Tag: t_bigPicPFF

PFF=Personal/Family finance, though most of the items are related to financial health

qualitative 360°scorecard@ %%PFF

Posted on by tiger40490

how many percent of Singaporeans have an exp recon system with “1-decimal-precision” i.e. 0.1k i.e. $100

This is a precise question. I would guess below 5%.

k_kidnap

See also

This is a scorecard for my family financial health. A real scorecard always references some benchmark. The benchmark is usually drawn from the local [1] population. A broad-based benchmark enables us to define social strata like “lower middle-class”. It would be invalid methodology to use a biased sample excluding the rich or the huge base of the pyramid.

My informal scorecard below is unscientific and biased, as it relies on a small sample of peers + casual observations of the local community. I don’t even know my peers’ actual incomes or expenses. Based on my subjective and vague benchmark, I think my family is/has ..

  1. A [h] good long-term sustainable burn rate; excellent data collection
  2. .. B [j] excellent long-term Fuller wealth .. based on Singapore recorded burn rate.
  3. .. A [h] excellent current brbr. Note I only remember the past 5Y to 10Y brbr.
  4. C [h] middle income per-capita, benchmarked to population
  5. B [h] good savings rate; good savings habit, resisting some lifestyle creeps .. In the U.S. we would cope with lower savings rate, lower living standard, higher stress ..
  7. — minor scores on the “back of the scorecard”
  8. C [j] decent net asset, still growing thanks to above-mentioned savings rate
  9. B [j] reasonable contingency reserve .. largely based on Medishield
  10. B [j] reasonable retirement plan .. based on Medishield + CPF-life etc
  11. C [h] reasonable investment return .. Let’s ignore the HDB
  12. D [j] * concentration-risk .. insufficiently addressed, considering CPF, 401k, Beijing property
  13. [j] unconventional insurances portfolio, hopefully adequate .. This item is unrated
  14. C [j] reasonable inflation protection .. for the low-inflation Singapore context
  15. AA [h] excellent exp recon and tracking .. basis of my monitoring, planning, forecast and this self-assessment
  16. [j =an accumulation item, 积累]
  17. [h=a current cash flow item, 花销]

Q: which items are neglected so far or deserve more sunshine?
A: maybe those marked with a *… Rather few.

— Defense, weather-proof … is the biggest theme in this scorecard, and presumably my cohort’s scorecard, too.
Singapore government provides more comprehensive protection than U.S. government.

Health is harder to accumulate or protect than wealth is. See reliable Shields@@ (burnRate^wellness) habits #w1r2 and other blogposts about “batteries”.

— [1] I have spent many years in U.S. and Singapore. Cost differences between countries are underestimated, and sometimes invisible until your entire family live in each location for a few years. See

[21]to sis:G3specific goals@invest`more

Posted on by tiger40490

See also best Spends@100k windfall but I want to maintain two distinct blogposts.

Hi my dear sister,

Re your “vague” question of what exactly I want to achieve with my investment effort, I have a longer answer now, hopefully not so vague 😉

Indeed I still spend several weeks each quarter on investment research/review/decisions. I adjust my views (more often than my portfolio) rather actively.

In [[irrational exuberance]]  Shiller imagined holders of stocks growing into paper millionaires. One of them out there will feel the itch to cash out and improve current living standard. If I were one of them , how do I want to “live more like a millionaire“?

Even though I feel almost “job done” (i.e. I can retire to a thrifty retirement), there’s still some cash flow anxiety beneath the surface.

1) First goal I want to achieve with my investment is relief from that anxiety. Comparatively, I’m on a very comfortable cash flow “high ground”, so my anxiety is less than other people’s.

I will say there’s a risk that we could fall sick, suffer an investment loss or take other strategic missteps. Investment incomes (hopefully diversified and without a 10-year wait) provide the cushion I need.

I can see the ERE author doesn’t have this goal in https://www.getrichslowly.org/early-retirement-extreme/

See precarious pillar/levee/shield #MLP

1b) a related (vague) goal .. reduce my dependency on the WSC harbor as the base_camp for my family livelihood. Best achieved with higher NNIA.

2) The Second (specific) goal I want to achieve with my investment is relief from long commutes, which is a common pain in NY/NJ area. Most people seem to put up with long commutes but I hate it. With more investment income, I can afford to live closer to office, or take lower-paying jobs closer to home.

This goal is so close to heart that it popped out  as soon as I wrote down your question.  After a while, I found a more important, less realistic goal about work stress (work-life balance). I would want to find an easy job (less lucrative) with plenty of free time, where I am free to put in 50% of effort to do a good enough job, without risk of PIP.  I said “unrealistic” because my current level of wealth is insufficient to support it. At a more realistic level, I do feel less pressure to earn more, since 2019 in my chats with GregR. See also my blogpost on all_the_way despite low pay

3) another specific goal .. to support my stay-home wife, so that she can nurture the kids till high school. Many well-off families have a stay-home mother.

