This blog is about financial freedom and serves to inform, educate and entertain the public on all personal finance matters. The author of this blog has been blogging for 5 over years. He was also a guest blogger at CPF's IMSavvy site (now AreYouReady site). This blog is visited by many unique readers from various countries every month. Do bookmark this blog and leave your comments.
Living Within Your Means
I have just discovered that it is very hard to live within one's means. As one climbs up the career ladder, or as one ages, one feels obliges to spend more on certain stuff. This can range from food, clothing to holidays even.
It is difficult to live within your means when everyone else is spending like there is no tomorrow. It is difficult to live within your means when friends and colleagues are always nearby and offer a good comparison of the things that you have versus what you do not have.
In fact, I am almost certain that it is not your absolute income that makes you happy. Rather, it is your relative income that makes one satisfied.
The simple lesson: Stop comparing and live the life that you really want to. Comparing gets you no where and only makes you desire for the things that you do not have. The reason why we fail to live within our means is because we keep comparing and our expectations go up. We expect to be able to own certain luxury goods that we could easily do without.
I have failed in this area too many times. This entry is just a reminder to myself and to readers to Live Within Your Means.
Bills to Pay
10,000 Hours To Be An Expert
I have been reading Outliers by Malcolm Gladwell. In one of the chapters, it mentions that 10,000 hours is what it takes to make a person good at a particular field. That is roughly 10 years. The most gifted person or the most talented person still needs to practice 10,000 hours before they get really good.
Come to think of it, I have never really truly put in 10,000 hours into any particular field. Even during my university days, I don't think I managed to study 10,000 hours. And that perhaps explains why I am neither talented in any sport or in any musical instruments.
10,000 hours is all it takes. Of course, there needs to be some talent involve. But even with talent, you still need 10,000 hours.
Where should you devote 10,000 hours to?
Funny Incident at MRT
Girl Made to Sign Pre-Nup Agreement
The forum thread is attached below:
Read this : http://forums.asiaone.com/showthread.php?t=33015
Do you think pre-nups are necessary? Is it wrong for the rich to try to protect their assets?
SIA Bonds and SGS Bonds
Thankfully, a reader (named Sen) corrected my mistake. The SGS bond had a coupon rate of 2.875% but that did not translate into yield as the pricing of the bond was still not known. That means the yield of the SGS bond will most probably end up being lower than the yield of SIA’s equivalent 5 year bond.
Morale of the story: When you think that you have found an anomaly, it is most probably not an anomaly.]
SMRA 4% Interest
Canadian Income Trusts
Online University
Hidden Gems in Singapore
Run Your Own Race
My Thoughts on Retirement
Double Dip Fears
Beware of this Insurance Agent
This is an especially common situation in Singapore where insurance agents change companies the way they change shoes. Because of buyout clauses, failure to hit sales quota, or some other kind of reason, insurance agents often change from one company to another over the years. This is nothing common and we should not blame them. After all, who really sticks with one company for more than 5 years in today's job market? Where people are encouraged to gain as much job experience in as wide a variety of roles possible, it is not surprising that people change companies.
But what happens when an insurance agent changes to another insurance company is probably the worst thing that can happen to his clients. It might be better if the insurance agent had left the industry altogether. For the insurance agent who changes company will soon try to convince his existing clients to switch over their policies to his new company. It is not a new trick. It is an old trick that has happened time and time again.
True. There are instances when an apple to apple comparison is done, the consumer can clearly see the benefits of a certain policy over another policy. However, the worst kind of comparison is the kind that tries to compare an apple to an egg. With this kind of insurance agent, one must beware.
This insurance agent will take a whole life policy and compare it with an ILP. And from there he will show you all the benefits the ILP has over your whole life policy.
If you have an ILP, he will take a term insurance and compare it to your ILP!!
If you have a term insurance, he will take an ILP or Whole life policy and show you the benefits of it over your term insurance!!!!!
With this kind of apple to egg comparison, it is impossible to refuse the "benefits" that are proposed by the agent.
Rule of thumb: Always do an apple to apple comparison. When you try to compare an apple to egg, it is impossible.
Don't say you have not been warned.
