Miles or cash back? An opportunity cost perspective

I used to be a 100% cash back credit card chaser as it is hassle free and cash is always better than a captive currency like miles.

Recently, I have been reading quite a bit on miles blogs. Apparently, there is strong interest in chasing the miles to redeem for premium flights. But do they actually make sense? The value per miles as advocated by some blogs is 1.9 cents per mile. Hence even paying 2% admin fees to buy miles make sense for some.

I would probably value it at no more than ~1.57 cents, which I will illustrate simply below, base on my personal circumstance.

As I spend 3k per month, I usually split up 2k on UOB one card (5%) cash back and 1k on OCBC 365 cash back card (averages 3.5% or so). For simplicity, the cash back I get back is roughly $135 per month. This works out to be 4.5% blended spending cash back.

If I were to spend it on miles, I probably would apportion my spending on 3 cards: $1k UOB Visa pay wave (4 miles), Maybank horizon (3.2 miles) $1k, miscellaneous $1k spending on UOB privi miles card @ 1.4 miles/dollar earn rate. I can earn approximately 8600 miles monthly.  

Hence the opportunity cost to earn the miles is to give up cash back of $135 which works out to be 1.57 cents per miles. The true opportunity cost should be even higher since cash is paid frequently  to offset bills and miles can expire (or even devalued).  

The attractive part of miles redemption is that business class tickets actually cost roughly only 30%-70% of outright purchase price when redeemed using miles. It is almost similar to earning a premium flight ticket discount coupon by using miles card.

For instance Sin-HCM-Sin business class ticket costs $1075 or 43k miles (opportunity cost $675 cash back from spending. 37% discount on ticket).

Business class ticket Sin-HK-Sin route costs $1800 but or 61,000 miles (opportunity cost $958 cash back, 46% discount on ticket).

The further the distance, the more value is derived from miles. Sin-Auk-Sin cost $5800 or 124,000 miles (opportunity cost $1947 cash back, 66.4% discount on ticket).   

It is actually uncomfortable for me to abandon cash back card altogether and earn delay gratification on business class travel. However, given that I am unwilling to pay for business class tickets, I would probably give miles cards a try.

Signs up are probably much faster to earn then spending. Hence, I am likely keeping my UOB one card for the 5% cash back but earning miles sign up bonuses to kick start the discounted business class travels.

Hence I applied for the SCB X card 100k miles for a start. That actually costs me $700 annual fee + $300 opportunity cost of using 5% cash back card = 1k. Hence my miles cost me 1 cent/mile.

In summary, it means that miles should be valued base on the cash back you give up (opportunity costs) and not on the advertised rates on blogs (base on the cost of business class travel – you wouldn’t spend cash on the tickets anyway).

Redeem miles on business class travel make some sense otherwise just stick to cash back cards to earn the cash and pay for economy class tickets.

It is possible to stick to 1 card for cash back (eg if spending is around $900/mth stick to OCBC/Citi cash back; $2,000/mth stick to UOB one card).

For miles chasers, a lot more planning is required on which card to use in order to stretch the miles rate.

You shouldn’t accumulate miles on your own and your partner should preferably share your obsession in chasing miles.  

A hybrid approach will stretch your dollars more; using miles card that earn 3.2-4 miles per dollar targeted spend; general spending to earn 3%-5% cash back is preferred over 1.4-1.5 general spending miles.  

It makes life a bit more fun, brains a lot more thinking to use a miles card!

Random reflections on my spending

Been awhile since I blogged, in fact more than a year! The initial rationale of having a finance blog in 2008 was to detail my decisions on spending and investing to provide a platform for reflection.

As I progressed in my career, the probability of financial independence becomes more certain. Admittedly I became over confident that my decisions on spending are right; up to a point along the way it became ostentatious and losing myself. Buying branded goods, driving luxury cars, watches, hotel membership on dining, 6 travelling trips a year (just to maximise the free 24 priority pass lounge visits – every trip I can utilise 4, 2 in SG, 2 overseas) became a way of life.

 This is no good. This is not me.

Where did the initial child like ambition of early retirement and simple life disappear?

Slowly, I started to declutter goods that I bought for the purpose of _____. As I struggled to fill in the blanks, phrases like “showing I can afford”, “keeping my image”, “keeping up with my peers” appeared at first instance.

