Mortgage a fully paid home and invest the money?

I have always been rather reluctant to borrow. Some might laugh at me for not taking advantage of "good debt" but I believe all of us have different levels of tolerance for debt. It is almost like a religion. It is very personal.

Indecent? Lewd? Maybe, to some.

Here is an email exchange with a reader on the issue:

Hi AK,

Love your thought process and your discipline and I was hoping you can give me your opinion.

Recently I have been toying with the idea of putting my name on my parent's property (1%) which will allow me to take a loan of up to 2 million based on my current income at a current interest rate of 1.4%.

The proceeds of the mortgage is purely for investment purposes.  One reason for doing this, is that I am thinking of leaving my current job, meaning that the option for a "cheap loan" (i am not referring to the interest rate but rather a mortgage backed loan) for none property related investments. Apart from the risk of making poor investments and losing all your money while still owing the bank money blah blah, what are the risks that you see?

As background, I have 750k in various asset classes ranging from cash to shares to foreign property and no outstanding loan. Looking to retire in the next 5 years!

Happy if you want to share this as a post but don't put my name!

Cheers,
H

AK's reply:

Hi H,

Depending on your personal consumption level and the productiveness of your assets, $750K worth of assets could possibly provide a rather comfortable retirement income. So, I would question if there is actually a need to mortgage a fully paid up property to fund more investments.

This was something offered by my banker as well a few years ago. However, being very conservative when it comes to using debt, I chose not to do it. On hindsight, I could have made more money if I did it but I wonder if the feeling of unease which I am sure I would have had would be worth it. It is rather personal.

The question on the possible risks apart from the ones that you are already aware of is very wide. I definitely cannot see all the risks but if we are of the opinion that interest rates cannot possibly go lower, then, we must expect finance cost to rise. We might want to question whether the expected returns on our investments will be able to rise in tandem.

Also, we want to bear in mind that rising interest rates are not good for real estate owners, usually. The much higher asset prices today is mostly due to the abnormally low interest rate environment in recent years.

We could see real estate prices declining as interest rates rise. It would probably affect the valuation of your mortgage property and this, as you can imagine, could create an issue. Of course, depending on the property's characteristics, it could be affected more or less. It is hard to say for sure.

I will share our email exchange in my blog to see if others have thoughts to share. I will make sure not to include your name. ;)

Best wishes,
AK

We welcome other perspectives on the matter as well. So, please feel free to leave a comment.

Related posts:
1. Good debt is always good?
2. To rent or to buy: Rule of 15.
3. Gear up and receive more passive income?

Should I have just left my money in fixed deposits?

This blog post is a reply to a comment made by a reader, pf.

Read pf's comment: here.

Hi pf,

Actually, some time ago, that was what someone told me too. I have provided the link to the related post at the end of this blog post, if you are interested in reading the story.

We can make money from stocks in one of two ways, capital gains and dividends.

So, although I like to say that entry prices are important because that has a bearing on future capital gains and also dividend yields, if we had paid a fair price for a good business, we should do OK too in the longer run. Yes, longer run.

In the longer run, we might not do as well by way of capital gains but if the stock pays regular and meaningful dividends out of its earnings, we will still do quite well over time.

However, if we should need the money for specific purposes in the near future and are forced to liquidate, then, we could end up losing some money if Mr. Market should be feeling depressed at that point in time. So, it is important not to use money earmarked for specific purposes in the near future for investing in equities.

After many years of struggle, I like to think that I have found my way and I am glad to say that my current home will be fully funded by capital gains and dividends paid to me by Mr. Market.

Some money are best left in FDs and some money should be in equities. Once we have sorted this out, we should do better.

Related post:
To be richer, be comfortable with being invested.

How to grow money put aside for home purchase faster?

I received this email from a reader and provided my take on the situation:

Reader's email:

Dear AK,

I have only recently read your blogs and I must congratulate you for your passion and energy in keeping up such an engaging community going.

