Why Its Difficult To Have Happiness In A World Of Consumerism?

I have to admit, the title of this blog post sounds a little too depressing isn't it? Consumerism again, isn't it telling me not to spend too much money to have happiness? Why is life so hard? The fact is, life isn't hard if we know the cycle that makes us unhappy. As humans, ultimately what we do in life is to achieve happiness but somehow, we may unknowingly create unhappiness in our lives instead. Have you wondered why some people are happier than others? Let me show you how does this happen.

Happiness can be explained in psychology. The Mazlow’s Hierarchy of Needs is a popular pyramid diagram which explains the different levels of needs of a human being. The higher we go up the pyramid, the more our needs are met which makes us happy. Here's what the pyramid looks like:

There are five levels:

1. Physiological
2. Safety
3. Love/Belonging
4. Esteem
5. Self-Actualization

Cut the long story short, my point in showing you this pyramid is because unknowingly, humans are stuck at only level 2 of the pyramid which is safety. It is especially true in a world of consumerism where money doesn't seem to be enough always. In fact, people in poorer countries who have the basic food and shelter are happier than people in rich countries. 

The first 2 levels of the pyramid are easy to understand. In the first level, food, shelter, water, sleep are our basic needs. Without these, we will be struggling to survive in life. As humans progress, we get into the second level which is safety. Here, we have a job and we have additional money to do the things we like. The key here is safety where we don't have to worry much about life's basic needs. We then move on to having a family and friendships, achieving more in life in our careers, getting respect from others which boosts our self esteem then to the highest level of self actualisation where we could focus on personal growth. 

Why are we always unhappy?

The world supports us in achieving happiness. In rich cities, everything is quite convenient. We don't just have basic food but exotic dining experiences with different theme restaurants and fine dining food. We have safety in the form of good working environments where we can get a job easily. We have the opportunity to excel and achieve something in our lives so we can be proud of and gain the respect of others. All seems well doesn't it?

However, people in rich cities are still unhappy. They rarely get pass the third level of the pyramid. The pyramid somehow seems stuck at the second level which cause us lots of unhappiness. How could this happen?

There are a few things in life that cause us to be always stuck at the second level of the pyramid. Until we realise how these things in life have been affecting us, we will not be able to proceed up the pyramid to get the happiness we want. So what are these things?

1. Going for too much convenience

Let's face the reality, all of us are in debt or will be in debt one day. Some of us get into more debt because of consumerism. Let me give you an example. Suppose we just started working and received our first paycheck. This adds happiness in our lives as we now have food and also safety in terms of a job and a paycheck. Life is good and one day, we decided its time to buy a house. We look at the houses available and want a house more than just for a shelter over our heads. Maybe we want a house where there are facilities and a security guard. This gives us more security and happiness right? Then, we feel that taking the public transport is too troublesome so we buy a car. A car boost our self esteem and even staying in a condominium gains more respect from others. Friends and family members see that we are successful and we get more happiness.

Credit: https://www.flickr.com/photos/jbhthescots/5227664185

The story above all goes well until the pyramid gets chip off at the safety portion. Yes we have self esteem and love/belonging but there comes a problem when we worry about not being able to pay the bills and not being able to provide the basic food on the table because of the high amounts of debt we have to pay every month for the house and car. This instantly drops us back to the bottom of the pyramid and we stay unhappy until situation improves. 

2. Making our life more complicated

Basic food and safety is what makes us happy and progress up the pyramid but we stay stuck and do not progress. We make our life more complicated by going for the latest gadgets and get sucked into the world of consumerism where we feel insecure and guilty after making an impulse spending. This takes away the safety we have and makes us stay unhappy until we get out of it.

No matter how much we earn or how we think how stable our job is, we will always feel the insecurity with too much spending. Spending within our means is ok but overspending quickly becomes a habit which makes our life very complicated. 

Spending Money and Still Be Happy

Some people spend money and feel unhappy, but there are also people who spend money and still are happy. Money can buy happiness but don't allow money to take unhappiness away from you. The key is to spend the money which you have and not the money which you don't have. I have been spending more money and I feel absolutely happy as I know my finances are still in place. I don't have to feel insecure because I spend some money which I don't have. 

Happy or Not comes from our thoughts

On a parting note, our thoughts actually create happiness or unhappiness in our lives. It takes courage to think positive in difficult times. When we see people around us living a good life getting promotions and progressing well in life, we may feel sad at our own lives which has not progressed much. A happy person will take this as a motivation to say I will work harder to progress more and take it as a motivation to improve but at the same time grateful for what he has now. A depressed person will feel lousy about himself and think its impossible for him to have a better life. Same situation but different thoughts lead to different emotions. 

I continue to spend more and live my life to the fullest while progressing in life. Ultimately, our goal is to achieve happiness in our lives so every decision we make (financial or not) should lead to happiness not in the short term but in the long term. Are you making happy long term decisions today?

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Do Not Focus On Investing If You Want To Be Rich

Over the years, I've received many emails from young readers that they want to learn how to start investing. Most will want to invest because they want to make more money or think it will make them rich. I too started with this mindset but I've come to realise that if we really want to grow our wealth, investing should not be the main focus. What should we focus on instead?

Should we focus on budgeting and saving? If we think about it, how much can we save if we scrimp on that $10 a week? Let's do some simple calculations, $10 a week is $40 a month which is $480 a year. That isn't a lot of savings indeed.

How about investing? If we can get 10% return on a little savings of $10,000, it is $1000 a year. Is this a lot of money? Furthermore, 10% investment return is quite a lot and not easy to sustain for the long term.

Don't get me wrong. I'm not saying that budgeting and saving or investing is not important. It is important but there is one key factor which will make budgeting and saving and investing much easier. This key factor is INCOME.

