Why is $$ always not enough?

I have read a chinese article and decided to translate it. I have added some juices to it.

"Money not enough" is common phrase among Singaporeans. There is even a local popular local firm named after it by Jack Neo. Seriously, why does people always say that? From my personal view, there basically 5 reasons.

1) Overstretching housing loan
90% of Singaporeans owns their own house in which 80% of them have HDB or EC flats. This is a compliment to the Singapore government efficiency in implementing "Everyone has a house" and "Buying house using CPF" policies. If you rent a house, you need to use CASH but if you are buying your own house, CPF comes in handy. For the same reason of using the "invisible" CPF, a lot of people don't really have proper budgeting. According to experts, your monthly installment should not exceed 35% of your total income. For instance, if you are earning $5000 monthly, the maximum installment works out to be $1750. Instead of adhering to the 35% taboo, a lot of people overstretch to 50% or more, especially given the soaring home prices. In the end, these people only have 50% to spend on personal expenses, children, insurance, their education and their saving. According to a survey by Oxford University Institute of Ageing, 90% of Singaporeans thinks they are not ready for retirement in terms of financial. The government just raise the retirement age to 75. How many of you still want to work when you have reach that age? This is the man Achilles heel for Singaporean's plight of money not enough.

2) High Car Maintenance

1 out of 3 Singaporeans owns a car. More Singaporeans are buying car because of faltering COE prices previously. Figures from LTA shows that the percentage of public transport users drop from 63% in 2004 to 59% in 2008. Frankly, accessibility in Singapore is almost perfect and since it is such a small country, there's little reason to get a car. Of course, a lot of people buy car just to show off their STATUS. Millionaire JIM ROGERS who migrated to Singapore doesn't owe a car.
Desipite this, a lot of people who is earning less than $5000 monthly can't resist buying a car even if it means sacrificing their meals. You must look beyond the monthly installment before you commit to buy a car. On an average, you need $1500 monthly to maintain a normal car. This work out to be 30% of your income. On the other hand, let's say you spend $700 on public transport and taxi, you can save $800 for RETIREMENT. There a research in YAHOO news recently stating if your total family income must be at least $7650 to owe a car comfortably.

3) Earn More Spend More

If I ask you "Are you earning more now as compared to 5 years back?". Most likely your answer will be a yes. But if I ask you "Are you saving more now as compared to 5 years back?. Most people would think hard. Why?

Most people will alevate their standard of living once their income increases. (e.g changing bigger house, newer handphones, cars, etc...). If you don't kill this bad habit, even if you are earning 10 times your income now, you will still be complaining "Money not Enough". ADAM KHOO says that it is not the amount you earn that matters but is the CASH FLOW.

CASH FLOW = INCOME - EXPENSES + OTHER PASSIVE INCOMES/INVESTMENTS/BUSINESS

Do not envy those just-achieved-some-success people who die die want to have big houses and cars. They do not own all theses but the BANK does. Infact, they are only around 6 paychecks from being bankrupt. Sound familiar? Not to worry, start rectifying the equation by increasing the CASH FLOW and reducing the EXPENSES portion.

4) NO REGULAR SAVINGS

If I ask you "Do you have savings?". Most people will say yes. That's good but HOW MUCH? If you can't answer that question, it mean you need to set aside $ first before you spend. For instance, transfer $300 to another account before you spend the rest. To plan the amount you can save, you must first keep track of what you spend monthly. Start tracking you expenses on a daily basis. You can use an EXCEL worksheet to do that. Personally, I use a self-written program for these purpose. If you are interested, you can email me and i will install for you for minimal charges.

Don't save whatever that is left after you have paid all your bills.

Another good method is to save all your year end bonuses.

If you don't have saving, you can't afford not to work or become seriously ill.

Life insurance and Hospital plan should be there in case you can't work or end up in hospital.

