Tag: t_intro44

make every dollar work hard4u@@ #SBH

Posted on by tiger40490

See also priorities in stock trading

It is Perfectionist and unrealistic to make every dollar work hard for us. Many experienced investors (few are wise investors and even fewer are real “experts”) stay invested, having very small amount of idle/unproductive/unemployed cash, like 12x monthly expenses. See https://tanbinvest.dreamhosters.com/24728/12x-monthly-expenses/

For decades, I have lots of USD or SGD sitting in bank accounts earning below 0.5% pa. asset%allocation: imprecise snapshot=best shows my cash allocation at around 15%, much higher than equities. Used to be 50%. I have long accepted low return in exchange for “excess liquidity“.

I didn’t complain. I usually complain only when I lose capital or lose liquidity (as defined in liquidity[def]: how I gauge illiquid products) .

* memorable eg: I remember the professional analysis of AllianzIncomeProtector. The annualized return turned out to be very poor. (I think cpfLife may also show a low annualized return, despite the high DYOC.) I probably don’t mind that low return. However, I do mind the horrible liquidity[1].

* memorable eg: Buffett’s IBM “mistake” shows an embarrassing but positive return on this IBM investment. Not spectacular but no disaster either.

I think these are some of the key reasons I don’t see myself as an “aggressive investor”. So not every dollar (sometimes not even half the dollars) in my possession is working hard. When my cash “productivity rate” did hit 90% (i.e. 90% of my spare cash deployed into /productive/ assets), I sometimes had my fingers burned:

  • In 2021 I deployed all my spare cash to FSM bond funds. About 80k is currently stuck.
  • I had a 150k position in the supposedly safe Allianz HY fund. Stuck for years. I lost liquidity and lost capital, but in terms of e2etr [end-to-end total return], probably up to 1 to 5% loss only.
  • I only invested about 40k with Jill, in contrast to 6-figure commitment of other investors. We lost capital.

— If I carry a 250k mtg at 2.5 ppa, but have 250k idle cash, then I would feel the pressure to make the idle cash more productive.

— Jolt: SBH in HDB.. why I can easily save 100k but won’t spend 100k on a new HDB? I wanted the 100k to be more productive, working harder to generate returns.

After Susan’s discussion, I feel 100k invested in a SlightlyBetterHome is different from “excess liquidity” mentioned above. This 100k will be non-productive for decades 🙁 In fact, part of it is cost (reno/fees), rather than investments. The rmSelf tends to neglect the xpSelf.

  • Investments are the focus of the evaluative rmSelf;
  • Those costs were incurred to provide experienced wellbeing of the xpSelf.

[23]class reunion: why salary still relevant2frree

Posted on by tiger40490

When I told Stephen.Y and YY.T that I can retire based on my savings + NNIA, what they don’t know is my salary now and in the foreseeable future. This is the invisible elephant in the room.

Q: Mathematically, my current salary is an irrelevant term in the retirement equation, in which the income side consists solely of NNIA. So why is current salary relevant, and highly relevant.

A: my current salary remains a huge factor affecting my motivation to continue working  — hardworking vs semi-retired vs fully retired. This decision is very relevant to my ex-classmates and cohort until we turn 60.

A: If they come to know that my income is 3k vs 30k, then this data immediately anchors their perceptions of my current burn rate and “quality of life”. They would have some idea about my “retirement equation” amounts.

A: As I told each audience, my ffree is mathematically barebones, based on a conserver lifestyle. Therefore, each month when I get a pay cheque, it /strengthens/ my nest egg and elevates my ffree “high ground”.

Attachment to salary? Impermanence? Indeed as we age, we would gradually lose income (similar to losing libido, erection, flexibility,,,) so income is not something to cling on to. In contrast, I think it’s more strategic to cling on to exployability, devTill70, family bonding, guaranteed NNIA,,,

%%riskTolerance: which countries feel OK #LIR

Posted on by tiger40490

This blogpost is a helicopter-level comparative

— Cambodia

  • 🙂 currency .. a hazard growing with holding period
  • 🙂 small quantum. Debt-free.
  • 🙂 availability of commercial property with GRR .. unheard of elsewhere.
  • 👎 country risk
  • geo-concentration risk? Actualy lower exposure than a single property in U.S., Aus, China or Sg