I have been in Singapore for a little over two years and am renting a condo with my family of four. I had applied for Singapore Permanent Residence but that hasn't come through. One of my intentions after becoming a PR was to buy a condo but obviously that has to wait (with all that one is reading about on prospects of property market in the next 2-3 years and the supply glut...I am just beginning to think may be that's a blessing in disguise :)

With the above intention, I've been keeping my money in rather safe but unattractive bank Fixed Deposit. Now that am not buying at least for another 12-18 months, would you have any advise for me to park my funds in options that can generate moderate returns? Of course i know i will have to forgo the perceived security of FD :)

Many thanks in advance!

A

AK's reply:

Hi A,

I will be very reluctant to take any risk with money that I will need within the next 2 or 3 years. I think fixed deposits are a good option if I were in your shoes.

I would also open an OCBC 360 account to get a higher interest income on the first $50K of deposit. I blogged about this not too long ago too.

If you like, I could publish your email in my blog, leaving out your name, to see if readers might have ideas that they could share with you. After all, I do not know everything.

Let me know if you would like me to do this. :)

Best wishes,
AK

The reader has agreed to have the email exchange published. So, if anyone has any good ideas, please feel free to share. Thank you.

Related posts:
1. Getting paid more while waiting for opportunities.
2. Eight pragmatic reasons to be Singaporeans.
3. Get VVIP discounts at condo launches?

Sell stocks now and wait to buy back lower?

This blog post is in reply to a question posed by a reader, Poh Huat.

Read Poh Huat's question: here.

Saruman, the White?

Hi Poh Huat,

If we can tell accurately when the market is going to crash, it would make sense to sell everything before that. If we can tell accurately when the market has hit bottom, it would make sense to throw in everything including the kitchen sink. ;p

Question: Can we tell accurately? This is where we try to make sense of the charts using technical analysis and I dabble a bit with this as you probably know.

However, I cannot say that I know with a great degree of accuracy if the market has peaked or bottomed. It is quite obvious from the moves I made which I blogged about.

What matters more to me is not to overpay for any investment. By this, I do not mean that if I pay $1 for a stock and tomorrow it becomes 90c, I have overpaid.

I mean buying at a price which I think the stock is worth or at a price less than what I think the stock is worth. If I have not overpaid, I think it is good to hold.





Of course, prices could go lower and as long as we have not overpaid, it means that the stock has become more undervalued. So, we should, in fact, consider buying more.

It is, therefore, important to have a war chest ready. It would be quite miserable to see all the undervalued stocks in a bear market but have no money to buy.

I hope this answers your question. :)

Related posts:
1. If we want peace, be prepared for war.
2. When to BUY, HOLD or SELL?
3. STE's story: Investment strategy.
4. Revisiting my strategy with Mr. Munger.
5. When to be fully invested?

Invest in stuff we understand.

Avoid investing in stuff we can't understand.

Try to understand the business before plonking down any money in it.

"Never invest in a business you can't understand."    
- Warren Buffett.

Don't buy just because someone else is buying.

Related posts:
1. How to be "One Up On Wall Street?"
2. Journey to financial freedom needs preparation.

Get a new HEPA filter and breathe cleaner air while in bed.

I blogged about how I have a Sharp air purifier in my room even before the very bad haze experienced last year. What makes an air purifier works is really the HEPA filter that is inside.

"High-efficiency particulate air or HEPA is a type of air filter. HEPA filters are designed to target much smaller pollutants and particles." (Source: Wikipedia)

A HEPA filter.

Those who have a HEPA filter air purifier will know that the HEPA filter comes wrapped in a plastic bag and has to be installed in the machine. Once exposed to the environment, the filter has a lifespan of 2 years. It says so in the manual.

However, I have people tell me that they don't ever change the filter because the machine still works. Well, the machine could be working but the filter is probably degraded so badly that it no longer works to filter out harmful particles. In fact, it could be paying out harmful particles if it is badly degraded.

Anyway, if you own a HEPA filter air purifier and you have not changed the filter in 2 years or more, you might want to get it changed. Of course, you would have to clean the inside of the machine before installing the new filter too.

If you are still not convinced that the filter has to be changed, I changed mine today and here are the photos:

Old HEPA filter.

