At the beginning of 2020, I decided to transition from full-time work to part-time work. This has greatly increased the amount of time I have on hand, and I’d like to channel some of it into personal development on a daily basis.
I’ve since decided to take note of the best personal finance article I read each day, along with 1 single lesson that I’ve learnt from it.
Everything I learn will be compiled into a blog post every week, so it can hopefully provide you with some value too. (Admittedly, this is also to help me, since I learn best when I write.)
If this provides any benefit to you, let me know. If you have any ideas on how to improve these round-up posts, please let me know as well.
Blog Post: Reader Case Study: Investing for FIRE in Malaysia, by Millennial Revolution.
Lesson #1 – Malaysians (and also Singaporeans) are able to circumvent withholding tax on U.S.-based ETFs, by buying Ireland-based ETFs.
I currently use Standard Chartered Bank as my brokerage firm to buy U.S.-based ETFs. I currently own some VOO, VTI and VXUS units. In each quarter of the year that I receive dividends, a 30% withholding tax will be imposed. That’s quite a hefty amount.
As such, the recommendation is to open an account with Interactive Brokers, “a US-based low-cost brokerage firm that is special in that it allows non-US residents to open up an account”. After checking, I realised Singapore is on their list of approved countries.
After which, I’m to invest in an “Ireland-domicilied UCITS ETFs that track the indexes”. According to various such as this and this, I should be able to receive an exemption on these dividends, as long as certain conditions are met. (Time to read up more!)
Blog Post: Life changing economic theories, applied to personal finance, by the Woke Salaryman.
Lesson #2 – Having money can help us to make better decisions. Having money enables us to have a longer-term mindset, instead of a short-term yet detrimental mindset.
With money, we can buy better-quality products, like $50 boots versus $10 boots (this was the example given in the blog post).
With money, we can choose to quit our jobs to chase our dreams even if these dreams can’t afford us an income for the first few years (long-term mindset), instead of working for a pay-check at a job we hate, just so that we can cover this month’s bills (short-term mindset).
Because of money, I had the luxury of transitioning from full-time work to part-time work in early 2020, as full-time work in a job that I despised was hurting my mental health more than I cared to admit. Since I’m currently working part-time, I get to write on most days, even though it doesn’t pay me a cent. I’m hoping that this writing habit and this blog turns into something I can monetise one day, and I’ll keep working at it till it does (long-term mindset), rather than stay in a job I hate, which makes me more anxious by the day (short-term mindset).
Blog Post: Do You Need to Own A House to Retire Early?, by Strong Money Australia.
Lesson #3 – One of the benefits of owing a house is having access to very low cost debt, as banks are willing to lend amounts at cheap interest rates, as long as there is a residential property as security. This low cost debt can be used for investment opportunities.
In Singapore, mortgage interest rates are currently lower than 2% per annum, which is an incredible interest rate. Should I ever be fortunate enough to afford a house in Singapore in the future, at such interest rates, I’d much rather invest than pay off the house. In fact, I think I might pay as little as I can, for as long as I can.
Blog Post: I Found My Dream Job And It Pays $225 A Year, by A Purple Life.
Lesson #4 – The lack of compensation that comes with blogging may help in lessening perfectionism.
There were so many cool points brought up by Purple in this post, but Lesson #4 really got me thinking. Like her, I’m a perfectionist as well, but I’ve never experienced an area in my life where perfectionism didn’t haunt me. At work, I’m constantly check my work till it drives me batty. And with blogging, I got so affected by my lousy writing back in 2018, that I stopped blogging for more than a year. Seems like I’d rather put out nothing, than put out something bad. Since I’ve started blogging again in 2020, hopefully that’ll change.
It’s going to be more than a decade until I reach early retirement, and until then, I wouldn’t know very much what it feels like to be less of a perfectionist because of the lack of compensation. But I think that I can understand where she’s coming from, and here’s hoping that my perfectionist tendencies change when I reach early retirement too. ?
Blog Post: Make Your Obsession With Money Temporary, by Trip of a Lifestyle.
Lesson #5 – Zero in on your expenses, identify the fat, trim it, form new and improved frugal habits, and then zoom out by no longer tracking your money so meticulously.
This post really resonated with me, as I’ve been meticulously tracking my expenses and money for the past 5 years or so. Sometimes, I get worried about when my bills are due. Other times, I get worried because I’ve busted my budget for the month. I spend hours each month just managing my money, and as Steven aptly wrote in this post, that’s a pretty miserable existence.
At the moment, I’m financially insecure when it comes to my future income, as I’ll probably be losing all of my income by the end of the year. However, I’m hopeful that I would soon be able to picking up online freelancing jobs and work remotely. Until the point in time where I have a more stable job, I might not be able to let go of tracking my money meticulously. But this will definitely be something to keep in mind when that happens.
Blog Post: Kindly Stop Saying The Efficient Market Hypothesis is Dead, by The Deep Dish.
Lesson #6 – The Warren Buffet Halo Effect occurs when Berkshire Hathaway invests in a stock, causing everyone else to invest in that stock too. This drives the price of the stock up. In other words, Warren Buffet’s success is now a “self-fulfilling prophecy”.
As I’m almost a complete novice to investing, there was so much to learn from this article alone. But what interested me the most was to learn about the Warren Buffet Halo Effect, as well as the fact that Berkshire Hathaway has underperformed for the last decade. This blew my mind, as I had always known Warren Buffet to be an investing legend and wanted to mirror his stock picks as well.
Blog Post: Routine, freedom, and the 1996 NBA Draft, by City Frugal.
Lesson #7 – Routine is essential for lasting success, and this can be done by establishing a morning routine, journaling and sleeping well.
Morning Routine – I agree that a morning routine is essential for lasting success .When I first started working part time at the beginning of 2020, I was all over the place, and got very little writing done even though I was working less. I then decided to work out first thing in the morning and take a cold shower after. Then, I would sit down and do some work. Although it’s not always easy to do hours of work in the morning, I can attest to the fact that it’s significantly easier.
Journaling – I don’t journal, but from the benefits that everyone raves about, maybe it’s time to start.
Sleeping – Frankly, I’m quite a crappy sleeper, but as I write this I think about how I had stayed up past midnight last night to shop online and watch Netflix shows (face palm). I should probably cut that out. After all, as David said in the post, I won’t be missing much.
And that’s all 7 posts for this week. I read so many wonderful ones over the week, and it was difficult choosing just 7, so I’ll just keep on reading and writing these “7 Lessons” posts. 🙂
Thank you for reading!