Purge Your Money Burdens

Purge Your Money Burdens

As I’m writing this, I am clearing out some old books from my cupboard. I looked at some of them and wondered how it managed to be on my shelves for so long. Some of the books have long served their purposes and probably could do with a new owner.

As I look at the tidier shelves, I struck me that my “financial journey cupboard” was cluttered years back. It was only months later that I realised that some of those things should have been removed.

Purge Your Money Burdens

Purge Your Money Burdens (Photo: Source)

Our worries and burden comes from things that are cluttered. Think about the last time you had a tough day a work, it might be because of “things are not moving”, “stuff piling up” or “too many things to do at one time” You have a clutter problem. Just like finances, things might have piled up before you could have realise it.

If you are feeling stuck in your financial journey, this article might help you purge the money burdens.

First: List Out Everything

This is the heavy lifting that most financial services consultants will do to help you declutter. Here is a list of things that you have to find before we can purge your burdens

  1. List out all your incomes sources (last 3 months)
  2. Print out your credit card statements (last 3 months)
  3. List out all your insurance coverage
  4. Your latest loan amount
  5. Your latest assets amount

In a nutshell, you can see that you are listing our your assets, liabilities, income and expenditure. This is allow you to have a clearer picture of your networth and also cashflow.

Second: Purge

You might have discovered that you might have some income or expenditure that you should purge. Let me help you list out some of the most purgeable items.

  1. Subscription that are recurring are usually forgotten. They might be your Netflix account, your Spotify account or Seeking Alpha assess. Purge out those that you have not used for the last 3 months but are still paying for it. If you have not use it for the last 3 months, you probably won’t be using it for the next 3.
  2. Purge out income sources that are not efficient. You might be doing a little of everything (mystery shopping, survey, Network Marketing, Fiverr, Grab). Potentially, you might have became too tired by spreading yourself too thin. Focus on one and let it grow.
  3. Is there an extra insurance coverage that you have bought years ago? Is there a loan that you can paydown or refinance? Re-analyze your assets and liabilities and purge those that should be gone.

Third: Recreate

Your financial journey is not only about clearing. It is also about recreating. It is only with a clearer lens that you will be able to organise and add for the future.

  1. Is your insurance serving you well at your current life stage? If not, what can you do about it?
  2. What kind of assets can I focus on based on my risk appetite? Should you top up your SRS? Should you contribute more to your CPF?
  3. How can I enhance my income? Is it adding about new skillset?

Move forward. If you are stuck again, don’t be afraid to do another purging exercise until you are satisfied.

 

Final Thoughts

To those that might be thinking the more the better (especially when it comes to income sources). This exercise helped me a lot during a time I was overstretching. I discovered I had 12 income sources and I was spreading myself extremely thin. I couldn’t focus on all 12 and eventually didn’t do well in all 12. It was really painful experience. I had then purge 9 of them and focusing on 3 right now.

Hope that you will have a better financial journey than I do. Till then, stay safe!

Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.  

Feel Free To Reach Out To Share Your Thoughts.

Contact: 94316449 (Whatsapp) chengkokoh@gmail.com (Email)
Telegram: Wealthdojo [Continuous Learning Channel]
Reviews: About Me

The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.

We are forced to be investors whether we like it or not

We are “forced” to be investors whether we like it or not

We are forced to be investors whether we like it or not Low Interest Rate

We are forced to be investors whether we like it or not: Low Interest Rate Singapore 25 Years

This one chart explains it all. It was just a “few years” back when my parents told me that it is important to save money in the bank. Saving money in the bank does have many tangible benefits. Firstly, it creates a pool of emergency funds for a peace of mind. Secondly, it gives you a lump of money to prepare for any opportunities. Thirdly, if you don’t do anything, the banks will give you up to 7% interest per annum (Dec 1980). That sounds good to me!