— US rEstate

  • 🙂 currency
  • 🙂 NRY after deducting legal costs, agency fees, maintenance etc
  • Quantum? With local knowledge, I can find mid-quantum like USD 300k

— SgCP

  • 🙂 currency
  • 🙂 legwork, familiar system
  • 🙂 reasonable NRY
  • 👎 quantum

— Not comfortable with Philippines .. 👎 currency 👎 country risk
— not comfortable with China .. 👎 extremely high quantum 👎 very low NRY
— not comfortable with Aus/UK .. 👎 quantum
👎 tx costs [taxes, legal fees]
👎 currency .. see separate section

^^^^ end of country list ^^^^
— Q: How about one more country/region for diversification? Presumably, I’m more geo-diversified than 95% of my peers at the same income (not wealth) level. This is directly due to the small quantums of my overseas assets, so I can avoid cross-border expensive mortgages.
BGC is a diversification from my biggest “egg baskets” 1) SG 2) U.S. 3) China, 4) Cambodia. So I don’t necessarily need Aus or UK assets as diversification.

Note U.S. is a huge “egg basket” because I rely on it for essential livelihood reasons over the long horizon. I also have about half my assets denominated in USD. USD depends on U.S. economy. I have a vested interest in the economy of U.S.

— currency hazard, assuming no mortgage.
Even if you hit a realized profit in AUD, when you convert it back to SGD, the end-to-end PnL may be negative!

( That’s why my sister suggests we buy stuff from Ph given our rental income is in PHP. )

Am I confident about my long-term (barebones) ffree? See le2Sister. Think deep and hard…. If yes, then there’s no justification to take on a sizeable but unfamiliar risk (like ccy) until I become comfortable with it, perhaps through an experimental trial.

— taking mortgage in the asset’s currency:
Cross-currency LIR [loan IR] hazard is worse than currency hazard alone.
Cross-currency LIR [loan IR] hazard is worse than leverage-alone.

Too complex to discuss. In fact, I am not knowledgeable enough.

## where2spend more, like upper-midclass

Posted on by tiger40490

Depending on your idea of middle-class lifestyle, some families spend $10k/M, some $15k/M.

Q: now that my retirement, medical, housing needs are taken care of, and college funding brushed aside (all related to CPF), do I have no aspiration to spend more like my cohort? If yes, then which specific expense items would I consider increasing?

— investments: property; dividend stocks; ETFs; HY/PE;
— investments: gold

Compiling the list below reveals to me that what I care about is different from what my peers spend on.  It’s crucial to attend to the needs of the self, rather than other people’s desires.

— lower paying, lighter job .. not a popular middle-class spend, but scratching a real itch.
— shorter commute .. another itch
— keep wife a stay-home mom
— get wife a bachelor’s degree
—- now some items similar to lifestyle creep
— wider variety of healthy foods
— more (low-cost) sports equipment to encourage everyone to stay active
— more yoga classes .. one of the truly luxury spends. To my delight, increasingly I can practice on my own.
— more vacations .. not my top favorite, but wife and kids will enjoy

[21]Gabbar: no right or wrong@@

Posted on by tiger40490

 

See also

In my Dec 2021 year-end dinner with 3 colleagues, once again I noticed my breakaway from middle-class, in terms of priorities, blindFOMO

They talked about condo (1.2M was what they discussed), big mtg (like 900k), maid, private internaitonal schools as if there is no choice (They are foreigner in SG. Later I brought up college funding and SDXQ.) They also talked about car ownership… in a well-connected Singapore!

Varun reiterated that there’s no right or wrong, but I do have an opinion. I think some of those items are the wrong priorities for me (and probably for them too), because I have better self-knowledge. I think in old age some of these individuals would regret when they re-evaluate their past decisions in total honesty. Other eg of personal priority where there is no right or wrong:

  • To them, short commute is a good-to-have but low priority.
  • To them, healthy longevity is presumably low priority, and pleasure is high priority. Well, look at Grandpa’s experience after 85.
  • To them, my diet struggle, hazards, availability … are clearly a low priority. I feel some of their waistlines represent their growing income.
  • To many of my peers in their 30s and 40s, more time with kids is a priority, but for me, I don’t want too much time or too little time with kids. I know what I want.

I don’t want to spend on commercially popularized priorities like car, luxury housing, top SDXQ, branded colleges,,,

I’m willing to spend on my personal priorities such as family reunion trips, low-stress/low-pay jobs (like Mvea, Citi…) I think the issue of maid is similar.

