• Financial Lessons

    Several times a year for the past few years I would revisit and update a spreadsheet that I created sometime back in 2010/2011 to track my (and wife’s) financials. It tracks our incomes, expenses, investments and assets and gives a projection of savings over a time horizon. Ever since we got married and bought a property in 2009 (with a loan, of course — as most Singaporeans do) I was concerned about the $200K+ property debt I had incurred; I worry that I may not be able to pay it off — let alone “retire” comfortably although I do not really buy the idea of a retirement. I believe in a working retirement, but this will be a topic for another day.

    The intent of this blog post is to share with you several expensive and painful financial management lessons I have learnt over the years. I know that it may be too late by the time people read this (as is usually the case) but hopefully those who follow my blog will be able to share their experiences or gain some good knowledge before shit hits the fan.

    This entry will be more of a summary since I will not be able to cover everything in a single post. I will try to write detailed follow-ups in the near future, and possibly also use this to track/share my investment moves and progress over time.

    A little history

    In 2009, I bought my current 5-room HDB flat with zero — yes $0 — COV. I was lucky to have bought it during a minor downturn in the property market. Even then, it was rare to buy a flat with no COV.

    Before I purchased my property, I set aside $10K of my CPF OA monies into Prudential Investment-Linked Funds (PruLink Singapore Managed Fund and PruLink Global Basics Fund). I was lucky (or maybe not) to have done this before the government imposed a minimum balance in CPF OA before money could be used for investments. The primary goal was to prevent HDB from taking all the money from my CPF OA for the property downpayment so I’ll have some rainy-day reserve. The secondary goal was to grow my money at a better rate than the prevailing CPF OA interest rate — as of this writing, 2.5% p.a..

    In 2010, I decided to speak to a friendly financial advisor on how to grow my savings. I bought into two Prudential endowment plans (PruFlexiCash and PruSave).

    In early 2011, I received a lump-sum payout from my business and once again approached my friendly financial advisor. I invested 30% of my cash savings into more Investment Linked Funds (ILF). The funds were distributed between a mix of global equities, bonds and commodities — something I thought to be very balanced and risk averse until the markets dipped in July/August 2011 right after I invested my money. FML.

    In late 2012, I finally got my online account for Prudential working and found out that my “investments” weren’t doing very well. In fact — they were in a mess. I switched several funds around to something that was relatively stable and growing — Singapore bonds.

    In 2013, I decided to buy some shares on SGX myself after realizing my Prudential “investments” were a load of bullcrap. Listening to my old man (who by the way is not your typical uncle trading tips with other uncles at the coffeeshop; he reads lots of books, of course including Warren Buffet’s book) and his theory of “it is never the wrong time to buy for the long term”, I bought into several shares between April and May. The government announced a bunch of cooling measures that killed a large % of my real estate shares and then a big market slide in September dealt a second blow. It’s the 2011 deja-vu. How unlucky can I get?

    Fast forward to 2014

    My flat has since gained approx. 38% in (unrealized) asset value but I ain’t going to sell it just yet. However if I do sell it, the nett gain after deducting interests would probably be somewhere around 25%.

    My CPF “investment” was at -36% of its original value before I switched funds in 2012. As of this writing, it has improved but is still at a miserable -32%. This is after 5 years!

    I also learnt that my endowment plans pay hefty commission charges and may possibly not yield the projected 3-7%, but forgoing it early would mean massive losses so I’m just keeping it for the sake of keeping it. Premiums paid-to-date (after exactly 4 years) are around $26K but the current value of the policies are only around $13K. That is almost 50% of losses for early surrender.

    My cash investment-linked funds from 2011 are at -8.3% its original value as of this writing. This is after waiting it out for more than 2 years. It was even worse prior to me switching to bonds in late 2012.

    My SGX shares are at -6% of its original value as of last week when STI fell below 3,000. But after adding dividends this turns out to be not too bad — my losses are around -4% nett considering that I entered at a really bad time near the peak of 2013 when STI was >3,400. I take this 4% loss as “school fees”.

    So with 4 years of crappy financial management, I asked myself if I could have done better.

    Summary of lessons learnt

    Not all debts are bad. I believe most articles on financial prudence would advise against debt, but it is near impossible for a young working couple to own a home in Singapore without a loan.

    Don’t trust your friendly financial adviser. Even if he meant well, the training he had received may not.

    Endownment plans are bullcrap unless you are the sort who does not know how to save, then it forces you to save (somewhat).

    ILFs are the ultimate garbage. The commission charges will kill you.

    As a summary of the three points above, never trust somebody else to manage your money for you… well… because it’s not their money.

    The one thing I am not sure about yet is the stock market which I will learn about and experiment with over the course of the next one year.