5) Do not know how to make money using money

Many people shun off from investment or trading because they lost $ on it. Most opt to put their money in the bank. In fact, they are losing money without they knowing it. Current fixed bank interest stand at around 1%. with inflation at around 3%. They are making a loss of 2% per annum. Even if you don't know how to start, just buy some REITS that pays 5-6% per annum. For more recommendations, you can give me a note on my chat box on the right hand side.

Note that to invest, you need to fulfil the criteria of point 4. If you have no or little savings, you can't do anything.

How to know how much interest you are paying for your home loan

http://au.pfinance.yahoo.com/calculators/loan-repayment.html

Handy bullish reversal chart

How to spot a potential Breakout 1: Narrowing Bollinger Band

Its means volality is at minumum as trading range narrows. Just need volume to expand to have a powerful breakout.

How to spot a potential Reversal 1: Harami bullish candlestick

http://www.fxwords.com/b/bullish-harami-candlestick.html

Why SembCorp 352 have some support

Looking for best Home Loan?

There are fixed rate and floating rate. Floating rate is based on SIBOR + n%. (Singapore Interbank Offered Rate)

SIBOR is cheap now. It is at 0.69-0.80%. But SIBOR will surge will recovery economy. It is 9% in 1998! It is updated daily.

https://secure.sgs.gov.sg/apps/msbs/domesticInterestRatesForm.jsp

Here is a website to compare the loans from different banks.

http://www.smartloans.sg/

What is the formula for Income?

Income = value created * time * scalability

Time

Let us talk about time. Many of us work from 9-5pm and you get a fixed pay monthly. But out of the 8 hours daily, how much is spend on low-quality time like emaling, chatting, complaining and doing things that is insignificant? We should spend 80% of our time on high quality work that will bring visibility and revenue to the company. Next time you boss give you a task, thing about the impact to the company and you.

How much you got to set aside for CPF minimum sum when you reaches 55

How much is the Minimum Sum?

Setting aside the Minimum Sum when you reach 55 ensures that you have some regular income from age 65 to live on in your retirement.The Minimum Sum was set at $80,000 in 2003 and will be raised gradually until it reaches $120,000 (in 2003 dollars) in 2013. These amounts will be adjusted yearly for inflation.

If you are unable to set aside your full Minimum Sum in cash, your property, bought with your CPF savings, will be automatically pledged for up to half of your Minimum Sum.

http://mycpf.cpf.gov.sg/CPF/my-cpf/reach-55/Reach55-2.htm

The minimum medi-save account is raised to $25000.

Don't lose your Confidence

The most powerful thing next to God, its the word of the mouth. When God created the world, He spoke His words. Similarly, words of our mouth is powerful. Self-confession is speaking to yourself. Everyday confess to yourself before you start your day:

1. I am the Head and not the tail, above and not beneath.
2. This is going to be the best day.

Don't let losers who speaks negative things about you that would affect your self-confidence. They did it to make themselves feel good or for their personal agenda. Similarly, only speaks editifying words to colleagues and friends - you will find yourself having more friends.

Remember your self-esteem determines your self-confidence. Start today by self-confessing positive thoughts daily. Don't let others dictate it but be in control. Self-confidence is the base for greater things to come.

Singaporeans in their 40s

Extract from somewhere.

http://singaporeanskeptic.blogspot.com

Regular viewer of the blog John sent me an email about the situation for Singaporeans in their 40s.

Hi Skeptic,

I wrote on your blog not too long ago on how to find job overseas. I recently went back to visit my parents and catch up with friends. Although it was a short trip, I left Singapore with a rather heavy heart. Maybe it is just me, as I have been away for a while. The conversations I had with friends, strangers and various contacts do suggest that life is tough for Singaporeans in the early 40s. However, the people I spoke to may not be representative of the population. Maybe you have a different view on this matter and I like to hear a different perspective.