Why is income important? A person who earns $1000 can never save $1000 but a person who earns $5000 can easily save $1000 or more. The more income we have, the easier it is to save money without compromising too much on our lifestyle. A larger savings for investment will make a big difference on our returns on investment. If we invest $100,000, 10% return is $10,000 a year. This is a significant sum of money. Let's compare a person who has $10,000 investment capital vs a person who has $100,000 investment capital:

Year	Person A	Person B
1	$10,000	$100,000
2	$11,000	$110,000
3	$12,100	$121,000
4	$13,310	$133,100
5	$14,641	$146,410
6	$16,105	$161,051
7	$17,716	$177,156
8	$19,487	$194,872
9	$21,436	$214,359
10	$23,579	$235,795
11	$25,937	$259,374
12	$28,531	$285,312
13	$31,384	$313,843
14	$34,523	$345,227
15	$37,975	$379,750
16	$41,772	$417,725
17	$45,950	$459,497
18	$50,545	$505,447
19	$55,599	$555,992
20	$61,159	$611,591
21	$67,275	$672,750
22	$74,002	$740,025
23	$81,403	$814,027
24	$89,543	$895,430
25	$98,497	$984,973
26	$108,347	$1,083,471
27	$119,182	$1,191,818
28	$131,100	$1,310,999
29	$144,210	$1,442,099
30	$158,631	$1,586,309

Assuming person A and B both invest and compound their money at 10% yearly, at the end of 30 years, person A who started with only $10,000 has $158K while person B who started with $100,000 has $1.58 Million. This example shows that our investment capital makes a big difference.

With this, rather than just focusing on investing, wouldn't it be important to focus on our income as well? The more income we have, the easier it is to accumulate a bigger investment capital assuming we are prudent with our money.

The first $100K savings is important. As seen in the calculation above, a person who has $100K compounded at 10% would have 1.58 Million. Even if its just 8%, it would also be close to a Million dollars in 30 years time.

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What Really Is Contentment?

Last week, many of you may have read a Straits Times article about Dr Lee Wei Ling on "More Than Life Than The Pursuit of Happiness". In the article, she said:

" Happiness, in whatever form one sees it, becomes more elusive the harder one tries to pursue it. That's why my personal aim is much more realistic: All I ask for is calmness and contentment. These at least are partially within my control."

In case you do not know, Dr Lee Wei Ling is the daughter of the late Mr Lee Kuan Yew, who's Singapore's first prime minister and minister mentor. Contentment is not easy to achieve in life. But I can see that most people who are contented are happy in life. They don't compare with others, they don't seek happiness from things that are superficial. There is this inner happiness and peace in those who are contented in life. Don't get me wrong. Contentment is not being lazy. It is also not an excuse to not improve or work hard.

Writing a financial blog is not about the pursue of money. It is the pursue of freedom. I have never set myself out to pursue money but its more about learning how to create a system where money grows so that it takes care of itself later on. This lets me have more time for the more important things in life such as spending time with my loved ones and living a fulfilling life that makes a difference. As the saying goes, why work for money if you can have money work for you? Contentment is part of the freedom equation. If we keep seeking more things or more money in life, there will never be an end. We will never achieve freedom even if we work all our lives if we live like this. It is not wrong to be rich but to be blinded by material things will leave us feeling empty.

Anyway, I saw another article written by Dr Lee Wei Ling which is so profound but yet easy to understand. What do we really seek in life? Read on and find out more...

Article written by Lee Wei Ling

In 2007, in an end-of-year message to the staff of the National Neuroscience Institute, I wrote:

‘Whilst boom time in the public sector is never as booming as in the private sector, let us not forget that boom time is eventually followed by slump time. Slump time in the public sector is always less painful compared to the private sector.’

Slump time has arrived with a bang.

While I worry about the poorer Singaporeans who will be hit hard, perhaps this recession has come at an opportune time for many of us. It will give us an incentive to reconsider our priorities in life.

Decades of the good life have made us soft. The wealthy especially, but also the middle class in Singapore, have had it so good for so long, what they once considered luxuries, they now think of as necessities.

A mobile phone, for instance, is now a statement about who you are, not just a piece of equipment for communication. Hence many people buy the latest model though their existing mobile phones are still in perfect working order.

A Mercedes-Benz is no longer adequate as a status symbol. For millionaires who wish to show the world they have taste, a Ferrari or a Porsche is deemed more appropriate.

The same attitude influences the choice of attire and accessories. I still find it hard to believe that there are people carrying handbags that cost more than thrice the monthly income of a bus driver, and many more times that of the foreign worker labouring in the hot sun, risking his life to construct luxury condominiums he will never have a chance to live in.

The media encourages and amplifies this ostentatious consumption. Perhaps it is good to encourage people to spend more because this will prevent the recession from getting worse. I am not an economist, but wasn’t that the root cause of the current crisis – Americans spending more than they could afford to?

I am not a particularly spiritual person. I don’t believe in the supernatural and I don’t think I have a soul that will survive my death. But as I view the crass materialism around me, I am reminded of what my mother once told me:  ‘Suffering and deprivation is good for the soul.’

My family is not poor, but we have been brought up to be frugal.. My parents and I live in the same house that my paternal grandparents and their children moved into after World War II in 1945. It is a big house by today’s standards, but it is simple – in fact, almost to the point of being shabby.

Those who see it for the first time are astonished that Minister Mentor Lee Kuan Yew’s home is so humble. But it is a comfortable house, a home we have got used to. Though it does look shabby compared to the new mansions on our street, we are not bothered by the comparison.

But I personally think the hard times will hold a timely lesson for many Singaporeans, especially those born after 1970 who have never lived through difficult times.

No matter how poor you are in Singapore , the authorities and social groups do try to ensure you have shelter and food. Nobody starves in Singapore ..

Many of those who are currently living in mansions and enjoying a luxurious lifestyle will probably still be able to do so, even if they might have to downgrade from wines costing $20,000 a bottle to $10,000 a bottle. They would hardly notice the difference.

Being wealthy is not a sin. It cannot be in a capitalist market economy. Enjoying the fruits of one’s own labour is one’s prerogative and I have no right to chastise those who choose to live luxuriously.

