Sunday, November 8, 2015

The market feeds on your emotions. Stand firm and believe in your objective

You heard it.

Corporate earnings disappoint. Companies face challenging market conditions, from softening of the retail climate to rising costs of rent, manpower and production. Externally, oversupply of oil with prices plummeting and there are few signs of recovery. Slowdown in China with China Central Bank imposes further interest rate cuts.

Locally, Developers are pressing for favorable regulations to incite buyers’ interest in properties. Commodities slump as demand drops heavily from China, Russia and India.The story of “emerging Asia” becomes a theme of the past as funds flow outwards to Europe. Standard Chartered is the latest bank to retrench their staff and begin their corporate restructuring. Other financial institutions are also reducing headcount and cutting back on wayward lending.

In Europe, recovery remains fragile after Eurozone crisis due to piling of corporate debts, high national deficit (e.g. Greece) and unresolved unemployment, from Spain to Italy.

Many share investors feel jittery and are tempted to head for the exit. Some think that this must not be the right time to put their money in the stock market – perhaps consider fixed income instruments instead. For investors who are getting emotionally charged and begin to think irrationally, I do strongly encourage you to step back, off your computer and ignore the market till your vision is clear. Take a piece of paper. At the centre, write down your main purpose of investment - the words as big as possible. Place it somewhere that you can see it daily, such as your kitchen window, your study table or the walls of your bedroom! Your aim can be retirement, financial freedom or to gain a certain amount of funds to pursue a goal.

Look at the situation – are you there yet, halfway on the mark or just started?

For me, I have a clear pathway. From 2021 to 2022 estimated, I foresee the peak of a cycle where positive events converged together, using the historic computation of macro-happenings and business cycles, of industries and sub-sectors. As we see, countries in North Asia to Southeast Asia have readily explored deeper cooperation at regional levels with federation and councils at national level partnered together to map out feasible agreements with lesser cross-border trade restrictions. Technology in seamless applications accelerates productivity and increases output, thus promoting growth at a faster pace.

Disruptive innovation facilitates trend build-up, making consumers like you and I highly excited about new products, including objects that we interact daily – all bundled together at the push of a button. The next phase (from industrialization in the past to artificial intelligence, machinery automation, medical advancement and robotics) may result in breakthrough and this may cause a ripple effect.

I am not a guru. No one is able to predict but I am one who likes connecting dots together. Cycles are meant for benchmarking basis. That said, I envision that my shares (in companies of cyclical nature) will be sold during this period. It’s an exit for me – after all, investment is a tool, never my life and I can pursue something greater. From now till the journey, I am focused on buying more of my cyclical stocks while my income stocks and REITS will provide me with regular dividend returns. Alongside, there can be stock opportunities (I love them!) for me to exploit since I am a commercial person, taking on calculated risks. I am still a Fundamentalist in business analysis; not a Chartist. Of course, patience and discipline are characteristics needed.

Therefore, it’s only at this junction that opportunities appear. STI may not be the lowest and certainly, the index has dropped off the cliff at some percentage points

Without negativity of world events, an Investor will not have the chance to cherry-pick and buy companies at attractive prices. It’s a great moment to keep your eyes peeled closely. Your watchlist helps to provide a good screening of “must buy” companies. And for the bystanders, you can never be assured of a right price at the right time. Have the conviction to buy from your margin of safety after your due diligence is done.

Happy hunting in the stock market for this Christmas!

Sunday, September 6, 2015

5 ways to make money before year 2015 ends

Look around you. There may be money-making opportunities.

But the environment is cluttered with various schemes – some are dubious and raise suspicion. Flip the papers and you see an advertisement promising you double-digit returns with an investment that needs little effort. Surf the internet and there are many online link-ups informing that you can earn a 4 digit income within a few days by working from home.

I prefer to pursue something that’s credible and pragmatic. In 2015, the chances are here!

Do note that the options regarding investment are purely recommendations. Every individual has their personal risk appetite. Please assess the disadvantages and advantages carefully.

