Archives for category: Personal Finance

Financial literacy (FinLit) in Singapore is going to be a thing. After all, sometime late last year, it was announced that all Polytechnic and ITE students would be made to undergo some FinLit module.

I really hope that this programme pays off because there are too many old folks who are quite clueless about basic finance concepts and there are too many wannabe financial bloggers out there who offer shitty advice and they really don’t know any better.

Old Folks Getting Scammed

I read this in the news the other day about how an elderly petrol station attendant got conned of almost $130,000 over a period of 10 years. Now, this elderly man may be an extreme example because of how he fell for such an obviously fake story but how many folks do you know of that trust every single word their financial advisor tells them?

I find that among older folks, it’s only those that have been running their own businesses for some time that are more savvy of when the professional advice they get is dodgy. So, for the majority of folks that fall in the average, they wouldn’t question the advice from a financial advisor regarding what kind of financial products are suitable for them, and which are not.

The oft-used analogy is that if you’re sick, you would get professional advice from a doctor. Similarly, if you have problems with your finances, you should get advice from a financial advisor. To a certain extent, this is true. However, also consider the fact that the barriers to becoming a financial advisor in Singapore are much lower than that for doctors. Even more importantly, is the fact that most of them work for commissions. In other words, the more money you put into their products, the more they earn. To me, that’s why you can’t compare financial advisors to doctors.

And it’s not just older folks

Maybe it’s just me. Or maybe Google’s algorithm is getting too good. But lately, I’ve noticed a proliferation of blogs (and this is just Singapore-based ones!) that start off as personal finance blogs but have now ventured into the space of giving advice on stock-picking.

Now, it’s one thing to give advice on how to save money but when you give advice to people on investing, that’s a whole different ball game. There are some basic principles to investing but giving advice on whether to buy or sell a certain counter is treading into a murky swamp that even professionals fail to do very well.

Take the following for example:

Not going to put a link to this and forgive my amateur attempt to mask their identities. You can go search for the post if you want to but I suggest you spare yourself the agony.

I saw this featured on my feed that Google’s curated and it looks like this blog’s trying to sell some course that teaches you how to invest so that you can spend your time travelling and experiencing the fun stuff in life.

But I read the post and realise that it’s as vapid as the title.

There is NO SUCH THING as a safe return. Dividends can get cut, Bond prices can go down and assuming you get 6% in one year, then what? What are your chances of finding another “safe” 6% yield for another year and another and another?

The worst part about this blog is that they were even featured in a local newspaper which goes to show how FinLit inept our local journos are as well.

In Short

I really do hope that people out there beginning to take an interest in investing find the right sources to start with. In the Singapore Financial Blogger Universe, there are way too many bad sources and few good ones.

In the vein of supporting FinLit, I suggest starting with the following places:

Personal Finance/ Investing with a Singaporean flavour
Investment Moats
Financial Horse
Dr Wealth
The Fifth Person

US-based
Anyone from the Riholtz Team (Ben Carlson, Michael Batnick, Josh Brown, Barry Ritholtz)
Early Retirement Now
Mr Money Moustache

There are definitely other good ones out there but this list is not a bad place to start to or even get by with.

Advertisements
Photo by Pixabay on Pexels.com

In a previous post, I commented on how the fall of the Vanderbilt dynasty is instructive that even with all the money in the world, people can still be enormously unhappy.

In this post, I want to comment more on the reflections regarding personal finance and dynasty wealth after reading “Fortune’s Children: The Fall of the House of Vanderbilt“.

Given that the book is a fantastic account of the characters that inherited insane amounts of wealth and how they blew it all in a generation or two, I learned some things and here are my thoughts on holding on to wealth, should you choose to do so.

1. Don’t Marry an Idiot and Don’t be One

Too many of the Vanderbilt children married spouses that were only interested in their wealth. Commodore Vanderbilt’s sons were only too happy to let their wives try and outspend each other by building mansions and ridiculous summer homes at costs that were astronomical.

The cost of building these mansions was not just the problem. The costs of running the mansions were astronomical because of the number of staff needed to for such a huge place.

