final stage is really intense and I think I got my third bout of flu in two months. This is a light weight article for the week-end. Maybe I'll do a more hardcore article on Sunday. ]

So I ended up watching Crazy Rich Asians with my mum and I loved it. I even started listening to the sound track which is perfect. Can't wait to see Katherine Ho's cover of Coldplay's Yellow in our local karaokes.

My wife said that I enjoyed the movie because I aspire to join the ranks of Crazy Rich Asians. I think that's not the point. The point is that the movie shed some bits of light into the lives of the uber-rich in ways that do not make ordinary mortals really want to be like them.

Instead, I think the real question is what can money do for you ?

Can it turn you into a free agent or a prisoner ?

The obligations of old money and familial relationships forms a prison around Nick Young and even threatened to draw Rachel Chu into it.

This is not the kind of reason why people seek financial independence. I don't want to be rich so that people will threaten by wife with a dead fish on her bed.

Money is a tool to be free.

That is why "F*** Y** Money" is such a powerful message to Singaporeans who have to report to a boss that they not necessarily look up to.

A financial independent worker and an ordinary worker can work for the same job and perform the same tasks but there is a fundamental difference between them :

The Financially Free Worker has the option to quit and seek another job. He does not have to endure a tyrannical boss.

The ordinary worker needs to think twice because he has obligations if he becomes jobless. He is a prisoner chained to his workplace.

[ Digression: Sometimes I wonder whether local Law Schools should keep on accepting high SES kids because they are the the ones who are most likely to be able to say no to a highly intense workplace and demanding boss. ]

So to me, Crazy Rich Asians is a cautionary tale.

Old money is stifling. Nick Young was supposed to be married to his equal and be stuck in this milieu for the rest of his life. If you read all the books, Eleanor Young was a victim too. Until that pivotal Mahjong scene, all that money in the world cannot give Nick the freedom to be with who he loves.

On the other hand, new money is free. Goh Wye Mun played by the hilarious Ken Jeong is much looser when upbringing his kids Peik Lin and PT. I have a special affinity with PT in the story because he seems to channel Singapore geek demographic. PT is also likely to turn INCEL in spite of all his wealth.

F*** Y** money can turn you from a prisoner to a free agent.

But you need to exercise caution.

Newer reports are showing evidence that employees with a Plan B tend to be less productive at work.

Being able to achieve passive income that exceeds your expenses is a binary test. Either you can or you cannot live on your passive income without digging into your investment capital.

Transitioning from a prisoner to a free agent is not binary.

You transition slowly as you gain more mastery over your money. My biggest fear is that folks who try out FIRE start losing their motivation before they are fully free from the workplace.

Perhaps the solution would be to use an absolute return portfolio and grow it until it is large enough to be converted into a dividend portfolio that pays all your bills at a later stage.

It may solve the motivation problem by making Plan B less obvious to the investor.

The Art of the Good Life #39 : The Maximum Point of Deliberation

As you think or rationalise your way through a problem, the point by which further contemplation no longer adds value to the decision you have to make, tends to be reached quickly. More thinking and research will reach diminishing returns.  At that point of time, the author suggests that you act because by interacting with the problem more directly, you get more insight on the situation that cannot be gained by thinking or by reading manuals.

One of the considerations I make when planning my workshop is to address the mistake I made when I was in my mid-twenties.

I considered myself "untrained" in investing and refused to buy individual stocks until I passed CFA III. In fact, by the time I started investing individual stocks seriously, I had the FRM, CAIA and MSc Applied Finance qualifications and it did not lead to any significant outperformance. Little did I know that the orthodox financial models like the Discounted Cash Flow are hardly useful in picking up better stocks in the stock market. This is because projecting future cash flows is too subjective.

Worse, I kept telling folks to buy Phillip Morris 20 years ago when I did not have the courage to act myself. I think this was a big mistake which I should have undone if I had a time machine. Philip Morris along in 2001 would have made me a rich guy today. On hindsight, I should have risked $10,000 of my money on local stocks while studying my Masters because it would have helped me get better grades (not to mention more money). I would not also feel so left out when my "adult" classmates spoke about investing.

