Blog Archives

Burning Thru S$70,000

31/7/2020

As I was thinking back on my life and my past decisions.
I came up with an estimate of how much I wasted throughout my 38 years of living and my time with my wife.

Now, of course these losses/expenses are based on my current view of life.
Maybe when I was younger, I would think this money was well spent.
Also, there are some expenses which I don't regret.
Like spending S$400 for a buffet for 2 at Raffles Hotel. It was a very nice experience. Expensive. I probably won't do it again, but it was still fun that day.

And yet, it's hard to say that the loss of all this S$100k was for nothing.
Cos... there's always the experience, the learning lessons, etc...
Not to mention, that if some of the risky bets I made turned in my favour, then I would have made money instead. So it's hard to really say that all these "losses" are just money down the drain.

So I'll run thru some of the losses and the experiences I've had...

First, right at the top of the list, I made an leveraged FX bet that went really badly. Lost S$35k overnight. I literally went to sleep and woke up with the losses due to forced closed positions.
Yea, I was stupid enough to place the bet without stop-losses. This is one of those scenarios... If the bet turned the other way, I would have made money on it.
But, no excuses.
For me, even though I could have made money on it, this has to be hands down the worst money burner I did. I learnt early on in life that I shouldn't be trading short term, cos I just wasn't good at it. I do better on longer term investments. And YET I still made this bet.

Second, I lost around S$3k when my options expired out of the money. I was trading warrants and the market moved against me. Yes, once again I could have made money on it but on hindsight, this was a bad "investment". Cos I was not prepared to lose the money.
After this incident, I told myself never to go into short term trading again. This happened before the FX incident mentioned above.
This was THE lesson which made me understand that I simply wasn't good at short term trading and yet I did it again.
I also don't sleep well when making such "investments".

Note: I have made other trades in options where I was prepared to lose the money. Even though they expired out of the money, I don't regret those, cos I understood the risks better and was prepared for the losses.

Next, lost around S$7k developing a prototype Android game. Yes, it was fun to plan and talk about it with my friend. However, once again, on hindsight, it was a stupid idea. Both of us did not have the expertise or experience to execute such a business idea.
After this experience, I came to the conclusion that I also wasn't suitable for starting or running businesses. I started a couple of small businesses when I was younger but they all went nowhere. It's just a personality thing, some people have the acumen, some don't. I don't.
I understand and accept that.
So now, I don't get into discussions with people about fancy business ideas, cos I know that a lot of it is just talk and in the end, running a business isn't for everyone.

The loss count due to "investments" at this point totals S$45k.

When I was in army and uni, I spent quite a bit on drinking and clubbing.
I think maybe during my second year in army and first 2 years in uni, 3 years total, I went to club and drink often.
I would estimate it to be around $200 per month? Not sure since it's been so long ago.
Then there are times during my working life that I went out to drink as well. Some were fun some weren't fun, or I felt it wasn't worth the amounts I spent.
I would estimate the total up to be S$10k.
It might seem like a lot, but really... that's probably an underestimation.
Yea I used to drink quite a bit last time.

Then there was this incident where my wife and I went on a trip to China.
The tour guide brought the group to a chop house... You know, the place where they bring tourists in to get slaughtered... Yea... So somehow, in the hype of things, I was foolish enough to plonk down S$2,000 on some overpriced jewelry which my wife wanted.
Why was it foolish? Even though it was something my wife wanted?
Well, cos we didn't have any expertise in the subject, jade. We didn't do any market research on the product, and didn't know what was market price, branding, what was considered good value or a rip-off.
IF we were better educated, then I'm sure that both of us would have concluded that the pricing was too high for the products that they sold. After we went back and did some research, we found out that we could get something very similar, with indistinguishable differences, at around S$500 or less.

Many years back, I used to go to "friends" weddings... I somehow had this childish misconception that I should be honoured that someone would invite me to their wedding. Like, they considered me their friend, and so they invited me. Then as I got older, I learnt (a little too late) that most of these wedding invites are just fillers. "Friends" whom I don't keep in contact with for years, then suddenly they invite me or my wife to their wedding. Errrmmm... Yea... sure... as older folk who've been around, we now realize that the couple just wants to make up the numbers to book a wedding dinner at a hotel.
I'm not too sure how many of such weddings I/we've been to that I feel aren't worth it. So I'll just estimate it to be S$1,500 between the both of us.

Upgrading our wedding package. The basic package was $1k per table. We only had 7 tables of close friends and family, so we thought that it would be nice to have better food and they probably would give bigger "ang pows". So we upgraded our menu to $1,500 per table. An increase of $3,500 in total. This wasn't worth it, the food was great, but since many people check the restaurant website for the price before they come, they just assume that the wedding couple would be taking the basic menu, so... yea you get the picture.

We used to subscribe to Fitness First. I think it was around S$138 per pax per month.
I kinda half appreciated it and half didn't like it. In the end, we didn't have any overall gain in health.
Subscribed to the membership for 1 year, we went daily for around half a year for the group exercises, then lost momentum after a trip overseas, then conveniently didn't go anymore, so we wasted half the subscription for no good reason. Total wastage for the half year, S$1,656.

My first car gave me a lot of grief. There were a lot of learning lessons. But nonetheless, I regretted that car. I should have done more research on cars and reliable cars. It's not just repair expenses but also the mental stress of having the car breakdown, bringing the car to a "ah beng" chop house and having no choice cos I didn't know much about cars, while the guy was probably just quoting me any price for unknown kinds of "necessary" repairs. Went to fix my car a couple of times for major things and a couple of minor things. Total estimated wastage S$5,000.
Compared to my 2nd car, where I needed no repairs and only needed to do basic oil changes every 6 months or so.

Loss count of "lifestyle" choices, S$23,656.

Some time back, there was an uncle who passed away.
The wife, who was my wife's aunt doesn't work and they didn't have much/any savings.
So my wife and I were discussing about how much "pek kim" to give.
And my wife wanted to give the aunt S$5k. Which I think is a quite a considerable sum.
Apparently the couple took care of my wife when she was younger, and the aunt seemed to be concerned about money, funeral expenses, rent and future living expenses.
So I was ok with it. The aunt was nice to us when we met, and since they took care of my wife in her childhood, I thought it was pretty acceptable for us to help her a bit during this trying period.
I mean... the money would probably be used in the interim for the aunt to stabilize her life, pay off expenses and buy her some time for her to find a job right?
So I didn't think too much about it... until around 2 months after the funeral, when I found out that the aunt was going to Australia for holiday.
Which led me to conclude that this aunt doesn't really need much help with her expenses...
If I/we didn't buy into her sob story, we would likely have contributed S$500 or less for the "pek kim".

Loss count of being "too nice" S$4,500.

Total count S$73,156

It's quite amazing how things add up. Over the course of maybe 20+ years, I've managed to burn through S$70k+ of stuff I regret doing.
And even though I would like to have avoided making these spending/losses, there are also lessons which I learnt along the way. Learning about myself, learning about people, learning how to react to certain issues, etc. Sure it would be best if I could have attained these lessons without the monetary loss, but what's done is done, and all I can do is to learn from them and move on and hopefully not make such mistakes in future.
There's probably more which I've forgotten so maybe the real total should be S$100k.
Hmmm, but if I don't remember it, then how can I regret it right? Means I probably don't think it was significant.

Now... of course, not all spending is bad, sometimes I/we intentionally spend more even though we could save on something. And we may indulge in some of the luxuries we enjoy.
Sometimes we try food which we end up not liking, but that's part and parcel of trying new things. So I don't consider that a waste.