1. Stock market

Not many will agree this approach - I will focus on companies in cyclical trade. In the past weeks, the share prices of property-related, oil & gas firms are beaten down due to weak macroeconomic conditions such as declining oil prices, slower demand in China and the fear of rising interest rate. This can be an entry point for investors to buy and make a profit when their growth and sector improves in the near future (you need to have patience). During the property crisis, I bought Ho Bee and Keppel Land at prices that are huge discount to NAV (net asset value). Less than 7 years, I cashed out with more than 100% gains when their assets were revalued higher due to the location, demographics and appeal of their properties.

Property crisis = buy property-related stocks

Now, there is weak property sentiment with tighter regulatory environment. It’s a good time to re-visit the forward-looking plans and pipeline of property companies. Choose one that’s promising.

The other is the oil & gas companies. I won’t see an improvement to the industry in the next 2 years since crude oil prices need to reach a stable price level first. However, it’s an opportunity to buy when many are panic selling their shares. Identify the right firm that has the network, deep capabilities and regular track record of winning multi-billion contracts.

Sell when there is an upward demand of oil, exceeding supply or when the media emphasizes the rise of crude oil prices.

2. Singapore Savings Bond

For the risk adverse, the Singapore Savings Bond is a great alternative to make your cash work than idling around. You get your principle amount back (guaranteed by the Singapore government), plus the interest income. You do not get penalised for early redemption but it’s advisable to put it for 10 years – effective return per year of 2.63% should you put $10,000. The first rollout is on 1 Sep and 25 Sep is the closing date. 1 Oct is the issue date. For details, you can refer to their website.

3. Part time worker

Be an Uber driver. Sign up to be a weekend Household Captain (don’t be surprised! guys are doing the chores with a smile). Be a babysitter. Take on the role of a Dance Instructor. Find something that suits your skills. Register on popular apps/websites to get leads. I heard of cases where you can earn a small fee by doing research and this takes only a few hours.

4. Rent out your stuff

Ever think of dumping your old chairs away? Give it to your neighbour who has an event and charge a flat fee per hour. Someone needs a bicycle. Rent out to him per hour. Your friend is inviting some friends over and needs X-box with some games. Charge him hourly usage. Start a rental business of your own. Use website like Rent Tycoon to place your product.

5. Referrals

Social media is infectious. Imagine yourself recommending a good place to eat and you get a small reward. Your friend enjoys the sumptuous meal. Win-win! There is no need to know the other party. Firstly, build a presence in Facebook, focusing on a topic of your interest that you are known for. Talk about it regularly through small, insightful posts. When you get sufficient traffic, link up with companies and agencies that will pay you for the extra eyeballs. If you get a group of people to sign up their products and services, you get a commission. Not bad for a day’s work, isn’t it?

There you go! 3 months towards end Dec 2015. Use the variety of choices above. At least, it’s legitimate and you don’t end up financially burnt by get-rich schemes.

Most importantly, take action now!

Tuesday, January 6, 2015

How to pull out key points from CEO/Chairman Statement in Annual Reports?

The AGM (Annual General Meeting) is coming. The annual report is printed with fancy images, painting a positive picture of the company. Looks like a colourful brochure to me. I flip the pages and more stunning visuals pop up. Selling the business may be appealing, however, that’s not important to me. What’s critical is the information beneath, which I need to tear out bits and pieces.

One of the first things I will look at is the CEO/Chairman statement. It’s an executive summary, providing an overview of the business. The statement is found in the first few pages of the prospectus. As example - I will use FJ Benjamin Annual Report 2012/2013. FJ Benjamin is in the business of selling apparel in retail outlets

Previously, I did a post regarding about the first 2 questions that a Retail Investor should ask in an annual report

Before going further, I will like to highlight that my interpretation is objectively angled, based on the aim of this article – what are the useful details to pick up in CEO/Chairman statement. The thinking process is the most important. Additionally, it’s practically challenging to connect many things together in an article. (easier to communicate verbally with visual drawings) Otherwise, the blog post will be lengthy. Therefore, I will cover a portion of it.