Gross Monthly Salary Poll Results
56% earn less than $5000 per month.
30% earn between $5000 and $10,000 per month.
13% earn more than $10,000 per month.
Interesting results. It shows me that some of my readers are earning $10,000 per month but they still find my site interesting/relevant enough even though I earn less than them.
Perhaps I should get them to share how they managed to earn such a high monthly income and what jobs or industries they are in.
City of Possibilities
Life and Its Funny Turns
Dividends and Passive Income (Aug 2010)
The following 2 REITs paid out distributions for the month of Aug 2010:
1. Ascott REIT ($423.60)
2. Suntec REIT ($25.28)
Total passive income and dividends for Aug 2010 = $448.88
It seems that dividends are still the main source of passive income for me as I do not have any money generating businesses or stuff to provide me with more passive income.
Youth Olympic Games
Curriculum Vitae or Resume
Best Homes in Singapore
Red Hot YOG
Happy Birthday Singapore!
Is Inflation Bad?
Salary Poll Results
The Little Steps You Take and the Decisions You Make
Success Takes Effort
AXA FutureProtector High Lapse Rate
Salary Discussion
Surrendering Insurance Policies?
While that might be a concern to most people, it is important to note that if your insurance agent has switched companies, he or she is not supposed to induce you to lapse or surrender your existing insurance policies and buy a new policy from them. This unethical agents are just out to earn extra commission as they no longer earn the trailer commissions that they would have earned if they had stayed with the same company. When they join a new insurance company, they start from ground zero all again and have to start building up their client base all over again. The fastest and easiest way that they go about doing this is to ask their previous clients to take up new policies with them, often citing the benefits of doing so.
Some of them might even suggest that they can continue to "take care" of you. That is not the case as the insurance policy contract that one purchases and owns is an agreement between the insurance company and you. The insurance agent is just a distributor and does not own the clients in a legal sense. When your insurance agent leaves the industry or leaves the company, the insurance company will get another insurance agent to "service" you. If all else fails, just call the customer service hotline. That is the usual way I find out information and it is much faster than going through your insurance agent.
In the insurance industry, this malpractice of replacing old policies with new policies has led to agents being caught and fired. Many have also been disillusioned by the unethical conduct and have left the industry or lamblasted the industry. However, the practice is still very widespread. I have met with many insurance agents before and all of them have at certain points in time asked me to surrender one of my existing policy to buy a "better and newer" policy from them. This happens even when I have met IFAs.
This point has been elaborated by Mr Tan KL before at his blog. In most cases, surrendering your insurance policy does not make sense. This is especially so if you are asked to buy a similar insurance policy to replace the policy that you have surrendered or lapsed.
From a monetary point of view, it is very difficult to justify surrendering a policy for another policy. Always remember to get a 2nd or 3rd opinion when in doubt so that you can make a more informed decision. Better still, ask people like me who are not in the industry and you will probably get a more informed and independent opinion. Of course, you will have to buy me coffee =) .........Just kidding..
Does Studying a Masters Help?
Of course, cost is one of the main factors that I choose to do it locally. Besides, I cannot afford to do it on a full-time basis and most probably will have to pursue it on a part time basis.
I was just wondering whether doing a masters in my related field of work will bring about a better career progression for me. Besides, I have also been wanting to do a masters for the longest time but I just don't know whether it is worthwhile to spend the time and money on something unless there are potential benefits. The other option will be to wait for a few more years, save up enough money and then go overseas to do my masters.
Decisions, decisions, decisions....
Poll Results: Which is the most toxic investment product
Generate Income from Your Property
What is Happening to Singapore?
Independent Financial Advisers?
Toxic Investment Products
I am running a poll to find out what you feel or think is the most toxic investment product out there in the market.
The poll can be found on the right hand column of this site. It is right under the picture of the pretty lady and should be located near to the top of the blog. The poll is only on for 4 more days so do let me know what you think simply by voting. Just one click and I will know the answer.
I have listed 4 choices of:
1. Land banking
2. Insurance
3. Wine investments
4. Shares
This will give an idea of what people think about the various products. I will share the findings with all so do contribute your thoughts yah?
