Monday, May 30, 2011

Lessons learned from cboxers

Just by looking through the cbox history, one can learn a lot of lessons from the actions (or sometimes the non-action) of people. I'll just list them out objectively,  not to ridicule but rather to reinforce the lessons in me again. I must have done it many times in the past, but hopefully not ever again.

1. Buyer's remorse (or seller's remorse)

This is when the queue that you had put in place had been hit, but instead of having feelings of joy and jubilation, you are feeling unhappy because you now really own the shares at the price. This is actually quite similar to seller's remorse, where you sold at a certain price but again instead of feeling happy, you actually regret selling at the price. These are just basic emotions of greed and fear at work. For buyer's remorse, it's the fear that after you key in a (hopefully) cheap price, the price will tank further. For seller's remorse, it's the greed that makes you want to earn more after seeing the stock rise up higher than the price you just sold.

Do I have this kind of remorse? Of course I do. It's hard to eradicate it, so it's better to think of ways to manage it. First of all, you really have to want the shares you want at that price. Only after the intent is clear will I queue for it. I don't queue for 'fun' because if the queue is really hit, it's not very funny. As for seller's remorse, I think setting a specific target price and sticking to it (and really, be content with it) is the key. Of course, selling slowly in batches is also a good way to alleviate that emotion if you have more lots - sometime like averaging up your selling price.

These days, after I sell it, I no longer look at it until perhaps a few weeks later. This is more as a post action review on how I can perfect my exit technique rather than to see if I had lost out on any potential future gains.

2. NATO (no action talk only)

I think to make money in the market, it's better to do more action rather than talking about it. Talking (to the right people) will help you understand certain aspects of your intention but beyond that, when it comes to pulling the trigger, you're all on your own. If you do not exercise your own judgement, it's really hard to pull the trigger. When the market is up, you'll be hesitant to buy because you think you can get a cheaper price. When the market is down, you'll be hesitant to buy because you're afraid it'll go down lower. So pray tell, when is the best time to buy? Perhaps talking about it will dissuade you from really doing something about it.

It might be easier if you have conviction behind your buying/selling thesis. There's a reason why people do fundamental analysis and technical analysis - the reason is to discover the value of the underlying stock. 'Discover' is used with deliberation, because I really think that's the way it is. You go around exploring, finding out a range in which the current valuation of the stock is, and you go and make your decision based on that conviction. For those without proper understanding of FA or TA, or those without strong conviction, I think the chances of NATO-ing is pretty high.

3. Too emotional over noise

I hate being manipulated like a ragdoll toy by market physics. It's something that I felt intensely when I was gambling with HSI warrants in the earlier part of my stock market journey and later on during the index futures phase. As I reflected on these emotional roller coasters, I realised that the only thing that make me emotional over such price fluctuations actually stems from money management, rather the lack of it.

If I've 50k and I put 40k into a counter, making it 80% of my entire portfolio, how can I not be emotional? If I earn 60k in a year and I put 40k into a single counter, how can I not be emotional? On the other hand, if I've 100k and I put 10k into a counter, making it 10% of my entire portfolio, would I be bothered if the price tanked? If I earn 150k in a year and I put 10k into a single counter, would I similarly be bothered by market fluctuations?

Feel free to change the percentages to suit your individual requirements - it's the idea that matters.

4. No exit strategy

Most books that I read about stock market focuses solely on how to buy correctly. Seldom do I find one that talks about exiting. I believe that even if you want to keep a stock for long periods of time, there is still a need to get in and out at opportune times to get the best out of the investment. It's best to look at different scenarios before you buy in so that you have a impartial view of the situation. Just by asking yourself questions starting with 'what if', you can clarify your thought process. It's important to have a clear strategy, be it based on specific target price or a particular value thesis, because it allows you to act when the time comes and not freeze like a animal looking straight at the headlights of an incoming car. Think about the cut loss levels (if you have one) and the % returns that you are after before buying it. If you think it can reach the % returns that you are after, then go for it. No point hoping and waiting for a miracle in a stock that just cannot move so much in the timeframe of investing.

