Thursday, October 11, 2012

I want to write a book.

This is another day in Singapore and the date on my 6 month young Seiko Velatura Kinetic Direct Drive says October 11 year 2012. Life has been great to me, beautiful wife, great kid, average 4-room flat. Driving a used 2007 Subaru WRX for two years, enjoyed the ride, not the petrol drinking monster, but hell, you want to enjoy, you must accept the facts isn’t it?

You have not heard about me including my job when I said life has been great to me? Well, job is just a job, there is seriously nothing fancy or funky that I want to talk about since it will bore you and sending you straight into the middle of the oblivion. Since I am, or we all are, going to be running through the same situation throughout our life. Get good grades in school, get part time job that pays S$10 an hour during school days, get first job, complain about it, move on to another job, complain about new job, look for greener pasture, unfold hidden rancid manure, move on to another planet which we dream about the bigger and brighter moon, end up discovering it is actually just another moon being lit by the same scorching sun.

Get retrenched, go into self employed business, earn hand to mouth, sick of this life, work as a janitor in a local hospital, complain about job, go into another hospital, complain about new job, look for greener pasture, realizing you ended up cleaning and clearing tables at a hawker centre. Finally turn into dust after 36,500 days that is, if you live to a ripe old age of 100 years old.

So what did they do that we have not done? They; who are ‘They’? They are the 1 million dollar Ferrari owners, living in 30 million Sentosa Cove mansions, enjoying the sumptuous and healthy 100 dollar breakfast at Picotin and then riding on their pet horses at 10am in the morning. Get a cool mentholicious shower at the prestigious Singapore Island Country Club, drive to the Marina Bay Sands and off to get their next collection of 30 thousand dollar Patek Philippe, which they are not actually owning it but taking good care of it until they pass it to their next generation.
They, are the same Homo sapien as we are. All derived from evolution and we were all mere single cell organisms feeding on microscopic nutritional square meals. Some may have a better start then the other, some may have reached the end to begin with, and some may just be like us, and became like them.

Generations of intelligent planting of money trees are yielding fruits of labor for the next generations and generations to reap on. Last generation of intelligent planting of money trees help kick start the next generation to prolong the meaning of life. This generation of intelligent money trees planting will bring you closer to the meaning of life, it will not be easy, trust me, it will not be easy, not without a little lady luck smiling at you.

Successful empire owners had just planted the right trees, with a little bit of luck shining on the choice made. Those who plant Mango trees get a first taste of the succulent sweet juice dripping mango. Those who plant Rain trees get to have shade and shelter to get away from the harsh elements. Those who plant beautiful Adenanthera pavonina get to enjoy the eye candy full of brilliant red seeds, also known as the Saga tree. The Saga seeds are highly ornamental, can be made into jewellery to melt the heart away. But they have to give be traded to the Rain Tree owners to have shade and shelter before they can enjoy the eye candy away from the harsh elements. Saga and Rain needed Mango because they have to eat to stay alive, and some say, you stay alive to eat. All in all, the empire owners, who made a choice to plant the Money trees, are accessible to succulent fruit, tallest and mightiest shelter, last but not least, the biggest and shiniest string of Saga ornament. Who says money don’t grow on trees, it is a matter of choice, a little self reflection if you want to have the fruit and eat it? Or has endless access to everything else which you can trade your money leaves for.
Building a house from scratch is like planting a Rain tree, you have shelter over your head, but no access to Mango nor Saga. Likewise, planting Saga has no meaning if there are no one else except yourself, who wants a piece of the eye candy.

Who says Money can’t grow on trees? Who say you can’t life in a cave? Who says you can’t eat tree barks and its roots? Who says you can’t live without dangling the beautiful Saga necklace? We all can, but most choose not to. That is a choice, a choice you can make and that is the power of choice, we, evolved from a single cell organism, can make or break or simply live the 36,500 days like a king or like a wimp.

Get good grades in school, get a good paying job, fight for higher position to get a higher paying role. The higher you are paid, the more risk you will take. The risk of screwing up, the risk of being taken over, some say, it takes 1 mistake for you to get really infamous, it just take 1 single wrong move and you will tumble from the seventh heavens, straight to the bottomless pit of eternal raging fire which you shall burn forever. 