But if one is blinded by materialism, there would be no end to wanting and hankering. After the Ferrari, what next? An Aston Martin? After the Hermes Birkin handbag, what can one upgrade to?

Neither an Aston Martin nor an Hermes Birkin can make us truly happy or contented.. They are like dust, a fog obscuring the true mean ing of life, and can be blown away in the twinkling of an eye.

When the end approaches and we look back on our lives, will we regret the latest mobile phone or luxury car that we did not acquire? Or would we prefer to die at peace with ourselves, knowing that we have lived lives filled with love, friendship and goodwill, that we have helped some of our fellow voyagers along the way and that we have tried our best to leave this world a slightly better place than how we found it?

We know which is the correct choice – and it is within our power to make that choice.

In this new year, burdened as it is with the problems of the year that has just ended, let us again try to choose wisely.

To a considerable degree, our happiness is within our own control, and we should not follow the herd blindly.

The writer is director of Singapore’s National Neuroscience Institute. And also Lee Kuan Yew’s daughter…

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Related Posts:
1. A generation of instant gratification - The cause of unhappiness

The Why, What, How In Our Journey To Financial Freedom

It has been quite some time since I wrote about financial freedom and more specifically my journey towards it. Over the years, I realised there are many different views towards financial planning. Some would think it is not necessary to plan ahead and don't have to worry  too much about money. Others will think its important to save money and plan ahead. Ultimately, what I strongly believe in is different mindsets will lead to different outcomes.

For example, if a person thinks his retirement will be taken care of by the government or his children, most probably this person will not plan for his own retirement. I would say everyone worries for their own retirement and whether they have enough to live during their old age but how they see that the retirement is provided will determine what they do now. If they think that other people will take care of them during retirement, what they would do now is nothing.

Financial freedom or financial independence is a different form of retirement. It is not about retiring from work and do nothing but its about making the best out of our lives. In essence, it is about living life to the fullest. More often than not, we humans focus on the what and how of our lives. What can we do to make more money? How can we achieve financial freedom? But, before we focus on the what and how, we should actually think about the "why". Thinking about the "why" will give us a sense of purpose and meaning of what we are doing now.

Why do we work? Why do we want financial freedom? Why do we want to live our lives? Knowing the "why" clearly in our minds will steer us in the right direction. If we just know the what and how, we will start to feel emptiness in what we do at some point in our lives.

I saw a video on the why and what we do which will show you why thinking about "why" we do is important. Check this out:

Comedy is "what" I do
You gotta see WHY this video is AMAZING
Posted by Michael Jr. Comedy on Friday, September 18, 2015

If you know your why, your what has more impact because you're walking in or towards your purpose. This made me think about why I started this blog.

For readers who are new to my blog, I actually started SG Young Investment back in 2013. It has been almost 3 years since I started writing. Back then, it was the busiest period of my life where I was juggling between full time work and part time studies for my degree. It took me a long time to decide which course I want to take. I made a decision why I wanted to go back to studies after working for about 2 years. My motivation was not the certification which I would get, it was the things that I could learn during the course of study.

I was interested in economics and doing research. Throughout the course, I had to do lots of research and reading up and also writing essays after essays. I realised my love for writing and started this blog. But, the main motivation of starting this blog is to reach out to more people on the importance of financial planning. I always feel sad when I see people or families who get into financial problems. All these can actually be avoided if we just have a little knowledge and live our lives more prudently. More than that, I actually believe in financial freedom and financial independence. I believe we can live our lives to the fullest and do what we really like. I don't want to live my life doing what I don't like just for money.

That was the essence of why I started the blog. I still hope to reach out to more people and make an even greater impact. What and how I do has more purpose because of the why. Do you know the "why" in what you are doing in your life now? If you are lost in what you do, consider taking some time to think about the why in what you do. You may just find the purpose to live your life to the fullest.

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Does Money Make You Mean?

Money is the root of all evil? I came across a video on Facebook which shows an experiment that was conducted using the game of Monopoly to see whether does money really make people become mean? Its interesting to note how money can really change a person. Watch the video below:

Does Money Make You Mean?
What happens when a rigged game of Monopoly makes some players really rich? Watch the full talk here: http://t.ted.com/TKyFGXE(Created in collaboration with AJ+.)
Posted by TED on Wednesday, November 11, 2015

The experiment shows that having more money does make people become less sensitive to the plight of others. As a person gets wealthier, their feelings of compassion and empathy goes down and their feelings of entitlements goes up. The wealthier you are or the higher your status, the more likely you're to pursue personal success to the detriment of others. This is quite true as what we can see even in work places. Bosses compete and take advantage of employees just to climb the corporate ladder or meet their targets.

But, there can be changes to this by reminding people on the benefits of cooperation instead of competition, or the advantages to community. This can make wealthier individuals more empathetic in this world. Its a good reminder to us as we earn more money or climb the corporate ladder in our own lives. Its not about chasing money but creating value in the world. That's what I believe.

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Do You Like Your Life? - Appreciate What You Have

Just a few days ago, I saw a comic series on 9gag which to me was surprisingly quite meaningful. 9gag is known for its just for laughs material and some don't really make sense. But this particular comic they shared is certainly not just for laughs. It's titled: "Appreciate what you have".

In life, a lot of people are unhappy. We're unhappy we have to work, we're unhappy we have not enough money, we're unhappy that we can't be better than others. Let me bring you back to the days when you were still a student and let's see what made people unhappy and unappreciative of what they have.

When you're just a student, you probably don't have much material possessions and at that time you hope you'll be able to grow up faster and start earning your own money so you can buy the stuff you like. You may envy others who come from richer families and when your friend shows you the things their parents bought for them, you also wanted it and go back home to try and ask your parents to buy for you.

After you graduate from school and start working, you were initially excited about working and earning your first pay check. However, as time goes by, you start to dread work and the money doesn't really motivate you anymore. You wake up unhappy going to work every single day not knowing that there are other people out there who want to work but don't have a job.