Quite retarded reasons.

Fortunately, I have managed to declutter some. 2 years ago, I signed up for the AIA vitality and discovered that by wearing a fitness watch, I am able to earn $10 grocery vouchers weekly, discounted movie tickets monthly and yearly $150 cash rebate. The perks are more than sufficient for me to wear any other watches that do not pay me weekly cash!

3 years ago, I was at the cross road to change my vehicle. It was extremely tempting. Back then, I was driving a 2.5L luxury car and finances allowed me to continue driving one. It didn’t help when peers were changing to nicer rides. I test drove Jaguar, Mercedes, BMW, Lexus, Infiniti. Porsche was very close on my list as well. After all, a colleague who was earning lesser than me could buy one as well. I can stretch my budget to 20k a year depreciation cost right?

Fortunately, good sense prevailed. I evaluated the decision economically. I only wanted a car slightly better ( in terms of size, design, performance) than a bread and butter (point A to B) car like Toyota Altis or Honda City with slightly higher depreciation cost. 

I managed to buy a 1.6L humble continental ride that comes with only 6 speed gear box, all around sensors, memory seats, 4 doors (keyless entry), leather seats, Apple car play, reverse camera, 18 inch sport rims and free 1 year insurance cap at 1.5k. The dealer also provided 5 years warranty and servicing further reducing my cost of ownership till 2022.

The depreciation on straight line basis worked out to be $10k/year, cheaper than a camry of around $12k/year then.

x

So far it has not given me any problems other than being a “laughing stock” amongst my peers.

“Car already so expensive in Singapore, it is stupid to buy an expensive one and not enjoy it!”

“No resale value one!”

“Kiam kanna!”

These are some of the remarks made by peers. Living with it saved me at least $5k a year. I think I can live with it.

My main cost of living is housing, transport, travel and food. For housing, as my property is in the money, in a way I am living for free. This is because I am able to cash out upon sale of my property and all payments made for the house from day 1 will be paid back to me. I can subsequently invest the money to generate an income to compensate rent or simply buy another HDB and fully pay off with my CPF balance.

I am actually contemplating to sell my house for a resale HDB in order to live even more simply. Of course more objections from people around me living in landed and condos:

“What for? Save the money and not spend it belongs to the bank!”

 “I have not seen anyone getting rich buying a resale HDB.”

It may not happen eventually, as I am comfortable at my place right now. 

Although I rarely use the gym, pool and have never booked the common facilities. 

The things I like (and not available in a new resale HDBs) are sheltered underground parking, kitchen built-in rubbish chute, nice lifts with aircon lobby, balcony (for plants and clothes drying) and my low entry purchase price (on hindsight). Moreover, the monthly maintenance of $300 is about $150 more than a comparable HDB (after accounting for parking). I will probably end up spending $150 on gym/pool facilities if I live in HDB hence the savings are insignificant.

For food I am spending approximately $1.5k a month on it. This works out to be $50/day. I do know that by picking up the skill of cooking I am able to keep food expense to $500 a month. It is something I would definitely explore as I move towards early retirement. However at the moment, I still quite enjoy the daily restaurants dining.

In fact, I do try to dine at odd hours where possible where there are 1 for 1 deals in town and neighborhood areas. Some credit cards also allow 50% off dining which fits my budget and taste buds comfortably.

Some random rants! I think I need to blog more or I will just have endless to say in 1 post!

Good bye textbooks..

Today my maid was clearing my room and asked whether she could (finally) clear my unwanted texts, files and notes I have not touched for years. I gladly agreed.

I used to have the habit of keeping ALL my textbooks religiously for fear that I may need them if I ever meet an unsolvable problem at work. My belief was shattered as over the past decade, nothing of such happened. 

No wonder I do not see any plumber or air con technician bringing along their work manual to my home! The notes and text I have “saved up” no longer serve any purpose other than giving me lift to nostalgia lane. Over the years I have accumulated a lot of books but not knowledge; a lot of information but not intelligence; learnt a lot of case studies but not actionable plans. Are they worth keeping if they no longer serve the purpose of education?

I am a firm believer that the purpose of education is to fill an empty mind to an open one; thus I would gladly trade them for a cleaner room.  