Fast forward to 2021, the bank is giving on average around 0.05% and it seems to be getting lower. The low interest rate environment has changed many areas of finance. Firstly, it has already affected the insurance companies’ participating plans. Secondly and more importantly, it has lead to the erosion of money.

This means that the money you have now, will be worth less in future. For every $10,000 you have in your bank, the real value of your $10,000 will be halved ~$5,454.84 in 30 years if you continue to keep money in bank. (assuming 2% inflation rate)

You can say that we are in a generation that is “forced” to invest or suffer the erosion of money value with time.

We are forced to be investors whether we like it or not Value Erosion

What It Means For You?

Whether you are in your 20s who might be working for the next 40 years (damn) or in your 50s who might be retiring for the next 30 years, we are all exposed to the same erosion. As a retiree, it is important to understand that your savings value will go down in quantity and value. As a working adult, it is important to understand that your hard earned money is worth less down the road.

There is only one obvious thing to do. Either you keep pace with inflation (endowment plans/selected bond funds/etc does a decent job for this) or you have beat inflation. If you want to beat inflation, you will most possibly be expose to other asset classes which might have higher volatility and risk. It is crucial to know your risk profile here before you proceed.  You might be not suitable for certain asset classes and it is important to talk to professional to assess this.

The Chase For Higher Yield

There are only 2 ways to do this. Either you do it yourself or let others do it for you.

Do it yourself: This is an active role. It involves many things such as knowing what asset classes to buy, what assets in the asset classes to choose from, the pros and cons associated into each assets, the co-relationship between each assets, the duration of investment, the investment thesis and when to exit. This list is not exhaustive.

There is a very strong emphasis here on the level of financial knowledge which might take years to acquire. (All this time, still spending most of your waking hour working on the job). It is a longer process but definitely rewardable.

Do it for you: This is a semi passive role. There is still a personal responsibility to know what you are investing in. Otherwise, you are completely at mercy of the provider. In Do It For You, usually a portfolio is readily available. There will be an explanation on the investment thesis and if you subscribe to the investment thesis, you can consider taking up the Do It For You.

Annual reviews or semi-annual reviews are important here to see how the investment is doing. Generally, it is a passive role after that.

 

Final Thoughts

Whether you choose to do it yourself or do it for you, the reality is that you have to do something. If you don’t, the retirement journey just might be a little hard.

We are forced to be investors whether we like it or not

We are forced to be investors whether we like it or not

Till then, take care!

Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.  

Feel Free To Reach Out To Share Your Thoughts.

Contact: 94316449 (Whatsapp) chengkokoh@gmail.com (Email)
Telegram: Wealthdojo [Continuous Learning Channel]
Reviews: About Me

The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.

3 Things To Know Before You Do CPF Shielding

3 Things To Know Before You Do CPF Shielding

As the population gets financially educated especially when it comes to the usage of CPF, the idea of CPF-SA shielding is gaining traction. Some says it is a “loophole” and wants this to be closed. Personally, I think it is weird to call it that way. It is like calling investing a loophole because it helps you achieve financial freedom.

If you have read my articles before, you would be aware that context is very important for planning and today’s focus will be the 3 things to know before you do CPF-SA Shielding.

3 Things To Know Before You Do CPF Shielding

3 Things To Know Before You Do CPF Shielding (Beautiful Photo From NME)

What is CPF SA Shield?

At age of 55, your Retirement Account (RA) will be funded from your Special Account (SA) first and then your Ordinary Account (OA) to make up Full Retirement Sum (FRS).

Read More: 5 Things You Need To Know About Your CPF

As SA gives 4% interest as compared to OA 2.5%, there is an interest (pun intended) to keep monies in SA. The idea of CPF-SA shielding is to fund your RA with more of your OA than SA by transferring your SA monies out temporarily.

So what can go wrong?

Read More: 5 mistakes people make using their CPF

Context. It is always about context. In my own opinion, not everyone should/can do shielding.

