Tag: t_sav`Habit22

Malaysian同龄人in his40s: realistic PFF

Posted on by tiger40490

I find this 2013 description on [[Personal Money]] rather detailed and realistic, offering multiple revelations and lessons for me. The subject is Mr Lim who wrote in to the columnist Gina Wong , to have his financial health [goals, projections, gaps] assessed in her column [[Money Makeover]].

  • 1) MYR 866k investment assets (29% in REITs, 26% in other stocks, 38% in fixed income funds, 7% cash or MM assets), generating a 8% return — questionable, unsustianable due to high equity allocation
  • 2) MYR 80k emergency fund
  • 3) MYR 500k “personal assets” .. vague.. presumably an estimate of his other assets .. perhaps home equity, 401k
  • 4) minus MYR230k total liabilities .. any debt beyond mortgage would be a worrying sign.
  • ^^^^ MYR 1216k Net asset, adding up the 4 line items
  • MYR 95,295/Y (almost 8k/M) family burn rate, on a MYR 230k income, at age 41. The author (Gina) thinks this burn rate is thrifty and uncomfortable. However, I guess many working class Malaysian families as of 2013 probably spend much less.
  • MYR 60k/Y squirreled away at age 41 = “approximately 25% of his income”, perhaps including  endowment bx.
  • ^^^^ 230k-95k-60k = 75k/Y earned but not spent not saved, so I guess it consists of payroll deductions [tax, 401k, donations, medbx, discounted company stocks,,] This large discrepancy is easily missed by most readers, who would get walk away with a misleading estimate of his brbr or savings rate
  • MYR 120k/Y target NNIA from age 55 through retirement. 60k/Y CRBR + 60k/Y to be reinvested to fight inflation
  • .. I find this NNIA ambitious/challenging if he wants to rely on stocks. Reits and bond funds are slightly less unreliable.
  • —- Lim’s other financial goals are a LG2 focus of this blogpost:
  • MYR 3300k age 55 target balance. Rather ambitious.
  • MYR 1200k  target college fund to help his 2 kids
  • No mention of his inherited wealth or his wife’s contribution.

Q: which portions of his snapshots are oversized/undersized?
* rEstate (conspicuously missing) : undersized
* 401k (conspicuously missing) : undersized
* debt: oversized.. should be close to zero at 41
* nest egg: oversized
* target NNIA by 55: ambitiously oversized

Q: is he on cash flow high ground or low ground? The author says high, notwithstanding insufficient insurance
Q: Brbr? 230k/96k = 2.4 very good
Q: is he a big saver, big spender?
A: author is 100% sure Lim is a “frugal family man” who , 5 years ago, started living “below his means”.
A: At the end of the review, author recommended Lim “upgrade family lifestyle” … relevant to me
%%A: not a big spender, but neither a big saver. I assume Malaysia cost is lower than Singapore, so MYR 8k/M family burn rate is too high

Q: how is his Earn/Save/Invest capabilities? Remember Lim is serious about retiring at 55.
%%A: aggressive investor

Q: Fuller wealth?
%%A: can be better. Lim’s current burn rate (8k/M) and Crbr (5k/M) are rather high

 

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

(hidden)factors]household saving rate as reported

Posted on by tiger40490

https://www.dbs.com.sg/personal/nav/are-you-saving-enough.page?pid=sg-dbs-pweb-nav-featured-cardtile-others-are-you-saving-enough claims that the average Singaporean household in the survey saved 55% of the total income including employer CPF contribution + nonwork income reported on tax forms. This figure is highly questionable.

— Issue: What’s the average Singaporean? I guess the authors meant that average household expenditure is $X and average household income is $Y, so 100%-(X/Y) gives 55%. This doesn’t mean a typical household saves 55%.  If we tabulate the savings rate of 1000 households, we get a distribution (bell curve histogram). Given this histogram,

( issue: ) is it valid to find a population average? I can only speculate

  • low-income households save less (in general but not always),
  • younger households save more for housing and raising family,
  • pre-retirement households may save more as their grown-up children have left
  • retiree households may have negative savings rate or possibly excluded from the calc

It’s questionable to compute aggregate statistics across any two distinct categories.
— Issue: most Singaporeans in the survey would have 30%+ of monthly income locked into CPF (compulsory savings scheme)

I would guess the alternative statistic of “savings rate as percentage of take-home salary” is much lower among Singaporean families with kids. The median might be 10-20%
— Issue: is mortgage payments considered savings or an amount spent? For the P+I,

  • I feel the interest portion is definitely an expenditure.
  • The principle portion is more like investment (savings)

— issue: is rental and dividend income captured as income? I would doubt it.

