How to think about the Return on Education for degree programs in Singapore

 

The Polytechnic semester has ended, but I have to constantly remind myself that, thanks to blog readers and friends who also work at a Polytechnic, there are now young and impressionable readers of this blog, and it behooves me to make it a little more useful and wholesome for everyone.

So this week, I'll be sharing a powerful framework to think about the value of an education that everyone can benefit from.

This concept, known as Return on Education (ROE), is useful for comparing the value of different qualifications. It is useful for students in tertiary education to assess the value of a university degree, so they can compare a 4-year degree at a local university with other educational options.

I'm actually going to use my own students in this example.

According to a web search on salary data for Temasek Polytechnic Information and Digital Graduates, the median income is $2,950. Suppose the student is an elite graduate with a high GPA > 3.9 and is considering a Business+Computer double degree at NTU, which offers the highest starting pay of $6,950 after four years.

We use the formula to calculate ROE (ignoring the effects of NS):

(Degree Median Income / Diploma Median Income) ^ (1/degree duration) - 100%

We can compute the ROE as ($6,950/$2,950)^(1/4) - 100%, which is 23%.

23%, according to the Gaokao book, is exceptionally high. This is the equivalent of a China Gaokao student qualifying for a program at Beijing, Tsinghua, or Fudan University. 

Let's consider another scenario. 

If you have a Diploma in Humanities, your starting pay is even higher than that of an Infocomm graduate. It is $3,200. If you are aiming for a Humanities degree from NUS, the salary is $4,300, but it is also a direct honors program that lasts 4 years.

We can compute the ROE as ($4,300/$3,200)^(1/4) - 100%, which is 7.6%.

A 7.6% ROE is objectively low, as the average ROE for China and the US is expected to be consistently 10% for a professional degree.

And this is not even the worst-case scenario for young people contemplating the value of local degrees. 

An A-level graduate is worth about $3,600 in the industry. If this person is contemplating a Music degree at Yong Siew Toh Conservatory, they would also need to spend 4 years, with a starting salary of about $3,820.

We can compute the ROE as ($3,820/$3,600)^(1/4) - 100%, which is 1.4%.

I think there is a decent chance that if I teach my students maths this way, I might lose my job, but the numbers clearly show that not all local degrees are built the same way, and we need a reasonable framework to think about the value of an education instead of merely appealing to a person's love of learning when trying to pick a university degree.

In the first case, where the ROE is 23%, I can conclude that no investment products outperform investing in this NTU program. My students who qualify for the program should even be happy, even, to take out a loan to get that degree. This also means that achieving sky-high GPAs in a Polytechnic and competing the heck out of your peers is a rational move.

In the second case, where the ROE is about 7%, the choice is almost on par with an investment in equity markets. A rational parent can even reason that it's better to put the money in a diversified equity portfolio for their child and push them into the industry earlier in life. I teach law at a polytechnic to working adults, so I do not have visibility into humanities education in a polytechnic, but I predict that with an ROE of 7+%, the humanities environment would be more chill. ( Certainly less cut-throat unless someone figures out the ROE for law school.)

The final case is so irrational that voluntarily putting the funds into your CPF yields better returns, but this is where a deeper understanding of society is needed to explain the existence of music schools in Singapore. With an ROE below 2%, the qualification serves as a means for the truly wealthy to signal their indifference to their economic needs. At this stage, we stop applying economic principles and instead apply Pierre Bourdieu's Sociology of Distinction to our analysis.

Currently, both my kids are fairly advanced piano players, with my son regularly playing solo fr his primary school, but even I know this might be unsustainable as they get older. But I don't mess around when parents signal to me that their kid is some ABRSM Grade 8 and gunning for a music degree. 

In this society, it's a pretty substantial flex.

Why I did not date until my passive income hit $600 a month

 

Someone wanted me to elaborate on my idea that a guy shouldn't date until he has a source of passive income. 

So maybe I share a little bit of my story when I was starting out with the FIRE movement. 

In my twenties, there wasn't a FIRE movement, but I was acutely aware of what was likely to happen to me in my 50s due to the lack of folks in their 50s in an American MNC, so I started saving like crazy because the outsourcing wave had just started and companies were farming off their IT departments to benefit from labor arbitrage. In those days, ETFs did not exist, so my funds were mainly in a Templeton Global Equity Fund, which I eventually liquidated and transferred to a CDP portfolio of dividend stocks. 

Once I started collecting dividends, it became very natural to want a certain amount of money on average every month. I settled on $600 a month because it was my allowance during my university days. At that time, my benchmark-yielding stock was SPH, which yielded about 6%, so I just needed $120,000 in my CDP across various stocks and REITs that yielded about 6% to meet my target. 

Prior to hitting this target, I didn't really date during my single days because I didn't think I could be a good provider if I couldn't at least replicate my University allowance through an investment portfolio. At the very least, I just needed my investment income to pay for dates.

Looking back, now that I am in my 50s, a lot of the things I predicted have come true! 

Folks of my generation are losing their jobs to retrenchment exercises, and ageism practically guarantees that they will spend their days doing SkillFutures courses and watching their savings dwindle before finding a job that pays half as much.

So recently, I've doubled down on this idea. 

I think Gen Z is in a transitional phase where guys are still expected to play the role of provider, but women are becoming more financially independent, and jobs are no longer as stable as before. Right now, some kind of new masculinity is still a work in progress, so guys still need to man up and play a provider role. And, I suspect in practice, throughout a marriage, both spouses may have to endure periods of unemployment throughout their working lives, but guys stand to take a larger hit to their egos if they can't play the role of a provider in a family unit.

To make things more interesting, I'm going to borrow some software engineering concepts from this excellent book, which I'm currently obsessed with, Designing Data-Intensive Applications, which is rapidly becoming the go-to book for casual-vibe coders looking to level up to senior-level engineering skills. 

The book distinguishes between a fault and a failure. 

In an array of hard disks in a RAID-5 arrangement, one hard disk failure is a fault. It can be replaced with no real system outage because RAID-5 is fault-tolerant. Just pull the hard disk out and put a new one in, and you're good to go. However, if two hard disks fail in a RAID-5 array, we have a failure because recovery is impossible without replacing hardware, followed by tape recovery.

So you can recover from a fault painlessly, but generally, failures can be events that you might not recover from.

Taking this back to family economics, in an ideal world, both spouses work, but if one spouse gets retrenched, it is just a fault in the system, and the family can recover so long as one spouse can hold the fort while the other finds a job. 

But in practice, traditional norms ensure that if the wife loses her job, it's a fault that can be overcome. But if the husband loses the job, it's a failure. We see that many divorces are triggered by a lack of economic means on the husband's part or his inability to keep up with the wife's capabilities.

So if this observation is true, then the husband must develop fault tolerance internally.

The most basic approach is for the husband to generate multiple sources of income. This can be created with rental property, blue-chip stocks, song royalties, or a side hustle. The best source of side income should be passive, because you still have a day job to take care of. 

So I think a young man should ask himself how much he will need to eke out a bare-bones existence living with his parents. Calculate the minimum amount of expenses you need. I think you can squeeze by on $500 a month. 