 

Context #1: Paying For Mortgage Using CPF-OA

Your CPF-OA contribution rate at age 56 is 12%. Using an salary of $6000 (Ordinary Wage Ceiling is $6000 anyway), $720/month goes into your CPF-OA. If your monthly mortgage is > $720/month, you might be using your previous CPF-OA contribution if you don’t want to use cash. (There is a whole literature on why you should use cash but we will leave it for another discussion).

When you do CPF-shielding, your CPF-OA balance drastically reduces and this might mean that you would need to use cash for your mortgage. This might adversely affect your cashflow in future.

 

Context #2: It Assumes You Know Where to Park your Money Temporary

There are several instruments that you can consider purchasing using your CPF-SA. Different investment carries different risk. It is most important to know your own risk profile or work with someone who can do that for you. Even money market funds carries it’s own unique set of risk. Please take time to understand the benefits and risk of your chosen funds.

To illustrate an example: Mr Suay bought $100,000 worth of Singapore Bond Funds using his CPF-SA to do shielding at the age of 54. Before Mr Suay could sell the Singapore Bond Funds, there was an economic crisis. Typically, volatility of bond funds are not high. However, because of the crisis, Mr Suay may see his Singapore Bond Funds be worth $90,000 now. Mr Suay may experience losses if he wishes to sell it and put it back into his CPF-SA.

And yes, there may be transaction costs involved. Please do the calculations to see if it is worth it.

Sidetrack: It is only when you know what the risk is, then you can learn how to manage those risk. It might be unwise to avoid risk altogether.

 

Context #3: If you are risk adverse

Every trained financial professional will be able to find out your risk profile by doing a questionnaire. If you happen to be a risk adverse individual, this might not be the best strategy for you.

It is okay to be risk adverse. I think everyone of you will have a different experience with money. There is nothing wrong planning your financial journey as a risk adverse individual. It just means the instruments that you will be using will be different from the rest. There is nothing wrong with that. You are uniquely you.

 

Final Thoughts

I believe that are merits of doing CPF-SA shielding if done well. The most important consideration is to see if this strategy makes sense to you. The context of the strategy is very important. It may not be applicable to some out there especially if they fall into #1, #2 or #3 as explained above.

If you wish to find out if CPF-SA shield is applicable for you, please do reach out to me.

Till then, take care!

Read More: CPF Accrued Interest Trap

Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.  

Feel Free To Reach Out To Share Your Thoughts.

Contact: 94316449 (Whatsapp) chengkokoh@gmail.com (Email)
Telegram: Wealthdojo [Continuous Learning Channel]
Reviews: About Me

The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.

Is it possible to profit from passion

Is it possible to profit from passion?

Drawing, gardening, home-based baking. These are some of the emerging trends where passion meets profit. To most people, this could be a dream come true. A dream where you are paid for things you enjoy doing. You could even supplement your wealth management journey through your passion.

You might have received an invitation to a limited time entrepreneur webinar or click through a Facebook advertisement asking you to “BE YOUR OWN BOSS”. In any case, I believe that it is definitely possible to profit from your passion.

In my journey to talk to my readers on their experience profiting from passion, I noticed some key trends that emerged. I realised that most people fail because they did not ask themselves these 3 important questions early on. To help you save your time and effort, I have dedicated time to write this so that you will not fail in this journey on profiting from passion. I have also interviewed a few entrepreneurs who are willing to share their valuable experiences at the end of the article.

Is it possible to profit from passion

Is it possible to profit from passion

Identify Your Passion

For most people, this comes intuitively. For others, it may take time.

Personally, it took some time for me to “identify” my passion. Reading good financial articles (like this one.. haha) and sharing about financial knowledge has been a great pleasure for me. Initially, I do it very sub-consciously. I started off sharing about the best credit cards, simple wealth management tips and also the lessons I learnt from books. It was just something that I enjoyed doing. Though, I did not profit from any of them. I enjoyed the process.

This was “invisible” to me until one of my friends pointed it out to me. He asked me why not look for a career in the financial services space where you can make full use of your passion. It took me 4 years just to “identify” my passion. While it certainly took a long time, I enjoy every moment of my career now.