5. Improper money management

I think this can be a post by itself because there are just so many points to talk about. I'll just talk about a few pertinent points.

a. Limit your counter to a certain percentage of your portfolio, even if you think the counter is 'guaranteed' to make money. In the face of unknown probabilities, invest in preparedness.

b. Limit the amount that you can buy in a single transaction according to portfolio size. This means that if you have only 100k of investible cash, you don't whack 50k in one single transaction. This ties in with part (a).

c. Bro8888's advice always ring true - buy and sell slowly

d. If you have a losing streak, stop yourself from buying anymore. Give yourself a time to reflect and gather your thoughts and think about why you are losing money. When starting up again, reduce the amount invested again, only increasing it after you've proven your worth by making a winning trade.

Thursday, May 26, 2011

More artwork ...

Here's a few more sketches coming from my Wacom tablet. I am really beginning to get a feel of how to work around this gadget. Unlike sketching on paper, where you can see exactly where you draw, this tablet works more like a mouse. You move the stylus one the tablet but your eyes are fixed on the cursor on the screen. It takes some practice to get the hand eye coordination perfect, but once it's settled, it's like sketching on paper.

The above sketch is me trying to recreate the innocence of childhood sketches. I used to doodle a lot on crayons and coloured pencils when I was a kid.

This one is a helm from a Greek Corinthian era. I was just trying to test out the effects of recreating the hair like plum on the helm.

This is Brie-boy. It was from the book from my favourite director, Tim Burton, called the melancholy life of oyster boy. The accompanying poem goes like this

Brie Boy had a dream he only had twice,
that his full, round head was only a slice.

The other children never let Brie Boy play....
but at least he went well with a nice Chardonnay

Tuesday, May 24, 2011

Life in Singapore

Have you heard about the financial bombs in life? These are the obstacles, the road bumps, along your road to accumulate wealth. It seems unavoidable especially if you want to follow the typical model family in Singapore. Of course you can also choose to lead the estranged and socially divorced life of Diogenes, but his is an extreme life. Let's talk more about these financial bombs.

Firstly there is the extravagant wedding. For Chinese couple, it would entail the customary wedding banquet in some posh hotels that would set you back by a few tens of thousands. For me, I kept it to a respectably 30k by keeping the banquet tables smaller and removing a lot of unnecessary (in my opinion, of course) frills that are just icing on the cake that we can do without. We got back in terms of the ang bao money given by generous guest and relatives, so it was really kept at a pretty low cost. It was a good thing too because on hindsight, the extra cash that we can save is really dumped into the next financial bomb....

...Housing. The second financial bomb that comes along will be one of the biggest purchase anyone in Singapore would have the misfortune or fortune (depending on how you see it) of experiencing. I got a resale HDB in a matured estate and a 5 room one too. Things are all well and kept within plans but the funny thing is that when the plans collides with reality, all your well laid plans might just fly away in the face of reality. I know the ideal home for me when I see it, the perfect location, the ideal setting to set up my family and a good location to set up my work at home plans...the only problem was that the property is a 5 roomer but the 'planned' property is a 4 roomer. Some had said that it was lunacy buying at such a high price with such a high COV to boot, but I think it was a period of rare sanity amidst my usual well organised but ultimately sterilized 'insanity' that is so characteristic of my life. Whatever you call it, it is a done deal now so I'll have to make the best out of it. After settling the downpayment and the necessary fees, the next financial bomb comes ticking in.

Renovation. I was searching around for renovation ideas and went to the recently held fare at Expo to take a look at the packages and quotations offered by the various interior designer firms. I think from the mind draining and sleep inducing talk by the various companies, it would seem that the renovation costs alone for my property might go up to around 50k. There are some serious questions to ask myself and my wife: Will we really enjoy the marbled living room floor instead of the cheaper homogeneous tiles? Are we paying good value for the parquet instead of focusing on, again, cheaper alternatives? Is a feature wall necessary in the living room? What is the focus on the living room - is it a place where different minds meet together in jovial conversation or where different eyes meet in the lively pixels of the latest LED tv?  Many more questions bombarded us as we go from company to company, seeking that elusive interior designer to help us discover what we really wanted in our hearts when we have not a clue to what we wanted. I think with furniture thrown in, it might really escalate the entire cost to the range of 60k plus. Oh well... so be it then.

