Saturday, 28 May 2016

Our Story Influences Our Reality

I would like to share an enlightening passage from a book titled "The Secret Language of Money‒- How to Make Smarter Decisions and Live a Richer Life".  The author is David Krueger. 


Two anthropologists were chosen to enter separate, essentially identical ape colonies to live and observe for a year.  The two men were matched for similarities of personality, philosophy, and education, in order to be as alike as possible.

When they emerged a year later to compare notes, they naturally expected that they would have had similar experiences.  Instead, they found remarkable discrepancies.

After an initial period of transition, the first anthropologist had been accepted by the apes as one of their own and integrated into the colony.  During his year, he had experienced an extraordinary level of unity and comfort within the ape community.

The other anthropologist, by contrast, never managed to move beyond his initial position as an outsider on the periphery of the colony.  Continually careful and vigilant throughout the year, he never came close to feeling accepted by the apes and always felt he was on the cusp of a conflict.

The men puzzled over this for months, trying to discern what could have made this dramatic difference.  Finally they realized what single factor had been different between them.  When the two men entered the two ape colonies, the second anthropologist brought a gun with him.

The gun never showed; he never used it, and the apes never even knew he had it.  But he knew he had it: He knew that if things got tough, he had an "out."  The anthropologist who had no gun had a commitment: He knew from the beginning that he would either make it or not make it on his own.

The two men went into identical situations with two different stories, and it was the stories they brought with them, not the situation itself, that created their completely different realities.

Note that it was not the gun itself that created such drastically different outcomes.  It was the fact that the man knew he had the gun.

Each of us enters every situation in our lives, day after day and year after year, with a hidden gun, just like the second anthropologist.  That hidden gun is our story.  Like the anthropologist, we are often unaware of the stories we are living - even though we have written them ourselves.  The plotlines of our own stories are often hidden from view, even from our own view.  Yet just because a story is hidden doesn't mean it doesn't have a profound impact on our lives.


What kind of a story are you living in your life today?

Saturday, 7 May 2016

Updates in My Life

It has been a long while since I last updated my blog.  Work and family aside, the sole excuse is that I have been lazy and my brain juices have receded in depth, just like the Linggiu Reservoir in Johor [news].  I am facing a mental drought of topics to pen down.

Nonetheless, like an ocean liner which has changed course by a few degrees, my wife and I have laid down certain plans that will dramatically alter how life turns out in the future.

First up, my wife and I are on track to prepay $100,000 for our mortgage in August when the lockup period ends.  The money has been set aside and this is one load off my chest.  The remaining loan will be repriced with the same bank.  (We calculated that the interest saving isn't enough to cover the expenses of switching to another lender.)

Next, we have decided to upgrade our residence.  Despite the current convenient location, we feel that we need a bigger place to accommodate our two growing boys and the piano.  We hope to purchase a resale five-room flat or an EA (Executive Apartment) in two years' time.  Within this period, my wife and I will aim to save $100,000 each to top up the price difference and have some cash for renovation.  This will serve as our final retirement pad.

We like our neighbourhood, so the new place will be in the vicinity.  Not forgetting to mention it is within one kilometre of a prominent primary school.  Parents will know the importance of location when it comes to Primary One Registration.  Still, we are taking no chances.  My wife and I will apply as parent volunteers in January next year.  We have been looking up past years' questionnaires and brainstorming model answers to fill in.  Call us kiasu.  When it is for our children, we prefer to play it safe.  Parent volunteer assuming we successfully burn our leave and slog seventy (yes, SEVENTY!) hours for the school gives us a balloting slot in Phase 2B.  The less-than-one kilometre proximity offers us added priority.  Should we fail to get into the parent volunteer programme, the contingency plan is that our new place must be easily accessible by public transport to other nearby primary schools.

On the investing front, I have jumped on the bandwagon and forayed into P2P (peer-to-peer) lending.  I have opened an account with Funding Societies and put in a small sum.  Honestly, I am not so noble in a bid to help our local SMEs.  I am in for the money.  The double digit interest rates are enticing.  But the risk is equally high.  Yet, it is amazing how the loans get easily financed within a short span of days, hours even.  There must be a huge crowd of yield hungry investors out there.  To clarify, I am just committing a small portion of my capital.  Nothing more than the worth of a luxurious overseas vacation.  The last thing I want is multiple loan defaults when I lose my job.

After a harrowing experience with one property developer, my wife and I have decided to pull all our funds from project financing.  While it wasn't outright fraud, a housing slump coupled with stricter government regulations has resulted in cash flow issues for the company.  Thankfully, it was a small price paid for a big lesson.  Succinctly put, we have grown wiser with regard to legal proceedings against a corporate borrower in default.