Be a professional, be a doctor, a lawyer, a pilot, a hawker, a flea market store paddler. Being the best in your trade, no doubt you will reap the fruits of what you sow. Be a doctor, be a lawyer, grow your world most succulent sweet tender juicy Mango. Be a hawker, a flea market store paddler, grow your world shiniest Saga seeds. These are all choices, and the choice you make, makes you. The risk you take, takes you. The trees you plant, defines you.

We all made choices in our life, right or wrong, we all deserve it and learn to deal with it. Money Tree made a right choice, Mango Tree made a tedious choice, Rain Tree made a tough choice, Saga Tree made a beautiful choice. There is no wrong choice, there is only mental wrestling you have to deal with. Ever heard someone said why plant a Money Tree where Rain Tree can brave you from the harsh elements? Moments later your Money Tree blooms and you hear the same someone said, you are lucky to have planted a Money Tree, now you can buy all the Rain Trees you want. A matter of fact any kind of success stories are amplified like the colorful fireworks in the sky and any failures are quietly carried away by the wind like a speck of dust where no one has ever known its existence.
Life Singapore is harsh, no doubt about that. High cost of living, high cost of shelter, high cost of private transportion, highly competitive jobs, high life you enjoy, high credit limits, breaking credit card limits, highly in debt,  when you can’t even get high.

You can always live in a 3 room flat, drive a more than 10 year old Toyota, beautiful wife, great kids, stable job, enjoy occasional feasts, and be as happy as a king. You can also live in a mansion in Sentosa Cove, drive a brand new Ferrari, beautiful wife, great kids, no job, enjoy daily feasts, and be as happy as a king. We can all be happy, contented, then not contented, make another choice, be happier, be busier, be happy, contented, then not contented, make another choice, end up as dust in 36,500 days. And it goes round and round again for generations and generations.

A typical Singapore starts off their first 1,460 days learning to crawl, to walk, to talk. The next 5,840 days in kindergarten all the way to university, or next 6,570 days if you are have morning wood because you cannot forget the time spent in mandatory national service. Looking on the bright side, everyone has a fair share of an average remaining maximum 28,000 days. That is quite a long time, some would say.

By the time you are in your early 20s, the prime of the prime era, you can no longer ride in your mother kangaroo’s sack, or you can be a slimy gooey parasite until fine one day your mother decides to call in the pest busters to eradicate you in the worst way you can ever imagine. These are facts, and facts we see every day. If you don’t see it, you are the lucky one, I can tell you it is true and nothing but the truth.

As of year 2012, the Ministry of Manpower current statutory age of retirement is 62, up to 65 in the first instance and, later, up to 67, and who knows in near future, the retirement age might be 70 or beyond. It is great for the government to take care of us, taken from the MOM website, during the Retirement Age (Amendment) Bill 2011 2nd Reading Speech by Mr Gan Kim Yong, Minister for Manpower, 11 January 2011, 3.00pm, Parliament. Mr Gan said, ‘the average life expectancy of Singapore residents has risen steadily, from 68 years in 1970 to 76 years when the Retirement Age Act was enacted in 1993. The average life expectancy has increased further to 81 years in 2009. It is a good thing that we are living longer. As we live longer, many Singaporeans want to work for longer. Working not only enhances their financial security in old age, but also provides an added sense of purpose in life. They can remain active while making valuable contributions to their organizations.’
It is indeed what I want, to work longer, not. Maybe you, but not I. I cherish my remaining days.

The economy in Singapore plants the Money Trees, loan us the money leaves to buy our Mango, our Rain Tree Shelter, our Saga seeds. We spend our 28,000 days paying back the money leaves with compounded interests and leave us dry during the end of our life. If retirement is at 67 and life expectancy is 81, we have to continue earning our keep during the remaining 5,745 days fending our own life before turning into dust. I guess it takes almost the same number of days to unmake us as it takes to make us.

No doubt about security and stability here, the convenience of life and certainty of our next generation holds high. We have foreign talents swarming into our little red dot, earning their buckets of gold and return to their country start living like a king in their not so old age. It is actually not a bad idea looking at the bright side. We have foreign manpower building the nation for us, and we don’t have to take care of them when they are in their old age. How convenient is that? We should see the benefit of the influx for foreign talent, no doubt there are serious competitions, but won’t we have competitions if there are no foreign talents? I doubt so.