If you need to know more about the CEO/Chairman statement, please feel free to contact me (scroll down the page and the "contact me" box is on the right hand side of my blog) and I’ll send you a free copy of my template. And if you are keen to discuss further, drop me a note and I am happy to correspond with you.

Do kindly note that I do not own shares of FJ Benjamin. This report is used for educational purpose only. Seek your licensed financial advisor for professional advices.

CEO/Chairman Statement

Firstly, I will scan through the entire pages to get a “feel” about the business condition that impacts FJ Benjamin, understanding that it’s prone to macroeconomic shifts. It’s to gather the management’s opinion about the firm’s current (and future) scenario.

Next, I will write down a set of keywords found in the summary that emphasizes the business conditions:

1) Most challenging

2) Volatile times

3) Subdued sentiment in China

4) Dampened consumer outlook

5) Reduced spending in the lifestyle arena

The keywords are found on page 1 and page 2 of the Executive Chairman’s Review.

While it’s good to accept the details at face value, I will ask myself if the above reflects the current trend now – by checking external country statistics, press releases and compare like-for-like listed retailer, similar to FJ Benjamin. Sometimes, prior observation on the ground assists my cross-checks. For instance, I will randomly ask my female professional friends who are regular lifestyle shoppers and compare their feedback with published sources. (e.g. newspaper clippings and income figures)

After getting a cursory insight of the external environment, I will seek to comprehend the factors surrounding the overall business performances, using 3 pessimistic questions.

A. What causes the company to be in this stage of business performance?

B. Is this a permanent or temporary financial change to the business?

C. How did the management plan to navigate around the obstacles?

Illustration for questions A and C:

A. What causes the company to be in this stage of business performance?

It’s stated that the luxury timepiece business is the main drag on earnings, due to the subdued sentiment in China that affects consumer spending. Thus, the business in Hong Kong and Taiwan are affected.

Another reason is the inventory turnover – “orders for goods are placed many months in advance, we found ourselves with more inventory than required”

This probably may explain why the management aims to be “nimble and flexible”, as highlighted in the first paragraph, including this question that is answered briefly - C. How did the management plan to navigate around the obstacles?

I like to be on the downside, asking questions like the above. It’s during this transition that I am able to clearly discover the management’s tone and ability to turnaround the business. When the business is doing well, the CEO’s statement looks green and rosy to me and therefore, it’s hard to find out the underlying reasons.

Thus, I am practically studying the integrity of the management. No business is 100% foolproof. Since the keyword is “dampened consumer outlook”, I won’t expect above-average returns. A good way is to study the past 3 to 5 year’s annual reports and keep track whether the FJ Benjamin has been using the same reasoning. If it is, the question to ponder is “how will the top guys allocate resources, create opportunities and propel the business forward?” And has FJ Benjamin meet their supposed targets quoted in past CEO/Chairman statements?

To investigate further, I will read through the overall results of each division. The company will comprise of several subsidiaries/business units that contribute to the Group’s profitability/loss.

In this instance, I will turn to both the Chairman and CEO’s report. Here are some data facts:

There is the fashion, licensing and timepiece segment, split by country and region. You can also refer to the charts in the next few pages:

In the Chairman/CEO statement, there can be more to read within the lines. Extract essential intelligence, place them together in an A4 paper and this will make sense of where the company’s direction is heading, how they are able to react constructively during the bad times and where the business is moving forward in the near future. There can be some missing analysis. Don't worry, that’s fine. I can read up the rest of the annual reports and contact FJ Benjamin for further clarity. Certain inputs from external analyst reports are free and may help too.

Feel free to contact me at the bottom right hand corner of my blog should you need any assistance.

