Category: t_college

[21]nestEgg enuf2preempt stressful return2U.S.

Posted on by tiger40490

How does CAD and additional potential health declines affect my answer?

As of 2021, we have a fully paid home enough for 4. I will also earmark enough for two FRS cpfLife accounts. Such a high_ground is an achievement, but might be harder to maintain after SBH.

Q: Beyond those assets, what level of nest egg would preempt/eliminate the need to migrate to the U.S.?
A: I used to (and still sometimes do) feel the cautious answer is $3M. However, based on the below assumptions, we need SGD 800-1600k to justify shelving the U.S. migration idea.

  • Assumption 1a: in terms of SGD monthly burn rate [excluding tax outlays, including bx], I will assume S$5-6k total outlay is “comfortable” even after the recent (2022-24) elevated inflation
  • Assumption 1b: in terms of Singapore salary.. for simplicity I will pick a nice number of $100k/Y from age 47 to 55, but $0 afterwards (in Singapore) -> 700k work income.
  • ^ ^ Those are the big assumptions ^^
  • Assumption 2: after kids grow up, we really don’t need more than $1500/person (inflation considered), so FRS cpfLife can be sufficient
  • Assumption 3: Unlike [1], I may choose to set aside an elastic S$100-200k/child for college -> up to S$400k.
  • Assumption(methodology) 4: Count cpfLife but Ignore NNIA + inheritance + grown-up children’s contribution + ..
  • No assumption about lease spread on HDB flat, even after 2035, since grown-up children may stay with us.

— the calc done in Nov 2021, before selling the #1173 home. I have the spreadsheet in github.

  1. Nov 2021 to 2035 when meimei graduates, we need 6k * 12M * 14Y = 1008k, marginally higher than [1]
  2. 2036 to Jan 2039 wife+I need 36k * 3Y ≅ 110k, matching [1] 100%
  3. Sometime before Jan 2039, top up 200k to my cpfRA to the max, ignored in [1]
  4. 2039 to 2043 we need only $0 assuming my cpfLife ERS starts paying around $3k/M (as I would max out on my cpfLife). This amount is explicitly ignored in [1].
  5. Sometime before Aug 2043, top up wife’s cpfRA by an increment of [$0] to generate $0/M payout. Together we need only $3k/M payout. This amount is explicitly ignored in [1].
  6. ^ ^ ^ Adding 400k [Assumption 3] to the above ≅ 1720k total outlay ^ ^ ^
  7. 700k total salary according to Assumption 1b
  8. nest_egg_needed = S$1020k, excluding our CPF balance as of Nov 2021

However, I stand resolute against lifestyle creep, so S$5k/M is more than enough, and S$200k/child is unnecessary luxury.

— Some implications
Looks like my nest egg is barely enough to justify staying in SG for good !?

Need more analysis from different angles before I would feel assured.

Based on the above analysis, the #1 j4/advantage of U.S. migration is … dev-till-70. Right now with my MLP job I can extend my Fuller Wealth quite fast thanks to low burn rate, acceptable health conditions …. So I would go to U.S. only when I could “extend” faster in the U.S.

— Q: why most of my middle-class peers don’t feel so self-confident if they are in my (financial) shoes?
A1: Assumption 1a amount needs to balloon to 10k+ for them
A2: Assumption 2 amount needs to balloon to 6k for them
A3: Assumption 3 amount may not suffice for them

— Q4: what type of portfolio adjustments would improve my high ground and help obviate/preempt forced flee to the U.S.?

  1. term insurance for occupational disability till 65?
  2. more NNIA with limited appreciation, such as SgCP on mtg? Hig ground would sink. Poor liquidity , heavy debt.. TBD.
  3. USD 100k into SP500 .. no loan. Better buy-n-forget, more like rEstate, but lower DYOC than some rEstate.
  4. more NNIA with USD 100k into div stocks .. (hard to imagine myself persuaded) with some growth potential? Too risky. My high ground would sink.
  5. USD 100k into growth stocks? even more risky.

blind_FOMO[def]: TJ.Lin@Chn young techie

Posted on by tiger40490

A powerful concept and pattern, in search of a shorter name.. like blind_FOMO, as a specific form of breakaway.

