January 2023 Portfolio Update

Portfolio allocation as of Jan '23.

• SG Shares: CDG, DBS, SGX, Valuetronics

• SG Reits: Syfe Reit+

• US Growth: BABA, INMD, PYPL, SHOP, TDOC, UPST

The rally so far in 2023, coupled with additions to the portfolio, propelled my total invested capital to record highs. But I'm having mixed feelings to be honest, on one hand it's nice to see my portfolio value go up, yet having undeployed cash on the sidelines and seeing fewer buying opportunities is frustrating. 

For this month I only added to my position in CDG, a laggard which was still trading below its Covid lows recently. This is mainly a recovery play and I've written about its merits in my previous posts. Another interesting company that I've looked at is Haw Par. For my Singaporean friends, you may be familiar with the Tiger Balm brand, which is manufactured by them. But beyond that, they are also an investment holding company with stakes in UOB and UOL. There is a significant holdco discount at the moment, with the current share price trading at a 30% discount to the value of its investments + cash balance. And that's before we even include the value of their healthcare business. I think the main concern would be that this could end up as a classic value trap, hence I've yet to decide on whether I should invest in them.

 

FIRE musings

I was informed that my post last week had made rounds in some forums, and generated some fervent debates. I briefly read through some of the comments and I think while there were strong opinions on both sides, ultimately the discussions were largely civil. I think that’s great – in a well-functioning democracy we need more of such debates – if only other contentious topics could be discussed in such a gracious manner… We can all be nicer to each other, even if we don’t agree on certain issues.

I will continue to write about FIRE. I won’t say FIRE is controversial, because that carries a negative connotation, but I’d say FIRE is still largely misunderstood. That’s because “retirement” means many different things to different people, and with the variations of FIRE (Coast FIRE, Lean FIRE, Barista FIRE, Fat FIRE etc), sometimes even those in the FIRE community can’t agree on the technicalities.

To some, especially those in the older generation, “retirement” could mean sitting in front of a television 12 hours a day. A more well thought out retirement life, could involve travelling, exercising to for a healthy lifestyle, lifelong learning, activities to maintain strong social bonds and much more. The latter requires more money, of course. The former just requires a television.

To me, in addition to the above, “retirement” is simply another word for “being able to pursue my dreams without any financial pressure". Note that in the above scenarios, there’s no “right” age for these – even though when you read the sentence “sitting in front of the television for 12 hours a day”, you might have pictured a 70-year-old granny.

Thus, in this context, I want to "retire" as soon as possible. Once I achieve financial independence, I will "retire". There are just too many things that I want to pursue – regardless of whether they are practical or lucrative.

At this point I want to share some comments I left on Thomas’ Instagram reel. Thomas writes about investing at Steady Compounding, where he shares his research and deep dives into many companies. I enjoy reading his articles and I think he’s done a great deal to uplift financial literacy not only in Singapore, but globally.

Thomas posted an Instagram reel recently, where he shared “Why I abandoned FIRE”.

To summarise his points into a few sentences:

•        Life is short
•        Don’t do something miserable but makes you a lot of money
•        Instead, do something you enjoy
•        Spend responsibly and sustainably
•        Smell the roses, enjoy life gradually, in a sustainable manner

 

I left some comments on Thomas’ post because I felt that while he brough up some good points, the lifestyle he is advocating is not mutually exclusive with what FIRE aspirants aim to achieve, but rather, just different ways to reach the same destination.

I have reproduced my comments below, with additional comments from me in blue.

[Me] I think practically speaking, it is difficult for most people to find their "dream jobs". What they may be passionate about may not be able to pay the bills. e.g someone loves playing football, but what are the odds that they can make a career out of it, or end up as Ronaldo or Messi?

Also, regardless of whether people are pursuing FIRE or not, think the vast majority do not "hate" their jobs. Rather, they are just working because they have to.

Here I want to bring in some additional context – I have found 2 surveys on Singaporean’s attitudes towards work. The first one is from CNA, quoting a survey which found that “More than six in 10 PMETs agreed that it is true or very true that they have found a meaningful career, and that their work makes a positive difference in the world”. While the second survey from PwC found that “Only 12% (compared to 25% globally) strongly agree that their jobs are fulfilling”.