For those listed above, I'd probably say, I'd liked to have avoided doing those things IF I had better clarity of mind, or more experience at that point in time.

<<PREVIOUS POST // NEXT POST>>

Did you like this post? If so, could you "blanjah" me 1/4 cup of my morning coffee pls.
You may also consider subscribing to receive the articles in your email, link in the column on the right.

3 Comments

Loss of Faith, Focus on Investing

30/7/2020

4 Comments

There's a lot of news around.
And I think of a lot about the changing landscape.
It bothers me.
It affects how I look at investments. How I plan for my future, etc.

US printing more money, this could result in a significant depreciation of the US dollar. Maybe another currency will take over as the reserve currency.
Class divide in US is growing. You either have money or don't have money. If we go back in history, when such class divides grow, there is usually civil war.
Trump may win the election. Even if he loses he may not want to leave the White House. This could also result in civil war or significant unrest in the US.
US lives by no rules. They will claim laws when it's in their favour, but ignore them when the situation is flipped around.

The rise of China will change things, US will try to contain China like a suicide bomber.
China also plays by no rules. Just like any big sovereign country.
China has made a lot of headway in many countries by providing funding and investments for development. Their influence on the world is growing significantly.

The future of SG looks gloomy.
Our Gov isn't what it used to be.
SG economy is pretty much stuck. Seems like most of the STI companies have reached some form of maximum cap and can't out grow the shores of SG. Seems like only the banks and REITS can keep growing.
Will SG still be around when I reach 65? How will my CPF be by then?

There's a lot of uncertainty in the future.
And IT IS DIFFERENT. It's different cos 10-15 years ago, when I invested during the last crisis in 2008, these weren't concerns.
During that time, I had good faith that the crisis was just a bump in the road.
I can throw my money in my investments with good confidence that the world system would remain the same and once the financial crisis was over, my investments would grow with the recovery.

But somehow, now, I feel that things have changed. My fundamental faith in the world system is no longer the same.
I don't have faith when I invest and hold the US dollar.
I don't have faith when I think about the future prosperity and longevity of Singapore.
I'm 38 this year. 17 years to 55, 27 years to 65.

It's a long time. A lot of things could change.
Remember, 18 years ago, smart phones didn't exist.
22 years ago, when I was in JC, handphones weren't a thing.

So another 17 years or 27 years, A LOT of things could change.

And yet within all this uncertain, I have to tell myself.
Focus on what I know, and make decisions based on that.
I can always adjust my strategy as life goes along.

I know that, despite what's happening in the US, it will be the center of consumption and innovation.
Apple, Facebook, Google, etc...
The next generation of innovation, product, etc... will come from the US.
Could be AI, could be quantum computing, whatever.
As old companies drop out of the S&P 500, new companies will be added and grow.
I haven't bought into the S&P 500, but I probably will in future.
I look at the S&P 500 as ONE BIG COMPANY.
Sometimes a company will close off some of their dying business, sometimes they will acquire new businesses.
When one business segment loses market share to another segment, I still earn, cos I own the whole market by owning the S&P.
Like, if Walmart gets less customers, but Amazon gets more deliveries.
Regardless, I still own the whole S&P "company".
What's even better is that the Gov supports this S&P "company".
So someday, I'll by myself some S&P.

I still want to stay in Singapore for the near future.
I cannot keep thinking 20 years into the future which might or might not exist.
Hope for the best, plan for the worst.
Maybe Singapore will find a way to keep developing. Hopefully they are able to re-engineer the economy and industries to focus on more future related segments.
Hopefully there will be no more changes to CPF policies so that I know what to expect when I grow old.
Even if things change in SG. I still have time to react. It's not as though we are like sheep in a farm. We can always do things to make our situation better.

China will become a powerhouse. It already is.
The problem with China investments is that I know very little about it. There's not enough transparency.
Also I feel there's a lot of government involvement in the financial markets. So I'm concerned.
I know it's a growing economy. It's a good place to invest for the next 30 years.
But yet, I find it hard to have faith in the financial markets there.
I suppose that's part of the risk and investors get compensated for taking such risks.

So I think... despite all my fears and concerns, I need to try to keep the faith that the world will largely remain the same at least within the next 10 years, and keep investing and planning for the future.
Regardless of what happens, money is still important, especially if I expect the world to change.

Then again, maybe all these concerns are in my own mind and I'm just being paranoid.
Who knows...

<<PREVIOUS POST // NEXT POST>>

Did you like this post? If so, could you "blanjah" me 1/4 cup of my morning coffee pls.
You may also consider subscribing to receive the articles in your email, link in the column on the right.

4 Comments

Investment Returns are Subjective

29/7/2020

0 Comments

It's quite strange when I think about returns these days.
Cos I'm Singaporeans and live in the US... So I tend to get mixed up about how I view returns.
And I realize that returns aren't really so clean cut, cos it depends on who's looking at the investment.

Imagine...
If I'm an American. I save in USD, I buy gold, at USD1,700 and now it is USD1,900.
Great! I have achieved around 11.8% return.

However, for a Singaporean, he saves in SGD, he buys gold at USD1,700 but the exchange rate was SGD1.43 per USD. Now the exchange rate is SGD1.38 per USD, when gold is at USD1,900. So for a Singaporean, the return would be around 7.9%.

Then for a European, he saves in EUR, he buys gold at USD1,700 the exchange rate was USD1.10 per €, and now it is USD1.17 per € when gold is USD1,900, resulting in a return of around 5.1%.

So depending on how the exchange rate moves with regards to the appreciation of gold, the Singaporean investor would have differing returns compared to the American and European.
The European guy could maybe have just bought some other EUR investments and achieved 5% return or more.

OR...

Assuming that the American expects the USD to drop against other currencies.
Well, he could do nothing, cos he spends in USD, a burger is still a burger.
Alternatively, he may want to buy gold, or change his money to € to take advantage of the expected depreciation of the USD.

Whereas as Singaporean, I could just hold SGD and I won't be particularly affected by fluctuation of the USD. Cos a plate of chicken rice is still a plate of chicken rice. The price wouldn't be affected by the depreciation of the USD.

For me, I'll likely return to SG eventually.
Although staying long term in US has crossed my mind.
And this has fuddled my mind and how I calculate and look at investments.

Cos... if I want to stay in US long term, then I need to take into account the FX (foreign exchange) fluctuation.
Whereas if I return to SG, then I should just convert to SGD and manage my investments in SGD, cos I'll need to be spending in SGD when I'm older.

Of course, the perfect way is to trade the SGD/USD if I know the direction of the currency pairs, but let's say I don't want to take that risk, so I'd just hold SGD as much as possible.

And since I always calculate in SGD, then when I want to make an investment in a US company, then I'll need to include the FX fluctuations in my expected returns, cos maybe I make money in the investment but in the end I lose money on the FX, and the return becomes a lot less than what I expected.

If I was born in America, I wouldn't even be bothered to think about another currency. Cos if I was brought up in the US, then I would think the USD is the best currency and live my life satisfied with the USD.

Then if you're a true investment professional, then you might want to try to maintain a portfolio with multiple currencies so that you can maintain purchasing power across currencies.
This isn't particularly difficult, cos when you buy large companies with global businesses, they usually sell stuff in local currencies, except that they may hedge away the currency risk. Whereas you might want the exposure to the different currencies. So it really depends on how the global companies handle their FX risk.

