Resorts World in Sentosa, Singapore by Cloudywind

I was at the Resorts World Singapore Integrated Resort recently and stepped into the casino for the very first time. The occasion was my mother’s birthday and she was staying at Hard Rock Hotel for her birthday vacation with my father. My parents are social casino patrons who do visit Genting and those Casino Cruises on occasion given their status as retirees who have provided for their medical and living needs.

It was truly interesting to see that even on a weekday afternoon, there were enough patrons to keep many of the tables at RWS humming along. Pai Gow, Pontoon, Blackjack, Caribbean Stud Poker, Roulette and countless number of Jackpot machines lined rows by rows with neatly attired croupiers and supervisors greeted the visitor who came in there.

Why am I talking about the casino at Resorts World Singapore?

Epitome of Singapore Inc.

The integrated resorts (aka. casinos) encapsulate what is the essence of Singapore. MONEY. The casino is a place where despite the $100 levy, Singaporeans and PRs queue up to throw money at the gaming facilities. It is a place where fortunes can be made or lost in a few short seconds, minutes or hours. It symbolises really that with MONEY, anything is almost possible.

In our quest for financial freedom, we tend to be focussed on MONEY. To have enough of investible savings that yields an income sufficient for our living expenses. To live within our means to generate savings. To use that savings to grow our investments. To grow our investments so that they yield returns even when we are sleeping. Financial freedom is why you read my blog and many others to learn more about the principles.

I walked by tables when the roulette wheel stopped spinning and stopped on the winning coloured number, majority of the punters had their chips systematically “washed” away by the croupier into the hole in the table. Before I understood the concept of financial freedom and embarked on this journey towards attaining financial freedom. My investments were closer to gambling bets in a casino than well thought-out moves to maximise returns at acceptable risks.

Thin Line Between Investing and Gambling

The fine line between gambling and investment is thin. What separates one from taking a gambling mentality versus an investing mentality is effort and understanding ourselves and what to invest in. Investing requires patience, hardwork to read about the companies we want to invest in for equities and about the risk-returns of other financial instruments. Gambling on the other hand, like putting money on a roulette table, requires one to only have  a very basic understanding of the rules of the game and then to put a wager on it. Gamblers put their entire capital at risk for quick returns. In the long-run the house always wins because of its larger capital and that the odds between payouts and outcomes of the casino games are weighed to benefit the house.

I realise that I used to have a gambling mentality in my quick punts on the stock market. I have since moved away from this approach and realise if I want to really gamble, the Marina Bay Sands resort and Resorts World Singapore are available for an entrance fee of $100. Better for me to take $300-500 as “play” money and have an entertaining time at the casino than see a couple of lots stuck in a blue-chip bought at inflated prices to make a return when I’m just gambling using a different vehicle and risking more of my capital.

Thus, I’m quite comfortable with my current investible savings allocation at 33% equities and remainder in cash and cash equivalents. Because I know I won’t be able to “get rich” overnight and be financially free simply by using the equity market alone. I need to continue to build up useful skills to help me generate more cash flows and to be prudent in my lifestyle. That has made me less of  a market watcher whose moods are affected by the swings of the Dow or STI.

Life is a Big Roulette Wheel Spin

Life is very unpredictable. We cannot control exactly what happens to us in life but we can control how we feel and react to it. I realise that even as the sands of time run out slowly like an hourglass, I need to conserve my life energy and channel it into meaningful pursuits. My career, family and personal growth are three key areas for me to focus. I know that many things inside my career, family and personal growth are affected by external factors; but I also know that I can concentrate my focus on things that matter to me in these three areas and work hard at them.

That is how I overcome the unpredictability of the world, to concentrate on what I can control and work on them.

In my quest for financial freedom, I can control my expenditure (to some extent) and to be open to new paradigms of either living a fulfilled life that is less dependent on material well being to growing my means to allow me to trade money for more of life’s experiences.

How do you cope with the unpredictability of life when it comes to affecting your plans towards financial freedom.

What are your thoughts if you have visited any of the Casinos in Singapore?

Share with Panzer in the comments section.

Be well and prosper.

The more I read about lifestyle design and think about how it applies to retirement, the more I realise that my paradigm on what constitutes retirement has fundamentally changed.