Now, to generate this amount a month using a portfolio that yields 4%, multiply the number by 300. So, to generate $500 a month at a 4% yield, you will need $150,000 (300 x $500). The numbers look daunting at first, but if you can get $30,000, your monthly income will be raised by $100 a month, making the next $100 much easier to achieve with the salary raises you made along the way.

Of course, imagining that you can live on $500 a month is not enough. 

We have to test it in a business continuity planning exercise.

While holding onto your job, you might want to just completely save your entire salary and set aside monthly expenses of just $500 just to see if you can survive on that.

Should young men who read this article follow my lead and refrain from entering the dating market until they have a passive income stream?

With AI disrupting the workplace, I think even if the young man refuses to ever enter the dating market, he needs a source of income if he finds that his skills are no longer valuable in the job market. 

And young women, too, because the income from Gen Z guys is hardly reliable these days.

The Four Types of Singaporean Investor: Why the "Safest" One Might Be the Riskiest

Ask ten Singaporeans how they're investing for the future, and you'll get ten different answers: a crypto wallet here, an ETF portfolio there, a stack of bank and REIT counters, or a shrug and "I'm just focused on my career right now." Look closely, and discounting the sophisticated investors who like to flex their alternative assets, and those answers collapse into four recognizable archetypes, each with its own relationship to risk, time horizon, and definition of "winning". Three of them know they're taking a risk. The fourth doesn't realize it's taking one at all, which is exactly what makes it dangerous.

1. The Speculator: Chasing the Fast Buck

At one end sits the get-rich-quick trader, drawn to crypto tokens, contracts for difference, and leveraged options, hoping to compress decades of returns into months. This group tends to be younger, chronically online, and quick to mistake volatility for opportunity. The wins get broadcast on Telegram groups and TikTok; the losses are quietly absorbed.

The numbers suggest this crowd is larger than it looks and more nuanced than the stereotype implies. A 2025 Coinbase x MoneyHero survey of over 3,500 respondents found that 61% of Singapore retail investors now hold some cryptocurrency, yet average allocations were a conservative 6-12% of their portfolios, and 58% described themselves as long-term holders versus 22% who identified as active traders. In other words, most people who own crypto in Singapore aren't the archetype: they've bought a small position and left it alone. The true speculator is a narrower, louder subset: the trader who treats derivatives and leveraged tokens as a primary income strategy rather than a small satellite position.

It's not that speculation is inherently irrational. SGX itself runs a substantial derivatives franchise, and options and futures serve real hedging purposes for sophisticated investors. The trouble is that for the retail speculator, position sizing and risk management are usually the first casualties of the chase for a fast buck. A trade that would be a reasonable 2% hedge for an institution becomes a 50% bet on a single altcoin for a 24-year-old trying to skip the queue to financial freedom.

2. The Builder: Quietly Compounding Through Low-Cost ETFs

A second, more disciplined group has emerged over the last decade: the savvy careerist who treats investing as a payroll deduction rather than a hobby. They dollar-cost average into low-cost, broadly diversified ETFs (a Straits Times Index tracker, a global equity fund, sometimes a REIT ETF for local income flavor) and largely ignore the noise in between.

This is no longer a niche habit. SGX-listed ETF assets under management hit S$16.3 billion by Q3 2025, up 40% year-on-year, and the SPDR STI ETF (ES3) alone pulled in roughly S$387 million of net inflows over the year, at a total expense ratio of just 0.28% a year. CPF and SRS investors have become one of the biggest forces behind this growth, funneling forced or tax-deferred savings into the same handful of low-cost, broad-based funds month after month.

Their edge isn't stock-picking skill; it's a stable income, a long horizon, and the discipline to automate the decision so emotion never gets a vote. This is the group financial educators spend the most time trying to grow, because it's the one strategy that scales to the average person without requiring either luck or genius: you don't need to correctly call the next hot sector; you just need to keep buying the whole market and get out of your own way.

3. The Income Seeker: Living Off Dividends

Then there's the old-school investor, typically further along in their career or already retired, who built a portfolio of blue-chip dividend payers (banks, REITs, telcos) specifically to generate a spendable income stream. For this group, share price appreciation is almost beside the point; what matters is whether the dividend cheque covers the month's expenses.

The appeal is easy to understand: a basket of well-run Singapore REITs is currently yielding in the 5.5-6%+ range, comfortably ahead of the roughly 3-3.5% yield on 10-year Singapore government bonds, and paid out quarterly or semi-annually like clockwork. For someone who has already accumulated capital and simply wants it to pay them a salary, that's a compelling proposition.

It's a philosophy suited to a low-growth, income-hungry stage of life, though it carries its own blind spot: chasing yield can concentrate a portfolio in a handful of rate-sensitive sectors, and a payout that looks safe on a dividend calendar can still get cut when the underlying business (a hospitality trust in a downturn, a retail landlord facing an anchor tenant's exit) hits a rough patch. A high yield is sometimes the market's way of pricing in a risk the investor hasn't priced in yet.

4. The Ignorant Masses: Betting Everything on a Single Career

The fourth group barely considers itself "investing" at all, which is exactly the problem. This is the mass of Singaporeans who pour their financial energy entirely into a single career, climbing the corporate ladder, chasing promotions and bonuses, while treating that income as the only asset that matters. It feels safe because it's familiar and within their control, but it's really a concentrated, undiversified bet on one employer, one industry, and their own continued health and employability, with no hedge if any of those three falters.

2025 gave this group an uncomfortable reality check. Singapore recorded 14,490 retrenchments, up from 12,930 in 2024, with the incidence rate climbing to 6.3 per 1,000 employees. PMETs (the professionals, managers, executives and technicians who make up exactly the "safe career" crowd) were hit hardest, with a retrenchment rate of 10.1 per 1,000, up from 8.6 the year before and above pre-recessionary averages, concentrated in financial services, info-comms and professional services. A retrenchment, an industry downturn, or a health scare exposes just how little of their financial life was ever actually diversified, because the career was never a separate asset from their income; it was the only asset.

Same Spectrum, Different Blind Spots

These four types map onto a spectrum of risk awareness, not risk tolerance. The speculator takes on visible risk in pursuit of outsized reward, and at least knows it: nobody puts money into a leveraged token thinking it's a sure thing. The builder and the income seeker each manage risk through a defined strategy suited to their life stage: accumulate broadly while young, tilt toward income as retirement nears. The career-only saver, by contrast, carries risk they don't even recognize as risk, which is precisely why it's the hardest of the four to fix: you can't diversify away from a danger you don't believe exists.

The healthiest financial life for most Singaporeans probably borrows a little from the middle two archetypes: steady, diversified accumulation in the working years via low-cost ETFs, gradually tilting toward dividend-paying income as retirement nears, while treating both blind speculation and blind faith in a single paycheque as two versions of the same mistake: concentrating your entire financial future in one bet and calling it safe because it's familiar.

Happy National Day ! Let's talk about something that stresses you

 

This National Day, I want to talk about what I know about education systems.

When scholars from China are asked about books that shaped the country's evolution, they often point to books about Lee Kuan Yew. So this National Day, I'm going to talk about this book entitled The Highest Exam, which really taught me how to think about Singapore and the way we structure Singapore society.

For a start, the Chinese have been taking Imperial exams for thousands of years; this is a timeline that is way longer than that of the Chinese Communist Party or Singapore, for that matter, so countries with a large population of ethnic Chinese would naturally try to structure society using what the book describes as a "centralized hierarchical tournament".