OR one could buy a Global Index tracker ETF. So that can help to get exposure to multiple currencies. Except that usually these ETFs are exceptionally heavy weighted on US equities, so the exposure will be around 50-60% US equities, 7-8% Japan, 4-5% UK, then the rest is a mix of the other countries.
So you'd still get a disproportionate amount of exposure to the USD.

Another perspective about returns being relative is market timing...
Think about those folks who bought private condos at the peak, vs people who were lucky and bought it at lower prices. Some people made money on their condos, some people lost money.
Some people faced higher interest rates, some had low interest rates.
People who bought HDBs using HDB loans at 2.6% vs someone else who got a bank loan at 1.5%.
Their returns would be significantly different.
Some people may share their experience getting 7% year on year returns, whereas other people would say property is not a good investment.

I have a friend who sold his HDB after 10 years and he did not make enough on the HDB to repay the additional 2.5% he owed his CPF account for utilizing the funds.

So the thing is, everyone looks at investments differently based on many different factors.
Our nationality, the currency we invest in, our past experience with it, how we executed the investment, our holding power, our skill and expertise on the particular asset class, transaction costs, taxes, etc.
It's easy to just look at historical averages and say... oh stocks provide 7% yoy return, or whatever return.
Whereas the reality of it is not so simple.
Cos average is just a single number, there's a large number of other possibilities based on the standard deviation.

What had worked for our parents, might not work for us, what works for me, might not work for you, etc...
I often hear people asking/talking about whether they should invest in property or stock market...
But I think... the answer isn't so simple, so many factors, leverage, mortgage, investment horizon, stress of stock market volatility vs stress of tenant, etc
In the end... as long as an investment suits your own risk profile and required return...
I suppose that's good enough.

<<PREVIOUS POST // NEXT POST>>

Did you like this post? If so, could you "blanjah" me 1/4 cup of my morning coffee pls.
You may also consider subscribing to receive the articles in your email, link in the column on the right.

0 Comments

Minimum Wage & Quality Jobs

28/7/2020

1 Comment

So I said I was going to write about this.
It's an interesting topic.

Disclaimer: I'm not saying any job is good or bad, or looking down on any job. Since this post is about jobs, then I have to talk about them. Whether they are skilled or unskilled, workers all provide a service and play a part in society and everyone is trying to make a living in the way they believe is best for themselves.

When we hear about low wage workers, the answer seems so simple. Just have a minimum wage and they will all be able to live properly.
And yet, when we look at countries with minimum wage, this solution didn't work out anyway.
Low wage workers are still struggling. And the solution seems so simple. Just raise the minimum wage...

Now, I'm no expert in policy, so... there's probably a lot of things I don't know about this.
But as I see the situation in the US, some parts of the story become clearer.
I see a lot of hourly workers. America is big there's a lot of workers who work in hourly wage jobs.
I didn't realize this, cos I am used to my own industry where people are paid an annual pay with benefits.
But in US and maybe even in SG, there are a lot of people who are paid hourly, and usually, the pay isn't very high.
Yes there are highly paid hourly workers, but generally, there are more low wage hourly workers than there are highly paid hourly workers.

Ok, so what happens if we put in a minimum wage?
Well yes, people will earn more.
Next, cost of production increases. The company will charge more for the product.
Consumers will pay more. Consumers who are also the people earning a minimum wage.
So if HDB construction costs more, then other minimum wage workers will need to pay more for their HDB. Same as for McDonald's, etc...

If the minimum wage is increased to a high enough level, companies will probably do 2 things.
1. Invest in automation.
Jobs will be lost, BUT companies will have to train some workers to use the automation. So productivity will increase.
Currently, wages are low, so companies cannot be bothered to invest in technology.

2. Companies may just move overseas to countries with lower labour costs.
A lot of manufacturing has left USA for China and Mexico where the labour is cheaper.
Even financial companies are looking to have their back offices in lower cost countries.
Call centers are being redirected through India or the Philippines.
Jobs will be lost.

Option 1 would be great. Cos it forces companies to invest in technology and increases the productivity of the people and thus providing quality jobs.

You see, the problem here lies not in wages or minimum wage.
The problem lies in value add, or the demand of the current economy vs the supply of skilled/unskilled labour.
Increasing the wages without increasing the productivity of workers will result in companies finding alternative methods. Or just cause more expensive products.

The real solution would be to create higher value added jobs. Train citizens to take up those roles, then maybe have foreign workers take up jobs which citizens don't want to do.
This will keep the cost of products cheap, citizens will have better jobs and have better wages.
And currently Singapore seems to be doing somewhat quite well here.
Many families are able to have excess money to buy stuff and travel overseas on top of their basic necessities. How many families do you know who do not at least take one vacation overseas per year?

IF Singapore doesn't import foreign workers at all, then the cost of low wage workers will also increase.
Someone still needs to clean the toilets. So maybe we'll end up with a country like Norway, or Japan, where such jobs have quite high pay as well. I'm sure that there's going to be Singaporeans who wouldn't mind being a cleaner for $5,000 per mth.
This also ends up with higher costs of products and possibly lower disparity of wealth. Cos every company is fighting for workers in a small labour pool.
Skilled workers will get market pay for their skills.
Whereas unskilled workers get higher pay cos there is little competition from cheaper alternatives, such as foreigners. Of course in this scenario, more companies will likely be willing to invest in technology and automation.
This ends up with a higher cost of living for everyone.
Which is somewhat ok I suppose, if that's the society we want to build. But means people won't be able to save as much and travel as much.

It would probably be better if most Singaporeans get skilled jobs, earn more, then have lower cost of living cos foreigners take up lower paying jobs and Singaporeans get to benefit from the reduced cost from cheap foreign labour. Then Singaporeans can save more and travel more and buy more stuff as well.

The issue is how to encourage behaviour.
That's what policy is about.
The Government needs to encourage people to upgrade and take on better roles.
Problem is sometimes, people don't want to upgrade to take on better roles. The rise of the gig industry is a testament to this. People want to do simple jobs and get paid a livable wage. As what I wrote about in my last post, this just isn't possible anymore in the new world. People can't sell labour and expect to be paid well, people need to sell skills, knowledge, specialty to be able to live well.
Having people change jobs, careers isn't as easy as just offering higher pay. Us mere mortals have a lot of inertia for change. It's just part of being human.

They need to get encourage companies to create better jobs.
Or get companies to set up shop in Singapore to create good value jobs.
But what if companies come to Singapore and sets up good value jobs...
BUT Singaporeans don't want to upgrade or aren't able to take up these jobs?
As a Government, will you ask the companies to go away or do you open the gates to "foreign talent", who might be able to take these roles?
I think this is a current problem in SG.

They are probably conflicted about importing foreigners for jobs which Singaporeans want.
Personally, I don't enjoy seeing foreigners at retail outlets and as accountants and auditors or IT professionals. I find these jobs are jobs which Singaporeans would like to have.
Unfortunately, although I prefer to have Singaporeans at hawker centers selling food, I understand that this is a tough job and many Singaporeans don't want the job of helping out at a hawker center.

But what if a job is low value add, but it's also a job which Singaporeans want?
Should the Government intentionally displace the Singaporeans to force them to upgrade and take on more value added roles?
And what if Singaporeans insist on having those jobs and getting low pay and continue to complain about the low pay?
This is happening in the US. People are working at McDonald's and demanding a livable wage.
Whereas I think many of us recognize that such jobs are jobs that shouldn't be taken as a career or to sustain a lifestyle. These jobs are maybe for teenagers to earn some pocket money during their holidays or retirees who want to pass time and make some pocket money.
But in the US, people get these jobs and hope to raise a family on it. And so... they demand to increase minimum wage.