If you've still survived all these three financial bombs, there'll be a fourth one - kids. Since I've not been hit by it, I'll not talk about it now. But seriously, it makes me think what I really wanted in life. It seems like either we have a pretty high standard of living or simply that we are not earning enough money. Money seems to drain out from our coffers like a fully running tap ever since we got married last year. Mind you, the proverbial tap is not dripping water, it's gushing water and for years to come too! I guess I'm just at the wrong place at the wrong time, but such talk do not make me feel better nor does it improve my situation, hence it's ultimately demoralizing and pointless. Let's just bear with it and shoulder on.

Friday, May 20, 2011

Black Swan Theory revisited

I hear a lot of talk about Black Swans in my cbox these days. It's getting to be pretty cliche because of the constant usage. Just what is a Black Swan? Black Swan theory (capitalized to avoid the reference to actual swans that are black) is a phenomenon, popularized by one of my favourite author, Nassim Nicolas Taleb. Black Swan theory is characterized by 4 things - it's an event that is highly improbable and incalculable probability, highly consequential and finally the event can be rationalized by hindsight after the event.

There's a lot of interesting things about Black Swan theory that I've already talked about when I read the books a few years ago. I thought it's a great idea for readers to read it for themselves. Nassim Nicholas Taleb wrote two books on his pet topic, "Fooled by Randomness" and "The Black Swan". I think that the first book is a better read than the second one, though the second one is laced with more substance. It's the easy readability of his first book that endeared me to his astute observations about the world we lived in.

Here's a few links that I wrote in my past entries:

The black swan


 Living life in an uncertain world

 There are a few things that I'd always remembered after reading his books. A good book will make always leave some indelible marks after reading, such that you can never see life again in the same light. Here's a few thoughts that still stick to my mind:

Incalculable, improbable, consequential & retrospective

1. Do not confuse absence of evidence for the evidence of absence.

It's hard not to mix up a rare and low probability event by a non-event. Not seeing a swan that is black (absence of evidence) does not mean that there are no black swans (evidence of absence). Well, it could be that there are really no black swans in the entire universe or simply that you haven't come across it yet. Likewise, a 100 yr old man who had never died before (absence of evidence) cannot proudly boast that since he had not lived a day where he had died in the past 100 yrs, he's going to live for another 100 yrs (evidence of absence). Here, a single occurrence of a rare event will render all theories that came before it totally flabbergasted, thus the management of rare events plays a highly important role in everyday life.

In essence, we have to be open minded and embrace possibilities instead of being trapped in the framework of the past.

2. It is impossible to tell in advance whether an event has yet to happen or it can never happen.

This is linked to the first point because it's hard not to get mixed up between a zero probability event and a event that has low probability. As the local posters by the police had mentioned, low crime doesn't mean no crime. If we have a pack of 500 cards, and after drawing 499 cards, we are still drawing to get a queen of hearts, do we say that there isn't a queen of hearts or simply that it has a low probability of occurrence? It's just impossible to tell in advance whether an event has yet to happen or it can never happen.

Again, this calls for one to be open minded and really requires one to have the ability to accept possibilities, even strange ones that nobody had thought about. As Albert Einstein put it so succinctly, a genius is a person who dreams of snow while living in a desert. 

3. Black Swan events have positive AND negative connotations

A lot of people attributed a negative connotation to Black Swan events. It can be the financial crisis (bad), it can be a spate of natural disasters in Japan (bad) or it can be a sudden diagnosis of cancer (bad). However, if you go by the definition, highly consequential events can either be good or bad. If you feed a chicken all the way when it's just a little chick, the chicken will learn to trust you. It may learn that you are its provider of food and you will take care of it. However, when the chicken is of age, you slaughter it for food. To the chicken, it's a negative Black Swan event.

