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Saturday, 21 January 2017

Why I chose a 30 year bank loan over a shorter one

OK, this post no short cut.

For the proper perspective and context, you really have to read this old post:

My aim is to have my cake and eat it – a 3 room HDB flat for free!

As you can see, although I can pay 100% of HDB resale flat in full using my CPF OA, I chose to take out the longest 30 year bank loan.

What? And pay the bank 30 years of interests for nothing???

That's what the "save more" would spot first.

These are the same people who would switch their savings accounts and credit cards every 1-2 years just to hop on the latest bank promotions - even though they knew the banks are making them jump through hoops just to earn that extra 1% in interests...

The same ones who are having fits of ecstasy as they do their voluntary CPF top-ups or CPF transfers from OA to SA. 

They see the world in 1 to 2% increments.

They pray to the God of Compounding.

Needless to say, I belong to the "earn more" camp. As a hybrid investor/trader with aspirations to become a full fledged speculator one day, I am turned on by words like: carry, margin, leverage, and all things they warned you never to try.

During my corporate days, I quickly learned the less I do and the more I talked, the more money I made.

If I can leverage on Other People's Talents (OPT), surely I can do the same with Other People's Money (OPM)?

I danced with the Demon of Debt; I do the leading of course!

Today's post is not about the nuts and bolts or dollars and cents of financial literacy.

We can debate until we all turn into smurfs (blue), and we still can't agree. Which is the right answer all along.

We all are different.

One man's meat is another man's poison.

You are risk averse; I am gambler. We choose the vehicle that suits us best!

But there's one non-financial aspect of decision making that eludes most "financially literate" people.


You may have did your sums to take on a 10 year bank loan, calculating how much extra bank interests you have saved by having a shorter bank loan, and once the bank loan is fully paid, the extra CPF interests you would be compounding from the 10th year forward...

What happens when you get retrenched and your cash investments have lost money?

Of course you can approach your bank to consolidate and reschedule your bank payments.

But you would be going in cap-in-hand.

To some people, once their self-beliefs (ego, pride, face; etc) have been shaken, they never fully recover from this fall...

By taking on a 30 year maxed-out duration loan, it may not make financial sense to some, but it was the most "conservative stance" psychologically speaking to me. 

I know if my investments made money, I can easily repay my bank loan anytime once the early payment penalty is over.

For my case, because of SERS, I've be repaying my 30 year bank loan 11 years early in 4 years' time.

I am approaching my bank in a position of strength.

The funny thing about blogging is sometimes we do meet kindred spirits. The young mother
who wants to start her own thing would understand.

Its never about money or sticking the middle finger to our bosses. (If you can't manage difficult bosses, how can you manage difficult customers?)

Sometimes the path that "appear" dangerous to others could be the "safest" ones for us.

Especially for those of us who never want to go cap-in-hand...

Thursday, 19 January 2017

无为 - Non Action

无为而无不为 - “The Tao never strives, yet nothing is left undone.”

Again, sometimes its good to remember our 5000 years of Chinese wisdom passed down through the ages.

You may already be practicing it without knowing the philosophy behind it - that's even better!

Our Singaporean blogger working in Taiwan is example of living without measurement or goals:

If eating 70% full is already part of your dietary habit, and a jog every evening is part of your daily lifestyle, do you still need weight loss goals or count and track your calorie intake?

In the Corporate world, we call it Systems or Processes.

Once systems or processes are in place, we don't meddle with it until its broken!

We track and measure and use SMART goal settings at the beginning of a journey when we don't trust ourselves...

Not sure whether our motivation is just another one of those "3 minutes' worth of passion activities" that we often start but never finish...

Or when our new activities have not become 2nd nature like in habits or lifestyle choices.

Once we have crossed the river, why do you still need the sampan?


Tuesday, 17 January 2017

Is this why Millennials want to seek Financial Freedom by age 35?

If you have 15 minutes, you may want to watch this video and reflect.

It has nothing to do with investing or trading (or does it?), but I think there are some parallels on how financial bloggers and their readers behave in our community.

1)  What's with the trend of young adults just starting work already making goals to be financially free before age 35?

You wonder whether its an euphemism just to mask their failures to cope in the corporate world... Investing to "escape"?

Since they have no freaking idea what to do with their lives, financial freedom becomes a convenient temporary "excuse"? At least now they have some "purpose" in their lives!

Notice some bloggers start their blogs at the lowest point in their corporate careers or were between jobs? (I'm not making any judgement, just pointing out what I see)

Can you also spot the cognitive dissonance when they say they are investing for the looooong term, yet they want it all by age 35...

2)  Those of you near my generation can attest to it. When we form relationships, its through face to face interactions.

We go on dates to make sure the person we like is not "mental"...

That's also why we have business lunches and dinners to "size-up" our business partners. 

You can't fax a handshake or teleconference a congratulatory hug.

When we say friends, we don't automatically think of Facebook friends, do we? 

And definitely not someone whom we never met and only knew with an anonymous nick!          

Which reminds me, please don't Facebook me when I don't know you. Just because you've read my blog does not make us "friends".

I'm like woman; I need foreplay.

At the very least we must have a "relationship" in the comments section first lah!

3)  Why do I care? Because its profitable!

Self awareness of my own motivations so I can better select the "right" vehicle for myself is a given.

Knowing how millennials think and behave as a group may present interesting investment thesis and trading ideas for me to exploit.

If I want to hunt foxes and wolves, I go where the sheep are. Wink.

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