Sadly, even those that recognised that their would-be spouse was merely after their money wasn’t spared. Consuelo Vanderbilt, daughter of Alva Vanderbilt, was married to some nobility in England because her Alva had illusions of grandeur about her descendants becoming royalty. The irony is that the noble family that Consuelo married into were running out of funds to maintain their estates in England and needed Vanderbilt money.

The funny thing is that there are similar stories across the Vanderbilt family so I can safely conclude that it doesn’t matter if you have all the money in the world, people who don’t understand money will find some way to spend it all.

2. Dynastic wealth is made from market power and requires diversification

Commodore Vanderbilt made his money largely by being one of the few operators in the market – first in the ferry industry in New York and then in the railroad business.

If you want to amass great wealth in a lifetime, it’s necessary that you own assets that have some sort of dominant market power. It was the same for Bill Gates and in case, you want to use Warren Buffett as an example of someone who’s been in a competitive business all his life, I like to point out that while insurance and managing funds is a fairly competitive business, he’s always stressed the importance of owning businesses that have a moat. If that’s not market power, then what is?

The thing about businesses with market power is that they don’t last. In the Vanderbilt case, the law quickly caught up to busting monopolies with the Sherman Anti-Trust Act and the Great Depression quickly made sure that asset values and incomes fell. Those who were still spending freely quickly found that they had to make deep, deep cuts. Revenues from the passenger service also fell as motorcars started becoming more affordable.

The issue with dominant players is that the market will always find a way to reduce prices either through the use of new technology or new competition. It’s hard to fight against these forces and therefore, the Vanderbilts should have been working hard at gathering a diversity of assets rather than spending freely.

3. Accumulate Assets, Not Junk

While the Vanderbilts were huge collectors of art, prized horses, and other things, the problem is that when you have all the money in the world, you tend to bid too high for these “assets”.

That makes them junk.

The Vanderbilts didn’t accumulate all these things based on a reasonable analysis of the store of value or appreciation in the value of these assets. Neither did these assets throw off any income. They just did it for the “appreciation of art” or to show who had more money or “better tastes”.

This meant that when it was time to sell these assets in order to either pay off debts or to maintain their lavish spending, these “assets” were sold for cheap. Even the mansions sold for much less than they were built. The only thing upside was that the land the mansions were built on were sold for much more than they were purchased because the land was situated in a prime area.

Is Dynastic Wealth even necessary?

At the end of the day, perhaps a better question is whether passing hundreds of millions or billions of dollars down to people who haven’t earned it a good thing?

I’m beginning to think that perhaps Buffett was right in saying, and I paraphrase, that he would leave enough for his children to do something but not so much that they would have nothing to do.

After all, look at the lives of various monarchs and emperors around the world. The royal families in England or Thailand have so much money that their descendants do nothing unless they choose to. Their lives are pretty much a PR exercise to make sure that the public in their respective countries still support them.

But the main thing is that dynastic wealth robs them of simple human activity. Japanese princesses have to give up their royal status if they marry a commoner and guess what, they then have to be taught how to do stuff like go grocery shopping.

I really think I’m leaning with Buffett on this one. Enough money to do something but not so much that I don’t have to do anything.

This is a culmination of thoughts after reading a few things.

First, to set some of the context, there’s this article on Daniel Kahneman’s take that most of us don’t want to maximise happiness. Instead, sometimes we choose to pursue unhappy actions that provide satisfaction.


Kahneman argues that satisfaction is based mostly on comparisons. “Life satisfaction is connected to a large degree to social yardsticks–achieving goals, meeting expectations.” He notes that money has a significant influence on life satisfaction, whereas happiness is affected by money only when funds are lacking. Poverty creates suffering, but above a certain level of income that satisfies our basic needs, wealth doesn’t increase happiness. “The graph is surprisingly flat,” the psychologist says.


Money only has so much utility

And then, I read that Mr. Money Mustache is no longer married. The godfather of the FIRE movement who longer has any financial worries is now separated from his wife. To his credit, it seems to be an amicable split because most breakups usually don’t end up well since breaking up is an emotional subject.

It’s not my business that he’s longer married and of course, financial difficulties probably lead to a higher chance of divorce. But it just goes to show that marriage is more than just about money.