Opening example: For many big-ticket products, a novice would often buy the market leading branded version (paying a premium), because he doesn’t know his own needs. FOMO is a suitable descriptor.

— the Main example of this blogpost: TianJue is the first to point this out, when I shared with him the paradox of China’s bachelor tech professionals. See latency无底洞

As soon as the bachelor enrolls at a Beijing/Shanghai college, he would face the same decision that some of his cohort has already decided on — “Will I end up working in 一线 city like 北上广深 ?”. If yes, then the home purchase looks inevitable and requires a whole-family effort starting from Year 1. .. Wrong priority.

I asked TJ “if the price is out of reach for my family, then what about renting?” I don’t remember his response, but perhaps 1 in 3 bachelors could realize “…beyond my capacity” and put away the decision. For the remainder, buying is nearly infeasible but question is “Will I regret if I don’t buy, and rent or work in a Tier2 city?” The more peers make the early decision to buy, the more peer pressure on the helpless bachelor to follow the herd instinct. It’s interesting how semi-consciously we filter our peer group and exclude bulk of the local population.

TJ also pointed out that dating game puts huge pressure on the bachelor. In my younger days, I had to work hard over decades to improve my /status/ in the mating competition. When I first had kids, I didn’t believe the opinions of those likes WQ.Luo. I was driven to improve housing, education resources… for my kids, engaging in the arms race with millions of fellow parents. Similarly, the inflation fear was a widespread brainwash. Medical cost inflation fear was driven by my own parents… All of these “struggles” are taught to every young men as part of Chinese enculturation. As a consequence, I felt perhaps $3M would be needed.

Those around me who gave up on ffree were seen as _quitters_. These are the individuals who decided to keep working till retirement age, buy a house of same size as the peers, save as much as the peers, save up for college funding as the peers… all without a ffree goal. They are seen as not trying hard enough.  Clearly my choices are a breakaway from these “quitters”.

TJ then concluded that by my age, I have figured out my real needs and real priorities. I guess that’s a SelfKnowledgeAdvantage

— eg: the ivy-league fixation + SDXQ fixation among the Chinese middle-class in U.S.
Many immigrants seem to assume that schools rated below 8 are unacceptable… Fear of unknown. They follow their peers [i.e. fellow immigrants] and reject these mainstream choices.

Kyle and I discussed our “insider insight“. With this insight, I hope we can live free of the huge financial burden/obligation. In such a case, I would count myself lucky to understand my own needs.

When I told my father that my kids don’t have to enter any college, he said he would be proud of my son if he gets into Community colleges or Polytechnics. Heroic words of wisdom.

— eg: retirement planning .. Many younger Singaporeans seem unsure how much they would need in retirement. Some follow the marketing propaganda, dismiss the CPF-life amount as inadequate, and take on the huge burden of “SGD 1M nest egg”.

TJ pointed out that by my age, I know my own needs.

— eg: safe European cars .. I put a high value on their extra safety level,  exactly because I don’t really understand the risk. TJ.Lin said the probability of preventable harm from dangerous accident is actually very very low.

— eg: if unsure, buy the dominant brand. In the 1990’s you won’t be at fault if you buy IBM, even if it’s not the best choice in hindsight.
My first smartphone was a Samsung… not “better” than the cheaper Vivo, Oppo, Huawei phones I have used.

CPIx-inflation[def]=exclub-driven

Posted on by tiger40490

— 3 types of inflation, as I told boy (CCA)

  • CPI inflation .. (retail market)
  • Commodity inflation .. (wholesale market) .. agriculture, construction, minerals, energy, shipping, extreme weather, geopolitical tensions,,,,, “News-related”
  • Asset inflation .. I think mostly real assets, perhaps equities, not bonds.

How about wage inflation? Well wage is not a price tag, so “wage inflation” is an unnatural extension of the “shrinking dollar bill” inflation concept.

Commodity inflation is a driver of CPI inflation, but often invisible to laymen.