    Stay tuned for further updates…

  • Ushering in 2014

    2013 has been yet another crazy year, although much better than 2012. A summary of what I have learnt in 2013: –

    • Patience is a virtue, especially when driving. (Easier said than done.)
    • If you ask, you shall receive.
    • Expectation is a bitch. Expect less and you may be happier.
    • In order to grow yourself you need to grow those around you.
    • Regrets are meaningless. Instead take them as lessons learnt and make the best of it.
    • Money is a tool. Use it to buy more experiences, not things.
    • Stock markets are dominated by computer bots. Be weary. Do not trust reports from trading firms.
    • It’s never too early to plan your finances. Track income & expenses in detail. Document your net worth monthly.
    • Healthy food costs more, unfortunately. If you can afford it, eat healthier instead of getting a $60 haircut. I went to QB house for the entire of 2013.

    Plans for 2014: –

    • New house — hopefully to regain some sanity.
    • New member of the family (fingers crossed).
    • Continue growing myself and people around me.
    • Learn to be more focused.
    • Learn to be more positive.
    • Make more friends.
  • Wheel upsizing and ride lowering – why you are doing it wrong

    Wheel upsizing (wider tyres + larger rims + wider offsets) and ride lowering are very commonly seen vehicle modifications. Many do so primarily for aesthetics and do not understand how these modifications affect handling. They think or hearsay they are improving their vehicle handling, but they are not.

    When tyre widths and wheel offsets change, suspension geometry is altered. Handling can be, and is almost always (if done cheaply) affected negatively — unless the manufacturer had set up the suspension poorly to start with.

    Price, size or performance? Choose two.

    Wider tyres can provide more grip but hurt fuel economy. The fact is that most people barely drive their vehicle to its limits. Worse even, some upsizers may compromise with cheaper tyres as larger tyres are significantly more expensive, so the effects of wider tyres may be completely negated by cheap tyres.

    Adding on to the list of grave mistakes, many actually ditch their heavy but sturdy stock wheels and opt for cheap wheels that are touted to be light, hence fuel economical. Little did they know these cheap lightweight wheels may crack easily. Good quality forged wheels are extremely expensive.

    Assuming all goes well and high quality rims and tyres are purchased, the list of mistakes do not end here.

    The usual theory goes: wider track and lower car = better handling, right? Not entirely correct.

    Here’s why.

    1. Wider track causes softer suspension. When wheels (offset) go further outboard, load on the suspension increases and as a result the ride becomes softer. To compensate, stiffer shocks and springs are needed. BMW, for example, would sell cars with staggered and non-staggered wheels. When opting for a staggered setup, the rear track becomes narrower because the staggered rear wheels are heavier. This compensates for suspension loading and also reduces understeer (wider front track = less understeer). Unknowing BMW drivers who opt to use spacers on the rears instead of installing proper staggered wheels are actually making their handling worse.

    2. Lowering springs? Need new shocks. When lowering springs are used without matching shock absorbers, the shock absorbers will wear prematurely and not perform optimally. Shock absorbers are designed to work within a nominal ride height and lowering causes it to work outside of its designed parameters. Lowering springs are also typically stiffer to prevent the lowered car from bottoming out easily. Shocks and springs that are mis-matched will result in a bouncy or unsettled ride. Again, this negatively affects handling.

    3. Rubbing fender? Too low! Wider offsets and excessively lowered rides may cause wheels to rub against fenders. When most people experience a rubbing problem, they tend to return to the tyre shop. The solution offered is usually a recommendation for lower profile tyres or sometimes even narrower tyres resulting in stretched sidewalls. Doing so affects the speedometer, odometer and fuel economy readings. The right thing to do is to raise your ride height and get a proper set of coilovers.

    4. Bottoming out? NEVER use spring stiffeners! Excessive lowering and poorly set up suspension will cause the vehicle to bottom out easily. That’s because most lowering springs are not very much stiffer than stock springs and cannot cope with the extra load and reduced travel. I have heard of “spring stiffeners”. These are basically blocks or “retainers” sitting in-between several coils of springs preventing them from compression. Doing so is NOT recommend — for your own safety! It will cause uneven stress across the spring and a broken spring can be disastrous. Get a proper set of coilovers!

    5. Lowering can actually lead to more roll. Most people do not understand the relation between roll center, instantaneous center and CG. When a vehicle is lowered, the CG of a vehicle may be lowered but the roll center could actually move further away from the CG. This creates an increased lever effect making the car roll more even though it is closer to the ground. The result is sluggish handling. The easy fix is to install stiffer suspensions but that has an effect on tyre load. The ideal fix is to correct the vehicle roll center by modifying suspension arms.

