FIRE (Financial Independence, Retire Early) Movement

[BBCWatcher]

So do you then only take into consideration assets that are liquid and/or generate cashflow into your networth?

No. Financial net worth has a definition. If you want to measure something else, it's something else (with another name). For example, "liquid financial net worth."

Many dividend haters have not come to terms with how ASSI's dividend strategy has been successful - even though he FIRED long ago, he is still maintaining his passive income level without any apparent need to draw down his capital - which is the idea many dividend investors have - live off your passive income, don't draw down capital, and you will never have to worry what is the correct withdrawal rate.

Yes you will still have to worry.

I don't hate dividends at all. I receive lots of them, after all. But there's absolutely nothing magical about them. They're forced distributions that are part of total returns, that's all. Financial history is littered with corporations and trusts that distributed lots of dividends and now don't (and now have zero capital value). Financial history is also replete with corporations and trusts that never distributed any dividends and that are worth enormous sums. Amazon (AMZN) is one such example — never even one penny of dividends but FANTASTIC returns to its shareholders.

As an analogy, how do you determine if someone is obese, emaciated, or somewhere in between? You need to know the individual's height and weight. Maybe more than that, but at least those two basic parameters. Dividend flows are like one parameter. You need at least one other parameter to determine someone's financial health!

 

[hwmook]

If don’t count real property or CPF or any other asset class, we may affect our financial planning and well-being. I have a fren who has 2 fully paid properties , about a million in CPF, and a few hundred k in financial portfolio accounts, that cannot sell as below mkt price. My fren really doesn’t count all this and lives like some poor person. Spending $20 for lunch is like a big deal!
I also know another fren who lives in a freehold landed ppty in good location. Surely worth at least $8m. Doesn’t count this asset. So whole family live super frugal.

So, if we don’t count assets, then we might end up living unnecessarily thrifty lives. And the lucky beneficiaries get to spend it all. More importantly, it’s also a psychological issue. U might actually be rather rich, but due to not counting, u feel u are really poor. Like my 2 frenz and their families.

i myself am affected by this problem too. Sadly.

What is the point of having so much assests if you don't know how to spend the money to live a better life? That is why I have learn to live a little without splurging. I spend on things that matter to me like food but won't splurge on branded watch, clothes etc. I bought a house that I like with features that matters to me but not a condo as the private property status doesn't appeal to me.

 

[polyglob]

So do you then only take into consideration assets that are liquid and/or generate cashflow into your networth?

For net worth count all assets irrespective of whether they are liquid or generate cash flow. Then minus liabilities. If a property is valued at 2mil, with outstanding mortgage of 1.5mil, the home equity which counts as part of net worth is 500k.

For living expenses cash flow is what matters. Using the examples in this thread, there are people who live frugally even though they own multiple properties because they have poor cash flow. And note that owning multiple properties doesn't necessarily mean high net worth. It could be that the rented-out properties are just enough paying for their own mortgage and maintenance, so they don't generate much extra income for the owner. And these properties may not have appreciated enough in value to contribute a big chunk of cash to the owner when sold. In these cases (I also know a few) the person while ostensibly owning several investment properties still cannot afford to lose their job.

For retirees, the question comes into play when thinking about acquiring more assets. Again using AK as example, he has stated that his close to 300k passive income gives about 150k 'extra' money after all expenses/buffers. He has said he is a worrier, so he may choose to invest that extra money for even more cash flow. Whereas if I have those numbers, I might save up 3 year's worth of the extra money and buy a Porsche.

 

[churnmaster]

As the bestselling book Psychology of Money says, the best feeling is not to feel rich or to feel poor, but to feel that you have enough.

I completely agree. The feeling of having enough and an abundance mindset goes a long way. Not being worried about anything in life and being ready to face the challenges as they come, helps to maintain sanity. Else you just become perpetually worried and depressed , which is not good for your mental well-being. We see many people depressed here despite being fairly rich by global standards.

