Money — A Long Game

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Dear Readers,

Thank you for coming here!

It is easy to forget it is a long game for most people.

Income -> savings -> investment -> financial freedom

It is a journey and it is a long game.

We need to increase our income. No one can save if they can only get their ends met.

We need to increase our savings % against income. Here we can have some control. Once we meet our basic needs, we can decide to spend less and save more.

We need to put our savings into investment. Here is where uncertainties kick in and they could be overwhelming. I know people who made big bucks in investment and I know people who only expect to beat inflation by investing (They have fat pay-checks enough to get them where they want to be, without the need for investment returns). I of course know people who has lost big in investment, a.k.a ME!

But financial freedom can be quite certain with time if we just keep at it and stay vigilant.

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However, it is easy to forget it is a long game.

That is why we feel confused and frustrated, we give up and change course, ad we suffer loss and delay the achievement of our financial freedom.

To me, reading is a good reminder.

There are tons of books on this and some are really basic and anyone can understand and follow.

Quickly glancing through them wont take much time, but serves as a great reminder.

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And a long game requires a different approach to do well from a short game.

It requires much more consistency, persistence and patience. 

Sometimes, doing nothing is the best strategy.

Good thing is that anyone can do it if they really believe in it and want it.

That is good news for commoners like us!

So no excuse if we cannot do it for ourselves. 

Till next time!

Monthly Net-Worth Update — Dec 2021

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Dear Readers,

We are officially ending 2021. 

And this will be the last update for 2021.

Our net-worth increased, but investment hit a new low. As a result, our net-worth increased less than 2020 during most of which I was not even working.

Ok. I have now witnessed the power of Capital from my own experience…

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Below is the usual summary.

Net-Worth increase from last month: 42K SGD, 0.94KG Gold

The increase was due to “non-routine” income:

• My salary from last month + some encashment
• My wife’s bonus
• My freelancer pay

Luckily, the income was sufficient to off-set the drop in my portfolio, to at least end the year with a “positive” note.

The avg monthly increment of Net-Worth for 2021 is 13.6k SGD.

This is not only far from my 40/40 goal, but also lower than 2020, thanks to the huge loss of my portfolio. 

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Investment: -9.31% annualized return, incl. dividend

My portfolio hit a new low this month in the absolute value. And the annualized return rate was almost reaching the lowest point as well…

The loss pretty much eliminated my income from hard work for this whole year.

So be careful with stocks.

 

Happy holidays! And till next time!

It is Dec! Take care of your tax relief before it is too late. A dollar saved is a dollar earned!

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Dear Readers,

Thank you for coming here!

It is Dec. Have you secured your income tax relief for 2021?

If not, below are 3 things you should consider right now, because they “expire” after the last working day of the year and you will lose your chance to save on taxes.

First of all, let’s distinguish tax relief and tax rebate.

Tax relief means a portion of your income is not subject to tax.

• For example, your annual income is 200KSGD and you can claim a tax relief of 40K. Now your taxable income is 160KSGD. According to the income tax rate 2019, you should pay 7,950 (For first 120K) + 6,000 (for additional 40K) = 13,950SGD in income tax.
• Tax relief typically applies every year and we need to be mindful about the timing to enjoy some of them, such as various Top-up schemes
• There is an overall tax relief cap of 80KSGD per year. I doubt I will ever hit that cap.

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Tax rebate means a portion of your income tax is off-set and does not need to be paid by you.

• For example, your income tax is 13,950SGD and you enjoy a tax rebate of 5000SGD. The actual income tax you need to pay is 13,950–5000 = 8,950SGD.
• Tax rebate is typically one-time. Once you use it up, it is gone. And before you use it up, it will stay in your (or your partner’s) account and be automatically carried forward to next year. While it is advisable to use it up as soon as possible as the balance does not generate any interest, the risk of losing them is very low, unless you do not know about it at all or complete forget about it.
• The tax rebate that applies to most of Singaporeans is Parenthood Tax Rebate (PTR), which is intended to support parents with children. It is 5K for 1st child, 10K for 2nd child and 20K for each child for 3rd and subsequent children. It is pretty generous as our government really loves babies and you and your partner can split it anyway you want.

