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So, just the other day I heard some shocking news.

An acquaintance of ours passed away and it turned out that she had been suffering from depression and took her own life. We didn’t know her very well but it was a shock because, from the brief time we knew her, she was very bubbly and cheerful. I don’t know if she was already suffering from depression when we knew her but it was also unthinkable that someone that appeared so positive could be suffering in silence.

The other shock was that she was EXACTLY my age. Right down to the day she was born. Someone my age passing away is a rare event, especially in a country like Singapore where life expectancy is high. But it happens. And in this case, it happened to someone that felt like life was troublesome than death.

And it’s a real shame because she had a gift. She helped my wife and I capture the memories of our wedding, which is one of the happiest moments of our lives. No doubt, she helped many others in the same way too and could have continued to help many more people do the same.

Dancing with darkness is seductive. It’s like a dance with a good-looking stranger dressed in black at a ball. The problem with life is that you can’t and shouldn’t keep revisiting that moment in the past. Doing so keeps your mind, and subsequently, your entire being captured in the memory of that moment while the entire world passes you by.

If you know anyone who’s suffering from depression, please get them some help.

This is for anyone residing in Singapore:
Samaritans of Singapore contact details
24 hours hotline: 1800-221 4444
Email (replies within 48hrs): pat@sos.org.sg

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Update: Being more mindful didn’t help me remember that I didn’t have a title for the post. So here it is.

So, I’ve been trying to be more mindful lately.

And something interesting happened just the other day.

I was sitting alone having lunch and enjoying some “me” time. Then along came a colleague from the administrative office and joined me. That was ok with me because I’m kind of OK with him; We’ve had lunch and kopi before.

Then along came another two more colleagues- one, I’ve never had much contact with. So I was kind of neutral. The second, I’ve always kind of felt a bit averse to because of some prior contact with her. To be more specific, I’ve always thought she was a bit bossy, caused inefficiencies and wanted the limelight without putting in the work. To be fair, I still think that way.

But I reminded myself to be mindful and be present. And not to judge.

And the surprising thing is that the four of us who are not regular lunch partners (in fact, the four of us never had lunch as a group ever) actually ended up having conversations that were surprisingly engaging. We discussed a wide range of topics that ranged from politics to social change. Even more importantly, we didn’t agree on everything but there was never any animosity or ill-will. It was just a nice exchange of views and opinions even if we didn’t all agree on something.

I don’t know if it’s being mindful that caused me to have a different view or attitude towards this but I usually dread having lunch with people I don’t know well or don’t particularly like.

But after this instance, in fact, I realised that the colleague I thought was all bad was really not all bad at all. I can’t explain why but even the previous feelings of dislike for this person has been reduced.

And I feel better for it.

 

 

 

This is going to be a departure from my usual posts on investing. It’s also going to be somewhat of a personal post. I do hope it’s a useful post though because this could potentially be more useful than any investing knowledge there is.

What is mindfulness?

Mindfulness, as I understand it, is the awareness of being present.

This means to focus on the present and not have your mind running wild about the past (like the fun you had yesterday at a party), the future (like what your life will be in 10 years time when you are happily married with 2 kids and a dog) or things that aren’t there (like whether that person you like just checked you out or the blank stares that you may get when doing a public lecture).

Why does it matter?

The thing about life is that there are many things that happen every day that are out of our control. These things can either make us extremely unhappy or annoyed when things don’t go our way or, they can make us extremely happy or joyous when things go our way.

The problem with depending on external circumstances or conditions means that we are at the mercy of others or luck when it comes to our own happiness. It also means that we end up chasing something in order to make us happy. Unfortunately, that may lead to unintended consequences. For example, when I was much younger, I used to drink quite a bit of whisky. It wasn’t so much for the taste but more for the feeling that alcohol puts one in. That feeling of temporary weightlessness where you can forget about any worries or troubles. Unfortunately, that meant having a hangover and feeling horrible for at least half a day the next day wasn’t so fun. Also, it means that I always depended on whisky in order to feel that way.

Now, just to be clear, the above isn’t just about the evils of drinking. Many people have a different poison. It could be shopping, eating, travelling, buying expensive toys, sexual pleasure. Some of those may be more “healthy” than others but the common thing is becoming more dependent on external conditions to influence our state of mind.

And if you think about it, it’s ironic that something external or outside of our self is the thing that influences our mood which is largely a state of mind. Why is it not our mind that influences our state of mind?