— CPIx

Is this(income+asset) inflation || improving` livingStandard — “Inflation” in this context goes beyond CPI. I call it CPIx-inflation in my blog, and is related to asset inflation, among other things.

CPIx inflation is hard to estimate. See also latency无底洞 about medical inflation as an exmaple of CPIx inflation

In contrast, CPI-inflation is implied and assumed, whenever we talk about retirement, cpfLife, basket or inflation figures like 2%.

 

branded degree: instead@USD300k, I paid UChicago 50k

Posted on by tiger40490

Somehow, I got a good deal.  Can share with LZ.Yu.

  • ! I didn’t pay 4 years x 70k. I paid only for one year.
  • ! my highest degree is now from UChicago. Most of the time, I don’t need to mention my first degree.
  • Due to c++ exemption, I saved on many modules, about 25% of the tuition fees which was SGD 90k+

— Total cost I paid to NUS was below SGD 4k over 4 years. This amount is an outlier.

  • + SGD 21k over Y1/Y2
  • – SGD 1.5k x 4 bursary
  • – SGD 500 x 24M from EDB stipend
  • – interest earned from student loan. The loan disbursement was held in a savings account. Loan amount was 80% of school fees, adding up to about 33k. Assuming average 2Y x 2% pa, total interest generated was around $1300

 

##[19] G11 progress]PFF plann

Posted on by tiger40490
  • MOETF with firewall, 3Y BnF, 3min due diligence
  • exp recon process improvement

No oth please.. I feel proud of my independent thinking and progress. I feel these items are remarkable and visible signs of progress. New and better ideas for the next 1~30Y.

I guess many of my U.S. and Singapore peers don’t have such a /progressive/, continuously refined financial plan.

Even though some of them (YW.Chen, Shuo, Ash.S,…) have multiple properties; some (Venkat?) more successful with U.S. equities, I feel most of them follow the bandwagon with fewer bold departures.

  1. [aU] bold decision to stay rented on lease spread, without U.S. home ownership — lower cash flow burden than buying 700k. 700k is like Ivy League plan among the Chinese immigrants.
  2. [AU] bold decision on college fund — discussed with grandpa, Kyle etc , and more convinced than ever to avoid the rat race to branded colleges … insider.
  3. [AU] bold decision to accept average school districts and focus on conducive learning environment instead of test scores
  4. [u] surprise discovery of current income /vis-a-vis/ windfall far out
    1. analyzed three ffree scenarios, based on my detailed burn rate record
  5. deeper conviction and belief in U.S. equities, /vis-a-vis/ other regions
  6. surprise discovery of SG elderly healthcare as more efficient and accessible than feared. No driving required as in U.S.
  7. [a] incisive researched on U.S. burn rate and figured out it’s much higher than SG due to Melvin3
  8. [u] more firm than ever before on my bold decision to work till my last day
  9. bold decision to include 43R model in my default plan, rather than the conventional 2FH model
  10. [AU] singled out Bayonne and South Edison as my bold yet viable choices

Above are progresses made since mid 2018. Below are Earlier progresses, roughly ranked by importance :

  1. bold investment in a 3rd shop unit, despite the concentration risk and lower NRY guarantee than before.
  2. bold decision to choose lower CPF-LIFE payout, since I don’t need the higher monthly payout or bequest.  This decision has implication on my savings rate now.
  3. [u] tried out dividend stock investing on Robinhood
  4. [au] bold idea of sending kids to Singapore universities, avoiding the mad rat race
  5. bold idea on MYS retirement — need more evidence and research
  6. [u] bold decision to stay as contractor
  7. [u] tracked family burn rate for years
  8. [a] passive income added up
  9. [u] bold and unconventional decision to favor walkable locations, to reduce car dependency
  10. new plan on HDB jumbo unit
  11. [a/A=high leverage i.e. high impact at low effort, low distraction, low laser dispersion]
  12. [u/U=unconventional among my Chinese peers. Back bone required]

I never buy iPhone #branded uni

Posted on by tiger40490

iPhone is a poster boy of a class of products that I always say NoThanks. Similarly

  • latest laptops? I buy the reliable low-end models. The one luxury feature for me is touch-screen! A less luxury feature is low-weight.
  • branded pianos
  • fancy big homes with low rental yield
  • luxury college degree? Instead of NoThanks, I did pay for one at UChicago and learnt my lesson.
    • I will limit the topic of college, as it has the tendency to dominate this blogpost 喧宾夺主.
  • luxury cars .. a different category. Safety and quality !