So, prior to blasting the class with my factor models and backtesting results in my workshop on Day 2, emphasis will be made on getting a beginner's portfolio up as fast as possible with around $10,000 on Day 1.

The strategy should not just allow a student to overcome fear, it has to enable sufficient interaction with the stock markets to maximise learnings instead of focusing on profits. This is why picking blue chips from the STI is a useful way to get folks started rather than getting into ETFs - returns backtested only 7.5% if you pick all stocks in equal shares from the STI but you can learn to start  cherry picking from 30 stocks. Also emphasised are retail bonds, preference shares and REITs which put money in an investors pocket within the next 3 or 6 months.

Good returns that can get someone started is better for rookies than getting great returns from a complicated strategy involving cross-reference two stock screeners.

I think there are two domains where it is far better to think more and do less :

a) In government work, there are too problems with optics and there are multiple stakeholders in everything public servants do. It is far better to ensure that documentation and procedures are being followed. I know from personal experience that trying to short-cut a procedure makes it many times slower. Not everyone can do procurement like Philip Yeo.

b) In legal work, revising arguments and adducing evidence will ramp up the costs for the client quickly. It is far better to get it right the first time, consulting and giving business to a more experienced lawyer if the situation calls for such. I think lawyers are highly stressed because there is so much anxiety over things that can go wrong in a document submission. For me triple checking is just not enough.

Safe Channels for Personal Development

Thought I would share something that is possibly novel in the personal development. This comes after thinking about my own hobbies or interests which played a majored role in many of my personal successes today.

I define a Safe Channel for personal development as some means to develop skills and competencies away from society's judgmental eyes. This can come in the form of a hobby or personal interest.

There are three components to having a safe channel.

The channel must develop some kind of useful skill through a regime of deliberate practice.  The second component is that no external party should assess your proficiency in this skill - you shouldn't need to feel that you need to attain a grade when you are in a safe channel.  The third is that developing this skill must be primarily for the purposes of having fun and goofing off.

For most of my life, my safe channel was Dungeons and Dragons. This was a game that does not even declare a winner at the end of a gaming session. Your player character just needs to survive and make it to the next game. Everything else is about coming up with a memorable story that people would talk about decades later. ( Much like my friend who hid in a dragon's anus for an entire fight and was the only PC to emerge unhurt in a battle with a dragon. ) Dungeons and Dragons allowed me to develop mathematical skills and verbal skills which went beyond what most kids were capable of during my time and was quite useful when I finally did my SATs during junior college.

During a presentation on Evidence Law, I noticed that my lecturer was getting sleepy. So during Q&A, I analogized the laws that granted a judge's ability to accept/ignore evidence as being akin to someone wearing three condoms at the same time. It works, but you may doubts after experience this law in practice. We got an A+ for the presentation and the professor stayed awake throughout the rest of my session.

During my NUS days, I had a different Safe Channel. I joined the Toastmasters and made a whole lot of friends who still keep in touch with me today. Public speaking, on hindsight, is a valuable corporate skill but, in those days, we made speeches to amuse our friends. Some of us wanted to see how many sexual innuendoes we can inject into 5 minute presentation. We practically offered the club presidency to this guy who made a 5 minute speech on his squash training but chose to describe how he stroked his ball before a crucial match. Doing research on how make a presentation more compelling was more of a hobby and, unless the speech was particularly bad, most speakers move on to the next project. Having public speaking as a safe channel allowed many of us to become communications experts without the pressure of taking some kind of exam. As for me, my life was also shaped by many law students I befriended doing this ECA.

( This was when NUS authorities still felt safe enough to place law students in a central part of a University campus instead of pushing them to some Gulag along Bukit Timah road. )

At work, there was also a lot of pressure to perform and meet performance targets. I chose a way to make money without going through multiple rounds of assessment. The stock markets do not care about my performance at work. Losing money was a personal affair but generally investment turned out to be a fun and profitable hobby. Not much more need to be said about this.