    6. Increased track? Steering and braking may be compromised. When track width is increased, scrub radius is reduced especially for FWD/McPherson strut vehicles with -ve scrub. A small change in scrub radius can significantly alter steering feel and braking stability. The change in steering weight or sensitivity (“twichiness”) is usually mistaken for better handling. Most will never realize that they may have also compromised braking stability because it is never tested.

    7. Excessive lowering causes camber issues. Most road cars do not have adjustable camber in the front. Without compensating for the increased -ve camber when lowering, tyres are subject to premature inboard wear. Change in camber can also affect a vehicle’s understeer/oversteer character, especially for cheaper FWD cars with torsion beams in the rear — camber angles do not change at the back when lowered. Excessive lowering will even cause +ve camber gain on most vehicles with McPherson strut front suspension. This will cause cars to actually flip over in an aggressive corner. Here’s a video I found on YouTube showing how the camber changes across suspension travel.


    Strut Suspension Camber Behavior.

    To properly lower a vehicle and increase its track width, a lot of modifications are required and mostly requires a complete overhaul of the suspension components. For most people, it’s just not worth the money.

    The cheapest way to improve handling on a normal day-to-day vehicle is to install a good set of tyres and proper brake pads. Most stock brake pads are too soft (adhesive type) because they are designed to work in cold (read: snow) weather. We do not have cold weather here in Singapore. Switching to a harder (abrasive type) pad will drastically improve braking performance. The only downside is that the brake rotors will wear faster and the brakes might squeal if not bedded in properly. Also ensure tyres are properly inflated — it makes a world of difference.

    Tyre inflation tip: Add more pressure to the front tyre and reduce in the rear. Most cars, even RWD ones, are designed to understeer right out of the factory. A slight change in pressure (+/- 2psi) will alter its handling character.

    I hope this has benefited you and saved you some money you should never have spent. Safe motoring!

  • Motoring tips for wet Singapore roads

    It’s the time of the year again. Singapore gets an average of 19 rainy days and about 260-290mm of rainfall in November and December1. Flash floods and accidents are reported everywhere, as if our traffic isn’t already bad enough!

    There’s two things all drivers can do to help yourselves and help other road users.

    First, get yourself a bottle of spray-on Rain X. Don’t be one of those driving at 20km/h with hazard lights, fog lights and high beam on. It only slows traffic and makes visibility worse for other road users.

    All you need is a few pieces of newspaper. Go to a sheltered carpark. Wipe off any water with a sheet of newspaper first. Spray on Rain X generously on the front, front sides and rear windscreens. Spread/apply with newspaper. Be sure to cover the entire windscreen. Wipe clean with a new sheet of newspaper. Repeat and apply/wipe off one more time. Also apply some on side mirrors. You’ll be set for the entire month.

    Next, this is the time to get your tyres replaced if they are balding. Please don’t buy cheap or eco tyres — they have poor grip, that’s why they’re eco! Friction and fuel economy are inversely related. A lot of eco tyres are made for comfort and longevity and barely saves you any more fuel than a properly inflated tyre. Never compromise your safety for a few dollars in savings or fuel economy.

    Some tyres that are relatively quiet and known to perform well in the wet are Michelin Pilot Sport 3 (PS3) or Goodyear Eagle F1 Asymmetric (v1 and v2).

    The next thing you should check is your tyre pressure. A properly inflated tyre can make a significant difference in aquaplaning and braking performance.

    For FWD cars that are nose-heavy, I usually increase the front tyre pressure by 2-3 psi above the manufacturers’ recommended cold pressure (found on the door pillar or fuel filler cover). Most FWD cars have lower front tyre pressures to induce understeer to make their lawyers happy, but an under-inflated tyre is not good for the wet.

    A good mechanic once told me that if there’s anything you shouldn’t save on, it’s tyres, suspension and brakes.  Each tyre makes a contact patch no larger than the size of your hand. Added together, the total contact patch is no larger than an A4 sheet of paper. That’s the amount of rubber holding your 1,400kg car to the road.

    Safe motoring!

    P.S. I’ve heard people say Rain X damages wiper, etc. Seriously, wipers costs almost nothing to replace compared to a weekly tank of gas. If you keep your windscreen clean and just give your wipers a wipe down often, they should last very long. Our hot tropical climate damages wipers quickly especially when it sits under the hot sun against a dirty windscreen.

    1 Source: Climate of Singapore, from http://en.wikipedia.org/wiki/Geography_of_Singapore

  • Where have the peaceful HDB estates gone?

    I haven’t been blogging for a while, so this really means something I feel strongly about to have me start writing again.

    Wifey was down with high fever over the long Hari Raya/National Day weekend. Her fever persisted for four days. It went as high as 39.5 deg C.

    Earlier this morning her fever was up again at 38.2 deg C even after a half-dosage of Panadol. Fearing it was dengue or some avian-flu thing, we drove to NUH A&E at 4am to have her X-ray and blood tests done.