— creep vs savings .. I think for some of these colleagues, their savings rate might be decent. However, their burn rate is probably higher than mine due to 1)housing 2)car 3)maid. I remember one Sonic guy used cheap credit to finance private school fees. Even without kids, some of them spend more than I do, perhaps spending 80% of salary.

Their lifestyle creep is probably higher than mine, influenced by peer pressure. Actually I don’t have enough insight. My lifestyle creep is non-trivial.

— high ground .. I feel they won’t reach my level of cashflow high ground any time soon.
I think their burn rate would be 80% of income including mtg P+I.
Their FullerWealth would be much low than mine.

Mtg .. They basically assume that a 30Y loan is “fine”, even though it would impose an extremely stringent obligation to pay $2k-3k/M non-stop.  Well, that’s Not “fine” to me, not a minor thing to me.

I enjoy a high brbr and FullerWealth (my priorities), but to them, those priorities may look like saving money for nothing.

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

lure@bccy, ##saferAssets

Posted on by tiger40490

Fact: I’m spending more time reading/blogg about bccy. Years ago, I diddn’t bother, then I blocked out the “radiation” of news story from friends and mass media.

I feel bccy trading is dangerous, comparable to gambling, addictive gaming, and speed driving. However, it’s increasingly difficult to stand back and stay detached.

I tell myself no to try even a small amount. The small amount could increase my confidence. The experience could easily lead to additional, bigger investments, but (most parts of ) the bccy /ecosystem/ is fundamentally flawed in many ways. Given my conviction about the flaws, I will not want to open the pandora’s box.

— Compare: Speed driving gave me a false sense of confidence. I learned from experience that it felt “not so scary” to drive at those speeds, but my experience was very limited and probably misleading.
— Compare: HY/PE… The earlier “successes” give investors confidence, and many of these investors would increase their commitment, at their peril
— Compare: Cambodia rEstate .. earlier “successes” increased my confidence, which led to dangerously high concentration in Phnom Penh. This thought has prompted me to compile a ranking of my assets by safety/resilience against swan events:

  1. cpf, SGD and USD cash
  2. hdb home
  3. Beijing house
  4. BGC, despite the weak currency
  5. U.S. stocks including 401k
  6. thePeak

buy+!oth #wife网购

Posted on by tiger40490

 

many purchases were bought-without-OTh but the rmSelf would inevitably become critical, and with guilt we will remember the purchase as a failure. Out of sight, out of mind… I would feel less guilt if I get rid of the physical objects.

creep/ctbz/guilt^buy+!oth .. Harmony and reconciliation between two conflicting directives can lead to a revelation and (personal) growth. There is a related case of reconciliation — frugal indulgence ^ ctbz

— keeping track ..
Related to “merchandize return”, another major tcost and stressor is keeping track of “stuff bought and disused long ago”.

When I lose such an item (perhaps at home or discarded), and have to buy again, I feel an acute self-hate, but this self-hate goes against use-without-care

For example, I removed the red pedestal pair from my bike after boy stopped using them. I kept them at home for a few years and discarded them. Then my daughter needed them so I had to buy online. Actually I did all the right things so regret is not justified.

— Directive 1: Below are SMS for many relatively small purchases. I invented these SMS’s more than 5 years ago. They are still valid.

  • use ….. without care
  • discard without guilt
  • buy ….. without oth
  • buy ….. without fear (of guilt, regret)

— Directive 2: ctbz@small spends

ctbz is my traditional strength in burn rate control. However, $2 wasted spend in Daiso .. is to be tolerated, given my nonwork incomes. Buy without oth, discard without guilt… Sounds like lifestyle creep !

Q: Will these spends accumulate beyond $1000/Y?
A: I doubt it. ctbz in this case can be ineffective. My due diligence (System 2) is sometimes too slow before spending such small amounts.

Over the years, Let’s record 10 – 20 small wasted spends (below $10) so as to calibrate System 1:

  • bicycle seat (boy) and helmet (meimei)
  • small paper punch (boy)
  • long cloth  hangers
  • Note: fancy indulgence/luxury foods (or consumables like battery) are never “wasted” esp. if eaten with pleasure
  • extra laptop .. now I feel a _burden_ to use it once a while to avoid disuse->oxidation
  • badminton net .. luckily, I didn’t make the buying decision.

