Ever since the CPFB introduced a colorful pie chart of our CPF savings a few years ago, I would look forward to mine every year like a teena...
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I receive many emails each week. Unlike my early days in blogging, I might not reply to all of them although I still try. Believe it or not, I also receive emails in Chinese. My proficiency in Chinese has never been high. The best grade I received was a B3. Not bad but not good either.
Unfortunately for me, emails in Chinese are the second most common after emails in English and they are usually a bit of a struggle for me. Anyway, with the help of Google Translate, there is my translation of a recent email: "My husband is a big fan of yours. I hope you will not find my request rude. "Since he started to read your blog a few years ago, my husband has become very careful with money and he has also invested in stocks.
"I am an ignorant housewife but my husband would explain to me what he is doing. From having nothing a few years ago, my husband tells me he receives almost $10,000 in passive income each year now.
"He likes to say, "Imagine what we could have when we are AK's age!" "He would read your blog every night and his favourite ones are about saving money. "Unfortunately, because of an accident recently, he won't be able to read for a while. "I thought of how to cheer him up and wonder if you could talk to him?" I left out plenty of details. Anyway, I think regular readers would know what my reply was. However, I decided that I could still do something for them. Took me a while to do this and I hope it does the trick. Here are my first audio books (or blogs) for your listening pleasure:
Not only do all of us have different financial circumstances, we also have different capacities to stomach stress. What works for one might not work for another (i.e. what might give someone peace of mind might be quite stressful for another).
So, listen to what others have to say but, ultimately, make our own decision, one that will not rob us of our precious sleep.
Chat with Reader #1
Reader: Hi there Ak. I have a question. I have a new bto flat that im staying in with abt 200k hdb loan spread over 25 years. It takes up abt half of my oa contribution every mth to pay it. Should i use the excess oa funds to channel it to sa or focus on paying off the house asap?
Assi AK I would max out my SA first. Money should go to where it is treated best. Doing so, I would maintain a buffer in my OA sufficient for 24 months of loan repayment in case something goes wrong.
Hi AK, do you think i should pay off 10k of hdb housing loan whenever my OA accumulates to 20k so that it stays below 20k to enjoy the additional 1% interest? i.e. 3.5% instead of 2.5%
Earning more interest is always appealing to me. ;)
1:11pm
Reader:
Cos I have a friend who says it's more impt to pay off housing loan as the 0.1% on a big loan is more than 1.5% on the 10k transferred. I.e. It only makes sense if the housing loan is less than 150k, correct?
I have a friend of more than 20 years who used to be fabulously fit. Now, he is "flabulously" fat. He is even fatter than I was last year before I embarked on my effort to lose weight. A few months ago, he said I looked unhealthy because I lost too much weight in a short time. Basically, I lost plenty of fat without gaining enough muscle mass. My entire frame shrank. Imagine that. Horrible, isn't it?
I was climbing stairs, lots of stairs, but I wasn't doing enough upper body workout. The solution for me, I found, was simple. Do more push ups. This is a simple and effective exercise that I can do at home. It builds stronger arms, shoulders and chest. It helps to strengthen the core too.
Anyway, when I saw my friend again recently, he said he has decided to lose weight too. It won't be an exercise to look fabulously fit but an exercise not to look "flabulously" fat. All he wants is to be able to wear swimming trunks to the pool again instead of a pair of board shorts. He said, "You can definitely go to the pool in swimming trunks now."
I don't enjoy swimming very much and walking around outside in a pair of trunks is like being clad only in my undies for all to see, I have always thought. He said, "But you can do it with confidence now." Yes, I know what he meant but I would still feel uncomfortable being mostly naked in public. My family and friends know that my determination to lose weight has everything to do with health and very little to do with looking good.
I was probably somewhat extreme earlier on in my attempt to lose weight. I was really driven by fear. This is similar to my determination to be frugal when I started life as a working adult. On hindsight, I was probably too extreme for many years of my life in allowing myself only $300 in spending money each month. Again, I was really driven by fear.