Relationships need work. Money is just another constraint to work with

I love this reflection from Kate at Minimalist in the City. It’s pure, honest and a wonderful reminder that everyone has good and bad days. Being able to recognise and appreciate both the good and bad is probably the first step to appreciate the fact that we’re alive in this world.

I need to work harder on being present. Thinking too much about what could be or what may be is a useful and satisfying distraction but that means that I’ll miss what’s going right now in my life.

Further proof that money isn’t everything

Last but certainly not least, I’ve just finished reading “Fortune’s Children: The Fall of the House of Vanderbilt“. It’s a fascinating insight into the Gilded Age where families controlled obscene amounts of wealth relative to the rest of society. And the Vanderbilt family was the richest of the rich thanks to the fortune amassed by Cornelius Vanderbilt.

The family spent it all within 3 or 4 generations no thanks to crazy spending by his descendants as well as the spouses they married. And from the account written (by a Vanderbilt, no less), it seems that they were deeply unhappy people despite (or maybe, because of?) spending all that money.

I’m pretty convinced by now that money is just the medium or the tool. The question I keep asking myself is: what will I be remembered for?

It’s December! Christmas is right around the corner and soon, no one’s going to be in the mood to do any work.

Just kidding. My students have tests in a couple of weeks. They should be doing lots of reading and practice right now.

Here are some reads to start your week.

 

books on bookshelves

Photo by Mikes Photos on Pexels.com

How to Retire Forever on a Fixed Chunk of Money (Mr. Money Moustache)

If there’s anyone interested in FIRE, then you need to read everything MMM writes. This is a good overview of the strategy that anyone who retires early will have to follow. The article covers some other points like why MMM only holds stocks, should you worry about a bear market etc. You may not agree with all the points but nonetheless, those are points to consider.

 

The Biggest Myth in Retirement Savings (A Wealth of Common Sense)

A look at the U.S. experience with 401(K)s and the early incarnation that is defined benefits plans. While we gripe about CPF, the alternative may not be that great either. Note that Ben Carlson says this in a footnote:

1Here’s the Ben Carlson dream retirement system: Everyone who is employed is automatically enrolled in the government’s Thrift Savings Plan. The maximum contribution is $50k/year and this one account can be used as a 401(k), IRA, and 529.

Practically CPF.

 

Patient Capital: The Key To Long-Term Wealth Creation (Financial Samurai)

A particular important read in trying times.

With all the fluctuations in the stock market, it can be jarring to see your wealth rise and fall drastically from month to month. But remember, what’s important is not your wealth tomorrow but your wealth in 10 or more years time.

If you have the right strategy, patience and work ethic, you should find yourself much, much better off than you were 10 years ago. If you have, then continue doing what you’re doing and 10 years later, you’ll find yourself much better off than today.

A relatively relaxing week for me. If you’re a civil/public servant in Singapore, you would have also read the good news which was kind of expected since the projected GDP growth rate this year is the same as it was last year.

Anyhow, here are some reads to make your week better.

 

books on bookshelves

Photo by Mikes Photos on Pexels.com

 

The Unfair Advantage Of Discomfort (KC)

A read on how the person behind the Paul Mitchell brand made it.

In a former life, I would have bought the arguments behind entrepreneurial tales lock, stock, and barrel.

I’m not saying that grit, determination, and hard work is bullshit for those who want to make it big. What I’m saying is that over the years, I’ve come to believe that those three things are a necessary but not sufficient condition for success to happen.

In other words, you must have grit, be determined and work really, really hard if you want to succeed as a self-made person. However, what I’m saying is that you cannot believe that everyone who does the same succeeds.

But if this story inspires you, then by all means, run with it.

 

Most Money Advice Is Worthless When You’re Poor (Free)

An article from someone who’s obviously down and out. I can’t say I understand what it’s like to be in that situation but yes, I can empathise with the person.

I’ve said it before, it’s hard being poor and I think they need help. Particularly so in a country like Singapore where inequality, before any form of help, is high.

 

Debt: A Love Story (Wealthsimple)

It still escapes me how people who are earning so much can be so poor.

If you’re a doctor, lawyer or anyone earning above the median or average person and you’re poor, then all I can say is that you must have made some really bad choices.

