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So I am back from my trip to China/Inner Mongolia and like always, the Chinese saying 读万卷书不如行万里路 rings true. This time round, there are two things that stood out for me

1.To always build your asset 

An asset is simply a resource with economic value that an individual, corporation or country owns or controls with the expectation that it will provide future benefit (Investopedia). Or to put it in simpler terms, something you own that provide you with a benefit (either current or future).

The month of May is still considered the pre-tourism season for inner mongolia and because of that, I got the opportunity to speak to some of the locals, understand a little more about them and also saw the preparation work involved for the season ahead – the construction & renovation in progress, the concerted effort & rehearsals to provide the experience that tourists are looking for.

And this is what it is. For towns whereby tourism is the main or sole source of income, the preparation is what matters because 3 months is all they have to determine their quality of life for the remaining year. Just a 3 months window period to earn their keep. And because of this precious window period, every single choice they make now and every single ounce of effort that they put in is meant to build their asset such that when tourists swamp the place, their homes will be able to offer the experience that tourists want. 

So build your asset, make it work, and stay relevant.

 

2. It is not just the Financial/Material Assets that we need to devote attention to. Social Assets & Value Creation Assets matter too. 

In general, Singaporeans are very much aware of the traditional Financial/Ownership Assets. This includes Property, Investment & Equity in Business. Then we have personal Value- Creation Assets whereby economic value can be derived from you providing your Skill, Intellect, Experience or Advice.. And we have our Social Assets consisting of our social influence and relationships with others.

In Beijing, we met a bus conductor who suggested that we alighted at a different stop from where we intended to. He subsequently became the driver who brought us to the Great Wall. Perhaps we should have been offended because we were kind of being cajoled into alighting at the stop where his car was parked, but we were not because we liked him enough. Maybe because from the moment we boarded the bus, he had build up his social asset (I honestly do not know if it was deliberate but he was really sincere and friendly throughout). More importantly, he was indeed able to provide value to us – bringing us around the (other) tourist traps and offering to help us bargain for souvenirs.

And I guess this is it… Beyond the usual dollars and cents, it is important to build our own ‘personal assets’ – to constantly find a way to provide value to others and to have healthy level of social capital. Not only for a wealthier life, but for a happier and more fulfilling one.

 

 

On most days, I am my client’s financial advisor – The one who manages their investment portfolio, advises on their insurance portfolio, plans for their kids’ education, their retirement and the one who assists with their businesses’ risks and crafting of employee benefits.

On some days, though, my clients have been my best teachers – some of them taught how not to follow their own financial footsteps while others taught me some of the most empowering beliefs about money and business. Because our attitude towards money will become our reality.

 

#1 Money is important, and it has nothing to do with happiness.

I know so many people who would tell me in a blink that happiness is more important than having money. I agree that happiness is important but it is not more important than money because they are not items to be compared and they are not entirely correlated. After all, not all who are rich are happy and not all who are happy are rich. It is probably a lot more complicated.

But trouble boils when people go around with the story of ‘happiness is more important’ and shelf money management away entirely. Because when we do not give attention to money, when we do not treat it seriously, we will never achieve a satisfying situation with it.

So perhaps the simpler way is to really view money & happiness independently. We can all choose to be happy but we should also accept the importance of money. Because when we only start planning when money becomes important, it is usually far too late.

 

 

#2 It all happens for a reason, and it has got nothing to do with luck

Horrible boss, no job prospect, no time, no independence, no guidance, no money. One of my clients was in that exact (horrible) situation but he created his own opportunity and luck. Back then, the company he was working for had no intention of developing his area of business – but he continued to network and build ties in China. 2 years in, once he was ready, he came back to Singapore and started his own business – thriving and well, with a partnership with his previous firm.

At the end of the day, it all happens for a reason and it has got nothing to do with luck. Personal and financial success is a result of determination and self-awareness.

 

 

#3 The rich get richer, the poor can get richer too

What most of us are more familiar with is that ‘the rich get richer and the poor get poorer’. On one hand, I fully understand how that came about. On the other hand, I know it does not have to be this way.