Previously, I used to think like what many of us did, that retirement was an age and it was not to work. But increasingly, my own research and reading of books such as Tim Ferriss’ “The Five Hour Workweek” and thinking about the day-to-day trends we see in Singapore has led me to re-evaluate what it means to retire when I advance another 20 years in life from today.

Retirement is Not an Age

The CPF system and the traditonal life of study-work-retire is under pressure. First of all, increasing life expectancy sees us living longer and hence needing to fund our living over a longer period of time. Secondly, the concept of lifelong employment and having a job for life is under threat from today’s volatile world. Thirdly, research has shown that mentally we degenerate if we do not keep ourselves active mentally and physically after we transit from a full-time career to a post-career lifestyle of not going to a routine of working from 8.30 AM to 6.00 PM Mondays to Fridays.

I see retirement as more a lifestyle design issue in that one needs to plan for how one can live on possibly reduced cash flows from a full-time job and transit more into a lifestyle dependent on less certain cash flows supplemented with some freelance type of work and passive income from CPF or other sources.

Continuing Cashflows Post Career

To continue to thrive post-career when one is close to the “official” retirement age of 62 (will probably be 67 by the time I hit that age bracket), one needs to plan for cashflows or a source of income then. Our CPF will only allow us a very subsistence type of living if we have minimum sum. Many will barely have it as most of our CPF is parked in our homes. Thus, I realise that one of the paradigm shifts that occurred for me was to be open to monetising my home through renting it out.

Now if I rent out my home, where am I going to stay? I’ll address that part in the later part of this article.

The other part of having cashflows is to have some useful and marketable skill that can translate into an income source. I believe I can do consultancy and training in the areas of public speaking, internal audit and fraud as well as general softskills type of “management” training. What I am doing now to build up those skillsets are to continue with my toastmasters activities, to deliver training in my current job as a value-add to my organisation and to continue to read widely in these areas to beef up the knowledge part. The toastmastering and actual conduct of training courses (beyond) my job scope  and speaking at conferences and seminars help me put into practise those skills needed in the future.

Living in a Lower Cost Environment

It is already happening. The Government has allowed us to use our Medisave in lower cost countries’ medical facilities. Taking the next logical step in the lifestyle design equation, why not transplant ourselves into a lower cost ASEAN country? This can work because we can monetise our main asset – our homes by renting them out for income, and then using that income to live more cheaply in a lower cost country. My current target is Thailand because it is quite big and you can find interesting locations to retire.

The catch is language. I have enrolled in a part-time (evening) conversational Thai course and intend to learn written Thai. I give myself 20 years to get fluent in the language and I am starting NOW even though I can actually pick it up later but I think planning ahead by taking the actions now will put me in a much stronger position to do so later.

By learning Thai now, I also can access more of Thailand’s culture and lifestyle as a tourist and slowly work up to be a retirement resident there in the future. Again, it gives me 20 or so years to get myself immersed into Thai culture and living there.

I am also planning to get my class 2B licence so as to learn how to ride a motorcycle. Getting around is not a big problem if you can drive or ride a motorbike. Given the economies and practicalities of getting around by bike in our neighbouring ASEAN countries, I realise learning to ride a bike would be a useful lifeskill going forward.

I feel excited about this plan because I think there are many direct and indirect spin offs from executing it. The skills such as speaking Thai and riding a bike will come in useful even in my life now as I can travel to more locations within Thailand as a tourist. Having a class 2B licence now will also make transportation easier now as my current home and workplace takes 2 buses to get to but would probably take me 10-15 minutes riding time depending on traffic condition. Hence, riding a motorcycle makes a lot of sense as my spouse takes the car on most days.

Once I learn Thai, I can shift my residence to Thailand and probably live off the rental of my home. I can supplement my income by teaching Thais English or to do training in Singapore in the areas of my professional interest.

Have you seriously considered your post-career plans?

Does it involve a radical move to a lower cost country?

Share with Panzer in the comments section.

Be well and prosper.

Buckhead home from flickr by The Gifted Photographer

I just made a significant mortgage loan payment using my CPF ordinary account which currently stands at $0.15 as at today. My special and medisave accounts are reasonably funded as there’s not many avenues for me to tap on those funds nor would I want to as they are meant for retirement and medical needs in the future.