The whole story is one of how “keeping up with the Joneses” is financially damaging. I guess it helps that I’ve never been one to care about impressing other people.

 

 

 

Every month, the relevant government agencies here in Singapore release the latest data on inflation. Inflation, being the increase in the general price level is something that most denizens of a country should be concerned about because it affects their lives in a very direct way.

When prices go up, the same dollar that you have buys you fewer goods and services. If you don’t have the power to negotiate for higher wages, then inflation causes a hit to your purchasing power. We can argue about whether being able to buy more stuff is necessarily equal to an increase in one’s standard of living but I’m quite sure that when inflation leads to a problem with affording necessities such as food, shelter, and medicine, that counts as a hit to one’s standard of living.

What some people may not realise is that here in Singapore, we have quite a few different inflation measures. And this can be a problem when you read the news. A simple search on Google reveals this situation.

sg_inflation.JPG

Sometimes core inflation gets highlighted while other times, it’s just inflation. What gives?

 

Headline vs. Core inflation

Headline inflation is basically the textbook measure of inflation. It tracks the percentage change in the Consumer Price Index (CPI) which is an index of price changes to a basket of goods and services that the average household purchases. Of course, the basket differs from country to country but it should reflect what the average household spends on.

However, Singapore’s situation is quite unique in that private road transport (i.e. cars) prices are highly influenced by governments policies (i.e. our COE system and tariffs on cars) in a bid to keep our roads relatively less congested. This makes Singapore one of the most expensive places in the world to own (not so much driving) a car.

Similarly, the homeownership rate in Singapore is one of the highest in the world. This means that any changes to rents do not affect the purchasing power of most households. Most households in Singapore are affected more by changes in mortgage rates than the actual price of rentals or property.

 

So, what matters?

Therefore, in Singapore, if you are like most people and you want to figure out if price increases are getting better or worse, you should focus on the Core Inflation numbers.

Sadly, in recent years, core inflation numbers have been higher than the headline inflation numbers for the simple reason that rents have been falling along with the increase in rental vacancies.

In 2017, the core inflation number was 1.5% while the headline number was 0.6%.*

What more perceptive readers should realise by now is that saving money for the long run is a losing proposition if you can’t get a return of anything more than the inflation rate.

In Singapore, interest rates on savings accounts are pathetically low (~1% p.a.). The implication is that you should only have minimal savings in a savings account to meet liquidity needs. Even putting your savings in accounts/assets that return 2-3% p.a. are mostly rubbish as, at best, it helps you preserve the purchasing power of your savings.

 

What to do, what to do, what to do?

What to do, indeed?

This is where financial literacy comes in. Minister for education, Ong Ye Kung, recently announced how, starting from next year, all ITE and Polytechnic students will have to go through a financial literacy module in their first year of study

It’s a good first step but I hope the module will actually get students to be financially literate rather than giving them the simple impression that budgeting and saving money is all there is to become financially literate.

I also hope that the financial planning industry doesn’t get involved in these programmes in a big way. I can understand how it may seem wise to get financial planners to teach people about financial literacy but as Buffett once wisely said, “Never ask your barber if you need a haircut.”

Getting the financial planning industry involved in promoting financial literacy is precisely that.

 

Notes:

*Statistics Singapore has wonderful infographics for a variety of other economic data. It’s really easy to understand and instructive.

Dang, it’s been a wet, wet November. Let’s hope that November Rain ends soon.

books on bookshelves

Photo by Mikes Photos on Pexels.com

There is a fine line between stupid and clever (The Undercover Economist)

I never thought I’d see Tim Harford do a piece that’s more finance than economics but here it is. As usual, it’s a very good piece that explores both the pros and cons of Dollar-Cost Averaging (DCA). Unlike all the simplistic self-help personal finance articles that one often sees in Singapore, Harford rightly points out that DCA is in theory, inefficient. Even in practice, DCA hasn’t worked very well. However, for retail investors, the benefits of inefficiency would be that they get invested at all.

I hope that if you read this, realise that DCA is not the panacea that many personal finance books and blogs make it out to be.

In short, I think DCA is stupid if you just know a little something about valuation.