I think the FIRE community of the U.S. would endorse my NoThanks.

— value/price ratio:
A common feature among these cases is the existence of an alternative offer at a fraction of the price.

I define my notion of quality and value (usually including durability and reliability) and I always find these “iPhones” extremely un-competitive in terms of value/price ratio.

By far the biggest case is luxury college. I have many blogposts about the quality question.

— show-off
another common feature — the manufacturers of iPhones spend huge amount of the marketing dollars creating an impression of superior quality, innovative features and sometimes exclub status. Many buyers really fall for it and buy these things to show off.

With the college choice, show-off is a key motivation, but things are more nuanced. I have blogged about the nuances.

As I age, I see more and more similarities between branded college and branded clothing, branded phone etc. The “consumer” here is the parent. East Asian parents spend very large amount of disposable income on these status items.

— FOMO: With iPhone, I feel my wife and other people are often driven by FOMO.

Many parents fear that an unbranded college means their kids are handed a second-best “ticket”. They fear their kids will pay a price in adulthood.

[21]S$900k: CpfLife^college reserve 鱼与熊掌

Posted on by tiger40490

 

This sum is just a symbolic sum, not an accurate forecast

  • CPF-Life ERS (enhanced retirement sum) may grow to SGD 450k when my wife or when I turn 65.
  • typical top college fees may grow to USD 400k/student when my kids enroll, which will happen before I turn 65.

Q: since I can’t save enough for both purposes, which one would I sacrifice? I like this type of sharp questions that focus our mind on the real priorities.

A: short answer — sacrifice college funding. Top U.S. college is like branded products, catering to the affluent.  There are many high-quality but inexpensive colleges including NUS. If your focus is quality of education (rather than FOMO, halo, vanity…), I don’t think my kids would receive the very best educatio only in a prestigious college. As explained in many blogposts, prestige is based on research not quality of education.
A: college cost is consumption whereas CPF-life is buying an annuity.
A: My sis and Zeng Sheg both agree to let the kids stand on their own feet at that age…

— liquidity

CPF-life money is committed i.e. locked in. For better liquidity, I may need to consider leaving part of the 700k in my rental properties

College funding is zero liquidity — not an investment with a liquidation value.

— student loan

In Singapore, my kids can get interest-free loans. It’s best to let the kids repay the loan, with whatever partial assistance I can provide.

— bare-bones ffree

Q: looks like I am not really financially free?
A: my earlier analysis of bare-bones ffree was based on $0 college funding. In reality, I may earmark some SGD 200k for college. Zeng

As stated elsewhere, there are some macro risks to derail my ffree, esp. risks affecting my properties. We have to live with them.

Therefore, bedrock of my financial planning is career longevity including dev-till-70.

[20]松一口气65^end@college #U.S. #w1r2

Posted on by tiger40490

Q: At what age would you feel relieved in terms of livelihood pressure? I think most of us have yet to give this question a critical analysis.

— common Answer …. age 65
For the middle-class Singaporeans with FRS, age 65 means about $1300/M/person. Assuming reasonable inflation and healthcare taken care of, this monthly payout can match retiree’s burn rate, IFF burn rate is well controlled.

In contrast, US burn rate would likely exceed SGD 1300/M/person, partly due to Melvin3++ (car ownership + rEstate tax + med bx… )

If you have no kids in school by then, you may wish to start receiving this payout earlier (like 62) so you retire at an earlier age. You would need non-CPF solutions such as SRS, which can start paying out at 62.

