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Old 29-07-2013, 12:16 AM
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Default Calling it quits!

When I first started my career, I wanted to make my first million by the time I hit 30.

During my 30s, whilst I focused on climbing the corporate ladder, I wanted to achieve financial independence. However, the goal post kept shifting higher and higher as Singapore entered a strong period of inflation.

I remembered my ex-boss who has since retired, telling me to ensure that I have enough "FO capital" so that when the time comes, I will not be beholden to my job. Unbeknownst to him, I have been busily planning and executing my own plans towards financial independence, but it was good advice nevertheless.

Decision to call it quits is a complicated one. My major concerns in this respect are:-
(1) What do you do after quitting? How do you meaningfully occupy yourself?
(2) When do you know whether you have enough financial resources to give up your career?
(3) Am I prepared to give up on my wealth accumulation by quitting?

The first question is not that easy to answer. However, I know what activities I would like to pursue (dependent upon my health and income) when I don't have to work:-
(1) travel
(2) sports - cycling, gym, golf, scuba diving
(3) study and learn something new that is unrelated to my professional career
(4) cook
(5) write
(6) manage my investments

My thinking around the second question is focused on a cashflow perspective. As long as the cashflow from my investment portfolio is able to generate more than what my family needs (with some leftover) with a strong degree of sustainability and recurrence, I would deem it sufficient.

However, the second question is also related to the third question, am I prepared to give up on my wealth accumulation? The current growth of my investment portfolio is facilitated by recycling 100% of my investment income and the leftover from my employment income.

Haiz ..... it's pretty darn difficult to give up on my employment income by calling it quits even if my investment income is sufficient to finance my family's lifestyle.

What are your concerns when you plan for your retirement?

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Old 29-07-2013, 08:34 AM
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Bear in mind, at the end of the day, you will not bring anything to the grave. Why would you work so hard, accumulating millions and only die a month after your retirement at 70? Your kids will be quarreling, to grab your wealth. Best is to give your kids a proper education and tell them to build their own wealth. Go to YouTube and type "the true meaning of life in this world" and you will know what's your true purpose.

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Old 29-07-2013, 08:48 AM
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Go to YouTube and search "what happen after you die"

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Old 30-07-2013, 11:46 PM
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On your third question, it is easy:

Get your passive income up to 2 times your families current expenditure. You will save at a rate much higher than inflation and it will handle even your extreme kiasu syndrome.

After a while, if your passive income is high enough, even education bills like $100K/yr for a couple of kids won't faze you.

If you have to spend $1m a year on hospital bills for 5 years, it's probably not worth living, so healthcare isn't an issue.

BTW, this what I think:
You will be able to travel first class until you are sick of it.
You will be able to buy the full carbon bike with $10,000 carbon wheels
Your age will make it frustrating trying to learn anything. Dementia, Alzheimers.
You will be able to buy a top restaurant and have the chef cook for you at home.
If your investments earn twice your expenditure, why fix something which isn't broken. If you get demented, you might screw up an lose it all. Just leave it.
From the way you write currently, I wouldn't try writing
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Old 31-07-2013, 12:15 AM
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Whizzard, you are back! I'm one of those who followed your interesting posts of past. Last I recall, you were looking at Porsche sports cars and were denying having a mid-life crisis. Haha

So give us an update of the last few years. What have you been doing? More interestingly, did you get richer. Details please!!
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Old 03-08-2013, 05:17 PM
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Quote:
Originally Posted by Unregistered View Post
Whizzard, you are back! I'm one of those who followed your interesting posts of past. Last I recall, you were looking at Porsche sports cars and were denying having a mid-life crisis. Haha

So give us an update of the last few years. What have you been doing? More interestingly, did you get richer. Details please!!
Haha, the last few years have been more or less the continuation of the years preceding that but with a main difference. I am no longer the person who pursued career progression single mindedly and with dogged determination. Instead, my main aim is to "cruise" and deliver my team's KPIs. It didn't take too much and too long for my slave driver boss to see through that and pressure was promptly applied. Don't get me wrong, cruising doesn't mean loafing off or not working. I pursue deals, execute them as flawlessly as I can and deliver the revenues but I wouldn't slog through the nights everyday or work on weekends any more unless on a very exceptional basis. In other words, I wouldn't voluntarily take the initiative to go the extra mile. In order to stand out in any organisation, you have to be super on but it is a conscious decision on my part not to be so.

My work also required me to travel frequently as it is a regional role. Initially, it was fun but requires loads of hard work. Before each trip, we would have to prepare the pitchbooks and work out the different strategies for each customer. In addition, most of the time I'll be meeting clients for the first time so the stress is intensified. For a number of years, I would travel every fortnight. These marketing trips are in addition to my role of executing the deals obtained in prior marketing trips. Even my gym instructor is getting fed up with my frequent requests to reschedule my training sessions!