In conclusion, it’s hard to have any confidence in these numbers. My target is Brbr, focusing on non-investment expenditure.

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

food security: low-saving U.S.families

Posted on by tiger40490

See also

Household Pulse Survey in November reported that Nearly 26 million adults (12% of all adults) said their household had food shortages in the past week.

Millions of children get free or reduced-price meals at school, says Prof Schanzenbach, “and losing access to that really hurts” for families already on the brink.

— https://edition.cnn.com/2020/11/26/politics/trump-biden-thanksgiving-two-americas/index.html described “the vast challenges facing so many, their lives financially devastated by the pandemic, who have turned to increasingly strained charitable organizations to temporarily satisfy basic needs.” .. like feeding the family.

A Washington Post survey of Census Bureau data from late October and early November 2020 found that food insecurity growing at a terrifying pace. One in 8 Americans said they sometimes or often did not have enough[1] to eat during the previous week, a figure that climbed to 1 in 6 in homes with children.

[1] I assume “enough” is subject to interpretation by the respondents, thereby weakening the value of this research.

Kamala Harris tweeted “Food banks across our nation are struggling to keep up with the demand due to COVID-19.” Personally, my judgement is that she can’t afford to exaggerate, not with the spotlight on her tweets.

Describing a family of four who had exhausted their savings, O’Connell spoke to CNN about the feelings of shame that often accompany having to ask for help. “They came to us to be able to put food on their table this Thanksgiving,” she said. “One of the parents stayed in the car because they were a little bit embarrassed about how they were getting food.”

glamorous women #exclub

Posted on by tiger40490

 

My first look at the world of pretty women, like my wife.

Most glamorous women marry businessmen, not high-ranking officers, MNC managers…

Phyllis Quek?

I have noticed some glamorous women choosing a husband outside the richest elite. If she misses her “chance” during her best years, then she can consider staying single all the way. Teresa Teng was one of the first to practice these principles.

Many glamorous women in show business could , if they want to, follow Teresa and save up enough over a few years to provide a lifetime of income [1] for her entire family and even her extended family. So there’s no need to sacrifice the more important things for the sake of money. What are the more important things?

  • #1 important thing: Statistically, the wealthy man tends to receive too much temptation and attention from younger women. They get “it” without effort. In fact, they need huge effort to resist the temptations. Just ask MingLiang. To the glamorous women, Fidelity is mandatory and non-negotiable, a bedrock of the marriage and the family.
  • important thing: Statistically, the wealthy man tends to be too busy with work, and not so devoted to his family.
  • important thing: deep respect and sense of equality. The powerful, wealthy man often look at a glamorous women as an object, or a trophy, not so much as an equal partner.
  • .. When things get bad, the man is likely to trash the women as a worthless old woman.
  • .. As glamorous women age, they need dignity, which requires certain level of wealth.
  • important thing: overall honor and decency. Statistically, it’s relatively hard to find a decent wealthy man.
  • important thing: Wellness? I would say a good husband help keep every family member in good health.

So I think an ideal man for a glamorous women should first and foremost be a loyal, reliable man with proven track record of loyalty, dedicated to the family.  Romantic perhaps.  Attractive? Of course since the woman in question has too many choices and has no reason to consider a man not attractive to her.

The man’s political/economic power, fame, influence and wealth are not essential to a glamorous woman. She probably has some of that in her self. However, some women are ambitious.

Most glamorous women marry someone older, but some don’t, because an older man attracted to a young glamorous woman can easily get seduced by an even younger woman.

Emily Chang was one of the most attractive women in the world — young, bright, bold, an Asian female (and gorgeous) face in male-dominated Silicon Valley… a breath of fresh air. Then her youthful face grew old.
I feel more than 60% of the audience is male, and males are attracted by a youthful, pretty face. I guess a mainstream, competitive global media power house that’s the flagship of Bloomberg’s entire technology franchise can’t have a 40-something women as the figurehead.

How about my wife? She was a pretty girl, not a magazine cover girl. I think she chose wisely and she is lucky.