When we fear something, we are likely to take measures to avoid it. The fear that my health might worsen drove me to lose weight. The fear of growing old and destitute drove me to be frugal. Unless you are new to my blog, you would know that my frugal lifestyle is an important ingredient in the recipe for achieving financial freedom.
Now, I am pleased to share that my health has improved mainly due to my weight loss which has been achieved mostly through dieting and, to a lesser extent, a moderate exercise regime.
In the conversation with my friend, I joked, "I will only feel comfortable being mostly naked in public if I could hide my face." We had a good laugh and, then, he said, "Why not share in your blog? You are faceless there. You might inspire people like me to lose weight too."
OK, I am comfortable sharing how much is my passive income and how much I have in my CPF accounts only because I am an anonymous blogger. The purpose is to inspire by sharing my own experience. To be honest, I was afraid I might regret it but so far, so good. So, I guess this is another first for AK and I hope I don't regret doing this.
With some trepidation, I share here a topless pic of myself taken today:
Ooops. Wrong photo. It should be this one:
If you are overweight and think that losing weight is too difficult, I hope you will think again.
I believe that any overweight person mentally strong enough to go on a journey towards financial freedom is mentally strong enough to go on a journey to lose weight. I am putting an emphasis on mental strength because it is about discipline.
Losing weight is not an easy journey. Like our effort to achieve financial freedom, we have to make positive changes and stay the course. However, compared to trying to achieve financial freedom, losing weight is much easier. Believe it.
lack of transparency too... many funds they own are not listed
that makes it worse
i got into it based on recommendation by a friend who invested tons in it (including his mother's money)... lost most of it
In case you are wondering, AIMS Property Securities Fund (formerly MacarthurCook Property Securities Fund) is still in my investment portfolio. I took up the rights units I was entitled to and I also applied for excess rights during the fund raising exercises after crunching some numbers and deciding that the fund would be able to pay decent enough dividends in due course. Getting in years ago when I did at a much higher price without fully understanding what I was getting myself into was a mistake. However, participating in the rights issues after doing much more research and deciding that it had become a bargain then has proven to be rewarding. All investments are good investments at the right price.
"Recently, my friend just shared with me that he lost 80k on the day that trump won the election. He went to short jap futures seeing that the DJIA futures were tumbling. The media were calling for doomdays and he shorted aggressively. In the end, he got stopped out. Now he has lost his entire savings. I wonder how long he will need to save another 80k. Now no more ammo to invest if a crash finally happens. I also didnt expect the market to recover that fast and break new high thereafter. Any special advice for the friend of mine.. It seems that he doesnt learn from his mistakes..."
There are two parts to this blog post. The first part was written a few weeks ago before I decided to take a break from blogging. The second part was written a few days ago.
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FIRST PART
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Readers who have written to AK to ask for a private meeting would know that they are likely to have a reply in the negative. This is mainly because AK is a very private person. Well, it also has to do with the fact that he is very lazy and finds it a bother to meet people. Recently, I received an email from a couple who were introduced to my blog by a mutual friend. Yes, it was signed off by both of them, two names. Later, they told me it was to be doubly sincere. Does it work that way? Anyway, they read a few of my blog posts which our mutual friend suggested and found them mind boggling! They found them so mind boggling, in fact, that they picked up the courage to write and requested for a private meeting with me, explaining to me their current situation and how they were worried about their financial future. As usual, I wrote them a short reply, politely declining the request. The next day, I received a call from my friend. He was roped in to help persuade me. He said that the couple were very private people just like me and they did not trust advisers in the banks or even insurance agents. They would prefer to talk to someone who has no vested interest like me. When I told my friend that they could wait for the next "Evening with AK and friends", he said they were genuinely worried about their ability to achieve financial freedom and did not want to wait. They had a whole gamut of questions and would prefer to have me to themselves for a few hours and were, in fact, willing to pay me for my time.
--- SECOND PART ---
I met up with the couple a few days ago in their flat. Yes, it was a home visit as the couple felt more comfortable meeting at home. Quieter and more private. As the meeting would probably last a few hours, I agreed that it made sense to be in a comfortable environment too.
