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DBS: 43% jump in earnings! Be a millionaire!
Wednesday, May 3, 2023Posted by AK71 at 8:54 AM 18 comments
Labels:
money,
money management,
tax
Why defensive investing is a good idea for most of us?
Sunday, April 30, 2023
If you have been following my blogs, you would be familiar with my reminder to myself that in the current environment, it is probably not a bad idea to be more defensive as investors.
The heightened geopolitical tensions in many parts of the world, sticky inflation, higher for longer interest rates, slowing economic growth and the prospect of economic recession in major economies make for a troubling brew.
I have also said that as a retiree investor for income, it really makes more sense for me to be more defensive and seek out capital preservation options, reducing beta or volatility in my portfolio.
When interest rates were very low, there were people who would borrow money to invest in real estate investment trusts and thought they were actually investing defensively.
Why?
An idea in defensive investing is to invest in assets which deliver stable earnings and meaningful dividends and real estate investment trusts, for the most part, looked like a good fit.
However, these investors who were borrowing money to invest in real estate investment trusts were not investing defensively.
What they were doing was actually aggressive and would fall in the same class as margin trading and options trading.
If interest rates were to rise rapidly which they did, they could find themselves in a boatload of trouble as the unit prices of real estate investment trusts fell and cost of financing rose.
What they were doing had little difference with borrowing money to invest in Alibaba's common stock.
If the price of the common stock fall below a certain price, the lenders will come knocking which was what happened to some investment "gurus."
I never want to have to deal with such a possibility which is the reason for the word "bread" in "eating crusty bread with ink slowly."
If you are new to my blog and don't understand, I will leave a link to the relevant blog below.
Now, is defensive investing only good for retirees like AK?
I would argue that defensive investing is probably a good idea in varying degrees for people who do not have deep pockets.
For regular folks who still need their earned income, capital preservation should have a place in the overall scheme of things.
For retirees and people who do not have the ability to stomach big financial losses, their investment portfolio should be more defensive than not.
The ability to stomach big financial losses will vary from person to person.
How defensive an investment portfolio should be should have an inverse relationship with the ability to stomach big financial losses, theoretically.
The more able a person is able to take big losses, the less defensive his investment portfolio could be, therefore.
However, I have often seen people who are ill able to take big financial losses adopting very aggressive investing ideas.
I think they should ask themselves if they liked the idea of living next to an active volcano.
Defensive investing is also a good idea for people who are mentally unable to take big financial losses.
Losing sleep because you lost a few thousand dollars in a recent investment?
Well, then, you might want to do more defensive investing.
How do we do defensive investing?
I will not tell anyone what to invest in but I will say this.
As long as we invest with an eye on capital preservation, minimizing the risk of financial losses, we are taking a step towards defensive investing.
Promises of astronomical growth and future returns from businesses which are burning cash do not interest defensive investors.
Thinking of becoming more defensive in your approach to investing now?
If AK can do it, so can you!
Related posts:
1. "Eat crusty bread with ink slowly."
2. Update on saving for income.
3. More in equities or fixed income?
Recently published:
Investing or speculating in properties?
Posted by AK71 at 9:09 AM 6 comments
Labels:
bonds,
debt,
investment,
money management,
REITs
Recession could hit Singapore. Do what Buffett and AK say?
Saturday, April 15, 2023
Warren Buffett famously said to investors the following.
"Don't worry about economic predictions."
In his opinion,
"... it really doesn't make any difference in what I do today in terms of buying stocks or buying businesses what those numbers tell me.T-bill ladder completing.
References:
1. Fixed income strategy.
2. Survivability and opportunity.
Posted by AK71 at 3:08 PM 16 comments
Labels:
investment,
money,
money management,
passive income
Lean F.I.R.E. 2014 till now! Still going strong! AK is wrong!
Wednesday, April 12, 2023
Then, in reply to my comment, Henry dropped a surprise on me.
My response.
Thanks for encouraging me to continue blogging.
Posted by AK71 at 9:10 AM 29 comments
Labels:
money,
money management
Avoid lean F.I.R.E. and struggling with higher costs.
Monday, April 10, 2023
A few months ago, I blogged about F.I.R.E.
