Wednesday, March 30, 2011

The unequal race

I saw this picture that just strikes out at me, urging me insistently that I put it up on my blog. Here it is:

In the picture, it clearly shows the difference between those from a wealthy family background and those from a poorer background. Even though the physical starting line is the same, the race can never be fair simply because the financial starting line will never be the same. Considering the two person running the race. They had started work at the same age and time, so their physical start line is the same. But the person in the foreground had to run the race carrying the burdens of their parents while the one in the background is 'pushed' ahead effortlessly by their Mercedes driving parents.

Unlike a photograph, everything in a hand drawn cartoon strip is done with deliberation and purpose. Every little detail bespeaks something that the cartoonist is trying to portray, from the fact that the two person have different body weight (one is more massive than the other) to the graduate hard-top hat and the harness that is strapped to the guy in the foreground.

Perhaps this is where meritocracy fails us all. Success is so often portrayed as the result of meritocracy, where the standing of one's position in society is based on one's individual efforts or merits. But how can this be fair if all of us begin with different starting lines in the first place? The flip side of meritocracy is also the sad perception that if you've done your best but you still didn't make it in life, it's your own fault because in a meritocratic society, this is what we're saying - individual efforts produce individual success. If you don't succeed, you're either dumb or stupid, so shut-up and accept your lowly lot in life.

This is totally unacceptable. Totally. I really hope that the elites do not have this kind of condescending view point on those who did not quite make it in life, especially in comparison to them. My knuckles whitened in anger when I think of this.

Monday, March 28, 2011

Have you done your taxes?

As I was doing my e-filing of tax (the deadline is on the 2nd week of April), I was pleasantly surprised by two changes. A picture, or in this case a table, represents a thousand words:

You can see that the % for each tier had been reduced for tax assessment year 2012. I noticed that there's more breakdown of the tax bracket between 40k to 160k too. The result would be less tax for everyone, but more so for the lower income bracket percentage-wise. This year, I paid lower taxes than the year before. Firstly, I earned less than the previous year. This is most likely due to the many interruptions that the wedding had forced upon me. The wedding I had last year coincided with my peak season, so the drop in income is understandable. The second reason is that there's this 20% 'ah-gong' discount to the tax returns. I'm not complaining, haha :)

The other pleasant addition is that at the end of the filing exercise, they actually gave me a estimated sum of how much my tax returns will be. I had always wondered about the amount since I had started paying tax, so this new addition is very welcomed by me. No more guessing and making my own spreadsheet to guesstimate the amount of tax due anymore.

I've no problems paying taxes. I think the more taxes I pay, the better. Singapore already had one of the lowest tax rates in the world. The tax is used for 'nation building', as the tax assessment form that they sent you yearly reminds you everytime, so I think it is for a good cause. Anyway, the more I earn, the more they tax, but the tax amount will never be more than the amount that I earn. I think it's fair as I'm enjoying the good stuff about being in Singapore. Tax away then :)

Sunday, March 27, 2011

Just do it

What is it with humans? We crave for the comforts and security of routine but get frustrated and bored by the very same things that we do again and again. We want to experience adventure yet fear the road that lies ahead. We want to be do the same thing that we did yesterday yet we get bored by them in the end. I've talked to people who complained about their lot in life. For every suggestion that I offered, but they shot me back with 10 reasons why it can't be done. It left me thinking that perhaps they do not want to solve their problems at all, but is contented to have bragging rights to others about their pitiful and sad circumstances.

I am guilty of such negativity too. But I fight against it. In fact, I fight against the very nature of complaining to others about my own problems. I believe that everyone has their own problems to solve, and probably they only have enough energy to just bear it through. A good friend might want to share your problems by hearing you out, but to what end? At the end of the day, and all that is to be said is vented out, you are still the person to clear up the mess. The person who unties the bell still has to be the same person who tied it in the first place, to translate from a chinese saying.

I will also not wallow in self pity. In my deepest depression a few years ago, I know the spiritual harm that this does to me. Every thing in the universe seems to conspire against you when you indulge in self pity. I use the word 'indulge' because like wine, you get intoxicated in the inebriety of it all. Work, surprisingly, is the one that compels me to leave my sorrow self out of my home. From my deepest depression, I learnt a few things about my character. I wish I didn't had to go through it but having experienced it, I am quite certain I would not be in it again. I remember vividly how difficult it is to cold-turkey myself against all the pessimism that my mind constructed and how hard it is to dig myself out of the hole of self pity. I am all the stronger because of it.

With your shield in hand and your sword ready, brace yourself for the good fight ahead!

