Live by the Sword, Die by the Sword

Are oil prices really going to the moon?

It looks like it from the recent price activity. The trajectory of the rise seems to indicate that a bubble is forming, according to many. Why shouldn't it be? After all, the meteoric rise of oil has many similiarities to the NASDAQ bubble a few years back (I read the article somewhere, but can't recall where).

I have no idea which direction oil prices will go. However, I'm not sure if it's considered a bubble if there are still people on the streets saying it is a bubble/ a bubble is forming etc. I thought a bubble is only formed when everyone is convinced prices will continue to go up. Oh well. we'll only know if it's a bubble after it bursts.

If you decide to get vested in commodities related funds, good for you. If you decide to stay out of it, good for you too.

All Markets are Dangerous

The other day, I visited the fish market to look for a Batang fish.

I've never bought a single fish my whole life. Being new to the fish market, the fishmonger sold me the said fish at a much higher price. To add salt to injury, the fish wasn't even fresh.

So you see, any market can be risky if you don't know anything about them. Do your own due dilligence.

Insurance Planning in 15 minutes

Some time back, I mentioned that I would be reviewing my insurance needs. Since then, I 've sent out several emails to various insurance companies to request for a quotation.

After doing a review, here are a few of the plans which I think is essential. In the order of importance (in my personal capacity as a normal man on the street):

1. Medical Insurance (Must have)
2. Insurance cover for Death and Total Permanent Disability (Must have)
3. Disability Income Insurance (Must have)
4. Insurance cover for Critical Illnesses (Nice to have)

Medical Insurance
Premiums for Medical Insurance can be paid using your CPF (up to $800 per person). It basically covers for any big bad events which requires you to be hospitalised. I've did a simple comparison on the benefits versus cost for different insurers but have been told that the premiums will be increased soon, probably in July. so I will not include the comparison here.

As you may have felt the effects of inflation on your daily life, do take note of this component too when you choose your plan. It's best to get one which reimburses you on a "As Charged" basis to cover yourself against medical cost inflation. If you need an idea of how much medical operations costs in Sunny Singapore, you can check it out here.

You can get this policy anytime you want. But do take note that if you do switch between insurers, make sure you do not have any pre-existing conditions.


Insurance cover for Death and Total Permanent Disability (TPD)
Most people would have known this by now. As such, my point of discussion will be on whether you should get a Term or Whole Life Policy.

Friends of mine will know that I'm a proponent of Buying Term and Investing the Difference/ Rest. My reasons are:

• The insurance should be for protection purposes, not for investment.
• The purpose of insurance is to protect yourself and your family should you be gone and unable contribute to the household.
• No intention to leave a large legacy for my dependents, except to cover for their daily needs when they are still financially incapable.
  

But one caveat about this method - You need to be fairly disciplined to invest the rest. I think this is not such a big problem if you set up a regular savings plan with Fundsupermart or DollarDex. I'll talk about that the next time.

You have to understand that as you're paying less every month in insurance, you should go along the path of becoming your own insurer after you pass the age of 65 or 70, when insurers will only take you in if you pay up a large sum of premiums. Hence, the remaining invested will be a cover for your own death and TPD after those ages.


Disability Income Insurance
There is a very real need to protect ourselves against risk of being totally or partially disabled. If the bad were to happen, the effective income generation due to the loss of working capability will be zero (unless you have other streams of income coming in, but that's a different issue). Hence, you need a policy which pays you should you lose the ability to work. For this, you can approach either Great Eastern or Aviva. To my limited knowledge, these are the only 2 insurers providing such policies.


Cover for Critical Illnesses
They are nice to have. The cost of hospitalisation and surgery should have been covered by your medical insurance. However, it might be necessary for you to have an additional sum of money to tide over the period where you are unable to work after your surgery (assuming of course you can be saved).


There you go. Insurance planning in 15 mins! I'm going to kick start my plans this weekend.

A Case of Luck

I recently had the opportunity to participate in a seminar on investing and financial planning. In the seminar, we played a game quite similar to the cashflow game of the Rich Dad, Poor Dad fame.

Although it was just a game, it provided an insight of how one would manage one's money in real life. However, I must comment that some rules of the game makes it quite unrealistic. For example, the winner is the one who is the most cash-rich, not the one with the highest net worth.

I observed at my table at how other participants played the game. Initially, everyone was quite cautious. They were some chances to make big money, but we tend to ignore them, until someone else makes the money. Soon, all of us were taking those chances. See how great the lure of money (whether real or imaginary) is?

As the game proceeded, we were becoming reckless in a sort of a way. There were some chances where the returns weren't that good. Worse, they actually had a greater downside risk then upside potential. But participants chose to take it anyway.

In addition, people tend to forget the prices at which they made the purchase. I became a middleman at some point and made some commission off other participants. These participants then sold off the houses/ stocks later when they thought they had made a profit. They would have, if not for the cut I took from them.