Coming back to the original topic, one of the most popular question that I hear from my readers is this: “How can I profit from my passion?”

After spending some time to discuss with them, I realised most of them cannot identify or admit truthfully that they have a certain passion. Most of the time, it is because the “passion” appears to be profitable. Their minds were thinking about profitability rather than passion. I think this is very normal. We do have real priorities like improving our standard of living, saving for retirement etc.

In the midst of finding our passion, we lost our way.

I believe the first step is to identify your passion. This will take time. I believe that passion are met to be a net positive in life. Even if it is not profitable or not yet profitable, it has to give you an intangible benefit like happiness.

For Vivian from Platter With Love, she “accidentally” discovered her passion. One faithful evening, she designed a platter (out of pure fun) and brought it home. She witnessed how her family was amazed and delighted at the beauty of the platter arrangement, the food, and also the taste. That was the start of her venturing into the platter business.

Step #1: What is your passion?

 

Does Time Permits?

You will need time. It is very frustrating if your passion now becomes a time burden to indulge in along with the other responsibilities you have in life. I asked a passionate hobbyist Plantssg his biggest challenge. This is what he mentioned.

“One of the biggest challenge is to make sure your assets don’t die. It must grow well and thrive”.

While he did not mention about the amount of time he spend in his garden, I personally believe he would have spend a lot of time there.

Before I scare any of you away, I would like to add another dimension to this. I believe that Time is about Consistency. It is okay not to make any money it your passion yet. It is okay to spend time on it. The most important is to consistently schedule it and commit to your passion. For now, forget about the profit and just doing it consistently will make you better and better. You will hit gold sooner or later.

Even for Liling from Ola.bakess, she had to schedule time outside of her full time job to plan for her business. Her weekends were spend baking while weekday nights were spent in business planning.

Step #2: Schedule your passion

 

Be Honest

Do you really need this passion to be profitable? Sometimes, your passion will turn to become a frustration. Just imagine while preparing your bread for your next customer, you receive a ridiculous bad review. This will definitely put a damper on your mood for the rest of your day.

Is it possible to profit from passion bad reviews

Is it possible to profit from passion ridiculous bad reviews

Honestly ask yourself if this passion needs to be profitable for it to bring happiness to the lives of yourself and others? I would rather you love the process. Not all passion has to be profitable although it can.

Step #3: Are you mentally prepared?

 

Final Thoughts

I believe that it is definitely possible to profit from passion. It is a journey of exploring, having fun consistently and if it makes you happy, profit from it! If you have a story when you tried to profit from passion, I would love to connect with you. Do email me or text me. I look forward to some of your stories.

Continue scrolling to read the interviews with fellow entrepreneurs. Wishing you the best in your passion =)

 

Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.  

Feel Free To Reach Out To Share Your Thoughts.

Contact: 94316449 (Whatsapp) chengkokoh@gmail.com (Email)
Telegram: Wealthdojo [Continuous Learning Channel]
Reviews: About Me

The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.

 

Special Interviews

Disclaimer: I’m a great supporter of these businesses. I do not collect any forms of remuneration by featuring them.

Vivien (Platter With Love)