The version of this tournament in China is the gaokao, one of the most gruesome exams in the world. Singapore's PSLE is also a centralized hierarchical tournament, but even some mainland influencers consider making 12-year-old kids go through our version of gaokao to be exquisitely cruel and would remind PRCs thinking of settling down in Singapore that our academic system is no cakewalk either.

From the Chinese perspective, the Gaokao is a great system because it measures everyone based on a single, transparent standard. In a corrupt society where money can buy favors, this is probably a better alternative than the US system, which prefers a multi-dimensional, holistic assessment criteria that can be gamed with money. Consequently, the proportion of urban elites in places like Beijing and Tsinghua University is smaller than in places like Harvard and Yale, which welcome legacy admissions.

Of late, the Chinese have been expressing some regret over their system. 

This is because the Chinese now feel that the latest Fields medallist, Prof Wang Hong, was only able to win the award after she left Chinese academia and settled in France. The academic environment in China may mean that she would be constantly overlooked, and some of her research might actually be stolen by her superiors, as she has stayed.

But the Western system has its own hobgoblins. Look no further than Cambridge Professor of Sociology Jason Arday, the DEI wunderkind, who is also a plagiarising fantasist.

Looking at the lenses through which the Gaokao matters, I can now see why the PSLE makes sense to us. Even though we are not (that) corrupt, a tournament gives everyone some kind of a hedge in case corruption rears its ugly head in the future. It's also a powerful way for the government to determine what is rewarded in society in the future.

How can we improve the system?

Right off the bat, eliminating the T-Score in favor of Achievement Levels does nothing for parents or kids because the PSLE remains a centralized, hierarchical tournament. I might even argue that A levels would be even better if they were T-scores, as that would provide greater transparency in determining who gets into top professions.

Reforms would be better if we examined the ITE and Polytechnics,  and disabused this notion that investing in Poly and ITE is like "throwing good money after bad," as allegedly said to the Education Minister in the 1990s by Tony Tan.

If the median GPA of a polytechnic graduate is higher than that of a university A-level graduate, then it makes sense to reduce A-level intake and increase polytechnic intake for that degree course. I'm seeing decent ITE students performing in a polytechnic, and perhaps a similar adjustment can take place for those few elite diploma programs.

So any alternative to the A-level system should not be another centralized tournament like the IB (which is like rich people paying to avoid A-levels by picking an easier alternative); it should be a brutal tournament based on a single score, with exams designed locally. The most direct road to a middle-class lifestyle and a profession should remain a tough road of pain and struggle.

On the other hand, Poly and ITE can have their own assessment systems, and universities need to constantly adjust their admissions based on alumni performance. Continuous assessment, project work, and skills development, rather than a winner-takes-all exam, should be a valid option for smart, ambitious Singaporeans to achieve a middle-class lifestyle. Our universities should also consider alternatives to the PhD. Keep two research universities, but some kind of new accreditation system should award doctorates for practical inventions, patents, and even for producing jobs for the economy.

Finally, I don't think any educational reform can address the major lack of social and cultural capital among Polytechnic students compared to JC students right now. This has always been a problem hidden in Singapore. Despite many attempts to make our society more inclusive and equal, we can only measure things like salaries and personal wealth.

Parents are not dumb. If my child does well in both JC and Poly and eventually gets into a University, I will still choose the option that exposes them to more peers who may end up as doctors, lawyers, or businessmen. And even with a strong social network, some environments simply allow a person to develop better "taste".  

Policy makers have a tough nut to crack.

The curious case of Colin Lau's Early Retirement

 

When the video about Colin Lau came out, a lot of friends forwarded it to me. Some folks even mentioned that there's now someone to give me a run for my money, even though there are folks like AK71 and Investment Moats who probably have a safer financial margin than me.

I thought it might be useful to blog about the strengths of Colin Lau's approach to financial independence and its inevitable weaknesses. I'm not coming from a position of being a critic; I actually think that Colin Lau's work is admirable, and it is a sad waste that the media took a while to recognise his effort doing charity work for the Philippines.

So here's what I think are the key takeaways:

a) You do not need to be rich to be financially independent

Colin's technique is hyper-frugal but also relied on the economic situation during the Great Financial Crisis of 2007-2009. In 2007, at 35, Colin bought a S$87,000 three-room flat with about 64 years left on the lease, paid in full, with no mortgage, since he felt loans "lose a lot of money." He rented out a room for S$900/month, which paid off the flat's cost within eight years. He still collects that rent today, and the flat has since appreciated in value.

b) You don't even need to buy stocks if you can minimise your personal expenses

He saved 80–90% of his income during his working years ("Everybody was spending money like water, I was spending like a test tube"). He now lives on under S$150/month, with total monthly cash flow of about S$2,500 (rental income plus insurance payouts bought when younger). He's saving the surplus for future eldercare, since he's a bachelor with no children. His philosophy: don't pinch pennies on small stuff; instead, cut the big-ticket items like housing.

This is a number that no one in my family can live on, not even my kids, because they have enrichment. Amazingly, Colin does not employ equities because all it takes is a 5% dividend stock portfolio of $36,000 to generate $150 cash flow every month on average.

c) You still need to do a bit to take care of your health

A serious health scare in June 2025 left him hospitalised for 62 days with 15 surgeries and a S$146,000 bill that is covered fully by insurance and subsidised ward class, so he paid nothing out of pocket. I'm actually surprised that he is willing to pay for some kind of insurance plan. 

Nevertheless, I think his planning and possible C/B2 class ward stay are the reasons why he's still alive today.  I can't help but feel quite sorry for him after looking at this episode.

Of course, this video raises a lot of questions as to whether someone can find a tiny little flat to live in without paying for a home mortgage. I doubt it's possible if you want a remaining lease of 60+ years, but if you are in your 60s and want something with less than 40 years, it might be possible. Also, I suspect the government may allow low-cost rental housing for singles in the future, so it's possible to build a dividend portfolio to pay off the rent for a one-room flat. Whatever it is, Gen Z would need to find a creative solution to replicate the same results.

Finally, there's no way to sugarcoat this, but Colin Lau is making the same mistake as the other ultra-frugal FIRE thought leaders in Singapore, all of whom are frugal single men.

What is he going to do to deal with loneliness when he gets older?

I think charity work is an important component of having a meaningful life, but being frugal to the point of remaining single might mean a lonely existence when you enter your 70s or 80s. There are some things that having a family and children can do for you - if you need to go for an operation, at least your kids (if raised well) will be there for you.

You can Google the number of deaths from loneliness; it kills at three times the rate of heart attacks. And men tend to be even lonelier than women as they get older.

But no FIRE blogger really wants to blog about the endgame when they hit their 70s; they just want to showcase their frugality porn on the web.

How an investor can benefit from the Feynman Technique

 

I still get a lot of questions about why I teach. 

It's always a variation of the question, like, "If you have such a successful formula for investing, why do you want to share it with others?" 

For quite a while, I argued that by teaching the subject deeply, I am forced to progressively simplify the concept and understand it based on first principles; this is further honed by serious students with genuine questions who expect answers because they pay top dollar to attend my Masterclass.

Now, with AI and teaching an actual Data Analytics class, things have gotten crazier.