An then during my time in SMU, BIGScribe was incorporated and I started giving talks using whatever knowledge I gained on investing. Most of the time I spent speaking ran parallel to my time as a law student. did I have plans to eventually start a serious workshop ? Probably not. I doubt a serious financial speaker would build his reputation by talking about "50 Shades of Dividends Investing" and "F*** Y** Money" BIGScribe was a safe channel to find shelter from a stressful study schedule. Meeting like-minded bloggers was also a bonus.

In summary, I think this art of finding a Safe Channel for personal development has been lost. Authorities made it worse by making assessment more "well-rounded". This made CCAs, which are meant to be means to develop a personal hobby and interest, into part of the Rat Race.

To be fair, Gen Z is also shaping up to be a pretty intense generation closer to us Gen Xer than Millennials.

If there is a novel principle in personal development, I would say that finding a Safe Channel to develop some useful skills indirectly through play is probably crucial to survive in an innovation driven economy.

How to interpret salaries and lifestyle decisions of fellow Singaporeans

One of the few things I learned while creating my workshop are interesting statistics on Singapore families. Of the new things incorporated into my training materials, two statistics stand out in terms of usefulness.

a) Median Household Expense Information 

The median household expense information is about $4,699 per month. This number is only useful after we adjust for inflation since the figures were collected in 2013. Inflation has been quite mild for the past 5 years, so after applying a 2% increase, a household spends around $4,792. Now, the median household size is around 3.2. So dividing expenses by headcount, we get a really reliable expense figure of about $1,500 per person in 2018 as a reasonable benchmark.

b) Median Household Income Information

The median household income information for 2017 is a fairly high figure at $9,023 per month. This is very impressive. Assuming that each household consists of 2 working adults as a couple, this is still an impressive $4500 a month. If you perform a full division assuming 3.2 adults, you get $2,819 per month which seems a lot more reasonable.

[ Note that these numbers include employer CPF contribution ! Revised household income then becomes $7,711. Don't get into a mess trying to match these numbers ! ]

I think these two statistics is useful when interpreting latest news on the lives of individual Singaporeans. Two examples come into mind.

a) Middle class and feeling the pinch.

This article describes the struggles of a middle class family that is earning $7,000 a month.

It might be tempting to buy the angst shared in this article but we need to remind ourselves that expenses of 50% of Singapore families fall below $4,800 a month. After deducting 20%, the couple still has $5,400. 

The couple is better off reviewing their personal expenses and cutting it down. I would not waste too much time feeling sorry for them.

b) ITE salaries

This optimistic article talks about ITE salaries and explains that ITE graduates can earn up to $3,000 after 10 years of work in 2017. This has attracted praise from parts of social media which lauded the 9%+ increments ITE graduates received for the first 10 years of their working life.

This optimism is misplaced. 

Suppose I make $1 a month and I get a 100% increment every year for 10 years my salary is still $1,024 per month. 

The most positive reading of this statistic is that an ITE graduate, after 10 years of work, can support himself with ease and live a comfortable single life.

But there are alternative reading of this article - After 10 years of hard work, an ITE graduate couple will earn below the median income of a Singapore family.  After contributing for CPF, the couple has $4,800 which is just barely enough for median living. In practice,  such a couple will be attempting to live below the median expenses level. This is something I have done so myself for many years.

There is another darker interpretation to this data. 

A male ITE graduate, after 10 years of work, is unlikely to be able to sustain a family's living expenses at the median level on his own. He will need assistance from his spouse. This interpretation may seem unfair, but it is the reason why Donald Trump had so much support from rural white males in America who voted him into power.

Does this call for universal basic income ? Perhaps not, I think perhaps some form of negative taxation may be justified to give our ITE grads a break. 

All corners of society would want them to succeed in Singapore.

The Art of the Good Life #38 : Mental Subtraction.

The concept of mental subtraction is not all that hard.

If you are feeling depressed, imagine what life would be life if you lost the use of your limbs followed by the loss of your senses like sight, smell and hearing. Compared to your current life, these scenarios would be truly depressing so naturally, after performing this exercise, you become a lot happier.

The actual reality is different from this mental exercise because we acclimatise ourselves to our good fortune and misfortune. Disabled folks rapidly become as happy as their non-disabled selves. Folks who win the lottery often find that their happiness short-lived.

