BigFatPurse - Living A Life of Abundance | Investment, Personal Finance and Success » Personal Finance

Groupon shows that rich people save more

Alvin — Wed, 05 Oct 2011 00:05:43 +0000

Groupon.com made coupon cutting digital and had gained popularity in recent years. I was looking at some demographics and data of Groupon users and I am amazed that I found affluent people tend to use Groupon more than the poor! Below are some of the interesting information:

1. Income

Amazingly, the use of Groupon rises with income. It seems like prudence is a requirement for wealth. People are wealthy because they practise a certain degree of prudence and this habit goes on even when their income increases.

2. Education

The number of graduate users overwhelms the non-graduates.

3. Ethnicity

I am not surprised that Asians are prudent people, especially the Chinese!

4. Gender

I am not surprised that females are more prudent than males.

5. Age

Older people seek for discounts, probably because they have lower income while the 35-49 age group has higher expenditure due to the need to raise kids.

Are you surprised by any result? Does it change your perspective of the relationship between wealth and prudence?

The above information is retrieved from quantcast.com.

Income Tax – Singapore vs US

Alvin — Wed, 08 Dec 2010 04:30:05 +0000

It is coming to the end of the year soon and we will need to file our taxes!

I was just looking at the tax brackets and see where I stand, and if I need to cut some taxes by doing a CPF top up or putting money into SRS. I always believe Singapore income tax is lesser than most of the developed countries. Curious, I went to take a look at the US income tax and made a comparison.

The first table below shows the Singapore tax brackets (2010):

The following table shows the US tax brackets (2010) Note that I have converted USD to SGD at a rate of 1.3:

Did you manage to spot the difference?

In Singapore, the first S$20,000 is not taxed. Whereas in US, you will be taxed for as little as first S$10,000 of your income, at a rate of 10%. Secondly, a Singaporean will only pay tax around S$4,000+ when he is taking in S$80,000. Comparing to an American who pays a tax of S$4,000+ when he earns S$33,000! No matter at which level you compare, Singaporeans are paying less income tax than Americans. I know what you are thinking – how about GST, ERP, etc? Those are consumption taxes which I think it is fair. The more you consume, the more you pay. A lower income tax, especially waiving the first S$20,000, do help to alleviate the financial problems of the poor.

Your life and money are too precious to be wasted on your computer

Alvin — Mon, 11 Oct 2010 14:13:56 +0000

I have a piece of good news for you. You no longer need to spend a lot of time and money on your computer. I have recently got rid of my Windows Vista and install a Linux-based Operating System (OS) called Ubuntu. is a free Operating System (OS) based on Linux. It is free and well supported by a community of programmers. The speed of debugging and updates provided by this volunteers is faster than the multi-billion dollar Microsoft. It works wonderfully well and here is why:

Super fast boot up and shutting down. It takes minutes to boot Vista but less than a minute to boot Ubuntu. Shutting it down is within 10 seconds. Life is too short to waste waiting for the computer.
Not susceptible to the virus, worms, trojans that plagued Windows (just like Apple’s Mac, as they are both Unix). This saves you the need to buy an internet security system. I previously used BitDefender on my Vista and it is indeed good. I paid $30+ for 3 licenses which I shared with my relatives. But it is not about the cost. It is about convenience and saving time. I no longer need to run the scan on my computer which takes 2-3 hours. Even though you say it can be done in the background, it still takes up resources and slows whatever you are doing.
Stable, fast and efficient. Does not hang like Windows. Photos loaded much faster. Waiting time between opening of programs becomes negligible. Do not ever underestimate this. A few seconds difference for every program can amount to something significant in a year. It extends your laptop battery life too since it runs efficiently. There are several linux-based OS that runs well for old computers. Maybe it is time to revive their glory if you have no idea to do with them.
Easy and fast downloading (and updating) of programs. There are tons of open source programs out there that are equally good. Ubuntu has a dedicated software centre where you can search for programs you want and instantly install them with a mouse click. Ubuntu will classify them automatically and keep your file system neat and tidy. No need to download installer, run the setup to waste your time and disk space. Think about your iphone if you have one. The software centre is like your itunes app store.
Highly compatible. I need programs that run on Windows. I admit this was my initial concern but I realised there is almost an equivalent open source software for every commonly used Windows program.
- Microsoft Office – This is the biggest concern I suppose. Your answer is Ubuntu has the suite of OpenOffice installed with the OS. It works 95% like MS Office. If you don’t like, you can use the free Google Docs online.
- Trading platform – I used to run desktop platform but since I do not need the speed, I can use the web platform without any compromise.
- MSN Messenger – Ubuntu was built with social connection in mind. It has a internet messaging client that can simultaneously logon to various internet messaging programs like MSN, GoogleTalk, yahoo talk, and facebook chat etc. Put all your contacts in one place.
- MS Outlook – Likewise, there is a program that comes together with Ubuntu known as Evolution mail which can pull all your mails from various email accounts into one. The layout resembles Outlook’s.
- Photoshop – I do some photo editing and it can now be done by the free program called GIMP, which has more or less the same functions.
- iTunes – This was my biggest worry as I have a ipod Touch myself and I cannot install iTunes on Ubuntu. To my surprise I just plug in my ipod and it detected immediately. Launching the default music player/manager, RhythmBox, and I can sync with it for music and videos (photos with F-spot, also automatically done).
- Printer - I have this HP All-in-One printer and it was installed just by plugging the USB into the computer. On another laptop which ran on XP, I have to download the driver from HP and install it myself. What I could do for 1 minute on Ubuntu, it took me 1 hour to get the printer installed properly on XP.