9) A distant goal I want to achieve with my investment is extra reserve to support optional big ticket items such as college. I don’t need an even bigger home, but my wife has persuaded me to consider a bigger home. Vacations are unnecessary to my simple life, but my wife would appreciate them.

Fundamentally, by age 40 I had completed all my big-ticket goals — 1) home ownership 2) retirement 3) medical contingency reserve 4) an optional, reasonable amount set aside to help pay college (discussed shortly)

When I look around at my age group, where is the Biggest difference in cash flow pressure, the difference between high ground vs low ground? Luxury branded education. As I said, most of my peers (Chinese professionals in finance or technology) set a target to save more than a million dollars for top school-district housing and top colleges. These are luxury items, not suitable for lower-middle class like me, with only a single income and two kids. To them I say NoThanks.

Now, Many of them consider the school-district home purchase (USD 700k+) an investment, but the monthly cost is heavy, including mortgage, pTax and maintenance, adding up to 4k to 6k every month. When I first considered this burden, this monthly commitment, I had to literally take a deep breath.

Why do I keep talking and thinking about my peers making their decisions? Because they represent a huge peer pressure on me and my wife. The “NoThanks” is easy to say once or twice, but consistency requires mellowness. I have to work hard to keep saying NoThanks. Paradoxically, this NoThanks is a major underlying motivation behind my investment effort.

Overall, I’m comfortable in terms of cash-flow, but in terms of income, we are really lower-middle class . No shame no regret.

— In Sep 2021 AshS asked me a similar question “Your growing net asset is just a number on a screen that you check every year. Why is that number important to you?”

  • I named nonwork income, esp. after retirement. I allocate most of my spare money into income-generators
  • I said that at the moment I wasn’t worried about having too much money to spend in later life. I think it reflects an underlying insecurity in livelihood[3], perhaps not about (anticipated) job loss but about non-financial disasters that financial resource would be needed just to reduce the impact. 100% complete protection is usually unattainable.
  • .. How about legacy for my offspring? I told AshS “not my plan” but any leftovers I can surely leave to them.

[3] Even the best managed companies and countries , with the widest moat, have the same insecurity.

— compare to younger peers like Kun.h
My friend K.Hu’s 2020 email is quite in-depth. Similar to my first goal, I can see that he still works hard for long-term family livelihood. ( I guess AshS is more carefree, due to the bachelor’s life. )

Compared to them, I’m older and more mellow, less ambitious in terms of Brbr, FOLB/exclub, career growth… Instead, wellness, lifestyle adjustment, healthcare, choice of home country, retirement planning …. are more important as I grow older. Therefore, livelihood is a slightly smaller driver.

FOLB/exclub/kiasu … At my age, I have less to prove, less to aim for in terms of moving higher…

Cashflow is a factor (sometimes a major factor) in each “dimension” above. However, cashflow should not dominate every dimension.

my take on FIRE

Posted on by tiger40490

update: FIRE doesn’t pay enough attention to disasters…

There are countless (too many) online discussions of FIRE, largely in the U.S. context, and largely among younger bloggers (See https://www.forbes.com/advisor/retirement/the-9-fire-blogs-you-should-read/).

I find the discussions less relevant to my situation, given my limited bandwidth, but I remind myself to never dismiss inputs from young people or inputs from other cultures. Once a while, I could find relevant pointers, perhaps in car choice and college choice.

— peers influence

In the U.S. I will be surrounded by Chinese and Indian peers. They represent a negative influence on me in terms of FOMO (kiasu, consumerism).

Similarly, I think my wife felt a form of pressure living in Newport among the rich and educated white-collar young moms.

With my unconventional choices, my journey would be a lonely journey, unless I find like-minded and rational voices in the FIRE discussions. Those who write a lot (like the bloggers) tend to be fairly rational like me.

— defenses (financial++)? Largely missing from FIRE discussions, various defenses (cushions, buffers, shields) form the bulk of my planning. The rest of my planning covers popular, mainstream topics like savings rate, nonwork income, brbr,,, These topics does relate to my defenses but my focus on defenses is not shared by the FIRE discussions.

The bedrock of my defenses, the bedrock of my financial planning is career longevity — FIR-End@life.