Finally, I have more breathing space to fill up an open mind!

Good savings from SRS and CPF voluntary contribution

It is the time of the year to pay income tax. The company owners are happy to receive dividends instead of income as they are tax a maximum of 18% at corporate level. The income I receive from REITs and listed company has already been taxed at source. Hence, I do not benefit from the corporate tax structure. For ordinary middle income Singaporeans like you and me, we can contribute to SRS and CPF (special account) to save a little on tax.

I have completed my last module last year for my postgraduate course, which means I do not enjoy tax relief on course fees this year onwards.

It is a struggle to decide if I should be saving into my SRS and CPF SA account. It is upfront savings VS long term locked-in decision. However, I decided to contribute the maximum as I forsee myself living beyond 62 and the funds will be invested in unit trust and enjoy 4% risk free rate from CPF respectively. 

I did a rough calculation and by voluntary contribution of $19,750 to both my retirement accounts, I saved 4.9% upfront or $968 tax after rebates. I personally think it is an excellent way to save retirement money. Given that many people stash aside money to endowment plans (with nominal coverage), by contributing funds to SRS and CPF, I will be earning at least and average of 4.5% P.A, which is likely to be better than most endowment funds in the market. 

It is extremely important to invest your SRS funds instead of leaving it idle. For me, I am treating my SRS and CPF funds as "bonds" allocation, cash funds as equities allocation. Hence, I am mainly investing retirement funds in bonds (sounds silly, but target returns of 4.5% is to outperform endowment plans benchmark), which will double by the time I withdraw them. Don't forget, I start off with 4.9% upfront savings gains! 

0% sales charge from IFast

Decent performing bond fund after 6M

Beware of BID and ASK Spread for Cars!

Lately out of curiosity, I decided to check out the value of my 7 year old Japanese car. A search at sgcarmart revealed that the same make/model/year cars would have asking prices of between $20,000 to $25,000 depending on mileage and month of registration.

I bought this car in 2006 for $46,000  (no loan) and the car has a residual value in 2016 of $6,000. This means the average depreciation over 10 years is $4,000 yearly, assuming a straight line depreciation accounting.

However, if I can sell my car at $22,000 now (lower end of asking prices), my average depreciation will be ($46,000-$22,000)/7 years =$3429.

This means that I should sell my car now, as if I have held to “maturity”, my depreciation will be at a much higher rate of $4,000 per year!

According to straight line depreciation of $4,000 per year, my car should be worth only $46,000 – ($4,000 depreciation x 7 years) = $18,000.

This calculation is similar to bonds valuation. We should be selling above PAR value since bonds will eventually move towards PAR value when it nears to maturity. However, the switch should be to another similar or higher yielding asset class to mitigate the opportunity costs.

Similarly, what should I switch to, if I were to sell my car now? Logically, I should use the bond valuation concept of comparing it with a 7 year old car. A search on the “car runs” showed similar Japanese/Korean makes, which doesn’t appeal to me, given that I will only be incurring transactional costs without having real benefit.

A 7 year old BMW 523i (2500CC) caught my eye. It has a residual value of $25,000, relatively low mileage of 90,000KM and costs $58,000. If I were to trade in my car for $22,000, I will only need to cough out $36,000 to drive for 3 years and receive $25,000 back in 2016. I will be $11,000 poorer (or $3666 additional costs yearly) in exchange for the experience to be a BMW 523i owner.  

Wow, so cheap after trade in!

 

The allure of it sounds too good to be true. I decided to call the 2^nd hand firm to find out more.

The car dealer is willing to offer what was stated on the sgcarmart website. However, they are only willing to take in $14,000 for my car.

This does not make sense to me. Even if there is a bid and offer spread, it should not be up to 44% {(25k-14k)/25k}

Imagine if I have to sell DBS at $9 (when it is trading for $15) to buy UOB at $19 which is trading at $19 on the same exchange (sgcarmart).

The dealer explained to me the last transacted price for similar cars of my ride was 20k. No one would offer higher than that and they need to earn a mark up (aka brokerage fee).

The high costs totally puts me off. My calculation will tangent off significantly if I were really to trade in my ride for 14k. My depreciation would be 4570 yearly (a 15% increase) and the cost of owning a BMW for the next 3 years will increase to 19k instead of the original expected 11k. 72% increase!!