I believe that in order to succeed, a person must overcome your own limiting characteristics. If I have to change my quiet nature in order to succeed, I would do that. Likewise, if the ability to take hardship and be disciplined is limiting my path towards success, I would have to train myself to be disciplined and to endure hardships. Many many would complain about their own specific set of circumstances that leaves them unable to compete on an equal basis with those who, because of their birthright and family relationships, are more well to do. Life is never fair, and the sooner you come to terms with it, the faster you can get past the different starting line of this race and try to catch up with those who had already started running. Be-Do-Have instead of Have-Do-Be.

The whole point of this article is to psych myself up for the trials and challenges that lie so clearly ahead of me. The chess pieces are almost in place. If I can also motivate you in the process, then this article would have done it's job for the two of us.

Friday, March 25, 2011

The 4 priorities

I believe that when we start working and start having a decent income stream, we shouldn't start investing straight away with that money. I think that certain foundation needs to be built first before we should think about growing our wealth. These following points, in my opinion, are listed in order of priority. I'll start with the first point with the greatest priority, followed by the last with the least priority:

1. Savings

This is the start of everything. Unless your family provides you with a huge sum of money to begin with, you'll have to work your way up. The savings is needed to build up a cash coffer for the many milestone events (like marriage, housing etc) that will likely occur in the near future. For those salaried worker, I think it's easy to set aside a portion of your monthly salary into another account, and then spend the remaining. This 'pay-yourself-first' strategy is reputed to be the best strategy rather than to spend and save whatever is remaining. For self employed tutors like me, I normally set aside cash as and when they come. My cash flow is not predictable, hence I work on a yearly savings target which is further broken down in monthly target. I'll continue transferring money (as it comes along) to a separate account until it hits that monthly savings target.

This brings about the next question: how much to save? I guess the answer to save as much as you can do it without feeling shortchanged in life. I think minimally, if you're earning 3k and above, you should be able to save at least 20% of your take home. If you can't hit 20%, you either have to find more ways to reduce your expenditure or to find more ways to earn more. As a guideline, I keep a savings percentage of around 60-80% of my cash intake.

2. Insurance

Insurance is to protect your savings. I'm not going to dive into the thorny whole life vs term fight here, but the first and most minimum protection should be a hospitalisation and surgery plan. Some might recommend using the cheap medisave plan and not a private shield plan. I leave it to interested parties to find out the advantages and disadvantages of each.  Personally, I have a private shield plan covering me to the the best ward available, complete with rider to cover the co-insurance / deductible portion. I think a disability income plan is the next important one to have, followed by the standard bread and butter life coverage with critical illness component. The permutations for the same coverage is infinite, so there's a lot of room for customisation according to everyone's needs and wishes.

I believe that it's good advice to think a few years ahead before you commit to any long term plan. I've heard stories of people committing to a very expensive plan but because it takes such a hefty toll on one's cashflow, the plan is surrendered often with a loss. I think if in doubt, do not buy first. Just seek professional advice.

I think unless you're super interested in the industry, insurance coverage is something that you want to have
without having too many headaches. Sort this out as soon as possible so that you can have a peace of mind.

3. Set aside money for emergencies

Life is often unpredictable and most of these events that popped up usually requires money. I think the standard recommendation is to have 6 months of your average monthly expenditure (including the cash component of housing loans) in the form of cash or cash equivalent (meaning the cash is put into assets that can be easily converted back into cash) ready for such emergencies. I think that the 6 months guideline is based on the premise that if you lose your job, you might need to look for 6 months before you can find one and starting earning the money to pay the bills. By having a buffer, you can sleep a little more soundly at night. Actually, I would put in 6 months of salary to have an even greater buffer, but that's just me.

This money is not to be used for investment purposes that is hard to liquefy when in need. I think the ideal place to put such a sum is in savings account, fixed deposit or money market funds (MMF). Personally, I had mine split into my investment of stocks and another portion in savings account and MMF. I don't mean that as an advice for everyone. I guess my job is slightly different because I am not in the mercy of just a single employer so my emergency coffer can be a little less liquid than the typical salaried worker.

4. Investment

I think everyone must be able to invest in some way or another. It's really very very hard to reach financial freedom by just working for someone because that is basically exchanging your time with money. To reach financial freedom by just savings alone isn't going to be easy and I think probably you'll run out of time. There willcome a time when you are older and less energetic and can no longer fetch such a good price for your time. This is where your passive income comes in. Ideally, the passive income should grow to such an extend that it can rival your active income. But where does the capital from your passive income comes from? Active work of course.

Everyone must dabble in some investing instruments, be it bonds, stocks or property. This is akin to taking a quick ride on a car along one's financial freedom route. If not, the slow march along the road would probably be too slow and you'll run out of time before you can reach your destination.