Looking back, my net-worth is at a relatively low stage compared to two years ago mainly because I have used my savings to top-up. My current new home is funded using proceeds from sale of my old home plus my CPF ordinary account and cash savings accumulated since paying off my previous home’s mortgage.

Technically, my mortgage can be completely paid up today if I want to but I decided to keep some of it (below $100,000) and build up a stronger cash on hand position for more flexibility in investment decisions I may make in the short-term (next 2 years or so).

When Your Net Assets Doesn’t Move Much

I sometimes feel impatient when I see that I am slowing down in my journey towards having $1,000,000 in investible net worth (excluding residential home). During army days, we call the situation of stagnating as “hentak-kaki” or marching on the spot; there appears to be much movement but you’re not getting anywhere.

Basically my net asset position has stagnated because the savings that I have obtained since I paid off my previous home has been invested in my current home which cannot be monetised unless I sell or rent out the home.

Hence, looking at it purely from the figure for net investible savings (which excludes value of my current new property) I have actually lost some ground in my journey towards financial freedom.

Looking at the Positives

However, I’ve gained in other ways that are not immediately tangible. My current property is in a better neighbourhood and the ability to rent for higher rental income is there relative to my previous property. My current place has a bigger floor area and is quieter. Such qualities can be monetised in the future should the rental or sale be required.

During the process of moving home, I also realised that despite my net worth stagnating using the conservative calculation of excluding value of current property I start to understand more about how I am really the main cash flow generating asset.

I’ve taken another step towards getting myself an appointment as an independent director. This is something I’m working on as a possible post-62 career as well as a way to monetise my assets as an accounting and audit trained professional. It is about building up my CV now for better earnings in the future.

Another realisation is that I’m getting less fixated about the numerical targets set for my eventual financial freedom but getting more interested in enjoying the process and the journey. I now network more to get connected with people just to understand more about life outside of my own routine rather than to seek to benefit from the “guanxi” that can be derived. I’ve started to build myself more into a linchpin in my own career and personal life rather than to be a passive rider on this roller-coaster ride that is life.

Counting is important but making your life count is also more important

The key realisation is that setting, counting and hitting targets in life is important. We do what we measure and we need to pursue tangible goals to know if we are on track or not in our life goals. But more importantly, it sinks in that making my life count more is more important even as we track the numbers that give us the feedback on how well we’re meeting our goals.

How are you counting your net assets and how do you make your life count?

Share with Panzer in the comments section.

Be well and prosper.

“Greed is good”

Wall Street 2

In terms of net worth position, it actually doesn’t change much except that legal fees and property agent commissions has eaten into my net assets.

I am fortunate in that because I had earlier paid up in full my mortgage loan for my existing property, my current property can be paid up anytime as I have more than enough in my CPF ordinary account balances plus my cash on hand to redeem the loan in full. The reason why I took the loan in the first place was the timing difference between receipt of sales proceeds and payment of monies for completion of purchase.

Financial Freedom Target Still Some Distance Off

My net worth now is still a fair distance from my target of being financially free with $1 million in investible net assets (excluding value of home). However, it is a reasonably sound figure that puts me in good position to continue my journey towards financial freedom.

I will be making a significant capital repayment on the loan by end of July 2010 which will result in me having an cash-equity split of 67% : 33% . This means every dollar invested in equities in the SGX is matched by two dollars in cash. A financially conservative ratio that suits me because I am totally clueless about how the equities market will take. My sense is that volatility is still here due to European economic challenges that some pundits have forecasted could potentially be the reason for the implosion of the European Union as an economic and political bloc.

My focus now is on growing my means. Call it coincidence or fate, but I met someone during a recent conference who was in a position to help me grow my means through becoming  a paid director of a company. This was something that I had been thinking about and was in my mid to long-term plan but I didn’t count on such an opportunity presenting itself so early.

While there is nothing concrete now, at least the path towards this potential way to grow my means opens up real possibilities.