More specifically, I blogged about lean F.I.R.E.
I said that some people would retire early once their passive income is able to cover their basic necessities in life, leaving very little or no room for error.
I cautioned against lean F.I.R.E. as I thought it was pretty shaky.
Of course, regular long time readers know that I like having buffers partly because I am mental but mostly because I think having a crisis mentality is not a bad thing.
I used an example of how I got pretty worried during the COVID-19 pandemic when both interest income and dividend income took a hit.
If I did not have sufficient buffers, I would probably have had to look for a job.
It would have been very difficult in a very challenging environment.
It would probably also have been very difficult because I was much older and have been out of the workforce for many years.
Why am I blogging about this now?
The catalyst for this blog was something I read this morning.
A F.I.R.E. movement pioneer who retired early 10 years ago at age 34 now says he must return to work.
Why?
He cannot afford his children's college education now.
I always say that kids are very expensive to bring up in Singapore.It is so important to think ahead when we plan for F.I.R.E. or anything in life, really.
Think what could go wrong and what happens if we should have an accident or a few along the way.
Maybe, we planned to have two children but got lucky and were blessed with triplets or quadruplets.
It sounds a bit amusing when I say this and we might laugh at it, but it could throw a spanner in the works, especially if we are on lean F.I.R.E.
After being retired for 10 years, it would probably be a challenge to return to the workforce.
Our skills or knowledge might have become obsolete or our old position might no longer exist.
Structural unemployment is very real.
Even if we are not obsolete, we would probably have to compete with younger and probably more energetic people for the same job.
They would probably be able to settle for lower salaries too.
Costs are rising and people on lean F.I.R.E. might be able to cope if they rise slowly but if they should rise rapidly like what has happened in the last one year, it could become difficult or even impossible.
I would avoid the various forms of F.I.R.E. which are along the line of lean F.I.R.E.
I don't like to live life with little or no room for error.
This is why people who follow the Y.O.L.O movement, believing that they should live life to the fullest, can ill afford mistakes.
Things do go wrong like they sometimes do.
I always demand a greater margin of safety for peace of mind.
What about you?
Related post:
F.I.R.E. lean or shaky.
Comments section of the blog on Mr. Lee Kuan Yew. |
1. Mr. Lee Kuan Yew's wisdom.
2. Obsession with salaries.
Posted by AK71 at 2:48 PM 22 comments
Labels:
money,
money management
Mr. Lee Kuan Yew on impressing people. Latest videos.
Saturday, April 8, 2023
Mr. Lee Kuan Yew said this in 2011.
"I see no reason why I should impress people by having a big car or changing my suits every now and again to keep up with the latest styles.
"I've got many new suits that are absolutely in good condition because I seldom wear them.
"In fact, the older I get, the less willing I am to spend time putting on a suit and tie.
"I just have a blouson or a buttoned-up Chinese jacket, and it saves a lot of trouble.
"I have had them for many years and they are very comfortable."
Latest videos by AK production house:
Have a good weekend!
Recently published:
Why do we obssess with salaries? Why compare?
Related posts:
1. Mr. Lee Kuan Yew said China could become pushy.
2. Why I have been silent on Mr. Lee's passing?
Posted by AK71 at 3:38 PM 2 comments
Labels:
money,
money management
Bankrupt before 30. Is this a trend? Don't let it happen!
Sunday, April 2, 2023
1Q 2023 passive income.
Survivability and opportunity.
Posted by AK71 at 3:08 PM 6 comments
Labels:
debt,
money,
money management
Singapore to split apart? Who to blame?
Sunday, March 12, 2023This blog was held in storage for many days because I was wondering if I should publish it.
What about a neighborhood school?
They habitually spent as much money as they made or more than what they made.
Posted by AK71 at 3:08 PM 22 comments
Labels:
CPF,
money,
money management,
passive income,
savings,
Singapore
Do you give parents enough money monthly?
Tuesday, February 28, 2023
In a blog published many years ago, I said that I was lucky that my parents didn't ever ask me for money.
If you are new to my blog or do not remember, here is the link to the blog:
How did AK achieve financial freedom?
