Additional $800 per Month

I have started giving tuition and that will bring in an additional $800 per month. I have realised that a lot of people are giving tuition (in fact almost everyone I know), and that is why I decided to do it too.

The job satisfaction of giving tuition thus far has been great. The parents are so appreciative of the help that I am giving.

I enjoy teaching. There is a certain joy and satisfaction I get when I see students improving.

But there are also times when I do not enjoy teaching. Somedays, it can just get so tiring. And I can feel brain dead sometimes when the session is too intensive.

Anway, I am really glad that I have an additional source of income now. The additional money will go a long way in propping up my family's finances.

Falling In Love with Our Stocks

Why on earth do we make the silly mistake of falling in love with our stocks..or investments?

A few days back, I posted about the 7 Investment Sins and some brief thoughts on the Price versus Value debate.

Over at MusicWhiz's corner, he had also written about the various investment sins too.

Today, I thought I would just write more about one of the problems that most investors (including me) suffer from:

FALLING IN LOVE WITH OUR STOCKS (and sometimes our investments too!)

(Beautiful Image Above by kwerfeldein )

Human beings tend to get emotionally attached to the things that they possess. Certain people have gone on to suggest the reasons why we fall in love and why it even feels so good to be in love.

Apparently, being in love helps to trigger some of the circuits in your brain that gives you pleasure. Dopamine which is the main chemical that is involved produces feelings of euphoria, sleeplessness, and focused attention on the thing that we fall in love with. Also, the feeling of love tends to last for two to three years. INTERESTING FACTS!

Does that explain why most of our stock holdings only last for two to three years? We research them, fall in love with them and them ditch them for something better after a time frame of usually two years!

This is my experience personally. I have been investing for close to 7 years and I can say that I hardly own any of the stocks that I first owned when I started out investing!

There is however one particular stock that remains in my portfolio today. It is Unifood holdings. Back in the good old days of early 2002, people were singing praises about this stock. I did my research and made the mistake of falling in love with it. The price dropped and I was too emotionally attached to let go of it. I had fallen in love with it. 7 years on, the stock price has dropped. I am now stuck with it.

The problem of falling in love with our stocks is that we let the emotional part of us go into overdrive and after spending some cognitive energies rationalising why we should purchase that certain stock, we simply stop our cognitive engines and rev up our emotional engines. We start to grown a certain attachment to the stocks that we have just bought into. Just the way love is blind, we stop seeing the flaws and only start to see all the good points of the business.

And yet most investors know that we should never let our emotions get the better of us. We are supposed to be cold blooded people just trying to squeeze the last penny out of every investment that we make.

And just like any marriage, we only start to see the flaws after it becomes too late. By then, the emotions are gone and we stare in disbelief at the stock sitting in our portfolio which we thought was the best in the world and should have risen up by ten-fold or twenty-fold.

Have you suffered from the same experience?

Or what strategies do you use to remove the emotional part of investing?

3rd Cheque from Google's Adsense

Over two years ago (in 2008), I started out on a journey to see whether it was plausible for one to earn money using adsense. I still remember the delight I had when I was able to earn $4.44 for a certain month in earnings. You can check out my posting about it here.

I remember lamenting the fact that my online earnings were low and I was not able to achieve the $1 per day target that I had set for myself. In a posting talking about Online Income from Adsense, I shared the joys and pains that I had about monetizing my blogs.

My Revelation - Earning Money Online is a Full-Time Job

I guess I moved on and realised that my blogging was not really about making money online. It was more about recording down my experiences and the thoughts that go through my head with regards to financial matters, investments or insurance. Slowly, I also added in more personal stuff which I would never share openly with strangers. The purpose was more to record it down for my own viewing pleasure in the future. Yet at the same time, I was hoping that others could learn from my experiences and not make the same mistakes that I have already made.

To me, any money that was derived from this blog was just an added benefit. Of course, there are days that I still harbor the thoughts of leaving the rat race for good and just becoming a full-time blogger. I am certain that my family and friends will desert me for good then =)

So I treated the income source from this blog as just a sort of added benefit. Of course, I still had earning goals that I hoped to achieve in due time just for the fun of it.