It's no longer about deepening a person's understanding when a lecturer teaches a subject. The lecturer can build something in real time to test the theories they learn and see whether it holds up in reality.

So here's a concrete example. 

One of the things my students have to do is linear regression; they might need to figure out which attributes result in better fitness, like lower blood pressure. For every topic I teach, I ask myself how to make it relevant to me and incorporate it into my Portfolio Manager Windows program, which I vibecoded using Claude Code.

So I tried to create a simple regression that looked at just stocks in my portfolio and determined whether a PE ratio and dividend would affect investment gains after a year. And I can see that a low PE ratio resulted in superior performance, but the high dividend stocks in my own portfolio would actually drag down returns after a year.

Upon closer examination, the reason is less dramatic; the outperformers in my portfolio are the AI Tech stocks on SGX like UMS, AEM and Frencken. With the exception of Frencken, I owned these counters when they were still dividend stocks a number of years ago.

Another thing I make my students do is to conduct K-means clustering. It employs an algorithm to divide a data sample into K parts. It's like dividing the class into 5 groups using AI based on the data fed to it, so that insights can be gleaned from this categorisation.

So when I teach this topic, I try to get my students to use their intuition to make a case for how the categorisation is done ( groups like "Fit Daddies" or "Bored Tai Tais" using gym data). It is not an easy task because it's highly subjective.

So after teaching, I began to eat my cooking and tried to cluster the stocks in my portfolio using stock ratios, and it somehow grouped banks with stable REITs, the Tech-based growth stocks, and high-yielding REITs with less prestigious sponsors. More interesting is a cluster of orphan stocks that include First Shipping Trust, Global Investments and, probably unjustified, Capitaland India Trust. 

Where analysis can be done, data can be ingested in a built-in AI chatbot. 

So, I've gone even further and given my software chatbot capabilities to answer questions about what I should do with my portfolio. In this example, the AI tells me to ditch ESR REIT for Sabana REIT.

My journey continues; this article is to get folks to look out for a future video on whether AI can replace Financial advisors with the good folks of The Financial Coconuts. I suspect the video might not do that well because it is easily one of the most technical talks I've ever done.

Catch me on Chills 276: The Smarter Way To Build Wealth While Working Full-Time

Most people trying to get rich faster are optimising the wrong variable. They're looking for a better fund, a better broker, a better entry price — when the portfolio is still too small for any of that to matter. That was the starting point for this week's Chills with TFC episode, where The Financial Coconut put three of us in one conversation: Chris How (semi-retired, retireby50.me), Chris Chong (ex-accountant, 45K-subscriber FIRE channel), and me. One commenter in the video called it "Chris's universe" — accurate, and a reasonable summary of how the hour went.

The core argument won't surprise anyone who's read Growing Your Tree of Prosperity or sat through my $100,000 challenge material: for someone in their 20s or 30s, the return on a small portfolio is noise compared to the return on growing income and controlling spending. Financial independence is a cash-flow engineering problem before it's an investing problem. Salary truncation — fix the lifestyle cost, direct the surplus, invest it on a system — still does more work than any stock pick. That hasn't changed since 2005. It's just less interesting to say than "which counter should I buy."

The more useful part of the discussion was what's aged badly, and why. Not just a list — the reasoning behind each one:

• Crypto hype rewarded timing, not process. Most people who made money were early, not right, and the strategy doesn't survive being repeated.
• Thematic funds chase last quarter's winner into your portfolio at the point it's most expensive, with a fee structure built for the fund house's marketing calendar, not your holding period.
• Job loyalty as a wealth strategy conflates tenure with security. It ignores that the employer's incentives and yours diverge the moment restructuring becomes cheaper than raises.
• Over-reliance on one strategy fails the same way concentrated stock positions fail — it works until the one condition it depends on stops holding, and there's no second system to fall back on.

We also went through robo-advisors, brokers, CPF, and regular savings plans versus the newer dynamic RSPs — and the thread connecting all of them is that every platform has an incentive that isn't automatically yours. A broker earns from turnover. A robo-advisor earns from AUM regardless of your outcome. That's not a reason to avoid them; it's a reason to know what you're being sold before you decide whether it fits.

Which is the real question the episode keeps returning to: not "what gives the highest returns," but "what game am I actually playing, and does this strategy fit my life?" Same question I put to students in the "Are You Investing or Just Collecting Stocks?" sessions — most retail investors can show you a portfolio but not a strategy, and the gap only becomes visible after something breaks.

Disclosure, since it's directly relevant to the RSP discussion: this episode is sponsored by Webull, and part of the conversation covers their Dynamic RSP — reportedly the first of its kind in Singapore. Mechanically, it adjusts contribution size to price: more when prices fall, less when they run up, instead of the fixed monthly amount a standard RSP commits you to. That's a variation on dollar-cost averaging worth understanding on its mechanics, not its marketing. Webull is also running zero-fee US stock and ETF trading — no commissions, no platform fees — separate from the RSP feature and worth checking regardless of which savings plan you use.

Cry for Govtech if you wish, but you should be crying tears of joy

About a week ago, one of my very skilled first-year students asked me to write a letter of recommendation so she could get an internship at GovTech. I said no.

My student is not just one of the most highly skilled students in my class; she also has a lot of gumption, having personally led her team in hackathons, and is mature beyond her years. So I explained that while GovTech produces some pieces of software that many of us know and love, like Singpass, I told her that to grow in the organisation, she might pick up some bad habits from HQ, like ringfencing her work, backstabbing her colleagues, or stonewalling useful initiatives. I also did not want such a capable student to be hurt when joining an organisation with a different career ladder for scholars and farmers; perhaps her stint in ITE and N-level grades might be held against her. I told her that I would be more than happy to provide a glowing recommendation to a tech firm or a bank, and that she should have the confidence to aim higher in life.

Then, almost like a miracle, the news of GovTech's retrenchment of 93 employees hit, and I was stunned. So I decided to pen my thoughts on this blog.

The first point I wanted to make is that on social media, I've noticed little sympathy for folks affected by the reorganisation. Most private-sector workers and businessmen felt it was the right move, and that removing all the "dead wood" could result in a more dynamic and forward-looking organisation. So if folks are generally positive about this news, I actually believe civil service leaders should be blamed for not doing this sooner. I remember during my time, some of the things I had to do were patently absurd. One presentation I had to make to senior management was explaining what an API was (initially I thought I had to explain what a REST-based API was, but no, it's just an API, you know remote function calls ). My technological skills atrophied so badly that I, somehow, became a subject-matter expert in food catering, the only thing I'm good at, given that none of my procurement papers succeeded. 

The second point I wanted to make is just how wonderful the retrenchment package is. It's one month for every year worked up to 25 years, plus an extra 3 months! And too little credit went to AUSBE. AUSBE are the real heroes in this story. When I was there, having come from NTUC-ARU, I volunteered my time with AUSBE because I had learnt to respect non-degree associate staff from my NTUC days, and you will not find another group that so doggedly works for their fellow employees outside office hours. This package is so attractive that I know some folks who left GoveTech lamenting that, had they stayed, they would have been able to FIRE immediately with it.