Therefore, I believe it must be possible for our minds to influence our perception of reality. In this sense, it gets a bit confusing. After all, it’s not like I can simply wish away things I don’t like or want by meditating. Meditating isn’t some mutant power that can help you win the lottery or control the stock market. Meditating isn’t going to be the cure for some terminal disease that modern medicine can’t.

On the other hand, mindfulness meditation has proven to have some health benefits. After all, our perception of things is a result of inputs from our senses to our brain. How our brain reacts to those inputs naturally affects how our body will respond to external events. For example, if we experience stress, our body releases a hormone called cortisol and studies have shown that elevated cortisol levels aren’t good for the body. Mindfulness meditation has been shown to help people deal with stress better and therefore reduce the effects of stress on our bodies.

My take on how it works is that mindfulness is all about being aware. Aware of what? Aware of the sensations and thoughts that arise in our mind and just letting them pass. Why do we have to let them pass? Because the more we hold on to those thoughts, the more we let them affect us. And this happened to me at work about 2 years ago.

One day, I received a phone call from the admin office. Over the phone, the admin manager told me that a student of mine (I was the student’s form class teacher) had been sent to the hospital just before the start of a class. He then asked me to call another office that had reported the incident for more details so that I could call up the student’s parents and let them know.

I got pretty angry because I felt that this guy was passing the buck to me. After all, if someone in the school gets sent to the hospital, which is a seemingly serious thing, why does it matter whether it’s the admin office or the class form teacher that calls the parent? Shouldn’t the parents be notified as soon as possible? After all, who knows how long it took before he even managed to get me.

Second, he obviously didn’t do his job well because I shouldn’t have to call up another office to speak to the person who helped call the ambulance to get the first-hand account of what happened. He could have got the account when he received the call the first time around. What if I made the call and the person was not in? That would further delay the relay of the message to the student’s next-of-kin.

Anyway, I ended up making all the calls (which probably made me more pissed off). But that incident stuck with me and for the next few days, I was busy justifying how unreasonable the whole situation had been to anyone who would hear me out. The worst thing about this is the opportunity cost involved. All the time that I spent griping about how unfair the whole incident was could have been time spent doing better things. And those aren’t minutes of my life that I’m going to get back.

My journey

First off, I’m by no means an expert nor anywhere near the level of people who have been doing this for years. In fact, I’ve only just begun to meditate for 10 minutes each day and I find that anything beyond 10 minutes, my mind really runs wild. In fact, I only started meditating more regularly because the missus went away for a few days last December which I also spent a good part clearing my leave. So I had to wake up early to feed the cat but I pretty much had nothing else planned the entire day.

Prior to this, I had heard about meditation and been casually reading up on the subject for the last 10 years or so of my life. I’ve never been a religious person despite growing up in a household that believes in the metaphysical. My father is a self-proclaimed Buddhist which my mother only found out on the day they registered their marriage. But the thing is that like many “Buddhists” in Singapore, he isn’t really a Buddhist. In fact, the rituals and belief system is a mish-mash of Taoism and Chinese folk religion. Basically, Buddhism as translated by the Chinese when it was brought to China many years ago.

Furthermore, I spent the greater part of my school years in a Christian Methodist school where weekly chapel sessions were compulsory. Needless to say, I never really believed in either because neither made sense to me. After all, I prayed for good grades but I still had to study. So, not a very good system as far as the demonstration of cause and effect was concerned.

In university, I took an excellent module called “Introduction to World Religions” where I finally learned that Buddhism, as understood by most other Buddhists, was not the Buddhism that I knew. What I knew was basically Chinese folk religion masquerading as Buddhism. Why it happened was probably for the same reasons Christians believe that Jesus Christ was born in the middle of winter in a barn. It’s basically the adaptation of an existing pagan festival to the Christian worldview in order for the religion to gain acceptance. Ditto for how the Buddha got assimilated into the same universe as all the other Chinese gods that appear in folklore.

More importantly, I learn that Buddhism was actually more a philosophy than a religion and the whole idea behind Buddhism was to seek nirvana which is this state of enlightenment. Unfortunately, that’s where things get seriously complicated. Buddhism has evolved into so many different schools with so many different practices that one doesn’t really know where to start. Furthermore, translations of Buddha’s teachings enter this realm of utterly confusing and convoluted jargon coupled with a whole list of “don’ts” or riddles that didn’t make sense. Nothing helped much and my search for meaning continued. Subconsciously I knew what I was looking for because I wrote my honours year thesis on happiness and incorporating it in cost-benefit analysis. Happiness and economics. What a combination. Didn’t find it though.