(This brings to mind another interesting aspect. A Black Swan event is a relative term. If you're the person who reared the chicken for food, there is no doubt in your mind that once the chicken reaches a certain age, you'll slaughter it for food. However, in the eyes of the chicken, nothing is further from the truth. The many years that the chicken has lived peacefully without you slaughtering it cannot be misconstrued as the evidence of absence of slaughter.)

Similarly, I can give other examples of a person striking it rich with a ticket lottery. Or a chance encounter with someone who loves your singing so much that he's willing to sign you up as a singer.

To prepare for Black Swan events, we must be prepared for both the good ones, as well as the bad ones. The key is to limit exposure to the bad ones while maximizing exposure to the good ones. We should all work hard to expose ourselves to opportunities, even those that looks like opportunities (again, I cannot seem to emphasize this enough - be open minded!). You'll never know if your next break may come from helping an innocent bystander to pick up the book that he dropped on the floor, or to strike up a conversation with the person sitting next to you on the lonely road to the office during peak hour (interestingly, a crowded MRT can be a very lonely journey).

To prove my point, I wish to highlight the fact that many of the world's greatest discoveries or inventions are made when the person involved is not actively searching for it. Penicillin, the wonder antibiotic, was discovered by a very open minded researcher in a very fortunate accident. America was discovered when a trip was made to look for India (trivial: hence Native Americans are called Indians). A way to measure the density of irregular objects was likewise made when a certain someone is relaxing in a bathtub, possibly after trying to solve a problem deliberately.

So there, that's something to digest and think about.

*This article is contributed to IM$avvy financial portal, which is managed by Central Provident Fund Board and supported by MoneySense. This site has a noble aim of promoting financial literacy to the general population.

Wednesday, May 18, 2011


For self reference:

I see a few things - a downtrend restricting the upward movement stretching back in Nov 2010, heads and shoulders (though with no volume confirmation), strong support at 3120 level and the significant recent low near 3078 (which is also near the ema 200d).

Sell in May and go away?

Sunday, May 15, 2011

Wacom Bamboo Fun pen and touch tablet

I got a new tech toy recently - it's the Wacom Bamboo fun pen and touch tablet. It's primary function is to serve as an pen and touch input, not unlike a touch screen phone. I've been delaying the purchase for a few months, trying to decipher within myself if this is an impulsive buy or something that I really wanted to have. The cost of this is not exactly cheap (retailing at 329 SGD), and with that cost, I could have gotten one of those wifi enabled tablets or even an ipod touch. But I guess I really wanted this.

The trigger for the purchase came ironically because of ipad2. I was playing around with an app, called zen touch and was immediately impressed by it. I was having so much fun that my wife had to pull me away from the apple store. If I really got an ipad2 there and then, it would have been because I wanted to explore more on the zen touch app. So this lead to that, and I found a pre-owned Bamboo tablet selling for 250 SGD and I grabbed the opportunity. I guess I never looked back since.

I cropped away the edges...okay, I admit, it was a bullshit job. I'm quite inept at photoshoping or gimping. Yet.

It was such a pleasure drawing and painting and sketching and experimenting. There are a few things about drawing digitally that is so vastly different from drawing physically:

1. There is no lack of paints or paper or the right kind of equipment. With a proper software (included in the package), you can form amazing rendition of any sort of painting. You are only restricted by your imagination and skills, not by lack of equipment or constrained by cost. I think in the past, where I'm too pai seh to ask my parents for yet another box of coloured pencils, had doomed me to sketch with just a single 2B pencil. As a result, I'm much more inclined to do monochromatic sketches rather than using the full spectrum of colours that are available.

2. I can undo multiple times digitally, but I can't do that physically. Undo is such a godsend! I can experiment with different techniques without risk of spoiling the overall picture. When drawing physically, there's always the risk of erasing more than I can handle. It's even worse when painting, because the botch-up might not be always recoverable and it'll definitely leave a mark. Not with the magic 'undo' button.