The third point is that government and statutory boards are winners, not losers, in this restructuring effort. The biggest losers are the vendor organisations like NCS, HCL, DXC or even IBM as the government begins to move work in-house. Work will dry up for these organisations, and believe me, when they start retrenching tech workers, there will be no 25 months or 3 months' extra notice when engineers are asked to leave. There's no AUSBE to negotiate for these guys, and many of them are people I know. 

A final story of my days should include a personality we all had to take called Emergenetics. And I vaguely recall that a director had to apologise for the personality test results in the HQ organisation. The reason is that the only kind of personality that can survive in HQ tends to be Green or structured, conscientious types with low openness to new experiences, whereas higher flyers tend to be more yellow or conceptual thinkers or blue, who are analysts. The saddest part of the survey is that folks who "red" or people who have empathy and love interacting with people are noticeably absent in the entire organisation.

This restructuring will bring balance to the organisation, and I'm particularly pleased that the 93 retrenchments are just Phase 1. There are more phases to come, and, if executed well, could mean that no part of the government is safe from obsolescence. If we make our bed with a Tech career, we should never expect an iron rice bowl. 

So, I actually come from reading this with a sense of hope and optimism for GovTech.

Next week, I will return to class and tell my student that I stand corrected in recent events, and I am now willing to complete her recommendation letter to Govtech.

 

Personal Update - Cheating Death and Getting Diarrhoea

 

Today I wanted to take a different spin on a personal update and talk a little bit about my health situation.

Some time ago, I started on insulin jabs, and while I'm seeing improvements in blood sugar, they don't seem to be improving fast enough, and I'm tuning the amount of insulin I am getting on a daily basis. So there is obviously some fear that I won't live long enough, given my short-lived ancestors are kind of short-lived.

So longevity is of great interest to me, and I've been reading a lot of books on it. And the logic is simple - the longer I live, the longer I can compound my wealth, the longer time I can guide my kids on how to manage their finances. 

So immortality is the ultimate game-changer, and I will take personal and financial risks to extend my life just a little bit.

So this billionaire, Bryan Johnson, launched a longevity mix called Blueprint, and I decided to pay about $200+ for two packs of the mixture. You can Google the contents of the mix. I don't think the contents are revolutionary; it's just a mixture of various compounds, all purported to extend your life, in a single package so you don't have to buy them individually.

So I started on this mix based on the recommended dosage and ended up with diarrhoea for a couple of days, and I also experienced bloating and nausea. Then AI told me it's a known issue for folks who take this mix. So I halved my dosage, and I've been able to do this for more than a month already.

I've since been trying to Google the immediate benefits of taking this mix and have found the effects fairly subjective; some people report feeling more energetic, which I can easily get from a cup of coffee, so it's no big deal. Others claim it gives them better sleep, but for me, I have more vivid dreams I remember when I wake up.

Anyway, while I'm still in the middle of this regime, I found out that Bryan Johnson has developed some kind of autoimmune disease that really ruined his plan for immortality.

I think at this stage, what humanity has achieved, you can't cheat death at the moment.

Instead, you get a lot of diarrhoea trying.

Anyway, if any reader is taking this mix, do share your notes with me on how it has changed your life.

Personal Update - Books I am reading

 

The effect of moving funds to my CDP from the higher-turnover IBKR is that I'm more relaxed about financial thought leadership, can take a chill pill, collect more dividends every quarter, and read material beyond the finance domain. 

So one of the effects of being really into using AI to create portfolio management tools and streamlining my work is that I actually think that it's now warranted to pick up new technical skills. But these are not the traditional coding skills that engineers need to do their work. To utilise AI to become a stronger builder, one has to pick up skills in technical architecture, which is too steep a learning curve for me, as I lack the basic foundations to start. 

So naturally, I turned to AI to suggest a plan for me based on where I am and where I needed to go as a builder. 

And AI pointed to The Pragmatic Programmer by Thomas and Hunt.

This turned out to be an enjoyable, relaxed read, and the advice is so powerful and general that I suspect the skills transfer across domains. After all, a legal contract is just a piece of code in English, ultimately parsed and compiled by a human judge or the counterparties. Simple maxims like "Don't Repeat Yourself" and Orthogonality are useful even in contract drafting or hardware systems design. 

Looks like I might have to find an excuse to teach my Data Analytics students this if they aspire to higher education.

( For folk in Law, the equivalent text is Learning the Law by Glanville Williams, which Min Shan recommends every law student read 4 times before embarking on a legal course. I must be so mediocre because I read it only once. There is, sadly, no equivalent in finance; The Intelligent Investor by Benjamin Graham is great but does not come close.  )

Of course, that's not the only book that was interesting.

Last year, I was crazy about Brandon Sanderson's Stormlight Archive, but this year I found a series that topped it. 

Dungeon Crawler Carl is the flagship offering in the LitRPG genre, and the author likely has years of gaming experience to write a work as absurd and entertaining as this series.

The story is about a guy named Carl and his girlfriend's Persian Cat called Princess Doughnut, going on a dungeon crawl and starring in a reality show watched by almost every alien in the universe.

The most exciting thing about this book is that I was raving about it so much that my 10-year-old son has started reading it. 

Parents who read the book will note how violent and vulgar it is, but I'll do anything to get my own to read a book that is just words.

Ok, this summarises the personal updates on my blog. We will get back to regular programming on this blog after this.

Personal Update - The Impermanence of Dreams

 

In my third personal update, I want to talk about hobbies and some of the dreams I had when I was much younger. I gave it a funny title because I think there is a sense of universality in the idea that the dreams we have when we're younger often don't persist into mature adulthood. 

So one dream I had when I was younger was to own a game shop. 

But modern games, even RPGs, barely excite me these days. RPGs evolved from wargaming, and gamers in my generation continue to play D&D like a serious game raid with an emphasis on combat tactics and cinematic carnage. But Gen Z plays D&D more like a therapy session, and I suspect my style of gameplay, often involving ambushing NPCs in an outhouse when they are taking a shit or setting random buildings on fire ("DM, how flammable is this building? "), may be considered toxic gameplay. We Gen X D&Ders are often the source of trauma for Gen Z players.

Even modern TCGs have moved away from competitive cut-throat gameplay, as I observe the latest Riftbound decks and have to take some time to figure out the gender of some of the characters in Riftbound TCG.

Another fantasy is retiring in a place like Perth to play RPGs all day with my gaming buddies.

Yes, before I discovered FIRE, Perth was the Valhalla where all the gamers I know go to play D&D for the rest of their lives. 

But over time, I've become crankier, so I'm now more selective about who I hang with, and people my age have become a lot more annoying. It might be a side effect of becoming financially independent, but I just don't share fellow Gen Xers' negativity about life, Singapore government policies, or the corporate world. So net-net the Gen X folks around me often drag me down. As such, I very much prefer the blissful optimism of Gen Z, even though I try to avoid talking about pronouns.

So, actually, I thought I'd talk a little bit about D&D because for months I've been contemplating quitting the hobby I've played for the past 42 years. 

The scene has changed. It used to be just medieval fantasy, and I can tolerate occasional forays into Wuxia territory, but this generation is really weird. There is some kind of Southeast Asian flavour to the gaming style, but it's purely flavour and doesn't come with mechanics my brain can be trained to understand. It's good to have a cultural identity for our gaming hobby, but it's just not for me. Maybe some gamers are just overcompensating, and the postmodern decolonisation they teach in modern humanities degree programs is finally invading my beloved hobby.