I think in investing, the capital idea is not to lose your capital. You may make less returns but as long as you don't lose catastrophically, you'll be alright as time would weave its compounding magic for you. This doesn't mean that because you have a lot of time on your side, you can take more risk. I think it's good advice that as long as you don't lose money, making any returns is a bonus. Remember, this is the extra boost that will propel you faster towards your destination. The main workhorse for that journey is still your active income, which will provide you with the first tranche of capital needed to grow more capital.

*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.

Friday, March 18, 2011

Clearing the clutter in your life

I hate clutter in my life. It can exist physically or emotionally. Physical clutter includes the mountain of nonsense gathered over the past months (some are years) and stacks of paid and unpaid bills on the desktop. Even my computer desktop is cluttered with pdf and word document files that are archived off to read in the future. Games shortcut that I'll never have time to complete, movies link that I'm supposed to follow up in the near future. As personal experience had shown, I never read stuff that are to be archived for the future. There are just too much information clutter present in this digital world to halt at a mere piece of information right now. Emotional clutter are just people or events that just sit there and drain your energy. You might find working for this particular person very distasteful but for whatever reasons, you still persevere. This kind of things just saps your energy and emotional reserves that at the end of the week, you feel physically and mentally drained. Emotional vampires, I call them.

After enduring these clutter for one year (I looked at the oldest set of bills - it's dated April 2010), I knew I had to clear them before I can 'free' myself. Hence, I spent the whole afternoon clearing up all the clutter that had accumulated in the past year. Bills that had been paid are thrown away. Slips of bank statements are archived neatly in a file and notices of insurance updates are slotted in the correct place. My whole desktop looks much neater now. I realised that there the tidiness of my desktop can never be perfect - it exists between a balance of chaotic and neat order. Whether it's neat or messy doesn't affect the ease in which I can find my stuff. However, if it's messy, I'll feel flustered and caged, as if I'm working and living in a heap of rubbish. I hate that feeling.

Like the Daywalker, I'll strive to cut up all my emotional vampires and physical clutter

I always clear my clutter before I embark on something big in my life. In this case, I need to clear up my life to prepare myself for the more hectic work life ahead. In the next few months until the wintry months, I doubt I'll have the time or the energy to clear my my desk. It can only be messier. I guess that indicates that I'm actually working on my desk, haha!

As for emotional clutter, I try to stay clear of people who do not value my time. It can be students (really, some of them are real emotional vampires) or just people whom I do not want to meet. I'm glad this year, I do not have a lot of emotional vampires sucking off my energy. It's most fortunate that my job allows me certain flexibility to select the people I want to work with. I'm really getting more selective these days because I realise the dangers of dragging yourself to work just to face off with these vampires.

Hmm, come to think of it, perhaps there's a third kind of clutter - financial clutter. These are financial stuff that sits there and drain your money, while cluttering up your financial life with things that you can't understand. I've a few clutter in my stock portfolio, perhaps it's time to cut up all these and lead a renewed life. Is your life full of clutter that needs to be cleared up too?

Wednesday, March 16, 2011

Nikkei crashing

Japan had the greatest earthquake in its history, of magnitude 8.9. This triggered a tsunami that devastated the eastern and mostly northern part of Japan island. Due to the specter of possible nuclear meltdown over the nuclear power stations situated in Japan and consequently damaged during the natural calamity, Nikkei crashed very badly. The first day it crashed around 6% and today it crashed another 10%. That's a very bad crash, bringing Nikkei below 10k mark to around 8.6k.

This is a historical moment in the financial world, so I'll snap a shot of the crash of Nikkei. Horrific really.

Stock market do not take kindly to uncertainty. Due to the tsunami and earthquake combo causing widespread damage, which is immediately followed by the overhanging of the possible nuclear meltdown, there is panic selling in Japan that spreads globally too.

Makes me wonder whether the time to buy and hold for long term is truly over, given the more and more frequent black swan events happening around the globe in recent years. However, it is not my place to comment on this. I just know what I have to do. Sell some and buy some. There's nothing to be emotional about your losses. Just take it stoically and be thankful that what we lost is just money. There are others out there who might have lost their entire home and even the lives of their loved ones.

Monday, March 14, 2011

Somebody by Depeche Mode

The Japan earthquake cum tsunami is very heartwrenching. Is it only when disaster strikes that we think more deeply on what is more important in our lives? I guess so, because all I want to do right now is to hug my wife and say that I love her.

I was listening to our march in song a moment ago. It's called Somebody by Depeche Mode. A very old song but one that speaks volume of our relationship. I didn't mention this in my wedding but this means more than the official wedding vows that we exchanged. This is our wedding vows, presented in the melancholic melody of that song, sung in the meaningful lyrics by Martin Gore.