So, the job is fairly intense as we need to juggle a few deals at various stages of closure in different countries at any point in time. The pay is not fantastic as I am still paid less than what I was previously paid. However, it is still more than enough to support my family's lifestyle with some leftover but not a lot that it would make a big difference in terms of my wealth accummulation since I have adopted a more extravagant lifestyle lately.

The salaried job has allowed me to rollover my investment income to grow the pot but my annual investment income is well below 10% of the portfolio so it would take quite a while to move the needle. I am tinkering with the idea of employing leverage to increase the returns but let's see how ..... my bankers are offering me loans at an all-in rate of approximately 1% + pa pegged to cost of funds (short term rates). Provided short term interest rates stay low, I could still increase the returns by leveraging my higher yielding bond portfolio. The game will come to a stop when the low and medium term interest rates converge so I am still thinking about it. But, it would give me a nice recurring passive income base for a few years if I set it up properly. I think I can assess credit risks but how interest rates would move is another kettle of fish! Any experts here have any views? I would like to learn. Private bankers only want to sell and earn commissions. I don't trust them at all. Only use them for execution.

Took a fair bit of money out of the equity markets recently. Don't know whether it was a good idea on hindsight as the markets are still charging ahead. Whatever, markets will always go up and down and a realised profit is always better than an unrealised profit. Now, as long as I don't do something stupid with the spare cash I should be fine - patience and adequate research before I redeploy.

I have also sold off my overseas properties. Waiting for the currency markets to move in the right direction before I bring the cash back to Singapore. I don't see the Singapore property market being a particularly good asset class currently but I have my eyes set on something here if it moves to my level. Well located freehold landed properties should still be a good investment class but not the non-landed segment. Again, patience and adequate research and analysis. Else, I just use it to pay off the bank loans for my existing investment properties in Singapore if mortgage rates were to spike up.

And yes, I got my Porsche a few years back. I am enjoying it. 5 years warranty and maintenance programme is a joy! The other day, a message popped up saying that my engine oil is low. I called up and asked them what kind of engine oil do they use, as I planned to top it up at the petrol station. They asked me to drive into the workshop at Leng Kee and it will be topped up within 10 minutes, no prior appointment needed. I drove there during lunch and they topped it up with 2 litres of oil. When I asked how much, they said payment not required as it is covered under the maintenance programme - even for engine oil. Sweet! Now, if I can only get them to do the same for my petrol! I am now itchy to get another Porsche, this time a convertible. But COE so high! $21 per day just for the COE. Insurance and road tax and would cost an additional $36 per day. Still haven't factor in other usage based expenses and depreciation and assume no financing. Haiz! Got to earn more money!!!

And so, this rat has to continue running because he cannot stop wanting!


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Old 03-08-2013, 06:28 PM
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Originally Posted by Unregistered View Post
On your third question, it is easy:

Get your passive income up to 2 times your families current expenditure. You will save at a rate much higher than inflation and it will handle even your extreme kiasu syndrome.
Yes, I am trying to see how I can maximise the income from my portfolio and get it to a fairly predictable and recurring level. Taking more risks does not guarantee higher returns and that's the problem.

Quote:
Originally Posted by Unregistered View Post
BTW, this what I think:
You will be able to travel first class until you are sick of it.
You will be able to buy the full carbon bike with $10,000 carbon wheels
Your age will make it frustrating trying to learn anything. Dementia, Alzheimers.
You will be able to buy a top restaurant and have the chef cook for you at home.
If your investments earn twice your expenditure, why fix something which isn't broken. If you get demented, you might screw up an lose it all. Just leave it.
From the way you write currently, I wouldn't try writing
Sadly for me, I am not as rich as you think I am. Travelling business class will be sufficient luxury for me. Buying a fanciful bike is something I have been thinking of but don't want it to sit around and collect dust. I could always let my son use it but I am worried about his safety if he rides on the road.

I am also not that old lah! Most people my age will still be building their careers. It is also not a given that you would develop dementia or Alzheimers when you get old although they are certainly risk factors. I think learning because "you want to" vs "you have to" is quite different. More importantly, learning keeps the mind active.

Cooking is a different form of enjoyment, at least to me. I can always go out and eat at restaurants but cooking a delicious dish on my own is a form of achievement. It also keeps the mind active! So, if I am retired and have time on my hand, why not? For me, eating out at a good restaurant is a form of pampering. They serve different needs.