The thing about minimum wage is... this is also a policy which affects behaviour.
It will encourage companies to do certain things.
It's easy for people to just say, implement or raise minimum wage, and expect the problem to take care of itself. However, personally, I feel that it's having a minimum wage will result in cause and effect, won't solve the problem and minimum wage will just keep having to go up cos it ends up as a cyclical problem.

So I think this is a multi-faceted problem which the Government, all Governments need to manage.
Cos it's not only about creating jobs, but also getting the people to take up those jobs.
Having the jobs created, doesn't mean that people want them, even though it pays better.
Could also be that people can't learn the skills required as well as reluctance to retrain.
Not everyone can become a doctor. Or not everyone wants to learn to be a plumber. Even though a plumber could earn a lot in the US.
It also has to do a lot with the expectation of people, and what people hope to work as to earn a livable wage. If folks believe that working at McDonald's deserve a livable wage, then that's something that the Government needs to manage, whether that expectation is reasonable, or acceptable or not... well that's up to the society to determine.

So for me, the argument for a minimum wage, or to increase minimum wage... it sounds really easy and sexy on paper. Such an easy solution to help the low income. Just pay them more.
And yet, I don't believe that the solution is so simple. Policies will change behaviour and companies will react to changes in policy.
I believe that a more holistic solution would be to create better quality jobs and encourage citizens to take up those jobs. Just cos the job is available doesn't mean people want or have the skills to fill those jobs.
And that's where the real problem lies.

I think today's post is different from my previous post written in 2014.
Some parts of that old post I still believe in but now, I think I was naive to think that just cos better jobs exist, that people will naturally gyrate towards it.
Yes, some people will upgrade to take up those jobs, but there are probably a lot of people who don't want to upgrade to take those jobs. It's just human nature.
And IF companies want to set up shop in Singapore, the Government will definitely want their business, but if Singaporeans aren't able to or unwilling to take up those jobs, then the Government will naturally open the gates for foreigners to help fill those jobs.

<<PREVIOUS POST // NEXT POST>>

Did you like this post? If so, could you "blanjah" me 1/4 cup of my morning coffee pls.
You may also consider subscribing to receive the articles in your email, link in the column on the right.

1 Comment

The Past Generation Never Bought So Much Sh!t

27/7/2020

7 Comments

I was reading about American spending habits, and I reflect upon Singaporean spending habits.
I hear/read stories about people who generally complain about not being able to save or retire. That they are being priced out of the system, they can't make ends meet.

And there's always 2 sides of the argument.

On one hand, there are people who blame the individual. Saying that people shouldn't be spending on Starbucks, iPhones, and that their spending habits are the reason why some people remain poor and aren't able to save or retire.

On the other hand, there are people who believe that wages haven't increased by much throughout the years, whereas the prices of stuff, housing, food, etc have increased by much more than wages.
So mathematically, housing, food and other essentials are taking up more percentage of our income as compared to previous generations.

We always hear stories about our parents generation where they can raise a family on a single income. And on a simple income, like a taxi driver, or forklift driver, stuff like that.
And then people say that that cannot be done anymore.
And that's somewhat true. Wages haven't kept up with inflation.

In America, that's also true, the "American Dream" is dead they say. Cos the average worker cannot afford what his parents afforded. Wages have remained low, cos companies have moved production overseas to China or Mexico. Low value add workers earn a low wage.
Executives fare better.
This is actually the reason why the SG Government keeps talking about quality jobs, and they don't have a minimum wage. When I think more about it, I can understand the reason. (Will write about it tomorrow.)

The thing about it is, both sides to this discussion are right.
Firstly, we have to recognize that the world has changed. Keeping a simple job as a labour worker won't keep an individual ahead of the game.
In the previous generation, this was possible.
But as the world changed, these labour workers aren't as demanded in the economy.
Knowledge based workers are in higher demand and so it pays more.

It's happened before. It's like... horses are no more in fashion cos there are cars. But horses can't complain.
Every age has it's new economy and what is in demand in that economy.
Unfortunately, people CAN complain, they want to be able to achieve everything that their parents achieved by doing the same thing as their parents.
But as the world has changed, this is no longer possible.

On the flip side, when we look at spending, it's a similar story...
Our parents never bought so much sh!t.
It's a new generation now... we have more stuff to buy. We need handphones, mobile subscriptions, Netflix, Spotify, branded goods, laptops, gaming chairs, air-conditioning, etc.
These things just didn't exist for them to buy.

We are in a generation of consumption.
Our parents never had HDBs with air-cons in every room. They didn't need to buy mobile plans, Starbucks, etc... I hardly ate out as a kid, maybe only on weekends.
There was no such thing as spending money on online games. Only rich kids had a game console and each game was expensive so kids would have only a couple of games. Now, kids have many games and many toys.

So the answer is actually Yes and Yes...
Both of the arguments are true.

Wages haven't kept in tandem with inflation.
The cost of basic goods has increased faster than wages have. This is also due the the problem that many jobs are low value add jobs which are low in demand. If we increase the cost of workers, then companies will just shift production to cheaper countries.
The number of high value jobs aren't that many. Even with more education, the number of quality jobs aren't enough. You only need a few hundred computer engineers/programmers to code out a game/software and it's easily replicated to sell to millions.
Whereas manufacturing of clothes is labour intensive and companies will just shift production to low cost countries.

The flip side is also true.
People spend more on stuff that never existed last time.
Premium coffee, avocado toast, luxury bags, eating out more often, computers, phones, etc...
Companies produce products which break easier, cos they expect people to continue to upgrade every couple of years anyway. Read about planned obsolescence. And of course, if it breaks easier, they get to sell more anyway.

So how?
Well...
The solution should be obvious here right?

As an individual, what can we do for ourselves?
Try to get higher paying, higher value add jobs. And spend less buying stuff.

As a Government... well, they have to try to create quality jobs for the citizens.

It's just the way the world works. Each generation will have their own challenges and we have to adapt to things. We can't expect to have the same lives as our parents. The world has changed a lot since then, we have lots of things which they never had. We've traveled a lot more than our parents ever did. Have lots of access to knowledge and information, different forms of entertainment, etc.

It's just a different life.
If we look at it in another way, our parents earned more and spent less.
Whereas for this generation, many people earn less and spend more.

<<PREVIOUS POST // NEXT POST>>

Did you like this post? If so, could you "blanjah" me 1/4 cup of my morning coffee pls.
You may also consider subscribing to receive the articles in your email, link in the column on the right.

7 Comments

Milking The American Consumer

24/7/2020

1 Comment

I've been watching a lot of YouTube about US Consumerism, homelessness, credit card debt, keeping with the Joneses, etc...

And I kinda came down to an overview of how I view the American consumer...
The consumer system, big businesses, marketing... these are like the farmers, and they are out looking for profits...
And the American consumer... is the cattle...

Now, of course all big businesses don't get together, sit down and discuss how to fleece the sheep, but somehow when "the system" works together the end result is the same...

You see, there's really A LOT of marketing in the American consumer economy.
There's a lot of free stuff, they want you to try their stuff, so that if you like it, you will continue to buy it.
There's a lot of credit being offered to consumers, there's credit cards being sent around to induce people to spend... and somehow, Americans seem to LOVE spending. They don't seem to have any self control.

Based on some quick research, depending on which site I see, the percentage of Americans carrying credit card debt is somewhere around 37%-47%. That's some insane numbers.

