Recession Heroes Ep 5 - Resilience during tough times

This episode made me very inspired. I really admire the person who was featured in this story. At an old age of 59, he still doesn't give up. He worked for a bank for 16 years and was retrenched because the bank was not doing well. Wanted to find a similar job but other banks did not want to hire him because of his age and his expected salary was too high. The companies would rather hire someone younger who can except lower pay. This made me think that one day i would become old also and i may face this problem too. It is important to plan for financial freedom so that we'll not be burdened at an older age.

He had a lot of loans to pay. Car loans, housing loans became a burden to him. Before that, his salary was high and he could afford all these. I think this is a lesson we can learn. We may be able to have high standards of living now and can spend more but if you're retrenched, the expenses will soon chock up your life. You will need to adjust accordingly when crisis strikes. 

The thing i admire about this person is he continued to go out and find a job. Went to a career fair and he signed up for courses that enable him to switch industry so that his choices will be more. He took up a job as an operations manager to manage ATM machines at only 30% of his previous salary. When the company needed people for Auxiliary Police Officers (APO), his company sent him for Auxiliary Police Officer training for 2 months. The training was similar to a police officer training and most of them are young people. He was already 59 years old at that time. 

Now, he has got a better job with higher salary but he still goes back to his former company to work part time as an APO just because he wants to help. This is really an admirable spirit. Always learning and still hard working at his old age.

Watch this episode on xinmsn here.  

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Related Posts:

1. Recession Heroes Ep 4 - Got retrenched at a young age of 23 but still full of passion in life

2. Recession Heroes Ep 2 - Trader with 17 years of trading experience still lose money

3. Recession Heroes Ep 1 - Why people lose their money during crisis?

Recession Heroes Ep 4 - Got retrenched at a young age of 23 but still full of passion in life

This episode really encourages and motivates me. The guy in this story is Ken Chee. I've saw his name somewhere before and i thought his face looks really familiar. The i realised he's the one who started a company called 8 investment. His company runs the millionaire investor program in Singapore and it teaches value investing. I've never attended the program so i'm in no way related to it and this is not an advertisement for the program.

Back to this person. I thought he looked and sounded really humble and i felt he's someone who's willing to help others. He grew up in a poor family as his father lost a lot of money in the stock market. His grandma had to come out from a semi retirement state and go back to work just to support the family. He started working at a very young age as his dad could not give him much allowance. When he graduated, he got a job in an IT company but during the Dot Com bubble crash, he was fired at a young age of 23. This woke him up to the reality of life. You can watch this episode here. The story is really heartening.

What caught me was this is another story of someone losing lots of money in the stock market. The financial loss not only impacted one person but the whole family. Its really saddening to hear that. People would say that stocks are dangerous and do not dabble in stocks because you can burn your fingers and lose a lot of money. This is true. I've heard many cases of it and even have friends who experienced it. They are as young as me. Many are much older than me with family to support.

On the other extreme, there are people who know that stocks are risky and never invest in stocks at all. The problem is they are also struggling in their finances. I realised many people have poor financial management and poor saving habits. Indeed, without knowledge and good habits, people struggle in life.

The purpose of setting up my blog is to educate readers on how to properly manage their money and also learn the proper way to invest. I hope i can do my part in this society and make it a better place. It is saddening to keep hearing stories of how people suffer in life just because they were taught the wrong financial habits or because of the lack of knowledge in investment. Many times its due to greed where people wants to get rich quick. Getting rich quick has nothing to do with financial freedom. Financial freedom is not about money. It is about the ability to choose what we want to do in life without having to worry about money.

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Recession Heroes Ep 2 - Trader with 17 years of trading experience still lose money

I missed episode 2 of recession heroes so i watched it online on catch up TV xinmsn. This episode is even more interesting and we can learn a few points from this female trader who shared her experience. I have also wrote about episode 1 here.

Here is the summary of episode 2:

This lady was retrenched during the 2007/08 financial crisis. She was a futures broker in a financial institution for 17 years. She worked mostly from 6pm in the evening to 5am in the morning trading futures market.

Why still lose money in trading?
After being retrenched, she thought she would be able to trade at home and have time to look after her son. But, within 10 months into trading at home, she lost quite a lot of money and stopped. Why did she lose money? She said trading in a financial institution allowed her to have tips and instant news to make decisions fast. Trading at home is different as most of the time the news is delayed. The second reason is trading an institution money's is different from trading your own money. The emotional and psychological aspect is completely different. Even with the experience and knowledge of trading, it is still highly possible to lose money.

My views on trading
After watching this episode, it confirms my view on trading. Firstly, I've heard that most people lose money in trading and it is said that only 5% of the traders in the world can make money consistently. I didn't believe it at first but now i believe in it. Secondly, i've heard that trading is a psychological and emotional game. If you can't control your emotions, you can't be successful in trading. This point is also confirmed.

So is it still possible to make money through trading? I think it is still possible to make money from trading but it will not be a lot of money. In actual fact, very few people are full time traders. Most trade on the sideline occasionally. You may not agree with me but i've traded before and know what it is like to lose money. It is really an emotional game. Want to make a lot of money through trading? Think again.