New HEPA filter.

The filters used to be available in Courts, Best Denki or Harvey Norman but they no longer stock them. I had to go to Sharp's Authorised Service Centre at Alexandra to get the filter. Not very convenient but it is worth the trouble to have clean air in my bedroom while I sleep:

Oh, it is cheaper to get a new HEPA filter than to buy a new air purifier, in case you are wondering. It costs just a bit more than $70 for the model of air purifier that I have.

This is not an advertorial.

This is just AK being kaypoh again.

Related post:
Protect ourselves from the haze while in bed.

Getting covered for critical illnesses.

The following is an email from a regular reader, Tree:


Hi AK,

Let me talk to myself a bit too. :)

To start with, I think it is important for readers to understand what CI coverage is for... it is actually term insurance coverage for the 30 illness, which are likely to lead to either death or TPD of some form.

A lot of people have signed up for CI coverage only to find out years later that they are not covered when they contract one of the 30 critical illnesses (mainly due to the clause, for example cancer, only end-stage [stage 4] is eligible for claim). That is where early CI coverage came in. Even then, the requirement for early CI is still quite stringent.

Understand that the coverage is very very narrowly defined within the illnesses (read: very very seriously ill).

It is thus very very important all readers, for this insurance, to go over the details of the coverage so that you do not become disillusioned, furious, shocked, dismayed, disappointed, upset etc. with the actual coverage.

So CI coverage, like term insurance, is for your family. It is to help your family cope with the bills caused by the illness if it occurs, but only the very seriously ill version.

Since you have a family and you are bread winner (I assume), you ought to get the CI coverage for your family if your family cannot cope with the bills if you *choy choy choy*.

If your family can cope with ease, it is optional.

Same reasoning with early CI.

Please note that with the coming implementation of Medishield life, there will be better coverage overall for hospitalisation and as such, the need for CI coverage decreases.

Related post: SAF Group Insurance and CI coverage.

Singapura Finance: Electronic application through ATMs.

I have participated in quite a few rights issues before and the way I do it has always been to visit a POSB or DBS ATM. However, we must not take for granted that this is always possible.

I went through the online document on Singapura Finance's rights issue and found that they will only accept electronic applications through the ATMs belonging to UOB or OCBC.

This is terribly inconvenient for me since the only bank I still keep an ATM card for is POSB. This card can be used at ATMs belonging to DBS too, of course. Combined, they have the biggest network of ATMs in Singapore. There is no reason for me to hold ATM cards belonging to UOB or OCBC. Well, not until now.

I will have to pay a visit to UOB to apply for an ATM card which would probably see only a one time usage. What a bother.

So, for anyone who is a Singapura Finance shareholder, in case you do not already know, please take note of this. Don't go to a DBS or POSB ATM on the last day for acceptance (27 November) only to be surprised.

Announcement:
RIGHTS ISSUE OF 79,342,945 NEW ORDINARY SHARES

Related post:
Singapura Finance: 1 for 1 rights issue.

How to be better investors?

I had a conversation with a fellow blogger whom I have grown to respect earlier today and he said that I might want to remind readers of the fact that I am not infallible. Although I think that I have continually mentioned this in my blog, it doesn't hurt to say it again.

As I don't have much time to blog this weekend, sharing my conversation with him is a good way to generate a blog post which I believe is useful rather quickly.

Yes, I know, sneaky AK!

How to be better investors? Know that we are not infallible.

Read the blogs mentioned in the conversation:
1. Managing exposure in AK's investment portfolio.
2. How to size our more speculative positions?
3. How to make recovering from losses easier?
4. Excuse me, are you an investor?

With some difficulty, AK says "good-bye".

When I was in secondary school, my family was staying in a HDB 3 room flat and my parents cordoned off a section of the living room for me to use as my bedroom and study area. 

In a way, I had the largest bedroom in the flat!





On hindsight, they did what they could to make our lives comfortable despite the difficult circumstances.

This is another reminder of my mother's love:

My mom bought this for me after I told her that my English Language teacher asked us to listen to the BBC as a means of improving our command of the language. 