Americans somehow love monthly payments. They earn their salary and they spend up to the limit of what they can afford. They will buy big ticket items on credit and pay monthly, up until what they earn. The problem is, this kind of spending and installment, is locked in. It's not like they can suddenly stop purchases when they lose their jobs. They have already purchased the item months ago and need to consistently pay their dues monthly.

So there's this complex network of advertising and rubbish marketing that drives Americans towards this end state of being like cattle.
The bottled drinks industry is big in the US. Bottled water, bottled sweet drinks, etc...
Soda, of fizzy drinks as we know it, is free flow at fast food joints. You pay for a cup, and you can top up all you want. Sodas are cheap at supermarkets. It's common for people to buy cartons home as their normal drink.
Warren Buffet drinks 5 cans of Coke a day.

Junk food, processed food, frozen foods are big in the US, they are marketed as time savers, easy, cheap meals... They aren't really cheap gram for gram, but they are affordable as a meal. A frozen stuffed crust pizza costs me US$7 which will feed me and my wife for the whole day.
Whereas I could alternatively buy 5kg of raw chicken at US$5 and I could cook this for days.
And yet, US$7 for a pizza is affordable and convenient.

Similarly, fast food is also cheap and convenient, it's not cheap dollar per gram, but it's affordable and convenient.

All these builds up to poor health for Americans...
It's estimated that around 40% of Americans are obese.

Around 9.4% of Americans are diabetic.

Generally incurable and ongoing, chronic diseases affect approximately 133 million Americans, representing more than 40% of the total population of this country. projected to grow to an estimated 157 million, with 81 million having multiple conditions.

Americans are unhealthy and they have to pay for it.
They pay for it in healthcare costs and insurance.

The problem with US healthcare and insurance is that the problem is cyclical.
Healthcare costs are high, Americans are unhealthy, they go to hospital, the hospitals know they are insured and charge them ridiculous charges to get as much out of the insurance as possible, then in-turn insurance companies charge even higher premiums and the consumers have to pay for the increased premiums.
It's an on-going cycle.

Then there's the typical consumerism, buying STUFF. LOTS OF STUFF.
They love stuff. They buy stuff for Christmas, Valentines day, whatever day, anniversary, etc...
They have those TV marketing, where they can call in and buy clothes, knives, vacuum cleaners, etc.
Amazon, etc... buying stuff is so easy.
It's part of the culture. They love to buy stuff.

Companies market to adults, market to kids, market to parents, make parents doubt themselves, "You need XXX for your kid's well-being", or "You need YYY for your pets' well-being".

Credit is easy to obtain.
Credit cards are easy to get, not so easy for me, cos I don't have a credit score, but most Americans have a credit score and they get credit cards really easily.
Payday loans are easy to obtain. People just pledge their next paycheck to obtain some cash NOW, for a fee, so that they can spend.

49% of Americans expect to live paycheck to paycheck this year.

Americans are paid every 2 weeks, cos they are notoriously bad at holding on to their money.
So they end up spending everything before the end of the month. So most companies pay every 2 weeks so that the people have money regularly.

Ok, back to topic... I'll combine all the above points...
The consumer system has made the typical American consumer like cattle.
They milk, fleece, bleed the consumer dry.

They sell rubbish food to the consumer, the consumers love the idea and buy into it.
Then they are in poor health, and they have to pay for healthcare or insurance.
Then they buy rubbish items and new cars, new phones, new TV, etc...
They live on credit, they live paycheck to paycheck...
They get into debt, they feel depressed with the debt, they go and see the doctor, they doctor prescribes medicine, anti-depressants, more bills, more consumption...

Essentially, the consumer system has sold the consumer everything that they can sell the consumer.

The consumer has been bled almost dry. There's nothing else the consumer can give to the system anymore. They have spent all/most of their current and future health, they have spent all/most of their current and future pay, cos almost half of the people are in debt.
And the system is still looking for more things to sell the consumer.

So if I look at it from an overall consumer system.
The system looks at the 37%-47% people holding credit card debt...
Or the 40% unhealthy...
If I'm the system, what would I do?

Well, I'd want to make more people even more unhealthy. If 50% of the population are sick, then there's more healthcare to sell to consumers. The more sick there are the more profits there are.
If more people are depressed, then I can sell more pills.

I'd also want to make more people indebted. If I can tap into the future earnings of these debt-free people. That would be wonderful.
For those people who are unhealthy and maxed out with the credit cards, these people are no longer useful to the system. They can't afford anything else. They have paid with their current and future currency.
I need to move on to sell to those who can afford what I'm selling.
I need to sell to the healthy and ruin them.
I need to sell to the debt-free and make them indebted.
I need to make these people pay me with their future health and future paychecks.
If I'm "the system" I'd want to destroy more lives.

Everyone has pretty much the same things that they can buy stuff with.
People only have so much money NOW... Once that's spent, that's it...
The best way for companies/"the system" to make even more money, is to tap into the future earnings of the people.
What a brilliant idea.

The typical American consumer is really like cattle.
"The consumer system" milks them, fleeces them, bleeds them and when they are useless, the consumers are left out to die and "the system" looks for it's next victim.

<<PREVIOUS POST // NEXT POST>>

Did you like this post? If so, could you "blanjah" me 1/4 cup of my morning coffee pls.
You may also consider subscribing to receive the articles in your email, link in the column on the right.

1 Comment

Are We In A Bubble?

23/7/2020

1 Comment

I'll copy and paste large chunks from Investopedia.

https://www.investopedia.com/terms/i/irrationalexuberance.asp

KEY TAKEAWAYS
Irrational exuberance is unfounded market optimism that lacks a real foundation of fundamental valuation, but instead rests on psychological factors.

The term was popularized by former Fed chairman Alan Greenspan in a 1996 speech addressing the burgeoning internet bubble in the stock market.

Irrational exuberance has become synonymous with the creation of inflated asset prices associated with bubbles, which ultimately pop and can lead to market panic.

Breaking down Irrational Exuberance
Irrational exuberance is widespread and undue economic optimism. When investors start believing that the rise in prices in the recent past predicts the future, they are acting as if there is no uncertainty in the market, causing a positive feedback loop of ever-higher prices.

We can tell ourselves anything...
There's more liquidity in the market, COVID will be gone soon, the market is forward looking, things aren't as bad as they seem... the list can go on...

But really? Is that really the truth?

BUT...
That doesn't mean that one shouldn't invest in a bubble.
It also doesn't mean one SHOULD invest in a bubble.
That's the difficulty.

If you wait for the bubble to pop, even after the pop, asset prices for good assets COULD be higher than what they are now.
BUT, if you buy the wrong stock, the pop could result in a worthless stock much like what happened in the Dotcom era.

Do I think markets are highly irrational now?
Yes I do, especially for US markets.
Singapore is still around 20% down from the peak.
Whereas S&P has recovered all if not most of it's losses.

Jobless rates are high, consumer spending is low. People are hesitant to spend due to concern of their jobs.
People aren't travelling. Discretionary spending is down.

Stock prices have to eventually reflect earnings.
Else investors aren't being adequately being compensated for the risks they take.
Imagine investing in a stock for $100 and getting $1 earnings after a year.
That's a 100 P/E ratio.
In such a case, either the company is a super high growth company, OR investors aren't getting enough returns for the purchase price of the stock.
It's like buying a bond with a 5% chance of default but getting a 1% return on it. The price and return must eventually reflect the risk.