It is not the 8k that matters (to me), but it goes against my principle of value, market efficiency and fairness. Why would I want to allow middle man to rip me off just because I have a 2^nd hand car to trade in? Why are car dealers “exempted” from transactional costs (whereby they can sell near asking prices) and I must sell my own car 40% below THEIR asking prices?!!  

Technically speaking, I can sell my car on my own first (at 20k-22k) and buy whichever car I fancy thereafter to avoid the hefty “bid ask” spread. This is similar to buying unit trust from fundsupermart at 0% and later transferring out to another service provider (free of charge) to avoid the quarterly platform fees at one and sales charge at another.

But this is too much of a hassle and I rather wait for my ride to be scrapped before shopping for a new/used car 3 years later.

 Notice I analyse general purchase of daily consumer products using frameworks for financial asset classes. This has been my thinking logic for many things and has helped me save/avoid costly decisions.  

 

How many hours did you spend in your car?

My colleague was lamenting that cars used to be cheap to own and he regretted not buying earlier. I need to correct him, car ownership is never cheap in Singapore, especially if you use my calculation matrix.

Ever since I started using a GPS to navigate directions, I noticed that I drive an average of 1km/min. If the journey is 15km, I usually take 15 minutes to reach the destination. Hence my average travelling speed works out to be 60km/h. This is largely consistent with the average speed of most roads in Singapore other than the expressways.

My car has a mileage of 70,000KM. This translates to 1167 hours usage. My car is already 6 years old and the depreciation works out to be 20k, base on current value of my car. Thus it cost $17 to spend one hour in the car! This excludes cost of petrol, insurance and taxes!

If I were to buy a new car now, the depreciation will be about 10k per year, base on my usage pattern, my cost will be $52/h. Prices of car have doubled since 6 years ago, but car usage cost has actually tripled, at least for my case.

I am not complaining on high cost of car ownership, but many people only calculate base on yearly depreciation. If we were to dwell further, the cost of actual usage is extremely high and uneconomical. Sigh, living in Singapore is tough!

My quality of life

I met up recently with an old friend overseas. It has been a long 3 years since I met him and every time we chat about old times, I learnt something about life and relish knowing my old self. People essentially change over time; the current self is vastly different from the old self a decade ago. We are changing without self conscious. Sometimes people like to cling on memories as memories remain but people change, isn’t it?

However, some things in life don’t change. A decade ago, I was driving a humble 6 years old Japanese Toyota corolla 1.3litre to school. Today I am still driving a Japanese make except with an upsize 300CC simply because there wasn’t a 1.3litre version. It is still trusty and when I see people on road with a brand new continental car breaking down, I will grin to myself and pat my steering wheel for giving me worry free driving experience.

I realize that my need for material wants have not changed at all over a decade. When I met up with my friend I was still wearing old winter clothing and eating cheap food. Over the years, the only thing that has changed was my bank balances. I remembered earning $2,000 a month eating the same hawker food, occasional restaurant and overseas indulgences. Currently I earn about $7,000 monthly, I am still eating the same, spending the same and having the same level of material needs. I must be a freak as my 3.5 fold increase in income does not translate to a better life style! I am probably spending more on investment only!

Why is that so? Hasn’t my quality of life improved over the years?

If we look at per capita GDP, my “quality of life” under official statistics would have improved tremendously; if we look at GNP, my quality of life would have remained the same as my spending hardly increase much; if we look at spiritual satisfaction, I probably have enjoyed my than 4 folds increase in quality of life.

I believe quality of life cannot be measured by the annual value of your home or the average household income. It is the same of Maslow hierarchy of needs: A blue collar worker can achieve self actualization needs while a CEO may still be struggling to satisfy the esteem needs level.

Over the decade, I have gotten a few postgraduate degrees, been through a few relationships and changed 2 jobs. I changed from a high paying job government bonded job to a new private sector entry level job before moving on to a managerial role to where I am today. My pay fluctuated from $2,000 to $6,000 back to $2,000 and to current levels. I changed countless boss in-between: Bosses that groomed me and bosses that made me burning mad and left the government service.

