Our Love Changes; So Do Our Investments

Growing up, our parents and siblings meant the world to us. They are our whole universe.

OK, for some, they never really knew their parents since both are busy working their butts off for their careers.

Just substitute grandparents, maids, or iPads (I'm reaching for my Kleenex) for parents if you must...

Then once we started school, we discover friends!

They now meant more to us than our parents. Especially during our teenage years of trying to establish our own identity...

As we move through different schools and into adulthood, we just swap one set of friends for another. Surprise, surprise! We now spend more time with colleagues (who are not our friends) than friends outside of work!?

We say parents are important, but what do we do in practice? We spend our Christmas and New Year eve partying with friends and colleagues...

Lucky there are no Corporate Chinese New Year eve dinners or else who will spend time with family on CNY eve? Aren't you glad "Lor Hei" dinner does not clash with anything else?

Being accepted by the Group or Herd is paramount. Or so you thought.

That's until you met her (and/or him. Hey! What goes on behind closed doors I don't care).

Now she is everything.

No one else matters. Even parents. But you don't say it out loud of course! 

You dare now to disappoint the world just because of her.

Friends "jio" you out you not free. Mom asks you back for CNY you say you are taking a vacation with her.

You even willing to tie the "knot" together. What is personal freedom?

Then a child comes along...

And your whole universe has a new alignment.

Now that child matters more.

And you are willing to do whatever it takes to make that child's future a brighter one.

Your career becomes back in view. You want to provide your child the best money can buy, even if it meant you won't have time seeing your child grow...

You tell yourself nothing else matters...

P.S.  This love story is just a metaphor. If you had 10 or more years worth of investment and/or trading journey, see if it rang a bell?

Works better if your journey now include more than one asset class other than equities.

Even if you are a one asset class investor as in equities only, I'll be very surprised if your "parents and siblings" still matter the most?

 

 

Can we stop using XIRR to mean annualised return?

First, the last thing I would claim would be to an England grammar vigilante.

Second, I would never dare challenge anyone on math or business finance calculations. Not when the max I can count using all my fingers and toes looking down is 21.


But XIRR?

Really?


If you have never studied business finance subjects - you've an Arts or Science background - its excusable you use XIRR as a "financial" blogger.

But if you got proper business finance training in Poly and Uni, well, what's your excuse?

XIRR is just a function in Excel to calculate internal rate of return or annualised yield for a schedule of cash flows occurring at irregular intervals.

XIRR is not a recognised business finance acronym like CARG for Compound Annual Rate Growth.

Yeah hor?

Can always say Annualised Return like what we see in Annual Reports and the Factsheets of mutual funds.

Why then we use XIRR?

If you observant, its mostly a Singaporean financial bloggers phenomenon. Overseas hobbyist financial bloggers tend not to care about "benchmarking".

See? This is how much hold big daddy has on you even on the sub-conscious level? (Yes, its always big daddy's fault!)


The answer is quite easy.

It all started with grand daddy monkey. He's the first to use XIRR in his blog.

Then some other monkey sons and monkey grandchildren follow.

Monkey see; monkey do.


Joking lah!

But it does make you think right?

I mean Annualised Return is simple enough. Why then...

Want to bet none of them work in Sales or Marketing in their day jobs?

LOL!

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

OK, this post no short cut.

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


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



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

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

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

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

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

They see the world in 1 to 2% increments.

They pray to the God of Compounding.



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

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

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

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



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

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

We all are different.

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

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



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

Vagary.

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

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

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

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

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


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

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

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

I am approaching my bank in a position of strength.



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

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

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

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