It is Possible to Make Money From Adsense

The only thing that I have proven thus far in my journey is this: It is possible to make money from adsense.

The problem is that the amount of effort one has to put in is totally not related to the amount that you will be earning. In fact, it is much easier to take on part-time work like tuition to earn money than to rely on adsense.

I have spent literally hours upon hours on this blog and if I translate the amount of time I have spent on it to let's say getting a part-time job that pays $30 per hour, I am much better off getting a part-time job. It is possible to make money from adsense but it is NOT EASY.

I repeat: It is NOT EASY <-- just in case some student sees this post and starts thinking that they can be the next Mr Brown or Xiaxue.

Get a job at MacDonalds, it will pay you much more than what you can earn from blogging!

My Earnings thus far.....

Jun 09 - USD$105 (forgot to record down the conversion to SGD)
Nov 09 - S$160.72
Mar 10 - S$180.75

1,500 People Visit this Site Every Month

This is actually the thing that keeps me blogging. Sometimes, I feel that my energies are being wasted in a futile activity. But at the very same time, writing has a calming effect on me. It helps me to organise my thoughts and I love to write. I am still not really a good writer as you can tell..

But just knowing that there are 1,500 readers per month makes me strive to keep this blog updated and interesting for all. I guess I have been able to make a greater impact through this blog than through my own personal life. I don't even talk to 15 different people in a month sometimes!

Yet this blog speaks to 1,500 people in a month!

Of course, I have yet to compute my readers that follow me annually. But it can sometimes be quite frightening....SO MANY PEOPLE ARE ACTUALLY READING THE STUFF THAT I PUT UP.... The last thing I want to happen is to become accidentally famous. I hate the limelight.

Should I Give Up Blogging?

I have been really weary lately. I really feel that my energies could perhaps be better focused elsewhere. I am still seeking God for a lot of questions that I do not have answers to with regards to my purpose in life and stuff.

There have been times that I have thought that I should stop blogging. Perhaps blog less frequently..or perhaps even just give up blogging forever. In this way, no one will ever find out who FF is. (FF is my online persona - it was a terrible mistake to call this blog sgfinancialfreedom cos the moniker FF just stuck with me. In fact, it was other bloggers and readers who started calling me FF. If I could change things, I would have gone by a cooler name that did not have so much focus on things like being financially free and stuff.)

Yet, here I am again..hitting the PUBLISH POST button. Perhaps I am addicted to blogging.

Networth Update for Feb 2010

Networth as of Feb 2010 is estimated around $652,000. A slight drop from Jan 2010.

The decline in networth was due to a slight drop in my entire investment portfolio as a result of the market correction.

Also worrying is my negative cash flow at the moment as the net income that the entire family is drawing in is less than our expenditures. It is likely to stay that way for sometime unless a job comes along soon.

Prudential to takeover AIA. What will happen to AIA policyholders?

I just read the news that Prudential will takeover AIA for US$35 million dollars. And I have a policy with AIA!!

Given this scenario, what will happen to AIA policyholders?

Will AIA still exist as a company or will all existing policies be taken over by Prudential?

I would like to think that AIA will soon stop existing as a company and that Prudential will just take over all existing policies in due time. This will be the most efficient way to run the business if I were the CEO.

Sometime back, Manulife bought over John Hancock and all policies were taken over by Manulife. John Hancock (JH) simply ceased to exist as an entity in a certain sense as you do not see any new JH policies or any JH agents around here in Singapore.

What do you think?

Price is What You Pay, Value is What you Get

As the common saying goes: "Price is what you pay, value is what you get."

This saying is supported by people who support fundamental analysis. These are the faithful followers of legendary investors like Buffet, Fisher, Graham and the like.

Not too long ago, I wrote a short post on the 7 Investment Sins many investors make. Today, I am expanding on one of these "sins" which is basically people ignoring a stock's valuation when they purchase it at a certain price.