Monday, December 22, 2014

The first 2 questions to pop up after reading annual reports

1. How does the company make money?

Easily, you can gather the nature of the business (what the company sells) through the company website. However, it’s not just about the products and services but how does the company actually make money? To illustrate an example, I will use Straco Corporation Limited (“Straco”), Annual Report FY2013. Straco is operates and manages tourist attractions.

Please note that this is not a recommended stock pick. Seek your licensed financial consultant for advice. Any information below is used for educational purpose.

Firstly, find out:

“Where did the company sales originate from?”

“Which segment contributes the most to the company’s sales?”

To get the answers, dive into the income statement of the annual report. Look at the revenue portion. You will get the figures in 2012 ($55,198,435) and 2013 ($72,840,387). Write the figures down on a piece of paper.

Notice that there is a “Note” section, just beside Year 2013. Notes to financial statements are important to explain how the numbers are derived. Sometimes, you see the numbers are “hard to believe” while some looked reasonable.

And that’s where you need to investigate further by referring to the points. In this instance, flip to the section on “Note 16” to understand the different segments of revenue.

The section reveals ticketing, retail, food and beverages and production service fee (who does the company earn from). Next, state the highest portion of revenue. It’s ticketing with $52,626,142 in 2012 and $69,170,152 in 2013. In other words, you have answered the question on “which segment/buyer contributes the most to the company’s earnings?”

2. How does the company spend money?

Like any businesses, a firm uses their capital to hire people, set up their operations and buy relevant equipment. A company sets a budget for carrying out their work annually. A percentage of funds are allocated for each activity and it will be reviewed periodically or once per year.

Certainly, from the investor perspective, you will not prefer a firm to overspend, buy unnecessary stuff or underspend. Ideally, there should be a balance, in consideration of the business plan. If the company spends excessively, without back-up financial gateway, the firm will be trapped in cash flow problem. Contingencies are vital, just like an individual’s Career Exit Plan

For example, it’s logical to debate that a new retail shop shall remain financially conservative in the first year. Capital is raised to buy merchandises, pay for the initial shop’s fit-outs and rental costs, including wages. Hence, the objective is to reach the break-even point. That said, it’s advisable to spend creatively. Reach a certain level of awareness to a target group of consumers and this involves money - without using more than half of the shop’s start-up capital. If their total sales proceeds are weak and total expenses accrued more than three quarters of sales, at the end of the year, the shop may face losses. To an investor, that’s not good news. So, a good look at the expenses is useful.

Therefore the next sets of questions to think are

“how is the breakdown of expenses like?”

“which is the highest expenditure in the last 3 to 5 years and has the company spend it wisely?”

“Do the expenses make sense in proportion to their business?”

Turn to the income statement again. Look at the “expenses” section.

There are 2 segments. One is operating expenses and the other is administrative expenses. What makes up each of them?

Let’s refer to the “Note 17” column.

Wages and salaries (staff costs) make up the majority of the expenses. Since Straco is in the business of tourist attractions, a bigger pool of manpower is needed to provide excellent service and memorable experiences – for instance, someone to manage the ticketing counter and another to maintain the cleanliness of the premise. While this constitutes the most, Straco has kept other expenses in check, as seen in the diagram below. Straco is in the leisure industry which is susceptible to macroeconomic shocks and unforeseen natural disasters.

Rationally, the logic makes sense. For a deeper analysis, an Investor is able to pull out a similar company (in the same industry) to cross-compare the majority of the expenses and whether the company is spending money wisely.

Assume, on average for the past 5 years, a company earns S$10 million and net profit is S$1 million. An Investor has to ask where the S$9 million goes to. If the company spends it on fancy office premise and purchases a yacht, on the pretext of looking “good” to draw more business, probably the firm should have a better way of spending money.

Should the company is in the IPO stage, naturally the company will not have 3 to 5 years track record. The Investor will look at other companies of the same nature or interpret based on judgement call – and a little common sense.

Walk away if you are unclear how the company earns money and how money is spent.