 

What’s Missing from Buy & Hold Critiques (The Big Picture)

To balance out the views of those may lie on the other extreme of DCA and Buy & Hold, here’s a piece that may make you reevaluate your ability to time the markets. Good read and valid points.

In short, I also think that trying to time the market in the short run (weeks or days) is futile.

 

The Painful Fall Of British American Tobacco (The Compound Investor)

Historically, tobacco stocks have been big winners. Is this a sign of opportunity? Do note that value has been getting killed relative to growth for many years now. Tobacco stocks have also come under fire because of a much harsher regulatory environment and its popularity seems to have fallen a lot. I can’t remember where I saw it but apparently, the proportion of people in the U.S. who smokes cigarettes have never been lower (at only 14.7% or so). So it appears that smoking is getting less popular in the developed world. I guess it all depends on Asia and SouthEast Asia now.

 

The GE End Game: Bataan Death March or Turnaround Play? (Aswath Damodaran)

The guy who wrote the book on valuation (literally) gives his take on GE. Nice brief history of GE and its fall from grace. Also, a stab at valuing the company right now.

 

All Weather Portfolio for Singaporeans (Financial Horse)

Conceptually interesting but for the person who wrote to FH, I think this portfolio won’t help. In my opinion, the person who wrote for advice has an earning or spending problem. Investing in a low volatility portfolio is probably going to address the issue of a low wealth base.

Also, FH needs to backtest this in order to make the recommendation worthwhile.

Light selection this week because I was reading the very good Atomic Habits by James Clear as well as a few articles on value traps in stock selection (more on these in the weeks to come).

books on bookshelves

Photo by Mikes Photos on Pexels.com

November Macro Update: New Employment Among Highest Since 2000 (The Fat Pitch)

A collection of statistics on the U.S. economic situation. Key points being that the U.S. economy is still going strong and therefore we can look forward to more rate hikes in the not-so-near future. The Fed didn’t raise rates in November but they are still expected to raise rates once more in December and three times next year.

Anyway, the money shot from this link is (emphasis mine):

Equity prices typically fall ahead of the next recession, but the macro indictors highlighted above weaken even earlier and help distinguish a 10% correction from an oncoming bear market. On balance, these indicators are not hinting at an imminent recession; new home sales is the only potential warning flag (its most recent peak was 11 months ago) but it has the longest lead time to the next recession of all the indicators (a recent post on this is here).

As Chuck Prince, former CEO of Citigroup famously said, ““When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

I guess the party’s still going strong in the U.S.

 

The New Three-Legged Retirement Stool: You, You, And You (Financial Samurai)

U.S. context but still very applicable to Singaporeans.

There used to be a lot more levers you could count on for retirement in Singapore. All civil servants used to have pensions (an auntie who’s in her late 60s was in the last batch that qualified for pensions).

Right now, I would say that Singaporeans have to rely a lot more on themselves. CPF is a decent system IF you have any money left in there after paying for your home.

If you have a big mortgage that is being paid off over the next 25-30 years, then you must hope for either (a) an increase in your pay and/or (b) an increase in home prices. That way, the burden of housing will decrease and there will be an option to cash in your home equity in your retirement years.

There is one more lever for some Singaporeans: hope that you inherit enough from your parents. For people in my students’ generation, this will be an increasingly attractive proposition as the demographics will be in their favour. Of course, this is provided there’s anything left after their parents spend on healthcare.

 

So what, we retired at the peak of the bull market? Here are seven reasons why we’re not yet worried… (Early Retirement Now)

A good take on sequence risk and it’s always good to point out that most people end up retiring at the top of the cycle. Subsequent drops in the market can cause a (temporary) drop in wealth and this may affect your standard of living in retirement.

What to do about it? Go on to the link to find out.

Last Sunday, the Straits Times ran this piece titled “CPF, cash not enough for comfortable retirement” (link here but it’s behind a paywall) and it’s written by the CEO of StashAway who makes some good points.

Of course, like any good businessperson, the CEO doesn’t say that your CPF money isn’t enough for retirement but that it’s not enough for a comfortable retirement. I won’t go into the details of the article because (a) I read it some days ago so my memory of it is hazy and (b) it’s hidden behind a paywall so I don’t have access to it as I type this.