Cheers,
FF
Sing Dollar Rises with Record GDP Growth Forecast
I have always been quite interested in economics. Unfortunately, I have never been trained in this subject. The closest I got was to study Economics 101 in university and that was pretty much about supply and demand lines. We hardly talked about currency appreciation and inflation.
This is my version or laymen's language of what is going on:
1. Singapore's output in terms of products and services have been pretty high over the past 2 quarters. As such, the expected GDP figures are going to be between 13 to 15 percent. GDP stands for Gross Domestic Product and is basically a measure of the country's economic output. For the long term, a healthy GDP growth is around 3 to 5 percent.
2. When GDP rises, inflation is also expected to increase. This is because firms require more workers and start bidding against one another to attract workers so as to produce a higher output. This leads to an increase in the prices of goods and services and thus leads to inflation. When GDP grows rapidly, inflation is also expected to rise rapidly. Most economists try to keep a low steady inflation rate of 2 to 6 percent. That basically means that there will ALWAYS be inflation in Singapore as it is judged that low rate of inflation is good for the economy. So do take note that inflation is not some airy fairy thing that only takes place once in a blue moon. Most countries try to keep a positive inflation as they view that deflation is bad for the economy. In that sense, we can expect inflation to be always with us.
3. By appreciating the Singapore currency, inflation will be kept in check to the low rate. MAS is not trying to abolish inflation. Rather, it is trying to achieve the targeted inflation rate of 2 to 6 percent which is deemed healthy.
I am not an economist and I am also not from MAS. But I guess this is the linkage between GDP, inflation and currency appreciation. At least, this is the way I understand it to work =)
Of Grenadine Syrup, Kolo Mee, Aimlessness and 1984
Had lunch at the Sarawak Kolo Mee place. I am not sure why they call it Kolo mee. I am not sure what Kolo is supposed to mean. Anyway, the place was almost empty. The waitress greeted me warmly and I took a seat. The last time I had eaten the Kolo Mee was like more than 3 years back. Now I understood why the place was empty. A bowl of Kolo Mee which is basically like noodles, pork bits, prawns, wanton and char siew cost over $6. Together with the drink that I ordered, lunch cost me a whopping $8.55!
Nevertheless, I must say that the Kolo Mee was really tasty. I am pretty sure they drenched it in lard oil or something cos it was really super duper tasty. But I guess I won't be eating it anytime soon simply because paying six over bucks for a small bowl of noodles doesn't make economic sense to me. I know of $2.50 wanton mee that taste just as good. There is this Pontian Wanton Mee outlet at various hawker centres which are really worth it and yummy....
Feeling aimless the past few days. My wife asks me why I am not talking to her. I also do not know what to say. I just feel like I have achieved quite a bit of the goals I have set for myself in life. In the past, it was stuff like get married, get a job, travel to Europe, study abroad, have children, buy a car, get my own flat, etc etc. And I realise that I have already sort of achieved all these goals already. Whereas my peers still have the fun and joy of looking for their life partners or are looking forward to buying a car or flat, I have already sort of BEEN THERE DONE THAT. I am just feeling so aimless.
Perhaps it is time to setting more goals. Or perhaps it is about discovering what my true purpose in life is.
I have just finished reading Ninety Eighty Four by George Orwell. I thought I read it in the past but I must have been mistaken. Because I do not remember it being so saucy. My goodness. To think that I recommended the book to my wife when we first met... hahahha.. she must have thought that I must be quite "loose". I figured that I must have skimmed read it the first time or probably just jumped right to the end of the book without reading the middle parts. Anyway, 1984 is a good read. I really liked the parts about history only existing in written records and in our minds line of argument. Wicked if you ask me.
If I don't exist on written records and I don't exist in people's minds, does it mean that I do not exist at all?
On to reading my next book : One Flew Over the Cuckoo's Nest
Being Contented Helps You Save Money
Economics of Real Estate
If every asset were to only appreciate then basic financial theory would be flawed. The demand would far outweigh the supply if everyone wanted to buy these assets that only went up. Unfortunately the banks lent out money to those who did not understand basic economics. For that matter banks did not understand basic economic either. The real estate market was not at equilibrium. The demand far outweighed the supply due to the fact that the banks were the outside force contributing to the demand. The definition of equilibrium is simply a state of the world where economic forces are balanced and in the absence of external influences. If the banks did not supply that external force, than the demand for assets would not have been so great, and the prices would not have escalated to the levels they did.