Finally, I am still bent on accomplishing my Master Plan 2029.  If you are new to my blog, it is my grand scheme of things to be able to retire (or at least semi-retire) in year 2029, at an age of fifty years young.  Some more distance to go.  Recently, I had been feeling stressed out and tired from my work.  I fantasized about financial freedom.  Sadly, I have to slap myself back to reality and stay grounded.  Given the anaemic economic climate, these are dangerous times for PMETs (Professionals, Managers, Executives and Technicians) [news].  One never knows when retrenchment is drawing near.  Already I have seen a couple of colleagues being 'managed out' (a.k.a. fired) by my employer, because of lacklustre personal performance.

Fellow blogger Createwealth8888 has a "Three Tap Approach" for retirement [blog].  Regrettably, I have none.  The basis of my Master Plan lies in three simple steps: To enhance my earned income ("play great offense"); to be frugal and live well below my means ("play great defense"); and to invest the balance into quality dividend paying stocks at an opportune time.

"What is an opportune time?" you ask.

"Depends on my gut feeling," is my reply with a cheeky grin.  Most likely, it will be when Mr. Market is hemorrhaging badly in the red.

Oh ya, my wife and I are planning to get a puppy.  But that is a story for another time.

How has life been for you lately?

Tuesday, 29 March 2016

Similar But Different

My wife shared an amusing observation with me.

Same story content, selective editing.  Conveys a different impression altogether.

Compare these two stories:

The moral of the story: Suspend all judgement (and jealousy) on what you read from the Internet.

Wednesday, 16 March 2016

Fast Lane

Sometimes I wonder if I am so used to living on the fast lane that I am unable to appreciate life at a gradual pace.

There was one weekday morning when I boarded a bus to work.  The captain was driving at an unbearably sluggish speed, presumably because it was way ahead of its schedule.  I was fuming inside as I did not want to reach the office late.  Yet, there was little I could do.

Out of the blue, an epiphany struck: Have I always been in a hurry that I am missing out the finer details around me?

I thought of my goal to achieve financial independence by year 2029 (at age 50).  Certainly, I am giving myself a lot of leeway in terms of time to hit this target.  There are financial bloggers who aim to achieve this feat by their mid thirties.  (I have no doubt their dream will be fulfilled.  It takes discipline to keep blogging - the same discipline to accomplish anything.)

At age 50, a man is still considered at his prime.  But a large part of one's life would have whizzed past.  When that time comes, will I ever look back and regret the richness of experiences forsaken and never to return? 

"Age is an issue of mind over matter.  If you don't mind, it doesn't matter."
- Mark Twain

If the average mortality statistics apply, at fifty years young, I have three more decades before I breathe my last.  Hopefully, with my daily exercise regime, I will still be fit enough to do what I want, when I want.

This begs the next question: When health, wealth and time are no longer constraints, what do I truly want to do?  Granted, there are many dreams I wish to pursue, but have not gotten around to.  For example, I wish to be a globetrotter and bear witness to all the beauty this world has to offer.  But will the sojourner's experience be as gratifying as I thought?  Will I get sick of the customs check, jet lag and living out of a suitcase?  Will I plug myself back into the workforce instead? 

These are answers which I will never know, until things have come to pass. 

My wife has a simpler wish: To take care of our two boys and watch them grow up.  It means to give up her current career and stay home to be a housewife.  It is not unattainable at this moment.  But – and I know this is an excuse – if we are to rely only on my sole income, we may not reach the desired state of wealth to live comfortably through our golden years.  In other words, we will have to make sacrifices, or hope for (when old age arrives) a swift and early death.

Perhaps I am missing the point here.  Post-retirement may not be as bad.  The freedom is priceless.  But right now, I see zero need for the mad rush towards the final destination (of financial independence).  I will be patient and enjoy the journey, one day at a time.

"Our lives are made up of a million moments, spent in a million different ways.  Some are spent searching for love, peace and harmony.  Others are spent surviving day to day.  But there is no greater moment than when we find that life — with all its joys and sorrows — is meant to be lived one day at a time."
- Unknown

Are you living life on the fast lane too?

Wednesday, 2 March 2016

Property Fever

Lately, my wife has been a little more than enthusiastic about searching property deals online.

It began with a conversation with my mother-in-law.  Now, I have deep respect for the grande dame.  She is an avid stock investor, managing a six-figure portfolio by herself.  She also owns three residential properties.  You wouldn't believe she had first started out as a housewife, making paper envelopes for extra income in the past.  A series of shrewd investments built her fortune today.  There is a lot about money management I can learn from the matriarch.

Anyway, I digress.  We were discussing about real estate investment the other day.  Succinctly, she lobbed a conceptual grenade into our minds.  We were told  As far as our finances allow, my wife and I should aim for the biggest landed property possible.