Crossing the causeway, we Singaporeans love to shop and eat and abuse the currency. Look at the bigger picture, look further from your comfort zone, see and think out of the box. We not only abuse the currency to shop and eat, we can abuse the currency investing in cheaper domestic and industrial properties. This is what they did and we did not. Yes, they are doing it, but they aren’t going to let you into their darkest secret. Well, that is just the first dark secret we are drilling into.
Taken from Forbes:

Year 2012 Singapore wealthy qualifiers need a minimum of $210 million to qualify for Forbes’ list:

The top 10 richest in Singapore are:

1) Ng Family (Far East Organization and Sino Group)
Net worth: $8.9 billion
Primary Source: Real estate

2) Khoo Family (Goodwood Group)
Net worth: $6.7 billion
Primary Source: Banking

3) Wee Cho Yaw (UOB)
Net worth: $4.2 billion
Primary Source: Banking

4) Richard Chandler (Richard Chandler Corporation)
Net worth: $4 billion
Primary Source: Investments

5) Kwee Brothers (Pontiac Land)
Net worth: $3.9 billion
Primary Source: Real estate
6) Kuok Khoon Hong (Wilmar International)
Net worth: $3.5 billion
Primary Source: Palm Oil

7) Ong Beng Seng & Christina Ong (Diversified)
Net worth: $1.9 billion
Source: Diversified

8) Peter Lim (Remisier King)
Net worth: $1.8 billion
Primary Source: Investments

9) Kwek Leng Beng (Hong Leong Group, City Development Limited)
Net worth: $1.7 billion
Source: Diversified

10) Lee Seng Wee (OCBC)
Net worth: $1.4 billion
Primary Source: Banking

Hard work, great foresight, dedication to giving finest care of their Money Tree, these fine billionaires and next generations and generations benefiting from once a seedling and budding into young plant and growing into a Money Tree with solid foundations. They chose the right tree, so why should we not.

Going into a choice is never easy, who said it is? Having an 8 to 5 job is easy, planting the Mango Tree is easy, picking Saga seeds is easy, it takes you somewhere, and that is your choice. If these top 10 Singapore billionaires did what our parents or grandparents did, they will not have been where they are today. Indeed this can be sheer luck, but luck only goes to people who choose to receive them, who choose to take intelligent risk, which enjoys delay gratifications, who eats the succulent Mango later and without having to plant them.

My heart is crying when I remembered how I came to what I am today. I am nowhere near them, one day I will, or the day never come, I know it may come if I choose, I know it will not if I do not. Everyone was young once, you want to shine at your earliest prime, I, once was a victim of being a short lived bright shining star, having later to know that a star is just a collapsing cloud of elements under its own gravity. There are those who say the rich get richer, and peasants remain peasants. What we should do first, is just exactly what those who say rich get richer, that is to get rich.

What is the definition of rich? Do you suggest you are rich when you first started work in your early or mid 20s earning an average of $2,500.00 a month which is an average of $125 a day if you work 20 days a month. Do you suggest you are rich when you earn $10,000.00 a month which is an average of $500 a day?

Let’s do some simple math:

Age 21 – 30: $50,000 per annum = $500,000
Age 31 – 50: $100,000 per annum = $2,000,000
Age 51 – 60: $200,000 per annum = $2,000,000
Total of 4.5 million dollars earned.
(Disclaimer, if you get married, income can be doubled as well as other expenses)

This income bracket is in the higher than average earning of a university graduate in Singapore, we just take more shall we? Isn’t the more the merrier?

Say over these years, we spend 25% for expenses, 25% for non-appreciable luxuries and holidays, 25% for those money you do not know where it goes (don’t tell me you are not guilty of those money spend on ‘you do not know where it goes), so then throughout the age of 21 – 60, you have 1.125 million dollars spare. Isn’t that great? You can find yourself being an owner of Bishan Street Executive Mansionette, or a proud owner of a Condominium at a highly inaccessible location.

That isn’t bad actually, as you turn into dust after 36,500 days, you can pass the Rain Tree to your only child, or share it amongst many. So tell me, how did you live the 28,000 days after you graduated? Are you rich at the end of it? Or there is something better you could have done earlier, if someone told you how to?

Coming back on being rich to be richer, we need to forget about how some lucky ones get a better head start. Quit the whining and use that extra brain power on something more worthwhile. If being rich can make you richer, why not first start with getting rich? Let’s now talk about how to become rich, action speaks louder than words.

From the simple math calculation, we see typical individuals or couples sinking themselves into this lifestyle. I know it is easy to say cutting down expenses by half, cutting down luxuries by half, or even cutting half of ‘you do not know where it goes’ money, you can have a vast amount of money accumulated. That is, if, you cut, and you will see it when you are almost time to turn into dust. It helps at the beginning, and that is where it all begins. We are going to turn these ‘cuts’ into Money Trees.