You go to work taking the public transport and one day you missed the bus and will be late for work soon. You get frustrated and thought how good if you had a small car which you can drive around.

Soon, you earn enough money to afford a small second hand car but the air con breaks down a lot of times and its not as comfortable as it seems. You look at the car beside you and thought how good if you can afford a new car.

After a few years, you bought your own new car and am happy with it. However, one day, you see another bigger car beside you and thought how good if you can own a bigger car which is more comfortable. Your car seems to be a little small and squeezy.

Indeed after another few years you manage to buy a bigger car. You feel comfortable and happy. However, one day, you see a very nice car just beside you. You thought cars are not just meant to be comfortable. Its meant to be nice too so it shows your status. Your car seems to be a little dull and boring.

And really, after a few years, you bought that nice, beautiful, comfortable car of your dreams. Then, when you think you won't want more than that again, you got stuck in the same traffic jam and thought how good it is if you can own a helicopter.

Helicopter? How is it possible that someone will be not satisfied to the extent he wants a helicopter for transport. Well, it has happened all over the world before. There are people who own their own helicopters and private jets to travel.

And now, here's the comic from 9GAG. Do you appreciate what you have in life? Being grateful can certainly make our lives happier. Remember while we are enjoying the small pleasures of life, there are other people who are less fortunate than us.

Photo Credit: 9GAG

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Passion or Discipline? What Makes A Person Successful?

What makes a person successful? Some say its passion, some say its discipline. What do you think?

Passion to me is when we love something we do, its a feeling we have that keeps us going. Passion however, can get us out of hand sometimes. Feelings makes us emotional and can't think rationally. We may end up doing crazy things because of passion and end up causing our health to suffer. When we like something so much, we sometimes can be obsessed with it to a point when we are willing to give up everything for a cause.

Discipline on the other hand is building up habits in our lives. We brush our teeth everyday not because we feel passionate about it but because we build up discipline or habits for it. We know what's important in our lives and take care of our health by eating healthier, sleeping well etc. We build up habits to save money not because we are passionate for it but because we know it is important for our future.

Now, which is more important? Passion or discipline? In life, I think we need some passion and also some discipline. Let me explain why. Imagine if you're passionate for something and you don't eat or sleep just to do that thing you're passionate for. Is this even sustainable in the long run? You may end up lying on the hospital bed even before you could be successful. On the other hand, if you just have discipline only and not passion, then your life is just a routine without any feelings.

Having both passion and discipline is not easy. We may have found our passion but do not have the discipline to make sure we balance our lives by sleeping enough, eating well etc. We may have discipline but will find it boring if we do not have passion in what we do. Blogging has been a passion to me. But I make sure I do not get so obsessed with it that its the only thing in my life. I still work because blogging doesn't give me an income to sustain my lifestyle. I still have my own social life and take care of my health. It actually takes both passion and discipline to write on my blog.

Discipline can be trained. It takes effort to build up good habits. Habits of saving money, habits of eating healthily and habits of sleeping well can be trained. This is the first step to sustain us for life. However, passion cannot be trained. We cannot force ourselves to like something. When I was young, I had the opportunities to explore the artistic side of me such as arts and music but I did not have the passion for it. I've seen people who are so passionate for arts that they spend hours upon hours drawing or practising their skills. This is just not me.

Passion has to be searched. It comes from the heart. When we find it, we will know it in our hearts. Its that simple, just search your heart and take time to listen and think about your life. Without passion, our life feels meaningless. With passion, we still need discipline to make sure it is sustainable. Find your passion, train your discipline. Life will be more meaningful and sustainable as a whole. Success is not measured by how much you have but by how much you have lived your life as a person.

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The Real Purpose Of Financial Freedom

Financial freedom is a word that's widely used and maybe misused. Some of us may think financial freedom is all about money. Why do we invest? Why do we want to save so much? Why do we want to keep having more money? It seems like those who pursue financial freedom is always focused on money. Isn't it bad for life? Shouldn't we just enjoy life and not think too much about money?


What is Money? Why Financial Freedom?

Before we can answer the question of the real purpose of financial freedom, we have to understand what exactly is money? Money in short is actually just a medium of exchange. We need it to buy goods and services. In layman terms, we need it to live our lives and to provide for our families.

As kids, we have lots of dreams and most of it has nothing to do about money. When a kid says he wants to be a doctor, its not about the salary he will receive. Its always about the people he can help and the lives he can save. A kid doesn't have to worry about money because money is taken care of by his parents. He can really do the things he like and pursue his dreams.

Credit: https://www.pexels.com/photo/red-sun-purple-dream-2220/

When money comes into our lives, when we have the responsibility to earn it for our own survival or the responsibility to provide better lives for our families, somehow we get lost in the world and lose our dreams and passions in life. We ask ourselves what are we working for? What are we living our lives for?

We get unhappy and pursue all kinds of funny things in our life. Funny because some of us will regret later and think why did we even pursue useless stuff in our lives in the first place? There are a few motivations even to these two popular words called financial freedom. Financial freedom can also be pursued in a wrong way.

Financial Freedom To enjoy life?

One of the motivations to financial freedom i've heard is that one can enjoy life once he reach financial freedom. He can travel around the world, buy the things he likes and really live the life he desires. More often than not, financial freedom is linked to a luxurious life of property and cars. Financial freedom is often said to be the state where we don't have to work and still live the life we desire. Desire is the key word here.

Do we desire a life of luxuries? Do we desire a life where we can buy anything we want? However, the key question is so what if we have reached that stage when we can afford anything we want without working? Is that all to life?

Financial Freedom To do nothing?

The second motivation I've heard regarding financial freedom is that one can do nothing and have the freedom not to work when we reach financial freedom. If we hate working and don't like our bosses or colleagues, this seems like a good idea. However, to do nothing when we reach financial freedom is really just meaningless.