She paid $40.00 for this and it worked tirelessly for 29 years.

The price tag stuck in my mind because I thought it was a lot of money back then.

Although I do not tune in to the BBC anymore, I would still tune in to a couple of local radio stations. 

Sound quality might not be amazing but it is clear and crisp.





Still serviceable, I will be giving it away to a co-worker who has greater utility for it. 

I think of it as a chance to unclutter my life as well which I have been doing a lot of recently.

Suddenly, however, it feels hard to say "good-bye".





Thank you for 29 years of faithful service.

Thank you, mom, for giving this to me.

Related posts:
1. Parting with an old friend.
2. My mug from 1987.
3. Ancient t-shirt is still good!

SAF Group Insurance and CI coverage.

I received an email from a reader, B, and he has agreed for it to be published in the hope of getting more ideas from other readers here:

Dear AK,

Thanks for your ever inspiring and encouraging blog posts for our daily living.

I would like to seek your advice (or what would you do if you were in my shoes) on some insurance matters.

As a background, I am a 27 year old working professional working for around 2+ years, just married, received my BTO flat and planning to have kids next year or the following. I owned a few income producing shares like REITS (not surprising as I am a regular reader of your blog).

I do not own a Investment linked insurance policy nor an endowment. I do have the SAF Group term insurance (Assured for $300,000) as well as the MyShield Plus (the hospitalization plan plus full rider).

I received a letter from SAF Group insurance, asking me to add 2 riders to my term insurance:

1) Supplementary Living Care  - For 30 critical illnesses, Sum Assured $300,000, monthly premium of $30.00

2) Living Care Plus - For common early critical illnesses, Sum Assured $200,000, monthly premium of $20,00

FYI, I am currently paying monthly premium of $38.40 for the SAF Group Term Insurance. 

More info on the 2 riders can be found below if it is useful:

http://www.aviva.com.sg/pdf/SAF_Living_Care_Product_Summary.pdf

http://www.aviva.com.sg/pdf/SAF_Living_Care_Plus_Brochure.pdf
 

 

AK's reply:

Hi B,

I enjoy reading your email because from the looks of things, you are doing things right and doing well. Happy for you. :)

I firmly believe that we need CI (critical illness) coverage. So, I would encourage that you take up the rider. I am not so sure about early critical illness coverage though. I suppose for people who might not have a lot of money put aside for emergencies (or do not have meaningful passive income), this would provide peace of mind.

I like to look at the annual cost instead of monthly cost so as not to be lured into an illusion of cheapness.

$30 x 12 = $360 a year. For a $300,000 coverage, it is inexpensive.

$20 x 12 = $240 a year. For a $200,000 coverage, it is also inexpensive.

If you do not yet have a CI plan, you should give the above serious consideration.

Genuine and constructive comments are appreciated, as always. Thank you.
-------------------------

Update: 13 September 2016.
A reader received this:

Value for money!

Complete table: here.

Related posts:
1. Graduating soon? Steps towards financial security.
2. Free Investment Linked Policies or Term Life Policies?

Tea with Jean: Improving personal cash flow.

The following guest blog is contributed by a reader, Jean:

I have done some search from internet and see whether got any way to get return slightly more than FD and also receive some amount of return in the future.

 

Here's what I have done and for sharing purposes:-

 

First, I open an 360 saving account at OCBC.

www.ocbc.com.sg/personal-banking/accounts/360-account.html

 

If I qualify, I will get 3.05%pa for 50K saving.

 

2nd, I just need to change my current giro payroll to this 360 saving a/c 

 

3rd, I also applied a credit card called OCBC Cashflo (with Great Eastern logo at the top right), which would be useful for my 4th point below.

www.ocbc.com/personal-banking/Cards/GE-Cashflo-Mastercard.html

 

4th, I bought an insurance plan called Family Three from GELA for three of my children. I just need to pay for 10 years and the return will run till my children pass away and still got a lump sum for my grandchild, if any. I make use of the credit card above to make the payment by instalments to enjoy the yearly rate for the premium, which is cheaper if compare to monthly premium. As I bought three policies thus my monthly instalments is more than $400, which make me qualify for the 3rd criteria of the 360 saving a/c.

www.greateasternlife.com/sg/en/pdf/brochures/Family3.pdf

 

In order to fully enjoy the 3.05% interest of 360 saving a/c, I need to meet one more requirement, ie pay any three bills using OCBC online or Giro. So, I use this a/c to pay the above credit card bill, tel co bill and utility bill.