Chances are, you will be swept away by the glossy pages of the annual reports. It’s best advised to look at another company.

If you need an easy-to-use document - “how does the company make money” - please feel free to fill in the "contact me" box, found on the right hand side of my blog (scroll down the page). I’ll send you a free copy of my worksheet.

There are a few self-probing questions which may be useful for beginners.

Friday, November 21, 2014

6 ways to save money yet gain something meaningful

I begin to think about how “the man in the street” is able to save money yet gain something meaningful. So, I churn out a list of activities that anyone can do, minus off the wallet.

1. Visit the Library

Take a walk into our National Libraries without flipping out a coin. Spend a day browsing through magazines or pick up your favorite book to read. Not only you can enhance your knowledge, you may also learn something beyond your imagination. Maybe, you may also know a friend next to you because of common reading genre. And who knows, sparks may fly? There are educational sessions held in the library. I used to host my career development and management workshops across the National Libraries in Singapore. Completely free and benefit people from all walks of life.

2. Check out free historic attractions

We have some educational learning that is beyond any classroom learning. One of them is Sun Yat Sen Villa. If you are Singaporean, you enter for free. More details can be found here. Others include Changi Museum and Chapel. Google it and you’ll be surprised. Your day is fulfilling, gaining insights into Singapore’s rich heritage and historic journey.

3. Chit Chat with your friends at HDB void deck

During my era, where there are not many chic and upscale cafes around, we will huddle together at the void deck of housing blocks. Armed with just a can of green tea, lemon tea or bottled water, we sit at stone benches to chat our day away while quenching our thirst intermittently. Now, it’s still possible at some housing estates. It’s a great way to share your work and life stories, especially the need to understand your friends at deeper level. It’s also helpful to strengthen your face-time communication skills – what’s the best way to do it at an informal, social level before going towards professional interaction. In other words, allocate some time for real conversations. Ditch your What’s Apps, forget Facebook. It’s time to talk. Talking is free!

4. Volunteer yourself

It’s always refreshing to volunteer some of your time to help others, especially individuals and groups who may fall below the cracks. You can do something rewarding. Have you done anything like this in 2014 yet?

5. Talk a walk in the park

I make a plan to take a breather every month. What this means is that I take leisure strolls in various parks found in Singapore. Your nearest neighbourhood may have beautiful gardens and benches. You may get a new inspiration when there is a sense of calmness and peace.

6. Jog and Run

Exercise, exercise, exercise. We have more than three marathons per year. You can jog or run in the early morning or after work. It’s an excellent option to de-stress without stressing your wallet.

Wednesday, September 24, 2014

5 things you need to know about Starburst

When I first heard about Starburst IPO, I thought this business is unique. Starburst specialises in the design and engineering of firearms-training facilities. Starburst designs, fabricates, installs and maintains anti-ricochet ballistic protection systems for firearm shooting ranges and tactical training mock-ups. Their clients include law enforcement, military and security agencies, as well as civil authorities in Southeast Asia and Middle East.

There are several positive takeaways why one should consider Starburst. The industry has high barriers of entry that many can’t imitate due to the intricate technical expertise. Starburst has the patented “Searls” trademark – anti-ricochet ballistic protection materials protect military lives during peacetime firearms training.

I shan’t talk about the advantages but focus on risks and challenges:

1) Operating cash flow is lumpy

Project fee is based on “percentage of-completion” recognition. The contracting party is able to retain 10%-20% of the contract sum upon completion of works in order to assess any shoddy work or outstanding work that yet to be completed fully. That leaves us 90% of earnings which I believe may split in 2 stages – one is design and the other is fabricate and install. Therefore, its three stages before the full payment are received. This does not sound appealing to me. This is probably why Starburst is focusing on increasing their maintenance services (after one year warranty), so that the business is able to earn recurring income. Currently, this portion amounts to 14% of group revenue as according to FY2013. Whether Starburst is able to expand tremendously (in terms of revenue splits) for the maintenance service over the years remain to be seen.