Many people hope that one day they don't have to work, don't have to wake up early or face the demands of their boss or the office politics. But, when that day finally comes when we don't have to work, it starts to feel that life is just too boring. We start to feel disconnected from the world, disconnected from people and lonely. This doesn't seem like a good financial freedom life.

Financial Freedom To spend time with our loved ones and pursue our passions

The last and most important motivation for financial freedom to me is that we can spend time with our loved ones and really pursue our passion. If we have kids, we can spend more time to nurture them to be better people. We can give more love to our family by spending time with them.

At this stage, we don't have to work for money anymore. We go to work because we really like our work and not because we have to work. When this happens, we become more motivated at work because we work for passion and not as a chore.

The most important reason for financial freedom is we can become like kids again, having dreams without worrying about the money aspect. We can fulfil our passions without having to think will this work that we do bring us enough money to provide for our family?  We can do meaningful things in our life.

If we get money out of our lives, we can do the more important things in life. That is the purpose of financial freedom. It is not for us to just enjoy life or do nothing but rather for us to lead a more meaningful life. Would you rather be a slave to money or a master of money? Slaves work for money while masters let money work for them. We can choose the path we take which leads to different destinations. altogether.

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Dream - Having a Purpose For Your Life

Throughout my past 2 years of blogging, I've received emails from several young people who want to take the first step to learn and change how their future would be. Some come from poor family backgrounds where they are worried even for their parent's retirement. It is heartening to see people taking charge of their finances because they care for the people around them. Money is never just for ourselves but its to provide better lives for our loved ones.

Having dreams is important as it gives as a sense of purpose in life. However, dreams will only stay as dreams if we do not take action. Most of us would have been motivated before to take action in one way or another through conferences, books, people etc. Here's a video that I saw which I hope will motivate those of you who want to find a purpose for your life.

"Someone's opinion of you doesn't have to become a reality. That you don't have to go through life, being a victim. And even though you face disappointments, you have to know within yourself that I can do this, even if no one else sees it for me, I must see it for myself."

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Spending on Luxuries The FIRE Way

Leave the boring retirement topic behind for now. Life is meant to be enjoyed and we should live it to the fullest. Why save so much in our early days and live a miserable life only to find that we still do not have enough money for retirement?

Yes, it is happening even in Singapore. People who scrim and saved in the past still do not have enough for retirement. This somehow prompted young people to spend all their money since they see that even if they save money, they would still not have much money anyway.

You see, the problem above can be explained mathematically. If you earn $2000/month and save $1000, will you have a lot of money? You may be saving 50% of your salary which is a very good thing but if we take the $1000/month savings and fast forward it to 30 years later, it is only $360K. Does it seem like a lot of money to you? It sure doesn't seem like a lot to me 30 years from today.

Therefore, even if we save 50% of our income but have a low income, its not going to make a lot of difference. However, this can be solved by a simple solution. Before we go into the solution, let's understand a new term which I came across recently called FIRE.

Credit: http://hummingbird88-stock.deviantart.com/art/BBQ-Fire-Stock-12-104756855

What is FIRE?

FIRE in its full form is know as "Financial Independence, Retire Early (FIRE)". It is a concept which has been discussed and expanded on by some financial bloggers in the west.

Gaining financial independence and retiring early cannot be done through savings alone if our income is too low. We can enjoy some luxuries and still gain financial independence and retire early. How do we do it?


You can spend on Luxuries the FIRE way

How do we reach FIRE status and still enjoy luxuries? This can be explained using a simple mathematical illustration. Let's go back to the example of saving $1000 with a $2000 salary. In this case, we only have $1000 to spend per month and still end up with only $360K savings 30 years later.

If we increase our income to $4000/month and save the same 50%, we would be able to save $2000 and end up with $720K 30 years later. It doesn't end here, the good news is we can spend $2000/month now instead of the $1000/month previously and still have more money 30 years later.

If you did not manage to understand how the above mathematical illustration works, read it again. I'm going to expand on a deeper concept below but you must first understand the concept above. Once you're ready, let's continue.


Spending on Luxuries and still save 100% of income

The road to financial independence or freedom is not about living a poor man's life now so you can be a rich man later. Yes, saving money is important but the truth is we can't save much from scrimping on the little things. What we need to do is to focus on increasing our income but at the same time make sure we do not overspend above and beyond our means.

Many years back while I was still a student, I came across a concept which said "if you want to enjoy luxuries, create the income for it". This income should not come from our main employment but from secondary sources (aka passive income). For example if we want a car and the monthly cost we have to pay for it is $1000/month for a certain number of years, we should create a secondary source of income to fund it. That's not all. Once the secondary source of income is created, it can be permanent and even after fully paying for the car, we still have that source income coming in every month. Now we got the car AND the extra income.

That was such a powerful concept that it stuck with me to this day. Now the question is, how do we create the secondary source of income?

There are a few ways to do it:

1. Create secondary income through properties

Investing in properties and renting out is one of the most common ways to create a secondary source of income. Many people in the world do that. The best thing about investing in properties and renting out is your tenants pay for the property and at the end, the property belongs to you. Not only do you get rental cash flow every month, you own the asset too.

However, the problem with investing in properties in Singapore is the high cost involved. Buying a private property cost more than $600K to $1 Million dollars. With a 20% down payment rule, this would set us up to more than $100K in upfront capital. This would not be easy for young people who just started out in their careers but is definitely a consideration when we have more money.

2. Create secondary income through stocks

Investing in stocks will give us a secondary income stream through dividends. REITS can be one popular way to get passive income. A REIT, also known as a real estate investment trust, has a portfolio of properties which they rent out to collect income. Buying a share of the REIT makes you a shareholder of the many properties that it has. For example, if you buy the shares of Capitamall (renamed capitalandmall) or Suntec, then you actually become a shareholder and own part of the shopping malls you see at City Hall, Tampines, Jurong, Woodlands and many other parts of Singapore. Some of these Reits have properties in other parts of the world too.