But before we can even go there, there is a difference we need to make between the PRICE of a stock and the VALUE of a stock.

In fact, Warren Buffet notes that there is really no distinction between value investing and growth investing as both are so integrally linked that any true investing must be based on an assessment of what the relationship is between price and value. Wise words indeed. Buffet goes on to suggest that any investing strategy which does not employ a comparison between price and value is tentamount to speculation.

So What is Price?

The price of a stock fluctuates from day to day. It's price can easily be determined either by turning to the Bloomberg channel or by checking up with your local stock broker. The price of a stock is what Mr Market offers you on a particular time and day. It changes from time to time and seems to be irrational at times.

Benjamin Graham's Mr Market is used to describe the price fluctuations that take place in the market. He appears daily and names a price where he would either buy or sell you a certain stake in a certain business.

Mr Market being moody and prone to maniac swings from joy to despair offers prices that are sometimes higher, sometimes lower than the value of businesses that are being traded on the stock exchange.

To put it simply, the price of a stock DOES NOT EQUAL to the value of a stock.

What is Value?

Valuing a stock is based on certain principles. Many people use price multiples. This include the simple price to earnings, price to sales and price to book ratios. These ratios however are based on price and basically compares what investors are paying for one stock to another stock. It does not really tell you anything about the value of a stock.

Morningstar believes that stocks should be purchased because they are trading at some discount to their intrinsic value. The value of a stock is calculated based on the present value of its future cash flows. To calculate an intrinsic value, the following steps are used:

1. Estimate cash flows for the next year
2. Forecast a growth rate
3. Estimate a discount rate
4. Estimate a long-run growth rate
5. Add the discounted cash flows to the perpetuity value.

After this is done, one goes on to calculate the Margin of Safety. This margin of safety is basically the discount price of the stock compared to your calculated valuation. It has been suggested that an average of 30 percent to 40 percent margin of safety should be present before the fundamental analyst purchases a certain stock.

The question is this: "Do people even bother to calculate intrinsic value and the margin of safety they have before they purchase a stock?" Do you?

Thoughts on Singaporeans Migrating

(Image by kwerfeldein)

A few days back, I wrote some thoughts about the Grass being Greener on the Other Side. In it, I touched upon some reasons why people often have ideas or thoughts that the grass is greener on the other side.

Today, I was interested to find out how many Singaporeans actually felt that the grass is greener on the other side and it made me realise that this could be quite a prevalent thought amongst Singaporeans. The reason for this is the number of people migrating or leaving Singapore's shores for "greener pastures" elsewhere.

I saw this old thread over at Stomp and am summarizing it here for your benefit. If you are interested in looking at the thread, you can view it here.

1. Over 10 years, 97,990 Singaporeans left the shores of Singapore and applied for permanent residency elsewhere. This figures do not include children but include students going overseas for studies and businessmen.

2. In a survey, two-thirds of participants said that they have considered retiring in other countries due to the slower pace of life and lower cost of living.

3. Australia and New Zealand feature high on the Singaporean's migration destination list.

Anway, it seems astounding that while foreigners are flocking to Singapore, Singaporeans themselves are trying to get out! Of course, the survey results could be pretty skewed and perhaps some of the Singaporeans do intend to come back after sometime. I guess it is also good in terms of Singapore's globalisation efforts.

But nevertheless, being such a small country, every single person counts. Wouldn't it be good if we managed to stop the outflow of Singaporeans to other countries? What are some of the things that need to be changed in Singapore to help it retain its people?

Suggestions to Stop Singaporeans from Migrating
First of all, I must qualify that I am not a policy maker and these are just some suggestions that I have gathered from viewing various forums. The ideas expressed are not mine.

1. Slow down the pace of life.
2. Reduce the cost of living for Singaporeans
3. Make Singapore more EXCITING
4. More free speech
5. Focus less on foreign talent
6. Improve the education system

I must still say that I do not understand why people want to leave when the tax rates here are so much more favorable compared to other countries. Yes, of course with the same amount of money you can buy a bigger car and bigger house overseas...so that perhaps tilts the equation back..