The Veiled Threat of Inheritance

This is a non-investment post.  Sharing an incident that happened in my life recently.

My wife and I were visiting my parents-in-law during the New Year.  My parents-in-law are a classic rags-to-riches story of the Merdeka Generation.  After graduation from NTU with an Accountancy degree, my father-in-law (FIL) started work as a property manager, earning a paltry income.  It was after he headed to China to work for a Singapore conglomerate, that his income improved significantly.  Over the decades, he managed to save a considerable sum of money.  My mother-in-law (MIL) did not complete her secondary school education, but has a knack for savvy property investment.  She took the saved money, invested in local real estate during the boom years and grew it multiple fold.  At present, my parents-in-law are sitting on net assets worth over 3 million dollars.

After exchanging pleasantries, my MIL popped a question to my wife out of the blue: is she (my wife) willing to accommodate my FIL to live in our HDB flat?

Now, my wife and I know this is a hypothetical question.  This scenario will never occur, unless my FIL is bedridden and my MIL passes away.  My MIL had commented once that she cannot tolerate our 'stingy' lifestyle.

My wife is a millionaire herself, much richer than me.  She has worked hard since graduation and saved every cent, never wasting it on frivolous stuff.  My wife has a stubborn streak, and is defiant against spouting 'sweet words' that she does not mean in her heart.  Even though filial piety dictates us to say "yes", we are well aware of the limited space in our HDB flat, and the inconveniences which will result in conflict.  So my wife tersely replied my MIL with a flat "NO".

What came next was expected, typical of a family drama.  My MIL responded with a barbed comment, telling my wife not to expect much from her share of the inheritance.

My wife and I have never dreamt of getting any inheritance from our parents.  We firmly believe in self-reliance and striving for our own goals.  There is satisfaction in exchanging honest effort for reward.

Being an outsider, I was not in a position to comment.  So I pretended to be reading my book, seemingly not paying attention, even though I heard every word of the conversation.

A few days later, my wife and I discussed the matter.  We agreed that our kids should NOT look forward to getting an inheritance from us.  They should work hard for their own financial future.

All through these years, we have told our kids that we are an average middle-income family.  Nothing in our daily habits betray any hint of our affluence.  We always advocate prudence and frugality when making lifestyle decisions.  Our kids have grown up in the HDB heartland eating hawker food, taking public transportation and wearing non-branded hand-me-downs.  The sole exception is our annual family holiday overseas.

My concern is whether my kids will morph to be 'revenge spenders', who splurge every cent of their salary in their adulthood, as they recall a sense of 'deprivation' in their childhood.  (I hope not!)

My wife and MIL are still on talking terms.  But when inheritance is a veiled threat, the harmony in the family can become broken.  Have you ever encountered a similar situation before?

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To Invest, Start With Lunch

This is a non-investment post.  Sharing a sneak peek on my life.

Working in the Central Business District has its advantages and disadvantages.  One advantage is that transportation is convenient, since it lies in the heart of the city.  If you like crowds, you will always find a lively atmosphere here during the daytime.  Just visit Raffles Place.

One disadvantage is that things tend to be expensive, for example, food.  Eating at a restaurant costs no less than 10 bucks.  Even takeaways cost north of 6 dollars.  For me, I usually take a walk to Hong Lim Food Centre at Upper Cross Street.  There is a particular economic rice stall that I usually patron.

This is my lunch for today.  Four dishes and rice cost only $3.60.  What a steal!

I usually bring my tupperware to pack lunch so that I can skip the Styrofoam box and cut down on environmental waste.  Additionally, I bring my mug to another stall to get my kopi siew dai.  It is my lunchtime fix, and it costs $1.  Yup, Starbucks doesn't get my business.

Overall, I spent $4.60 on my lunch, and I thoroughly enjoyed the food.  I repeat this routine daily.  On rare occasions when I meet up with my friends, I will be 'generous' with myself on spurging more for good food amid good company.  No reason to be Scrooge all the time.

I believe my minimal lunch expense is one reason why I can save a significant portion of my salary for investment.  Do your daily habits support or detract you from achieving your financial goals?

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Buy Now, Pay Later for Groceries

I was reading through Bloomberg Businessweek when I came across an article titled, "Americans Go Deeper Into Debt as They Use Buy Now, Pay Later Apps for Groceries" [link].

My impression of BNPL is that it is typically spent on clothing, fashion accessories, electronic gadgets and the like. But this is the first time I've read of people resorting to BNPL for grocery supplies. This speaks volumes of the dire straits that some people are currently facing.

Unlike clothing and consumer products that may still have some residual resale value, there is none for groceries since they are meant for literal consumption. One is getting into debt just to put food on the table.