The real estate market got so far away from equilibrium that is having to snap back to attain a level where supply equals demand. At the moment there is little to no demand for many of these assets. This is also due to the fact that banks that once supplied endless amounts of loans to anyone who asked for them, are not loaning out money. In both instances economic theory has proven true. The demand became out of touch with equilibrium and so did the amount of loans issued. In both cases, they are in the process of correction which will take time. The current state of the market is such that there is so much supply that prices will have to come down to meet the demand. Not only are people hesitant to buy a home, but the banks that once lent money to anyone are being rather picky to those who want to take out a mortgage.
Today, loan availability is reserved for those with a steady employment history and a good credit score. The supply of available homes will hopefully continue to be bought up by investors and buyers who are able to obtain loans. If the supply remains at the highs that it is currently we should expect to see a continued falling of prices. It will come to the point where homes are cheaper to buy from the banks than they are to build. Bank homes will be coming on to the market for the next few years. Unless there are inflation pressures, the prices will fall.
This presents a buying opportunity to any foreign buyer that has a stronger currency that the Unites States Dollar. The exchange rate for these buyers will be able to buy them more home for the money here in America. By looking at exchange rates on the internet or a forex account, those interested in buying real estate in America can calculate the cost of the property in their own currency. Let us hope that our currency remains weak enough to attract foreign buyer to help rid of us of the supply. It is imperative for the health of our country that that real estate market is in equilibrium, and not gyrate in one direction or the other.
The following article is a guest post from Forex Fraud. While written for a United States audience, it is still relevant to Singapore in certain ways. If you wish to contribute guest posts to this site, please email sgfinancialfreedom@gmail.com
Paul the Octopus is NOT Psychic
Can You Trust Your Financial Planner?
Below is the first article that I contributed to CPF's IM$avvy. It discusses the current state of the financial planning industry in Singapore. I hope readers find this useful.
Being too trusting of others can sometimes work against us in financial planning. Too often, we are not skeptical enough when it comes to financial advice offered by others. Can you trust your financial planner? Is he really providing independent and unbiased advice or is he just trying to close a sale?
Advisory Business or Sales Business?
When the Financial Advisers Act was first introduced in Singapore, many thought that the financial planning industry would come up with a new breed of financial advisors who were independent and unbiased. While the fee based or fee-only model of financial advice is slowly taking off, most people in Singapore are still unwilling to pay a financial planner for the time and energy he takes to craft a financial plan. As long as the market is not ready, financial planners will continue to be compensated based on commissions.
A thin line separates the financial advisory business and the sales business. A sales person is one who derives his income from commissions. On the other hand, the financial advisory business is supposed to provide independent and unbiased advice to clients. It is important to realize that potential conflict of interests arise when financial planners earn commissions from the sale of financial products.
If your financial planner is earning a commission from you, can you trust that he will make the best financial decision for you? If a financial planner is selling you a product that you know very little about, how can you trust that the product is suitable for you?
Financial Products and Imperfect Information
I just read a book and it talked about a wallet auction.
Imagine that I pull out my wallet from my pocket and placed it on the desk in front of me. How much will you offer for the money in it? Whatever the case, any buyer of my wallet will be certainly worse off as I will only accept offers that they should not be making. I know what I am selling but the buyer does not know exactly what he or she is buying. It all boils down to information asymmetry or imperfect information.
The same theory applies to financial products. Imperfect information exists and the buyer has to overcome his lack of knowledge of the situation or of the seller. Market economies often deal with this problem through the mechanisms of advertising and reputation. As a consumer of financial products, your perception of a certain company’s reputation might influence you to purchase the product or invest in certain instruments. Or perhaps you have seen some advertisements that offer yields and gains that are too tempting to resist. Or perhaps, your friend had recommended a “reputable” financial planner that you can trust.