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In this post, we will focus on the 3 types of tax relief that typically applies to employees with regular pay-check, which I guess is most of us. 

You need to complete them by year end to enjoy the relief.

So let’s begin. While you need to determine your priorities based on your own situation, below sequence is what I follow and suggest.

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1.Voluntary Contributions (Cash) to Medisave Account (VC-MA)

• If you have not reached your Basic Health Sum (BHS) and you have not reached the annual CPF contribution cap (37,740SGD), you can top up your MA using cash and enjoy the tax relief
• According to IRAS website, the amount of tax relief given is the lowest of the following:
• Voluntary cash contribution directed specifically to Medisave Account
• Annual CPF contribution cap for the year, less Mandatory Contribution (MC)
• Prevailing Basic Healthcare Sum(BHS)^, less the balance in Medisave Account before the voluntary cash contribution.
• The process is fairly straightforward. Just follow the CPF instructions. If you give CPF a call, they will also walk you through it step-by-step
• Remember to use PAYNOW option to enjoy the almost immediate transfer. Wire or check is likely to miss the deadline, which is tomorrow.
• Best time for doing this for me is late Jan every year to enjoy the max interest or when some Medisave money is used if you have reached BHS. 
• This requires you to have a reasonably good forecast of your annual CPF contribution though. But there is no need to worry too much. Excess contribution will be returned to you by CPF after a while (not sure how long) with no interest.

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2.Top up (cash) your CPF Special account (SA, below age 55) or Retirement account (RA, age 55 and above)

• You can top up your or your relatives’ SA or RA all the way to the Full Retirement Sum (FRS)
• The tax relief would be the lower of your cash top-up amount and 7KSGD
• You can also top up your relatives’ SA (Parents, ground parents, spouse or siblings) if they meet the requirements (basically low income) to enjoy additional tax relief, up to 7KSGD as well
• Again, follow the CPF instructions and use PAYNOW
• Best time for doing this for me is late Jan every year to enjoy the max interest

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3.Top up (cash) Supplementary Retirement Scheme (SRS) account

• You can open a SRS account with DBS, OCBC or UOB. Sometimes, they even provide cash benefits if you open an account with them. Do check and grab the “free” dollars.
• The benefit of this account is that your contributions is tax free, up to 15,300SGD per year. You can invest the money. When you withdraw the fund upon or after retirement, only 50% of the withdraws are taxable
• The potential down-side is that if you withdraw before retirement, 5% of penalty will be imposed. Therefore, it is advisable to open your SRS account now, to lock in the retirement age after which you can withdraw the fund from your SRS account without the penalty.
• Once you open an account, the top-up is like any other bank transfer. However, it does take a few days for the account to be opened.
• Best time for doing this for me is when my bulk of dividend has come in. This way, I can invest the dividend together with the new contribution to save fees. The fee to invest this account is not the best.

If you have done all 3, super! If you have not, please consider based on your actual situation. A dollar saved is a dollar earned.

Till next time!

How to be a good employee (10 times the salary in 10 years) - Part 8: Let the bullets fly…

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Dear Readers,

Thank you for coming here!

Two things happened recently at work where I could have delegated better. 

I felt quite bad about them at first.

But they turned out to be right decisions after a week.

Therefore, as a manager, try to delegate properly, but more importantly, do not feel bad.

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1.I could have delegated

In drafting up a deck for the client, I discussed with the team and agreed on the storyline.

There were 5 slides that needed major work and 1 slide that needed adjustment.

3 of the 5 that needed major work would be hard to delegate, because I had all the information and background.

So there were 2 slides that needed major work and 1 slide that needed adjustment that I could choose to delegate.

There were 3 other members in the team.

I only delegated the 1 slide that needed adjustment to one team member and took the 2 that needed major work upon myself.

I guess I was partly trying to continue the work I had done on the 2 slides that needed major work and partly did not want to load the team more as I knew they were involved in other engagements too.

But afterwards, I regretted.

If I had delegated the 2 slides to the two other team members, there would be at least 4 benefits:

1. I would have less to do and could focus more on the 3 slides.
2. The workload of the team would be more even, at least from the perspective of this engagement. The team member that got assigned the 1 slide that needed assignment might feel a bit unfair in the current arrangement.
3. The deck would be more of team work, instead of my storyline and my deck.
4. If there would be needs for further changes to the deck, we could split the work more easily and deliver the update version faster.