— marry “lower”

  • Lin Chi-ling
  • Teresa Teng
  • Charlie Yeung
  • Zoe Tay
  • Gigi Leung

These glamorous women each chose a man “lower” in wealth and economic power. In a way, each glamorous woman above has made enough money and doesn’t need more money. She does need respect[3] and equality in marriage. Having higher economic power provides her a safety. Once she commits to a marriage, she becomes extremely vulnerable. She would have a marriage to protect. She may have kids to protect. Statistically, marriage failure within her circle was higher than average, perhaps as high as 30%.

The power, wealth, good looks.. on the groom’s side is a hazard.

Therefore, these glamorous women were shrewd. They know their priority, their weaknesses/vulnerabilities, their liabilities (累赘).

— [3] respect .. I think respect is really precious, esp. for pretty women without professional or business capabilities. These personal capabilities provide respect + livelihood. Without those capabilities, a reputable college degree would also bestow some respect + status.

For some of these women, fitness and body shape also provide respect. In contrast, healthy longevity is not a common priority, but look at Angelina’s mastectomy decision.

For my wife, bearing 2 kids gave her a solid, irreplaceable, central position in the family.

New smartphone and nice apparel provide some basic status. There are economical but nice choices.

— [1] Fuller wealth vs exclub — Since this is posted to a blog on personal finance, I would say a key question for the glamorous woman was burn rate control. (Applicable to sports superstars and any celebrity.)

Exclub (and status, public image) is important to glamorous women (not necessarily a celebrity) simply because she draws a lot of attention.

She has to be conscious of her limited shelf life, her peak earning age, and the dangerous concept of the exclusive club, which consists of wealthy man and young glamorous women, but who is forever young?

If she aims to join and stay in the exclusive club, then her burn rate would be 10 times higher than the average family in the locality. Such a burn rate would be unsustainable given that she has no long-term earning power to match the males in the exclub.

Instead of the exclub, she can focus on Fuller wealth.

 

minimalist lifestyle in late retirement

Posted on by tiger40490

Although the timeframe is far-out, this discussion constitutes a part of the guiding principles for my life and my children and grand children.

In  late retirement (I don’t prefer “twilight years”), I want to continue my minimalist (more than “conserver”) lifestyle. I don’t have insight yet on the justifications. I feel it’s a good lifestyle and habit to keep till my last day. Perhaps it helps me reinforce the role model and positive influence for my offspring.

Disasters can happen to any of my offspring. Some of them may be poor and appreciate even a $1000 handout.

— eg of grandpa

My dad is leaving behind about USD 50k to his grand children.

I feel it means a lot to my son.

— eg of Rahul’s grandpa

Rahul felt his grandpa was a lovely grandpa…. because the amount he plans to leave to his children and grand children is too small. I beg to differ. Even if it’s a mere $100 for each receiver, it means something.

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.

Each monthly wage extends Fuller wealth by2M

Posted on by tiger40490

See also blogposts on

For the next X years in Singapore, my family burn rate is predictable (no college no mortgage) at around $4k/M excluding transfers, $5k/M total burn rate. I sometimes tell my wife “Every time we squirrel away $60k from (work/nonwork) income, we extend our Fuller Wealth by a year.” This /prognosis/ is almost too good to be true. Simplistic but motivational thought. Long-term forecast is naturally less reliable, subject to multiple upsets but still, some guesstimates can help us plan better. Just remember not to put too much trust in the guesstimate numbers.

This prognosis is a useful yardstick for comparison with other families. Some families can “add a year” quickly (a couple of paychecks), while others need a decade to “add a year”.

— going from strength to strength, from strong to stronger .. In 2018 I had a numerical projection showing barebones ffree. Then in 2020, I wrote to wife another numerical projection showing that salaries are not really needed.

So my Fuller wealth already exceeds those targets. Every new month, my nest egg is now more fortified/resilient [2], growing (by $5k+) towards a new target of “no need to flee to U.S.”

[2] Keystone of the “nest egg” idea is … defense — against hazards, missteps, contingencies, uncertainties.

How does this prognosis differentiate me from my cohort? Many people also grow their nest egg every month, but they don’t have a FIRE target amount like 25Y worth @ living expenses. I have multiple progressive targets.

— Let’s /substantiate/shore up/ some weaknesses of this prognosis.

  1. college cost will become relevant in about 8 years. Fuller Wealth is not about luxury or higher aspiration, but aiming at a basic healthy level of lifestyle.
  2. medical cost?
  3. inflation? Addressed in several blogposts. I believe SG CPI inflation is much lower than …