However, I have also shared in my blog in recent years that I was providing my parents with financial support.
Sounds contradictory to what I said many years ago?
Well, my parents didn't ask me for financial support.
I offered.
The thing is if we are blessed with good parents, they usually try not to burden us, their children.
They might just tighten their belts or make some pocket money doing some part time work.
If we are good children, we wouldn't want to see our parents do that.
They have labored to provide for us children till we became independent and, in their golden years, it is our turn to make sure they are at least financially comfortable.
I believe that this is the least we can do as children.
Anyway, the catalyst for this blog was something I read online.
The author asked how much money did people give their parents?
He said he gave his parents 10% of his salary monthly.
The amount was $400 a month.
Source: theindependent.sg |
The blogging bug bit me when I saw that.
If the author's parents were relatively well off and he was just giving them a monthly allowance to express his filial piety, I think his method would be OK.
Method?
Yes, setting aside a fixed percentage of his monthly pay to give to his parents.
Otherwise, it seems pretty arbitrary to me.
It's like saying,
"Hey, don't say I don't give you any money, OK?"
Don't get me wrong as it is better than not giving any money at all.
It would be more meaningful, however, to find out what our parents' needs might be financially and if we could do more to help.
Also, simply giving parents money might not always be the best way to help them.
Helping them pay recurring bills might be a better idea, especially if we want to make sure that the money is being used properly.
Some people are just not very good with money.
Both the giver and receiver would have peace of mind this way.
Hopefully, not having to worry about recurring expenses, our parents would have sufficient resources of their own to take care of their daily expenses.
Otherwise, we might have to provide financial support to defray their daily expenses too.
Then, it might also be a good idea to set aside an emergency fund for our parents, especially if they do not have one.
Things do go wrong like they sometimes do and unexpected expenses do pop up.
Being prepared for a rainy day or, worse, a storm is never a bad idea.
So, what about me?
Well, I don't set aside a percentage of my passive income to give to my parents.
I also do not give them money monthly but I do give them relatively generous red packets on Father's Day, Mother's Day and their birthdays.
That's the only cash I give them.
I can hear some long time regular readers asking questions now.
Yes, in a blog which I published in August 2022, I revealed my updated budget.
In that blog, I said I would be setting aside $48,000 per year from my passive income to provide financial support to my parents.
Most of the money would go to helping them pay recurring expenses and the biggest ticket items are H&S insurance premium, property maintenance and property taxes.
Up until recently, recurring expenses also included mortgage payments.
Thankfully, the final housing loan was fully paid in 2H 2022 and I paid the legal fees to discharge the mortgage as well.
To be honest, $48,000 per year has quite a comfortable buffer as the amount I set aside for parental support was $40,000 per year before.
So, what about the amount in excess of annual red packets and paying recurring expenses for them?
Well, I could increase the size of their red packets henceforth.
However, being a worrier, most of the excess would go into the emergency fund I have set up for them.
I have blogged about the importance of having an emergency fund and how mine was big enough to cover 24 months of routine expenses not just for myself but also my family.
However, I have not blogged about how our emergency fund should also keep pace with inflation, if my memory serves me right.
If we have set up an emergency fund a few years ago and if we have not looked at it since, maybe, it is a good idea to check if it is still as robust as before.
If you are new to my blog or need a refresher, read:
So, how much money am I giving my parents in percentage terms?
Well, this number is going to be different from year to year since my passive income is going to be different each year.
My passive income for 2022 totaled S$205,999.
$48,000 is about 23% of that total.
To be sure, I am not telling anyone how much money they should give their parents.
I am definitely not saying that I am 10x better than someone who gives $400 a month or $4,800 a year to his parents.
We most probably have different circumstances and, in some cases, quite possibly, very different circumstances.
However, instead of asking how much money are you giving your parents monthly, perhaps, the author of the article which was the catalyst for this blog should be asking are you giving your parents enough money monthly?
I am going to take shelter now.
Just talking to myself, as usual.
Related posts:
1. Inflation, passive income and my budget.
2. 4Q 2022 passive income.
Posted by AK71 at 7:55 AM 11 comments
Labels:
money management,
passive income
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