I regretted over the weekend multiple times and could not help thinking about the benefits of better delegation.

In the beginning of the subsequent week, I managed to find time to complete all the slides. But I still felt bad.

However, after a few days, I found out that that could be the right decision.

One of the other team member got assigned to another engagement entirely. If I had assigned to him the one slide, I might have to take it back anyway, which would cause more interruption.

The other team member was entirely occupied on another stream of the engagement and she did not even bother me with it, probably partly due to that fact that I left her out of this stream to allow her more time to work on the other area.

Therefore, that decision could be the best one, in term of completing the work effectively without interruptions.

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2.I should not have delegated

The 2nd incident was even more straight forward.

I delegated some analysis to an intern and it turned out to be a bit complicated for her.

I had to spend more time training her than doing the analysis myself.

I regretted also. Why didnt I just do it myself?

However, I later found out that she could catch up much faster on the other analysis after the training. 

I guess the training enabled her to understand the methodology and my train of thoughts.

This is good and she is able to help me with more analysis, which definitely saved more time for me.

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Summary

Delegation is as much science as art.

As a manager, try to delegate properly.

However, if some seemingly less ideal decision is made, do not feel bad.

Let the bullets fly…

You never know how it would turn out.

And we can always learn to improve!

Till next time!

Where does Money come from?!

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Dear readers,

Thank you for coming here!

I read about an interesting research on “Where does Money come from?” the other day. 

It was done in 2019 so it is a bit outdated, but I believe things should not have changed much over the last two years.

Therefore, I would like to share it with you in this quick read.

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Where does Money come from?

In 2018, 

• 73% of the income of Chinese residents came from work — “People-generating money”
• 27% came from investments — “Money-generating money”
• In US, even for the richest families, about half of the income came from work

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I think it tells us two things to get money.

1.Focus on improving our work efficiency and output

It is clear that work generates most of the income for the mass population.

And that is just the average.

That means, for some people, work can even generate more than 100% of their wealth. That is what happened to me when I first started investing, with negative returns.

Therefore, to accumulate wealth, the best way for most is to focus on improving our work efficiency and output and use that to trade for wealth.

This is especially true when we do not have big enough capital.

2.Start investing as early as possible and make it a continuous journey

On the other hand, 27% is significant. 

Therefore, we should definitely not ignore it. No matter we like it or not, investing is going to be a “must” for us. 

I did not start investing until past my 30. If possible, you should start as early as possible. 

The earlier you start, the less costly your mistakes will be and the more time you will have to make compounding work to your favor.

And it should be a continuous journey. And I mean two things.

1. You should spend time on it continuously to learn and practice. Spend time on money related staff at least every week.
2. You should keep exploring new things, not limiting yourself due to laziness. I limited myself into “DCA into ETFs” without knowing there are so many other ways to invest.

This does not contradict with the first point. Time will be available if you really think it is important.

I did not spend extra time on work before I started investing. I spent it on gaming, movies and etc.

Besides, focusing on just one thing, as many tell us, sounds so boring.

I think we can manage to do two things well! 

Happy work and Happy investing and Happy getting rich!

Till next time!

My Market Transactions — Wk 3 2021

 

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Dear Readers,

Thank you for coming here.

Another update on my transactions.

I might be enjoying the buying a bit too much. I think I need to slow down.

Over the past week, I made the following transactions:

Capital injection: ~16KSGD

1.Semiconductor Mfg Intl 

This is the leading enterprise for Chinese Chips. 

The share price kept shooting up. We have decided to buy more, at a much higher price than the first transaction of course.

We believe there is still potential and also this is the compare we are willing to bet on for the long-term.

The price did drop a bit after our second buy. Let's see how it performs going forward.

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Capital outflow

None.

But I am seriously thinking of clearing my ES3 positions. The index is just not moving. 

We are still making the decision,

Happy Investing!

Till next time!

How to be a good employee (10 times the salary in 10 years) — Part 4: Take the right responsibilities

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Dear readers,

Thank you for coming here!

This is the episode 4 of the “Good employee” series.

When I thought of this topic, I struggled to decide whether this would be a better fit for the “Good manager” series.