I can't really say that tossing myself into workshop training fresh from being admitted to the Singapore Bar is an act that will makes me unequivocally happy. It's a highly risky act which flies in the face of common sense and goes against "doing the right thing". If done wrongly, it may even taint my resume. I get criticised a lot for not jumping into a legal career immediately with quite a bit of it coming from my own family. Personally, my logic is that once I get my workshop right, only my time beyond office hours are affected, and I can still get regular employment at a later stage. ( Sort of like  a portable alpha salary. )

As I get more folks second guessing my career moves, I find that I have developed a very unorthodox approach to towards mental subtraction :

I imagine what my life is like without my passive income and how desperate my life would have been if I was forced to pick up any IT project management job just to keep the mortgage payments running.

This establishes passive income as a hidden psychological asset and strength.

Capital becomes Psychological Capital.

Once you have a source of passive income, whenever you become depressed or down, you can imagine what kind of life you would have if this source of passive income does not exist. Hopefully, you can spurred onwards to grow your passive income further.

Of course, imagining the loss of passive income when other folks imagine the loss of limbs can be a little hubristic. We're now going through a period of rising interest rates and our investments have not done all that well as of late.

This is why even having some workshop revenue reinforce the margin account on some occasions is not such a bad move.

The Art of the Good Life #37 : The Dogma Trap.

Today I got called to the Bar. So it is a happy day for me.

But I can't seem to stop being a magnet for weirdoes.

At the Supreme Court, my mother asked me why is there a strange looking flap at the back of my barrister's gown. I said I don't know. It looked like a gun holster, so initially  thought that perhaps it contained some kind of weapon in the medieval era. Then this strange person whom I will designate as Tiger Mum, overheard my conversation with my mum, brutally interrupted me, and said," If you don't know, why don't you ask other lawyers. After all, you lawyers must be intellectually curious, right ?"

I have no idea who Tiger Mum is, but I'm not surprised that this is the kind of mum that produces the straight 'A' kind of JC students who eventually end up in law school (or become nervous wrecks) , but this was a happy day so I smiled and just walked away. 

Why must lawyers be intellectually curious?

It certainly helps in litigation but intellectual curiosity is not a trait that I found when I dealt with legal counsel when I was working as an IT professional, the ability to block my project initiatives did not require curiosity at all, just a stubborn adherence to some kind of rule which, on hindsight, can be quite arbitrary.

Tiger Mum is dangerous because she is dogmatic. She has fixed ideas on how lawyers should behave. Right now, the legal industry is undergoing a lot of change, so I feel sorry for her kid because we probably will end up being a different kind of lawyer than those in practice today. That is an article for another day.

You can identify dogma in three ways : they attempt to explain everything, they are irrefutable and they are obscure.

The investment world is full of gurus who spout quotes from Warren Buffett as if it is investment dogma.

Take for instance the following quote from the Oracle of Omaha :

Price is what you pay, value is what you get.

Of all the WB quotes, I hate this one the most.

You can seriously use this in any situation to sound wise and profound.

Victim : "Oh shit, I just got a margin call."
Guru : "Ah, price is what you pay, value is what you get. You should review your investments. You are not buying value."

a) It can be used to explain everything.

"So what if you bought a low P/B stock, it has negative free-cash flow. Price is what you pay, value is what you get. You got no value, that's why you lose money. "

"You did not enjoy yourself in Geylang last night ? Price is what you pay, value is what you get. Better get checked for STDs."

b) It is irrefutable. 

Price is indeed what you pay. Value (or lack thereof) is indeed what you get. Sometimes you obtained value if you make money. If you lose money, you did not get value. Hindsight 20-20.

How can you falsify this statement ?

c) It is obscure. 

What is value ? I have been investing for over a decade and frankly, I have no idea what value means within the context of this statement, it might a combination of factors in factor investing.

Based on my quantitative approach, I can at least say with some mathematical precision that, in SGX,  value is low P/E, low P/B and high dividends but it does not persist across time periods. Some people will say that value is an investment moat or a good management team.

Anyway, the book has a really effective way to trip up demagogues who spout dogma in the investing world.