Life should be simple. Technology supposed to facilitate your life, and not add complexity to it. As we become more dependent on the computer, we have become slaves to it. You can save money and time by just switching to Ubuntu or other Linux based OS. I remembered there was an advertisement several years ago. It pictured a man drawing a curtain at a window and it said, “Shut your Windows and get changed!”.

You cannot afford to delay your retirement savings

Alvin — Fri, 13 Aug 2010 18:44:49 +0000

Dennis Ng, founder of housingloansg.com and masteryourfinance.com wrote an article for MyPaper on 11 Aug 10. I have translated it into English here. For the mandarin version, pls refer to the attached pdf file: 为退休准备，不能延迟了

“I’m still young, why worry about retirement?” This is a rather common answer. Do you have the same thinking?

Suppose you are 30 years old now and intend to retire at age 60. Given that the average life expectancy is about 80 years old, you would have about 30 years to accumulate wealth and live the rest of the 20 years without working.

30 years is a short time and you better start to build your retirement fund. You must remember the mantra, “you are the young person that can take care of yourself at old age”.

Nowadays, Singaporeans are mostly having 1 or 2 children. Given that the standard of living will increase in the future, it is getting harder for our children to survive and take care of us when we turn old. It is not sensible to depend on our government too. Hence, the best way is to prepare now, so that we can enjoy our old age without worries.

2 common errors for retirement planning

Procastination – If you start to save $600 every month from 30 years old, and grow your money at 6% every year, you would have a fortune of $600,000 at age 60. If you start from 45 years old, you would need $2060 every month to grow to the same amount of $600,000! This is the price of starting late!

No ‘real’ savings – Almost 99% of the people will say that they have savings. But is it true? Based on my observation, most people would spend their monthly salary on necessities like food, clothes, travel etc. The remaining money, if any, would be saved. If required, the surplus from previous months would be withdrawn to meet spending needs. Hence, the truth is that this “money” cannot be considered as savings, but simply an emergency fund. It is also not wise to practice consumptive savings, saying that you are saving for a holiday trip at the end of the year. The correct way to save is to really set aside money consistently, and only use it during retirement.

3 common errors for saving

Save too little – Many people save around $100-200 per month. This is not sufficient if we want to retire at 50, and living a decent lifestyle (travel once a year and eat out once a week). If you save $200/month for 30 years at 6% growth per year, you would only have $200,000.

Start too late – When we are in our 20s, we save for marriage and children. In our 30s, we save for our children’s education. It is only when our children are much older, we begin to start saving for retirement. By this time, we are likely to be in 50s. Even if we begin at 40s, we may have to risk our savings for higher yielding investment to meet our financial goal. If not managed properly, we may even lose our savings.

Playing it too safe or too risky – If you keep our money in the bank, the interests paid are not sufficient to beat inflation. Hence, your money is actually shrinking. On the other hand, if you do not know how to invest but just went ahead playing the stock market, you are likely to lose a lot of money. There is a product in the market that has capital guarantee and yet giving returns around 4-8% per year. It is known as UK Endowment Policy. Recently, it has become more attractive as UK pounds is at its 30-year low against Singapore dollar. Hence, you should choose such products that are safe and provide decent returns.