Toilet blue flush .. I used to think this is unnecessary lifestyle creep. Now I think it can
* reduce water consuption because wife (and I) will not “flush again” when the blue conceals the light-yellow. Half flush never worked with my wife.
* reduce conflict with my wife

— How about wife’s online shopp habit? She bought many small furniture items (often non-durable models), used each for about a year and discarded them (regardless of damage) when she buys a replacement.

Beyond furniture, many of her purchases are decorative so she enjoys “churn”.

I think her practice is “buy without oth and discard without guilt“.

SBH= SlightlyBetterHome 4her

Posted on by tiger40490

XA.S is the first to point out that my proposed upgrade to a 4-room flat in the same block is a minor upgrade. Now I recognize it as a SlightlyBetterHome:

  • same rental amount
  • same size
  • same location in every aspect
  • similar age

Q: Why is SBH a potential problem?
A1: we are striking a balance:

  1. If I spend “too little” on this SBH, I am fine as a minimalist, but not my better half. I often feel I have “too much” spare cash, not giving her enough quality life. She sacrificed a lot for the family and deserves a more comfortable, more modern home. She deserves splurge.
  2. If we overspend then ROI is too low. ROI in terms of rental yield or appreciation. In this case, ROI is low but not as low as a bigger upgrade. I do foresee a loss of rental yield. It hurts my self-esteem because subconsciously, I want every dollar to work hard and generate returns.

If we look at maximizing ROI, my wife and I are very different personalities. For me, ROI means rental yield (or appreciation), so $0 spending is maximal ROI. For wife, low-floor living is becoming intolerable, so some amount of investment even without rental increase is a good ROI.

A2: Since late 2019, we have enjoyed a cash flow high ground…

  1. If I overspend on this SBH, I give up a lot of high ground. In this case, the loss is tolerable. Am reluctant not resentful about it.
  2. If I spend “too little”, the home improvement is too much hassle about nothing. In this case, it’s mostly higher floor + better renovation… non-trivial improvements for wife.

[18]ffree=state@mind #peers diff

Posted on by tiger40490

See also ffree ^ envy+FOMO

6 levels of ffree is one of the first articles describing the liberating self-knowledge that “I can retire now if I want to”. Financial independence is based on easy elementary math — Without salary from work, match up your family burn rate against your Savings + Income.

This elementary math has to be a projection over a long horizon, but over long term there are many uncertainties. We tend to overestimate our predictive power on medical, inflation, property depreciation … We tend to underestimate the amount of uncertainty/volatility,  black/white swans. See also NAV 一辈子花不完@@ 4 factors. Therefore, for me financial independence is really a state of mind. I often feel peaceful and reassured by mathematical projections based on

  • income — rental incomes + rental spread + CPF-life .. but beware of attachment
  • income — shields
  • expenses — burn rate … due to detachment
  • asset appreciations — Beijing, Cambodia, BGC, SG .. but beware of attachment

Actually for me, “financial independence” has a modified math definition — “without the pressure to work, match up … .” Due to the modification, my peace of mind has another pillar

  • I’m capable of, and will enjoy, working till my 70’s

Q: Am I too attached?

Yes to my property assets
yes to my health, which will eventually diminish
yes to my robust career prospect, which will eventually diminish

— Q: Strip away the exaggerations, the superficial, the unfounded, what are the measurable, rock solid, real differences between me and my cohort in terms of ffree ?

  • I record/reconcile my burn rate over decades, and have higher confidence in my forecast.
  • I have a reliable nonwork income in cpfLife and HDB rental, not counting other rental properties.
  • I often feel free to (and actually did) choose lower jobs. I don’t think many in my cohort feel that same level of freedom.
  • Based on straightforward calculations and SG public data, I have no worries about medical, retirement income, long-term inflation. I think many of my cohort are not so care-free. These are big components of long-term ffree.
  • — Here are some subjective assessments:
  • I have no plan to save up USD 300k/child for college
  • I say and feel I can stop working any time .. Statement 1
  • I say both parents can stop working indefinitely and my family can live a reasonable, comfortable life .. Statement 2.
  • I sometimes say that I have more money than I need for my lifetime .. Statement 3.
  • ^^^ My circle of a few dozen friends never say these things. Am I serious? Yes. I didn’t say what kind of family lifestyle that Statement 2/3 entail.