Tag: t_need$where

Shiller: live more like millionaires #Sgp economy

Posted on by tiger40490

On [[irrational exuberance]] P139 Shiller gave an illustration — Suppose most owners of some rising stocks are becoming multi millionaires on paper, but their current living standard is anything but. At some point, some owner would want to sell her shares to start living a little more like a multimillionaire. It’s only rational — we buy-n-hold investment assets not for the sake of holding, but to improve our existence on earth.

(On a related note, Rong.Zhu said, You don’t want to pass on with too much unspent money, but somehow I don’t worry about that… )

  • For my wife, “living like …” means better home — newer, higher floor, even if it means lower investment return.
  • For Deepak CM, “living like ..” means seeking then living the better life as immigrants. Perhaps it also means “spend freely without calculating, without economizing.”
  • For (half not all) my NY cohort, “living like ..” means Ivy league and school-district home (usually big sqft). In this sense, they are not forced to sacrifice for it. Instead, they willingly sacrifice other things for this important priority.
  • For me, the answer is in
    1. my answer to sis: G3 specific goals@investment effort
    2. best Spends@100k windfall

— Assuming Shiller’s stock keeps rising …
Q2: would you prefer AA) to grow your paper net worth by holding the appreciating stock, or BB) (cash-out) sacrifice that growth for a better current life (… Life is short)?
Note that AA satisfies the FOMO, exclub desire.

Market risk is a huge risk we have hitherto ignored, also the (arguably) biggest difference between a millionaire vs paper millionaire. Without market risk, this stock would present an arbitrage.

— Q1: what if Singtel stocks make most Singapore citizens paper millionaires (or half-millionaires)? Singaporean’s average wealth level would leapfrog to top of the league table. So what?
( Q1b: what if Nokia stock makes most Finnish citizens paper millionaires? )

A: In such a case I think Singapore rEstate would appreciate further, making our lives somewhat poorer just like in Hongkong. If Singaporeans must reside and consume/spend [2] only in Singapore and if without foreign labor[1], then they would find that many services become expensive although imported goods would remain affordable. That would be drive force for more automation, more self-service, but many retirees really prefer human service.

[1] In reality, Singapore relies heavily on foreign construction workers, foreign maids, service sector foreign workers (from SEAsia + China) to control labor cost. See SG reliance@low-wage foreign workers: maintain cost+competitive
[2] In reality, Singaporeans really like to spend their wealth overseas.

## 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]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.

##[22]to theRich^Poor, extra$$means… #quality

Posted on by tiger40490

Q: what extra wealth/income means to the rich vs the poor?

(There is a difference between wealth and income, to be discusssed.) This blogpost is about “extra” wealth or income, beyond what we need right now.

— To the affluent, extra income means

  1. Premium education for their children and grandchildren
  2. Better housing in terms of size, location, renovation, insects,,,, [SBH]
  3. Premium nutrition
  4. working mom staying home to take care of kids
  5. More importantly, extra wealth means higher capacity to cope with a variety of non-trivial missteps (or swan events) such as
  6. * legal complexities
  7. * juvenile deliquency
  8. * addiction treatment .. Nams
  9. * minor accidents
  10. * loss of valuable belongings, including at home

I feel it’s more important to set aside slack resources for these mistakes, rather than paying for  “higher quality” .  Only a small subset of “quality” solutions are meaningful to me, such as
* local agents for my overseas rental property
* hospital offering better care
* safer car

— To the poor, (wealth is smaller and transient) extra income means

  • Food security
  • Basic healthcare
  • buffer against rising inflation
  • long term saving or retirement saving? Forget it.

— To me after my barebones ffree, extra income like NNIA means .. (the more specific the better)

  1. Shorter commute
  2. Less stressful job or more enjoyable job, perhaps at lower pay
  3. more time with grandparents
  4. Workout classes, but see the blogposts on dependency
  5. premium healthcare but only when needed like in old age

##[19] best Spends@100k windfall

Posted on by tiger40490

to Genn: G3 specific goals@investment effort #commute is an introspective. In line with that if I receive $1m windfall, I would use it to strengthen my shields and relieve my anxieties.

Q: what’s your best use of additional 100k, assuming you can’t invest it?

  • I didn’t choose a very small sum — not enough of an interesting question, and not engaging
  • I didn’t choose a very big sum — unrealistic and not engaging

Specific items I can spend on … are the best answers.

  • lower-paying (probably contract) job with more satisfaction. Respect is the #1 satisfaction.
  • .. In contrast, My answer to Genn is more about work-life balance (free time …)
  • commute — See my answer to Genn. Note For commute current income is more effective than a $100k windfall far out.
  • more frequent visits with grandparents, but business-class ticket would be un-affordable luxury.
  • vacations to nearby locations. There are plenty of world class yet low-cost destinations in SEA, China and India.
    • No Japan no Korea please — luxury and unnecessary. Our family life isn’t less complete if without them.
  • — smaller, “lifestyle” items that I could spend part of this 100k on
  • more yoga classes, and possibly other classes
  • more packaged, washed raw veg and fruits
  • more frequent buying of salads
  • — less specific items:
  • spend to create more spare time for kids, family and myself

For Mr Money Mustache, apparently such a windfall doesn’t mean anything, but I doubt it.

Some of These are among the G10 most important lifestyle changes after I achieve bare-bones ffree.