However, I did get this idea as an employee. It would be good for employees to take the manager’s perspective from time to time anyway.

Moreover, I am an individual contributor now (aka employee) and I do not know whether I will have enough material to continue the “Good manager” series.

Therefore, I decided to post it here in the “Good employee” series.

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When I think of my past experiences, there are two types of responsibilities I take on, corresponding to the “Positive” and “Negative” mindset I follow in different stages of my career.

Type 1: The responsibilities to deliver success — Positive mindset

Type 2: The responsibilities to take punishment for failure — Negative mindset

Type 1 is like saying “Just leave it to me. I will make it happen.”

This requires motivation and pro-active problem-solving. There is no room for excuses and we need to give it our very best.

We take it on ourselves to overcome whatever difficulties and roadblocks.

This mindset usually improve things.

Type 2 is like saying “If this fails, you can blame it on me.”

No doubt, this is not easy either. This requires courage and accountability.

However, this could be used to justify not trying and not caring.

As a manager, Type 2 is a must. A good manager will take accountability and the consequences for their team’s failure.

Type 1, however, could harm the team’s performance because it brings the risk of micro-management and dictatorship.

But as an employee, we have to take Type 1 responsibilities. 

We are hired to make things happen. That is why we are here. Otherwise, we would have been of no use to corporations.

As an employee, we actually do not have the option to take Type 2 responsibilities, because they always fall on the organization and then our managers first. We at most take a small part of them.

Therefore, as an employee, we need to devote all our proactiveness to make things happen.

The other way is not really a choice. 

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Maybe the best team will have managers take Type 2 responsibilities and members take Type 1 responsibilities.

And, the opposite would no doubt be the worst set up.

When employees are made to take Type 2 responsibilities, they will also try to avoid Type 1 responsibilities.

Can you imagine saying “Just leave it to me. I will make it happen” to a manager who will punish you for the failure?

So in conclusion:

As a manager, take Type 2 responsibilities always (maybe this is not a choice either) and show it to your team. Be cautious with Type 1 though.

As an employee, Type 1 is the only type for us. Take it and give it our best in a team where managers take Type 2. If we are unluckily in a team where managers avoid Type 2, protect ourselves until we quit for a better team.

Till next time!

How to be a good employee (10 times the salary in 10 years) — Part 3: Express Anger

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Dear Readers,

Thank you for coming here!

Hope you all had a great break! 

I would like to start the new year with one more entry in the "Good Employee" series. Hope we all achieve good career progression in 2021~!

This is the episode 3 of the “Good Employee” series.

Again, this post will focus on only one point.

How to properly express anger as a professional employee.

In Asian culture, anger is perceived mostly as negative and impolite. Growing up, we were taught to control our anger or at least hide our anger. 

However, anger is a type of emotion, just like happiness or sorrow. And emotion needs letting out sooner or later, one way or another.

As an emotionally healthy human being, we need to allow anger to be expressed, just like any other emotion.

However, it is hard, partly because expressing anger involves conflicts and confrontation which is again something we are taught to avoid in Asian culture.

I have suffered in my career, on both my feelings and career progression, because I did not know how to express anger properly. 

Luckily, over the years, I have reflected and learned. 

And now I have some thoughts and techniques that allow me to handle anger in workplaces properly, at least in a way that neither bothers me nor hurts my career progression.

I would like to share them with you in this post.

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Why is it necessary to express anger?

So why do we have to express our anger? Cannot we just suppress it inside ourselves and avoid the uncomfortable confrontation?

That was my approach in the beginning of my career. 

And from my experience, it does a lot of harm and almost no good. 

1.It harms the mental and physical health of you and people around you

As mentioned above, anger is emotion and needs letting out sooner or later, one way or another.

Suppressing your anger as a habit will either make yourself feel really bad or push you to bring the negative emotions to people around you, especially your families.

And this could happen without you realizing it. 

Till today, I can still very vividly remember the experiences during my first job as a supply chain specialist.

Business was booming and the team was under tremendous pressure to deliver equipment. And manufacturing department always made unreasonable requests to demand components ordered the day before to arrive today, and without exception blamed supply chain department for the delay of progress.

As the supply chain representative, I got the “fire” every day in the morning stand-up meetings. 