The rental collected is distributed to all the many other shareholders and each will receive a portion of the income according to the number of shares they own. Reits listed in Singapore typically pay a range of 5-8% in dividends. If dividend remains constant, the lower the price you buy a share of the Reit for, the higher the expected dividend yield will be. The best thing is you don't have to manage the property to get the rental. The Reit manages it for you.

Besides REITS, we can also consider stocks of other companies to invest. You can read the below 2 articles on stocks investing:

How to pick stocks (Part 1) - Economic Moats
Buying the company on the streets (Part 1) - Discovery stage

3. Create secondary income through your talents

Finally, we can create secondary income source through our talents. I always believe that everything we do, even if its just a hobby, can be turned into a potential income source. Do you like craft making? Maybe you can make some of your own products to sell. There are just so many other possibilities which we can explore on. Think about what you are good at and think about how you can create value for someone out there through it.

One thing to note is don't focus on making money first. Focus on adding value or providing good service in whatever you want to do. As a result of adding value, the money will come later.


The End Result

Let's go back to the example of the $4000/month income. After saving $2000, this leaves us with $2000 to spend. If we manage to create an additional secondary income source of $4000, we now have $6000 to spend and still have $720K at the end of 30 years. In the end, we may not even spend all the passive income which would mean we can possibly retire with more than a million dollars without having to forgo all luxuries.

Its time to take action if we want a better future.


Epilogue - Do you really love luxuries?

Last year September, I wrote a post specifically on luxuries. I shared my experience of luxuries and also said the following:

"You see, luxuries can be a drug. It is addictive and there will be problems when over consumed. Remember the first time when you took a sip of good coffee? What was the feeling like? You do feel a boost and feel more awake as what coffee will make out of us. But those who drink too much coffee will always say that coffee doesn't have an effect on them any more. They are numbed to the effect of it. Similarly, if luxuries are consumed on a daily basis, it loses its effect which is suppose to make us feel good.

When luxuries loses its effect, you'll never be satisfied or happy no matter how much you have. It then becomes an addiction to seek even more luxuries where people are willing to borrow money to indulge in it. Over borrowing for a car or a condominium more than what you can afford are signs of over dependence on luxuries to make you feel happy. Some even borrow to travel luxuriously, borrow to buy branded goods. The list goes on." 

You can read the full post here and find out what luxury I experienced: Your Perspective of Luxury and an Experience. Now, do you really love luxuries?

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How Delayed Gratification Can Determine Success or Failure?

The keys to success have finally been revealed by just one experiment done by psychologist Walter Mischel in the late 1960s to early 1970s. Walter Mischel was a professor at Stanford University. In the experiment, a child was offered a choice between one small reward provided immediately or two small rewards if they waited for a short period, approximately 15 minutes, during which the tester left the room and then returned. (The reward was sometimes a marshmallow, but often a cookie or a pretzel)

If you're still confused on how the experiment was done, watch this video and notice the reactions of the kids in the experiment:

See how the kids really struggle very hard to resist the temptation of eating that one marshmallow just to get another one if they wait patiently.

Some parts of the video were really funny looking at the kids faces of how they wait patiently.

The Results of the Experiment

In follow-up studies, the researchers found that children who were able to wait longer for the preferred rewards tended to have better life outcomes, as measured by SAT scores, educational attainment, body mass index (BMI) and other life measures. Those kids who were able to wait patiently were more likely to succeed in life. There is certainly a positive correlation between delayed gratification and success.

Delayed Gratification for Financial Success?

Now comes the point which I want to bring across. Having delayed gratification will result in financial success as well. Think about it, if we really can delay gratification and resist the temptation to spend money, we would have more savings. We would not unnecessary get into debt problems as well.

Also, having delayed gratification may mean we have the patience for investing and not the greed of wanting to get rich quick. We're less likely to burn our fingers in the stock market and less likely to fall into investment scams. It seems like there are so many benefits of delayed gratification.


Does it mean that people who are not able to delay gratification are set for failure? 

Looking at all the benefits of delayed gratification, we may wonder what if we are not able to delay it? Are we set for failure? While there are positive correlations between better life outcomes and delayed gratification, this does not mean those who cannot wait will be forever labelled as a failure. Delayed gratification can be taught and the process can be changed completely. How do we do it?

In a further experiment, the kids who were not able to wait for the second marshmallow were told to imagine that the marshmallow on the plate has a frame surrounding it. They were told that this is just a picture frame and it is not real. After this imagination process, researchers found that those kids were then able to wait patiently for the second marshmallow which they were not able to do so at first.

But you may ask, how do we apply it into our financial life? From the above example of imagining that the marshmallow is fake, we could similarly imagine that our money is fake or is not there. We must also remember that if we do not spend our money now, we will get more money later when we invest. One practical way I can think of is to transfer our money to a separate bank account and invest it prudently. We are doing a real life marshmallow test for ourselves now.

Try the real life marshmallow test on yourself and see what happens.

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Never Be Complacent - Lee Kuan Yew in the 1970s

This whole week, Singapore seem to come to a stand still as the nation mourns on the passing of our first prime minister Lee Kuan Yew. The scenes were touching, the support unwavering and the unity is strong. Everyone came or is still coming to express their gratitude in one way or another.

How could one man's death have such a huge impact on a country and even impacted the international realm as well. Former U.S president, Bill Clinton, will be coming with a few other US officials to attend Mr Lee Kuan Yew's funeral service on Sunday. Why did so many people respect him so much?

Photo Credit: Remembering Lee Kuan Yew Facebook Page

This whole week, most of the usual TV programs on all Singapore's media channels were cancelled. Instead, they broadcast documentaries of Singapore's history and how Mr Lee Kuan Yew brought Singapore to this current stage. I've been watching some of these programmes and just a few hours ago, there were a broadcast on Mr Lee Kuan Yew's various speeches from the 1950s all the way to the 1980s. From those speeches, I could really sense his heart for Singapore and his concern for the people of Singapore.