  1. What made u decide to venture into selling platter with love ?
    The business is very much an extension of me as a person; my love for gastronomical fare, my love for quality time spent with family and friends, my love for variety and options, and my belief in contributing back to the community. I have worked as a school teacher before this. Despite years of teaching in schools; in primary schools, secondary schools and junior colleges, I still feel inadequate. I was missing life lessons. Though I am still a teacher at heart, I had wished to be better myself as a person before heading back to the classroom (possibly in my retirement years). One evening, I designed a platter, out of pure fun and enjoyment, and brought it back to my maiden home. I witnessed how delighted my family was as they marveled at the beauty of the platter arrangement, like that of a piece of valuable art work. After digging in, the platter sparked many conversations, my family was curious as it was not a conventional fare. They enjoyed the liberty to try out different food combinations. Not only that, the platter provided something for the whole family, from my niece who was one to my grandmother who was 91 years old. Everyone huddled around the platter and delighted in the meal, it was a precious sight. That was when I resolved to turn it into a business.
  2. Before you started selling your products, how long have you been practicing making platter with love?
    Platters are a relatively new concept, especially in the Singapore market. The concept started in 2016, in Australia/New Zealand, when it was done as a grazing table at a wedding reception. The grazing table offers a variety of food options, primarily cheeses, charcuterie, fruits, and just about anything else you like. Unlike conventional buffet lines where you queue for your food, the concept allows for a freestyle selection, according to your preference. When Covid-19 hit last year, I read about many who have lost their jobs. The job market did not look promising. Instead of viewing that as a crisis, I started to do extensive research and reading up on my passion: gastronomy. I have always enjoyed experimenting and cooking. It was after months of experimentation and research, rounds of feedback from family and close friends, that we arrive at the menu we have today. At the same time, I underwent officially training as a private chef and went for food hygiene certification. I have run this business for over a year now.
  3. How much time a week do you put into running this business?
    I do not stipulate hours when it comes to running Platter With Love. As an entrepreneur, I learnt that we not only possess the ability to dream, but we need to be willing to put in the hours to set our dream into motion. Apart from customer service, fulfilling customers’ order, hours need to be put aside into creation of content for the website, maintaining customer relations, inventory checks/replenishment, licensing, etc. At the end of the day, the raving reviews from my customers are an acknowledge of my efforts. It gives my great satisfaction to know that I have done my best in ensuring happiness and bliss, (apart from a delectable food platter) are safety delivered to my customers. More importantly, the true reward comes in how this business is serving as a vehicle to donate meals to the needy in Singapore, and that makes everything is worthwhile.
Profit from passion Platter With Love

Profit from passion Platter With Love

 

Liling (Ola.Bakess)

  1. What made u decide to venture into selling Ola.Bakess?
    I just like to bake and eat macarons (Hahaha)! Macarons are very delicate almond cookies and require a lot of attention. The recipes are very challenging but I get a sense of excitement and happiness especially when it becomes perfect. It is my dream to make perfect macarons
  2. Before you started selling your products, how long have you been practicing making Macarons?
    It took me almost 1 year for my macarons to be at the level of my satisfaction. I took various courses such as macarons class to have a deeper understanding on the basic foundation. There were also a lot of try and error practice to be satisfied with the recipe.
  3. How much time a week did you put into running this business?
    This is difficult to quantify. I have a full time job. I usually do business planning during weekday evenings. My weekends are reserved for baking.
Profit From Passion Ola Bakess

Profit From Passion Ola Bakess

How To Identify Bullshit Investors Say

How To Identify Bullshit Investors Say

This might be an uncomfortable read for some. If you might take umbrage at what you are going to read, I suggest heading to other friendlier parts of my website such as “what’s holding us back in our wealth management journey”.

The market don’t really make sense on a day to day basis. Benjamin Graham, father of value investing famously said this. “In the short run, the market is a voting machine. In the long run, the market is a weighing machine.” Personally, I agree with this and that you should really invest in the companies you want to see grow in the long run.

Alas, in real life we have plenty of distraction coming from our friends, “Gurus“, Gamestop, Bitcoin, Elon Musk (just to name a few).

On the ground, here is a story of bullshit that I hear one investor says and here’s how to identify them.

How To Identify Bullshit Investors Say

How To Identify Bullshit Investors Say: Hulk Says BULLSHIT!

 

There are 4 stages of Bullshit that you get to hear. It follows very closely to the market cycle.

4 Stages Of Market Cycle

4 Stages Of Market Cycle

The most noise happens typically at stage 3. One recent example would be the market crash of March/April 2020. Let’s start here.

Stage 3: This time is different. Wait for confirmation.