The gaming company has also done a lot to spread ill will. Now the producers of D&D are selling feats and spells piecemeal on their portal, while refusing to let us buy PDF copies of their book. 

All this is a sign for me to move on and pass the hobby on to a new generation, except that something very strange has happened to it lately...

For a start, an old friend wanted to try his hand at game-mastering, so I got an experienced friend to form a small group where he DMed for us, and we just functioned as referees to let him gain some experience. There's a lot of theorycrafting, understanding the mechanics and making the game enjoyable and challenging for veteran players. We were happy because we got to play the 2024 ruleset. None of us thought this was even sustainable.

Then my friend got the hang of running games, and now more people in our networks wanted to play with us. So our group grew, and immediately some players even wanted to buy adventures to keep the campaign going.

So without any intervention on my part, I actually managed to be part of a fairly substantial group of Gen X RPGers playing my favourite RPG, without the wokeness, weird Renaissance SEAsian cosplay antics, and pronouns. Instead, I just tell my gaming buddies that in our 50s, we need some kind of system to manage loneliness, as it can kill 3x better than a heart attack, so guys need to just hang out and do stuff together.

I do what I do best in D&D, throwing fireballs, killing things and taking their treasure, all in the name of the greater good.

Personal Update - Business

 

Ok, so now for my second personal update. 

You should have noticed that some of the trainers who were active five years ago are nowhere to be found, so it does not take a genius to figure out that my industry is practically dead. My Early Retirement Masterclass has been running for about 8 years, and it no longer pays the bills directly; it has become more of a hobby to me.

The inclination to just quit the business is quite strong given such poor numbers, but the primary reason I remain in this industry is that it forces me to maintain my knowledge of financial markets, and teaching it sharpens my investor instincts, as years of using my programming skills to suggest financial trades and backtest different scenarios give me an understanding of financial markets that is rare for such a small, insular market like SGX. And we've come a long way from queuing up to use a Bloomberg terminal at Lee Kong Chian Library to figure out whether a low-PE strategy worked against the baseline investment across all STI stocks. These days, I vibecoded a solution to run 3,200 backtests on the top 80 market-cap stocks in about 30 minutes.

So I can safely say that it's not my superior investing skills that made me an investment trainer. It's the fact that I can teach investing that supercharged my investing ability for the past 8 years. ( This is called the Feynman Technique )

Technically, for ERM, we can probably lower prices to drive more revenue. But a poorer business and falling numbers also mean that folks who cough up the fees are serious investors, probably very motivated to do well for themselves, and that almost everyone is someone worth networking with and guiding along their investing journey.  

So work has become more pleasant.

But there is a counterweight to all this.

I have gigs teaching at public institutions that now pay a larger share of my earnings, and this adds a new dimension to my development as an instructor. I have a fairly privileged position in that I teach Law and Data Analytics simultaneously, and this work may even expand next semester, as I am negotiating to teach a hardcore maths module as well. 

In these gigs, I cannot set a price filter to find the students I want. I have to take anything the system throws at me, so I can continue to struggle to grow. Truth is, I've been scolded in class by angry students (who make up their view of what the law is) and disrespected by some colleagues at a level I will never experience as an investment trainer. So, as someone with a five-figure passive income, I find it takes some philosophising to justify doing all this for just $100/hour.

Over the years, there have been people who cruise when passive income hits a certain level. 

I'm no longer keen to live like this because now I believe that if a person removes all suffering and inconveniences from life, which financial independence can do at the drop of a hat, meaning gets wiped out as well. I also have no wish to become a bad influence on my kids. They need to see me do some work, like my dad when he became a production operator after selling shares of the pet shop he founded.

Finally, having some kind of tenuous link to the world allows me to continue to understand what any workplace can be like, and it has an effect when I pitch my investment courses. Of course, not needing that income is itself a shield that allows me to keep carrying on like playing an arcade game. I get a nasty encounter on Thursday night, and I sleep it off till Friday morning. 

So this year, folks will notice that I'm doing more. My talks at SIAS are proceeding, and I'm seeking speaking opportunities with brokerages. Not all the gigs will pay, but they are a good marketing effort.

My next talk will be on CPF in August with SIAS, but more details will follow soon.

Personal Update - Personal Finances

 

I'm going to do a series of personal updates, and it's lengthy enough to warrant a number of articles that are not aided by AI at all. So the first personal update is on personal finances.

To understand what my personal finances have been going through, it might be useful to review the series of blog articles I wrote when my portfolio was facing the worst drawdown in March 2020. Thanks to private bankers telling their well-heeled clients to deleverage their REIT portfolios, the stable REITs with strong sponsors actually collapsed, and I saw a 45% drawdown within a matter of weeks.

In those days, I was under tremendous stress and had to deleverage as well, as I might be just inches away from a margin call. Worse, the brokers were not picking up their phones, and I eventually got so mad that I terminated my margin account with DBV Vickers. As a final insult, after not picking up my call for days, their incompetent team even sent me a margin call after I had completely deleveraged from the markets!

This marked the beginning of my stronger relationship with IBKR. When the market recovered a little, I went full leverage again, but after recovering some losses, I pared down the margin portfolio and transferred some funds into my CDP account, putting a large six-digit sum into just DBS, which has flourished to this day.

One of the things I promised myself then was that if the market melted up, I would treat the situation with the same urgency and rebalance my portfolio from custodian to CDP. This kind of dramatic trading that I had to perform in the 2020s is not something a 50-year-old should be engaging in, at least not on that scale. 

But it would be a happy problem, if I stopped my leverage, it would mean that I have won. 

And finally, after 6 years of anticipation, that moment is finally here.

With the STI above 5,200 and PEs above 16, markets, while not overpriced, have become a ripe moment for another round of voluntary "panic" deleveraging and repositioning into the more stable CDP portfolio.

I have taught 42 batches of ERM classes, and now their portfolios, which I have carefully built from scratch, are gone from my margin account. Sums have transmigrated into my CDP and are allocated to ultra-stable blue-chip stocks in a portfolio designed to generate steady cash flows to cover my family's expenses. I still have a happy tech-stock problem: my gains in tech, even in my CDP, need to be shuffled into an underperforming REIT or a high-yielding bank in Hong Kong, but tech momentum is strong, and companies like UMS are not really tied to the AI boom at the moment.

My custodian account is now almost bare, with just over $20k, no longer leveraged, and its purpose has been transformed into a trading account with three algorithms running simultaneously. A trend-follower ETF strategy, a mean-reverting stock picker, and finally a trend-follower SGX stock picker that scans the stocks with powerful momentum and invests in them tactically. The future of my custodian account is to be run like a high-leverage hedge fund with both long and short positions.

What does this mean for my students who have current portfolios?

Absolutely nothing. 

I continue to track these portfolios and celebrate their victories.

I continue to hold the majority of these stocks in my CDP account, currently 66.

In Batch 43, I will add a Python script to the training covering momentum trading in a market that is no longer woefully underpriced.

In the next article, I will talk about the training business.

Letter to Batch 42 of the Early Retirement Masterclass

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

Batch 42 graduates into a market environment that is, in many ways, the most interesting we have seen in years. Two events in particular deserve your attention as you set out to build and maintain your dividend portfolios: the Straits Times Index crossing the 5,200 mark, and the arrival of a new Federal Reserve Chairman in the United States. Both have direct consequences for the kind of investing you have just learned.