 

[highsulphur]

I completely agree. The feeling of having enough and an abundance mindset goes a long way. Not being worried about anything in life and being ready to face the challenges as they come, helps to maintain sanity. Else you just become perpetually worried and depressed , which is not good for your mental well-being. We see many people depressed here despite being fairly rich by global standards.

Perhaps it's more important to attend such courses to attain contentment rather some silly financial trading courses. Can save many so much money

 

[zeroX26]

Perhaps it's more important to attend such courses to attain contentment rather some silly financial trading courses. Can save many so much money

I dun think there are personal financial courses that teach how to attain contentment leh.

 

[highsulphur]

I dun think there are personal financial courses that teach how to attain contentment leh.

yeah i think attend Buddhism class better

 

[zeroX26]

yeah i think attend Buddhism class better

Unfortunately, Buddhism teaches detachment rather than contentment leh.

 

[highsulphur]

Unfortunately, Buddhism teaches detachment rather than contentment leh.

ah.. that makes sense

may end up donating all your wealth after that course then

 

[magicming]

I guess many people in Singapore tend to be worried and not “content” because costs can be very high, unless one lives a very simple life and can do many things ourselves. I know a couple in their 70’s. They say that their general monthly expenses are less than $700 each. They cook their own meals, seldom go out to eat, and seem to be content to not stray too far from their flat.
However, for the majority of us, such a low cost life is simply impossible. So we worry and always feel we don’t have enough. Definitely, people in the entry level rich category, say net worth $3m to $10m still worry quite a bit.

 

[homer123]

agree with this.



Many dividend haters have not come to terms with how ASSI's dividend strategy has been successful - even though he FIRED long ago, he is still maintaining his passive income level without any apparent need to draw down his capital - which is the idea many dividend investors have - live off your passive income, don't draw down capital, and you will never have to worry what is the correct withdrawal rate.

Even though ASSI is making 200k, he has also posted that he is worried it is not enough. He has also admitted in many blogposts that he is a 'worrier'.

As the bestselling book Psychology of Money says, the best feeling is not to feel rich or to feel poor, but to feel that you have enough. My passive income is lower than ASSI but I already feel I have enough and I 'feel' financially independent. Maybe the difference is that I still have a job, so I have an additional income flow.

I find folks who have too much and don't know how to spend foolish.. AK happens to be one of them

 

[BBCWatcher]

Let's suppose someone tells you this:

"My passive income has reached 6 figures."

Impressive, right? Well, not exactly. Here are two, fuller examples:

Example #1: "My investment portfolio consists of 2 emerging market REITs, 2 high-yield corporate bonds, and 1 cryptocurrency staking account. My passive income from my portfolio reached 6 figures last year."

Example #2: "My investment portfolio consists of 3 low cost, globally diversified index funds. About 80% is in one global stock index fund, and the other 20% is in a pair of investment grade bond index funds. My passive income from my portfolio reached 6 figures last year."

Which is more impressive? (Who has the bigger portfolio?) It's Portfolio #2, of course. In fact, I'm more impressed when someone's passive income (interest, dividends, and other distributions) is "high" from a portfolio that isn't expressly aiming for distributions — when the portfolio is "low" dividend yielding. And you should be, too.

I don't think you should brag about your financial situation. But *IF* you brag then at least do it right. Passive income boasts ain't it. Everyone who isn't an amateur already knows that some investment vehicles have low (or negative) capital gains with high distributions while other vehicles are the opposite. And then there are more conservative investment vehicles with low expected net returns. Characterizing distributions in a vacuum says very little about your situation.

 

[Dividends Warrior]

Guys, don't waste too much time focusing on others' spending habits. At the end of the day, it is all about personal preferences. No right or wrong.

Look at Warren Buffett & Charlie Munger, considering their crazy immense wealth, they should be the most 'foolish' in their spending? Why stay in the same old house for decades? Why drive an old second-hand car? Why eat Mcdonald's breakfast? Both of them can afford to buy multiple mega villas, penthouses, private islands, mega yachts, private jets, Rolls royces, Lamborghini, Rolex watches etc. But they never did any of it.