 

Good point for the 360 saving a/c is.....I can withdraw any amount any time freely which FD cannot. But.... ceiling is 50K. :(

 

Pertaining to the insurance......I have bought the similar type in Malaysia, which introduce this plan few years earlier than Singapore, and now I enjoy the return...... use for travelling and service other present policies. If I rich enough, I may buy more so that can get more guarantee return in the future, provided GELA never got financial problem in the future. And in order to enjoy the lower premium...one must have CHILDREN.

 

Hmmm.....I am not insurance agent, not work in OCBC bank and also not a credit card promoter. This is just purely for sharing only.

 

In an email to me, Jean said, "I also hope to receive some comments that can improve my plan." So, please feel free to leave comments for Jean. Thank you.

 

Related post:
Getting paid more while waiting for opportunities.

Singapore properties will surely make money in the long run. There is no need to time the market.

JK sent me a link to his latest blog post and has graciously allowed me to extract a portion of it to share with readers here. See what JK has to say:

I have some doubts on the claim that Singapore properties are sure to make money in the long run and we should not time the market. 

(AK says: This reminds me of what a friend told me that there is never a bad time to buy a home...)

I witnessed my siblings purchasing properties in Singapore when there was an economic revival. It was year 2007 (when COSCO was at S$8 a share, remember?). Then, crisis struck in year 2008.
I think timing of the market is important. I know you guys are searching for the below market value property, but how much bargain is that under such good economic environment? I take Caspian as an example, if owner bought in year 2009 at S$600K, and they are able to sell it last year at S$1.2 million and now the selling price dropped to S$1 million, is this a good buy now? Take note, Lake Point condo also dropped heavily to S$300K before it shot back to S$900K, and with current market of S$800K, is that a good buy?

Bought a condo at a sky high price?

My advice is, unless you have a lot of cash, you can afford to have multiple properties, that's different. If I have only enough to shoot for one, my advice is, keep your money, build up your war chest because there will be a better time to buy.

I am sorry to say that the real estate price is following "closely" 6 months after the stock market performance for the entire history except for year 2009. In year 2009, the real estate price following exactly the same as stock market. Both index rebounded together in March 2009 , starting with Caspian new launch, then Mi Casa, etc. then, Interlace come in September 2009.

 

So, does that mean these two prices index will be decouple ? It will not.

 

Look at Dow Jones right now, it is at history high . Look at STI, it does not even challenge the new height just yet. We are all in good party mood. Will the stock  market come down? It has to come down.

If you don't like market crash, perhaps a meaningful correction of 30% is needed. If so, why can't you use the time now to prepare all the cash tightly and wait for the time and shoot once BIG TIME. Guess what, there are many people waiting out there as well, that is why when the price dip for 10%, 20%, people start to enter and support the price and the price stable or stagnant. But then, as I said, timing is still relatively important. Why did we not buy in year 2009?

Why?

It is because we didn't have enough cash at that time? (That is why I emphasize to build up the war chest) Or you fear that it will go down further? (If you fear the property price will go down further in year 2009 BUT NOT in year 2014, I think we have a problem here) Or you fear that you are next to be retrenched when you see DBS was slashing so many jobs away in year 2008 , 2009?

I know we must have positive mindset. I fully agree. But, for big investment with a fees of ABSD, I don't think it is attractive at all at this moment. Anyway, I am building my cash pile now slowly and I am all ready to shoot a big one when time is right. I sincerely wish all the investors winning big time!

Read JK's full blog post: here.



Discounting is the new trend.

I agree with JK. I have always said that entry prices are important. We don't want to overpay for any investment.