We also have to take into account that winning a contract is often a lengthy, time-consuming and complex process. As of now, the firearms training and tactical mock up service offerings is non-income recurring. So, this will create an uncertainty in revenue streams, unless there is a continuous pipeline of order book to provide the earning visibility.

2) Cost management

Starburst will estimate and buffer in any additional costs for their contracts. However, there is a possibility that the itemised costs may rise above the management estimate. For example, additional foreign workers are hired to meet the timely delivery of the project. Or there is an unforeseen increase in the cost of materials, components and equipment. Or there are under-par performances of sub-contractors and suppliers that result in project delay. (hopefully, the work is not stalled) These are issues that contribute to cost overruns which will cause a dent in the profitability of Starburst.

Another point to note is the possibility of rising raw materials cost such as steel and anti-ricochet materials under the “Searls” trademark. It’s done by third party manufacturers based on client specifications and this cost is passed on to Starburst. At the moment, I don’t see this happening as the working capital is healthy. But I can’t foresee the future in Middle East where contractual agreements (with terms and conditions) with agencies could be volatile at times. If there is a cost dispute during the project execution period due to sub-contractor/leasing of equipment problem in foreign markets, this will result in project delays and cost constraints. As a result, Starburst should have a solid cost management structure and cost contingency plan in place.

And for this reason, I also won’t expect Starburst to pay off any huge dividends in the future since the business is new in Middle East. If so, I will be hugely worried. Cash needs to be maintained for any of the unforeseen cost-based issue mentioned above. If you buy Starburst, you are aiming for capital gains. However, to attract retail investors and I think it’s attractive - Starburst agrees to pay 20% of the Group’s PAT (profit after tax) for the financial year ended 31 December 2014.

More on the costing part…. the nature of this business is working capital-intensive. Majority of the project expenses are upfront costs, meaning the past project earnings have to be received on time to pay off any short-term liabilities. The challenge is that the payment from clients is paid progressively (percentage-of-completion method). Alternatively, a cheap loan taken to pay for the overriding expenses but this means interest expenses incurred. Should interest rates rise; I am not sure how this will affect their repayment period.

According to the CIMB analyst report dated August 20, 2014, the analyst reports that there will be a Guarantor for Starburst, per project undertaken. The Guarantor is usually the Financial Institution who issues the performance bonds. This can mitigate the risks of the contracting party gone bust (in the worst-case scenario) or does not pay up over a long period of time (you are dealing with foreign agencies). I think this protect Starburst interest.

I am a little skeptical. Resolutions and legal recourse takes a great deal of time and effort.

3) Payment delay

There is a risk where the client may drag on the payment. I understand some feel the payment is prompt because the contracting parties are government bodies. Think again. Starburst is entering into new markets of Middle East that include Qatar, United Arab Emirates and Saudi Arabia. Not to forget any bureaucracy that stifles prompt payment. Starburst needs time to establish their trust, reputation and network. Especially strong business relationships.

Therefore, there is a chance of ballooning receivables when credit terms lapses. If this gets out of hand, your cash is locked up and your cash flow will encounter problems when other project costs escalate because of higher material cost.(the overall project and production cost split is found in the prospectus) Do remember to monitor the costing and accounts receivables of Starburst.

I just hope more clients of Starburst will take up their maintenance services in the near future since income is recurring.

4) Government regulation and permit changes

There is a risk of government and state-owned agencies not renewing the permit for Starburst to operate in Middle Eastern countries. I think they may be some level of regulatory approvals required. In this industry, the project bidding process is highly opaque. It’s best to check with Starburst directly. I am not in an expert on this but I do wonder why the Qatarians not choose the local Defence Contractors to work closely. There will be, of course, some level of competition amongst contractors in Middle East. Maybe the “Searls” technology is a unique selling point for Starburst, apart from their extensive experiences and track record.