My views on investing
On the other hand, investing is different. Most people can make money through investing. The more knowledge and experience you have in investing, the more successful you can be. The longer time you have in the market, the higher the chance of having better returns. That is why i advocate investing more in my blog. The benefits of investing at a young age is great. You can read more on how to invest here and here.
Knowing the difference between investing and trading is important. Know which one you're more suitable for and learn as much as you can.

The story ends with this lady becoming a housewife and does some baking at home. She sells some of the cakes and pastry she bakes at home to friends and relatives. She has more time for her family and her son especially. As family income reduced greatly, she had to sacrificed yearly expensive and long overseas trips, dining out in fine restaurants at hotels and reduce spending on buying branded stuff. She is more happy now and lives a more carefree life.

You can watch this episode 2 of recession heroes on xinmsn here.

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Preparing and experiencing a disaster. How we can prepare ourselves for a financial crisis?

I've not been posting in my blog for the past few days. I'm actually in Taiwan currently. If you've watched the news, Taiwan is preparing for a typhoon that is forecasted to come in today. The name of the typhoon is typhoon trami. I'm preparing for this disaster and experiencing it for the first time. I'll share with you on how we can prepare for a financial crisis too in this post. So read on to find out more.

As a Singaporean, we do not have any disasters in our home country. In a sense, we're really fortunate to live in a safe environment. Let me share with you how Taiwan is preparing for this typhoon.

The news channel here is reporting on the typhoon and keeping residents updated on the crisis. Many shops are pilling up sand bags. Fishermen are securing their boats to prevent their boats from being blown away by the typhoon. Currently, many states in Taiwan has declared the sea and land typhoon alert. Schools and offices are closed and declared typhoon holiday. Domestic and some international flights are canceled.

I'm at central Taiwan now. The strength of the typhoon is strongest at the north of taiwan at taipei. From where I am currently, it has been raining very heavily since morning and winds are very strong.

The bad thing for me is i'll be stuck in my hotel for the whole day today. Hopefully tomorrow when the typhoon passes, I can continue travelling.

Preparation for any crisis is very important. It is the same with our finances. During a financial crisis, we may lose our jobs, our investment portfolio will suffer loses and those with high debts will be affected the most.

How do we prepare ourselves for a financial crisis?

1) Set aside at least 6-9months of your monthly expenses as emergency fund

Having an emergency fund will prepare you in case you lose your job during a crisis. It helps you to have a piece of mind to continue living your life and provide for your family while you find another job.

2) Do not be overleveraged on debt

How much debt is a healthy level? Many financial advisors will recommend you borrow not more than 60% of your monthly income. This includes your housing loan. Debts require you to pay interest also. Generally, debts with high interest rates will increase the impact caused to you.

3) Have a compresensive insurance and hospitalisation plan

Having insurance will ensure your family have a sum of money in case something happens to you and hospitalisation plans will cover you for your medical bills. We should have ourselves covered by insurance and hospitalisation plans regardless of a financial crisis or not. Seek a professional financial advisor on what you need. A point to note is do not buy too many insurance plans. Some are not really needed. So do research throughly before buying one.

4) Do not invest money you cannot afford to lose

During a crisis, stock market will crash and most of your investments will be negatively impacted. If you invest money you cannot afford to lose, you'll be emotionally unstable during a crisis and will not be able to make sound decisions. That is what happen to many people who over invest. They got their fingers burnt because they were forced to sell their investment during a crisis. Those who have capital to invest more during a crisis will emerge out better off. Learn how to invest wisely before you even start investing.

5) Upgrade your skills and seek to have more than one source of income

Upgrading our skills or learning more skills will enhance our competitiveness. In case we lose our jobs, we can find another one more easily if we have more skills. Investing in yourself and getting more certifications will definitely help you. Having more than one source of income is definitely even better. We can learn to create passive income. Other sources of income can come from rental from properties, dividends from stocks, part time business, royalties from intellectual properties like books and music albums etc. Learning to create multiple sources of income can increase our income greatly and let us reach financial freedom faster also. During a crisis when you lose your job, you do not have to worry too much too.

These are some of the points that can help us in preparing for a financial crisis. I can write so much today because I'm really stuck at the hotel as the winds and rain gets heavier and heavier. I can see the trees swaying agressively and the winds howling strongly even though the windows are tightly closed. I'm experiencing a nationwide crisis.

Start preparing today. Preparation starts before a crisis happens.

I'll end of with a famous quote:  "If you fail to plan, you plan to fail."

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2) How to pick stocks (Part 1) - Economic Moats
3) Rising household debts in Singapore worrying

Never forget: The Banks Caused this Recession...Counter "the vast lie"

"There's a few things Labour should be doing in my view. They have to get a coherent line on the economy,"
Mullin told the BBC's World at One. "Firstly they've got to counter – and my goodness they should have been doing this for a long time – the vast lie which has been allowed to become embedded in the public consciousness that our economic problems were primarily caused by the last government.

"To paraphrase Bill Clinton: it was the bankers, stupid. The only thing Labour needs to apologise for is not regulating the banks sufficiently, and the Tories are not entitled to take advantage of that because throughout they were in favour of less regulation, not more."