The more I travel along this journey along financial freedom, the more I am starting to develop a strategy that has one eye on what Nicholas Nassim Taleb shares in his book, “The Black Swan”. I am inclined to treat the stock market as more a game for small speculative plays and a temporarily respository of my net worth. The real cash flows will still have to come from earned income from my career and possible directorships in companies that can pay a reasonable directors’ fee. Of course, being an independent director has its share of risks of being liable for the mistakes or wrong-doing of the company management. But investing all your monies in the stock market also has the risk of seeing your net worth halve or become a quarter of what it’s worth if the stock markets go south.

Ultimately, I have to develop my own strategy towards financial freedom that is suited to my personality, skills and abilities. There is not set formula to ensure financially freedom. But I continue to believe in practising the principles of living within my means, saving and investing and growing/protecting my means.

How has your personality helped you towards your own style of investing?

Be well and prosper.

Hilton Corniche Apartments, Abu Dhabi, UAE by U-g-g-boy

I have spent the long weekend shifting from my current place to my new place. It has been a tiring but interesting journey in finding out about managing change in financial freedom.

Changes in life are inevitable. As we progress along this journey towards financial freedom, things change all the time. Our financial situation, our health, our relationships at work and at home. Change is the only constant is the common phrase we hear but are we truly able to embrace change in our quest towards financial freedom?

Managing Change

1. Be Open

Human beings are creatures of habit and like to continue to be in the comfort zone. It takes a fundamental mindset change to be open and receptive to new ideas, environments and situations. It was the same for me when my spouse first brought up the idea of moving house. At first, I was quite resistant because I hated the idea of packing and unpacking all my stuff and also spending money on renovation, top-up in home equity for new house and related administrative and monetary costs.

However, the more I listened and opened up myself to the possibility of moving, the more I realised that it was not all bad and the change would result in a shorter commute time to work for me, better rest and sleep for the whole family and a family friendly location near to a park and other green areas.

Thus being open to change to a new residence did result in outcomes that were more positive than I had envisioned.

2. Be Prepared

The actual move itself was quite chaotic and tiring but we managed to pull through with the help of an efficient moving company, a mindset of taking one day at a time and being prepared for contingencies by being flexible and ready to adapt to new circumstances.

Making a plan on how to move helped a lot as we did have the sequence of events set out. However, the actual move deviated from the plan because the movers came a little late and there were minor hiccups which fortunately were resolved on the day itself.

3. Under-burden yourself

Moving my residence opened up my eyes to the amount of junk one can accumulate in one’s 10 year stay at one location. I lost count of the number of bags of stuff that I threw down the chute that I hardly used even when I owned them. It made me realise that it is the same in our journey towards financial freedom. Unburden oneself with having lots of “stuff”. The fewer items in life we have such as clothes, accessories, gadgets; the simpler life we can lead and have more time to focus our life energies on the things that matter to us instead of keeping up and maintaining the stuff in our lives.

In our journey towards financial freedom, unburdening is to continue to live within one’s means and spend less of our hard earned monies on stuff that does not matter so much.

Unburdening has another dimension of building up support groups and networks of people sharing your burdens with them. Talking out work or family issues with trusted friends or relatives.

I found my group of four kakis to have been supportive in my quest to be of great help to offer their moral support to get me through the challenges of shifting house with a spouse, a 2 year old and mid-stream change of helpers thrown into the mix.

4. Change provides an Opportunity

The interesting thing about change is that it provides tremendous opportunities as well. In my case, the change of home allowed me to realise the capital gains from my existing property into a tangible form as I upgrade to a larger and more peaceful residence. The actual cash outlay is mainly the difference between selling and buying price as well as miscellaneous legal, interest costs and minor renovation costs.

While this has set my financial freedom target by about 1.5 to 2 years, it has opened up my eyes to what my money can do for me in terms of purchasing a preferred residential location and more space for my daughter to run around at home. The value of such benefits is worth the increase in home equity needed.

What are some of the changes you face in your journey towards financial freedom?

Share with Panzer in the comments section.

Be well and prosper.

"Hope - Faith - Love - Luck "Flickr image by Funchye

The more I journey towards financial freedom, the more I believe in luck or fate in helping or hindering us towards our goal to be financially free.

Why do I say that?

Luck, Chance of Fate

There is an element of luck or chance in life. The way we are born. The way we are endowed with certain gifts or talents (or lack thereof). That we are alive and able to make it to this world from conception till birth to life.