1) I was speaking to a nice taxi driver on my way from the airport to my parents' place. The taxi driver uncle was very polite and speaks very well. I found out that he used to be an Assistant GM for a manufacturing plant (electronics) in Singapore which had to be shut down and relocated to China. He is 45 and has two kids still in school. His job search took more than 2 years and he decided to drive taxi as an interim measure to keep the income coming while he continue his job search. His comments: " when you are in your 40s, you better make sure you either at the top of your profession, CEO, or running your business. If you are in the middle management level, most headhunters will not be interested in you unless you have very specialized domain knowledge or expertise. "

2) I spoke to a friends of mine in a dinner setting. (age group 38-41) Most of them are senior executives (VP level) at various industries. I asked them a question, " do you see yourself keeping your job when you hit 45?" Most of them were not too optimistic about it. My friends are in sales and HR in various industries, software, IT, telecom, manufacturing etc. Their responses were quite similar. If you don't make it to senior management level, say at director level or above, chances of you keeping your job above 45 is going to be tough. How many people make it to the top? For the singles, adjustment is less of an issue as the smart ones would have amassed some cash and property that will help them through the winter years. However, at 45, the winter years is going to be very, very long given the average life expetancy these days. For those who are married with kids still in School, it will be very tough. Most of them would not have enough for early retirement and options are limited at that age. It seems strange to me that if only the senior executives (director, business owners, CEO) get to keep their job above 50, then where are those people who are not the same calibre at that age group? For people in the HR and accounting professions, I told them there is still lots of demand in China, if they are willing to take local package and rough it out for a couple of years. Many were surprised that some jobs in China pays better than Singapore. However, most of them expressed reluctuance to work abroad and not willing to be away from family for an extended period of time. I can only conclude that my friends are not hungry enough and life is probably still tolerable for now.

3) with the exceptions of the high fliers and those in the comfortable government jobs, it seems that 45 is roughly the cut off age for meaningful employment. Past that age, the income level will start dropping and it will be difficult to hold on to long term meaningful employment. How many of us have enough for retirement at 45? How many of us are planning for things to keep themselves busy while making some income beyond 45? What are the options available in Singapore at that age besides driving taxi, McDonalds and 'consultancy'. The latter being a euphemisum for being unemployed. However, many people don't seem to be worried until it hits them by surprise and it becomes too late to do anything.

I don't have solutions, but I think if we are start thinking about such issues early, we will be better equipped to deal with it when it comes.

Skeptic, have you come across similar issues in the past?

Best Regards,

John

This is one part where I agree with Lee Kuan Yew. We Singaporeans are complacent. As children we constantly worry about our future until we graduate and get our first job. We then stop worrying about our future at the time when we should be planning ahead. And we resume worrying in our late 40s onwards when it is too late (after spending 20 years on auto-pilot).

Why do I say so? Because in your 20s, you have have more resources to protect yourself. Firstly, your social network is not yet set in stone. It is easier for a young person to move around and network compared to a 40 year old former manager looking for a job. It is also easier to form positive habits when one is younger.

So this is what I would do to protect myself. It is no guarantee that it will always work but I think it is better than nothing.

Money Investment
1. First save as much money as possible. This means deferred gratification. This is especially hard in our materialistic society. Furthermore, housing is expensive and CPF is low return so that would prove to be hard. One possible way to get around that is to relocate out of Singapore.

2. The second thing is to try to develop passive sources of income and make sure they are safe. Maybe use your money to buy dividend producing blue-chip stocks or A rated bonds. Go for stability of income rather than high yield.

Social Investment
3. This is something that Singaporeans are not very good at. But you should network early when you still have a job. That means volunteering, join the grass-roots or some club. It is better if you establish firm contacts outside your comfort zone. If you are working as an engineer, network with lawyers. If you are a teacher, network with businessmen etc.. This would give you more mobility when you need to switch fields. You should network early. The last thing you want is to attend a networking session for jobless 40 year olds who merely exchange business cards but find no meaningful contacts.

4.Do not burn any bridges. So what does this mean? If you are a boss. Be nice to everyone, you never know when your subordinates may help you in the future when you get retrenched. Whether they are at a lower or higher position than you, treat everyone nicely.

