Investing in yourself (kidding) (not really)(do it)
People shift their dough between asset classes all the time.
In economic recessions, safe slowmoving assets like cash and fixed deposits make more sense. In optimistic booms, you would wish that your money was in stonky stocks for higher growth.
Recognising where we are in the economic cycle can help you predict the future.
Put less magically, you’ll be able to recognise the best times to shift your money from one family of assets to another.
Like a farmer waiting for ripe spring soils before planting, it helps to know the seasons!
The economic cycle has four stages: Expansion, Slowdown, Recession, Recovery.
Many things affect this cycle! Consumer optimism, changing interest rates and government policies influence how much money people are willing to fling out there, and how much they want to keep in their pockets.
Here is how most investors rotate assets in each part of the cycle:
Right after a recession, optimism starts to rise and interest rates are decreasing. people are willing to borrow and invest. Industries like tourism, retail, automobiles and technology start to accumulate demand. ETFs are a very popular way to take advantage of the higher return rate of equities while spreading your risk exposure in these high times. When it becomes clear that governments will raise their interest rates, this is the best time to sell bonds and increase exposure to inflation-sensitive commodities and real estate.
Expansion -> Slowdown
While business continues to do well, fears of a pending crash and all-time-high interest rates (aka governments trying to encourage less spending and inflation) often result in a sector rotation within stocks to safer, blue-chip dividend growth stocks (think Pepsico, 3M, P&G). As the expansion slows, it’s a good time to collect your earnings from past optimism and growth by selling higher-risk stocks, equities and shares at their all-time-highs and accumulating cashand fixed deposits before the next recession.
It’s hard to predict when the economy is in a slowdown or still in expansion. In times of doubt and uncertainty, Gold is a popular hedge which may still be volatile but never go to zero.
Slowdown -> Recession
If you’ve allocated your assets well, this is you in a recession!
When the market crashes, business optimism takes a hit and investment sell-offs trigger massive drops across the economy.
Schoolkids remain blur, generally insulated, and quite happy.
In a recession, pretty much all asset classes decline. Whatever the cause, crashes are often sudden! Here, the art of moneyparking becomes more about losing less than seeking growth. Once it’s clear that an economy is in decline, goverments reduce interest rates to ease the drop, making bonds and fixed assets more attractive investments to buy.
Recession -> Recovery
At the very bottom of the recession, it is a great time to buy resilient stocks which you think will last through the recession and return again (just like SG Airlines in the heart of COVID last year…) As the mothers say, “This one is by the government … won’t fail.”
This is the part of the market where you “Be fearful when others are greedy. Be greedy when others are fearful.” (quote by Britney Spears)
Sentiment around the very bottom of a recession is awful – people are pessimistic, companies are doing very badly, and it can often slip one’s mind to tackle the market with an aggressive, optimistic portfolio. But that is the best time. Stocks perform best over the long term, and depending on your risk tolerance and needs, having some cash around to invest more during recessions can help you emerge with a better outcome.
Using the Economic Cycle for decisions
Knowing how money flows cyclically can help you in other choices too!
For example, if you were deciding whether to buy or rent a home, and wanted to know if real estate would be a better investment than having spare cash for stocks from renting your house, you might want to look at how the real estate market has historically reacted around big crunches like COVID!
In fact if you took the remaining, er, $2000-3000 of cash you had and grew it at a faster rate than the property market, you might end up with more value than if you bought a property!
With new eyes, you see your cash and property as two different types of investments, subject to the economic cycle in different ways.
I hope this helps you see the variety of assets out there, and how they respond to the market!
There is much more to uncover, like the different types of crypto, how to tell which part of the cycle we’re in, and more! For another time 🙂
You can let me know your feedback in the comments, I’d love to hear suggestions to make these posts more useful.
On top of the ~80,000 houses available, 1600+ renovators are available. There are hundreds of millions of possibilities.
How to decide sial.
I find it helpful to list your minimum requirements. Specifically, the things you need a house for.
If I lived alone, my house would be for:
For this bare-bones existence, I’d need a…
And that would look like:
This box is about 12 square meters, or 130 square feet.
So now that I know I need 12sqm, browsing property sites is a little less scary. Looking at typical HDB sizes, even the humblest of flats is enough:
1 Room / Studio: 36 sqm / 388sqft
2 Room HDB: 45sqm / 484sqft
3 Room HDB: 65sqm / 700sqft
4 Room HDB: 95sqm / 1023sqft
5 Room HDB: 115sqm / 1238sqft
What about couples? The budget life is hardly glamorous, but nonetheless the mental exercise of defining your minimum requirements (perhaps with a woke spouse) makes navigating the ocean of buy/rent options a little easier.
