Buffett and Munger don't like to pay full prices. Do you?

It is hard not to mention how important it is to save money whenever I blog or talk because it is so much a part of me. Now, by saving money, I am not just talking about paying ourselves first. I am also talking about how I try to get the best deals.

Today, I thought I was meeting some friends and when I messaged one of them, I found out that I was mistaken. So, I decided to do some window shopping. Nice, lazy Sunday. Then, suddenly, I felt like having a cold Ribena drink. It was kind of strange but I just felt like it.

So, I walked into the supermarket in the mall and saw that it was going for $1.70 a packet. Those that were chilled would cost 15% more! Reminding myself that there was a Watsons in the mall, I decided to check if they had the same drink at a special price.

Wow! Chilled Ribena drink in Watsons was cheaper at $1.50 a packet and the special deal was "Buy 2 for $2". Jackpot! So, basically, I got 2 for the price of 1.

Since I was in Watsons, I decided to see what other good deals they had and I found these:

Usual price: $8.20 each. I paid $8.80 for 2.

I am always getting paper cuts. Using hand mosturisers each time after I wash my hands help to prevent paper cuts. Rosken is an inexpensive brand which I have been using for years and the pharmacies here have special deals once every few months. Those are the times I would buy.

People sometimes laugh at me and ask me:

1. How much can you save?

2. Aren't you spending more by buying more?

Well, I believe that savings no matter how little do add up. If I am able to get more bang for my dollar, why not? If it is something I use regularly, why shouldn't I buy more?

This thinking is not something that I apply only to the small things in life. I am like this with bigger things in life too. 

I will try to find value for money in big ticket items like cars, apartments and stocks too. 

If something has become a habit, it pervades our lives. Always looking for the best deals is a habit for me.

So, how much money did I save in the process of pampering myself with chilled Ribena drinks and buying what is an essential item for me? Well, there could be several answers to this question. So, I will let whoever is interested derive his own answer:

Of course, for those of us who did Economics in school as a subject, we will remember that all of us have imperfect knowledge, so, it could be very difficult, if at all possible to get the best possible deals all the time. 

If we did get the best possible deal sometimes, we were probably lucky. 

However, this shouldn't stop us from trying. For anyone who is always paying full prices, getting better deals is already a fantastic start.

"Whether socks or stocks, I like buying quality merchandise when it is marked down," Warren Buffett.

"... all that is required is a willingness to bet heavily when the odds are extremely favourable, using resources available as a result of prudence and patience in the past," Charlie Munger.

Related posts:
1. Song Stonecold: Getting value out of everything.

2. Seven money habits of AK71's.

3. Shopping online with free shipping saves money.

How to have peace of mind as an investor?

Having peace of mind will help us to think clearly, not panic and make the best of market opportunities. 

Remember 5 words:

"Eat bread with ink slowly."

Yes, this is in keeping with AK blogging more about food these days but bread with ink? 

Yikes! Has AK gone nuts? 





Hey! Squid ink happens to be a delicacy. 

Don't you know?

Well, some of you might already have guessed it. 

AK is using mnemonics. 

It is something I used to do a lot of as a student to help remember long lists and facts. 

I also taught my students in the past to use mnemonics to help them remember things.

Eat bread with ink?!

OK, before I go off tangent again, what does each word stand for?

The letter "e" in "eat" stands for emergency fund. 

All of us should have an emergency fund. 

During good times, build an emergency fund. 

We do not know when we might need it. 

Having an emergency fund gives me peace of mind during good and bad times.




The letter "b" in "bread" stands for borrowed funds. 

Don't borrow money to invest.  

This does not only mean borrowing from institutions like banks and brokerages. 

It also means borrowing from friends and relatives.




In both "e" and "b", we don't want to be caught in a situation where we might have to liquidate our investments at times not of our own choosing. 

If the money is needed elsewhere or asked to be returned, we might end up liquidating at prices we would not have sold at otherwise.






The letter "w" in "with" stands for war chest. 

We must always have money put aside for opportunities. 

Remember that this is not just cash in our bank accounts but also money in our SRS account and CPF-OA. 

I explained how the CPF-OA money should be the last war chest we use because it earns 2.5% per annum in interest, risk free.






The letter "i" in "ink" doesn't stand for squid ink. 

It stands for income, specifically investing for income. 

I explained how all of us have to have earned income unless we are born with a spoon made of some precious metal in our mouth. 

If we invest for income, we would be able to benefit from a growing stream of dividends (i.e. passive income).




Investing for income is important in providing me with peace of mind because it is:

1. The best form of insurance, self insurance.

2. A fountain of wealth that fills my war chest.

3. A contributor to my improving financial resilience.




Finally, the letter "s" in "slowly". 

It stands for sizing. 

More specifically, position sizing. 

I explained before that if we lose sleep over an investment, then, very possibly, we have too much money in it. 

We might want to whittle the position to a size that will allow us to sleep better at night.




So, do you want to have peace of mind as an investor at any one time? You do?

Then, remember to eat bread with ink slowly.

Related posts:
1. Financial security: 5 points.
2. Making recovery from losses easier.
3. Investing for income and position sizing.