Skills Investment
5. You have to be careful with this one. Unless you are in a field which requires constant updating of skills like doctor or computer engineer, it would make more sense to upgrade your social-networking skills. You could potentially gain more from volunteering in church/grass-roots than doing a correspondence course unknown MBA; which I think is a waste of time and money. But whatever it is, don't upgrade for the sake of upgrading. Some of these courses are pretty useless. Choose it carefully. Take courses where there is a high barrier to entry. So a CPA would be more useful than a course that teaches you how to use Microsoft Word.

Health Investment
6. Make sure you take care of your health. What could be worse than a retrenched 40 year old man is a retrenched 40 year old man with hypertension and diabetes. If you are of poor health in your 40s, how are you going to compete with a man in his 20s?

Insurance
7. I do not know about Singapore. But in the US, there is such a thing known as unemployment insurance which help smooths your cash-flow when you get retrenched.

8. Health Insurance- this one is pretty obvious.

9. Life Insurance- Not so much for you but for your kids. (applies to married people only)

Risk Taking
10. Finally, you should be prepared to take calculated risk when you are young and venture abroad. Ask your company for a transfer, study overseas. Strike it on your own. The Singapore job market is a small well. Do you want to be a frog in the well for your entire life?

I want to state that it is easier said than done. I am speaking as someone who doesn't have a family or live in Singapore but this is what I would do. Furthermore, I must admit that I am still young and inexperienced so some of the things I say can be taken with a pinch of salt.

So John this is what I would do to have some level of protection. Thank you very much for your comments. I hope we heed his warning calls about life at 40.

People review and 10,000 hours Theory

Group 1: Alot of talk no action
These are people who will never fail because they fail to start anything. They would give excuses like "no money", "no time", "no connections" and so on. As a result, they led a mediocre life. No risk but safe.

Group 2:Alot of action but same strategy
These are people who is slightly better as in they never stop to try after they failed multiple times. For instance, they keep losing $ in stock market but they would keep trying without new strategies.

Group 3:Alot of action after reviewing
This is the best group. After they have failed, they will never give up but will keeping reviewing and fine tuning his strategy until he has achieved success. It involved alot of hard works and perseverance. From research, a man needs to cross the 10,000 hours mark before succeeding. Steve Jobs, Apple Chairman and Bill Gates, Microsoft Chairman was programming for more than 10,000 hours on their computers before they made the breakthrough. Few people know they are Programming experts.

I will leave with the story of 2 of greatest men alive I have admired.

Sim Mong Woo, Creative Chairman
He is only a diploma graduate from Ngee Ann Polytechnics. When he first started out, he wants to build his own multimedia PC called Cubic CT. This PC was costly and was a complete failure. What did Mr Sim do? He fine tuned his strategy and decided that people can't afford such costly products. He decided to build only a sound card which is only part of his old Cubic CT. Today, look what his product has brought him.

Steve Jobs, Apple Chairman
He was a school dropout. He was pursuing his interest in computer graphic fonts in his home garage while other people are schooling. He started Apple Inc and was doing great until he decided he needs a CEO to run the company. As a result, he employed John Scully as CEO. John and his directors kicked Steve out of the very own company he had started because they found him difficult to worked with. What did Steve do? He can give up or can go on to sue John Scully and his gang. Instead, he started NEXT computer but was not successful. Next, he bought over Pixar Animation at dirt cheap price, when other don't see the potential of the company. This company successfully produced The Toy Story. The rest is history.

Apple meanwhile was swinging from profit to losses. They brought back Steve and he immediately sacked those unproductive executives. He also bring in the Operating System he has written during his time at NEXT computer and named it MAC OS. He also came up with innovative products like iPhone, iMac and so on. Today Apple Inc share price is closing on USD 200.

Breakout Stocks > powerful then picking bottom

Ezra breaks 2.16 (sold at 2.10)
Indo break 2.00 (Missed it)
Kepland breaks 3.18 (Sold 3.11 and bought back 3.16)
Parkway breaks 2.71

Can't chase liao.

Look out for

Genting cut loss 1.05
Suntec cut loss 1.25
SMM cut loss 3.5