Budgetbox v2 is about 16 square meters, or 177 square feet. Amazingly, a 1-room HDB is still larger.
Knowing the minimum size for a liveable room gives us mental building blocks to imagine greater needs – how much space do you need if you wanted:
Adding the building blocks is a simple guideline. However, with multiple people, amenities like kitchens, desks and washrooms can be shared for further economy.
You can add literal blocks to get a picture of the minimum floor space needed:
Your mileage may vary – you might need a balcony, or decide you don’t need a big livingroom, or want some separate dining areas etc as a minimum. Nonetheless, here’s a summary of the experiments above for reference:
I personally would like some spoils in the house like a balcony, a garden, a rooftop view etc. But if I can’t find these spoils, at least I know what my minimum requirements are, and whether they’re met. I hope this experiment brings some comfort to your decisions too.
I’d love to hear your feedback! Do you think I:
Missed any points out?
Should do a clear explanation on any bits?
Could go deeper in certain areas?
You can let me know your feedback in the comments, I’d love to hear suggestions to make these mental tools more useful.
A key feature of this calculator is seeing how much your initial loan increases (e.g. 150% of its initial value) if you stretch it out over a longer period of time. For example, if you take a$800,000 loan at a 2% interest rate, paying it over…
10 years: Total sum paid is $872,182 (110%) at $7,361 monthly
20 years: Total sum paid is $956,748 (120%) at $4,047 monthly
25 years: Total sum paid is $1,000,687 (130%) at $3,391 monthly
30 years: Total sum paid is $1,045,684 (130%) at $2,957 monthly
35 years: Total sum paid is $1,091,698 (140%) at $2,650 monthly!
See how the tradeoff works? You sacrifice liquidity every month for a lower total amount. In the long term, it may look like a good idea to pay off your loan quickly, but you really have to be able to give up that amount of monthly cash. This article covers both sides of the dilemma quite well I think!
If you’d like to play with it and add your own figures, you can download the calculator here:
Looking back on your timeline, how many houses did you live in?
Most of us think of:
If you live outside of Singapore, where houses are cheaper, maybe more of a:
I base these on countries like Canada or the States, where housing is a little cheaper than Singapore. Certainly helps to widen the variety of options in one lifespan.
For the lucky bunch of us who need less variety and pretty much know what they want, the options are simpler:
In these fantasies, the first house you buy is the last house you buy.
Assuming you can confidently live by yourself/yourselves, you know what house you (and your spouse) want to live in, age in, kidz in, retire in and expire in.
If you can’t afford a loan yet, rentals might be a waste of the savings+investments you’re building to afford buying this One Home.
So in conclusion…
If you crave less variety and have researched enough to have high certainty in the house you want, save up to buy.
Of course, if you have the luxury of being in a multi-generational flat, and are comfortable living with parents, you may not have to worry about buying at all. This might seem outlandish if you subscribe to the idea of independent living, but 3Gen flats are still a thing here.
I’ve met adults with children who live in the same flat as their parents, who have no intention to move out. It’s not for everyone, and it’s not for me, but I can see how 3Gen flats are a supremely convenient, secure and frugal choice.
To some, staying in the same box for 10-20 years gnaws at the soul. Comfortable routines and neighbours may be valuable to some, but life can look short. The world, your oyster, is ever ripe for the picking (well, opening). (tasting?)
What tempers variety is children and affordability.
Children of parents who travel a lot don’t recount a great experience (Check out this Reddit and this Quora). While moving is exciting and makes your kids super-adaptors, it’s hard to build lasting relationships with friends who you’re ripped away from after years of bonding. LDRs are hard enough.
My advice to variety seekers who also want kids is to go forth and move to a new setting/view/style, but relocate near the same schools and amenities to help your children grow some deeper social roots in a community. Most friendships take years to form, developing the ability to maintain long relationships later in life. See the Reddit and Quora links above for more perspectives about this!
For readers who don’t want kids, its a lot easier to move houses frequently, as long as it makes economic sense to you. Which brings us to…
Looking long term and buying a dream home for your 60-year old self can be tough for your cash!
If you’re looking to buy, say, a landed property for your retirement higher than 1000sqft (approximately a 4-room HDB flat, or 27 king-sized mattresses), most of those will cost you upwards of $800,000 SGD.