Killing Sacred Cows by Garrett Gunderson

Alvin — Tue, 06 Jul 2010 04:51:30 +0000

This is the summary for the above mentioned book. I have kept summary as succint as possible, often enough to include my perspective on what he actually means, and to the point it may not do justice to the author. For greater details, please read the book, as he provided very clear elaboration to his arguments. He organised his book into 9 myths that will harm your financial well being, and of course, urges you to killed these sacred cows.

Myth 1: The finite pie

We should not be thinking in terms of lack. Getting more for yourself does not necessarily make another person worse off. It is not a zero sum game. Adopt a win-win and not a win-lose mentality. Once you eliminate scarcity, you will have abundance. This concept is similar to law of attraction, everything begins from your mind, physical realisations are manifestations of your thoughts. So to have more, start to think in abundance. The world is not evil or good to you, it is how you perceived it.

Myth 2: You’re in it for the long haul

It is a financial mistake to put all your money into banks and retirement accounts. It is not about accumulating wealth, but how you use your wealth that matters. Keeping all the money tied up in retirement accounts is not utilising. People who focus on accumulation tends to postpone their dreams, as they think they need to have this and that, before they can really do what they want to do in life. Instead of accumulation as a target, one should focus on utilisation or value creation. The accumulation focuses on net worth while utilisation focuses on cash flow. With cash flow, you constantly channel resources to places demanded or desired by the society, and the act itself is value creation. You will have greater cash flow if you can create greater value.

Myth 3: It’s All About the Numbers

This seems like an extension to Myth 2, where he challenged the definition of wealth and how it should be used. To quote him, “Wealth is doing what you love to find joy and fulfillment. Focusing primarily on numbers often prevents us from achieving true wealth.” Next, he criticised the financial industry for the use of numbers to appeal to investors. For example, the use of “average returns”. An average return of 25% per annum is very impressive but may not suggest anything concrete about your actual yield. Look at the hypothetical calculation:

His point is that, beware of the numbers that financial industry reports. They are meant to look nice so that investors will buy.

Myth 4: Financial Security

Do not believe in financial security. You are your very own security. Your ability to create value and earn a living is the security. Do something that you can create the most value to the society and you will be rewarded accordingly. Having a job that pays well, but not necessary allow you to live to your full potential of value creation is a waste. You think it is not sensible to quit because you need the money to live, but in actual fact, it is just giving you a false sense of security.

Myth 5: Money is power

More money does not equate to more power. The ability to create tremendous value brings about money and power. Money is a byproduct of value created be people. This post has a more extensive discussion about your relationship with money.

Myth 6: High risk = high returns

No investment is inherently risky but the approach to how you invest determines the risk. You should invest in areas or businesses that you are creating value in, as it is something close to your heart and you know best. Otherwise, you should look out for businesses that create value for others. A business must have a value proposition, without which, it will wind up pretty soon. You should also invest in yourself, increasing knowledge decreases risk. You must first know what to look out for, and subsequently do your due dilligence and homework before investing.

Myth 7: Self-insurance

Insurance is an act of transferring risk away. One should therefore transfer as much risk as possible to the insurance company. Remember wealth is created by value creation. In this case, you are the goose that lays the golden eggs. It makes sense to insure the goose as much as possible. The ability to lay more golden eggs means the more insurance you need to cover yourself with. Hence, the focus of protection is about the value creator or human life value, and not the possessions (house, car, etc) that you have. Another advantage of insurance is that it give you a peace of mind, knowing that the worst thing that can happened to you is taken care of, and allows you to go all out to create value for the society.

Myth 8: Avoid debt like plague

Debts are not necessarily bad. There are forms of debts that are good. The author described 3 types of liabilities, Productive Liabilities (PL), Consumptive Liabilities (CL) and Destructive Liabilities (DL). Let’s talk about the last one, DL do not increase cash flow and in fact, it destroy human life value. Think about drugs and junk food. CL cost more than any increase in cash flow, but may contribute indirectly to productivity; items like sofa, car, nice shoes. PL result in future increase in cash flow; e.g. are rental property, student loans, small business loans). It is obvious that we should go for PL, minimise CL and avoid DL totally. If a debt can create a positive impact to your cash flow, it is a good debt.

Myth 9: A penny saved is a penny earned

Again, the author urged us to focus on value and not price. Instead of be a coupon cutter, or constantly looking out for discounts, we should spend the time to create better value and earn more money thant the amount saved. It goes the same when we buy a product. Do not just look at the price, Product A may cost more that Product B but because it is of better quality and more durable, it delivers more value to you than Product B. You actually spend less over the long run.