Lastly, I have to agree to disagree with you on the point about actively managing an investment portfolio. We just have to do the best with the cards that we are dealt with - illnesses and accidents may or may not happen. They can't be planned for so in the meantime, we manage based on our circumstances. E.g. I have invested in Datapulse for some years which has been paying fairly good dividends (about 10% pa). The stock doesn't appreciate much but it provides good dividends. But, the world is moving away from what the company does i.e. CD and DVD replication services. As high speed broadband becomes increasingly pervasive, consumers find it more appealing and convenient to download their songs, movies, games and software online instead of physically buying the discs. Some of this has even gone to a cloud based model. I recently divested my entire holdings in this company as I am no longer confident that its business is sustainable in the long haul. It may remodel itself into something more promising in the future but at the moment, if it continues the way it is, I am not that upbeat about its business prospects. It has provided me with a good dividend yield all these years but the time has come for me to say farewell to it, take the money and move on to another better investment hopefully. It's still paying a good dividend and the share price has stayed up and it would be easy for me to leave it as it is but I think that investment is getting riskier for me.
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Old 05-08-2013, 09:39 AM
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The salaried job has allowed me to rollover my investment income to grow the pot but my annual investment income is well below 10% of the portfolio so it would take quite a while to move the needle. I am tinkering with the idea of employing leverage to increase the returns but let's see how ..... my bankers are offering me loans at an all-in rate of approximately 1% + pa pegged to cost of funds (short term rates). Provided short term interest rates stay low, I could still increase the returns by leveraging my higher yielding bond portfolio. The game will come to a stop when the low and medium term interest rates converge so I am still thinking about it. But, it would give me a nice recurring passive income base for a few years if I set it up properly. I think I can assess credit risks but how interest rates would move is another kettle of fish! Any experts here have any views? I would like to learn. Private bankers only want to sell and earn commissions. I don't trust them at all. Only use them for execution.

Took a fair bit of money out of the equity markets recently. Don't know whether it was a good idea on hindsight as the markets are still charging ahead. Whatever, markets will always go up and down and a realised profit is always better than an unrealised profit. Now, as long as I don't do something stupid with the spare cash I should be fine - patience and adequate research before I redeploy.

I have also sold off my overseas properties. Waiting for the currency markets to move in the right direction before I bring the cash back to Singapore. I don't see the Singapore property market being a particularly good asset class currently but I have my eyes set on something here if it moves to my level. Well located freehold landed properties should still be a good investment class but not the non-landed segment. Again, patience and adequate research and analysis. Else, I just use it to pay off the bank loans for my existing investment properties in Singapore if mortgage rates were to spike up.
What you are talking about is the carry trade, which Singaporeans with private bankers have been doing for the last 5 years. You are a bit late to the game. However, it's still an OK time to add leverage to your portfolio. A secured credit facility (secured off your existing equities or properties) should not cost you more than SIBOR+75bp and if you negotiate, you should be able to get it down to SIBOR+50bp. This should put your borrowing cost under 1%, not over, whether S$ or USD. On negotiating, your key point should be that you will bring your entire portfolio, overseas, local, property and equities under one bank. Calculate your entire asset base, then lever to a certain safe level. Say, if you add up all your assets and you have $10m and $1m worth of loans (e.g., mortgage), you are probably under-levered. If you are a conservative fella, and it sounds like you are, try getting it up to around 30%. This means, you can borrow another $2m and invest it into bonds or high yield equities. At 5% return, this will give you another $100K of passive income per year. On bonds, long-term rates have risen and are expected to rise more, so I think I would wait a little until for rates to rise more. As a finance professional, you know that bond prices will fall as long-term rates rise. If you are impatient, you can pick up some of the recently issued UOB Basle III Prefs for around 4.6% yield (they were issued at 4.9%). You are right not to trust private bankers as they will sell you the highest margin products for them rather than the best for you.

I would stay invested in equity markets. Rising rates means that economies are recovering. For Singapore, there is a switch from yield plays to cyclicals. Recovery seems to be taking hold in the US, so you might want to shift some funds there. US real estate is rising rapidly. If you are trying to time the market and willing to feel lousy for a while so you can make a lot of money, put it into Europe, perhaps that villa on the French Riviera.

I wouldn't hope on property prices coming down in Singapore. There are too many people like you waiting on the sidelines with a ton of cash. I personally know 20+. If you are under-levered, why are you paying down your mortages? That is just not sensible. Besides, if you make an arrangement with a private bank by collateralizing your properties and equities, you can always raise a few million in an instant should an opportunity come along. You will always have "dry powder", even without keeping a ton of cash earning nothing.
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Old 05-08-2013, 10:12 AM
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Haha, the last few years have been more or less the continuation of the years preceding that but with a main difference. I am no longer the person who pursued career progression single mindedly and with dogged determination. Instead, my main aim is to "cruise" and deliver my team's KPIs. It didn't take too much and too long for my slave driver boss to see through that and pressure was promptly applied. Don't get me wrong, cruising doesn't mean loafing off or not working. I pursue deals, execute them as flawlessly as I can and deliver the revenues but I wouldn't slog through the nights everyday or work on weekends any more unless on a very exceptional basis. In other words, I wouldn't voluntarily take the initiative to go the extra mile. In order to stand out in any organisation, you have to be super on but it is a conscious decision on my part not to be so.