Simply ask them this :

What kind of facts would need to arise for you to consider your idea wrong ?

Back to that strange flap on barrister gowns...

A lot of folks initially thought that the flap was some kind of a pouch for clients to pay barristers so it functioned as some sort of a money pouch. But a deeper investigation showed that the barrister gown evolved from a mourning dress during the period of Charles II 1685. It is remnant of a hood. You can find details here.

So dear Tiger Mum, If you are intellectually curious about something, Google it and make sure you have credible sources.

Happy Mass Call 2018 !

More on Quitting the System...

Ok, this is not going to be long post. The hits on the last article was absolutely crazy ! There is a chance it might crack top 5 of my most popular blog posts of all time here.

Here's more interesting developments :

a) Ruffled some feathers in the blogosphere

A Millenial blogger reached out to me in private conversation because it seemed to her that my article was referring to her specifically. Regardless of whether I was actually referring to her ( I read many Millenial bloggers because I want to figure out how to have more Millenial engagement ! ), I felt that if there are flaws in my article, the public forums are the best place to air them and I prefer the BIGS World Facebook group because its members take personal finance more seriously. I shared with her that, privately, I will not really change my mind.

I felt that I was accused of spreading doom and gloom by this blogger. Granted, I also can't sound as if I'm from the movie Frozen and be positive and self-affirming all the time, but clearly you guys like my doom and gloom articles. So why change my style ?

It's not as if every time someone talks about private degree candidates, no one will jump in and point out that some private degree holder can become millionaires and have many local grads working for him. I think this detracts from fact finding the root cause of 33% discount in salaries which I am personally interested in because I have kids who may end up not getting a seat in a local Uni in the future.

Instead I would like to channel a scene from the latest Donnie Yen movie, Big Brother. In this movie, five secondary school kids from a worst performing class was expelled and one of them was complaining about the world being unjust because the fight involved kids from better performing classes but the kids who were expelled all came from the shittiest class in the school. Big Brother Donnie Yen basically told them that if they felt that they were treated unjustly, the proper response is  to show the world what they are made of.

Complaining about injustice rarely results in anything.

b) Malaysia is a big place.

Someone pointed out that my statistics employ nationwide statistics from Malaysia so settling down in Kulai would have a different cost of living compared to settling down in KL.

Upon further reflection, there is an additional dimension to this that is ethnic in nature.

Malaysia is different from Singapore. It may be possible that living like an ethnic Chinese may be different from living like a Bumiputra. Sadly I do not have the numbers to confirm this possibility. I am not ready to take this blog to address this sensitive issue.

c) Investing in Bursa Malaysia

Another interesting point is whether investments should be made in Bursa Malaysia instead. Like most societies, Malaysia is less kind to REIT investors than Singapore. Resident and non-resident investors pay a 10% withholding tax on all REIT dividends.

Once you get out of Singapore, F.I.R.E. becomes a lot more challenging once you factor in salaries and taxation. Our dividend taxation regime makes Singapore one of the most underrated Welfare States in the entire world.

Welfare for the owners of capital, that is.

Why I sometimes think about quitting Singapore.

I think I am doing relatively ok in Singapore.

My work planning for the next workshop is proceeding quickly, markets are doing quite well in spite of an impending trade war and my passive income is edging higher this quarter.

Recently, I had a conversation with a friend who is now taking concrete steps to resettle himself in Australia. The complaint about Singapore is typical fare - Society has become more unequal, flats will be taken back after 99 years, and the CPF board seems unwilling to allow folks to ever see their hard earned money. I've done my fair share defending our policies, but I am always mindful that I gamed the system quite well ( being D&D trained after all ) and I was a huge beneficiary of the low dividend tax regime which I exploited from a reasonably young age. 

But even though I am objectively well ahead of most working people here, the thought of quitting Singapore never really left my mind.

When I was an engineer, I thought of quitting everyday when outsourcing was at it's peak and local IT staff were driven out of companies by foreign "talent". When my investments started to do better, I "switched sides" when these same folks who competed against me in the workplace also consumed products and services and, most importantly, paid rent to us locals landlords. This is the reason why I feel that the Government will reopen to doors to FT once our infrastructure can take in a bigger population. Some Singaporeans do benefit immensely from this.