I must say that before 2010, mindfulness and meditation were still pretty much confined to Buddhists and the self-help realm. Too many of them write in ways that are either confusing, pompous or full of things that offer grandiose claims (e.g. Deepak Chopra). For me, the big breakthrough came from Tan Chade Meng, Google’s Jolly Good Fellow who created a mindfulness meditation program for Googlers that seemed fairly successful. So I bought his book but I never developed a sustainable practice. His book, while describing mindfulness in very, very simple terms and prescribing very, very simple exercises to get started is good for beginners. But for me, I just couldn’t buy in completely because of the overly saccharine, “feel-good” tone of Tan’s writing. Add to that the lame jokes that get boring after a while and I never really bought into it.

What got me started again

2017 was a tough year of sorts. The worst part about it was not things that happened but things that happened that I could have controlled. In the face of a lot of things that happened, I pretty much turned to cracking open a can or two or saying, “never mind, let’s have a nice meal.” This led to my weight gain (which I’ve, thankfully, lost some) as well as this nagging feeling that there were things I could have done better.

And a few days ago, I discovered a book by Dan Harris called “10% Happier: How I Tamed the Voice in My Head, Reduced Stress Without Losing My Edge, and Found Self-Help That Actually Works–A True Story“. In it, he details his journey from skeptic to being a regular meditator. What got him started was a meltdown on national TV (he’s a newsman) that was triggered by stress as well the use of drugs. However, the best part of his journey is not the fact that he’s attained nirvana or any supernatural bullshit. The best part of the book is that it details how he struggled to convince himself to start meditating and the various struggles on his journey thus far. He showed that meditation isn’t going to be some cure-all. In fact, after getting started, there will be lapses in practice as well as lapses in behaviour. He reverted to some old habits pretty quickly and for a while, he questioned the gains that he had made because it all seemed to have gone away. You don’t have to get the book because his talk at Google (link here) provides a pretty good overview of what it’s about.

So, for what it’s worth

I’m not saying that religions are all hokey. My beef is more with the people that practice the religion. I’ve seen good people who are Christian, I’ve seen horrible people who are also Christian. I’ve seen good people who are Muslim and I’ve also seen horrible people who are Muslim. Ditto for Buddhists or even Atheists or Agnostics. Or any other religion beyond the major ones.

I’m also not becoming religious or spiritual and starting to pray to some idol. Rather, it’s becoming more aware. More aware of my thoughts, my feelings, my emotions and the impact that’s having on my life.

I can’t say that there’s been any meaningful change nor am I sure that I’ll be able to objectively say that there’s been a positive change in any area. However, I’ll know that it’s working if the people around me start to notice the change and tell others about it. That’ll be validation for me. In the meantime, yeah, I do feel that I don’t reflexively react to things all the time. There are lapses but then I usually recognise and acknowledge them. I don’t beat myself up about it as I focus on the present.

There are

So now, I’m pretty sure that for 2018, meditating regularly until it becomes a habit will be something that I’m doing.

 

This is a series of posts that I planned to start on some time ago but never got around to doing. So why am I doing so now? Well, someone in the family wanted to know how to get started so here I am writing down my thoughts, basic reading material as well as other things one needs to get started. The entire series is here.

Why should one invest?

This sounds like a simple question but it needs to be answered because without honestly answering this question, one may find that he/she does not have the necessary resolve to see the plan through.

A simple analogy would be dieting. Many people diet because of some shallow motivation like wanting to lose a few kilos or to fit into a pair of jeans that they used to be able to fit into. However, most diets fail simply because many people who start a diet see the diet as something temporary. Once the objective has been met, the diet will stop. Unfortunately, once the diet stops, the weight gain comes back with a vengeance.

It’s the same with investing. Many people start investing thinking that it’s the path to helping them get a new car or to pay for that dream holiday. However, once that goal has been reached, the investment plan is chucked aside and the wealth accumulation stops.

Notice that in the previous paragraph, I used the word “plan”. And the reason I used the word “plan” is that an investment operation (to use Benjamin Graham’s phrase) is not a one-off action. It is a commitment to a process.

The commitment is necessary because markets don’t always go your way. Often, they go against you and test your nerves. You will wonder if you are indeed doing the right thing or if the wisdom passed down through the ages have become obsolete. This becomes especially true when many people around you are making huge gains* from some new-fangled form of investment that they themselves fail to understand.

