Don't make decisions when you are stressed.

Adult humans are naturally unsettled by things they don’t understand. Light ambiguity can be amusing or intriguing, but more extreme cases of ambiguity can induce us to make rash decisions.

Ambiguity will always be a part of our lives. It’s important to be able to cope with it, especially in key situations in life.

Don’t make important decisions when you’re stressed out. Don’t quit your job just because you’ve had a bad day at work. Wait until you’ve calmed down before making any big decisions. If you’re feeling anxious about some kind of ambiguity, you’re not thinking straight.

Millionaires don't all lead luxurious lifestyles. Your goal may be wrong

Many of us want to be millionaires to lead a luxurious life. Yet, I know many millionaires who become millionaires by avoiding flashy lifestyles. They prefer to be financially secure and independent.

Financial independence simply means you can avoid work and lead a credible lifestyle - travel, have fun, mean just below your means.

Many people prefer a lifestyle they cannot afford. They drive cars, drink wine, gamble, go for expensive holidays. They stress over how to afford their lifestyles. The alternative is to consume lesser and you can immediately be richer. Rich is a relative term when you compare what you have to how much you need.

Productivity at work and at home. Develop habits, stop multitasking and say no more often

When you make something into a habit, doing it becomes painless and effortless. Consider your daily habits. Perhaps you make yourself a cup of warm tea right after you wake up. If you have done this for years, it becomes a habit and it is painless. If something is important to you, make it into a habit. At first, you have to do it conscientiously and repeatedly. One day, it will be automated. 

Multitasking is a waste of time. Imagine you are using a water host to clean the floor. You need to focus on one source and you need high pressure. If you split the source into a few hosts, the effect of cleaning is weakened. Give that one thing you do undivided attention. Move on after you completed the one thing.

Say no more often than yes. Pick what you agree to do carefully. A simple rule is to make "no" your default answer. Do only the most important things in life.

What happens when you fail to spot blurring of lines between sectors and market segments

A technological innovation disrupts. Before the 2000s, Dell was a market leader and enjoyed massive profit margins. After that, Apple introduced tablets which ate into the market share of laptops and computers.

It may not be easy to spot trends ahead of time, but leaders must try to navigate hints and signals. Nokia didn’t act on the series of patents that Apple was filing secretly over the years.

You need to find talent that can spot developments early in an industry, and develop a taste for cross sector analysis. Disrupt happens when one industry crosses into another. Think about the implications of mobile phone technology and the financial sector. Major changes to take place soon. The same will happen in other industries when sectors merge.

Intelligent investors understand the importance of stock-market history

This is an excerpt of a summary of the Intelligent Investor. You can choose to read the article or simple read these next 3 words to save your time and pain – buy index funds.

Looking back through history reveals that the stock market has always been defined by regular ups and downs. Often, these fluctuations can’t be foreseen. The unpredictability of the market means that investors need to be prepared – financially and psychologically.

Economic crises, like the Wall Street crash in 1929, are a fact of life, and happen from time to time.

Thus you need to ensure that you can take a big hit and survive. This means that you should have a diverse stock portfolio, so your investments don’t all get hit at once.

What’s more, you should be mentally and psychologically prepared for crisis. Don’t sell everything at the first sign of danger. Remember instead that, even after the most devastating crashes, the market will always recover.

And while you can’t predict every crisis, looking at the history of the market will give you a better idea of its stability.

Once you’ve determined that the market is stable, focus on the history of the company in which you’d like to invest.

Look, for example, at the correlation between stock price and the company’s earnings and dividends over the past ten years. Then consider the inflation rate, i.e., the rise in prices generally, in order to see how much you’d really earn, all things considered.

For example, you calculate a 7-percent return on investment within one year, but if inflation is at a 4-percent rate, then you’ll earn a return of only three percent. Think carefully about whether it’s worth the effort for only a three-percent return!

When it comes to shrewd trading, a knowledge of history is a fine weapon, so be sure to keep it sharp.

The first thing you should do before you invest isn’t to look at a stock’s history. That’s important, sure, but what’s more important is looking at the history of the stock market itself.