More than 2 years ago, I also cautioned that the government is engineering property prices to be significantly lower. At the time, I had some readers telling me that it won't happen because it is not in Singapore's interests as so many people have their wealth tied in properties.

Well, I always say don't underestimate the political and social motivations that power our government.

"I would caution that there are reasons for why the cooling measures are here. Whether the reasons are good or not would depend on where we stand. However, it is obvious to me that the government is sending a clear message that they want property prices in Singapore to lower in the next couple of years, not that they need to do much more to achieve this."
From: Leverage up and buy investment properties now?

Remember, we should never ask a barber if we need a hair cut, especially not the ones who are bald.

Related posts:
1. Affordability and value for money.
2. Never lose money in real estate?
3. Buying an apartment: Some considerations.

SembCorp Industries: Where are the supports?

I was asked if I feel upset with SembCorp Industries' share price plunging. Well, I don't know if I feel anything, actually.

I know what motivated me to become a shareholder of SembCorp Industries. I know that I got in at fairly good prices which meant that I did not overpay. This is because I made fairly conservative earnings assumptions from the start and I also bought at a realistic PE ratio of about 12x or so.

Now, with its share price having moved much lower, I could, perhaps, accumulate at a PE ratio of about 11x which would represent better value for money. What about a PE ratio of 10x?

I don't know if prices would move higher or lower. I could make a guess, of course, but I wouldn't know. However, I do know what I would do if the share price were to move lower to test stronger supports.

Related posts:
1. SembCorp Industries: "A safe price of entry."
2. SembCorp Industries: Increasing exposure.
"I feel that it is probably another fair entry price and, so, I did not bring out the heavy artillery."

How to have children and a comfortable retirement? WARNING: This answer might be shocking for some.

I have brought up the topic of having children and what a pragmatic attitude towards having children should be before. 

In an expensive country like Singapore, I believe that having a healthy dose of pragmatism is even more important.

For young couples, it could seem like the most natural of things to spend money freely, giving the best they could to their children. 

However, it might be a good idea to hold back a little.






Now, before anyone protests, I am not suggesting depriving children of necessities. I am suggesting not depriving ourselves of a comfortable retirement! 

I shared a story in an earlier blog post before:

A reader discussed with his wife on whether some of the enrichment classes they sent their two children to were necessary. He knew they were spending a lot of money on such classes but he was surprised at how much they actually spent. So, apart from classes which were deemed essential, lifestyle classes such as tennis lessons were axed. This helped them save about $600 a month.
From: How to have a comfortable retirement?






$600 a month means $7,200 a year. Let us assume their children were to take classes for 6 years, it would amount to $43,200! 

Now, imagine if they were to do a CPF Minimum Sum Top Up (limited to $7,000 a year) to enjoy a 4% risk free rate and income tax relief at the same time. 

That would go some way to ensuring retirement funding adequacy. 

Want to upsize $100K to $225K? 

AK shows you how and with some music to boot: here.

Often, whether decisions are good or not will become clearer after some time. 

Hindsight is always perfect, isn't it? 

So, spending freely on children now might seem like the natural thing to do but, in our old age, we might just regret it.






In an article in MoneySmart recently, a Mdm Ang who is in her 60s complained about spending too much on her 3 children in the past. 

She and her husband didn't want their children to be saddled with huge study loans and paid for their tertiary education.

Mdm Ang complains that her children are so wasteful and take everything for granted now. 





"I should have used the money for my own retirement," Mdm Ang said. 

"My children don't even appreciate the sacrifices we made for them."

Oh, dear.

Another senior citizen, Mrs. Tan, 60, said that she and her husband spent almost $1,000 every month, sending their daughter to all types of classes, from ballet to abacus to piano. 

They don't even have a piano at home anymore.




Although thinking about children as consumption items might sound unfeeling, I believe that a dash of pragmatism is helpful. 

Like with all consumption items, we want to avoid over-consumption which inevitably will always set us back financially.






儿孙自有儿孙福, 莫为儿孙作马牛.

Related posts:
1. Married with kids? AK shares 5 steps.
2. What is our attitude towards having children?

Why did AK buy an atas mattress but a cheapo TV?