But luck can only go so far because we need to be equipped to handle the cards we are dealt with using our inate abilities, skills and experiences.

I count myself lucky in that my family’s decision to buy a new place resulted in me selling some of my holdings at realised gains due to the run-up in share prices since the beginning of 2010. However, recent economic events in Europe, particularly over the state of sovereign debt in countries such as Greece and Portugal, Italy, Ireland and Spain has resulted in the Euro coming under pressure and resulting in another round of fear and uncertainty about the economic recovery.

When only a few months ago people were talking about recovery and growth. Now it’s back to gloom and doom with pundits saying now there is a serious risk of double-dip recession due to the euro issues.

Even as I cashed out and locked-in my new home, my equity holdings are now at a modest and comfortable level that I can hold for long-term, i.e. 10 years+ time frame for dividends.

I count myself fortunate that the decision to upgrade my home resulted in me increasing home equity but allowed me to lock in realised gains from share holdings. The current prices of shares now are way below what was 1-2+ months ago.

Again, this reminds me that I cannot “time” the market right on my own. We make decisions looking forward and can only analyse the correctness of the decisions looking back. Thus, one needs to move forward and make the best decisions on limited information but guided by the principles of financial freedom.

Following Your Principles Creates Luck

When you follow the principles of living within your means; saving and investing; growing and protecting your means, you are creating your own luck. You are not as affected by the fickleness of the markets nor worry daily as stock or other asset prices go up (or down).

With the savings accumulated from living within one’s means, you are better able to ride out these financial storms and even scout for opportunities to buy more value-stocks in sound businesses for the long-term.

With focussing on growing your income from career or business and from prudent investments, one also grows one’s investible capital to be suitably employed for reasonable returns (at least 2 x fixed deposits for me) and safety of capital.

This luck is knowing that one is less susceptible to market forces and is responsive enough to ride out the inevitable economic cycles that is the feature of a capitalistic society like Singapore.

How have you created your own luck or found yourself lucky in your personal journey towards financial freedom?

Share with Panzer.

Be well and prosper.

Flickr image "Debt" by alancleaver_2000

This Channelnewsasia report “Younger Singaporeans Biggest Debt Defaulters” is cause for concern. The report shares how younger people in their 21-29 age group have a debt default rate of 7.16% versus 3% for all other age groups.

What this means is that more and more younger people are starting to live beyond their means. There are still many young people who are prudent and live within their means but the statistics give us an indication of the future trend that is coming.

A Lifestyle Beyond Your Income

The lure of easy consumer credit could be a factor in helping more young people falling into the debt trap. Just take a look at the way the banks market their credit cards and personal unsecured credit facilities. The emphasis is on the ease and convenience of having money now and spending it on lifestyle products and services. Want that BMW 3 series? Use balloon payments and stretch out your car loan to the maximum tenure. Want to go for Europe holiday, spend now by borrowing and pay later? Want to take that MBA? Just get a loan and think about paying back later.

Easy consumer credit but itself is merely an enabler that allows those of you who are unable to distinguish between wants and needs to indulge in your wants.

It is easy to spend but it is difficult to save.

Singapore is a society very much driven by the values of economic growth, consumerism and a get-rich-or-die-trying culture. The messages we get from magazines, television programmes and the internet is to consume and we will be happy and fulfilled.

Keeping up with your neighbours and having that lifestyle for appearances and self-esteem drive many of us. I too was captive to this when the five Cs (car, cash, condo, credit card, country-club membership) beckoned as well.

Short-Term Gain for Long Term Pain

The downside of living beyond your means is that you need to borrow to fund your lifestyle. Borrowing comes at a cost of interest. And generally, interest rates of borrowing are almost always higher than interest you can get from risk-free investments.

A lifestyle that is beyond what you can afford is unsustainable in the long-run. Unless you get lucky at hit TOTO group 1 prize, your increment, promotion or windfall gain in the future is not guaranteed. But when you borrow, your interest is 100% guaranteed to be paid unless you want to risk being made a bankrupt.

You risk long-term pain of feeling financially pressured and stressed about meeting bills and payments if you live beyond your means. I remember the feeling each month when I initially started paying my housing loans, it was scary to see how much I was paying just for the interest and how little my monthly instalments went to reducing the outstanding loan principal amount.