What I’m trying to illustrate is that while it is definitely good to advocate for people to find their “dream” jobs, ultimately it is difficult for the majority to land something ideal (or find their Ikigai). Anecdotally, whether they are pursuing FIRE or not, I think for most people, after working for some time, say to themselves “my boss is not bad”, “my colleagues are not bad”, “my salary is not bad”, and then just end up going with the flow, and before you know it 40 years has passed and you’re in your 60s. Speak to your family, relatives, friends and colleagues, and I’m sure similar sentiments will be shared.

Pursuing FIRE does not necessarily involve the trade-offs you mentioned. I think of FIRE as simply a way for one to pursue their passions with little to no financial pressure. Barista FIRE for example, is a decent compromise of having that financial safety net to pursue interests that may not be lucrative.

That said, I think it's great that you've found an area which you are 1) skilled at, 2) passionate about, and 3) able to make a living out of it. I'm sure you worked hard for this and I appreciate your work.

But as to whether this is possible or probable for the vast majority of people - I would say it is very challenging to say the least.

 

[Thomas] Great points. A balanced approach would always be the best. But just to push the conversation a bit further, it will be near impossible for someone to be the next Messi or Ronaldo.

But they could very well learn to monetize their love for football by being a coach or building an online presence. I think in today's age, there is an abundance of ways to monetize your interest.

 

[Me] Thanks for your reply. Yes, the Messi / Ronaldo one was an extreme example, but if we were to use more common examples - someone may like baking, but what's the likelihood of running a successful bakery? Or someone may like plants, but how practical/lucrative would it be as a florist?

I agree with you that people should pursue what they love as far as possible. But I view the timeline of jumping towards entrepreneurship/passion as a something of varying riskiness.

In the order of highest to lowest risk:

1) [high risk] Starting a business right after graduation. Examples of people that have done well would include SecretLab, which was started by 2 university students, now worth more than a billion dollars. Zenith Education, which was recently featured on the Straits Times, within 3 years scaled to become an 8-figure revenue and 7-figure profits business. An Acai Affair – founders started the company when they were 20 years old, and now operates more than 10 outlets across Singapore. Seedly – Kenneth and Tee Ming started the personal finance firm “from their dorm rooms in NUS”.

2) [moderate risk] Working & saving up for some years before striking out on your own (which is what you did; if I recall you shared that you saved up 24 months of expenses before making the leap, at around 30yo?).

3) [low risk] Working till 35, with a ballpark passive income of say 3k/month before pursuing passions. A good example here would by my finsta friend @centsofindependence, who left her full time job last year to pursue Coast FIRE. She now earns almost double her hourly rate ($95/hr) compared to her full time role ($58/hr), and only works for around 15 hours each week. This frees up a lot of time for her to pursue her passions. Do less, earn more (per hour).

To add to Thomas' example of the football coach above, I would think that if someone is able to build up 3k/month of passive income by their mid-30s, and then perhaps “retire” to become a part-time football coach for kids, working only on weekends to earn an additional say 2k/month, for a total monthly income of 5k (the median income in Singapore), then I believe that this is still a very good balance of pursuing their interests and securing their finances.

4) [very low risk] Working till 40, with passive income of 5k/month before pursuing passions. I think the best example of this would be AK71, a Singaporean blogger who retired in his 40s, and now collects more than $200k SGD in passive income annually.

 

What I'm trying to say is that based on the above, your path (2) was a relatively riskier one (which paid off), compared to (3) barista FIRE and (4) FIRE.

But I think for the vast majority of folks, 3 & 4 makes more sense as lower risk scenarios. I think for the average person, it makes more sense to live frugally but not to the point of deprivation, invest prudently, build that FU money, and finally pursue their passions with a financial safety net in place.

Ultimately, one has to decide for themselves whether scenarios 1/2/3/4 are most appropriate for them, and thus I don't necessarily see "FIRE" as being in conflict with what you're saying, but rather just different milestones along the risk spectrum.

 

When writing the above I think a saying that’s apt would be “all roads lead to Rome”. Some are riskier than others. Choose the one that best suits you.

Let me again emphasise that the choice to retire early is entirely a personal one. I don’t think there’s a right or wrong age to retire, as it very much depends on your expenditures, finances, commitments, lifestyle, health and many more.

I know my choice. Do you know yours?