You should be aware by now that the entire book revolves around one word: VALUE. Focus on value, not money.

Do not live below your means. Learn how to own it!

Alvin — Wed, 23 Jun 2010 07:27:54 +0000

I am not sure if thrift is part and parcel of Chinese’s culture. What I know is that I was brought up with the thinking that there are alot of things in this world that my family cannot afford, and I should not compare my situation with other rich people. Failing which, I would make myself miserable. Thus, I must be contented with what I have, even though there’s a little unhappiness or a tinge of envy hidden somewhere. I must say my mindset is shaped in this way. Only when I was exposed to the concept of law of attraction, that I see the root of all successes begin with the correct thinking. If I think in terms of lack, I will limit myself and abilities to have what I want. The converse is true, if I think abundance, I will have lots. That is why I changed the tagline of this blog to “living a life of abundance“.

Teacher Keane said before, “live below your means” is one of the most limiting phrases to be used. It tells you subtly that you should know your limits and stay in there! He also said that the parents will be inculcating a mindset of lack to the children when they say “we cannot afford it”. All these phrases are negative, and imagine this is the environment your children grow up in. In no time, they will start to see the world with lack. Instead of telling them you cannot afford, you should tell them to learn how to earn or own it. “How to own it” is an open-ended question. It spurrs creative thoughts for the individuals when they start to pose the question to themselves. Most importantly, it does not limit the mindset. It does not kill the idea that you cannot own it. It even gives you the opportunity to own it if you can find a solution. Giving them the responsibility to find out the solution is also a test for their desire for that item. If they want the item so much, they will be willing to work for it and not give up easily.

Having a right mindset is like learning the ability to fish. We always quote “give a man a fish he eats for a day; teach him to fish and he eats for a lifetime”. Inculcating the right mindset is akin to telling him to learn how to fish. You tell him that there is abundant fish in the sea and it is up to him to find ways to harvest them. For a mindset of lack, you tell him that there are fish in the sea but do not bother to catch them because you cannot afford the fishing rod, so you cannot fish. What kind of excuse is this? Are you able to accept this if someone said this to you? But this is what most of us are doing, using such phrases that inculcate lack, and they sounded ridiculous on scrutiny.

Ways to save money when driving a car

Alvin — Sun, 13 Jun 2010 05:57:17 +0000

The best way to save money is not to own a car in Singapore. But I am not going to debate whether a car is necessary as I believe it is a very subjective matter. So let’s assume you already have a car and we examine ways to minimise the financial damage.

Do you really need to drive?

Please do not be mistaken. The question above means you have to consider other options than driving to your destination and not a contradiction to what I have said in the first paragraph. Sometimes, it may be more convenient to take public transport. For example, going to city or town area during weekends. You would expect traffic jams and full carparks. You would end up reaching your destination an hour earlier if you take the train. It is not about saving money in this case but time. Hence, ask whether you really need to drive.

Research on routes to take and ERP charge

If you are not an experienced driver or if you are going to an unfamiliar place, you should research on the route. Nowadays, it is a norm to have a GPS in cars and you may well use it to guide you. But what if you are like me, still a caveman who does not see the need of a GPS in Singapore? If I have internet connection, I would use online aids like streetdirectory, google maps, or gothere. I prefer gothere as it not only shows the route, it also shows the parking and ERP charges that you will incur. The Government has also introduced their own version of map, OneMap. If I am on the go, I would use my trustworthy Street Directory (the physical book!).

Research and decide on carpark before travelling

Always make a habit to check the carparks around your destination. Sometimes you can find a cheaper alternative which is equally convenient and near to the venue. You can use SGCarMart Carpark Guide to help you. Of course, this is when you have the luxury of time prior to travel. But what if you are on the go? Personally, I have an Ipod Touch and I downloaded a free application, Carpark@SG, which does not need an internet connection to assess the rates. Deciding on a carpark before reaching the venue would also help you save time and reduce frustration, as you already ahve a clear idea of where you are going.

Put parking coupon

It is not worthwhile to test your luck. The fine goes up to $30 if you are caught. $30 can buy you 30 hours of parking ($1/hr rate). Does it make a good risk-reward ratio sense to cheat 1 hr for a potential loss of 30 hrs? You need to be lucky not to get caught for 30 hours to break even. What’s the odds? Would you do this kind of investment?