My friends always tease me for not owning a car. They wonder why I want to squeeze with peasants on the MRT & bus. I told them I simply don't need or want a car. Sure, I can well afford a car, but the public transport in Singapore is good enough for me. Just because you can afford something, doesn't mean you have to buy it.

 

[limster]

I don't think you should brag about your financial situation. But *IF* you brag then at least do it right. Passive income boasts ain't it.

Again, you fail to address the point that AK not only has a $200k passive income but a solid 10+ year track record of dividends. I wouldn't follow his portfolio exactly but there are things I agree with, which like the power of DBS/OCBC/UOB to generate dividends!

Its pretty obvious that in terms of local finance content, a lot of people are interested in what AK has to say and his dividend focused strategy.

I pity the 5th Person people, they seem to be trying hard to make decent content, then they realise that if they want hits, all they needed to do was to publish a video with "$200k dividends" and "$1m CPF!!!"

 

[DevilPlate]

I guess many people in Singapore tend to be worried and not “content” because costs can be very high, unless one lives a very simple life and can do many things ourselves. I know a couple in their 70’s. They say that their general monthly expenses are less than $700 each. They cook their own meals, seldom go out to eat, and seem to be content to not stray too far from their flat.
However, for the majority of us, such a low cost life is simply impossible. So we worry and always feel we don’t have enough. Definitely, people in the entry level rich category, say net worth $3m to $10m still worry quite a bit.

Majority YOLO…..only peeps here are worrisome group lolol

 

[polyglob]

Definitely, people in the entry level rich category, say net worth $3m to $10m still worry quite a bit.

Please lah. How much you think you need then will feel secure - 15mil, 30mil?

Remember the saying: When people wish they have a million dollars, usually they mean they wish they could spend a million dollars

 

[Mephist0pheLes]

agree with this.



Many dividend haters have not come to terms with how ASSI's dividend strategy has been successful - even though he FIRED long ago, he is still maintaining his passive income level without any apparent need to draw down his capital - which is the idea many dividend investors have - live off your passive income, don't draw down capital, and you will never have to worry what is the correct withdrawal rate.

Even though ASSI is making 200k, he has also posted that he is worried it is not enough. He has also admitted in many blogposts that he is a 'worrier'.

As the bestselling book Psychology of Money says, the best feeling is not to feel rich or to feel poor, but to feel that you have enough. My passive income is lower than ASSI but I already feel I have enough and I 'feel' financially independent. Maybe the difference is that I still have a job, so I have an additional income flow.

It is not that "dividend haters" have not come to term with them, but we see what they really are, which is nothing but forced distristribution as bbcwatcher calls it, and something that dividend investors love bcos they are unable to understand that distributing cash is the same as selling ur assets from ur holdings. The only difference is whether u r the one doing the selling or the company's management

 

[highsulphur]

It is not that "dividend haters" have not come to term with them, but we see what they really are, which is nothing but forced distristribution as bbcwatcher calls it, and something that dividend investors love bcos they are unable to understand that distributing cash is the same as selling ur assets from ur holdings. The only difference is whether u r the one doing the selling or the company's management

Well commission will be saved.

Perhaps it's better to invest in non dividend paying stocks during accumulating years to minimise reinvesting cost and switch to dividend stocks during retirement years to minimise selling cost

 

[Mephist0pheLes]

Well commission will be saved.

Perhaps it's better to invest in non dividend paying stocks during accumulating years to minimise reinvesting cost and switch to dividend stocks during retirement years to minimise selling cost

Maybe for sg stocks, which i think most non dividend investors will have no or small exposure to, the comm for selling us stocks is minimal.

And even in retirement years, a cash flow plan that depends on companies' management decision hardly make sense to me

 

[magicming]

Please lah. How much you think you need then will feel secure - 15mil, 30mil?

Remember the saying: When people wish they have a million dollars, usually they mean they wish they could spend a million dollars

I’m just saying minor rich do worry. These are people I actually know. I also mentioned there are non-rich people who are content with spending $700. So, perhaps the point is that contentment may have little to do with the amount of money one has.