Today my reasons for quitting has changed - I will quit Singapore if my children are unable to get a degree from a local university.

ITE and Polytechnic figures for permanent employment are dismal with about 40% being stuck with gig economy six months after graduation. Polytechnic salaries were stagnant for close to decade prior to the 2011 elections which saw a U-turn on the FT policy. Recently, someone asked me whether Singapore would enter a period of the Lost Decade like Japan: I should have answered that Polytechnic graduates just came out from one 7 years ago.

On this note, I do not understand why so many bloggers, in a bid to please or molly-coddle private degree holders, write such painfully PC posts to them, telling them that managing their Linkedin accounts and working on their EQ and skills future portfolio would somehow erase the lead local graduates have on private university graduates. It's actually quite patronising when these Millenials bloggers have local degrees and claim to be doing quite well in workplace. It sound like gloating to me.

Here's what reality treats folks with private degrees....

Let's face it, if private degree are holders are making 66% of a local grad's pay, alleging discrimination from the industry can only explain a small part of the salary gap. This is because any businessman would happily reduce their manpower costs by a third if they happily reject local grads and hire private graduates instead. A better way is to talk to an SME boss and ask them about their own experiences with private degree holders off the record. Personally, over the years, I had one or stories complaining they soak up more management attention, and a manager's time is also money. This can be another article on another day.

As it turns out, there are some really harsh realities of private degrees that students and private universities do take a certain share of the blame.

All our private universities are audited on procedures but are generally not required by regulatory bodies to meet  standards on content and delivery of material. Furthermore, private university students are customers of these institutions. Local university students are not customers, they are products of their institutions who answer only to the government and industry. It follows logically then that the content that is taught would be less rigourous.

There is also a propensity of private degree students to take management and business courses which, sadly, does not have a "moat" around them ( because they are easy as fuck compared to a tech course ). This is even when there is evidence that fields like engineering and technology practice less discrimination and has higher salaries.

Ok, enough with the brutal manhandling.

Let's have a candid discussion about the mechanics of quitting Singapore for diploma folks contemplating a private degree.

I did some Googling on Malaysian statistics. A Malaysian household spends about $5,300 MYR every month but their household is fairly large at about 4.3 members. So we can say that an average  Malaysian needs about $1,230 MYR every month or about $410 SGD to survive.

To generate about $410 SGD per month, a Singaporean needs a portfolio of only about $70,300 generating 7% yields every year. This is currently achievable using a portfolio of REITs.

Now suppose a polytechnic diploma holder finds a job at $2,200 per month, forgoes a private university degree, and has decided to quit as soon as reasonably possible because he can't stand being in a Crazy Rich Asians elitist society any longer than necessary.

Based on our own statistics on household expenses, a single man can sustain himself on about $1,400 SGD per month. So, it does not take a stretch to imagine that with some lifestyle adjustment, a private degree holder can save about $500 a month. At a rate of return of 7%, this private degree holder can achieve this $70,300 portfolio size within 9 years. Shorter if he gets his increments and farms his bonus back to his portfolio.

A polytechnic diploma holder can start work earlier if he forgoes his private degree. He starts making money at around age 22. So a reasonable escape to Malaysia can take place at around age 31.

The trick is to retain your investments in Singapore while trying to carve a new life and career in Malaysia.

So there you go. I won't quit while I consider myself to be winning here, but not everyone gets to win in a society like Singapore.

I won't write an essay saying that with grit and willpower, private degree holders can also make it in Singapore. That's still up to the individual. With grit and willpower, Bruce Jenner can become Caitlyn Jenner.

But if you are a polytechnic student contemplating a private degree, I showed you a way out of Singapore if you decide to forgo a degree qualification. It's not as politically correct as Ong Ye Kung, but I think it's a workable plan given current market and employment conditions.

But I think with a passive of $400 per month at age 31, you might actually grow to love our country more.

Maybe.

After Action Review : Unstructured sharing session with young people.