Let’s start from the fact that we are all in debt. Education loans, Car loans, Insurance, Home loans if you are married. Or even, Credit Loans, Credit Cards debts, personnel loans from friends and family members. Tell yourself now, you are having a great head start if you are clear of education loans, no car loans, and you don’t buy insurance, not married, credit card or other debts. The basic human instinct, especially in the highly competitive Singapore, you will eventually, one way or the other, end up in this devilish and blood sucking situation. So first, let us find out how to get out of this situation, if you are the lucky ones whom are having this great start, read on to learn how not to get into this bottomless pit.

Many do not have my luxury of head start, I did not go to university, but I do have a diploma loan, which is way lesser than a university loan. That also means I command lower salary, earning a mere $1,800.00 a month which is about $25,000.00 per annum including bonuses.
INCOME               +$ 1,800.00
Transport            -$ 400.00
Basic Food           -$ 400.00
Education            -$ 200.00
Phone Bill            -$ 50.00
Internet               -$ 50.00
Entertainment  -$ 300.00
Lodging                                FREE (Kangaroo in the pouch)
FINAL                    $ 400.00 savings per month

So for the whole of first year, I managed to save $4,800.00.

I was pretty green during my first job, I took for granted being late for work, not sucking up with boss’s wife whom was my manager. Did perform well though, I manage to increase my department’s earning by 400% comparing to the year before and the two years before. But eventually, due to disciplinary and non sucking attitude, I was fired and given one day notice (actually half day) to get out of the office with immediate effect. I moved on to my new job in second year, with a savings of $4,800.00.

New job, greener pasture, brighter moon, I was delighted and utmost grateful to my Ms Boss whom sees my positive attitude, passion for growing the company. I was paid $2,100.00 a month, approximately $30,000.00 per annum including bonuses.

INCOME               +$2,100.00
Transport            -$ 400.00
Basic Food           -$ 400.00
Education            -$ 200.00
Phone Bill            -$ 50.00
Internet               -$ 50.00
Entertainment  -$ 300.00
Lodging                                FREE (Kangaroo in the pouch)
FINAL                    $ 700.00 savings per month

I am really on cloud nine when I was working with my new Ms Boss, great opportunities, chance to learn skills which the previous company did not offer. Moreover, I was delighted with my average savings of $700.00 a month, which I decided to buy me a brand new car, a very wrong move, a move which I greatly regret within a time span of 1 year. What I should have done was to buy a 3 – 4 year old car right from the start, Singaporeans take so good care of their car you can find most are as good as new. I had from then on learnt a $17,000.00 mistake and have always got a used car since. I took a 10 year full loan which later cost me dearly when I was penalized by the famous bank clause rule 78. Do read and calculate with caution what rule 78 is, you will regret later if you did not at first.

I was given a raise after 3 months probation, bringing my monthly salary up to $2,300.00 and now I have a car, my company gave me a transport allowance of $400.00 a month. With that, I need to work out my budget for installment, petrol, ERP, parking, insurance, road tax, fines (Yes please don’t forget this), extra spending due to mobility and act of showing off to friends.

My new balance sheet looks like this:

INCOME                                               +$2,300.00
TRANSPORT ALLOWANCE            +$ 400.00
Car Installment                                 -$ 500.00
Petrol                                                    -$ 300.00
ERP/Parking                                       -$ 100.00
Insurance/Road Tax/Fines           -$ 200.00 (1.0 Liter car)
Basic Food                                           -$ 400.00
Education                                            -$ 200.00
Phone Bill                                            -$ 50.00
Internet                                               -$ 50.00
Entertainment                                  -$ 600.00 (heavily increased)
Lodging                                                                FREE (Kangaroo in the pouch)
FINAL                                                    $ 300.00 savings per month

At the end of the second year into my working life, I have a savings of $9,800.00. I was indeed having a great time, doing my due diligence in my job, having to own my machine of teleportation for the very first time. Then comes the time where we complain about new job, unfold hidden rancid manure, and decides to move on to another planet which we dream about the bigger and brighter moon. I am greatly thankful to my Ms Boss during the mere 1½ year in the company, we parted with mutual understanding it was a indeed a hard decision to move on from a company which you feels like working as a team, as a family.