 

CPF, as originally intended, isn’t all that bad

Furthermore, I’ve shared my thoughts on CPF before (see here and here) and over the years, I’ve come to believe that CPF in its original form is a pretty good system.

Why?

If you look at this handy retirement calculator, saving 37% of your money means that you can retire in roughly 30 years assuming a rate of return of 3.5% (this is an estimate of the blended OA and SA rate) and a withdrawal rate of 3%.

In short, if you continually save 37% of your money up until 55 years of age, you could retire with the amount of in your CPF account providing you a return to match your yearly expenses ad infinitum.

But wait! There are some issues

One issue that CPF has against it (just like that crappy endowment plan your financial advisor tries to sell you) is that those numbers are nominal. In other words, if someone earns $50,000 per year and is saving 37% of it in their CPF, he/she will be spending $31,500 per year. Unfortunately, the same $31,500 per year 30 years later is going to buy him/her a lot less stuff.

Of course, having some cash to retire on is better than not having anything at all. However, if CPF could pay inflation-indexed rate of returns, we would be in a much better place.

Of course, optimists will point out that salaries don’t remain constant over time and some people might save over and beyond the amount in their CPF accounts. Also, the official retirement age is 65. That’s a full 10 years more than the scenario above. Also, the withdrawal rate of 3% may be too conservative. If that’s the case, then the loss in purchasing power won’t be (so much of) an issue.

Reality Sucks

In reality, we know that the CPF system has morphed into one where monies in the CPF is used (mostly) for housing. In that case, retirement becomes a much more dicey affair. After all, if a person has taken out a 25 or 30-year loan on his/her property, then there wouldn’t be much left to compound in the CPF account, would there? If the 25 or 30-year loan is so huge that it completely wipes out the monies going to the OA account, then there won’t be much to compound on either.

I haven’t looked at the numbers but based my observation of colleagues and relatives, I suspect most people have overspent on housing but they haven’t felt the effects of it because they are so far away from retirement.

 

Less house, less stress

Personally, my house is dirt-cheap because it’s a BTO in a less appreciated part of the island. This allowed my wife and I to take on a loan that’s ridiculously cheap (it gets paid off in eight years and the deductions are less than my OA contributions). The flat itself is nice because we got a good facing (pure luck here!) and we have good neighbours.

Of course, the downsides are that my commute to work is far and we’re not really near a train station. Of course, this means that we spend more dollars and time our transport and commute.

The good thing is that this allows us to sleep better at night and I definitely won’t be worrying about life at 60.

men s brown top near trees

Photo by Sadaham Yathra on Pexels.com

 

Mr. 15-Hour-Work-Week (15HWW) has a great post on being a monk versus a warrior or a farmer. His post is in response to a post over at Dr. Wealth on whether people in the FIRE community are reaching financial independence at the expense of a better life.

From the Mr. 15HWW post:

A long long time ago, there was a province named Sophistia.

The majority of the people worked as farmers, toiling from 9am to 6pm on the farms. Some of these farmers were happy. But most were not. These farmers were the subjects of regional lords.

Becoming a farmer was the default path for citizens of Sophistia after they graduated from school at 15. If a citizen did not want to be farmer, there were two alternative paths.

1. Train to be a warrior or

2. Enter a monastery to become a monk

A warrior’s main role was to fight, win and conquer new lands for the province. After a decade, a successful warrior would have conquered enough lands to warrant the title of a lord, enjoying a life of respect and luxury. Titles, lands, farmers and beauties will be bestowed to him and his descendants.

On the other hand, the monk’s role in a monastery would be to convert the scriptures, chant them and serve the gods. They would also have to live a life of relative “suffering” and “deprivation” to appease the gods. After a decade or two of service, they could then go back to life as a commoner. They would not have to farm as grains will be offered to them monthly by the lords and farmers for their religious service

Mr. 15HWW’s tale is a take on the path of an entrepreneur/corporate high-flyer versus the conventional FIRE method of accumulating huge chunks of savings in order to retire early. In the story, the idea of a ‘monk’ is to save up enough such that the returns from investment more than compensate for the expenses required to live a decent life.