When I managed to pay off my home about 2 years back, the lightness of feeling was indescribable. It really feels great to see a lot of your paycheck go into accumulating retirement income and providing for more luxuries in life.

I read the book “The HP Way” about how the Hewlett Packard company (now known as HP) grew organically but using its profits and never borrowed money from the banks. This conservatism was a characteristic of successful organisations when I later read “The Living Company” by Arie De Geus.

The more I read about news about how people start to abuse debt to fund unsustainable lifestyles, the more I realise that it is the ethos and values that comes from living in a consumer-oriented culture such as Singapore.

Share with Panzer what you think about the CNA article telling us than more young people are living beyond their means?

Be well and prosper.

"Dinosaur" by kevindooley on Flickr

If you watch enough films such as “Armageddon” or “Deep Impact” that talk about meteorites hitting the earth and wiping out the human race, you will find the term ELE or extinction level event familiar.

It refers to disasters of such epic proportions that an entire species e.g. the dinosaurs, can be wiped out quickly.

Why am I talking about ELE with respect to financial freedom?

Known Unknown ELEs

The world is unpredictable–you know that already. Personal financial planners bombard you with risks and threats to your life from illness, premature accidents, death or permanent disability and try to tell you that insurance (and the higher margin investment linked) plans are the way to mitigate those risks.

Those are the known-unknowns, i.e. risks you can foresee and take some actions such as insurance or to adopt a prudent and healthy lifestyle. These are scary but not too bad if you can anticipate the possibility of those happening and take (some) precautions.

But if an ELE type of event happened to you in our journey towards financial freedom, would you be able to cope? How would it shake your assumptions, your foundations and your views about life itself?

Prelude to my own ELEs

I have described in earlier posts about what triggered by fierce drive towards financial freedom. It was the realisation that no-one was indispensable to the organisation. This struck in 2003 when two of my colleagues in cost centres were asked to go in a GLC that was making 300-400m in profits. They were let go as part of the process to hit $500m in profits under corporate cost-cutting and austerity measures. Their individual performance was not the issue; their position in a cost centre was the issue.

This was for me the epitome of capitalism. Shareholders did not care about you as an individual, they only cared for you as a factor of production to generate returns on investment. If you are not the part contributing to increasing the bottomline, then perhaps you are not needed.

Flashforward: A Possible Personal ELE

Since then, my drive towards financial freedom has led me to living within my means; saving and investing my investible capital and growing while protecting my means. I have concentrated on my career and in managing my money while having a family.

In a perfect world, all things go well. In this imperfect world, my career is all right but my family life is not going well. The gulf between my spouse and I is increasing and it is in jeopardy because of inter-personal relationships.

I now live in a world of flashforwards where there is a very real possibility of separation. To complicate the issue, my daughter is growing up in this environment and any decision by the adults will have a lasting impact on her even as it has on my spouse who comes from a divorced family.

It is within this context that I reflect on my own personal ELE. My assumptions, illusions and dreams of achieving financial freedom come to naught if the family is broken and relationships are damaged beyond redemption.

The positive aspect of this largely negative development in my current life is that it has made me really question the “WHY” of financial freedom. I realise that in life, it is indeed difficult to have your cake and to eat it too.

Facing up to One’s ELE

I now realise that financial freedom is important only if you can live your life according to your values and principles. There are just too many things that can go wrong for one to plan for every single contingency and event that can develop in our lives.

I realise even more that happiness is the attitude that one needs to cultivate despite one’s circumstances. It is easy to be happy when things are going well. It is hard to be happy when they are not.

I am still committed to this path towards financial freedom as the values of living within my means, saving and investing as well as growing my means fit within what is important to me.

But I am tempered and humbled to also understand that I cannot control many things, only the small actions I take each day to bring myself closer to financial freedom, and to bring myself away from the abyss that is my relationship at home.

I am thankful that despite the tough conditions at the home front, I can still function well and to still be the father to my daughter. I just hope to be able to do what I can each day to mitigate the fallout on her and to be there for her in ways that I may be limited to if my spouse and I indeed do separate.

Be well and prosper.