So far, during this two and a half year, I managed to up my earnings, as well as I up my spending. This is what typical Singapore life or I should say an average diploma holder’s life. University graduates may have a better start for the initial income but likewise there will be a higher education loan to bear.

Before the beginning of my new job, I went on an 8 days holiday in Taiwan, it was definitely relaxing and recharging experience. The painful part was I spent more than my $9,800.00 savings, which part of it was the $4,000.00 ornamental Fengshui display which I was so enticed to buy in a moment of folly. The moment when you have your credit card with you, the moment when you are mentally hypnotize by professional master of their realms, you willingly whip out that credit card and sign off as if you don’t need to pay for at the end of the month.

Now, I am back to square one with zero savings. Having to think about it now makes me realize what an idiotic pea brain maggot I was.
What I did wrong, so far:

Brand New Car

Doubled Entertainment Fees
(if not for the car, I would not have increased this, well, I did enjoy it during the moment, so I’m accepting what I’m enjoying, but beware the paying for it hurts like fully sticking in a 10cm needle under your nail 1mm by 1mm)

Reduced my Monthly Savings

Used up my Overall Savings

What I would have done if I can turn back time:

Buy not even a Used Car
If you have to buy a car, new or used, both has its pro and cons. The basic rule of time is to not loan more than 80% of the initial price, not taking more than 7 years loan.

$50,000 loan with 2.68% interest over 10 years
Interest incurred = $ 13,400
The interest amount is a whopping 27.0%, thus anyone will be crazy to be making such decision.

If I had bought a used car (taking 3 year old similar 1.0 liter car):

Estimated depreciation and market rate: $38,000 loan with 2.68% interest over 7 years
Interest incurred = $ 7,128.80
Actual interest percentage incurred = 18.8%
Rule 78 penalty at 20% of interest if you sell the car = $7128.80 x 20% = $1,425.76

If I had bought the same used car with down payment of my $9,800.00 savings:

($38,000 - $9,800) loan with 2.68% interest over 7 years
Interest incurred = $5,290.32
Actual interest percentage incurred = 18.8%
Rule 78 penalty at 20% of interest if you sell the car = $5,290.32 x 20% = $1,058.06

Not only you reduce your monthly installment payment, you also significantly reduce the interest incurred. On top of that, the benefit of down payment reduces further any form of penalty related to early sale or upgrade of your car.

I actually couldn’t afford the car and it has increased my entertainment fees and reduced my monthly savings. That is the part where delay gratification by a year or two, having saved up the initial 20% down payment can turn the table around. Impulsive buying during holidays was also not to be forgiven, it may feel great during the moment, but trust me, walk away, if you didn’t have it in the first place, you probably don’t need it anytime soon or ever.

On the hindsight, if I had put the savings and further savings in stock or small business, worst thing I will lost everything which is the same as spending it away. If things turn out well, a little profit doesn’t hurt. It was in the year where 9/11 happens and followed by SARS outbreak where I actually have that savings, shares like Citibank dipped from over $300.00 per share to below $17.00. The opportunity was there but I did not have the capital to invest, thus if I had, I could have made:
$9,800.00 / $17.00 = 576 shares

As of October 2012 now, Citibank is price is $33.00 per share.

I could have retained my $9,800.00 savings, and earn $9,216.00 before fees deduction.

This is a classic case of not having ready money when opportunity knocks at your door. Even if you have no business plans right now, you never know when opportunity knocks and you can definitely turn that savings you have into money making vehicle.

The reset and missing opportunity was a big blow to me, I was never near planting a Money Tree, nor was I planting any kind of tree. I am simply buying Mangos and Saga Seeds which this cycle eventually goes round and round and round.

Spending of funds in consumables rather investments are what economists call, consumer debt. These are consumables are either are consumed or has no appreciating value. Other types of consumer debt like credit card debts, payday loans, typically of higher interests, or even lower interest long term loans like house mortgages are typical living standards of Singaporeans today especially with ever rising property prices. You may be in need of a car for your outdoor nature job, or a house because you are tying the knot, this is the tipping point where you stay in the consumer cycle, and never be rich, to get richer. You can have an older car at a start, a smaller house at the beginning, by not fully loading your income versus spending; you stand a chance when opportunity knocks at the door. Understand this, isn’t hard, but many choose to follow the consumer cycle and spending the rest of the 28,000 days of their life working on wealthy people’s Money Tree while being paid Money Leaves and in turn trading them for Mango, Rain Tree shelter, Saga seeds.