Use petrol discount cards and credit cards

Find a petrol station that is near your home or workplace. I find that all the brands are the same. One brand does not make it go faster or save more petrol than the other. Choose one brand and stick to it. Find out which credit card would give you the best discount and apply for it. The savings can be quite substantial over the long run.

$0.30, $3 and $6 car wash

If I have the time and do not feel lazy, I would personally wash my car. I wash it at the multi-storey carpark where it has a washing bay and water dispensing machine. It cost $0.30 for 1.5 pails of water which is enough for my small car. I would send the car for washing at the petrol station only when I think it is really dirty and necessary. I would try to utilise the $3 discount given for pumping petrol at SPC to offset the washing charges ($6). You should try to wash your car on your own as much as possible. It is a good workout especially if you do not exercise much. And you will know where the latest dings and dents you have made

Manage car speed, acceleration and braking

I find it no point of driving fast in Singapore. In fact, I think it is not possible. Before you can accelerate to high speed, you need to slow behind a car or stop at the traffic lights. Frequent and excessive acceleration and braking consume much more fuel than normal driving. The most efficient speed for best fuel economy ranges from 80-100km/h. Anything above would increase the drag force (wind resistance) exponentially. Physics says that drag force increase to the square of velocity. In simple terms, the faster you drive, there are more invisible horses pulling in the opposite direction. In simpler terms, drive around 80-100km/h where speed limit allows.

Find the most value for money car insurance

Car insurance is very competitive now. There are many options in the market and it is difficult for you to source for all the quotations. You can request for no obligation quotes here. Some insurance may be cheap but you have to take note of things like “excess”. For example one company may offer $200 less in premium but have an addition excess of $500. A $500 excess means you have to fork out the first $500 for repairs caused an accident. If you go for the cheaper alternative, you are assuming a higher risk. You know yourself best, a careful or reckless driver.

Good servicing and maintenance

You should regularly service your car to maintain road worthiness as prevention is better than cure. Personally, I service my car once every 6 months. A well-serviced car would yield many positive effects; your car feels nicer to drive; fuel economy remains stable; your car does not make funny noises; you would not get stuck in an expressway with an overheated engine and causing a traffic jam; most importantly, your brakes work when you need it.

Getting Cheap Books in Singapore 3

Alvin — Fri, 04 Jun 2010 18:08:01 +0000

I am delighted receiving this book and I would like to share my happiness with you. I ordered “Inside the House of Money” from a UK book supplier, The Book Depository. It was recommended by a kind reader of this blog – AL Ong, thank you!

What’s so impressive about this supplier? It delivers to your house for free! And it is cheaper than most sources, including from your local book store. Many times, I dread ordering books online as I have to pay for delivery if I just want to buy one or two books. For example, Berkshire Business Books charges S$5 for delivery if you spend less than S$75. Amazon offers the greatest variety and at the cheapest price, but because of the delivery charges, it ended up more expensive than The Book Depository. Hence, it seems like I would be using this supplier until I find a better deal.

The picture below shows how the package looks like. It was hand delivered to my house.

The 2nd picture shows the package is bubble wrapped which protects the book well.

Lastly, you can see the order form that states the order date was 28 May 10, and I receive this on 3 Jun 10. The book is delivered within a week and it is considered fast! The book is in immaculate condition even for the cosmetics conscious reader. Yes, I am one happy customer

PS: I actually left out my unit number in the order address. I email the helpdesk and the response was within 24 hours. The book was shipped to my house without any problem.

Getting Cheap Books in Singapore 2

Alvin — Mon, 07 Dec 2009 18:17:23 +0000

There was a Penguin sale at Singapore Expo over the weekend. Do not be mistaken, Penguin is the book publisher. I was actually at Expo collecting my Standard Chartered Race Pack and chanced upon the sale. I spent about an hour there and got 12 books for $99! Here’s a picture of my steal:

I must show you the breakdown to convince you that the books are really cheap:

1) The Ultimate Sales Machine – $10
2) Microtrends – $8
3) The Extreme Future – $5
4) Unlimited Power – $8
5) Liar’s Poker – $8
6) The Passion Test – $8
7) Even Buffett Isn’t Perfect – $8 Collapse – $8
9) Here Comes Everybody – $8
10) Meatball Sundae – $10
11) The Emerging Market Century – $8
12) The Age of Turbulence – $10

Total cost is $99 and the books are in good condition! Although I bought non-fiction books, there are many fiction, children, assessment and IT books.

So do look out for Penguin sale next time! I think it is a great deal and a must go for a book lover!