Their home was definitely comfortable. It fact, it could be an understatement. It was a HDB flat but it felt like the hotel suite I stayed in Hong Kong once upon a time (and I blogged about it in my travel blog before: here). It was really very nicely renovated. It was obvious that they spared no expense. When I remarked at the relative opulence of the interior deco, they told me they loved travelling and always stayed at 5 star hotels. Coming back from their travels, they didn't want the feeling of luxury to go away.
I could not resist asking how much the renovation cost. The most expensive HDB 3 room flat renovation I knew up till then was $60,000. They wouldn't tell me how much their renovation cost exactly but they told me it was a 6 figure sum!
I felt like the church mouse there and then. Now, something like that was mind boggling to me. When our mutual friend told me the couple were "metrosexuals", it probably didn't register but when I saw the couple, I understood. I first came across that word when the newspapers used it to describe an MP of ours, Mr. Teo Ser Luck, years ago. It sounded posh and it sounded expensive.
"A metrosexual is especially meticulous about his grooming and appearance, typically spending a significant amount of time and money on shopping as part of this." Source: Wikipedia. They were both well groomed and well dressed. I was dressed in my Uniqlo best but I probably looked a bit shabby. Shabby chic, maybe? I won't be sharing the details but, in the next few hours, I answered all their questions and made quite a few suggestions to help them achieve financial freedom. Big adjustments would have to be made.
As we chatted, to them, the topic wasn't mind boggling anymore, it was almost depressing. They have probably enjoyed their lives to the fullest but now find it difficult to envision an enjoyable life in their golden years. As they are in their 40s, I told them that they would have to work doubly hard now to achieve financial freedom not by 55 years of age (which is what they want) but possibly by age 65 (when CPF Life starts paying them a monthly income for life).
Obviously, they were not thrilled by the idea. Realistically, however, without making any adjustments, they might never be able to retire (even with CPF Life's monthly payments) if they want to maintain their current lifestyles. They still looked somewhat depressed when they shook my hand as I was leaving their home (and I am quite sure it wasn't because they had to give me a red packet as promised) but there was determination in their voices when they told me they would take all my suggestions to heart. They said they wished they had done all that I did in the last 20 years. I could only smile and wish them the very best on their new metaphorical journey. All of us could do with a bit of luck, after all. So, why did these metrosexuals seek help from AK? Definitely not because AK has good fashion sense. Remember, we have choices in life. While we still have time on our side, choose wisely. Related posts:
1. Work hard and plan early. 2. Too late to plan at age 57? 3. Retiring before 60 is possible. 4. Wife on retirement adequacy. 5. To be a happy peasant.
I avoided buying Breadtalk's stock for a long time, probably for as long as I avoided buying their bread and I definitely have never bought their "fresh" soya bean milk before. All so expensive.
Yes, I know. AK is very giamsiap. Terrible!
A very high PE ratio and gearing makes the stock unpalatable. To make it even less attractive, the dividend is peanuts. Give shareholders only enough money to buy some bread, maybe.
However, I revealed that I nibbled at Breadtalk on price weakness during the last "Evening with AK and friends". Why har?
Reader: Sir, there is one thing that puzzled me. You mentioned that you bought Breadtalk, but this seems contrary to certain principles which you always talk about. For example, the stock doesn't seem cheap, seeing that the PE of 44 is near its 5-year high. Second, the stock doesn't give very high dividends (you already explained this point). It is the first point that puzzles me, since you have always talked about buying an asset when it is cheap. How come this time it is different leh?
Assi AK: If cash flow from ops is strong and CAPEX reduces, earnings will improve. BT has strong CF... CAPEX needs to come down and if/when it does, earnings will go up and PER will improve. They could pay better dividend then. Not for the pure income investor.
Tsk, tsk...
Not for the purist income investor, to be sure, it is a smallish long position for me.
Consistent with my philosophy (remember "the pyramid") and to put things in perspective, it accounts for less than 1% of my portfolio.
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