Having the belief that ‘the rich get richer and the poor get poorer’ is pretty disempowering – it results in inaction because one may start believing that limited ‘resources’ limits one’s opportunities. People who are in sticky financial situations may not do anything about their situation because they do not believe that things will change. Or they may always be doing the same thing because of the the fear of change/loss (greater loss aversion).

But drawing reference to #2, resources go beyond external factors. Sometimes, you have to create your own resources and luck. Sometimes, you have to take a risk, change a job, change your mindset – The rich get richer but the poor can get richer too. Richer, relative to a previous situation.

Because sometimes, it’s all about baby steps

Yesterday marks the end of Financial Alliance’s Overseas Business Convention. On to the next part of my journey. As the saying goes… 讀萬卷書不如行萬里路. A short trip for clarity, I hope.

1) Spending more during a sale

It is not gender specific. Really. Both men and women make impulsive purchase and this happens more often during sale & discount, and especially when people feel that they are getting something for Free (Hurray!). But by the time you are done with shopping, you probably only really wanted 6 of the 10 items you have purchased. Discount? What discount?

So the next time you see a big red sign stating One for One, avoid it unless you actually really want it. Or you may end up with TWO tops that you hate and which would simply take up space in your wardrobe. 

 

2) Spending more, on something that you do not actually want. 

More than once, I have met with almost death stares when I order bottled drinking water or willingly pay for water at restaurants. 
Afterall, why would anyone pay for something that is ‘free’? So within that short few seconds of being told that water costs money, some of us would feel dissatisfied and go through a new round of decision-making; “WHAT? why should I pay for water? I’d rather pay for a proper drink. That’s fairer.” and to finally ordering a drink which we may not necessarily want, but which we are comfortable in paying for.

That is, we end up spending more on something that we do not actually want. 

So really, if you are not the owner of the restaurant, try not to be too affected by their margins. Focus on what matters: know what you want and is willing to pay for it. And when this is clear, you will know exactly what to buy when the sale is going on.

I recently sent out an email update to my investment clients to highlight on the recent market volatility (led by the intersection of the U.S tapering and the ill data from the developing markets/banks). Some of my clients, who are highly aware of what’s happening, sees & seized the opportunity to increase their holdings. Some others are a little concerned on the ups & downs of it all.

But at the end of the day, I believe we will all go back to basics. 

This quote (grass and all) reminded me of an analogy that I read from before: Investing is like farming. If you sow a seed, you have got to give it time before the seed grows and bloom.
And this is it about investment. It takes time. It takes patience.

If you have invested in the STI at the peak in 1990 and have done absolutely nothing about it, your investment would still be up by almost 100% today.

On the same analogy, if you would like to harvest a crop in the fall, then we cannot sow the seeds in late summer and expect a good harvest.
And this is it for retirement. It is impossible to invest for retirement at 59 when you expect to retire at 60. Investing early for retirement -sowing the seeds early- means that you allow your seed the time to grow bigger and stronger- such that it can weather through storms and the market volatility even through your olden years.

I have shared examples of the impact of starting early. So, why not another one, just as a gentle reminder.

Let’s assume that two friends start their jobs at age 22
-Investing Early: Jane begins saving immediately. She saves $6,000 per year for 10 years, until when she is 32. She received an average of 8% annual return on her investment. By age 60, Jane has ~$809k. She invested a total of $60,000 into the portfolio.

-Investing Later: Julia, on the other hand, only started saving at the age of 32. She saves $6,000 per year for 28 years, until when she is 60. She also receives an average of 8% annual return on her investments. Julia invested $168,000 into her portfolio, but the value at age 60 was less than $620k.

Now, if we were to take into account inflation and time value of money, the result is still the same. by starting later, you consistently need to save a higher % of your income at every single point of your life.

So during volatile times like this, it’s back to the same old advice – hold tight, and watch the trodden grass regrow.