In Singapore, we have government financial assistance for families living at the poverty line. There are also welfare organisations that provide needy families with help. Admittedly the support is targeted and some families, while barely making ends meet, may not qualify, or the amount isn't enough. Hence, BNPL and payday loan may appear as attractive alternatives.

According to Investopedia, BNPL volume could exceed $3.5 trillion by 2030 [link]. From what I understand, there are lower hurdles to getting BNPL financing compared to credit cards.

I hope the BNPL culture does not spawn another debt crisis in the future.

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Mortgage takes a bigger bite of my income

CNA published an explainer last evening about how the U.S. Fed interest rate hike impacts mortgage rates in Singapore [here].

This brings to mind a letter I received from DBS a few days ago. The bank wrote that in view of the increase in their FHR6 (6 months Singapore Dollar fixed deposit interest rate), they will be raising my mortgage rate from 1.00% to 1.55% p.a. accordingly.

My first reaction was, "Yikes."

I know the Fed had hiked Fed Funds Rate (FFR) by 50 basis points in May, but DBS is raising their FHR6 by 55 basis points???

I can imagine getting more letters from DBS in the remainder of the year, as the Fed had just hiked FFR by 75 basis points in June, and is committed to do the same in their July meeting if required.

This spurred me to reach deep into my email inbox and retrieve the details of the repriced mortgage package which my wife and I signed with DBS in September 2021. Back then, our mortgage lock-up period was expiring, and DBS strategically sent us an email with an attractive repricing offer.

The offer was a fixed rate package tied to FHR6 in stepwise increment for first three years. FHR6 + 0.80% p.a. for first year, FHR6 + 0.85% p.a. for second year, FHR6 + 0.90% p.a. for third year and FHR6 + 1.00% thereafter.

But what got me to sign on the dotted line was a feature that DBS offered:

The bank promised to cap the maximum interest rate at 1.60% p.a. throughout the first three years.

Looking at the inflationary enviroment today and the central banks' aggressive posturing, I am glad I have gotten the deal.

Mortgage servicing is due to take a bigger bite out of Singaporean households' expenditure. A 1.00% increase on a $500,000 mortgage means an extra $417 per month to the bank.

That is $417 which could have been spent on a nice staycation, a new kitchen appliance or an investment course.

Or if you are a glutton like me, that is $417 which could have been spent on restaurant meals.

$417. Each. Month.

My wife and I are dead set to repay the full mortgage at the end of the three-year lock-up period. That will be one heck of a milestone for us.

In the interim, time to 'take revenge' by investing in bank stocks. DBS itself is starting to look attractive. Yummy.

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Skipping Meals Because of Inflation

I read with sadness how one quarter of Britons have resorted to skipping meals amid crippling inflation in the U.K. [article]

One caterer even commented how schools are facing difficult decisions on whether to shrink food portions for students or use lower quality ingredients.

Spiking food inflation is one of the worst outcomes to befall on a nation, especially for importing countries. British grocery inflation hit 5.9% in April. In Singapore, the MAS reported a YoY increase of 3.3% in food inflation in March. [data] Looking at the current world situation, no country will be spared.

Wheat prices have risen sharply because of the Russo-Ukrainian War. Russia and Ukraine are both major wheat producers, and the war has caused their output to drop significantly. India has also banned wheat exports to meet their own domestic demand. Wheat is a staple used to make various foodstuffs like bread and noodles. A supply constraint means prices for these items will rise correspondingly.

Price of wheat futures at CBOT. (Source: Yahoo)

Indonesia has also banned the export of palm oil, another important ingredient used in processed foods.

Similarly, global energy prices have shot up. Persistently high crude oil prices mean electricity and even plastic packaging will incur higher base costs. The business of manufacturing, transporting and serving food has gotten more expensive.

Price of Brent crude oil futures at NYMEX. (Source: Yahoo)

Then there is the wage-price spiral. As workers demand higher salaries to handle the rising expenses, companies have no choice but raise their product prices. Workers have to spend more of their paycheck per item, thus they demand higher salaries...and the death spiral goes on.

Consumers are forced to choose cheaper alternatives and dial back on non-essential spending. Companies, already facing margin pressure, suffer from lower revenue. Cost cutting takes place, layoffs happen and before you know it, a recession comes knocking.

Granted, such an apocalyptic scenario does not occur overnight, and there is a possibility we can avert this crisis if higher interest rates can curb demand to cater to the reduced supply.

However, it is a fact that interim higher prices on basic necessities will cause more hardship for families living just above the poverty line. Woe to the household who has to decide between buying groceries or footing the utility bill.

I hope the children will not have to go to bed hungry at night.