The STI at 5,200 — A Milestone That Cuts Both Ways

As of this week, the Straits Times Index is trading at approximately 5,212 points, having reached a fresh record high of 5,169 on 17 June 2026. For those of you who have followed Singapore equities for any length of time, you will know that this is extraordinary. For most of the past decade, the STI languished between 2,800 and 3,500. Breaking convincingly above 4,000 was already newsworthy. Crossing 5,000, let alone 5,200, is a generational milestone.

I want you to hold two thoughts in your head simultaneously about this achievement. The first is that it is genuinely good news. It reflects growing international confidence in Singapore as a financial centre, improving earnings quality among STI constituents, and the government's ongoing efforts to revitalise the local equity market. If you already hold a portfolio of Singapore blue chips, your net worth has risen. 

The second thought is more sobering: a rising index compresses dividend yields. This is not a crisis — it is arithmetic. When the price of a stock goes up, and the dividend stays the same, the yield you earn on each dollar invested falls. A stock that yielded 6% at $1.00 yields only 5% at $1.20. The STI's ascent to 5,200 means that many of the counters you studied during the course now offer yields that are meaningfully lower than the historical averages we used in class.

What does this mean in practice for a Batch 42 graduate? A few things.

First, do not abandon your dividend strategy simply because entry yields look less attractive today than they did a year ago. The strategy works precisely because it forces discipline. You buy when the yield is attractive relative to the risk-free rate, and you hold through market cycles. If the market has run ahead of fundamentals, patience is your ally, not a pivot to growth stocks.

Second, be more selective. At STI 3,000, there were dozens of counters offering yields above 5% with decent balance sheets. At STI 5,200, that list is shorter. This is not a reason to lower your standards — it is a reason to be more patient with deployment. Keep your watchlist active and your powder dry. Market pullbacks, even modest 10–15% corrections, can restore attractive entry yields very quickly.

Third, do not confuse capital appreciation with income. If your goal is to build a portfolio that replaces your employment income, rising prices alone do not get you there. A $200,000 portfolio yielding 4% generates $8,000 per year. The same portfolio, with a market value of $240,000 after capital appreciation, still generates $8,000 per year if the dividends have not grown. Stay anchored to the income, not the price.

For the S-REITs among us — and many of you built significant REIT positions during the course — the picture is nuanced. REITs have historically been valued on yield spreads over the risk-free rate. A REIT yielding 5.5% when 10-year Singapore Government Securities are at 3.0% offers a 250 basis-point spread, which the market generally considers fair. As the STI has risen and REIT unit prices have followed, those spreads have compressed. Whether they compress further depends heavily on what happens in Washington, D.C., which brings us to the second major development.

A New Fed Chief — What Kevin Warsh Means for Us

On 22 May 2026, Kevin Warsh was sworn in as Chairman of the Federal Reserve, succeeding Jerome Powell. Warsh is a former Fed Governor who served during the 2008 Global Financial Crisis, and he has a well-documented hawkish instinct — meaning he is more inclined to raise interest rates to fight inflation than to cut them to stimulate growth.

His first FOMC meeting as Chair, held just this past week, resulted in rates being held steady. But the language was unambiguous: inflation remains elevated at its highest level in over three years, with core inflation running at approximately 2.5%. Warsh signalled that if inflation does not decline, rate hikes remain on the table. He also made a notable stylistic break from Powell by dramatically shortening the Fed's policy statement — removing forward-guidance language and eliminating details about the indicators the Fed is watching. Markets, accustomed to being spoon-fed signals, found this disorienting.

Why should Singaporean dividend investors care about the chairman of the Federal Reserve? Because interest rates in the United States remain the gravitational centre of global capital markets. When the Fed raises rates, US Treasuries become more attractive, drawing capital away from riskier assets — including Singapore equities and REITs. When US rates are expected to remain higher for longer, borrowing costs for leveraged entities like REITs rise, directly compressing their distributable income per unit.

The Warsh era introduces a specific kind of uncertainty that we have not had to navigate since the early 1980s under Paul Volcker: a Fed chair who is willing to prioritise price stability even at the cost of near-term economic pain, and who is deliberately less transparent about his next moves. You should expect volatility. Not because anything is broken, but because markets price in expectations — and Warsh has made those expectations harder to form.

For your portfolios, I would offer the following thoughts. S-REITs with high floating-rate debt exposure are most vulnerable to a Warsh rate hike. Before adding to any REIT position, check the interest coverage ratio and the proportion of debt that is fixed-rate versus floating. A REIT with 70% fixed-rate debt is far better insulated than one with 70% floating-rate exposure. 

On the other hand, Warsh's hawkishness is a double-edged sword. If he successfully tames inflation and restores credibility to the Fed's 2% target, the medium-term outcome is lower rates and a more benign environment for income investing. The pain, if it comes, is likely to be front-loaded. Investors with long time horizons — which should be all of you, since you are building portfolios intended to last decades — can afford to view short-term rate volatility as an opportunity rather than a threat.

One more observation on Warsh: his reduced communication style changes the nature of the Fed-watching game. Under Powell, investors built careers on parsing Fed minutes for subtle word changes. Under Warsh, that game may be less rewarding. This is, in my view, a small blessing for retail investors like yourselves. It levels the playing field slightly and redirects attention where it belongs — to the fundamentals of the businesses you own.

I’ve learnt as much from you as you have learnt from me

One of the things I keep saying in class is that I learned as much from you as you have from me. A good challenge for me this round is the thoughtful questions on dollar-cost averaging (DCA) versus lump-sum investing. In the age of AI, not only can I answer the question, but I can also code a simulator to compare a lump-sum strategy and a DCA strategy that keeps uninvested sums in a cash portfolio that returned 2%. 

Based on the results, I can confirm that lump-sum investing yields higher returns for the STI and the S&P 500. DCA enthusiasts should not be too disappointed, as lump-sum investing comes with much higher risk as well.

Putting It Together

Batch 42 enters the market at a fascinating juncture. The STI at 5,200 is a reminder that Singapore equities can surprise to the upside — and a caution that buying at elevated prices demands greater care and patience. A new Fed Chief in Washington introduces a regime change whose full implications will take months to become clear.

Through all of this, the framework you have learned in this course remains your anchor. Buy businesses with durable earnings and a track record of returning cash to shareholders. Buy them when the yield is attractive relative to the alternatives. Diversify across sectors so that no single rate move or policy shift sinks your income. And review your portfolio regularly — not obsessively, but thoughtfully.

The market will test you. It always does. What separates successful investors from the rest is not a superior ability to predict the next move of the STI or the Fed — nobody can do that consistently. It is the discipline to stick to a sound process when the noise is loudest.

I am proud of the work every one of you put into Batch 42, and I look forward to hearing about your investing journeys in the months and years ahead. As always, my door remains open.

Good luck, and invest wisely.

Christopher Ng Wai Chung

Tree of Prosperity

20 June 2026

Is passive income overrated ?

 

[The field of personal finance has been enriched by the humanities for many years, with sociologists such as Thomas Stanley writing about The Millionaire Next Door. I find it very fortunate that I can now read the works of a history professor who has read hundreds of historical works on how to get rich in America and has personally undergone the journey to become a millionaire himself. 