On hindsight, whatever I have gone through has not been in vain. If not what I have been through, I would not have survived in my current post and be where I am today. If not for my nasty bosses, I would not have met nice ones that were willing to groom me. Life is about trying out new things isn’t it?

Along the years, my pursuit of knowledge made me a calmer person; I get less irritable on unfair treatment; more tolerance for irritating colleagues and bosses; less vocal on things that simply cannot be changed overnight. I will still not spend more than $70,000 on a car and still a firm believer that money should be spent on things you used the most, not on what people will use to judge you.

I do not know if I would change a decade from now, whatever it is, I believe I will continue to enjoy life and enhance my quality of life, regardless of my earning capacity. It is not how much I earn but rather my expectations of life that dictates my perception of good life quality.

Common Law Is The Law For Common Man 法证先锋3 Translation

Cantonese dramas are the best form of entertainment. It virtually costs nothing as it can be downloaded on the net, provide excellent subject knowledge of law and specialised fields. I took awhile to translate the above, impressed by the efforts made by the script/research writer. The below translation begins at 1:05

Pro Sir: Common law is the law for common man. Common law is the fundamentals of all Hong Kong laws. The model for common law is to accept the objectivity of rules. This refers to the unspoken rules agreed by the majority which dictates habits, truth and false, right and wrong. This forms the fundamentals of common law.

The motive behind an action is accepted is not solely due to my judgment but derived from the fundamentals of common law. It reflects the same motive behind the same action of the majority.

The accused forcefully inserted the pill bottle into the deceased mouth. The motive behind the action was to force the deceased to swallow ketamine pills within the bottle.

Lawyer: Your honour, the witness’s illustration has already been dislodged from the specialization of a forensic scientist.

Pro Sir: My professional judgment must definitely be base on the fundamentals of common law. Thus my court statement is not dislodged from my profession.

Judge: Expert witness, you may continue.

Pro Sir: Thus when you brought the bottle to your mouth with a swallowing action, the whole set of actions under normal circumstances would led one to believed that the bottle is filled with water or other forms of liquid. Thus a normal person would then be driven to display a drinking action.

Of course, a person would also would pick up an empty bottle and pretend to drink. This is because he is acting. He is an actor. The motive behind your actions is to create a perfectly logical scenario. In reality, your account is an unconceivable illusion which is a blatant attempt to overthrow the whole truth.

From your perspective, to overrule my judgment, your motive is reasonable. But I need to emphasize, the legal judgment I made is based on the fundamentals of common law. The accused forcefully inserted a bottle full of ketamine pills into the deceased’s mouth have led to her death.

This is definitely a correct judgment, closest to the truth.

Why I worry about retirement

Many close friends who read my blog often label me as a salty man. This has a negative connotation because in Hokkien context, it is “kiam” or scrooge in western terms. However, when I explained my rationale to them, suddenly they realize they either be prepared to work past 55 or be better off being more salty.

In today’s competitive workplace, there are not many people who are willing to work past 55 years old, even if they are ABLE to. Perhaps it is due to the increased pace of life and work pressure, many people just find it too stressful to cope mentally and physically beyond 55 years old.

The problem is exacerbated when the same group has ailing parents, growing kids and mortgages to repay monthly.

Life becomes much more stressful, simply because they need to work or they die (from debts and poverty).

In a nutshell, most people don’t retire at 55 simply because they cannot afford to do so, not because they choose not to.

Let’s work some simple figures here. Most Singaporean men with degrees start work at 25 years old. If they aim to retire at 55 years old, they have 30 years of working life. Assuming a life expectancy of 85 years old, they have another 30 years of income-less life to sustain after retirement.

This effectively means for every day we (men) work, we need to set aside funds for both the day we work and another day we do not work for the next 30 years.

And for the savings we put aside, we need to grow it at least at the prevailing 5.7% inflation rate in order to sustain the same kind of life style when we retire.

CPF only grows 2.5% PA, which is grossly not enough to cover inflation. Even if it is enough, most likely it is depleted to purchase HDBs which easily cost $500,000 at today’s prices.

Let’s assume again a modest lifestyle of $2,000 per month for a single at age 55. This works out to be $2,000 x 30 years = $720,000 cash balances in today’s dollars to sustain a modest life style. The amount will balloon to $900,000 if the single requires $2,500 a month for the next 30 years.