5) Founder risk

I read from the recent CIMB analyst report dated August 20, 2014 that the business is highly dependable on two founders – Messers Edward Lin and Yap Tin Foo, who manage the technical and marketing aspects of the business respectively. Maybe this explains why the management owns 80% of Starburst shares, leaving limited free float to the public tranche. It can be seen as a positive sign because both will manage the business diligently. On the other hand, it can be viewed as a risk of not having a talent contingency plan and structured organization flow chart in place due to limited talent capacity. You are buying into a scalable business which has the potential for growth, but one that may operate like an SME.


I will put Starburst on my watchlist for now till valuations are compelling. If I buy, I will accept the risks and challenges highlighted and capitalize on the demand for firearms training facilities in Middle East. I also do note the competitive strengths of Starburst such as their track record and economic moat (Searls trademark). Starburst is in a high EBIT business with few competing players, an area where defence budget in Qatar, UAE are increasing.

The main challenge, in my humble opinion, is the revenue recognition process and the cost structure which may need some monitoring in place. No doubt Starburst sounds attractive from the external perspective but one need to look beyond the ringing sound of current and forecasted order book. Don’t get blown away. Stand on guard and focus beneath Starburst mode of earnings and expenses.

Wednesday, June 11, 2014

Why you should have a financial balance

I read many articles that talk about prudence and frugality. The message across is a timely reminder as an individual should not spend beyond their means, especially the high inflationary pressures in Singapore. In other words, think about saving first (paying oneself) before paying off your bills, much least spending the extra cash. Think about your emergency fund first. Think about delayed gratification, so that you can build your cash flow.

However, being superbly obsessed with every dollar and cent may bring you to the point of over practicality, such that you get upset if you spend twenty cents more over a cup of coffee. What I mean is, you hold the reign of money in such tight control that you forget the essence of life’s little pleasures - your wishlists, hobbies or self-gratification pursuits. These activities need money, no matter how less or more it is, to fulfill your desired life's journey. It can be a backpacking trip, a dance workshop, a craftsmanship apprentice program. Anything that adds value to your personal holistic life experiences. It can also be a trip with your loved ones or spending on a deserving meal that brings people together. For laughter, for bonding (you need to spend on food). Therefore, are you losing your vision completely?

Certainly, you do not want to end up a terrible miser who loses important friends or girlfriends because you are scared to spend. If you are, you may become tense and worried at the slightest mention of the word "spend". You are trapped in the soul of money that life becomes worthless to you. The hoarding of money turns you into an evil warlord that drives your buddies into oblivion. You may think I may be going to the extreme but trust me, I used to meet people who may not realize this is happening to them, though they are earning decent income with less commitments - all circumstances remain equal (not referring to any household wealth or unfortunate incidents that warrants a high level of money cautiousness). They become lonely and alone, for the sake of every growing money tree without inhabitants.

I used to have an Army friend who will walk the extra mile to McDonald’s than spending 20 cents for a washroom, simply because it’s free for the latter. The distance was 1km away. Due to his over “thrifty” habits, he started to take advantage of people during friends’ gatherings. For instance, he won’t buy a drink, citing that his throat was well. In the next minute, you would see him sharing drinks with a friend – and downing a full mug of beer without being apologetic, without politely asking. Later, we found out that he was reluctant to spend in general and like to maximize freebies whenever the chance. So that, he can save the last dollar. The last I knew about him? His friends deserted him.

For the financial experts who quote - it’s important to have a monthly spreadsheet, a tracking apps or something you do to ensure your personal finances are healthy. I agree fully. Another alternative is to develop your personal custom-made system of cash flow. But the degree of dissecting it into tiny bits and pieces could be time-draining and mind boggling. Imagine this. Let’s say you have your lunch with colleagues. You go to a coffee shop and order a cup of hot tea. This costs 90 cents. You key into your expense tracking apps. For food, you order a plate of chicken noodles that costs $3.00. You key into the same apps. You feel a bit hungry, so you hop to the nearest bakery to buy a bun. This costs you $1.20. You key into the apps. Multiply this by two (lunch and dinner, taking out breakfast). Do this constantly in 30 days and in one calendar year. Continue the same process for 5 consecutive years. This is only for food expenses only (wow! I still have other expenditure to monitor – am I using my value time to do mindless chunks and chunks of data?)