The commitment is also necessary because unless you use leverage (i.e. borrowed money), buying assets require savings and savings require income, and needless to say, income comes from work. Therefore, there has to be a commitment to save instead of spending your income on present consumption to distract you from the stresses of work. This isn’t something that many people can live with unless one has the epiphany that consumption beyond a certain base level doesn’t bring extra utility.**

For me, investing is a no-brainer.

  1. It makes you wealthier and with wealth comes fewer worries and more choices.
  2. It’s fun. Investing is like a game where you try to figure out what things are worth. If you can buy it for less than what it’s worth, you’ve got a bargain.
  3. I’ve reached the realisation that more things don’t make you happier. Even certain experiences are over-hyped. Many things that make one happy don’t necessarily come at a monetary cost.
  4. It’s an exercise that you can do in solitude. In fact, some solitude may be necessary as chatter and other opinions may only add to ‘noise’ instead of being ‘signals’.
  5. It’s simple if done right. Notice I said ‘simple’ and not ‘easy’. Simple means that you don’t have to follow complex and arcane rules or necessarily be quicker or smarter than others. However, it’s not easy because one needs to have the right temperament (i.e. discipline and patience), especially when things aren’t going your way.

That’s why I invest. You may not become one of the richest people in the world but if done even semi-right, you will definitely be better off than most people who leave their financial future in the hands of financial planners***.

In short, start thinking about why you really want to invest before even doing any investing. If you find your reasons to be shallow and superficial, you may want to start thinking again before committing to an investment plan.

Notes:

*Unfortunately, many of those gains will eventually prove to be illusionary.

**Taken to the extreme, this is the nirvana reached by monks. The detachment from worldly possessions because all worldly possessions are by their very nature, impermanent.

***The term ‘financial planner’ refers to how it’s used in the Singapore context. I don’t have anything against financial planners but in Singapore, ‘financial planners’ are basically product salespeople for insurance companies. There’s nothing wrong with having insurance but most financial planners are paid on a commission basis and belong to an agency whose targets are sales-driven. The only way to hit these targets is to sell products that have higher commissions and these are typically plans with some sort of investment component where the investments are taken care by the fund management company associated with/outsourced to by the insurance company. These funds charge high fees for basically giving you market returns. Some financial planners may not like it but show me a financial planner who got wealthy through actual financial planning instead of sales commissions and I’ll retract what I said.

2017 has been a crazy year.

Globally, Trump has proven to be the destabilising force he said he would be. After all, how can you upset a country with nuclear bombs (i.e. N.Korea), an entire religion (i.e. Islam when he decided to move the US Embassy in Tel Aviv to Jerusalem), and of course, an entire gender (i.e. women, thanks to his support of Roy Moore amongst other things).

Markets have obviously ignored all the geopolitical risks and trended higher throughout the entire year. While the local market (proxied by the Straits Times Index (STI)) has performed pretty decent, US markets have rocketed. The Dow Jones has hit all-time highs multiple times all year.

On a personal note, this year has been more tumultuous than most. Funny enough, a student from two years ago whose family runs a fortune-telling business read my fortune and said that 2017 would be a “tsunami year” for me. I don’t know exactly what a “tsunami year” is supposed to mean but I suppose it was supposed to be a disaster of epic proportions.

Well, I guess this year had a little more volatility than most- we had to deal with a lot of lifestyle changes with changes in the work environment, getting a cat and a medical condition. Emotionally, some days were trying. Physically, some days were exhausting. I’ll never forget sleeping for just a couple hours two days in a row while the cat adjusted to our sleep schedule.

Thankfully, markets have been kinder and all portfolios only went one way – up. Some things like bitcoin have gotten all the attention but everyone’s forgetting that markets had a solid run this year as well. I’ll focus on the markets a little more in a separate post.

Despite all that has happened in 2017, I would say that I’m the better for it. We managed to check out more of Tokyo this round. I never had Ikinari Steak or gram pancakes before this and both were worth checking out. I also had a mind-blowing lager and braised pork belly combi at Yona Yona Beerworks.* It was also my first time seeing sakura so that was cool.

 

 

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This was magical

We also managed to check out Cempedak island- the sister resort of Nikoi Island Resort. The place was amazing. While the beachfront wasn’t as nice as Nikoi, each villa had its own pool. The food and service were also spot-on just like what we experienced on Nikoi.

 

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This is paradise

 

But I think the best thing that happened to us this year was that we got a cat. He thinks about food all the time, tries to get a taste of breads and cookies, wakes us up very early in the morning only because he wants to be fed, sits on our laptop keyboard while we’re trying to do stuff and rather play with all the empty cardboard boxes than the toys you get him. Despite all that, he’s really adorable and pretty well-behaved. I never had a cat before but I have to say that taking care of a cat like the one we have is much easier than taking care of a dog (at least, the ones that I’ve had).