If we factor a conservative 4% inflation, today’s $720,000 will be worth $2.34M (future value) in 30 years time.

The same 4% inflation will make $900,000 today’s dollars worth $2.92M.

For people lost in reading, it simply means that you need $2.92M in 30 years time to buy something worth $900,000 today if inflation is 4%.

In order to enjoy the same modest lifestyle of between $2,000 to $2,500 per month, the individual who retires at 55 needs to set aside between $2.34M-$2.92M for him to call it quits at age 55, 30 years later.

This is not factoring if the individual lives beyond 85 and whether he can invest his retirement funds at the prevailing inflation rates. If he is unable to do so, he probably needs to sell off his house in order to exchange for food.

Most Singaporeans who buy houses today stretch their loans to 35 years. This means that a 30 year old couple will need to service their loans till they reach age 65 before they finally own their homes.

There are no prizes to guess why government is stretching the retirement age.

Some other observations I made as follows:

(1) Most singles out there probably spend more than $2500 a month, even if they just earn this much.

(2) Most people at age 55 now do not have $720,000 to $900,000 to lead a worry free life up to age 85. What makes you think we can achieve the equivalent amount in future value 30 years later?

(3) Medical costs and inflation rates are not at 4% only.

(4) You need to earn a minimum of $5,000 a month, save $2,500 a month and invest this sum at prevailing inflation of at least 5% consistently for the next 30 years in order to retire at 55.

(5) The sums required may increase 1.5x to 2x if you have a partner. If you have kids, you need to pray that they give u some allowance if you have not achieve the required by age 55

(6) You cannot afford to be retrenched or your retirement age stretches even further.

(7) You cannot depend on CPF for retirement if you have bought a house.

In my workplace, I do see many people earning high 4 figure salaries but have not much savings. They take for granted that health, wealth and career path will always be smooth sailing.

Let’s not be pessimistic about life but admit the fact that we can’t afford to retire if we are not prepared for it.

And I am not kiam, just getting prepared. :)

Patriotic to own a Beemer

One of my classmates bought a BMW recently. I know she earns about $10,000 a month and technically speaking, she is buying a car that cost roughly twice her annual salary. There is nothing wrong to enjoy the finer things in life though it means she is also patriotic as well.

Why patriotic?

In Singapore to own a car, you will be paying a huge load of tax to the government. Take my classmate’s BMW, she has paid the following to the government:

Open Market Value (OMV)= $58,000

Thus Additional Registration Fee (ARF) will cost 100% of OMV =$ 58,000

Excise Duty: 20% OMV= $11,600

Registration Fee: $140

Certificate of Entitlement= $45,000 (few months ago)

GST: OMV x 7% (approximate) = $ 4,000

Total tax payable to government coffers: $118,740

The total cost of her car was about $210,000 then, which means the gross profit margin for the car dealer was 43.4%.

In order to own her dream car, she has to contribute in excess of $100,000 to nation building, I have respect for that.

Good thing is that she only took a 1 year loan and has only a couple of months to fully pay up her car. As for me, it will be unlikely that I will ever own a BMW, probably the furthest I would go is a Toyota Camry.

My rationale is simple. Consider a $200,000 lump sum investment to grow on a compounded basis of 10% (1.1^10), this initial sum would grow to $518k after 10 years. The opportunity cost of $318k means that she might have to work another additional 3 years to fund her retirement. Coupled with her 2 years salary to purchase the car at the onset, she potentially could have retired 5 years earlier.

Yup, 10 % PA might not seem realistic. But if one has the investment horizon and purchase some China Equity fund, we should be looking around this level of returns. China will be overtaking America as largest economy in my lifetime, according to most analysts.

Well, to each his/her own. I prefer to retire earlier and spend my days reading, writing and travelling when I am still able. As for owning a nice car, I think I will hitch a ride when I meet up with her in school instead.

Life is tough, retire early. That’s for me.

Liu Wei: Armless Pianist

While you are digging your nose and reading my blog, listen to this:

Out of difficulties create miracles.

Now stop complaining about life. Not when Liu Wei isn't.

Number 1 search result!

Every time you search "Singapore Blue Chips", you will definitely have my website as one of the top search results.