And so it goes. The winners from each table were asked to share how they win the game. Since the game involves dices, luck was one of the component which some winners believed were essential to their positive outcome. While I believe many people had fun with the game, they might have taken home the wrong message, especially when the trainer implied that luck was important as well.

If I were to assume that the observation at my table applies to other tables as well, that is hardly the case. We might be unable to control the externalities (eg. the dice rolls), but we are able to control ourselves (the decision we make or don't). We might not be able to win the game because we happen not to land on those big chances (lack of opportunity as some say), but it not should be used as an excuse for some lousy decision made (your bad...admit it).

Bringing these learning points back to real life, here's how we could apply them.

1. Be clear on your financial objectives.
2. Monitor your finances carefully.
3. Determine your potential gains to losses when making any financial decisions.
4. After the middlemen take a cut of your profits, you're on your own.
5. Life could be cruel and deal you a bad hand, but you must learn to play the game good.
6. If opportunity doesn't knock on your door, it's probably because you haven't built one yet.

Opinions

In recent months, I have taken an interest in people and how they lead their lives. I like to find out what mindset and outlook they have and how their thinking has serve them.

Let's take a look at my aunt. She leads a pretty secure and comfortable lifestyle in a humble 4 room HDB flat with her husband and three children. Just 2 years before, her son was considering what course to take up in university. I recall the conversation with her as such:

"What course is good?"

"That'll depend on what your son likes."

"Which course offers the most job opportunities? How much do Bio-Engineers earn?" (that was the hot thing then)

"Hmmm...the course is competitive. But if your son likes it, he should do quite well in it, I suppose."

"I think I'll ask him to apply for Bio-Engineering. It seems like the next big thing and there won't be any problems finding a job in the future."


I was at another person's place the next day. Coincidentally, the host (who is extremely hospitable and warm) is a father of 3 children and owns a landed property together with his wife. He was chatting with one of his nephews and I overheard them.

"So have you decided what course you want to do?"

"Not at the moment."

"What? You haven't planned anything?!"

"Not really, I have planned to take a particular course. I'm waiting for the results to be out first."

"Just remember. No matter what you do, make sure you like what you are doing."


Contrast the 2 different response. Which person (my aunt or the host) would you rather meet?

End of 2007

Yes yes. I haven't been diligent in updating my blog here. For the record, here's what I did/happened to me during the months between September and now in chronological order:


September/ October - Got real busy at work
September and October were pretty crazy months as my department was completing one of the bigger projects for the year. At the same time, there was some internal corporate stuffs to deal with. Having a unresponsive 3rd party in the project only created more tension among the department. Despite all that, the project went through successfully. Now I can add this item to my resume.


Mid - Late October - Got walloped by Mr. Market
I was taught another lesson by Mr Market again. This time round, the mistake was made because of my position size. When things went wrong, I went into a panic - a very serious and costly mistake. But I have learnt to avoid this by taking on smaller positions so that when things go in the wrong direction, I will still be in a clear state of mind.


Early November - Participated in the River Regatta
The River Regatta made me realise that it's better not to have any reserves in a team. Although it might be hard to believe, some people just don't like to play 2nd fiddler. Noted this in mind so that if I form any sort of teams in the future, I will know what to do.


Late November - Visited my ancestral tomb in China
Now I finally get to see what people has been telling me: China is really developing at the speed of light! The China trip with my family was to visit my distant relatives. I couldn't get used to the food there on the first day. But I grew to like it eventually. Went to Fuzhou and saw the young ladies there dressed fashionably and wearing jade bangles. Seems to me that you can change one's appearance but not the thinking. At least not so fast.


Early December - Attended a creativity and innovation course
The course was quite interesting as it introduced some hard and soft tools to encourage creativity and innovation. I do agree with the trainer that we are too constrained by ourselves most of the time. What I learnt was that the best ideas are usually the last few ideas in any "brainstorming session" and we shouldn't censor our own ideas during such sessions. After all, the last best idea wouldn't be possible without the earlier lousy ideas.


Mid December - 4th In-Camp-Training (ICT)
Donning the green uniform, I went back to my favourite camp for my 5 day ICT. Things seemed to run pretty smoothly this time round. I guess now I'm slightly better off at delegating tasks as compared to in the past. But I must admit that my brains are really rusty from the lack of use, and it's affecting me quite seriously. Anyway, things might have been better this time round because my own perception has changed.


Now - Clearing work. Dental Visit. Looking at various insurance products.
After being away for 2 weeks (in China and ICT), there were lots of work to be cleared. So I spent the past 2 weeks clearing my stuffs before the year ends.

Last week, I went to seek dental treatment for my tooth as it became very sensitive. I subsequently did a Root Canal. The experience wasn't as bad as the Wisdom Tooth episode. But nonetheless, it was still pretty traumatic to have small iron rods filing away the nerve/pulp in the said tooth.