My work also required me to travel frequently as it is a regional role. Initially, it was fun but requires loads of hard work. Before each trip, we would have to prepare the pitchbooks and work out the different strategies for each customer. In addition, most of the time I'll be meeting clients for the first time so the stress is intensified. For a number of years, I would travel every fortnight. These marketing trips are in addition to my role of executing the deals obtained in prior marketing trips. Even my gym instructor is getting fed up with my frequent requests to reschedule my training sessions!

So, the job is fairly intense as we need to juggle a few deals at various stages of closure in different countries at any point in time. The pay is not fantastic as I am still paid less than what I was previously paid. However, it is still more than enough to support my family's lifestyle with some leftover but not a lot that it would make a big difference in terms of my wealth accummulation since I have adopted a more extravagant lifestyle lately.
Whizzard, your path has been very similar to mine. Laid off during the global financial crisis, but after accumulating a lot of wealth at a global institution, I joined a local firm at a huge paycut and tried to cruise. Like you the boss soon figured it out and put a lot of pressure and I responded to it by delivering. Again like you, I was able to deliver without working nights and weekends anymore although I travel regionally (a few days in the middle of the week) every week. The ability to deliver easily was because the demands of local firms are much lower than global firms.

What is different from you is that the local company I worked for got taken over by a very large mainly Asian conglomerate. After a few months of integration, the consultants they hired decided that I should run a division of the conglomerate. Haha. Last thing I really wanted, but I was curious. It came with a few interesting perks and I insisted on being paid the same level as when I was working for the global firm, which they relented. Now I get Business Class everywhere, even KL, and a nice car and driver both in Singapore and at the HQ country. I went from managing a team of 30 to 300 professionals. I thought it would be a nightmare, but no. I found someone to replace myself and embarked on a new journey. Now I travel every week, but to HQ in a foreign Asian country for a LOT of meetings. Between various committee and board meetings, I think I do about 30 a month. It's very low stress. I just sit there in a conference room and give groups of people who wander in a hard time then am whisked off to a nice lunch. I'm relearning golf in order to play with board members and have had to make a few new suits. Interestingly, one small Singapore company has already approached me to be on their board. I can already see my future retirement as being on a few Singapore company boards, being paid $50-100K each.

Point is that after you rise to a certain point in a large organization, everything suddenly becomes low stress.
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Old 05-08-2013, 10:26 AM
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Lastly, I have to agree to disagree with you on the point about actively managing an investment portfolio. We just have to do the best with the cards that we are dealt with - illnesses and accidents may or may not happen. They can't be planned for so in the meantime, we manage based on our circumstances. E.g. I have invested in Datapulse for some years which has been paying fairly good dividends (about 10% pa). The stock doesn't appreciate much but it provides good dividends. But, the world is moving away from what the company does i.e. CD and DVD replication services. As high speed broadband becomes increasingly pervasive, consumers find it more appealing and convenient to download their songs, movies, games and software online instead of physically buying the discs. Some of this has even gone to a cloud based model. I recently divested my entire holdings in this company as I am no longer confident that its business is sustainable in the long haul. It may remodel itself into something more promising in the future but at the moment, if it continues the way it is, I am not that upbeat about its business prospects. It has provided me with a good dividend yield all these years but the time has come for me to say farewell to it, take the money and move on to another better investment hopefully. It's still paying a good dividend and the share price has stayed up and it would be easy for me to leave it as it is but I think that investment is getting riskier for me.
This is not a good example, because it's a small cap stock. There are quite a few of these old tech small caps with good yield but dying business models. Elek and Eltek comes to mind and to some extent, Venture Manufacturing is in a similar boat although they are trying to change. Singapore tech is a sunset industry because of the cost of doing business and if you don't have much future prospects and are unwilling or unable (due to management age) to reinvent yourself then you simply pay out all you earn until the company goes to nothing. There are high dividends but no growth.

The type of companies for a long term portfolio that you manage passively would be yield stocks that are stocks with decent yields and growth that at least matches GDP growth or inflation. These could be blue chips like bank stocks, SPH, high quality REITs, ST Engineering, Singtel etc. If you are in these types of stocks rather than small caps, you should not have to do anything with your portfolio, should you become demented
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