Tag: T_abvePeers22

own`family car]SG: white elephant

Posted on by tiger40490

https://www.budgetdirect.com.sg/car-insurance/research/car-ownership-singapore

k_X_car_dependency

Q: Looking at the stats below, what’s the need/motivation for a car in the family of Kevin.A, kun.H, Jun.Z, yu.Lin, and all of my 92S27 classmates

Based on very limited observations (not “evidence”) I will stick out my neck and venture to offer my opinion that it’s possibly lifestyle creep. Many of my friends live in condos located far from public transport. I guess a lot of HDB dwellers and office workers are in familiar situation — owning a car mostly for leisure and convenience of the family with kids and grandparents. If (a big if) my opinion is valid, then

  • it helps explain their cash flow stress level.. brbr, Fuller wealth, early retirement
  • it helps explain their worry about the impact (not “likelihood”) of job loss .. high monthly burn rate. Re OC survey 2020. In contrast, Raymond can last years without a job.
  • it helps explain their housing preference .. they use their car to discount the commute tcost. Well, tcost is a hard cost and can’t be discounted!
  • Let’s remember the the other tcosts — stuck on road; maintenance; insurance; paperwork; recon on bills (remember BGC rental)
  • it helps explain their lack of time for exercise.. In contrast, non-drivers walk longer for commute, and some commuters stand or even do yoga in MRT.
  • it helps explain why SGD 200k spare cash pile is not easy or common for them.. they would use this “pile” to pay off car loan or upgrade to a better car

In (tentative) conclusion,

  1. I think I’m better than many of these car owners in terms of earn / save / invest.
  2. perhaps car ownership is really valuable to them. If no more than “marginally important”, then it’s a huge waste of resources — both $$ and time.

— stats .. As of 2021, Singapore has

  • 577k personal-private cars excluding taxi/private-hire cars
  • 68k private hire cars
  • 15k taxis
  • 142k motorbikes

As of 2018, 35% of Singapore households owned at least one car (presumably including private hire cars), down from 42% in 2013, presumably due to Grab etc.

— Convenience .. is a lubricant and important to my life as well. Convenience is very subjective, not rational .
Convenience comes at a $cost. Some people are willing to sacrifice brbr (like 2 to 1.5) for convenience, but I won’t.

— 150k / 10Y total cost of car ownership … I won’t spend too much time. There are many breakdown analysis online, usually including loan interest.

  1. https://dollarsandsense.sg/2018-edition-cost-owning-car-singapore-10-years/ uses a $94k model to derive –> SGD 157k over 10Y. A 2022 POEMS webinar also used this estimate.
  2. https://www.singsaver.com.sg/blog/car-maintenance-cost-in-singapore#final uses an $80k model to derive –> $12557/Y * 10Y + $19155 for Y1 = $145k over 10Y

PFF habits: learn from SG gov

Posted on by tiger40490

SG gov is not Buddhist in nature (successE and successZ). This PAP gov is keen to maintain a world class standard of living .. FOLB. High burn rate.

Subconsciously, I try to follow a few “habits”[1] from the SG government in terms of long-term financial planning. Here is a list of those habits.

  • high savings rate — during each term the government squirrels away some amount for rainy days or long-term investment. I do the same. Across developed countries, many families have insufficient savings rate… 20% is rare, even among some ethnic Chinese families.
  • .. (the other side of the same coin) “spend within your means” — 量入而出. In my burn rate criteria of “80% of LMHI [local median household income]“, I leave 20% buffer.. for savings/investment. This is somewhat comparable to the “squirrel away”. Other national governments do not have this discipline. They often spend more than their revenue … unsustainable.
  • .. U.S. has poorer public healthcare, social support for the needy or elderly (see prevalence@poverty: SG ilt U.S.)
  • high contingency reserve aka “rainy day reserve” … see seprate section below.
  • high current income from investment — SG gov investment income from past-reserve contributes S$17b (3.3% of GDP) to the national budget, a big red packet
  • low debt-burden — I hate interest cost as part of my monthly burn rate. SG government borrows only for investment that generates higher return than the interest cost. See public debt: SG^US
  • ^^ The above are the top 3 factors of the cashflow high ground
  • diversify across sectors — Admittedly, I’m over-concentrated in properties esp. in Asia. I did try growing mutual fund allocation, but disappointed.
    • I feel my peers tend to focus on single-country residential property or U.S. stocks.
    • Given our small balance sheet, none of us is well-diversified.
  • unique abilities to generate income via gov-linked firms that have to stay lean and competitive. Similarly I have a unique dev-till-70 plan, based on wellness.
  • low tax compared to all other rich countries, to reduce the burden on the current generation. I manage my family burn rate similarly.
  • stay relevant to the new global cash-cow sectors — reinvent itself