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You Are the Strongest Protection Against Inflation

The Oracle of Omaha, Warren Buffett is renowned for providing plenty of good advice in his Berkshire Hathaway Shareholder Letter, as well as during the five-hour long Berkshire Hathaway Annual Shareholders Meeting (AGM).

While I do not follow the meeting live due to the time zone difference, I would read the summaries published by newswires the next morning.

During this year's AGM on April 30, Buffett spoke at length about inflation, which is the primary concern of U.S. investors right now. In particular, he talked about how to attain the strongest protection against inflation.

Buffett said (and I quote from the CNBC article [here]):

“The best thing you can do is to be exceptionally good at something... [people] are going to give you some of what they produce in exchange for what you deliver.”

“Whatever abilities you have can’t be taken away from you. They can’t actually be inflated away from you.”

“The best investment by far is anything that develops yourself, and it’s not taxed at all.”

If Buffett isn't a legendary investor, I'm sure he will make an excellent life coach. Buffett understands that deep down, the best hedge, come economic hell or high water, is what lies between our ears.

Buffett is talking about our knowledge, skill set and abilities. These cannot be taken away from us, regardless of inflation, taxes, or automation for that matter. In this day and age, people are still willing to pay a premium to be served by "exceptionally good" craftmasters.

We can find many examples around us. Look no further than my second favourite topic - food.

We have a wide variety of pastries produced cheaply in industrial size ovens. Yet there are folks willing to fork out more to buy from an artisan baker.

And microbreweries will always occupy a niche market of its own, despite the proliferation of mass market brands like Tiger and Heineken.

Putting things in Singapore context, what Buffett meant is this:

If you sell bak chor mee (minced meat noodles), make sure you can cook the most delicious bak chor mee in Singapore. And you can always beat inflation by setting your own price tag without worry.

Can you cook the best bak chor mee in Singapore?
(Photo credit: Unsplash)

I can personally attest to Buffett's advice. Now I don't know how to bake bread, brew beer or cook a decent bak chor mee. But I do know at my workplace, I'm the first person my boss and colleagues turn to, if they want to consult on a specific technical subject. I have also carried out successful product demonstration to prospective clients, leading to contracts signed thereafter. I have delivered value for my employer.

This is only possible because I have spent effort sharpening my craft. And I have been duly rewarded for my labour via the inflation-plus-plus salary increment in the company.

Moreover, while I'm taxed on my income, the government cannot get a cent on the information stored in my head. If I have to start all over again in a new country, I am confident my knowledge, skill set and abilities will help me to survive adequately.

Granted, not all jobs are created equal. The fastest and highest rated delivery rider cannot expect a fantastic premium, given that competition is rife and the barrier of entry is low. But for most occupations, as you become a subject matter expert or take on a more vital role, your compensation should rise comfortably.

So take it from me that Buffett knows what he is saying when he uttered the words above.

You yourself, are the strongest protection against inflation.

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Three Maxims to Share With My Children

Having spent half of my lifespan, I have gathered some precious lessons which I hope to ultimately pass on to my children. Some were gained from bitter experiences; others were illuminated in a moment of inspiration.

Here are three maxims that I want my children to remember:

Singaporeans are notorious for their incessant complaints. You hear it all the time - the bus is so slow; the food is so expensive; the service is so lousy. It brings to mind the slang NATO (No Action, Talk Only).

This is an incredibly poisonous attitude, especially in the corporate world. While whining may provide temporary relief and seeming camaraderie among complainers, it drains a person of the willpower to act on the problem and change the situation.

Everytime I hear my kids make such a remark, I will remind them that complaining is useless. They should proactively find a solution. If it is beyond their control, they should look for someone who can make the improvement.

The above is a simple but powerful maxim by English Professor William Johnsen. It gels nicely with another Buddhism-inspired maxim that getting angry at an issue is useless, as fury will only hurt yourself, seldom others.

Let's face it - life is inherently unfair. If life was fair, there wouldn't be a rich-poor divide today. Being born in Singapore is a stroke of good luck; being born in Ethiopia is not.

Yet it is precisely because Life does not grant the same favour to everyone, there is a fighting chance for you to be the winner. It may not be what you envisioned, but there will always be a niche where you can outshine others. And more often than not, being a grand master at a specific subject matter entitles you to greater renumeration compared to the average layperson.

My kids sometimes complain how the teacher picked their classmate for a role they had wanted. I would gently nudge them to think about their own strengths, and areas where they have an edge over their peers. Along the same vein, I would drill into them another life lesson - if they are not willing to put in their best effort, they should not start on the task at all, be it learning a new skill or a new subject. If my kids have decided to embark on the quest to mastery, then they must be disciplined to work their way to the top of the field. No half-heartedness here.