 

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We still love him. We really do.

I guess that in 2017, I wished that I could have cooked more, baked more bread, done a little more coding, lost a little more weight, got much fitter, bought some bitcoin**, made more money, quit my job and saved the world. So despite all the downs, my 2017 may not have been perfect but I’m glad that looking back, there are things that I really, really am thankful for that happened in 2017 and I wouldn’t change a single thing.***

Here’s hoping that I’ll do all of the above in 2018 (except bitcoin, of course).

 

 

 

notes:

*They are two separate things on the menu but together, make for this endless cycle of satisfaction.

**Just joking.

***Chaos theory lah.

Focus on what you can control.

– Michelle Obama

In just six words, Michelle Obama reminded me of the most important thing that I’ve already come to know but constantly forget to apply.

Life constantly throws things our way. Sometimes, those are nice things like someone saying something nice about you or, someone doing you a kind deed or favour. Other time, you just get hit by something terrible like someone saying or doing something unkind to you or, some stroke of bad luck which could be minor or major.

You can’t change that.

What you can change is your perception and reaction to the event.

Someone cuts your lane in traffic. You can curse and swear, put your foot to the pedal and give him/her a taste of his/her own medicine. Or you could always take a deep breath and realise that the person behind that wheel is just a fly that happened to buzz around you and that fly is long gone. Why bother with a fly?

You find out that you have a major illness and require major surgery. You can curse the gods and question why this had to happen to you, be angry at the world for not having to experience the uncertainty and anxiety that you have to go through. Or, you could try to find out more about the procedure and think about how to best deal with the recovery from it. Perhaps the awareness of the fragility of life will make us treasure each passing moment more? With that recognition, maybe we’ll spend less time on unimportant things with unimportant people.

The stock market tanks and takes your portfolio down by 50% or more. You can panic and give in to the mania; Turn to drugs or alcohol to (temporarily) forget about the problems. Or, you can look at the evidence that manias tend to pass and be thankful that you didn’t overextend yourself and were forced to liquidate. The same is also true when you see and hear people around you with stories of wildly profitable “investments” in esoteric asset classes. You can develop a major fear of FOMO or you can breathe in and remember that all bubbles (in tulips, the South Sea Company, over-priced growth stocks, unprofitable dot-com companies, over-leveraged bets on real-estate) don’t end well.

You can choose to be angry and unkind. Or you can choose to be calm, firm, grateful and kind.

Most importantly, you can choose. This is something I have to remember. Always.

This August officially marks ten years of investing.

Ten years is a long time and I’ve learnt some things along the way. However, my investing journey is by no means over and I’m pretty sure there are many more things I will have to learn.

This post is going to be a reflection of the steps, missteps and lessons I have learnt so far. (Beware: long post ahead)

How I got started

Investing was something I read about from Rich Dad, Poor Dad. I know the book is controversial (see the criticism the book got) but that’s the first time I even got the idea of being an investor.

However, that idea never really took any shape until one day in 2006 when I saw a flyer on campus that the business school at the National University of Singapore (NUS) was organising a talk by Robert P. Miles. Robert P. Miles was invited to give a talk about his book, Warren Buffett Wealth. That was my first introduction to Warren Buffett.

Subsequently, I read whatever I could find about Warren Buffett and Value Investing. Of course, it didn’t help that I had no idea how to read a financial statement. By nature, I’m not one to go through the details with a fine-toothed comb and I was studying for an undergraduate degree in Economics. Not exactly the kind of major that teaches much about accounting.

Thankfully, the mid-2000s had some resources online. I’m forever grateful to Value Buddies and its predecessors (Wallstraits and subsequently, Afralug). Some of the regulars there have been generously sharing their wealth of experience and that really sped up my learning.

I bought my first stock (technically, it’s a unit since it’s a Reit) in 2007 and still hold it to this day. To be honest, I didn’t buy it because I had great insights or superior analysis of its financial statements. I bought it because I figured that Singapore’s ageing population will be spending a lot more on healthcare in the years to come. Thankfully, that investment has paid off handsomely.

Of course, that investment wasn’t all smooth-sailing. Buying in Aug 2007 meant that basically, I was buying at the top of the market. For those too young to remember*, Aug 2007 was as high as markets got before things started to go to hell. End 2007 to September 2008 was just a long descent into hell and Lehman Brothers’ collapse just caused everything to fall off a cliff.