There is good news that banks are changing their engagement strategy with Millenials. They are moving away from the hard sell strategies that turned off an entire generation of consumers in the past and are now experimenting with alternative approaches of engagement that focuses on having more candour and authenticity with the public.

As part of this experiment, sometimes financial bloggers are brought in to engage with younger consumers. This is a very new thing and I am honoured to be chosen for this experiment. 

Yesterday's sharing session would have been rather challenging if not for my stint in Law School where I spent most of my time cracking legal problems with youngsters. Nevertheless it exposes some really interesting questions that I was not really prepared for. The participants are mostly beginners, so his article might be useful to rookies.

a) How do you deal with fear that before you invest in markets ?

This question threw me overboard. I can answer questions on how to deal with interest rates and survivorship bias but I started investing a very long ago and forgot that people do feel afraid when they start investing. Furthermore, my own personal answer is not satisfying. I started with unit trusts and refused to buy an actual stock until I passed CFA III. I also know that surrendering your financial future to a commissioned sales agent is really bad idea. 

My only solution is to deal with it one step at a time : Open a brokerage account. Buy the Philips Lion S-REIT and wait for the first round of dividends to come. See if you lose sleep over this investment. When you are ready again, start buying the top 15 highest yielding blue chips on the STI. 

Get used to having dividends drip into bank account because it will provide a buffer against fear at a later stage.

Dividends are the opiates of the capitalist class. Dividends conquer fear.

b) What happens when a spender marries another spender ?

Millenials are particularly interested in relationships. Obviously, I spent quite a bit of time talking about Family Law and Divorce. 

I explained to the crowd that I was lucky because I am a Saver who married another Saver but most couples are Saver-Spender couples and need to establish some ground rules on money management. Often the Saver would have to rein in the Spender within the relationship.

So one guys asked me a question as to what Spender-Spender couples can do about money ?

My answer may be considered both unhelpful and politically incorrect. I told the person to let the couple be because investors need most of the population to consume in order to continue to collect rents and dividends from their investments. 

Why stop a happy couple who living life to the fullest ?  I also told them that I can introduce a great divorce lawyer if the marriage fails.

Let me know if you have a better answer than me. 

c) Can people live a such a disciplined lifestyle to achieve early retirement as I did ?

The short answer to this question is "no".  Because there is an entire industry devoted to "assist" folks who, for some reason or another, do not wish exert their control over money. 

Money has a bias. If you are extroverted, conscientious and disagreeable, you'll find that making money is a lot easier in a Capitalist economy. This also means that agreeable and likeable folks will try to stop you from attaining your ambitions in favour of "greater harmony amongst equals". Over the years, I keep getting asked why can't I conform to others : work hard, travel every year, buy a lot of insurance, get a BTO at a younger age and pay expensive tuition for your kids.

I've been living this life for more than a decade. 

• After my first appearance in Me and Money, people mocked me for being single and a scrooge. 
• My second appearance after my wedding drew criticisms because I did not have to raise any kids. 
• At least one publisher laughed at my books because I was not a millionaire then. 
• When I used a Nokia handphone reinforced with rubber bands to keep the battery casing on, colleagues found the whole thing amusing.  
• Using a SAF notebook to track my daily expenses, that's insane ! 
• Losing a BMW in the stock market in 2008 was something folks laughed at at the depths of the recession, they became incredulous when I continued to farm my entire pay-check into high yielding counters. 

If you play the game of life to win, people are going to talk. You play a lot of Euro games like Settlers of Catan, you know that the guy with the highest Victory points will get maximum grief from everyone else on the gaming table and this is supposed to be a "fun" setting. ( In Catan, people send a robber your way when you are ahead )

They will continue to resist you.

So it's more than discipline. Picking up finance skills requires discipline. 

But dealing with "well-meaning" folks who want to shoehorn you into a conventional Singaporean lifestyle requires discipline and being extremely disagreeable. 

Anyway, yesterday's session has been fun. It's a new market and I welcome this refreshing turn towards more authentic engagement by our bigger financial institutions in Singapore.

[ The picture in this article is related to a pretty bad Hokkien Joke I cracked with the participants during dinner. ]