So many people have came to queue up just to pay their last respects to him. People are queuing up for up to 10 hours just to personally pay their respects to him. This is really amazing.

Photo Credit: The Straits times

His Worry For Singapore and it's People

A few issues were brought up in his speeches. Low birth rates and low marriage rates were among the problems that had to be resolved. In 1975, 10 years after independence, there was also complacency seen in the people of Singapore. Life was better, spending habits have changed where people are spending more money. He was worried that parents would pamper their kids too much and spoil them in the process. In 1975, he urged the people not to be complacent and not pamper their kids too much just because they could afford it.

Every year from 1975 onwards, he keep rallying the people of Singapore together and reminded them how far they had come. He keep asking the people of Singapore not to take things for granted as they could lose all these in a very short time. In the late 1970s, he said the current generation have not experienced an economic crisis before but they will experience it soon in the 1980s. He warned and prepared the people for it. I guessed such reminders were taken to heart by Singaporeans back then as Singapore grew even stronger after the crisis.


The Most Touching Speech in 1980

The most touching speech I saw was a PAP rally in 1980. This was the scene which most of us would be familiar with where Mr Lee Kuan Yew said

"This is not a game of cards, this is your life and mine. I've spent a whole life building this and as long as I'm in charged, nobody's going to knock it down". 

What I did not know was what he spoke before this familiar scene. I was watching the whole 20 mins rally and realised he was speaking in the rain.

The rain got heavier and heavier and he was wiping the rain water off his face with his hands as he was speaking. His shirt was all wet. The people who were listening to him speaking still stayed on listening to him in the rain. The other PAP members sitting behind him were in the rain too without umbrellas. Their shirts were also wet and throughout the whole speech, I could see those PAP people behind him also wiping the rain water off their face and some took off their glasses to get rid of the rain water. This was the kind of government which Lee Kuan Yew led and the kind of people we had who could endure and stay united together.

Below is the video of the whole speech. The particular scene is towards the end of the video:

A Frugal Man with a Simple Life

Apart from the firmness and ruling with a iron fist which we know, Mr Lee Kuan Yew was actually just another simple man with a simple life.

I read on the New Paper yesterday that his frugality was well known in Tanjong Pagar where he served the residents for the last few decades.

I quote: "He maximised all resources available and there was never any wastage. Where there was no need for resources, he would never put any there." 

Mr Lee also lived in a modest home. His house is still filled with olden days items dated back to the 1970s and the house remains largely unchanged as compared to the multi-million dollar, multi-storey bungalows that sprang up around it.

You see, a man with great stature and still lives humbly shows that he doesn't need to prove anything. He has got no need or desire to show off what he has achieved. Yet, he has gained the respect of many by staying humble and passionate for a good cause.


The Love Of His Life

As we all know by now, Mr Lee Kuan Yew loved his wife a lot. The death of his wife a few years ago was devastating for him. When his wife was bed ridden but still conscious, he would read to the love of his life every single day. Defence Minister Dr Ng Eng Hen said when he was travelling overseas with Mr Lee Kuan Yew for official duties, he still never fail to call back to his home and read to his wife everyday.

Below shows a very touching video of the soft truth of Mr Lee Kuan Yew:

What Can We Learn?

It is heartening to see so many people showing their gratitude to a man whom they may have never even met before. The once often negative landscape of the social media has transformed into a place where people show support and gratitude. I'm sure we are much happier when we think about how fortunate we are to live in a country of peace and prosperity instead of complaining and sinking down into negativity. 

After studying economics in university, I know a country's success or failure does not come by chance. It is the deliberate planning and policy implementations which made Singapore to where it is today. We should never be complacent and take all these for granted. The future of Singapore will depend on all Singaporeans, whether we are still united and stand together as one people and one nation. A divided nation can never survive long. 

The reason why we can live in harmony with each other is because an identity has been built painstakingly by our founding father, Mr Lee Kuan Yew. We should never lose this Singapore identity and I'm glad that we are showing the whole world the strength of our unity at this current moment. May Singapore be an ever greater nation for many generations to come. 

Rest in peace, Mr Lee Kuan Yew. 

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Finding Your Passion and Keeping It Alive

Life is a journey and will always be a journey. I was chatting with a few colleagues during lunch and somehow we realised how fast time has passed. Time lost can never be rewind back. Do we want a life that is mundane and just work for money or do we want a life where we can find a purpose for?

Image Credit: pixpirations.com

In the current world we live in, everything revolves around money. Without money, it is very hard to get married and start a family. It is also very hard to buy a house without money. Passion on the other hand does not focus on money. It is what we do because we want to, not because we have to. Can we still pursue our passion and at the same time still have the money to survive in this world?

Financial planning is important and my blog, SG Young Investment, is a blog about finance and money. However, if you've been a reader of my blog all these while, you would know that I do not subscribe to the chase after money lifestyle and materialism. This blog is about finding your purpose in life and freeing ourselves from the slavery of money through financial intelligence.

Let me share with you some ideas on finding your passion and keeping it alive in this new age that we live in.

1. Search Your Heart

Passion lies deep in our hearts. It may have been there since our younger days. Search back your heart to the days when it was still innocent. What did you want to do when you grow up? What do you really like doing as a child? It can be you like to help people since young so now you may be a councillor. It can be you like challenges since young so now you may have your own business. As with all matters of the heart, you'll know it when you find it.

Another thing to look at is to search for the distinct talents which you might have. Some of us may be good at analysing. Some of us may be more creative than others. Some of us may relate better to people. No matter what, all of us will have talents in our own unique ways.


2. Discover Your Passion by Stepping into It

Many of us like to think through life and imagine how good it would be if we were to live in it. However, you would never know the true feeling of being in that life unless you take action and step into it. To discover your passion, take small steps to try out and expose yourself to what you like. You don't have to do it full time and quit your job. You can do it during your free time while still working.