After months of procrastination, I finally got down to looking for insurance products. I am a firm believer of the "Buy Term and Invest the Rest" approach, contrary to the majority of whole life policy supporters. Right now, I am waiting for the agents to get back to me on the different products available and their quotation before making a decision. Maybe I'll talk about this topic in another post next time.

One-Third

I was looking through my calender for this month only to realise that I have been on my job for 4 months.

So far, my intitial assessment of the organisation, its people and culture were not too far off. Indeed, I think this is a good place to hold a first job after coming out from the protected environs of student life.

At this stage, most of the inability to cope with problems stem from a lack of knowledge about the industry and its practices. I wanted exposure into certain areas when I got in, and I am getting it.

In fact, everything is almost as I have imagined it. Most people have a perception about their jobs and how it'll be like, only to find that there's a gap (sometimes huge) between their expectation and reality. The gap in my case would be around 5-10%. So I must say that the 2 interviews before the job offer helped prepare me well for the job.

I remembered what my HR module coordinator told me. If at first sight you don't like the interviewer, and talking to that interviewer doesn't change your perception, get out immediately. Else you should be prepared for a difficult time.

It's funny how things I asked for turned out. Early in the year I wanted to try out the property market without risking my working capital and to learn the works related to it. Now I am in this area, learning about it, and with no use for my working capital since I'm dealing with corporate assets. The "downside" is of course, I don't stand to gain anything from the sales. I got what I asked for.

Leaving the University

I wrote my last paper on Thursday. It effectively marks the end of the 4 years of my university life, the end of my formal education. There was no feelings of elation or being lost after the paper, which I had expected.

I cannot say with certainty that I will never go back to any path of formal education in my life. It's part of the requirement by the society sometimes.

But learning never stops. I will be continuing with my own informal learning. To date, I have already finished 7 books on various topics since the start of the year. I expect to be able to complete another 2 books by the end of next week. Yes, I do have a bit of time before I start the next phase of life.

As a commitment to learning, I will be starting a book fund for myself. A portion of my monthly pay will be filtered into this fund. It will be used to acquire useful books of interest over time.

Meanwhile, I foresee that my favourite haunt in the near future will be the library.

Some Oberservations

Since I embarked on the task of finding a meaningful career, I've been sending out resumes. As luck would have it, I am quite pleased with the hit rate, although I am sure other more qualified graduates would have companies hunting for them.

By the way, I applied to 2 companies which were related to my field of study in Chemical Engineering. Just in case things did not work out. I eventually chose one which was outside the field. Contract position nonetheless, some uncertainties to be dealt with here...as always. I'll deal with that in a later post.

I attribute the success to the state of the economy at the moment. Graduates just a few years ago would have tales of how hard it was to find a job, much less one which a person likes. I consider myself lucky to have done 2.5 years of compulsory military service which "delayed" my graduation.

Despite such optimistic outlook for new graduates, my observations seems to imply that it might be considerably more difficult for a graduate who has average results to find a job related to his field of study.

My argument is this. A good student (let's just define that based on the most traditional, but maybe inaccurate measure of Cummulative Average Point), by virtue of his stellar results, would have secured an internship with a well known oil major through the University's internship program. Based on their performance during the internship, they would most likely be offered a starting position in the industry.

Even if they aren't, it's ok. A lot of companies (not just the related ones) are wowed by their good results and will consider attracting them.

Let us now consider the case of the bad student. For the past 3 years, he knows that even though he has an interest in the subject, it is of little use since others seem to have a grasp of the topic much faster and can perform much better than him. Consequently, it led him to think that maybe it was pointless to chase after the grades. Instead, he focused on brushing up other capabilities. In the process, he decided that another field is more suitable for him. It goes without saying that he applied for jobs which are outside his degree. Hence, we assume that they are absorbed by other industries if they continue working at it.

Now, there's also an average student who decides that they still love the thing they are doing. These are the people with the perseverance and determination. They work hard and make sure that they get the grade they want. However, it's unfortunate that the good students always seem to shift them down the Bell Curve, making them...average.

In the end, the bigger companies will tend to choose the more competent people (i.e good students) and leave very few places for the average ones. So in that sense, it is more difficult for the average student to find a related job!

Of course, this is only my observation. By no means do I insist that they are correct. There are other cases which I have failed to consider. Internship experiences, C0-Curricular Activities and other assorted parameters such as personality traits all come into play. Maybe you have a different point of view? Share it!

A Poem

I bargained with Life for a penny,
And Life would pay no more,
However I begged at evening
When I counted my scanty store.

For Life is a just employer,
He gives you what you ask,
But once you have set the wages,
Why, you must bear the task.

I worked for a menial's hire,
Only to learn, dismayed,
That any wage I had asked of Life,
Life would have willingly paid

Indeed, Life is what one makes out of it. Life is beautiful to some, yet cruel to others. You choose the path you want to walk down.