[1] I won’t say “strategies” or “principles”

In this blogpost, I will focus on my strengths relative to my peers.

— The covid19 budgets — decisive deployment of rainy day reserves. I could consider spending my annual leaves to support my kids’ studies and grandparents.

https://www.straitstimes.com/singapore/politics/budget-2022-6b-draw-on-past-reserves-to-pay-for-covid-19-public-health-expenditure revealed —

In FY2020, the Government had said it would draw up to $52 billion to pay for measures but it now expects to use $31.9 billion for that financial year. In FY2021, the Government had planned to draw $11 billion to pay for the Covid-19 Resilience Package, but now expects to draw just $5 billion for that financial year. Reasons include

  • stronger-than-expected rebound.. loan loss provisions were not used
  • reduced expenditure of $10 billion earmarked for the Covid-19 Resilience Package
  • ministries not needing to spend as much because of projects being delayed by Covid-19
  • extra revenue from one-off revenue upsides, including from vehicle quota premiums and stamp duties

few adopt my2investment criteria: Tanko+JL.Lim

Posted on by tiger40490

I told Tanko about my 2 stringent criteria to pre-qualify an investment asset. I then asked Tanko ..
Q: why so few in our cohort follow similar principles?

— 1) A (Tanko’s immediate answer): many don’t have enough free cash like 500k (Tanko’s figure).  In The affluent often favor Funds over stocks@@, I discussed 200k as a criteria.

On 5 Feb 2022, I met my HJC classmates. Joonling (JL.Lim) said that most in our cohort (Singaporean Chinese) don’t have a lot of spare cash risk_capital to invest in stocks. He singled out burn rate on car + mortgage. I guess many Singaporeans (Zeng?) in my cohort have over-sized property assets paying out very little (or negative) DYOC — i.e. non-productive assets. I see that as cashflow low_ground.

Put yourself in the shoes of a big(like 500k+) mortgage borrower .. some of you probably don’t want to invest too much into stocks. The heavy debt limits the risk appetite, risk tolerance and overall capacity to take risks. Analogy — gymnasts carrying weights?

— 2) A (Tanko): If they have 500k, many investors prefer to see their 500k staying safe in a bank account, rather than fluctuating in an investment account. I guess my wife is one, so is my dad.

Put another way, I set aside risk_capital, whereas these investors have plenty of free cash yet very little risk capital.

However, some risk takers in my cohort maintain mortgage so as to invest 200k loan money in equities. This amount would be higher-tier risk_capital.

— 3) A (I told Tanko): a fundamental reason is that dividend yield is widely seen as insignificant compared to windfall achievable with growth stocks or SP500 passive investing.

Their burn rate probably makes $1k nonwork income insignificant. See $1k nonwork income=more meaningful to ME than others. To make a difference, they probably need $4k/M or $50k/Y nonwork income. At 5% payout rate, that requires $1M invested. So many of them would not be interested in receiving 5% payout.

With a risk capital below $200k, I would say a 6% nonwork income (below $1k/M) is not exciting or life-changing given their burn rate. Therefore, they probably want to deploy it to big bets.

##[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]

Q: while cutt nonessential spends,where Not2cut #rich-n-frugal

Posted on by tiger40490

Trigger: I decided to cut burn rate on tuition, piano learning, Siloso hotel … to keep burn rate under 4k/M.

Q: so where DO we allow ourselves to spend more? A lifestyle creep question.
A: PEK trips, hote, dining out, healthy fruits and salad, blogg infra,

I think for many individuals, this question is extremely tempting and powerful. You probably feel deprived if you see a windfall investment gain (or bonus), small investment gains accumulating, or months of consistent savings accumulating … but somehow unable to spend it.

