Wolf Money(portfolio update for end Aug 2024)part 1

 

Battle plan for tougher time(personal finance)

With geopolitical tensions and social unrest going on around the world. Tougher time might be upon us soon. In Singapore, we generally don’t feel it as much because all those external wealth flowing into our country has kept recession and asset deflation at bay.

I have an eye on the ground due to a few of my friends in business. Most of our chats centred around the poor business environment. Consumers are not spending. Even if they are spending, most opt for cheaper alternatives. Retail sales numbers were weaker, reflecting the current consumer sentiment. Tourism numbers were down too. The strength of the Singapore dollar likely having an impact on tourists choosing Singapore as a choice destination. Just like most Singaporeans prefer going to a country that has a weaker currency for holidays. Property sales and rental markets were down. My property friends were complaining about the low transactions. Even my blind contractor that used to have long waiting period for their service, could have my blind fixed within a week. The business environment has definitely come off the boil since last year. My message is not to zap the life out of you, having a battle plan in view of tougher times ahead is key to survival. The US-China trade war will impact our economy. No matter which party comes to power in America, both can agree China is a strategic concern and tariffs will go up. Given our number one trading partner, China is having sub-par growth, Singapore will be affected although our second biggest trading partner, Malaysia has managed to pull up their socks, their 5.9% GDP growth recently is nothing short of spectacular. If I put it more simplistically, if your top customer is not doing well, can the business be doing well?The European economic situation is dire too. Below are those things I will do during an uncertain economic environment.

1.) Cut down on discretionary spending

Less frequent visits to cafes and restaurants will be on the menu.  Expensive holidays will be cut. Priority will be given to needs over wants. A coffee shop coffee is a need, an expensive latte is a want. Focusing on those small or micro spending goes a long way. I used to spend $500 a month on Starbucks unknowingly until I took an interest in the small items in my credit card bill. Small amount adds up to a substantial figure. Imagine spending $6000 on Starbucks a year.

2.) Avoid long-term financial commitments

Buying a second home or a new car or undertaking an expensive life insurance plan can caused financial stress if the economy caused one to be made redundant. Most bankruptcies involved long term financial commitments failing to keep up with short-term reality of tougher economic. It is the big ticket items that gets people into financial trouble.

3.) Zoom in on all your assets to optimise their returns

Is there a better way to generate a higher return? A pure vanilla saving account with a local bank pays only half the saving interest what a foreign bank does. Given there is a 100k sdic insurance for all deposits accounts. All saving accounts offered with any MAS regulated financial institutions are safe up to100k limit. An empty apartment could be considered for leasing out or a sale. 

4.) Look for alternative solution to a problem

If a family needs a car, there are options for carpooling and car sharing widely available. It will lower down the transportation cost given the fixed cost associated to owning a car is high. An alternative arrangement of having a weekly cleaning service instead of having permanent domestic help are some ways to reduce spending without sacrificing quality of life. 

5.) Avoid buying things you don’t need to impress others you don’t care. (Not my words but they are damn bloody wise)

6.) Networking is very important socially and economically

I am blessed by friends who are willing to share their intimate knowledge of their industry. Having a good network helps you to get the next great opportunity. Recently, a newly appointed CEO of a local bank share the same financial alumni as the current boss. You never know the next opportunity might come from a close friend. Having strong support network gives one better mental wellbeing.

7.) Avoid high borrowing

Having good mental health is important. Most mental health stresses come from jobs, money and relationships related problems. I can’t say much about the affair of the heart but taking financial stress off from a person can give rise to a better mental wellbeing. Undertaking too much financial commitments can put a lot of undue stress on oneself and family. More than 50% of marriages broke down in US were due to financial woes.

8.) (Un)friendly loans

During a downturn, more people will turn to you for friendly loans. I am sympathetic to those falling on hard times not to their own doings. If you have plenty of money to lend, please help. For most of us with limited resources, one should focus on saving up for yourself and your family. I am not in favour of any friendly loan due to my unwillingness to deal with a friendship litmus turned bad over soured loan, it is an unpleasant situation no one should ever go through. Although I am more readily to extend non-monetary help. In order to help others, one must be able to do it from a position of strength. It is similar to an emergency on a flight. Put on your mask first before putting on for your child. In order to save others, save yourself first. 

(Image credit: MM2)

9.) Be a tax hawk

Paying a fair share of your taxes is an honourable service to your country, but I also believe in the wisdom of tax planning. Look into the possibility of incorporating more tax deductible into your tax bill LEGALLY. The lesser taxes you paid, the more you have in your pockets. One way is to voluntarily top up CPF for yourself or your loved one to get more tax-deductible. 

10.) Playing the striker role

For those earning a good income, with spare cash lying around. A downturn represents an opportunity to accumulate wealth. If one deploys your capital wisely during a downturn, scoring that important winning goal of your life, the next upturn you will be in a different level financially. 

For people wanting to grow their wealth, please read my 10 points stock market battle plan.

Part 2 to come later. Thank you

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