So how long could this party go on for?
Well... If the Central Bank/FED is the greatest fool, if they are willing to keep buying assets, then the party could go on for very very long.

You see, the FED doesn't have the same objective as us investors.
Investors try to make money, and want to have reasonable return for the risk we take.
The FED doesn't need to "make" money. They can just print it.
Their objective is to stabilize the economy. Or they hope to. So they can just keep propping up asset prices for whatever objective they deem fit.
BUT, this in-turn would crush returns and yields for normal investors.

If there's ever a time for value investing, investing in companies that have a good moat, good cashflow, good management, now's probably the time for it.

And we all know who's the best at value investing... *wink wink*

Once again...
These thoughts are my own analysis and thoughts, please do not use it as an indication to buy or sell. Please do your own research before making any decisions.

<<PREVIOUS POST // NEXT POST>>

Did you like this post? If so, could you "blanjah" me 1/4 cup of my morning coffee pls.
You may also consider subscribing to receive the articles in your email, link in the column on the right.

1 Comment

The Next Drag on the STI Index

22/7/2020

0 Comments

As usual, please don't take it as an indication to buy or sell your investments. Please do your own research.

Every time I look at the basket which makes up the STI Index, I ask myself.
What would I like to remove from this basket?
Cos well... I do think an STI ETF is a fairly ok investment for the long run.

So to me, when I look at the basket, I mentally classify the stocks...
Good stocks, stocks that I would like to include in my portfolio,
Average or "don't mind" stocks, aka stocks that I don't think are great but I don't mind holding them in the basket,
and Drag stocks, stocks which I DON'T want to own cos they will likely drag down the overall performance of the STI Index.

Now, I don't particularly mind buying the STI ETF, cos it's value weighted. Meaning, the larger cap stocks would make up the bulk of the ETF. And the drag stocks make up a smaller percentage of the ETF.
So maybe the drag stocks would take up 5% of the overall performance. Doesn't mean the performance will be less by 5%, just means that this 5% would perform weaker than the rest of the other component stocks. Resulting in a slightly lower average return.

Of course there are benefits to holding the STI ETF...
I don't have to manage and rebalance 30 different stocks.
I get a fair amount of diversification.
For people who don't have large AUM pools, they can get a fair enough diversification with just one ETF.
They are names which most Singaporeans know and trust.
Etc...

So just a couple of months ago... There was SPH that was one of the drags on the STI ETF...
It was a fairly good dividend stock last time... but that was really long ago... I used to own it and got a nice 5% dividend yearly... Wrote about that here.
Sold it long time ago so no love lost.
Anyway, SPH has been removed from the STI Index.

And so I look through the component list and once again I ask myself.
What's the next drag which would likely under perform the overall index?
Note, I tend to look at this long term... more than 5 years.
Meaning, which stock is a dying industry, and not just any under performing stock.

Example.
Yangzijiang is performing poorly currently, BUT, it's possible that in the future, ship building picks up again when things get better over the next decade or 2. Personally, I expect shipping to eventually recover, when relationships between China and US eventually improve, trade will resume eventually.
In the end, the lust for money always wins.

SIA and SATS are also currently under performing, and will continue to under perform until COVID is over AND people need to trust flying again... I think people won't want to fly for holidays unless they have sufficient trust that they won't come home with COVID.
However, in maybe 3 years, things may eventually pick up again...
So I think eventually, SIA and SATS will recover some day.

For me, I think the long term under performer will be ComfortDelGro.
ComfortDelGro has revenue streams of...
1. Running public transport for SG, UK, Australia (Approx $2,400m in revenue)
This segment is probably stable.

2. Taxis in multiple countries (Approx $1,200m in revenue)
This revenues stream looks at risk. With many people moving toward ride hailing, earning from this segment will likely be eroded significantly as the years go by, unless they make significant changes.

3. An engineering arm which maintains and services taxis (Approx $180m in revenue)
With the reduced demand for taxis, it's likely that they will continue to reduce their fleet size and this revenue stream will also be eroded.

4. VICOM & Other businesses (Approx $200m in revenue)
Small revenues which doesn't impact the overall business significantly.

With approximately 1/3 of it's revenue/profit which might slowly become obsolete, I feel that ComfortDelGro would be the drag company on the STI.
Note, this doesn't mean that ComfortDelGro will lose money or go bankrupt. It might just be a shrinking business. Like SPH just didn't manage to keep up with the times. CDG is still a company which employs many people. Just that I think this company might be in an industry which doesn't grow with the times.

Whereas I feel that the industry that SIA, SATS, YangZijiang are in, will continue to go strong, unless the companies themselves are mismanaged and have other management issues.

Once again...
These thoughts are my own analysis and thoughts, please do not use it as an indication to buy or sell. Please do your own research before making any decisions.

<<PREVIOUS POST // NEXT POST>>

Did you like this post? If so, could you "blanjah" me 1/4 cup of my morning coffee pls.
You may also consider subscribing to receive the articles in your email, link in the column on the right.

0 Comments

5 Biggest Myths About Early Retirement

21/7/2020

2 Comments

There's a lot of comments about retirement or early retirement when I talk to different people.
So much so that I'm tired of saying that I'm retired. I usually just say jobless or taking a break.
It's a lot easier to explain and there's less weird comments.
The thing is, retirement is NOT on many people's minds, so it becomes a hard topic.
And instead of trying to understand or hear my story, people instead try to TEACH me about retirement... or what I need, or what it should be...

HUH? ... An un-retired person teaching a retired person? What retirement should be about?
Something wrong lah...

So today, I'll run through the most common myths that people have about retirement.

1. You need a lot of money
Right on top of the list, many people believe you need a lot of money. Like SH!TLOADS of money.
Millions!
The thing is, people vastly overestimate what they need.
Cos they attribute retirement as lifestyles of wanton entertainment. They think that they will spend the same amount on weekends as weekdays. So if they spend $200 on entertainment on a Saturday, means they will need $75k per year.
The truth is, for many people, when they retire, their lifestyles scale down. They realize they don't need so many things, they usually become more chill.

For my parents, after they retired, they kept spending for a period of time, then reality struck them. They realized that their funds wouldn't last long if they kept up the spending, so they reduced their spending.

In SG, if we look at the spending of old retired folks, their spending is around $2,400 per month per couple. If you stay in a bigger place, you'll end up spending more.
As we grow older, we don't need so much clothes, items, stuff, etc...
We also don't go out for entertainment as much.
Actually, once we start NOT having colleagues to compare against, or stop comparing with neighbours, the propensity to spend drops by a lot.
And that's on average...

And since I'm more frugal than average, with avenues to obtain free resources, then I would probably be able to retire on less.
So when I say I don't have a lot of money, or don't need a lot of money, it leads people to believe... point 2.

2. Without a lot of money you live like a pauper
People tend to believe that retirement without a lot of finances means living a life of restraint.
Of significant self control. Like a retiree needs to deny themselves a lot in life.

OK... There's some truth to needing to be diligent with spending.
I mean that's quite obvious. If you aren't diligent in spending BEFORE retirement, then you probably shouldn't retire anyway. Money burns really fast if you buy frivolous things.
Especially if you're into silly marketing. Like in US, there's special days for everything. They have "National hotdog day", doughnut day, fry day, taco day, etc... all this to induce people to spend more.
They are also very big on festivals, Valentines day, Memorial day, Independence day, etc.

Now, I'm not into these things. Marketing doesn't have much effect on me. I buy what I need, and sometimes I buy stuff I want. Like maybe a nice meal. I don't have many wants, except for better food.
I do treat myself occasionally.
The thing is, I don't feel the urge to treat myself more often.