The first item to cross my mind is DEBT.  My mother-in-law is asking us to take up the largest death warrant that the bank would let us sign our names to.

That seems like shockingly bad financial advice.  Moreover, if we are going to stay in the house, it is not going to generate any rental cash flow.  Per Robert Kiyosaki's definition, that is bad debt and it spells trouble with a capital T.

In all honesty, I am looking forward to fully repaying the bank loan on our existing HDB flat.  Five more years and I will be relishing the salvation of being debt free.  Taking on a humongous mortgage now would be to consign myself to three more decades of wage slavery.  I can kiss my early retirement goodbye.

It took a while for the horror vibes to subside, before my brain regained sanity.

"Why?" I pondered. "Why is she offering such advice that runs contrary to good money sense?"  As the weight of her words sank in, my mother-in-law explained further:

Having a big place will allow for multi-generational living.  My sons and their families will be able to live with us under one roof.  Even if our children do not wish to stay together, we (my wife and I) can always sell the house later and buy a smaller lodging.

It is a beautiful dream, except that I cannot wait for my two sons to grow up and shift out to their own pad.  (I miss my personal space.  Badly.)

Nonetheless, the seed of thought has been planted, taken root and begun to sprout like weeds over the past few days.  My wife is thinking of getting the banker to churn out the target loan figure on our next visit.  If the OCBC Home Loan Calculator [link] is of any guide, we could probably be eligible for a loan of up to $1.9 million, which roughly translates to a home purchase price of $2.3 million.  Real estate portal Propertyguru is decidedly more conservative and would only suggest a loan of no more than $1.7 million [link].  

Plenty of caveats here.  My wife and I will have to slog in our jobs till age 60.  We will have to avoid the retrenchment axe to the best of our ability.  It also means our kids will need to be smart enough to get a university scholarship or a study loan.  No vacation.  No big expenditure.  No life.

The sad fact is, for a price tag of $2.3 million there are not many locations we can consider, if we want landed housing of a decent size.

This is certainly one matter my wife and I will have to brood over, preferably with a calm mind once the initial excitement fades.  As the cliché goes, "Rome wasn't built in a day."  We need to evaluate our property goal carefully, until we can comfortably crawl over our mental brick wall and go house hunting.

“Real estate cannot be lost or stolen, nor can it be carried away.  Purchased with common sense, paid for in full, and managed with reasonable care, it is about the safest investment in the world.” 
– Franklin D. Roosevelt

Do you have a similar goal to own a landed property?

Wednesday, 24 February 2016

It Won't Matter Once I'm Old

A new advertisement at the bus stop near my home has caught my eye.  It shows the face of a young boy bearing a glum look.  There is a quote on the poster:

"I don't want to work hard.  It won't matter once I'm old."

It is part of the new publicity campaign by the Tripartite Alliance of Fair Employment Practices (TAFEP) [website].  The aim is to highlight the bias against older employees at the workplace.  

Due to their higher salary base, senior workers are deemed to be costlier, compared to their junior counterparts.  The implication is if older employees are treated unfairly, the younger generation may fear the same eventual outcome, and hence will not be motivated to work hard.

Is this a proven truth, or simply a scare tactic?  Your guess is as good as mine.

Age discrimination is a perennial issue.  It occurs in every society.  A better question to ask is at what age would a worker be considered old?

Surprisingly, it can be as young as 35.  An article by job portal eFinancialCareers screamed the following headline, "35 year-old bankers who lose their jobs in 2015 may never get rehired."  As one headhunter quipped, "Banks now have no interest in hiring the 30 and 40 somethings who can remember the seven figure pay days of the past – even if those people do say they’ll accept less, they’re always going to be bitter and twisted about it." [article]

When I applied for employment with my current organisation six years ago, I had just hit the big "3-0" in age.  Back then, I was competing for the same entry-level position with hundreds of fresh graduates from the local and foreign universities.  It was my fourth career change within a short span of seven years.  I had my worries and concerns.

Thankfully, I was part of the cohort who made it through the four rounds of interview.  I reflected on the strengths of hiring an old geezer like me compared to a greenhorn whose ink on the degree has barely dried.  Partly what had worked for me was the experience I bring along from my previous job stints.

As I rose steadily to a position where I can influence the choice of a candidate, I began to realise the same "work experience" which I had depended on can be a double-edged sword.

Consider the following example:

A (relatively speaking) old joiner with a "battle-hardened" mindset is unwilling to put on multiple hats for the same paycheck.  Lack of recognition at his previous employment has left him skeptical of going the extra mile.  He is also inflexible to venture out of the box (or beyond conventional methods) to accomplish an unfamiliar task.  He prefers to "play it safe".  Unfortunately, negative prior experience had formed a mental tripping stone that cripples the future of the seasoned hire.