Many wealthy families are frugal.

This is yet another example of “time-honored but tough guideline”, as explained in the open blog.

— Singapore past reserves … is a semi-relevant case study. PAP government refuse to spend the reserve. I think every year’s investment return is split 50/50 so half of this return is spendable, but none of the principal.

As a family, it’s important to recognize we are not a country, so I want to be much more frugal with my reserve.

PAP government was proven right when the past reserve had to be deployed (not depleted) in rainy days. Without the fiscal discipline over the decades, the reserve would have been depleted.

— plowback .. see [18]invest salary{high earn`phase #plowback
At the moment, I don’t see a lot of worthwhile plowback choices. It’s easy to become infatuated with the “plowback” notion, and waste money:

  • tuition fees? questionable

gain`traction {20Y wheel-spinn: eq investing

Posted on by tiger40490

See also [21] %%G9 strengths as investor #specifically

div-stock picking after years of disappointing mufu-research + FXO trading — this is my vision/traction.

I wrote this blogpost as a retrospective and also to highlight my presumably improving wisdom(?) and competence(?) relative to the lay public. Am growing to a wise investor.

A random list of my vision secrets:

  • Dividend is more reliable, higher ROTI. In contrast, dividend is dismal in mufu (mutual funds) + FXO.
  • Blue-chip stocks are more dependable than mufu
  • mentally segregate my stock portfolio into growth ptf + income ptf etc. Even the growth ptf could be fine without benchmarking against SP500.
  • — minor insights:
  • Easy to find rich research insights on individual stocks, much better than mufu .. With mufu (or FXO), the info available online is 1% compared to stocks. There’s no dividend history (My vision secret) to look at. The online reading experience can be fun but aimless, often time-consuming, but some other forms of analysis can be enjoyable as I feel accumulating a bit of insight and vision.
  • mufu would eventually lose out to SP500 due to expRatio cumulative erosion. Important to long-term buy-n-hold investors
  • eqMufu div yield > 3% is inevitably unsustainable. (I have multiple blogposts) Underlying CDY is up to 4% but expense ratio is 1.5%, so it’s hopeless to aim at DYOC of 5%.  Stocks are superior.

A random list of my traction secrets:

  • Favor US.. see U.S.beats other markets over3Y+ 
  • decent marginal ROTI, due to effort, not completely luck or dumb timing.
  • The effort has to be sustainable and compatible with my lifestyle.
  • sustainability .. buy-n-forget with firewall, without babysitting
  • zero commission + fractional .. permits quick and frequent experiments
  • 100+ stocks diversified .. made possible by buy-n-forget habit
  • recording annual return is futile and poor ROTI

==== historical review
For decades, I never really perceived equity as a suitable investment for my financial needs. Too unstable, unpredictable. Unacceptable liquidity by my definition (blogpost). A long trough could last 10Y+, so I never had the conviction to invest 10k (“$20k” later on). Even now, on Futu trading app or elsewhere, when I look at the 100 well-known stocks across my familiar countries [US, greater China, SG, Japan, EU, Korea], I see the same absence of long-term trend. Well-known stocks attract hot money, leading to boom-n-bust… that’s one of my theories.

My eqMufu journey since 1997 has been long and wide. It confirmed those “theories”. Instinctively, I always cash out my mufu at some modest level of profit, because I felt that the profit is impermanent. In hindsight I tend to blame the expRatio — forever erosive. 2% over 5Y means 10% erosion.

Then in 2013 it occurred to me (unknown to the lay public) that US large-caps exhibit much better long-term trend than other regional markets.

In 2019, I discovered Robinhood. Thanks to the one-share minimum I was able to pick dozens of stocks, rather than “handful” in a typical portfolio.

Only in 2020 did I create my “system” based on DYOC/firewall/buy-n-forget.

How about non-eq? With FXO and FX, I did a lot of research but did rather few trades, largely due to per-trade commissions. My traction secret? Robinhood lets me act on my research more easily

— gambling?
FX, commodities, futures, options are zero-sum games, more gamble-like than equities. Index investing is actually just as gambling as stock picking, but div-stock picking feels less gamble-like. Blue-chip div-stock picking is esp. thrilling, even though my picks are sometimes unspectacular.

