Own a house and become poor? No passive income?

This is the transcript of a YouTube video I produced recently.
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In 2017, I published a rather controversial blog which shared the story of a couple who chose financial freedom over home ownership.

OMG!

What did I just say?

Isn't home ownership part and parcel of financial freedom?

Well, it depends.

Anyway, some readers didn't like the blog.

It could have hurt their vested interests, if you know what I mean.

So, if you are one with vested interests, you might want to stop listening or reading now.

I don't want to upset anyone.

I might have upset some people before but it was never my intention.



Still here?

OK, since you are still interested to find out more, just take this as another perspective on how to achieve financial freedom.

So, back to this couple who chose financial freedom over home ownership.

They are in their thirties and, well, they are retired.

They can work from anywhere in the world that has good internet access.

They are able to move to anywhere in the world where housing is relatively cheap to rent.

Footloose, they move to any country with an attractive standard of living, while having a relatively low cost of living.

This lifestyle must sound pretty attractive to many people, including Singaporeans.

This is probably because it is attractive.

It is probably why many Singaporeans are thinking of moving to Johor in Malaysia to live.



Not being bogged down by high costs of living especially the high housing costs in Singapore, they could possibly fast forward their journey to financial freedom.

What about people who want to stay in Singapore?

Singapore is relatively more expensive but there are many things to like about Singapore.

Well, for those of us who choose to stay in Singapore, we could become financially free faster if we avoid over consumption in housing.

Very often, people over consume when it comes to housing.

Not surprisingly, they might also be the people who find financial freedom out of reach.

This could be even though they might be enjoying higher than average earned incomes.

Often, it has to do with peer pressure.

Keeping up appearances is more than just financially destructive.



Do you believe me when I say that when I tell people I downsized from a two-bedroom apartment to a one-bedroom apartment, most of the time I would get a negative response?

When I told my banker that I bought a small car, he said the same thing my dad said, that he would not buy a small car unless he could not afford a bigger one.

When we think about it, it really has to do with peer pressure and keeping up appearances, but it is also how we deal with it.

In a recent survey, results showed that homeowners generally scored lower on retirement readiness than those who live in rental homes.

Nearly 30 per cent of homeowners surveyed saved less than 10 per cent of their salary, and their median retirement readiness score was placed at the “very low” level.



“These results suggest that homeownership does not guarantee retirement security, especially if an individual is not saving enough for retirement.

While a property is usually considered a financial asset in the long term, it is essentially still a liability until its mortgage is paid off.

“An individual with most of their retirement savings tied up in property assets could be facing a less-than-ideal retirement, since this property wealth does not contribute to retirement income.”

So, subscribing to this idea that our homes are investments could be misguided.

In order for this to be a good idea, we must be willing to monetize our homes in one way or another.

We must be willing to rent out the spare room or rooms, if available.

We must be willing to downsize or downgrade to unlock value, if any.

This means going to for a smaller apartment or to move from a private apartment to a public flat later on.



It doesn't hurt to have some advantages in life but unless severely disadvantaged, all of us can be financially free.

Know ourselves.

Know our circumstances.

We especially do not want to do something to keep up appearances.

If we want to be financially free, focus on cash flow.

Don't end up being asset rich but cash poor.

If you want an example of this, just think of AK spending his early retirement playing computer games!

I am not going to say if AK can do it, so can you.

You might not like computer games.

However, we can definitely spend some time talking to ourselves to come up with a plan.

If AK can talk to himself, so can you!

Reference:
More passive income than "rich" friends.

DBS, OCBC and UOB. Past, present and future. Charting!

This is the transcript of a YouTube video I produced recently.
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I was looking at my short history with Singapore's banks this morning.

DBS was the first Singapore bank I was invested in, and this was back in early 2016.

The lowest price I paid was around $13 a share and I am still holding to those shares today.

Why did I decide to invest in DBS back then?

Regular long-time readers of my blog might remember that 2016 was the year I decided to increase exposure to non-REITs.

The rationale was that low interest rates could not last forever.

At the time, I recognized that it would be an ongoing exercise to transform my REITs heavy investment portfolio.

Of course, that exercise has become a multi-year experience.

Since 2016, I have added to my investment in DBS at various times.

I also became a shareholder of OCBC and UOB later on.



I increased my investment in DBS in April of 2020 during the COVID-19 pandemic.

It was at under $19 a share.

I also increased my investment in OCBC during the pandemic at under $9 a share.

The pandemic saw me becoming a shareholder of UOB as I bought aggressively in late 2020 at around $19 a share.

Since those purchases, my last buy price for DBS was at around $24 a share as I did not add to my investment in the bank recently.

In recent months, I favored OCBC and UOB over DBS based on valuation considerations.

The last time I added to OCBC was in March this year at under $12 a share, and the last time I added to UOB was at around $26 a share in October last year.



So, it should be obvious to anyone that over the years, I have gradually increased my investments in DBS, OCBC and UOB.

Today, their combined market value in my portfolio exceeds $1 million.

Together, they are my largest investment.

This transformation of my investment portfolio surely did not occur by chance.

However, luck played a part in allowing me to buy when I did at more reasonable prices.

In one of my recent blogs, I said that I would like to see my combined exposure to DBS, OCBC and UOB at around 40% of my portfolio.

This is still work in progress.

How long is it going to take?

Well, lacking an earned income, with only my passive income doing all the heavy lifting, it could take a few more years.

It might even take another 10 years or more, depending on what life throws at me.

Do you think it sounds like it is taking way too long to happen?

Well, consider this.

I am not going anywhere in a hurry, and neither is the stock market.



So, when am I adding to my investments?

To be honest, the common stocks of OCBC and UOB are trading at pretty fair valuations now.

If I am not invested yet, I would buy some.

However, as I am looking to add, I decided to look at the charts for some guidance.

DBS has the weakest looking chart right now.

Down trending with negative momentum, we could see it going under $30 a share.

It would have to break immediate resistance at around $32 to go higher.

UOB has a chart that suggests a bottoming process is underway.

If this is indeed the case, we might not see the bottom of October 2022 at around $26 a share retested.

Now, it seems that its common stock could trade sideways for a bit.

I would buy some in the event it closes a gap which formed in late October last year.

This is close to $27 a share.



Amongst the three banks, OCBC seems to have the nicest chart now.

If we connect the lowest points in the chart in July and October last year, we get a trendline.

We can see that this trendline was retested in March this year.

It was also retested multiple times in May last month.

The trendline has always provided support.

So, it is likely to hold the next time it is retested.

If the market should offer me another chance to buy at closer to $12 a share, I would buy some.

Just me talking to myself, as usual.

Remember that what works for me might not work for others.

If AK can talk to himself, so can you!

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