Contrast this with a graduate without any preconceived notions.  Entering the workforce for the first time, he is bold (or brash) to prove his mettle.  He rushes headlong to tackle numerous challenges at once.  His optimism is unfettered and he dares to try.  The eagerness to learn and confidence shines through.  The upstart shows promise and gains acknowledgement from management.  He is accelerated through the hierarchy.  The absence of psychological baggage from previous tenures is a boon for the younger employee. 

"Anyone who stops learning is old, whether at twenty or eighty.  Anyone who keeps learning stays young.  The greatest  thing in life is to keep your mind young."
- Henry Ford

Of course, I may be generalising things here.  There are always opposite cases to be found.

I believe older workers are more likely to be retained in industries that are knowledge intensive.  Years of exposure on the job would have equipped the senior employee with a rich depth of expertise to handle the most complex situations.  Examples of such fields include medicine, aviation and information technology.

The tide turns farther in favour of the seasoned employee when the cost of training a new hire is high.  Besides the resources dedicated and time spent to get the rookie up to "production speed" (which can take months), the lost productivity of a fully competent worker (despite his higher wage) cannot be underestimated.

In the current global climate of anemic growth, it is tempting for companies to shed manpower as a swift measure to cut costs and save the bottom line.  The banking sector is already shrouded in fear with new layoffs being announced every quarter.  The oil and gas (O&G) industry is not spared the headwinds either, with stalwarts like Keppel Corp talking about "right-sizing" their operations and resources [link].  While the retrenchment axe may not be imminent in some professions, I have heard that no replacement was sought for co-workers who had resigned.  

The stress on older employees might have gotten a notch higher.

What are your thoughts about the latest publicity campaign by TAFEP?

Friday, 19 February 2016

Branded Stuff Boosts Performance

I often emphasize on being frugal.  I go for generic rather than premium stuff.  But it seems my approach may have been shortsighted.

On Thursday, Bloomberg published an article titled, "How an Expensive Suit Can Make You Better at Your Job".  You can read the article here.

The author listed recent research which found that wearing brand-name gear can provide a noticeable placebo effect that could boost performance.  In other words, if you think donning that Salvatore Ferragamo suit makes you a better speaker, guess what?  You could be right.

The keyword here is "could".  It would be a stretch to nail the causality between branded goods and being successful.  Nonetheless, other research in the past have arrived at a similar conclusion Brand names can have an influence on people.  A 2011 Boston College study involved a driving simulator that featured a logo-splashed vehicle.  Participants who drove a virtual Red Bull vehicle did so with more speed, power, and risk-taking behaviours than those piloting a Coca-Cola, Tropicana, or Guinness car.  (The Formula One effect?) 

I wonder if this is the primary reason for product endorsement by media artistes and sports stars.  By associating an item with a celebrity, we attribute positive qualities to the product.  For example, a particular brand of facial cream will let you enjoy snowy fair complexion, similar to that of the prominent actress.  (Never mind if the picture had been airbrushed for optimal effect.)  Or by wearing a particular brand of swanky sneakers, one can score shots at the hoop, just like the famous basketball legend.

Folk wisdom tells us to "look good is to feel good".  Feeling good builds confidence.  With confidence, one is more capable of putting our best foot forward.  Perhaps there is a grain of truth that we can alter our outer material image to enhance our inner psychological state. 

Looking good can be an expensive affair, and a lucrative business.  The global medical aesthetics market is estimated to be worth 12.6 trillion U.S. dollars by 2020, representing a compound annual growth rate (CAGR) of 10.8% between 2015 and 2020 (reference).

That is great news if you are a cosmetic surgeon.  For the rest of us however, beauty does not necessarily translate into wealth.  In fact, most millionaires are not known to have a fanciful wardrobe.  In the study conducted by Dr. Thomas J. Stanley and Dr. William D. Danko, bestselling authors of the seminal book "The Millionaire Next Door", an interesting relationship was observed.  For every millionaire who owns a $1,000 suit, there are at least six owners who do not have annual income exceeding $200,000.

So who is shoring up the high end consumer market in America?  Certainly not the rich.

Most people hardly earn a six figure salary.  So our cash inflow is limited.  If we are to aspire to debt freedom and true financial independence, watching our cash outflow will be of prime importance.  The better we can save and invest our monies, the likelier we can achieve our dream.

That said, there is little harm to tailor make that bespoke suit if it makes you feel like a million dollars.  Go on.  Pair it with a Hermès silk tie if you like.  Your boss might even thank you for it. 

Just don't make it a habit of splurging your hard earned cash everytime.

Do you believe in wearing branded stuff to boost performance?