Here's the lyrics:

I want somebody to share
Share the rest of my life
Share my innermost thoughts
Know my intimate details

Someone who'll stand by my side
And give me support
And in return
She'll get my support

She will listen to me
When I want to speak
About the world we live in
And life in general

Though my views may be wrong
They may even be perverted
She'll hear me out
And won't easily be converted

To my way of thinking
In fact she'll often disagree
But at the end of it all
She will understand me

I want somebody who cares
For me passionately
With every thought and
With every breath

Someone who'll help me see things
In a different light
All the things I detest
I will almost like

I don't want to be tied
To anyone's strings
I'm carefully trying to steer clear of
Those things

But when I'm asleep
I want somebody
Who will put their arms around me
And kiss me tenderly

Though things like this
Make me sick
In a case like this
I'll get away with it

Sunday, March 13, 2011

Cache Logistic trust

Cache logistic trust



Company pays dividend per quarterly, with annualized DPU at 0.077. At price of 0.925, dividend yield is 8.3 % pa. Gearing is 23.7% based on last FY results. Sounds like a good trade...perhaps within the week. But the profit margin isn't that fantastic. Selling near 0.95 to 0.96 yields only around 3% ROC...not that fantastic. Even if the weekly divergence plays out and I sell at 0.97, it'll be around 5% - that might be worth something. As such, I'll not pay too much attention to the daily...I'll wait for the weekly to show some signs before I commit.

Interesting to see how it'll play out though. If conditions are right, this could be one of my favourite set up for a mid term trade. The yield is seductive though...

Sunday, March 06, 2011

Collected thoughts

I was quite out of touch of the whole world, having spent most of my week out in the jungle having no access to internet and newspaper. Even my starhub reception out there is intermittent at best, so I can't even call out or sms if I want to. Anyway, nothing much changes with or without me - the world revolves on its own in my presence or not.

Some random thoughts:

1. I noticed that I had many pens in my pencil case. I was trying to clear out some non-working pens and was testing out the ink of the pens, so I was scribbling on a rough paper and writing some random stuff. I didn't really think about what to write and was really letting my thoughts flow out without inhibitions. Was pleasantly surprised by what I wrote, so thought that I'll share it here:

"There are only so many things you can do in your life before your flame dies off and leaves a trail of smoke marking your existence. But fear not, and be sad not - it's the journey and the quality that counts, not the quantity and the length of the journey. A mayfly living for a day might have more purpose than someone who lives through 100 yrs of purposeless and driven less existence."

"There are so many things I wish to accomplish in my life but do I have the time to do so? Nay. I can only prioritize and choose the one that gives me the most satisfaction according to my goals and my needs. Who is to say that my wishes and aspirations, though not lofty and almighty, are any less significant than yours?"

I seem to have written about mayfly before. Doing a little search on my blog confirmed my suspicions. There is something interesting about mayfly to me. Somehow their 30 mins to 1 day of life (depending on their exact species) makes me think what the mayfly are thinking about. Is their life fruitful? Is their life too short? Would they wish to have a longer life? Interesting thing to ponder.

2. I was reading the newspaper today and saw that people are complaining about a certain Kelly Ong - a commentator for starcraft battles - and her incomprehensible accent. I listened to it here and found that it was alright. I listened to her comments for 2-3 clips to have a broad view of her accent. It didn't sound fake nor was it too fast, as the comments mentioned. Those who commented on her accent are mainly from the west. Perhaps it's time for them to accommodate to other country's accent instead of always assuming that other people have to follow theirs. The world is bigger than the country you're living in, so grow up please.

3. I realised that I didn't miss the stock market. The market goes up and down and I might have missed the opportunity to get some cheap buys but am I worried about it? No...the opportunity will come again. If it's mine, it'll be so, so that's no point fretting about it. Perhaps not looking at the stock market so often will do wonders to my mental well being and probably nothing much will change in my portfolio, even if I watch it like a hawk. So why do I still insist on watching it so closely? Habit? Obsession? Boredom?

4. My broker asked me if I wanted to do a placement for Hutch's IPO. It's denominated in USD and pays dividend in HKD, around 4-6% (I really can't remember). I am left wondering why such a hot IPO will have placements for me, a retail investor. I don't like it to be denominated in USD and paid in HKD. The fact that I was asked about the placement makes me think twice about it. Am I going to subscribe? IPO is a funny business - if you can subscribe to it easily, it's not going to be a good one; if you can't subscribe enough of it, it's going to be a good one. Screwed if you do and screwed if you don't.

5. A spunky newbie in the market asked my wife if she does Forex trading. The student, a guy, said that his friend is going to teach him how to trade it profitably with just $500. Can it be done? I suppose so, but it's not going to be easy. Let's hope that person don't lose more than the $500 that he intends to put in. Somethings in life, you can only learn from mistakes that you commit on your own even though preferably it's better to learn from other people's mistakes. Let him be aware of the risk and rewards of doing forex trading, and let him be the one who smiles at his profits and grimace at his losses.