I started this blog back in 2013 out of a passion to write on financial matters. I did not quit my job and in fact was still pursuing my degree on a part time basis while working full time. I was writing articles on my blog and at the same time writing thousands of words for the many essays I had to submit in University. Even after writing more than 30,000 words in University and more than 250 articles on my blog, I'm still at it now. This was how I discovered my passion by stepping into it.


3. Meet up with Like-Minded People

Once you've discovered your passion and step into it, chances are you'll meet like minded people too. However, it still takes a conscious effort to build up friendships along the way. Our time is limited and we can only choose to spend quality time with that many people. Setting priorities and managing our time well is crucial at this stage to keep the passion alive.

For myself, ever since I started writing on financial issues, I've met many other financial bloggers, financial professionals and even people from various government ministries who are into financial education. Right now, every week I'm meeting new people and each time my passion for financial education is boosted. It is heartening to know that there are many other individuals out there who want to spread financial literacy to make our world a better place.


4. Integrate and Make the Passion Part of your Life

Doing what we like for the rest of our lives is a dream for many of us. Transitioning from pursuing your passion part time to full time is a conscious effort. Sacrifices have to be made. There are businessmen who found their passion in the F&B industry and started their own food business. You may have heard of the tough times these businessman went through but they kept going on. Passion keeps many of them going.

You can also find passion in the job you choose to work in. Not all of us have to start businesses. I've seen people who are so passionate in their job that it becomes part of their lives. Teachers can be passionate in teaching and find joy in seeing their students succeed in life. Nurses can be passionate in serving their patients and seeing them recover well. Chefs can be passionate in serving good food to the diners.

When we're passionate about what we do, we become so good at it that it can attract opportunities and people are willing to pay a higher price for our services. At this stage, money doesn't become a problem then. This is where we can say: "This is not just what I do but who I am."

Have you found your passion yet? If you have, you should be on track to a meaningful life. If not, continue searching and don't give up. I'll leave you with this quote to end of this post:

“If you say that getting the money is the most important thing, you'll spend your life completely wasting your time. You'll be doing things you don't like doing in order to go on living, that is to go on doing thing you don't like doing, which is stupid.” 

― Alan W. Watts

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Your Love Relationship and The Stock Market

Do you remember the last time you fell in love with someone you like? What were the emotions you experienced? You would probably feel excited but at the same time tensed. You may even feel happy but at the same time think how can this be real? Some people say relationships are only exciting during the so called honeymoon period and  becomes less exciting and more comfortable after some time. So how do all these relates to our journey investing in the stock market?

The stock market is full of emotions. It is more complicated than a love relationship between 2 person and even more complicated than a love triangle situation. The stock market is made up of emotions of hundreds of thousands and even millions of people. How does it look like in a chart?

Credits: myenticingjourney.wordpress.com

There are so much emotions as you can see from the chart above. Its like an emotional roller coaster ride. Every investor will go through the stages of excitement, thrill, fear, panic, hope and optimism. Let's take a look at the stages a new investor would probably go through:


1. Excitement

Credit: www.flickr.com

Most new investors who want to start investing would start with excitement. Its like they really fall in love with the stock market. Out of the people I met so far, I've never seen anyone who starts investing without feeling excited. However, when there is excitement, most would forget that they need to be logical as well. This happens in a love relationship as well. It seems like when we fall in love, we forget all about our brains.


2. Thrill

This is the so called honeymoon period in a relationship. The thrill to meet one another everyday. The thrill to talk to one another everyday. This emotion is much more exciting than the excitement phase. For investing, new investors get the thrill when they make some money from the stocks they buy. The stocks start to go up and they see their portfolio increase from $100 profit to $1000 profit to $10,000 profit. This is the thrill which is very real.


3. Fear

Credit: http://commons.wikimedia.org/wiki/File:Scared_Child_at_Nighttime.jpg

Thrill and excitement dies off after awhile for most of the events in our lives. The dream job which you thought would last you for the next 10 years becomes boring after just 1 year. The excitement and thrill of owning that new gadget dies off after awhile. The thrill of a new relationship becomes more comfortable and mundane after sometime when you realise that your partner may not be that perfect. This is the real test for us. For investing, the stocks you bought is losing money. It does not seem as perfect as what you imagined it to be. Now you might be thinking, should I sell or should I average down and buy more? It is very hard to make a decision when you have fear.


4. Panic

After fear comes panic where we make rash decisions. For love relationships, we may end up quarrelling and breaking up. There are lots of hurts involved when we make panic decisions. For investing, we lose so much money that we just sell the stocks away, not thinking whether is it the right thing to do?

In relationships, you'll realise that there are no perfect people out there. In investing, you'll realise that there are no guaranteed money making stocks out there. This is the stage where we really need to calm ourselves down and think carefully on why we started the relationship or invested in that stock in the first place? The partner you chose to be with may not be that perfect now but he or she is probably the same person whom you first knew. The stocks which you bought may be going down a lot in price but it may still be the same company which you know is strong. The fundamentals may still be good.

If you calm yourself down now and make the right decisions, you may realise that the partner you have is still good and you can invest more time and fall in love all over again. If you think that the stocks you bought seems to be still fundamentally stable, you can invest more and average down the price.

On the other hand, if you've thought about it carefully and think that the situation is different from the first time you encountered, then you should cut loss and move on. This applies for both relationships and investing in the stock market.


5. Hope and Optimism

If you've made the right decisions in point 4 above, then hope and optimism comes into your life. Your relationship with your partner becomes stronger now as you put in more effort for it. The investments you average down is going back up and you start seeing profits.

Credit: www.flickr.com

There are also times when we have to cut loss for our investments. If we know we invested for the wrong reasons in the first place or we are not sure why we invested in that particular stock, cutting loss will let us have a new beginning with clearer direction for our portfolio.

For relationships, sometimes a break up may be inevitable if both are really not compatible. In this case, its better to move on where there will always be hope for a better future.

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