When is it OK to be nice and unhappy?

Recently, I had a chat with a reader till about 1.30am in the morning. It was on the topic of insurance. Mind you, I wasn't giving any advice. I am not allowed to and I know it. We were just bouncing ideas off each other, she said, and she overheard me talking to myself.

In a recent blog post, I said that we often meet nice people in life and the reader I chatted with is a nice person and so is her husband. How could I tell?

Many of us are nice people who are considerate towards others. Unfortunately, nice people very often get taken advantage of in life. In the case of the reader, she had wanted to make adjustments to her insurance policies but her insurance agent had objected because:

"he said he'll have financial penalty if we withdraw some policies after buying 2 new ones this year from him"

So, what is the reader's plan?

"so, we decide next year, we'll be firm with what we think is right..at least he said within 1 year, if we terminate old policies after getting new policies, he suffers. So, next year, after the 1 year is over, we'll want to terminate some."

Isn't the reader being exceptionally nice? I think so. She really has no obligation to behave like this but she is being considerate despite being rather unhappy. I hope her agent appreciates it.

Personally, I had one such experience too when I bought an insurance policy when I first started life as a working adult. It was a whole life policy bought from a relative.

When the policy was delivered to me, it had riders which I didn't want (and I told him beforehand that if the product must be sold with the riders, I would not be interested) because it bumped up the premium by some 15% and it was a lot of money for a young working adult. He ignored my wishes because he needed the sale to hit some quota to qualify for some incentive trip.

I had wanted to cancel the policy but the relative objected and sought my dad's help. My dad told me not to cancel the policy because it would jeopardise the relative's career and I kept the policy despite being very unhappy. I lost all respect for that fellow (the relative, not my dad) since.

Nice!

Sometimes, it really doesn't pay to be nice, does it? To be nice, sometimes, we end up unhappy and paying more. So, how? Is it OK to be nice and unhappy? It depends.

We have to learn not to be nice and not care what some people think of us. Some people don't matter to us and, therefore, what they think of us should not matter at all.

Do you find it hard to tell who these people are? Well, if we know who are the people who matter, then, it becomes easier. The people who matter to me, ranked in order of importance:

1. Immediate family.

2. Close friends. Extended family.

3. Co-workers we work closely with.

4. Boss (whether we work closely with him or her does not matter.)

5. Friends less close. Co-workers less close.

So, anyone else should not matter much, if at all.

What should matter more to the golfer? The golf ball or the grass?

Over the years, I have become more discerning with requests for help and mindful about taking care of my own interests. There will always be people out there who would covertly or overtly try to take advantage of us. We should know this and beware.

There is still that boy scout in me but boy scouts grow up too.

Related posts:
1. To let go or to hold on to a position?
2. Nobody cares more about our money than we do.
3. Response from AK to accusations regarding seminar.

Get VVIP discount at condo launch!

We always see things like "early bird discounts" or "VVIP discounts" when there are new condominium projects here and although I am not saying that they are all just a lot of hot air, I think that it is only prudent that we take claims like these with a pinch of salt.

After all, I have not come across sales people who would tell clients, "Hey, don't buy. Even after the discount, it is still not value for money." Sales people must always say optimistic stuff to their clients and look the part too.

"Being a salesman and an actor were not that dissimilar: It is a good lesson in covering up your feelings. No one wants to buy from someone who looks depressed." -------- D. Scott

Someone who recently visited a showflat received a strong dose of such optimism and shared her thoughts with me in an email. I would like to share a little bit of it here:

"So how did the agent try to convince me it is a good deal? The usual talk on
1. FH property and offering to show stats on the ROI in the area.
2. Discount is very attractive. 8% special discount + 5% VVIP discount if buy this weekend.
If you refer to the transacted prices of nearby developments which I included here, it is obvious that there is no discount to speak of."

Comparing with recent transacted prices of surrounding properties is something I do too and that was how I snagged good (i.e. undervalued) deals before. Comparative analysis is quite simple to do and I do it a lot in my investments in the stock market.

Now, in another blog post, I asked, "why would we want to buy a property that has priced in future value?"
(See: Buying a property: Affordability and value for money.)

Although this is not the motive of the question, it could give an impression that property prices would definitely go up in future but what if they were to go down instead?

Entry prices are important and if we ended up paying prices too high, we would have no margin of safety to speak of.