Getting through the Global Financial Crisis (GFC)

The GFC seemed so long ago but anyone who lived through that would have seen their investments get totally wrecked. I’m pretty sure some of my investments were down by 50-75% at one point.

The silver lining was that having just started out in the market, I didn’t have a lot of skin in the game. In fact, that was the best possible time to commit even more money. So did I make tons of money from that period? Not really. There was always this constant fear of whether the market would go down some more. And by the time, the market was in an uptrend, you start worrying about whether another shock will hit the system.

That, however, provided me with a good understanding and experience of classic market psychology. It’s a lesson that not everyone may learn or may even learn too late. A very senior colleague of mine who made his retirement nest egg in the GFC by buying tonnes of stock at what was almost the market bottom basically sold out in May 2015. He was vindicated by the horrible second half of 2015 but practically missed out on collecting dividend income in 2016 and the run-up in late 2016 till now.** On the contrary, I stayed in the market and my portfolio is roughly 7% higher based on pure investing returns for the same period. In short, market timing is a difficult business.

Investment Record

First off, a disclaimer. I’m not putting my investment record here to brag or in hope that someone will recognise my prowess and give me a job. In fact, you’ll see that my record is nothing to brag about. My objective is to show that any average person can achieve decent returns in the market with a solid plan, plenty of patience and a decent understanding of markets.

In 2007, I started with a portfolio of roughly $6,000. This may not seem like much but I can assure you that it was a substantial sum to a university undergraduate at that time. Unfortunately, I was young and not smart enough to know what records to keep and where to keep them (this was all before we had cheap gigabytes and cloud storage) so I only kept records of how much my portfolio was growing. It was only in early 2011 that I began to keep records of both my investment returns (that is pure investing returns not inflated by me adding more money) as well as the actual growth of my portfolio.

From 2011 till now, my investment returns (capital gains and dividends reinvested) or what’s more commonly known as Compound Annual Growth Rate (CAGR) is about 7.51%. However, the actual growth of my portfolio is 18.85% p.a. for the same period.***

So what gives? As I’ve said before elsewhere on this blog, that big difference is down to mainly two things: (1) I started from a low base. In early 2011, my portfolio was below six-figure territory. Just by saving $1,000 a month, that would increase my portfolio by somewhere about 12%. (2) Savings are key to building your portfolio because that acts as a buffer or insurance. When markets are down, that continual addition to the war chest helps you add positions when the markets are cheap. When markets are expensive, you just build up your cash position to take advantage of when markets (eventually) get cheaper.

Obviously, as time goes by, your savings will contribute less and less towards your portfolio growth. The growth in your portfolio will come to consist of only your investment returns and that shouldn’t really be a cause for concern because when that time comes, you will probably have reached your financial goals. In fact, the more you save each month, the quicker you will reach financial freedom assuming of course that your spending stays the same after having zero income.

Three steps to get started

Step one, read as much as you can. You should not be reading about the theoretical or technical knowledge regarding investments but as much of the history, different schools of thoughts, and the different participants in the markets. In other words, don’t just know how to read the financial statements of a company and be able to do all the not-so-fancy calculations but start to appreciate how markets used to be and how they are now.

Also, not everyone in the market is an investor. Even among investors, there is substantial variation with regards to how long-term an investor’s view is. Get to know how traders and speculators behave because invariably, the siren song of being a speculator is tempting and you need to know when you call yourself an investor while acting more like a speculator. Traders have their place in the market but you have to know if you have brains and fortitude to be one.

Step two, just do it. I’m sorry for borrowing Nike’s slogan but there is really no better time to get started. As long as you are using money that you are prepared to do without for 10 years or more, being in the markets should not be an issue.

Step three, keeping learning and getting continuos feedback. Feedback doesn’t just come from the markets. You should seek out like-minded individuals who want to better themselves. ValueBuddies.com is a valuable place. There are plenty of investment bloggers (e.g. kyith at Investment Moats, Dividend Warrior) out there as well who maintain a good conversation with people who leave comments on their blog.

Environmental factors

A note of caution for those trying to replicate my model. Your investment portfolio cannot exist in a vacuum. If my wife was a high-maintenance trophy wife, the portfolio definitely wouldn’t be where it is today.

Fortunately for me, my wife was raised in a very practical household with parents who are the most down-to-earth people one would ever meet. Our expenses are minimal and our housing expense is way below our means. In a world where mortgages can stretch up to 30 years, we only have 5 years left on your mortgage despite only having bought the place a few years ago.