— parenting cost — is seldom discussed. An elephant in the room.
— withdrawal rate — is present in CPF-life, not in my current FIRE planning.
— Social security — is less reliable than CPF
— Malaysia — (and China) is a viable option for my wife and me, if our long-term planning turns out less successful than anticipated.
— homesteading is most popular in the U.S. but not every early retiree likes it
— healthcare — is country-specific. The U.S. discussions (not a lot) is largely irrelevant.
Beside the long-term costs and the major hospitalization costs, every outpatient medical cost can add up a lot

–Inflation — is a key risk missing in some FIRE discussions.

Gold can offer effective protection, but is seldom discussed. I think the FIRE guys may dislike the carry cost

U.S. inflation is higher than Sg.

— stocks — is a prominent feature of the FIRE discussions. I think many of my U.S. friends also rely largely on stock portfolio. Most of them rely on index ETF.

Worth learning.

— alpha males: MMM, Jacob (ERE) and the leading FIRE bloggers are all alpha males with

  • health
  • intelligence, talent
  • education, wide-ranging practical knowledge mostly self-acquired
  • mental and physical energy, endurance
  • formidable intellectual resource to compensate for whatever financial resources they have accumulated.

In contrast, the regular guy has much less capacity to pull it off.

long-term PFF plann: doubter QnA #一劳永逸 #w1r2

Posted on by tiger40490

A 2021 revisit — I told my friend Zeng that any financial planning (ffree++) is a piece of cake for some, if they ignore the black swans and missteps, which are often non-financial. Zeng felt many disasters can be managed with insurance. However, many black swans are not financial in nature and can’t be compensated by insurance. (Amputation compensation?)

According to the originator, black swans by nature tend to dominate the course of history , esp. over the long horizon.  [19]random derailers@ffree lists many swans+missteps, but today’s blogpost is absolutely not exclusive to ffree, so most of the contents do not belong to that ffree blogpost.

My conclusion after the discussion with Zeng — the longer your horizon, the more you will see your planning dominated by swans (+missteps), which are not mathematical and hard to estimate.

Below are some common questions from friends and advisers, on my long-term financial planning, including retirement planning. I like the questions to be phrased as sharp and specific as possible, rather than vague and broad.

This blogpost is not in-depth, but offers an across-the-board comparison.

— non-stop marathon, no 一劳永逸, limited profit Lock-in

Fundamentally, There’s nothing permanent when it comes to long-horizon financial planning. The harder you think and the harder you try, the more clear this becomes.

  • Prime example — Singapore’s stability, prosperity, hub status.. is never guaranteed by anyone and constantly under threat. Similarly,
  • Your wellness will not last. You can’t “invest” or “buy” 10 years of wellness like 一劳永逸. You must keep working on it. Daily battle. My dad and LKY are good role models. You can lock-in BMI, cardio, muscle improvements for a few months (flexibility? a few weeks) but there’s no “capture this gigantic profit opportunity and enjoy temporary retirement for 4Y“.
  • You career longevity is even more similar to the Singapore case. Body building (Continuous coding drill, QQ study..) is a lifelong hobby and training, similiar to fitness.

The worry about the uncertainty and impermanence is legit and can be life-enhancing #bbc.

— Q: can I maintain my low burn rate through retirement till my final year?
A: As show in G5 Shields@family_livelihood, this shield is in my hand. There are surely some derailers — random ffree-derailers #resilience is the best “derailer list” I have.

— Q: can I achieve career longevity like dev-till-70 and beyond ?
A: As show in G5 Shields@family_livelihood, this shield is probably even more in my control. I actively reject the pessimism expressed by Jason Fu and the like.

Some concern, some sense of uncertainty are completely legit and would motivate my diligence, self-improvement, close watch, detachment.

— Q: are the SG medical cost cushions sustainable and reliable?
A: I choose not to worry, and leave it to the PAP leadership and the healthcare industry.

— Q: is CPF-life reliable over my lifetime?
A: easy question. I think this is like questioning the insurance industry, insurance model. Annuity has been around for a long time, in many countries, not invented by SG government.

CpfLife (and other annuities) basically adress the CRBR, not the black swans.

— Q: how reliable are the other nonwork incomes?
A: less reliable than CPF-life. Therefore, I plan to liquidate some of them and convert to CPF-life, despite the inferior return and liquidity.
A: I don’t want to be too pessimistic. In fact, I want to be cautiously optimistic. Many retirees seem to receive fairly reliable rental and dividend incomes.

This question is most relevant to the 一劳永逸 concept. In theory, you can buy and hold a hero stock for life to receive high dividends, but in reality it’s like winning the lottery. See buy-n-hold a hero stock4div #ValueInvest. If it’s easy to get so lucky then why is it enviable in the first place?

— Q: how long is my good health going to last?
A: among these common questions, this question has the weakest answer from me. In fact I have no answer.

Some fear, some sense of powerlessness are completely legit and would motivate my diligence, self-discipline, close watch, detachment, kindness, generosity.