So I think this could be up to the individual.
If someone wants a lot of stuff and desires, then when they deny themselves, they feel unhappy.
But if they don't have wants and desires, then they aren't denying themselves.
Like for me, I don't feel like I'm denying myself, and I'm living a pretty good life.
My lifestyle has hardly shifted from when I was working.

It's the idea of, I don't miss what I don't want.

3. You lose purpose in life
Now, this is really sad. If work is the only thing giving someone purpose in life.
You give yourself whatever purpose you want to have in life.
If you think work is your purpose in life, then it's a sad case right?
You don't have anything else better to do?

For me, personally, I believe that there is no such thing as purpose in life. I am here to exist and die.
Like any other animal. And I'm ok with that. I don't try to look for any other higher purpose.

Even for anyone who believes in purpose in life, I'm sure they should have more interests besides working right? For someone who loves their job, their job becomes their hobby, that's fine.
But I also think there's a lot of people who aren't happy with their jobs. And they also don't want to quit.
Maybe cos they can't afford to quit, or feel insecure quitting... Then they tell themselves that they have no purpose if they quit...

But seriously, there's a lot to do after retirement, IF you try to find things to do. Else, yea it's boring and there's no purpose, and then... point 4...

4. Your mind slows down
I've written about this before. Keeping my mind active after retirement.
If you have other interests, then the mind won't slow down.
Hobbies, reading, mahjong, sports, whatever...
If you don't have any interests then go back to point 3...

The mind is like any muscle... it will deteriorate if it's not used. Doesn't mean only in work.
The mind can be used in multiple ways. Learning a language, sports, taking care of kids, hanging with friends, etc...

5. 4% withdrawal rate is not safe
I don't understand why people think of withdrawal rates and stuff like that...
It's not like it's some hard rule... If markets do well, I also won't withdraw 4%... I'll withdraw what I need. Which is likely under whatever withdrawal rate I'm comfortable with.
If markets are bad, I'll also withdraw less than 4%...
The idea of withdrawing 4% regardless of market conditions is HIGHLY FLAWED.

It's the same as people who believe savings is a percentage of salary.
When I was earning $2k salary, I spent, $1800.
When I was earning $2500, I spent $2000.
When I was earning $5k, I spent $2100...
Just cos I earn more, doesn't mean I spend proportionately more. I might spend a bit more, but not in the same proportion as earnings.
Wrote something to this extent here.

Same as withdrawal rates. On good years, I spend around the same amount as on bad years.
Any excess I reinvest into the pool of assets.
In bad years, I may cut my spending. Or maybe my spending is already low enough that a bad year still results in excess for reinvestment.
So the whole idea of 4% withdrawal is totally irrelevant to me.
The whole notion that people keep changing their budgets due to market conditions is pretty far-fetched.

So there you have it, the Top 5 things which I think are most misunderstood and wrongly believed by many people.
Do you think there are even more myths and misunderstandings which I have missed out?

<<PREVIOUS POST // NEXT POST>>

Did you like this post? If so, could you "blanjah" me 1/4 cup of my morning coffee pls.
You may also consider subscribing to receive the articles in your email, link in the column on the right.

2 Comments

The Reality of Food Waste & Helping the Poor

20/7/2020

4 Comments

Regular reader Kuriko asked about this topic, so I decided to do a post on it cos the answer is quite long.

There's a lot of ways and views to look at this, and many various points to note.

So on the food waste side, I'd say, there's a lot of food waste.
And most of it is destroyed by incineration.

When we go to Pasir Panjang, we know that there's a lot of waste at the wholesale level.
This isn't even at the import level, there is another level above wholesale, and that's the importers.
SG Food Rescue has been called upon to help clear 8 pallets of sprouting onions.

Below is the size of 1 pallet of onions. Imagine having 8 pallets which would go to waste cos the importer can't sell sprouting onions.

(The picture is a picture found on the internet as an example, it's the size I want to demonstrate.)

Now... Sprouting onions aren't potatoes. Not all sprouting things aren't edible.
Sprouting onions are the in-between of onions and spring onions. They can be eaten. But no one really buys them.
So SGFR goes and tries to distribute the onions to whoever is willing to take them. Doesn't necessarily mean the poor, cos food waste is food waste, helping the poor is a different thing.
And anyway, not all low income are willing to eat sprouting onions as well.

The importers could have bought too much, left it for too long, whatever...

At the wholesale level, at Pasir Panjang, the shop owners will also filter through the products.
Cos they need to send before ripe products to the retailers, like supermarkets and wet markets.
Note, BEFORE ripe. Cos retailers will display the products for 2-3 days.
Which means, if the produce is ripe, they might want to dispose it, cos the retailers might not want it. Cos it won't last.Then they'll remove produce that might be too big, too small, cos it doesn't look nice on display, remove those with different skin colours, even though the apple might taste the same, remove banged up veges, cos no one is going to buy them, etc...

At the retailers, supermarkets, wet market, little India retailers, whatever, once again, the produce is filtered, light damage from transport, banged, over ripe, unable to sell in time, new stocks coming in so dispose old stocks, etc...
Understandable, cos consumers want to buy perfect products.

There are also other business issues...
For example, a supplier has an over supply of cucumbers. He will force his retailers to accept the oversupply, even though it's cheaper, retailers will end up with a lot of cucumbers that they cannot sell. So they end up having to throw away.
BUT, they have to accept this.
Cos when the supplier has an under supply due to poor weather, the retailers want the suppliers to continue to supply them.
The idea of, you help me, I help you.
Cos if the retailer doesn't want to take excess stock, when there's over supply, then the supplier won't want to supply the retailer when there's limited stock. "You don't help me, why should I help you?" Might as well I help your competitor who helped me last time.

Leading supermarkets chains... I shall not name which... They proclaim they have minimal/zero food waste. What they do, is that for biscuits or canned food which cannot be sold in time, they return the stuff to the supplier. Like magic, the food waste disappears from their books. The problem is now the suppliers' problem.

Or during CNY, a major supermarket may order 2x the needed amount of bakchoy from 2 different vendors. And at the last minute cancel one order, cos this helps them as a contingency plan. So that the supermarket can confirm have the supply available. But this leads to one vendor having to hold on to a whole order of wasted bakchoy.

From a business perspective... it's like that... you buy 100 cans of sardines, you sell 90, it's good enough. Throw the rest. IF can sell 100 cans of sardines, then next time I'll restock 120 cans... I'll keep buying more cans until the point where I have to throw away.

Businesses want to keep stocked up, and we as consumers are used to being able to obtain anything we want, whenever we want. We have grown to expect that. Of course, all this comes at a cost to consumers, even though consumers don't see the cost.

Or at a buffet, a buffet is usually open for 4 hours... let's say 6pm-10pm...
At the end of the day, there's maybe 100kg of wasted food. So that seems a lot.
But maybe in total they produced 1000kg of food and consumers have eaten 900kg of food.
So yes, the 100kg seems a lot, but when looking at the total amount served.
As a business owner, it's acceptable.

If you look at it from the perspective of individual businesses, it's understandable.
But if you look at it from a big picture, end to end supply chain, it's ridiculous.

There's enough food waste to feed the less fortunate AND drive down the cost of food for everyone else.
Now, don't think of food waste as rubbish food. It's not. It's food that is disposed due to whatever reasons. Which might have nothing to do with the quality of the food.
Example... Go to Marks & Spencer after 25 Dec... What do you see?
Yes, there's sub-prime food, but there's also a lot of good food that is discarded due to whatever business reasons. Furthermore, it doesn't make business sense to give the food away, cos expense and logistics.