The reason why buyers rely on reputation and advertising is that they are not willing to spend the time to overcome the information asymmetry that exists. For example, a doctor gives me a prescription for a certain ailment. I trust his recommendation because of his reputation and credentials even though I am clueless about the medication that he has just offered me. In this case, it is unwise of me to spend 5-6 years of my time going to medical school just to breach the information asymmetry that exists between him and me.
But are financial products so complicated that we cannot take some of our own time and effort to breach this information asymmetry? Can you still trust that your financial planners will give you the best recommendations when there is a potential conflict of interests?
Trust Yourself: Financial Education
One simple way to overcome this information asymmetry would be for the consumer to become educated in financial matters such that they are better able to understand their own financial situation and make better financial decisions. This would help them better understand the financial products that they wish to purchase. For the beginner, the CPF IMSavvy website has a comprehensive list of articles that should serve as a good foundation for anyone interested in becoming more financially literate.
Are you willing to invest the time and energy to learn more about financial planning? Or do you still trust that a financial planner will do the best job for you?
Why Financial Knowledge is Not Enough
Financial knowledge is not enough by itself. It is akin to knowing about healthy living and eating but still being overweight and living a very unhealthy lifestyle. When I am choosing what to eat for lunch or dinner, I know what are the healthy food choices. I know that I ought to stay away from fizzy drinks. I know that I ought to exercise alot more. Yet even when I am armed with all this knowledge, I do not act upon it. I continue to eat unhealthy food and skip my planned exercise sessions. What results (love handles, tummy, failing IPPT) is not due to my lack of knowledge about healthy living.
The same case applies to most people when it comes to financial knowledge. They might know the need to save and invest their money. They know the importance of planning for their retirement. They know the importance of insurance. The problem is not really a lack of knowledge. The problem is that they fail to act upon it. I know of people who are well-versed in terms of financial knowledge but whose financial health itself are in a "mess".
In Bloom;s Taxonomy of Learning, it has been identified that people need to acquire Knowledge (K), Skills (S) and Attitude (A). As such, we can see that knowledge is just part of the entire learning process. Having knowledge alone does not mean you will succeed. It is an interplay between the K, the S and the A.
Financial Knowledge is not enough. We need to act upon that knowledge. We need to work on our attitudes that are so ingrained within us.
Lease Buyback Scheme
- are living in a 3-room or smaller flat
- are at CPF draw down age (currently 62 years) or older
- have not enjoyed more than one housing subsidy in the past
- have not previously owned a 4 room or bigger flat, or private residential property
- have lived in the flat for at least 5 years
- have a monthly household income of $3000 or less
- Do not have any outstanding loan of more than $5000
Change of Ownership for AIG Global Investment Corporation (Singapore) Ltd
Lending Money to Friends or Relatives
Invest with Temasek through Seatown
Cheap and Good Books
Cheapest Way to Invest (Part 2)
New Look For This Site
Featured Post
Unlock Exclusive Deals and Savings: Join Amazon Prime Today!
Amazon is celebrating Prime members with a multitude of deals during Prime Day. The event will offer more deals than ever before, with new d...
-
Civil servants or public officers in Singapore are expected to declare their financial standing when they first join and every year thereaft...
-
Trying to compile the salary pay scale for the Singapore civil service. Somehow, I only managed to find the figures for 2011. There are p...
-
In my previous article , I compared an endowment plan with an ILP. Many might think that an ILP is a silly way to save for my child's ed...
-
Everybody loves free stuff. So as part of the Christmas Celebrations, I am giving away MONEY! ANYONE can earn it. Just leave a comment on th...
-
Not too long ago, I wrote a post about how much to give for Chinese wedding dinners. It was pretty well received so I thought a good fo...
-
Many young graduates who are seriously considering joining the civil service are likely curious to find out what is the starting pay or sala...
-
“We are more than that; we are in the business of creating time.” - Tay Liam Wee Mr Tay Liam Wee has an estimated networth of around S$135m....
-
Here are some frequently asked questions about sgfinancialfreedom: Q: How do you compute your networth? A: I compute my networth by adding m...
-
How much does a normal or average Singaporean earn? Based on median income, that is supposed to be $2,400 per month and raised to over $300...
-
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 ...