You can be proactive, getting sensitive to every number. Question is, will you get too bogged down till you are conditioned to think “Hey, I spend $200 on food and if I want to buy a box of egg tarts for my loved ones (once-in-a-while surprise), I can’t do so. My budget has exceeded and I have to wait till next month. And the next month arrives; you are too caught up with daily nuances of keeping track till you lose the sight of people who appreciates you.

Just me and my money. Me and my precious…………the one ring I conquer, the one magical DIGIT that I must, at any costs, achieve no matter the situation......

Please, don’t fall into the invisible “money entrapment”. Your life is worth more. Be sure to live what you want. You do not know what happens the next day.

On the other hand, if you’re tracking tool works perfectly fine without causing you a hindrance in daily/monthly life pleasures, I can imagine you having a good financial balance. The word pleasure differs from individual to individual. For instance, an individual can buy a Starbucks Coffee Grande size. To him, this is money well spent, for something he wants, defining it as “pleasure”. Some prefers the coffee from hawker centre. This is absolutely fine. As long as the individual manages his cash flow in his personal system well, not getting overly obsessed. Also, I will like to reiterate that, for every cup of Starbucks Coffee, the individual may save on other items. I am referring about giving something up to gain something.

It should not be an addiction to things otherwise the financial balance is gone. Ended up paying more than what you can afford. One may argue that being a millionaire is great, so you need to think about it. True, the mindset is essential. It all starts from aspirations. Fully support. But one has to self-reflect - at what opportunity cost?

For example, if you reach the millionaire status at 50 years old, for all the hard, frugal life you build up, have you seriously traded off your days of youth frolicking around, trying new things? - just because this millionaire goal is more vital than any of your priorities. Henceforth. lead you to stop spending, except for daily survival.

To me, paying for memories are crucial. It's my chapters of life. Moreover, I like travelling with a purpose. Through paying my dues beyond Singapore, I carry knowledge that is far more superior to money. I gain new skills and new exposure to finer things around me. I strengthen my cross-cultural communication abilities by interacting with local people in the host country. With my global horizon, I can source for scaled up job offers since globalization trends begun in the new age. Headhunters look for me as companies need global thinkers.

For my loved ones that I spent on travel, I earned the companionship filled with joy and laughter. You can be different. You can spend on certain products and services that generate a wonderful purpose for you. Purpose is what you need to seek, not money. Money is just the ticket to your objective.

There are also individuals who buy a Prada or Louis Vuitton bag, as part of luxury ownership. It does not mean they are high spenders who purchase regularly (unless they do and this topic is out of question). They may just get one expensive item for someone or a few for personal keepsake (maybe resale in future). Their objective is to look good, probably needed in their jobs or to serve a particular want (“once in a lifetime” item). Point is, are they over-spending on these items/become addicted?

In short, whatever we spend, whatever we save, the individual has to understand that the importance of financial balance. The purpose of spending vs. the purpose of growing your cash flow. The middle portion is the one you need to seek out. For any reasons, keep your cash tap running but not too frequent or seldom. Appreciate the opportunity to smell the roses and taste the wine in every aspect of your life.

Soon, you will realise money becomes meaningful for you. You will not be a complete slave-driver to Mr. Money, one who constantly thinks about money-making activities (e.g. investments). Just to attain the status of millionaire or in fact financial freedom at the expense of many other worthwhile things in lives. Like myself, I will still strive to create more multiple streams of income while developing the habit of meeting this balance. I know the underlying purpose of spending and I don’t have a rigid framework to keep my wallet bounded. I hope you can find your personal financial balance in life too.

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