    As usual it took several hours to have tests done. By the time we returned home it’s already 7am; dengue tested negative, thankfully.

    Wifey took her meds and laid down to rest while I headed downstairs for breakfast.

    Just as I got home from breakfast all ready to do some work, lo and behold, all the pounding from neighbouring renovation works started. Adding on to the pain I still have my stomping neighbour upstairs randomly banging shit around the house at night — especially over this long weekend.

    In short, I have practically no peace at any time of the day. It does not matter if I’m trying to do some work or trying to sleep after taking meds.

    This is not the first time.

    A headache was brewing from all the noise. My skull felt like a cracked egg.

    I even made a recording with my phone. Playing it back appalled me. (Question: How can I share it?)

    Where have the peaceful HDB estates gone? I don’t remember hearing neighbours stomping, renovations for weeks on end, pounding/chopping boards from housewives or noises from bamboo poles hitting against (stupid HDB design) metal railings. These are all noises I hear only after I moved to my new flat.

    I was rarely woken by external noises at my parent’s flat. The loudest thing would be my mum yelling at me to wake up, the kranguni man or the hum from the vacuum cleaner. Occasionally there would be renovation works, but not once every two months!

    Right now I can hear (if you have some faith in a musician’s trained ear) three concurrent pounding/drilling works going on.

    What is wrong with our houses? Why do people have to tear them apart and put them together over and over again. Why are people moving houses again and again? Not tired meh? Not expensive meh?

    With 20 to 30 storey HDBs built in closer and closer proximity to each other I foresee these noise issues to be even worse in newer estates.

    All these made me wonder if I should just suck on it and save up to buy a landed property with my parents or simply leave this country because of the ridiculous property and car prices.

    What good is life with no peace? Can’t work without peace, can’t sleep without peace. Heck, tell me if you can make out with your neighbours drilling. Baby bonus my ass.

    The government needs to recognise that noise pollution is a major issue in densely built up areas. Our kampung era policies don’t work anymore. If they don’t work on doing something about this and leaving it all to “community mediation” we’re going to have neighbours burn each others houses down soon.

  • Building another Joomla or WordPress site?

    Looking to build a website for your business? You have been warned.

    Somebody I know had her company’s site done by one of those companies selling Joomla or WordPress ‘packages’. When she saw the end result, she face-palmed. When I saw it, my reaction was pretty much the same. The site was riddled with horrid mix of serif and sans-serif font, bad alignment, varying font sizes, etc.

    For about $2,000-$3,000 dollars you can have these people build you a Joomla or WordPress site, but you really pay only about $800 for it because the government is helping you pay the other 60%, or about $1,200 via the Productivity and Innovation Credit (PIC).

    No, this is not a blog entry to advertise the PIC. There’s rampant abuse of the PIC scheme, and it has actually created a lot of crappy work (and IMHO, crappy jobs). Not to mention photocopiers selling for $15,000 with “cashback”.

    A lot of these web “design” companies are selling you nothing but pre-built templates reused over and over again. No surprise all their client’s websites look pretty much the same. With some changes to color and images, bingo! They’ve transformed the template into your website.

    But wait… it still looks like crap. Why?

    A lot of ‘designers’ are really just ‘developers’. Designers come from art school. Developers come from IT school. A lot of these designer-developers don’t even understand basic typography, let alone color theory, or help you with illustration or photography. And if they aren’t good in English, expect your site to be riddled with grammatical and spelling errors.

    When you engage a proper web design firm you actually are paying for a lot of things. A good company will actually advise you on the kind of content or site structure you should have, and also be able to provide additional services like copywriting, photography, illustration, etc. A proper design firm needs to hire both designers and developers, and they’ll also need somebody to manage these two very different groups of people and ensure they don’t kill each other.

    If you are really looking for a cheap solution you can actually buy beautiful templates off sites like Template Monster for a fraction of the money, then engage a freelancer to help you add content and deploy it to a hosting provider.

    You’ll want to choose a template with the similar color theme and typography as your corporate brand. You don’t want to mess with colors or fonts — that’s a job for designers.

    Nowadays the first impression people have of your company is through your website. Don’t underestimate the impact a website might have on your business. Messing a website up is as good as messing with the signboard and interior design of a retail shop.

    One final word of advise — make sure you get a company that can support you through upgrades and security patches of the CMS you use (WordPress, Joomla, Drupal, etc.) preferably one that provides hosting service as part of the package. Most people with Joomla sites built a few years back would have had their site ‘hacked’ by now due to security issues (I’ve dealt with a lot of these cases). If you must, choose WordPress. It’s better than Joomla in terms of security.

    It’s really 一分钱一分货.