Google

Yahoo

Rednano

My google page rank has a decent value of 3. For a non profit personal blog, I think that's a little achievement! Yeah!

Public transport

I tried taking the MRT and bus to work recently. It was a horrible experience to take the train. As I need to alight in Orchard area, I had to smell the arm pits of commuters. Then I tried the bus, service 65. Below was the snap shot.

I was pleasantly surprised! I could even read papers there! The ride was a short 30 minute ride from my home. I could check the bus arrival times rather accurately using my iphone from the SBS website. Meanwhile, I could even have a cup of coffee and noodles for breakfast while waiting for the bus.

The dedicated bus lanes also narrowed the time savings between public and private transport. I felt sorry for the cars beside me having to pay hefty $4 ERPs (accumulated), $150 season parking while being stuck in jams daily.

My daily transport cost? $2.20. Of course I hate to leave my car at home, but it just doesn't make sense to pay 100 times more and spend more time travelling.

As LTA races to tender out railway network in Singapore, I seriously doubt the marginal increase in ridership will increase the profits of SMRT. The circle line is already operating at a loss, major lines running at full capacity, what kind of growth are we looking at? A PE ratio of above 20 doesn't justify its growth rate ahead.

Though the bus business seems to be a dying trade, I would prefer to take the bus anytime now, considering the current situation of MRT rides. Due to training purposes, public transport for me will only be a temporary measure, but I am quite sure I will research the bus routes instead of MRT whenever I take public transport.

Well done SBS!

Make money blogging

I have been meaning to write on blog monetization so here it is!

I started Singapore Blue Chips in May 2008, it has been slightly more than 2 years from now. I would say that my blog did generate decent income to cover my internet bills over the past 2 years. The majority of my income did not come from direct advertising but rather from indirect sources.

I earn referral fees from US advertisers to put up their advertising on Singapore blogs. I receive $6-$10 for each referral. So during my free time I comb the local blogging fraternity for possible referrals.

Another part of my income comes from online requests. Prudential once approached me to moderate their forum, http://www.honestlyspeaking.sg/ (forum closed down as campaign ended) and I was paid $100 weekly. The forum was part of their advertising campaign and I am honoured to have the opportunity meet their advertising team to discuss on the online advertising aspects of insurance products.

Occasionally, I do get tertiary students asking me to complete their finance assignments. I do charge high prices for that, at $40-$60 per page. Most of them get good grades anyway, so ethics aside, this blog does generate indirect income similar to online tutoring service. I do discourage prospective students from approaching me though as you are eventually short changing yourself.

Lastly, online advertisements account for the least income. My readership isn’t high, slightly over a thousand unique views weekly, hence payouts from advertisers have been slow. And I know you guys reading my blog never click on my advertisements too!

Fortunately my “Singapore Blue Chips” is always the 1^st search result on google and yahoo. Hence readership can always be maintained at a decent rate even if I stop blogging for 3 months. Mr. Tan Kin Lian has kindly linked his blog to mine, which generate the highest number of web referrals too.

This blog was never intended to make money anyway. But it is really satisfying to be able to generate income from a hobby, however little it may be.

I do get several emails a day from readers asking advice on stocks and wealth accumulation. I rarely reply them due to time constrains and the information provided is simply inadequate. Besides, I have no license to advise on financial matters! All I can say that it is never simple to make money through equities investing. Making money through equities does not mean you are correct in your financial concepts. The acumen needs to be honed and there is no short cut in hard work to build one’s fundamental knowledge in finance.

Lately I have been blogging lesser on equities mainly because my portfolio is generating decent income and passivity is my best way to monitor the market. I have no desire to generate super normal returns and my farmer philosophy has served me well.

Hence, everything will continue as so.

Of Cars and Cars

I have a rather luxurious family car below where I rarely drive. Most of the time, I drive my trusty 5 year old Japanese car (1.6 litre) for work or take the train when I go for trainings in town. Occasionally, I do drive my family car for errands when it is available. Often people who just got to know me will associate the car with me living in a bungalow or working in prestigious MNC. It seems that the car is an epitome of success, which is quite inconsistent with my current image. In the end, I have to clarify that I have a humble job, that car isn’t mine and I only stay in a HDB flat.