Distribution itself is an issue.

Then we have organizations like "Food Bank".
By right, they work with other organizations to accumulate the unsold products and try to distribute it to the needy. They have food boxes left all around shopping centers, void decks to help gather food.
In the end, what happens is, people will drop off their expired food or past best before date into these boxes.
Yes, such food is still edible, I've written about that before.
Don't take my word for it. Just Google search "Are expiry dates real?".
But Food Bank doesn't distribute such items.
Previously some freegans used to go to Food Bank to help take and consume the stuff they aren't able to give away.
In other cases, some people buy food to put into the boxes... which pretty much defeats the purpose of reducing food waste.

Retail chains also give food to Food Bank... Sometimes, they give them with a lot of time to spare, so the Food Bank is able to distribute the food. Sometimes, retailers give the food to Food Bank with only 1 month left to expiry, so Food Bank isn't able to push out the food in time. So ends up, more food waste.

Food distribution to the needy isn't as simple as just pass Food Bank the food and they immediately pass it out. It's a charity, they only have a handful of employees, they need or organize volunteers to distribute the food. So that takes time...
Also... there are OTHER organizations which request Food Bank to organize events to distribute food with their employees, so these organizations will BUY food to give to the needy and Food Bank will help organize the employees of these organizations...
Remember the example I gave you about sardines? So what happens is, the retailers will see a spike in demand for sardines, and next month, restock more, but most of these "help the needy" events are once off by the organization... so what happens to the excess? Sure you can slowly sell canned sardines, but what if it's eggs and milk?

The problem of food waste, isn't just about finishing the food on your plate.
It's a deeply entrenched issue within the system, the supply chain.
It's the effect of industrialization and automation. Producing large volumes of food has become easy.
And people have become rich. So they are more willing to pay more to have nicer products.
So a farmer may throw away 30% of his produce cos it doesn't look perfect and he's still able to turn a profit by selling the remaining 70% to the next level.
Supermarkets only show nice fresh veges cos consumers want that. It's a natural progression of humans.
And it's not easy to undo. Cos what if NTUC now supplies less stuff and imperfect produce? Imperfect looking, but still edible. What if NTUC has less cans of sardines, corn, tuna, so some days when you go, you can find, some days you go, it's out of stock?
What happens is consumers may end up going to Sheng Shiong instead, or complain.

Food security through the food supply chain goes hand in hand with food waste. The only hope is to reduce the food waste.
As a farmer, in my worst year, I must be able to produce enough to keep my business afloat. Which means in my average/best years, most years, I have excess.

Then we move on to feeding the poor/needy/low income...

CNA did a documentary about this below.
In one clip it shows some less fortunate people who have nothing to eat.
In the 2nd clip it shows some elderly folks who are over-served by organizations such that they have so much that they are able to waste it. They may not have cash but they sure aren't hungry.

It's a flaw in the system and probably due to "feel good" factor of doing social work.
The idea of, "I've already donated", and I pat myself on the back.
Or I've delivered food for the less fortunate, and I think I'm great cos of it.

I have friends who tell me that some of these low income estates are so over provided for, that they leave rice and oats at the void deck, in the hopes that someone else can pick it up and use it. Cos they say... "We receive so much rice, how much rice can we eat?"

SGFR has delivered food to a low income estate. It was quite regular. It's a truckload of fruits and vegetables. One of the volunteers who was organizing the distribution thanked us for the food and asked if we have any initiatives for meat products. Cos apparently they have difficulty obtaining meat products.
And this really blew my mind. Cos... WOW to me, it's some entitlement mindset.
There are vegetarians in SGFR, so to me, eating purely vegetables and fruits are considered an acceptable diet. Are they expecting donors to provide everything? In my mind, I was thinking... "If you have rice and vegetables and fruits... that should be good enough. If you have excess money and want to buy meat, then that's your choice. Cannot be expecting others to provide 100% of their dietary requests right."

And yet...
If you watch the clips, there as an instance where the elderly has 4 packets of food per day and he chooses which to eat.
Or products which are given to the low income and after a while, they start demanding for brand names. "Why oranges aren't Sunkist brand?"

Even giving to the "needy" results in food waste. Are they even needy anymore?

There is a serious lack of coordination on who and how and what to supply.
Charitable organizations are like any organization. Same ol' nonsense.
Politics, turf wars, money matters, etc.
I've heard of politics and turf wars between organizations. They want to serve the same area, no one wants to move out and serve somewhere new.
Within the organization, it's like any other company, people want to be promoted, get more pay, etc.
The volunteers are blissfully ignorant. They feel like they have done good deeds by providing help and delivering food to the needy. Well done! Pat themselves on the back!

I think food waste and feeding the poor are very different issues.
It's possible to combine them and get a lot of synergies.
But they need to handle a lot of their own issues which have nothing to do with each other.

Food waste is the result of an over supply and the demand of perfection.
There's so much produce that people can afford to be choosy.
People buy and stock up food and discard when it's not consumed.
Food that's packed for events, or celebrations, festivities.
Companies that refuse to give away the waste in the fear that it would impact business. Cos people might wait for the food to be discarded to obtain it for free.
Food is cheap, too cheap.
Lack of education about expiry dates, best before dates, and what they mean.
Lack of common sense.

Poverty is another issue.
Could be poor choices, lack of education on the choices available.
Mental issues.
Lack of knowledge about the help available.
Lack of health so they aren't able to work.
Organizational politics, turf wars, as an organization you want to serve the people where you can be seen. It's part of the game. If people can't see what you're doing, then you won't get more donations.
Also, organizations need to be efficient and would want to help people in a cluster. No point delivering to a place with only 10 low income households.

Why do I think it's important to solve them independently?
Cos food waste is food waste.
You can reduce food waste and NOT feed the poor.
Food waste is a systemic issue, pushing leftovers to the poor is just finding an outlet for the problem.
The problem is a function of overproduction AND consumers wanting food that looks nicer, and also the lack of education of expired food. Tons of food are discarded just cos people believe that it can't be consumed or that it is not safe to consume. And even if some people know it's safe to consume, they don't mind throwing it away cos it's cheap, might as well buy a new one anyway.

Feeding the poor is also a different issue.
You can feed with poor with better organization of the help available.
It's possible to help the poor without involving food waste.
For me, feeding the poor is just a once off stop gap...
In my mind... it's always been, ok so we've fed this person... what's next? What's being done so that this person will be able to get out of the cycle?

So yes, it's best if both problems could nett off each other, but they also can be settled by themselves.
Even if it's combined, without proper organization, the excess food redirected to the wrong parties would also end up wasted.
On the other hand, if there's good organization and a good network giving the excess food to the needy, if there is poor acceptance of imperfect food, that's also a problem. Cos some people would be fussy on the products received cos they don't look perfect.

Personally, I'm not into either food waste or feeding the needy.
For me, it's about fun and convenience and free food. If I get free food and it's fun and convenient to pass some off to the needy, I'll do it. Then I don't think about how the food is used, if it's wasted, whatever. Cos I'm just there for my own personal benefit.
These issues are just too big for my tiny brain so I rather not think too much about them.

<<PREVIOUS POST // NEXT POST>>

Did you like this post? If so, could you "blanjah" me 1/4 cup of my morning coffee pls.
You may also consider subscribing to receive the articles in your email, link in the column on the right.

4 Comments

<<Previous

Author

Archives