Of course, circumstances vary among households but I believe that contrary to what most people say about the average person living in Singapore, we are living proof that staying in Singapore doesn’t have to be an exorbitant affair.****

What’s the end goal?

My personal goal is to have my portfolio provide enough income for me and my wife to meet our expenses. These could range from daily expenses such as utilities and groceries to one-off expenses such as medical emergencies and holidays.

Once that goal is met, we will have much more options on how we want to live our lives. I don’t know about my wife but I certainly would explore my creative side much more. I have dabbled in some of these things recently but I really would want to pick up some skills like drawing/sketching, creating web apps, dabble a little in simple DIY tech-related craft (like using a raspberry pi as a security cam), baking bread and cooking at a more advanced level.  Or as my students might put it, I want to become a pro at these things.

If you’ve been following this blog, you will realise the slowdown in postings. I won’t be blogging as much as before because of impending changes on the job front as well as this minor obsession I’ve developed on programming.

Good luck investing! Here’s to the next 10 years.

Endnotes:

*I feel weird saying this but I do have some students who have just gotten in the market and for whom the GFC of 08/09 seem like a distant memory.

**Of course, financial planners will rightly tell you that your age profile matters when it comes to asset allocation. However, converting almost your entire portfolio to cash is not a valid retirement strategy either with interest rates on cash being so low and inflation for seniors (healthcare) being higher than the general inflation rate.

***My investment portfolio consists only of stocks and cash. I haven’t included my property, CPF monies and other assets such as insurance-based financial products that could be surrendered for cash.

****We are by no means extremely frugal people. If I wanted to go to that extreme, I would not have gotten a car and we wouldn’t be taking yearly or even twice yearly holidays to places like Japan, London and my favourite retreat off Bintan.

There’s a mystery in my current organisation that I’ve been trying to solve.

Currently, my organisation offers employees who reach the official retirement age of 62 years a one-year contract for the next three years. There is even an option to have that extended to 67. Of course, the employee has to meet certain performance requirements before these options are offered.

Some additional context

My organisation doesn’t offer a pension upon retirement. Singapore has a compulsory savings scheme called the Central Provident Fund (CPF) where workers have a certain portion of their monthly salary socked away until they hit a certain age.

Also, the colleagues in question are not low or even average-pay workers. They would easily be considered middle to upper-middle class folk for the last 20 or 30 years of their careers.

The mystery and my theories

The mystery for me is not what my organisation offers but why would my colleagues want to take that offer up in the first place. I have a few theories but none seem to be wholly satisfactory.

Theory #1: They need the money

One possible reason could be that some colleagues who work until 62 and beyond do so because they need to. In other words, if they retired at 62, they would have problems funding their retirement.

I’m not very satisfied with this theory because I’m pretty sure most of my colleagues have enough put away for the rest of their lives. Furthermore, most of their liabilities such as housing loan(s) and children’s education (yes, in this part of the world, parents usually pay for their education if they can afford to do so) would have already been settled.

Also, if you can’t afford to retire at 62 years old, then is another three to five years going to matter? It might also have been that many moons ago, these colleagues planned their retirement up till 65 or 67 and therefore, they are near the end but not quite. In that case, isn’t that level of planning a little suspect? What person plans to the exact year without having a buffer of some sort?

Theory #2: Retirement is boring

I can understand this sentiment. If you look around, there are many people who say that once their professional lives are over, their minds degenerate quickly because there is nothing to keep them engaged. This is a particular statement many elderly businesspeople make.

The flip side for my older colleagues is that interests can be cultivated or expanded. In fact, most of us have other interests outside of our professional lives. Wouldn’t retirement free up a lot of time to pursue those other interests in a bigger way?

Many older colleagues also tend to be grandparents and I’m sure their children would appreciate their help in taking care of the grandkids. Or maybe it’s finally time for my older colleagues to go out and see the world.

Theory #3: They love the job

Truth be told, there are some colleagues who fall into this category. They love the interaction with their students so much so that they don’t want to step away from it. However, the job isn’t all fun and games. There are many mundane administrative aspects to the job as well as the boring and utilitarian committee work that we’re all forced to be a part of. If they really love the job, they could always become a freelancer. This would allow them to focus on the teaching without having to be a huge part of all the administrative machinery.

If they love the administrative machinations, then that’s a whole other story but which begs the question- why not be part of an administration somewhere else instead? Other administrations would probably pay better.

Also, teaching doesn’t have to be confined to the classroom or the school. Sharing knowledge and guiding others happens digitally and in other venues such as religious organisations as well.