As Sir John Templeton puts it, this time is different is the 4 most dangerous words in investing. During March/April 2020, the stock market crashed. People were pulling money out of the market because they felt that COVID19 was going to have a significant impact of the economy.

During a crash, the best thing to do is to keep calm and learn how to endure the correction. As easy as it may sound, it is not easy to do. I know of people who are pulling out or adopting the stay at the side saying “this time is different”. The crash will be longer than usual and this is the first time (not really) that a virus has made it’s way worldwide. Every sensible country is in a lockdown. The entire economy is in a standstill. This situation will drag on. It is better to keep some in cash.

Most people don’t do anything (if they have the capital) or they may take losses to protect their capital because “this time is different”. This is bullshit because this is the best time to invest in companies you always wanted to.

Stage 4: Some leverage is good debt. Let’s 10X our capital.

Things are recovering right now. People are starting to enter the market. At this stage, most people would be making money from the stock market easily. If you know someone who have invested from May 2020 to Dec 2020, they will be bragging how they can be financially free in no time. They are looking into leverage instruments because they are looking to 10X their capital!!

This is the time to go long because economies are recovering. Some sectors have benefited and it is obvious (in hindsight) that they are benefiting (WFH stocks like zoom). You are a little late but there is still some time to enter. People all around somehow are making money and you don’t want to left out.

More bullshit because greed is now fueling the stock market. This is the easiest time to make money no doubt. Talk is cheap, people are showing off their results on Facebook. Almost everyone is making money here.

Stage 1: Value Investing is Dead. You got to pay more for quality.

This the most scary part of the cycle (in my opinion). The market is over-heated and valuation are rich. The narration here is “you got to pay more for quality”. As more and more people starts to pay more, the price of the stocks starts to go higher and higher. Cathie Woods starts taking central stage here in 2020 with her ARK funds outperforming all major indices. People starts to buy into the idea and invest with higher prices.

The ultimate bullshit because prices are going to the moon now. No one is concern about fundamentals. Everyone is waiting for the stock to gap up and celebrate until…

Stage 2: You need to have diamond hands. Valuation is everything.

For some reason, earning beats don’t increase the stock price anymore. Although the results are fantastic, stock prices are dropping. Stock prices drops and people start to think that there is a “sector rotation”. Here, you will need to have diamond hands as you have bought the stocks are “good prices” already.

However, stock prices continue to drop. Warren Buffett takes central stage again. Gurus are saying valuation is everything. Prices continue to go down and people gets worried. People begin to sell in companies that they have less conviction in.

Bullshit because it is too late to notice that valuation was too rich before.

 

Final Thoughts By Wealthdojo

The cycle continues on. I heard this bullshit in the last one year all from the same investor. I cannot imagine how inconsistent his/her investment strategy is and how many people have lost money because of him/her.

To put things into context, the above advice are good advices except that it is adapted conveniently to sound smart in the market. Investment is not all rosy and sunshine. It comes with rains and storms. We need to learn when is the best time to plan the seeds, when is the best time to wait and when is the best time to celebrate. A far sighted plan is needed to prepare oneself in their investment journey. Average investors learn from their own mistakes over time. The best ones learn from other people’s mistake using their time and experience. Investment is not complicated. You just need to learn from the best and apply it.

All the best to everyone enduring this correction.

 

Chengkok is a licensed Financial Services Consultant since 2012. He is an Investment and Critical Illness Specialist. Wealthdojo was created in 2019 to educate and debunk “free financial advice” that was given without context.  

Feel Free To Reach Out To Share Your Thoughts.

Contact: 94316449 (Whatsapp) chengkokoh@gmail.com (Email)
Telegram: Wealthdojo [Continuous Learning Channel]
Reviews: About Me

The views and opinions expressed in this publication are those of the author and do not reflect the official policy or position of any other agency, organisation, employer or company. Assumptions made in the analysis are not reflective of the position of any entity other than the author.