If you took an $800,000 loan for 35 years at a fixed interest of 2.6% (rates are lower now but it’s a good average), your future selves woulda paid $1,183,692 in total – 150% more than the initial loan amount. Renting 5 increasingly expensive different places over the same 35 years could save you $108,492.
$100,000+ That might look measly in a conversation about real estate prices, but if you put that sum to investments you could be saving much more than you think!
So buy or rent?
My personal opinion is that if you haven’t tried living in your own place yet, the experience is absolutely worth it (The woke salaryman covered this pretty well). If you are just trying things out first, go for a rental and go low until you learn what you really want. Renting provides the flexibility of GTFO-ing when you’ve had enough of one place.
Otherwise, jumping into a multi-year commitment to pay a monthly mortgage can be stressful if you:
Are unsure of what house you want for the next 30 years
Don’t have career stability (mortgage payments are harder to get out of than rents)
Don’t have enough savings to bolster 6-12 months of expenses on a rainy day!
However, once you’ve figured out what you want, and can afford a loan to get it, and have enough savings to buffer a year of low/no revenue, I think that buying is a legit option.
I approach the Buy vs Rent question like a buffet.
At a buffet, I’m faced with 20 options at the table.
In plate 1, I sample a small part of each food on the menu.
Some food sucks. I take note and avoid it in plate 2.
Some food is not bad. I will add it to plate 2 just to double-check if I love it or not.
Some food is MUST HAVE. Smoked salmon. Eclairs. The good stuff. These go in plate 1, 2, 3, 4 and probably be part of my last bite.
By plate 3 or 4, I already have my faves down, and don’t bother with the weak options which were in plate 1. For the notbads, I’ve decided whether or not they should be dontneeds or musthaves. Applying this to housing choices, it’s like knowing what your core wants are over time, and what things are just fluff. (Do you really need that lawn?)
Before I pick a home I gotta payfor+stayin for 30 years, I sample the whole menu to figure out what I likeand don’t like, lowering the risk that my eventual choice is one I grow tired of after 15 years.
I can’t speak for what the 70-year old me might want, as tastes change, but I intend to make his decisions easier by properly planning how I spend my money today.
I hope this post helps you in your own path. Let me know if there’s..
-Anything I missed out
-Any clear explanations you like
-Anything I coulda covered better
I’d love to hear your feedback! You can post in the comments to let me know. Cheers.
I make these things to budget my life better. I hope you find em useful too.
Let’s start with cold coffee!
Note: Coffee bean only has one cold brew size, compared to Starbucks’ three.
ALSO, you can see that the maximum savings you can get is $5.50 a day on cold, black (heartless) coffee. According to my calculator (you can download it here), that’d save me $15,467 at 35.
I thought it would also be interesting to list the prices for hot black coffee, which would eventually show us the price of ice after a quick subtraction.
The most you could save here is a comparable $5.3. Of course, a kopi o kosong is not the same as a Large from Coffee Bean. You might have to drink a little less coffee a day to make those savings. Ask yourself how much caffeine you really need.
Thought it would help to compile em all in a big graph too:
Aaaand ice price!
Interesting to see the increase in markup on ice for smaller vendors. That extra 20c-$1.30 would amount to an extra $562 – $3,656 at 35.
I hope you found these tables and charts useful. I’ll be adding more coffee prices here as I see them, and the next topic will be on something close to heart – cookies.
If you want updates for new posts, you can subscribe here:
Living a short walk from the local shopping mall and hawker centre, my mornings could involve a kopi o kosong peng or an iced americano. Sometimes I grind & press coffee beans at home, so… aiyoh, daily trilemma. But alas, variety is the spice of life.
Being a me, I had to list the options.
Kopi O Kosong Peng: $1.40
Kopi O Kosong Peng (Marked up): $3.00
Iced Americano: $5.00
Cold Brew: $5.80
Note on the Homemade: This will depend on your beans; I use 35g of beans a cup, so a 250g bag at $14 = seven cups at $1.96 each.
Look at the difference between an americano ($5) and kopi o kosong peng – you could be saving $3.60 a day!
What would this mean in a year? Or 5 years?
The answer is complicated – interest rates, inflation and options to invest need consideration.
Luckily for you,
So before we get into the sheet [free download at the end of this post] let me unpack these basics:
For money saved in the bank, interest rates determine how much your saved money grows over time, or the amount that banks pay you to keep your money in their account. They would then use your money to lend borrowers and charge them that interest.