Remember many retirees rely on dividend stocks + bond coupons. Investment-grade bonds are comparable to annuities (least gamble-like)

 

CPIx-inflation fear: discrediting high-saving (minimalist)lifestyle

Posted on by tiger40490

Since my 20’s, many people around me have drilled into me notions like “your $1000 /squirrel/ away will be worth $500 in 10Y (or 20Y), so saving 60% of your income every month is less advantageous than spending 90%”.

(The same people also say that “If you can invest profitably, then it’s a different story”, but we always stopped there because none of us has that skill.)

This is the mainstream view. Well, since my 20’s I have gradually increased my savings rate. I guess it was 2-3k when I was earning s$5k. Now it’s touching s$10k.

Q: Was I unwise and regretful maintaining high saving rate?
— A: On the contrary, I think I am insightful and incredulous, with a healthy dose of skepticism. Luck is a secondary factor.
— A: No. SG government squrrels away some amount in every term, to build up the past reserve. The purchasing power didn’t drop to below half over the years. In fact, I think it has grown.
— A: No. ERE author and MMM each saved up enough and retired early. Apparently, their savings didn’t lose value due to inflation.
MMM has a blog proclaiming — once you save up 30Y worth of living expenses you will be able to retire.
— A: No because I have managed to leverage my savings to invest profitably not in traditional stocks, mutual funds, insurance products but in overseas and local properties.
— A: No because I don’t know where I could have spent more. I can look at my peers’ burn rate breakdown
— A: most important, inflation rate in my personal experience has not been half as high as predicted (by those pundits). My best-effort analysis is 30Y SG inflation: personal xp.

Only a small portion of my personal “basket” has doubled in price over 30Y.

[19]cohort family BR=USD 6k ex.housing+med

Posted on by tiger40490

See also big-ticket discretionary spends4Chinese middle-class]US

I know our monthly burn rate in SG = SGD5k (6k including $700 tax), with zero rent or mtg. How about U.S. ? My estimate is USD 8k, or 6k Excluding the big 3 housing costs [pTax/mtg/rent]. Below is my quick survey.

Beware: rather few individuals would spend the time to understand the true burn rate including mtg monthly, excluding income tax. Therefore, their estimates can be 20% off the mark.
Beware: Melvin3 highlights the omission of infrequent but large repair costs.

In the job loss scenario, austerity can cut family burn rate by 20%+ but more likely I would return to Singapore, where my burn rate is roughly half the U.S. level, after FX conversion.

  • Jenny ——– said 5k minimum for 4-people family, excluding housing/pTax+medBx. This would be Melvin1. Jenny said her bank statement shows minimum 3k+
  • CSDoctor —- said $9k including mtg and pTax so I guess non-housing burn rate = 6k.
  • CSY ———- said household expenditure might be under 5k, excluding A) med insurance, B) pTax, C) mtg. If Including A+B+C, he estimated 6-9k.
  • XR ———– said he did his income taxes many times, each time summing up his total outlay as 100k+. This total used to include mortgage but now it includes 2.4k childcare + pTax and zero mortgage. By my standard, his monthly burn rate is 9k
  • Deepak —– said $9k for a family of three, including $2200 rent and $250 med insurance sponsored by employer. In 2022, he estimated their combined take-home was 160k+ and saving target was 55k
  • https://transferwise.com/us/blog/cost-of-living-in-the-usa says excluding income tax or rent, average in NY = 4k
  • median family pretax income is typically equal [1] to total burn rate including everything, so after tax total burn rate is probably 65k/Y across the country. Pretax is 79k/Y according to https://fred.stlouisfed.org/series/MEFAINUSA646N
  • https://howmuch.net/articles/how-americans-spend-money-2017 shows 57k/Y excluding income tax, for an average American family. Per month = 5k
  • https://www.valuepenguin.com/average-household-budget#nogo and https://www.usatoday.com/story/money/personalfinance/budget-and-spending/2018/05/08/how-does-average-american-spend-paycheck/34378157/ show breakdown by expenditure category

[1] My own estimate — most American families save less than 5% over long term like 5Y+