Every dollar counts.

UPDATE (DECEMBER 2016):
After more than two years, my cheapo LED HDTV is still brilliant and trouble free. I think it is safe to reveal the brand now:

If  you are not brand conscious, you can get this brand of TV in Giant hypermarts. I feel that it is definitely good value for money.



---------------
2014:
I have been super busy and super tired recently. I would get home at about 11pm, take a shower, read the news a bit and go to bed. So, you can imagine that I have not had much inclination to blog.

Today, I took some time off from work to do my own things and chatted a bit on FB with readers and thought it interesting enough to share with readers who don't follow me on FB:

Some of you might remember that I bought an expensive (but value for money) bed and mattress recently but I have settled for an inexpensive TV even more recently. 

This is even less expensive than the Chimei brand 26" LCD TV I bought 8 years ago for $699 for my old place.

I don't know if I should reveal the brand for my latest purchase or not. I don't want to have readers who might be unhappy with the quality hounding me.

Anyway, with age comes aches and pains and with these come wisdom. This lately acquired wisdom tells me that the bed is more important than the TV. Hence, my decisions.

Unless born with a spoon made of some precious metal in our mouths, all of us have rather limited resources and must make the wisest use of our money.

Related post:
I could not afford it but now I can.

Financial freedom: Your children will become what you are.

I was out and about when I overheard a conversation a father was having with his young son whom I thought must be 9 or 10 years old.

Son: Daddy, can we go to USA for holiday? My best friend says his family is going to USA next month for holiday.

Father: Go to USA? Will be very expensive.

Son: Mommy says maybe next year we can go.

Father: See whether daddy gets a good bonus or not this year. OK?

Son: Cool! I pray tonight and ask God for help.






AK thought to himself: 

"I will pray for you tonight too."

Of course, it is no business of mine what the father decides to do but if I were in his shoes, I know what I would have said to his son. 

I am sure you know what I would have said too.





I strongly feel that delaying gratification is something we should teach the young even if we are very rich and money is not an issue.

Something I said to my niece before was how she could be getting free money as a young working adult because of her investments in stocks made in the last few years. 

Basically, by the time she is in her early or mid 20s, she would have recovered her capital invested. 





The annual dividends that she could continue to receive then would basically be free money.

I fear that many people are trapped, running like hamsters in their wheels. 

They are not able to make progress in their financial well-being as they are stuck in a culture of consumption and instant gratification. 





What makes the wheel scarier is that people accept it as an integral part of life and, therefore, their young will also have wheels of their own in future. 

It is a depressing thought.

"Your children will become what you are; so be what you want them to be," David Bly.

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Read:
More needs to be done to provide Singaporeans with investor education: Lawrence Wong.

Know the answer to this question and life will be better.

1. Before we have a pet, we must have the correct mentality to have one. 

How often have we heard of pets being abandoned or neglected? I

f we are not prepared to be responsible pet owners, don't have pets.

"I am fond of pigs. Dogs look up to us. Cats look down on us. Pigs treat us as equals," Winston Churchill.

2. Before we have a car, we must have the correct mentality to have one. 

It irks me when people tell me that they do not send their cars for regular servicing until they develop serious problems. 

Their cars could break down on the roads and this not only causes problems for these owners but also for other road users. 

It is not just about being responsible for our cars but also being responsible to other road users.

"The best car safety device is a rear view mirror with a cop in it," Dudley Moore.

3. Before we get married, we must have the correct mentality to be a good husband or wife and to be a good father or mother (if we plan to have children). 

We must also have the correct mentality to be a good son or daughter in law (if our spouse is not an orphan). 

Marriage brings with it a great deal of responsibility.

"When a man opens a car door for his wife, it's either a new car or a new wife," Prince Philip.

4. Before we become an investor, we must be sure that we have an emergency fund put aside and we must make sure that we are not investing with money that we cannot afford to lose. 

Again, it is about doing the responsible thing.

"In this day and age, it is really stupid to be stupid about financial matters," Maria Shriver.





Therefore, an important question to ask before doing anything is:

"Am I ready?"


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