Eroder of savings. Eater of worlds. Inflation is probably the number 1 reason to invest your money, and also why my iced kopi costs $1.40 instead of $0.90 like it used to back in school.
Inflation is the rate of increase of prices of stuff (goods and services la) over time. Inflation has many causes – higher costs of stuff-production, higher wages of stuff-makers (shame on your payraise), higher demand for stuff (e.g. when people in developing citiers can afford higher standards of living) and government policies are the usual suspects.
What’s Singapore’s inflation rate? Most sources use the Consumer Price Index (CPI), which tracks the change in price of commonly purchased goods and services, including housing and transportation.
For this post, however, I’ll be using the MAS Core Inflation, which excludes fluctuations in housing and transport. More info here!
To be a little conservative, let’s go with a fixed inflation rate of 2% per annum.
A popular topic – this could bloat up a post real quick. However, it’ll be good to illustrate just what can happen without investment, so I’m going to assume an investment growth rate of 0%. Keke.
Here we go.
Savings between Iced Americano ($5.00) to Kopi O Kosong peng ($1.40) = $3.60
Saving $3.60 a day means $1,310 a year! That may not look like much, and indeed $1,310 saved in the bank (earning interest) will only have the spending power of $1,221 in 7 years.
Summing up the accumulated years of savings, 7 years of disciplined cheap coffee drinking would result in an extra $10,124in my bank account.
If I invested those savings, say, in CPF top-ups with a guaranteed rate of 4%…
$1,310 saved this year would no longer be worth less next year, but more. Specifically, the growth percentage would look like this:
I’m a project engineer and we do late nights sometimes!
While I’m not a cab guy (Public Transport is a no-brainer here!) (If you’re childless) (And don’t work in Jurong Island), the chains of late nights have a glorious hidden benefit – racking up them Grab Rewards perks. (Not sponsored, chill.)
I’ll get right to it: I sheeted all rewards I could see on my app, added their equivalent value and calculated the points/SGD for each one.
What the points/SGD column means: Lower is better. It means you can use up fewer points to get back a dollar.
The categories listed on the app are Entertainment, F&B, Grab, Limited Edition, Services, Travel and Shopping. Here goes:
So which one is the ‘most‘ worth it?
To find this, look for the lowest points/SGD item in each table. This means that you are getting the most SGD you can get from each point used.
The overall lowest points/SGD here (i.e. best deal!) is the yogofi 20% off monthly wifi voucher at 7.8 points spent per SGD.
In second place is the 80% discount of PHS Hair Science’s scalp treatment service, at 21.1 points spent for each SDS redeemed.
In third is the $30 voucher for Earnest & Collective for men’s shoes. Again, quite a niche audience, but a very worthy 133.3 points per SGD redeemed!
Important note: There’s no clear ‘best’, really, because of the “% off”-type rewards you can redeem.
Technically, if you redeem a %-off-type voucher, the amount of SGD you save is endless because it scales with the total amount spent. Also, with rewards like Yogofi’s unlimited monthly wifi, I maxed out the value by putting in the most expensive daily plan ($12.90/day for Middle East, Egypt, Reunion, South Africa), so your mileage may vary!
Did I miss anything? How can I improve this next time? Let me know what you think (comments section below). Cheers!
I invest in stocks from time to time. (I started off with the SAXO Trader platform, which has been convenient so far.) (Chill, they’re not a sponsor.) (Yet.) (Plz.)
In the wake of this downturn, I habitually check out the US stocks every night at 9.30pm when the NASDAQ/NYSE opens. I do this to keep a more watchful eye on opportunities and potential losses.
As I trade in many countries’ exchanges, keeping track of each timezone’s stock exchanges gets tiring. The list on tradinghours.com was a helpful reference, but I thought a single, unifying graphic would be easier to grasp the different timezones intuitively.
Check it out:
Note: Pre-Open/Pre-Closing Hours are excluded. If you want those details, the following table is for you.
Just to condense things even further, I thought it would be helpful to make a 24-hour clock to summarise the trading hours in a single graphic:
The clock is currently purely for the SG time zone (GMT+8). It should be pretty simple to make it easy for my source files to display relevant clock/clocks and tables for other time zones.
A brief explanation of Daylight Savings time!
I hope you like these graphics. Please lemme know if there’s
-Anything I missed out
-Any parts you want clear explanations on
-Any other ways to improve
You can post your feedback in the comments! I look forward to it 🙂