I was new and I was the only non-manufacturing employee in the room full of people, including management of manufacturing department. So I sucked up and only updated the current status and expected delivery date.

However, I often felt angry afterwards, to a point that the anger became the “background” of my life.

I would wake up during the weekend, automatically recalling the experience and feeling angry and depressed. 

Or it could come to me any time during the day and ruin my mood, during movies, meals, friend-talks etc etc.

It got so bad that I started to read religious articles to make myself feel better.

My wife, my girlfriend then, told me once “You have not been happy for a long time”.

Thinking back, I may have taken some of the comments too personally, but still not expressing anger could hurt you really bad.

Of course, there is a far worse form of this effect: you suppress your anger at work and unleash it upon your families after work because you think they are weak in front of you.

Anyone who does that is just a coward and loser.

2.It harms your relationship with your colleagues

Not expressing anger when we feel it could make people think that we do not have any bottom line and they can bully us.

Not expressing anger sometimes could also mean refusing communications.

Either way, it harms the relationship with our colleagues.

Surprisingly, expressing anger properly will give us the opportunity to recalibrate and rebuild our relationship through meaningful communications with clear boundaries.

In my example above, my relationship with my colleagues from manufacturing department became very hostile.

They actually believed that they were under so much pressure and criticism because I did not bring them the components. How could they not “hate” me?

I believed that they unreasonably brought so much pain and negative impact to my life when I did my best to bring them the components. How could I not “hate” them?

Until I decide to change.

I started to push back in the meetings, sometimes raising my voice, telling them “Do not expect me to do magic”.

And surprisingly, things started to improve and people started to talk more sense. We started to understand each other’s frustrations.

We slowly “hate” each other less until we could finally sit down and discuss how to find solutions to the problems we face.

And that provided the necessary condition for cooperation.

3.Last but not least, it harms your career progression

First, not expressing anger harms the overall performance.

In my example above, there was no real cooperation or collective problem-solving between manufacturing and supply chain until we could finally improve the relationship, which meant lost opportunities to the company.

Second, not expressing anger could give the management and colleagues the impression that we do not care about the work or the organization, which causes loss of credibility and authority, which surely harms career progression.

Therefore, for the sake of ourselves and the organization we work for, it is necessary for us to express anger properly!

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How do we express anger properly?

It involves having the right mindset and technique.

Mindset 1: It is allowed to express anger in the workplaces

Contrary to what we have been taught growing up, it is allowed to express our anger.

Based on the reasons above, it is necessary and required for us to express our anger properly.

Mindset 2: Expressing anger is merely a means; always remember the goal

Always remember expressing anger in workplaces is to re-install the balance in the relationship and ultimately help our career goals.

The key here is to never lose emotional control. 

Expressing anger in workplaces is like a show. When we express anger, we need to be rational to show the “audience” our bottom line.

If we burst out our anger, caused a conflict and damaged a relationship because we lost our emotional control, it would have shown our unprofessionalism and come with irreversible consequences.

If we expressed anger, showed our bottom line and recalibrated the relationship, it would have proven our high IQ.

If we pretended to be angry and expressed the “anger” to warn the other party not to overstep, it would have been a great show to avoid future troubles.

If we were very very angry in the occasion where expressing anger would not be appropriate and we suppressed that anger, this would have shown our capability for emotional control.

Always remember express anger is only a means to the end goal.

Technique 1: Facts + My feelings + My expectations

In expressing anger, we should always start with facts, because facts are acceptable and undisputable to most.

“You did not mention my work in the last management reporting”

“You were late three times in the past week”

“…”

Then we follow with our feelings.

“It makes me feel undervalued and not appreciated”

“It makes me feel you do not respect the team norms”

“…”

Then we end with clear and specific expectations.

“I hope we could report together in the next meeting”

“I expect you to be on time from now on”

“…”

The key here is to never “judge” the other party, even though that might be the “natural” reaction.

Do not say “you are too greedy” or “you are just incapable of following plans”.

This will cause push backs and arguments.

Remember we have the end goal for expressing anger. And that goal is not unleashing our emotional frustration or making the other party apologize. 

It needs to be much more productive.

Hope we can all become better in expressing anger in workplaces!

Till next time!