3. The ability to draw on layers is a concept that is pretty new to me. On paper, everything from the form sketches to the colours to the shades of colours are done on a single layer. Digitally, you can break out a project into multiple layers overlaid on each other, so that you can do edition on one layers independently without affecting the others. It makes a other 2D project three dimensional, so to speak.

I'm like a child magically teleported inside a candy store - suddenly I've so many tools to play with and I don't know what to start with. As a result of this endless permutation of tools to play with, I'm addicted to doing some art project daily. Sometimes I just have to wean myself off the screen and take a break, because staring at the screen for extended periods always tire my eyes (another good reason why for serious readers, you should get a kindle instead of the more popular ipad - it's that different).

Here's some of the projects I've done. I've conveniently removed the more amateurish attempts when I first tried playing with the bamboo. I censored the clumsier attempts all for your viewing pleasure of course, not for my ego, haha :)

Wholly inspired by SMOL's latest post, of course

If you don't know who this this, don't ask

This is still work-in-progress...been 3 days already. One of my longest project on Bamboo


I've finally completed this after 3 days. The hard work is well worth it because I know the tool so much better than just a few days ago. I'm ready for more challenging projects :)

There is a story behind the picture. It'll set the mood and the feelings for this project:

Urthadar of Clan Hunting Wolf stands alone, in the wretched rain. The storm clouds darken much of the sky, as if foretelling his dire circumstances now. He alone will guard this only bridge to his homeland, if none others would volunteer. No, they have a much more important task at hand - to warn the others of the coming of the impending Plague that comes from the north. The ominous sound of a horn is heard, and is rapidly followed by many others, forming a cacophony that heralds the coming of the cursed orcs. Calling upon Tempus, his god of war, he gripped the handle of his battleaxe with renewed determination and roared defiantly.

Tuesday, May 10, 2011

Know your limits, then break them

You know that I've always been saying that saving can be achieved by two means - either through an increase in income or by decreasing one's expenses. But till recently, I've never put a thought to which method is gives the least resistance. In other words, I didn't take into account the mind's resistance to new changes. I think based on your personality, you might find it easier to increase your income, but another person might find it much easier to just reduce expenses. Ultimately, the success of each method depends on how well suited you are to the method and how far you have to stretch out of your comfort zone.

This epiphany came as I analyzed the weight loss equation. There are two ways to lose weight - either to increase your energy through exercising more or by eating less calorific food. I know myself, I'm not a very sporty person so asking me to go out to exercise more is definitely harder than to simply eat less. I know another person who is better suited for losing weight through exercise because food is simply too tempting to avoid. I guess thr method you choose really have to suit your lifestyle to make the journey easier, because you do not have to step too far out of your comfort zone. Isn't this the same as the financial analysis versus technical analysis divide too? Some are better suited for the swashbuckling trading way rather than the more studious and research based investing. It's hard for someone with a personality for trading to switch to investing and vice versa. It's not that it can't be done, it's just that it might not be the easiest path.

Back to savings, I think it's easier for me to save more by reducing expenses. Some people might find it hard but for me, I think it just comes naturally. In fact, to spend more money requires quite an effort from me and that always amazes my wife. I find it quite a curse to be so tightly bound to my money habits (I'm trying to change it and my friends told me I'm much better now). That being said, the easier method might not be the better method in terms of accomplishing your goals. The pursuit of comfort might hinder the pursuit of goals because you tend to do things that doesn't stretch your comfort zone too much, never mind whether it achieves your end point or not. So, since I'm better at reducing expenses, I should not just concentrate on reducing expenses because that's easily done. I should explore options to increase my income because that is truly the limiting factor in the savings equation; You are limited by what you cannot do well, not by what you can do well.

For that somebody who finds it easier to lose weight by exercising more, she can try eating lesser as well as continuing her normal exercise routine. For those who are naturally suited to financial analysis as a way to view the stock market, he can take up a bit of charting. For those who are good in charting, she can pick up fundamental analysis to push her skills to another level. And finally, for those who are good at increasing income to save money, he can try reducing his expenses.