We should remember that nobody cares more about our money than we do.

Related posts:
1. Buying an apartment: Considerations.
2. Where to buy shoebox apartments for investment?
3. Apartments with rental yields of 4.95% to 7.3%

Emergency funds: Have joint savings accounts.

Someone wrote to me and said,

"Even with passive income, your representative will have to wrestle to get your affairs settled.  This takes both time, effort and even some muscle power.  My greatest fear is being poor and going to bed hungry. My next greatest fear is being half-dead.  Sigh.  .  . I worry a lot."

I have a simple solution to this. What is it?

Have joint savings accounts with our loved ones. I have two such accounts, one with my mother and one with my sister. In case I were to be incapacitated in any way one day, they have access to the money in these accounts.

As adults, we naturally want to have a clear line separating "my" money from "your" money. After all, we have our own lives to build and our own dreams to chase. However, having at least one joint account with someone we love and trust really makes sense.

For example, I know that many couples, married or not, have joint savings accounts to which they contribute equally on a regular basis. Such joint accounts could serve many purposes including paying for regular household expenses.

However, the joint accounts I am thinking of hold emergency funds. They come in an imaginary glass case that has the words

"BREAK GLASS IN CASE OF EMERGENCY"

written on the outside in bright red colour.

Having said this, for married couples, a joint account to hold emergency funds makes sense. For couples yet to be married and for singles, it would make sense to have such a joint account with a trustworthy immediate family member even if the money is all yours. (At this point, I hope no one asks me the question which I think someone might ask.)

Yes, we need to have people we can trust to hold keys to these funds. We trust ourselves (I think) but if anything untoward should happen to us, someone else we trust should be able unlock these funds on our behalf.

Still having second thoughts? Hey, this someone we trust and love will be taking on additional responsibilities (with thanks and only thanks), you know?

What's the next thing to do after this?

Keep our fingers crossed and hope that we are the ones who might have to break the glass case and not them.

P.S. There are many ways to make sure that our loved ones have access to our money on short notice, I am sure, and I am just sharing one way here. (See related post #3)

Related posts:
1. Why a meaningful emergency fund is important?
2. Emergency fund: How much is enough?
3. Emergency and convenience cash.

Whole life insurance, universal life insurance and investing.

"It is a horrific investment!"

This blog post is actually a reply to Kenneth Chua, who left very thoughtful comments regarding how whole life insurance has worked for him: here.

Since not many readers visit the comments section, I thought I should bring the comments section in as a blog post especially when I believe I have something important to talk to myself about:


Hi Kenneth,

Yes, times have changed and there are many more options available to us now in Singapore to help us plan for retirement.

When I am in my 60s, I could be amazed by how things might be different just like how my parents find how things are more complicated nowadays compared to the time when they were in their 20s. Life was simpler then.

Well, we are lucky that we have a paternalistic government who, most of the time, do the right things. We still have to try to grow our savings to ensure retirement adequacy on top of what the government is trying to do for us.

With Singapore's core inflation at about 3% per annum, the whole life policies which I have are only tracking inflation with returns of about 3% per annum. While it helps to know that my wealth is not shrinking, it is not growing either.

When the time comes to draw upon the policies (i.e. cashing out at 65 like you said), the sum of money would start shrinking rapidly, both in nominal and real terms due to its utilisation and a lack of growth.

A solution would be to buy an annuity then but, of course, the money would be locked up again. Although most people would not like to have their money locked up, this is a good hedge against longevity risk for people who are not investment savvy.

For me, however, the better solution is to ensure our wealth grows at a faster rate than inflation and the sooner we achieve this, the better. Apart from saving a good portion of our earned income from active employment, investing in income producing assets that will grow in value is my preferred method.

The nice thing about this is that when I reach 65, I wouldn't have to cash out. Hopefully, these assets would still be generating income for me and this would help fund my retirement till my final day in this world.

Thanks so much for sharing. Keep the comments coming.

AK

I also replied to another reader on Universal Life Insurance recently. If you are interested in this, please read comments: here.

Related posts:
1. Inflation! What to do?
2. To retire by age 45, start with a plan.
3. The best insurance to have in life.
4. An annuity: A case study.
5. Matthew Seah explains Blue Chip Investment Plan.

"The amount that is going into insurance goes up every year and the amount that is going into investment goes down every year. This doesn't work. It is a way of investing money poorly."