In a similar vein, the Dr. Wealth article frames the choice of huge savings now as ‘suffering’ which implies that the emphasis on huge savings comes at the detriment of current consumption.

For those who have done the early retirement math, the returns on savings won’t be large enough to net you serious dough until quite a few decades later so, in a sense, the FIRE method or being a ‘monk’ means consuming at a level far below that of a Crazy Rich Asian.

 

There’s some Truth to it but…

It’s not that Mr. 15HWW and the Dr. Wealth article are wrong. Savings today does come at the expense of consumption. The problem is seeing ALL savings as a drag on consumption. Just like savings, consumption, when taken to the other extreme, can be ‘suffering’ as well.

I know this for a fact because I come from a family that consumed far more than we needed to. For pretty much most of my life, my parents always owned two cars. My dad needed one for work but the other one was pretty much unnecessary because my mom stopped working many years ago and the car was used mainly to ferry my brothers and me from school. It made life more comfortable but once again, it wasn’t necessary. Even today, my parents own two cars that both fall into the luxury category and most of the time, one’s parked at home.

Cars weren’t the only thing. We went on expensive holidays, had expensive toys growing up, and on a regular occasion, ate good food at exclusive places. The lifestyle wasn’t a one-percenter kind of lifestyle but it was easily upper-middle.

The good thing about having been there and done that is that I can safely say that those things are overrated. Once you move from taking public transport to taking a car, there is hardly any difference whether the car is a Mazda (I love my Mazda 3) or a Mercs. In fact, there are some instances where public transport can triumph private transport. I had to go to SGX Centre in the middle of town the other day and it was so much easier to take the MRT than have to worry about parking and traffic.

If you think I’m an oddball, then look at other examples around the world. Warren Buffett stays in a house which he bought many years ago that cost him $35,000. He also famously drives a pretty beat-up car. Buffett isn’t the only one. For the amount of wealth he has, Bill Gates drives a considerably cheap car.

I don’t mean to say that I don’t like fancy cars, nice houses or the material trappings that this world has to offer. What I’m saying is that even among the super rich, they have recognised that these material things aren’t the most important things in life. In certain cases, being too caught up in chasing after material wealth is a form of ‘suffering’ as well.

What The Enlightened Focus On

I rather think of the ‘monk’ in the story as being a wise one. And being a wise one, a monk should be enlightened enough to see that things like cars, fancy watches, and ridiculously-priced food are NOT necessary for a good life.

Instead, what’s necessary are the relationships that one has with friends and family and being engaged in hobbies that nurtures one’s spirit. In short, you have to ask yourself what gives your life meaning.

If you’re like most people, then it’s probably one of the things on this list that Bonnie Ware wrote about. Bonnie Ware was a nurse who worked in palliative care and she compiled a list of what were the ‘Top 5 Regrets’  that people who were dying have. The list doesn’t really mention any attachment to some expensive car or watch.

 

Final Thoughts

In sum, I can’t deny that I still have a tinge of envy when I see a Porsche or Ferrari on the road but when I think about the things that matter, it’s not the meals I’ve had or the places that I’ve been to that matter. It’s the people that I had the meals with and who was with me when I visited those places that matter.

After all, if it were just the meals or the places then having the same food or visiting those places alone would bring me the same amount of joy as when I was anyone else. In reality, ask anyone what their best memories were and the answer is most likely the experience of being with someone dear that matters.

In the story of the monk vs. the warrior, the idea is that farmers should look to becoming either a monk or a warrior. Being a warrior is always tempting because the spotlight is always on the one who, despite what seems like otherworldly odds, overcomes them and triumphs. The parties and spoils from overcoming the odds capture the imagination like a bright flame. Unfortunately, what farmers do not see is that flames are attractive but dangerous. Get too close and you get burned.

Therefore, the parable Mr. 15HWW puts forth may ring true but the other addition to the story is that perhaps the monk is more enlightened than the warrior. He sees the additional risks and burden of being a warrior. He knows that the trappings of great wealth and glory are but an illusion that warriors continually chase after but never seem to be satisfied with.

There is another path to escaping the life of a farmer. One that is more peaceful, more moderate, and ultimately, provides the same sort of satisfaction.

That is the way of the monk.