Honestly, sometimes driving this car leads to more embarrassment than awe as people who just knew me would probably be thinking why the hell you are driving this car when you are “supposed” to be taking a bus.

There are many cons in driving that car other than the above scenarios. I would be afraid while in my possession that it might be scratched, knocked or stolen. I have to be careful while going over the humps and struggle to remember the different functions that are supposed to “aid” in driving.

When should I be using cruise control these days when the expressways are as crowded as the car parks, 24/7?

I forgot to mention that I need to see a doctor to check for my hearing soon. There seems no difference between a Mark Levinson and a pioneer locally assembled car stereo system.

On the contrary, I feel a lot at ease driving my own LKK car. The leather seats seem seasoned to my butt, fitting them comfortably. The single CD player (not even MP3 player) never jams. The $50 full tank can last me for a good 10 days. Not to mention the $750 insurance premium and $769 road tax is easy on my pocket. The servicing cost me $100 every 9 months, nobody ever bothers to scratch my car since day 1 I bought it. I can floor the accelerator without feeling heartpain. Only God washes my car for me (quite often recently!).

Driving is a luxury only when you comfortably afford it. I guess I still can’t get used to spending things I rarely use and impressing people I don’t know.

Is Singapore really that bad?

Today a colleague told me she wants to migrate to Australia. Initially, I thought it was just a passing remark. However, as I probed further, she has actually obtained PR status through an agent here, after spending about $8,000. She has also taken an English test to demonstrate her proficiency in English and will be moving over to Western Australia by December as a skilled worker.

My first question was, why leave? She is in her late thirties and has worked in the same line as me since graduation. Her grouses are the same as mine: No work life balance, working over weekends, no time for herself to consolidate and “talk to herself”. She feels the sheer volume of work is making her out of breath, only by leaving Singapore can she regain her sanity. She has a lot of health problems, possibly attributed by her career.

I applaud her courage. She is single, have aged parents and living alone. She will only look for accommodation and job when she reaches there. I would probably sink into depression if I go to a foreign land with no friends and job.

Is Singapore really that bad?

Over the weekend, there are extensive reports on the Singapore Dream. It states that to attain 5Cs has become increasingly impossible over the years. This is extremely true even for me and everyone around me. I earned an average of $6,500 a month. However, I can only afford a Japanese car (5 year old now) and stay with my parents. Unless I get married, there is no way I can afford a roof over my head alone. Well I can, if I use up ALL my savings and investments. That would mean an opportunity cost of at least $1,800 a month as the dividends from my investments generate roughly that amount on average.

I would need to pay for utilities, property tax, maintenance, gas, groceries, electricity and many other costs associated with living alone. My living cost will shoot up and I will be stuck to my job, forever.

Lately, I feel the strained in my workplace. It has become increasingly competitive as every other colleague competes to outshine each other. Workplace has become a place where working hard is no longer enough; Competition breeds office politics and other hypocritical acts. Nobody is my friend now. I am an economic unit of my office which is a subsidiary of Singapore Inc.

Not many people seem happy in my workplace. Many are stuck and resigned to fate.

“This is Singapore”

“It is the same everywhere”

“Some places are worse!”

“I can only do this”

“I have a family and mortgage to service every month”

My Singaporean readers, are you entrapped in the vicious cycle as well? Do you pursue wealth to attain happiness only to lose happiness while pursuing wealth?

Why are you feeling like that?

I believe it is an issue of comparison. Below was an excerpt I posted 2 years ago on my blog:

Robert H. Frank, professor of economics at Cornell University, says that most people find the first option more attractive. When it comes to salaries, we care more about relative size than absolute size. What matters most is earning more than our neighbours.

The same holds true for all sorts of things. The actual size of our apartment matters less than its size compared to everyone else's. And most of us will settle for a modest car - provided our neighbour is driving something worse.

It is a sobering thought. We assume that getting a pay rise, or moving into a new apartment, or trading-up to a better car will bring us increased levels of happiness and satisfaction. In fact, many of us simply raise the bar on what counts as adequate.

We work longer hours, earn more, spend more and consume more. Meanwhile, everyone else does the same. So, by comparison, we are no better off, and therefore no happier.

How true?

(I actually enjoy re-reading my blog sometimes. It is like talking to someone about my past. It makes me philosophical and happy.)