In summary, what do I advocate? Know your strengths and choose the method that suits your personality. Once you start on whatever goals you desired, maybe you should look at the limiting factor that stunts your journey, take a dab at that, try it out. If things don't work out, no problem because the risk of failure is low since you've already have something working. If it works out well, then your limit is expanded. And that is always a good thing, yes?

*This article is contributed to IM$avvy financial portal, which is managed by Central Provident Fund Board and supported by MoneySense. This site has a noble aim of promoting financial literacy to the general population.

Saturday, May 07, 2011

The past and simpler world

"How many people long for that past, 'simpler, and better world', I wonder, without ever recognizing the truth that perhaps it was they who were simpler and better, and not the world around them?"

~ Drizzt Do-Urden

How true that simple statement is. People, me included, often thought of the good old times, reminiscing how good the older and simpler times are compared to the more unpleasant present. How well it'll be if all the flats are cheaper and bigger, how well it'll be if the cost of food is cheaper compared to my salary and how carefree students are in school compared to the present. While no doubt that there are truth in such statements, perhaps it is also clouded by the nostalgic sentiments of the past, so that you only see the past with bias recollection of the more pleasant times, while blatantly ignoring the more unpleasant times.

Perhaps Drizzt Do-Urden is right, the world changes no doubt, but it is the person who changed even more. If I am somehow, magically transported to my distant past, would I have found the world a better and simpler place to live in? Maybe not, because I no longer look at the past with the eyes of someone browsing through a new book for the very first time, soaking in the smell of the new-ness of the book and absorbing all the sights of a tourist arriving in a beautiful town for the very first time. Memories are to be re-lived in the mind, not to be visited physically, otherwise the magic of the sweet nostalgia would be broken by harsh reality.

Let's relive some memories mentally then. People of my generation would have experienced these little pockets of memories as lively as my own recollection:

1. In primary school, we are have to chew on some tablets that gives a red colouration to our teeth so that the plaque are highlighted in order for us to brush it off.

2. After recess in primary school, the whole class can be seen squatting besides the drain in the school compound, gurgling water from a cup and brushing their teeth.

3. Buses are paid in coins, with a conductor stamping the ticket. Then the paying system becomes transit link card where you have to press your own fare. Finally it becomes ez link card where the fare are automatically calculated for you.

4. In primary school, I witness the explosion of plastic usage in everyday life. Tuppleware parties are held. The wood and metal tables and chairs are slowly replaced by plastic ones. Metal containers used to hold food are replaced by plastic containers. Metal water bottles are changed to plastic ones.

5. There's no such thing as calling someone you're meeting at 1pm that you're late, using a handphone. Handphone only became popular towards my army days and perhaps into my university period. Before that, if you make an appointment, you bloody hell make sure you're there on time. If not, there's no way to contact the person en route since neither of us carries handphone...

6. ...unless that person carries a pager. In which case, you have to call his pager, leave a voice message, and hope that he received the page and CALL his voice mail to retrieve the message. Really, it's just easy to be punctual.

7. I remembered dialling up to connect to was a frustrating exercise when a call comes in, then all your internet connection gets cut off. Not that there's anything much to do on the internet anyway.

8. Before google, alta vista was my favorite search engine. Lycos, yahoo are a close second. But once google appears, everything else is changed. Search engine can never be the same again.

9. I saw the advent of coloured television. When I was little, I remembered watching television in black and white. Then it became coloured, now it became 3D.

10. I saw the building of the MRT lines. I remembered fondly in primary school that a worker was waving at us (or rather, because we're waving at him) from the half constructed mrt lines. I remembered my first ride on the east-west line and how scared I was by the roar of the train when it's underground.

11. When I was in secondary school, punggol/sengkang was a swamp. I have great memories of canoeing and camping there. I remembered serangoon shopping centre was a hangout for ah-bengs and gangsters too.