This is a worthy book for anyone who is serious bout personal finance.]

The promise of passive income has become a cornerstone of modern personal finance advice. Build a portfolio, collect dividends, and watch your wealth grow while you sleep—it sounds almost too good to be true. And according to Joseph Moore's How to Get Rich in American History, it might be exactly that.

Moore presents a compelling counterargument to the passive income narrative: most people who earn passive income spend it. And when you're spending your returns rather than reinvesting them, you forfeit the exponential growth that makes compound interest so powerful. The math is simple. If your dividend portfolio returns 4% annually but you withdraw that 4% to live on, your principal never grows. Meanwhile, conventional wisdom suggests your wealth should multiply year after year. It's a sobering critique that deserves serious consideration.

The Case Against Passive Income

Moore's argument cuts to the heart of a fundamental human truth: people have expenses. A retiree living off dividend income needs that money to pay the mortgage, buy groceries, and maintain their lifestyle. A young investor building toward financial independence might feel entitled to enjoy some of the fruits of their labour. In both cases, the passive income gets consumed, and the portfolio stagnates.

This matters because the entire pitch of passive income rests on compounding. If you're not reinvesting your returns, you're breaking the only engine that makes passive income wealth-building. It's the difference between a portfolio that grows from $500,000 to $1.3 million over 20 years (with reinvestment at 6% returns) and one that stays at $500,000 while you spend the annual $30,000 it generates. The narrative we're sold—retire early and live off your dividends—assumes you can live indefinitely on a fixed dollar amount, even as inflation erodes its purchasing power.

Moore's historical perspective offers valuable lessons about why this matters. Throughout American financial history, the wealthiest individuals weren't those who lived off passive returns; they were those who reinvested them relentlessly.

But There's More to the Story: The Psychology of Motivation

Yet Moore's thesis, while thought-provoking, doesn't tell the whole story. Many investors don't fall into the trap of spending 100% of their passive income. A real estate investor might reinvest a portion of rental income back into their properties. A dividend investor building wealth might live on 70% of their annual returns while letting 30% compound. A semi-retired person might need passive income to cover basic living expenses but continues earning a modest income from work, allowing them to reinvest the surplus.

But the more important gap in Moore's analysis isn't mathematical but psychological. I've spent years studying investor behaviour, and what I've learned is this: motivations matter in personal finance. In fact, I'd argue that financial success is as much a sociological phenomenon as it is a mathematical one.

Here's what I mean: the pure math says that spending your passive income is inefficient. But psychology says something different. The knowledge that money is flowing into your account every quarter—regardless of what you do—is profoundly motivating. It reinforces the investor's identity, validates their past decisions, and creates positive momentum to keep building. For many people, this motivation is the only thing that prevents them from abandoning their investment discipline when markets dip or life gets complicated.

Consider three psychological traps that derail novice investors:

1. Dopamine-seeking — The impulse to chase exciting returns, leading to speculation and emotional trading.
2. Recency bias — Overweighting recent good performance while underestimating risk in up markets.
3. Benchmark blindness — Focusing on absolute returns while ignoring how your portfolio behaves during downturns.

A passive income stream combats all three. The regular arrival of dividends provides consistent positive reinforcement without requiring you to check stock prices or chase hot tips. It gives you something to show for your discipline. This isn't captured in a spreadsheet, yet it's the difference between an investor who holds for 30 years and one who panics and sells after the first correction.

In my view, passive income isn't primarily a wealth-building mechanism—it's a structural solution to behavioural discipline. The mechanism works because it solves a motivation problem, not just a math problem. Without that quarterly reminder that "you made the right choice," many investors would never build substantial wealth in the first place, regardless of the mathematics involved.

Why History Matters to Your Finances

Reading How to Get Rich in American History does something that most personal finance books don't: it grounds financial decision-making in real history. It's easy to accept the passive income narrative when you're only looking at current market conditions and recent case studies. But when you examine how wealth has actually been built across centuries of American economic life, you see patterns that aren't obvious in personal finance blogs.

I've spent years examining the historical record of investment, and one insight stands out: properties of an ideal investment don't change, but the context around them does. What made an ideal investment in 1800 shares has a certain DNA with what makes an ideal investment today. Yet the specific mechanisms—tax treatment, available asset classes, interest rate regimes, regulatory frameworks—shift dramatically.

Understanding this teaches you that financial advice doesn't exist in a vacuum. Tax policies change. Interest rates fluctuate. Economic structures transform. The strategies that worked brilliantly in one era might be obsolete in another. And the promises made to you by investment marketers—whether they're promising passive income or anything else—should be viewed with the healthy scepticism that comes from knowing how many "sure things" have failed throughout history.

When Moore examines American wealth-building across centuries, he's not just telling you what worked—he's showing you the difference between enduring principles and temporary conditions. For instance, dividend investing dominated wealth-building in the 20th century partly because of tax policy and the availability of traded shares, not just because dividends are intrinsically powerful. Yet the discipline of reinvestment—the core principle beneath Moore's critique—has always been central to building lasting wealth.

A sense of financial history also helps you separate timeless principles from fleeting trends. Spending less than you earn? That was true in 1850, and it's true in 2026. Letting your investments compound over decades? Still powerful. Seeking investments with predictable cash flows? Always valuable. But the specific mechanics of how you invest and what you can reasonably expect from that investment deserve scrutiny rooted in how things have actually worked out across different periods. History gives you that critical lens.

The Hidden Success Factor: Deliberate Architecture

The real lesson from both Moore's critique and the psychological research is this: passive income only works if you've designed your life around reinvestment, not dependence.

I call this "salary truncation"—the practice of fixing your lifestyle expenses and treating all passive income above that fixed level as capital to be reinvested. It's not about willpower or self-denial. It's about structural design. When you set your expenses at 70% of active income and 50% of passive income, you're not relying on motivation to do the right thing. You're making the right thing, the path of least resistance.

Moore's critique is mathematically correct: if you spend all your passive income, your portfolio won't grow. But his framework misses something crucial: people who successfully built wealth across history did two things simultaneously. First, they understood the mechanics of compound growth. Second, and more importantly, they created structures that made reinvestment automatic rather than aspirational.

The Synthesis: Why Moore Matters

What I've come to believe is that passive income is neither overrated nor underrated—it's simply misunderstood. It's a powerful tool for those who use it deliberately and thoughtfully. It's a trap for those who see it as a solution to overspending. And it's a structural enabler of financial discipline for those who understand that motivation matters as much as mathematics.

Moore's How to Get Rich in American History is valuable not because it provides the final answer, but because it asks the right questions and grounds them in evidence across centuries. He shows us that the wealthy didn't get wealthy by living off passive income, but they built it. This historical perspective cuts through the marketing noise and forces you to ask: What am I actually trying to do? Build wealth, or live off existing wealth? The answer matters because the structures you need are completely different.

If you're building a dividend portfolio, if you're planning to live off passive income, or if you're simply trying to understand how wealth actually gets built in America, this book deserves a careful read. The insight you'll gain isn't just about passive income. It's about the intersection of history, psychology, and deliberate design—and recognising that the best financial decisions are the ones you've actually thought through, rather than the ones you've been sold.