Work Email Tips

When you are working on a document, don't leave the email open. Deal with work one thing at a time. Distraction is painful. You take twice or more time to go back to what you were working on.

Read your email aloud or in your mind before sending. There will almost be always silly mistakes. You want to look professional.

Keep emails short. Try to rewrite them so that you can your points delivered the shortest possible way.

If you bcc someone, do it because you don't want to get that people flooded with replies. But always tell the rest of the group who is bcc-ed. You don't want the embarrassment when the person in bcc replies.

I find that changing the title to focus on the new key points is important. Helps you find the content you need quickly.

Writing as simply as you can

Writing is simply talking without being interrupted. You have all the time to think and you have all the time to deliver the message. Writing is also efficient because the writer does not need to repeat the message.

One thing I learnt about writing is the beauty of simplicity. Simplicity in terms of sentence structure and the type of words used.

Keep your thoughts clean. Write to tell your readers what's on your mind. The shorter the sentence and the entire piece, the better.

Where possible, blog on a platform with minimal scripts. Don't use advertisements. Don't use wordpress.

Start today.

Inflation and your pay

I would like to address the demand for cash balances. How much you will keep in your cash balance is a function of price levels.

If prices fall by 1/3, people will need 1/3 less money in their wallets. In the same way, if prices increase, people will need more money in their wallets.

Wallets is merely a simpler way to address liquidity. The more they need their money, the more liquid they need their savings to be.

Prices of money are determined by supply and demand of money
Purchasing power of money is merely the inverse of price levels. As prices rise, the purchasing power of money falls.

If someone uses fake money to purchase goods and services, the supply of money increases and the new price level will increase. The value of each existing dollar is diluted by the new dollar. This is similar to the inflation process. If the government releases more money into the system, the value of your money decreases.

In other words, if you did not have a pay increase this year, the value of your pay package would have decreased by the level of inflation.

Which is a more dominant force in changing prices? It is the supply of money. Government and financial institutions can collectively employ looser monetary policies to increase the supply of money. Theoretically, they could print money, drop it into your mailboxes and decrease the value of money. They could also lower interest rates to increase lending.

I hope all these are clear. But if there is one thing I would like to stress, it is that the value of your money is determined by the supply of money and the demand for money. The value of your money decreases when there is inflation. Pay increases matching inflation is not an employee benefit. It is to ensure the value of your pay remains the same as the year before.

Websites that disrespect consumers should be made irrelevant

Using too many plugins and scripts? Didn't optimize your images? If you don't respect the pockets of consumers you really don't deserve many viewership.

Consumers can collaboratively boycott these sites. Create your own content. What can you do to generate sustainable content for the Internet? 

1. Use simpler words. Don't embed scripts if you want to tell me your Twitter username, type it. Don't embed the code. 

2. Use plain html. You don't need to customize CSS in a Wordpress environment.

3. Optimize images or don't use images at all.

4. Make impactful content. If they are not impactful, use a social platform.

Website Obesity

As a minimalist, it pains me to see how websites have become "obese", overloaded with information and pictures unnecessarily.

What's taking up so much space? Besides pictures which I feel are necessary for visual impact, the biggest reasons are scripts, advertisements and social sharing functions. Merchants and website makers now feel the feel to overwhelm our websites with dynamic content.

We need to strike back. This is why I dislike Wordpress and have moved most of my blogs back to simpler platforms like blogger.

Who gets hurt when website content gets more "obese"? It is us, the consumers. As we consume more data on mobile phones, we will suffer as websites become more bloated.

Here's what we can do to tackle #websiteobesity

1. Blog on simpler platforms

2. Boycott scripts

Working from home - creating value with lesser footprint

I have been thinking about work. Work is the processing of creating value for society and in return, the worker gets remunerated for the value he or she creates. But in cities, many people travel to office for "work". Work becomes a routine to appear somewhere else. They don't necessary give their best because work is not always motivating. They may not like their bosses, their team or even the work they do.