12. In the past, buses are not air-conditioned. There are little windows that you have to shut it when it's raining. On the top of the buses, there's also a air vent that you have to close it physically when it's raining. Have you seen the sight of rain splattering inside a bus? A journey inside such a bus is warm but sleep inducing. I can even say that I can sweat comfortably and be lulled into a nice nap.

Is there more of such memories that you can think of? What was it like for life in the 50s, 60s, 70s, 80s that you remembered fondly? Do share it in the comment box below. I would love to have a oral history of how life was like in the past, compared to now :)

Tuesday, May 03, 2011

Outgrow your problems

Everyone knows that to save more money, you need to reduce your expenditure. However, not many talked about saving money by earning more money. The equation is this: Savings = Earnings - Expenditure. From here, we know that to increase savings, you can either decrease your expenditure or increase your earnings. Nobody is going to stop you if you do both too.

If you've read T.Harv's book titled "Secret of the Millionaire mind", you'll read about growing bigger than your problems. He mentioned that "Rich men grows bigger than their problems. Poor men tries to solve their problems". Now, of course that is a general sweeping statement, but if you would just stop and think through it, it is actually quite a good paradigm shift in thinking about personal finance. No longer do we have to cut on our wants in order to reduce expenditure, but we can have both our wants and save more at the same time. But how do we do so?

Simply increase your earnings!

If you are so much bigger than your problems, then you can not only solve them, you actually outgrow them.

That is easier said than done, or simply impossible to some. Impossible is something that people try to reason to themselves in order for the status quo to remain the same. If you're always feeling comfortable and secure, then you are not growing. Most jobs do not require you to work over the weekends, so that's your best shot at monetising your private time. If you enjoy teaching, you can take some students for tuition. If you enjoy swimming, you can teach children how to swim. There's bound to be certain things that you enjoy doing over the weekends but can earn you an extra bit over and above your main salary. Most of the mid-career switch to being self-employed actually begins like this. A stressed up lawyer might do some baking over the weekends, but is so good at his craft that people will pay for them, so he quits his job and starts a bakery shop, thus earning way above his lawyer's pay but working in something that he likes very much. Not everyone will have this fairy tale ending, but if you don't try, you'll definitely not have it!

To grow bigger than your problems is to increase your earnings to such an extent that the problems shrink to something insignificant. I remembered fondly of the times that me and my classmates would pool money to buy MacDonalds in our JC days. In those times, having a decent meal for an outing is a trip to the golden arches. Even coming up with the few dollars needed to share a meal at MacDonalds is a strain on my financial resources, because the only 'earnings' that I have is the pocket money that is given to me by my parents. After I started working and my salary increases many fold, the few dollars seem insignificant now. That is the magic of growing bigger than your problems - the problems that plagued you in the past suddenly doesn't seem so daunting anymore because you've outgrown it. I'm sure there are people who can buy Mercedes without batting their eyes at all because their income is so high that the price of a Mercedes is just a Happy Meal to them. Price is a relative thing.

Here's a suggestion on how to both increase your savings and to satisfy the wants. This method works for me, so it might also work for you. If you want to get something that cost $500, try to earn $1000 above what you normally earn. The reason for this is that I try to keep my savings ratio above 50% of what I take home per month, so if I earn $1000, I have the 'right' to spend $500 without affecting my savings ratio. If you can earn that $1000, that you will get rewarded for getting that unnecessary but ultimately fulfilling want. In the event that you can't earn that extra $1000, you carry on as long as necessary, until the desire to get that want is just diminished (it's just too much work) or you've worked extra hard over the next few months to earn it (so you are rewarded).

You can tweak the percentage as you deem fit, but the basic underlying concept still applies. You always spend less than what you earn. If you want something that is not a need, you earn your right to buy it by earning more than the cost of that want. In this way, you can save more and get your craving satisfied. Don't always talk about fulfilling your needs and suppressing your wants. Needs sustain you but it's the wants that colours your life. You don't merely want to survive life right? You want to live life with as rich an experience as you could ever have.

*This article is contributed to IM$avvy financial portal, which is managed by Central Provident Fund Board and supported by MoneySense. This site has a noble aim of promoting financial literacy to the general population.