— common Answer …. when my kids complete formal education and start working
This typical Chinese parent’s answer (LZ.Yu?) assumes the college cost is a major burden on the parents. Most middle-class Chinese parents I know seem to voluntarily take up the job to bankroll the children’s education.

I don’t plan to take it up as full responsibility. I want my kids to start saving up, take a student loan, and repay it after graduation.

— My answer …… when my NNIA can match my U.S. burn rate (USD 7k excluding housing?), which is much higher than SG burn rate (SGD 6k?)
Now (2020) I’m very comfortable on my cash flow high ground, thanks to my brbr + Fuller wealth + …

Paradoxically, I foresee worsening livelihood pressure relocating to the U.S. but still want to go.

few]%%cohort have global branded degrees→迷恋

Posted on by tiger40490

In their 20’s, China was much poorer than now, so very few could afford private colleges overseas. Due to competition, few could get a scholarship to a branded college overseas, so they have to settle for a lower-tier colleges overseas.

After a certain age like 30, a low single-digit percentage would see enough justification for the high cost of a branded degree.
Most of the Chinese peers already had a postgrad degree in their 20’s. Hard to justify another postgrad degree.

If they were unable to earn a global branded degree, then I think that’s one reason so many of them have unrealistic evaluations of a branded degree.

livelihood n Maslow’s hierarchy@needs #w1r2

Posted on by tiger40490

See also

  • maximizing potency is a focus study (blogpost) using the Maslow pyramid as a framework. It provides concrete examples of Esteem, Self-Actualization etc.

This diagram from wikipedia is a better diagram than the pyramid. In poverty (left end), physiological and safety needs dominate. Sometime in our adolescence, belongingness [ social inclusion/acceptance, exclub/FOLB …] tend to dominate, when the lower needs go “underground”. Fairly soon, esteem_needs become dominant. This phase often lasts indefinitely and is seldom , if ever, overtaken by self-actualization needs for most individuals.

— livelihood .. as defined in my blogposts are mostly about 1) safety 2) belongingness, love (family). Esteem_needs are not strictly livelihood. If you draw a vertical line somewhere in the graph, you may notice a ranking in terms of “needs intensity”. Unlike the pyramid, the higher needs are more intense.

  • yellow above lime[safety] above orange[esteem] and green[physiological] … is the “standard” hierarchy of livelihood needs in rich cities like SG, U.S. or perhaps the upper middle class in some Chinese cities.
  • yellow above orange[esteem] above lime[safety] above green[physiological] .. the hierarchy of livelihood needs for my peers

— safety needs in my observation .. include retirement inflation, medical inflation, clean air, sanitized safe housing,,,, as described in livelihood[def2] x-class #S.Liu . As such, it is usually above (i.e. more important more intense) than esteem_needs

My T_defense tag collects many non-trivial reflections of safety concerns.

— esteem_needs .. Maslow noted two versions of esteem_needs. The “lower” version of esteem is the need for respect from others, and may include a need for status, recognition, prestige, and attention. The “higher” version of esteem is the need for self-respect, and can include a need for strength, competence, mastery, self-confidence, independence, and freedom.

— Q: when middle-class immigrant parents work so hard to send their kids to a branded college, how does Maslow theory explain it?
Esteem_need is One element .. like a badge of honor. It satisfies the (lower and higher) esteem_needs of parents more than the grown child.

My fundamental belief — a luxury college education only slightly enhances the grown child’s capacity to meet her own livelihood needs. However, many parents overrate that education-as-enhancement , like it would transform the child into a higher human being… a major misperception. I think many of these parents feel their own socioeconomic status is not in the upper class (上层社会 exclub) but a branded college education would raise their offspring into upper class.

I had first-hand experience (3 years!) in an expensive college. I know my fellow graduates are not fundamentally higher than lesser-known college graduates. A good high school would provide a more conducive environment during the formative years, but by age 18, most kids already know what they want, and won’t be highly influenced by the local culture of the university. A branded university does help the graduate get into good companies.

— Self-actualization .. left a vague impression on me even though I once read it extensively in my school (college?) days. I even photocopied the relevant chapters of his book. This need is elusive and ivory-tower.