This maxim is deeply personal, as it is the basis that drives me to seek wealth. Being rich is not just about having lots of dough. It is about having a wide variety of options at one's disposal. From as simple as cleaning the toilet to as complex as fighting climate change, money can shape the outcome. There is the oft-quoted adage that money is not a panacea for everything. However, while money cannot solve every problem, it is extremely effective in the ways that it can.

Here is a simple example: An average income family may choose to eat mostly at home or at hawker centres due to a tight budget. On the other hand, a well off family can choose to eat either at home, at hawker centres or in posh restaurants without much impact to their finance. The availability of more choices can make life a tad more enjoyable, even though more choices don't necessarily guarantee greater happiness.

My kids are aware that their material choices are influenced by money. Each of them has a POSB Smart Buddy watch that limits the amount they can spend daily. This forces them to plan their consumption in advance. My kids play the Monopoly game frequently, where they learn getting bankrupt (out of money) loses the game. They also learn cashflow, in which money is needed to pay for green houses and red hotels, but eventually they regain it through rent. They had come across the concept of stocks and bonds in another game (Wongamania), but the topic is over their heads for now.


I hope the above maxims will serve my children well as they grow up and lead their lives as desired. Do you have any life lesson you would like to share with your children? Let me know in the comments below.

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Do you remember the lowest point in your (financial) life?

Before I started my current job, I was a property agent.

I was recruited by a good friend, lured by the possibility of high commission, and thence a comfortable life.

Embarrassing to say, I wasn't a good salesperson. I was lousy at promoting my service. I didn't like pandering to the seller's whim. I had trouble coaxing buyers to sign on the dotted line. I was spouting words that I didn't like to hear myself.

As a result, I had challenges getting deals, let alone closing them. While I secured the occasional rental agreement, the paltry commission only lasted for a while. The dream of a fabulous income did not materialise. Soon, I was literally eating and surviving on my dwindling savings.

I knew the money would not last. But it never occurred to me that I would hit rock bottom with a bang.

Until that day, when I did.

I will always remember that day. It was noon time. I was heading home onboard a feeder bus. In my mind, I was contemplating what I could have for lunch on a meagre $2.50 budget.

As the bus was making a right turn, that was the moment it struck me. I realised I had fallen to such a pathetic state, having to think so hard about my next meal. With less than $50 in my account, I had to stretch my every dollar. Tears welled up in my eyes.

I hadn't dared to speak to my parents about my dire situation, for fear of causing them worry. Pride also stopped me from asking my friends for a loan. I have hardly anything valuable to pawn. And I know getting credit from a moneylender will pull me deeper into the abyss with its exorbitant interest rate.

That marked the lowest point in my finance, my dignity and my life.

I made a fateful decision that day. Enough is enough. I vowed NOT to allow myself experience this horrible feeling again. I severed my last lingering hope of striking it big in property. I refreshed my outdated resume and began blasting it to multiple companies as well as recruiters. Humiliated as I was, it was time to call it quits and start finding a salaried job.

A headhunter phoned and informed me of an opportunity at a global MNC. The private firm was recruiting candidates en masse to provide real-time analytical support to their growing clientele. I applied for the role. After three rounds of elimination interview, I got in, together with a bunch of university graduates much younger than me.

I had newfound determination to succeed at this job. I worked harder and smarter than my peers. I made it a point that my contributions were visible to the higher ups. If the clients had a good word for me, I made sure my boss heard about it. If there was blame, I apologised quickly and let the matter fade as soon as possible. I did my best not to burn bridges, nor step on other people's toes. I polished my listening and presentation skills. And I carefully honed subject matter expertise that was in short supply within the company, so that I could remain invaluable.

My team leader once told me that originally, my manager did not want to hire me. But the management decided to take a chance on me.

A chance that changed my entire life.

Even though my starting salary was unremarkable (as it was just after the Global Financial Crisis), my income grew exponentially year after year. From the misery of having to fret about my next meal, I managed to reach a comfortable level where I am today.

I attribute my success to that single lowest turning point in my life. I'm sure many folks have their own sob stories. I hope each person will be able to find the motivation and sheer drive needed to climb out of their personal sinkhole, and attain a level of financial stability previously unimaginable. Your pot of gold could just be at the end of another rainbow.

Do you still remember the lowest point in your (financial) life?

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Singapore Savings Bond GX18120X

I have successfully redeemed my April 2018 Singapore Savings Bond (SSB).  The average yield over ten years was 2.31%.  I have decided to use the money and subscribe for this month's SSB (code: GX18120X).  The average yield is higher at 2.57%.

If you are wondering how to forecast the average yield for next month's SSB, you can refer to the MAS website (here).  Simply download the daily 10-year bond yield for the latest month.  Next month's SSB yield will be the average of these values.

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