Recession Heroes Ep 1 - Why people lose their money during crisis?

Just watched the first episode of recession heros on channel 5. This first true story is quite inspiration and I would like to summarise the story here.

The guy in the story lost all his money during the september 11 stock market crash.

Here's a summary of his story:

Father was a businessman in Malaysia.  Business was doing well until his father got cheated by a business partner and lost everything. His family was in debt for a few million dollars. They later moved to Singapore. To supplement his family income, he came out to work at a young age of 14. Work as a cleaner in the morning, gas station pump attendant in the afternoon from 1pm-10pm then wash taxi at night all the way to 1am. He worked this for 1 and a half years.

After that, he went to serve National Service in the singapore police force. Read many books on computers and developed an interest in it. Went on to secure a job as a computer trainer and quickly climbed up the corporate ladder to earn $12000 at the age of 25.

He got really arrogant and his ego became very big. He said his ego was more than 10 times his head. He would scold and despise his staff and colleagues. Started investing in stocks and turn a $50k portfolio to $500k. He became even more proud and think that he was a genius.

During the september 11 terrorist attack on the twin towers, the stock market tumbled and he realised his stocks portfolio was only left with $7000. He had invested all his money into stocks.

After that incident, he wanted to build up a business and started a company with another guy. The partnership turned sour and he was caught up in a 3 year long law suit. He lost everything at that point.

After all these failures, he finally understood what it means to be humble. 

He went on to pursue his dream again to own a business and start up a company with his wife called commsgate which provides IT infrastructure for SMEs. His business flourished until now.

2 things he learnt from the crisis:

1) Do not dabble in stocks with money you cannot afford to lose. Must know the rule of the game.

2) Wealth is a habit. Must build the habit to save and invest regularly for a leriod of time.

I do feel that the stock market is a place that will reward the humble and punish the rich. If a person is proud and looks down on others, it is easy for him to lose everything and be destroyed by his own ego. Invest with a humble attitude and learn the rule of the game to succeed. Risk management is important in investing.

Hope you're inspired by this story. 

This is a true story as shown on mediacorp channel 5. Watch the next episode every monday at 9pm.

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Channel 5 new TV series - Recession Heroes

Saw this advertisement on a new TV series by channel 5 called recession heroes. I think it would be an interesting program to watch.

From Mediacorp website:
Recession Heroes is a 6-episode docu-drama series featuring real-life stories of six individuals who had been adversely affected by recessions such as the 1997 Asian Financial Crisis, 2001 September 11 Attacks and the 2008 Lehman Brothers Crisis. These individuals had either been made redundant during the recession or had suffered huge losses to their businesses. However, through sheer perseverance, wit and determination, they have managed to overcome their trials to start life anew.

Recession Heroes is both inspirational and enlightening as it demonstrates how a never-say-die attitude and support from family and the community at large can help individuals overcome financial setbacks in their lives and learn valuable lessons from their mistakes.

The program starts tomorrow 12 August(Monday) 9pm on Channel 5.

How to Solve the Recession: End Prohibition and Tax Drugs?

I listened this morning to "From our own Correspondent" on BBC Radio 4. One report was from Uruguay where they are considering legalising drugs. The main reason given for this was to put out of business violent drug gangs.

I remember being at a pension meeting a few months ago where we received a briefing from an economics adviser on the financial outlook. It was pretty bleak with the prospect of years of little or low growth, demand or investment and continuing cuts in public expenditure. The adviser broadly supported current government policy.

I said there is always an alternative economic policy and why couldn't the UK do what governments did before the second world war - borrow money and invest into massive infrastructure projects to pump prime the economy out of recession?

The adviser made an interesting but provocative response. He said that many people who look to the massive state investments during the New Deal economic programme in 1930's America as an example of what we should be doing now miss an important point. This huge investment was largely fully funded and not borrowed. It was paid for by the ending of the prohibition on alcohol in America, which led to increases in taxation, which paid for the New Deal investment.

While I do not accept all his arguments it did bring the question to the fore that should we in Britain legalise and heavily tax drugs in this country to bring in enough Government revenue to pay off the national debt and invest to bring about recovery?

Since we were at a pension trustee meeting, sadly it was decided that such matters were not really within our remit and we continued to discuss the normal "boring but important stuff" such as valuations, fund manager reports etc. 

I have for many years been convinced that we have lost the war on drugs and we should consider legalising them to get rid of the violent drug gangs. There will still have to be safeguards and it will have risks but if by ending this prohibition and then heavily taxing drugs, we can bring about the end of this recession, is this not yet another powerful reason to at least consider it?

Personal views as always. Photo of anti-prohibition pro-Beer Tax parade in 1930's USA.

"Rising unemployement and recession is a price we had to pay to keep inflation down but that is a price well worth paying"

Tories: Norman Lamont in 1991 explaining that rising unemployment and recession is a price well worth paying to keep down inflation.

Did the unemployed agree? No doubt the wealthy did....

Can everyone remember this is what the Tories are really, really like and vote Labour on Thursday?

Hat tip Captain Swing