I am clearer now after observing working styles across Europe, China, Australia, Taiwan and Singapore. People appear to be self motivated when they commit time to work on things they love to do. While this is simple, it's often underrated. Working on something you love creates unspeakable value for yourself - as you created, you have fun. No amount of money can replace this feeling. Bosses and workers are equally responsible for ensuring workers love their work. Without joy, they will come to office late, they will be unhappy every night and look forward to the weekends. This is definitely not what man is made for.

Neither do I advocate that everyone takes on online trading and blogging. Most of these are just eye catchers and don't bring in sustainable income. I'm advocating that everyone be open to take a pay cut to find work nearer to your home and to do something you like. In many circumstances, you may find that you like to bake, make clothes, host friends. Be adventurous and be honest with yourself. You can start a bakery from your home and you can start a B&B if you live in a private apartment in Singapore.

A simpler way is to initiate a pay cut to work lesser hours. Take the hours you saved to think about a new business. The new business does not have to be an online venture, it can be brick and mortar. I own a rather brick and mortar business of tailoring. Anyway, the lines between online and physical sales is blurred. Revenue collection online is now far more convenient.

I advocate that you escape from the 9 to 6 pm lifestyle. Do not work on anything that you don't enjoy. Find that spot that you love and work hard on it. This is not new at all. In the early 1960s and 1970s in Singapore, we used to do household chores for income. My mother was a tailor and my relatives sold products door to door.

How to buy Index Funds in Singapore

I felt this post was necessary to give Singaporeans a no nonsense guide on buying index funds. I'm not paid for this post, so you can be sure this is objective. I was the President of the Society of Financial Service Professionals, Singapore and am a CFA Charterholder.

I won't address why you need index funds again.Going straight to the point, there are 3 ways

1. POSB $100 min a month investment in Singapore Equity and Bond ETF. Search POSB ETFs and you will see a monthly investment plan. There is a sales charge apart from the monthly fee.

2. You can buy ETFs off the exchange. To do this, you need an account with a local broker. You will always need to pay the minimum transaction fee of $25++ per trip.

3. You can buy ETFs off the exchange with Standard Chartered Bank. Note that they will be your custodian, not the CDP. There is no minimum transaction here.

Other ways - you can buy from Fundsupermart, but I am a strong believe of going direct to buy from the exchange, never from an intermediary. 

Important Note on Insurance

The Short Story

Buy term life insurance and critical illness insurance because you will regret if you do not.
The Long Story

Many don’t appreciate insurance. Most regret only during the occurrence of risk events. When these events occur, accidents and prolonged illness can deplete your savings rapidly.

Many may delay the purchase of insurance because it is just to justify the returns from the expense. This is also why investment linked policies seems emotionally easier to sell.

A survey by LIA in 2007 found that the average policyholder is under-insured by as much as $362,000.

Plans that are bundled with savings and investments such as whole life and investment linked products seem to be more popular. The focus on cash value always undermines the importance of protection.

It is hard to price protection. That’s why it takes so much effort to convince someone to buy the protection only product. If agents sell a plan coupled with savings and investments, the product seems more attractive.

Premiums for whole life plans can be much more expensive than a simple term policy. The savings component can be easily parked somewhere else.

To determine the amount of insurance you need, it is good to start with a needs analysis. An advisor will have to understand your circumstances to ascertain how many years of income is needed should a risk event occur.

Many planners do not take into account the required household Cashflow. When planners are more concerned about their own earnings, their clients may suffer from a lack of Cashflow.

It is also not coincidental that the least sold insurance and the cheapest for customers, term, has the least commissions. Term is flexible in terms of coverage horizon. Logically, you may not require life coverage after your retirement because you have no or little earnings power and you should be able to save enough for bequeathing needs. Insurance works best to cover the risk of losing income so that your dependents will not suffer.

Delay the purchase is not a wise decision. If you are struck with some conditions, insurance companies may not admit you into their plan?

Please do not switch plans because there will be an underwriting process. If your health has deteriorated, you may be faced with higher costs or lower coverage.