Conclusion

Those are my theories and none of them seems particularly satisfactory. From the viewpoint of a 30-something year old who’s been here for about five years, I can’t imagine why anyone would want to stay until 62. The only sane thing is that they really can’t bear to leave this place because of the joy of work. Therefore, my money is on theory #2 or #3 although there are some holes in that argument.

Having said that, if I could, I would go when I’m ready. After all, age really is just a number. If I was financially free, I would be doing what interests me or what is meaningful regardless of the amount of money it brings me.

Yes. That’s the exact clickbait-y (which obviously works) title of an article I saw on a site sanctioned by our Central Providend Fund (CPF)* and their answer is:

As an ideal, the correct amount to have saved up – at any age – is six months of your income. Any amount beyond this should be redirected into a retirement fund. This is because savings are just to deal with emergencies, whereas investments are for the long-term.

So if you have an income of S$5,000 a month, your savings are good if they are at least S$30,000. Note that your CPF doesn’t count, as it’s not savings you can immediately access.

That’s actually pretty sound advice.

At first pass, I nearly thought they were recommending you have savings of $30,000, period. I was thinking that it’s a pretty low number but after reading it properly, I realise that the article meant that if you earn $5,000, you should have about $30,000 in cash or equivalents.

What I think is more important is that people take heed of the second part of the first paragraph which tells people to invest any amounts above this buffer of 6 months’ income. Where and how you invest should be determined by the amount of financial knowledge and fortitude you have. If in doubt, consult a financial advisor you can trust. (Buffett’s pearl of wisdom about never asking a barber if you need a haircut comes to mind.)

The later part of the article is quite sad though.

Everyone’s financial situation is different. You may have responsibilities that others don’t. For example, some people have parents or siblings with medical conditions, who need more expensive healthcare. Some people have an income lower than the median, which makes it hard to save. There’s also one element that many people in their 30s have in common.

Your 30s are typically the age in which you’re saddled with your first major financial costs. It is probably the first time you buy a flat or car, and you might be settling down with your first child. It’s quite possible that you did save diligently from your 20s, but your wedding has wiped out those funds.

Seriously, if you find yourself agreeing with that part of the article, you have a serious spending problem. If you have an income so low that it makes it impossible to save any meaningful amount, then you really need to be prepared to work really, really hard.

I was looking through my records and it shows that my 30s (so far) have been the greatest period of my wealth accumulation and to be honest, without a proper savings game plan, it wouldn’t have turned out so well.

Don’t be surprised but there are plenty of 30+ year-olds out there holding very ordinary jobs who easily have six-figure bank accounts or stock portfolios. These are the people that you just never read about.

*The CPF is the name of the organisation that handles the compulsory pension savings account every Singaporean resident has.

The Sunday edition of the Straits Times has the Invest section which was the only real reason that I read anything in the Straits Times. I use the word ‘was’ because I haven’t gone through the paper in a very long time. The main reason is that I had access to copies of the Straits Times get a little more restricted and to be honest, the content in the Invest section seems to have gotten a little less useful.

Take the latest exhibit, The real cost of avocado toast. The article is obviously riding on the trend of bashing the guy who advised millennials to cut back on avocado toast in order to save for a downpayment on a house. The article does rightly point out that cutting back on certain habits every day and letting that extra savings compound will help you get quite a bit richer.

The problem with such advice is not that it’s wrong but that it doesn’t really provide you with a solution for getting it to work. It’s like telling an overweight person to eat less otherwise the chances of dying early gets higher. It’s good advice but the more important thing is how is the person supposed to use the advice to get results?

Since the article rightly points out that people need to cut back on certain habits, we must also acknowledge the fact that habits are hard to break. It takes a lot of willpower or an insanely good strategy to avoid going back onto the wrong path.

This is where I’ve found that it’s much easier to focus on how much you want to save each month and set up a standing instruction with your bank that automatically transfers that sum to an account that is relatively less liquid. i.e. You don’t normally use that account for daily spending.

Any monies that are left in the account after the automatic transfer to the ‘savings’ account is then left for spending. It’s that simple. People often think that this is not doable but I am willing to bet that it’s possible for the average person. After all, in Singapore, 23% of your monthly income gets put in your Central Providend Fund (CPF)* account and we’ve pretty much learned to live with that ‘savings rate’ of 23%.

So, try it. Start with transferring 10% of your monthly income to an account that you won’t touch unless you absolutely have to and have as much avocado toast you want with what’s left.