Frugality is important even when you are rich

Do you spend lesser when you earn little and spend more when you earn more? It always seems natural that we should reward ourselves when we have a pay raise or a good bonus but overdoing it may result in destroying your life.

Recently, i was talking to a friend who has quite a large amount of savings and good income from his various sources such as a website he manages professionally and also from Forex trading. Two years ago when he was at the age of 24, he already has over $300,000 savings and makes a consistent 5-6k income from his website and also 2-3k monthly from Forex trading. No doubt I was envious of him having such good income and this kind of savings at his young age.

When i chatted with him just this week, things don't seem that well for him any more. He told me he lost $200,000++ in his Forex trading due to greed and his website income has dwindled to only 2k per month. Yes, greed can affect a person even when he already has a substantial amount of money in the bank. Be careful if you're doing something for the money. He bought a car before he lost money and now he still drives it with a monthly expenses of about $600. He paid $30,000 cash for the second hand car. Even if he does not drive a car, he will still take taxi every single time as it has already become a habit for him which he has been doing for the past 4-5 years.

This brings me to the point that frugality is important even if you think you have a lot of money. You may have friends who also tell you that they make this amount through stocks trading or this amount through Forex trading and this makes you envious of them. You may even feel that maybe you can follow them and make that kind of money fast through trading. A person who knows how to make money may not know how to manage money. It is not how much money you can make but how much money you manage to keep at the end of the day. When increasing your expenses, do always remember that one day you may not be able to afford the luxuries you are having right now. Will you be able to change your lifestyle when the time comes?

As for my friend, I cannot advise him any further. Two years ago when he told me about his consistent profits through Forex trading, I told him that it is not easy and very hard to control greed which he agrees to it. I did not expect him to lose that much as he seems quite well controlled back then. Still, things can spiral out of control when you least expected it to happen. I trust that he has learnt his lessons and will not make the same mistakes again. As for his spendthrift lifestyle, it seems like he can't change much of it even though he has a lower income now. Eating at restaurants and having a car has already become a habit and part of his life which is hard to change.

Life can be enjoyed even when its simple. But however, don't get the wrong idea that we should save money to the point of stinginess. Spend money when you have to but keep it in check. Spend money on meaningful stuff that will add value to your life and build up relationships. The worst reason you want to spend money on is to impress somebody that don't matter anyway.

"Beware of little expenses; a small leak will sink a great ship"-- Benjamin Franklin

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Get rich quick - Real or myth?

Channel news Asia reported 2 days ago that the number of rich in Singapore is on the rise. It was reported that "The number of millionaires here rose by 4.5 per cent last year to about 105,000, according to the latest World Wealth Report from Capgemini and RBC Wealth Management." This means if we take a population of 5.5 Million in Singapore, there is one millionaire in approximately every 52 people. These millionaires are defined as having US$1 Million or more in investable assets.

Young people in Singapore are influenced by the prosperity of the nation and want to be part of the rich and successful bunch of people. However, many get themselves into trouble by venturing into the unknown. This can be dabbling in stocks, starting an unfamiliar business or lured by high returns investment schemes. The question is: what is real and what is myth?

Real or myth?

We've heard of traders who can make tens of thousands a day just by trading in the stock market. We've heard people who made a fortune through starting a business. All these influence young people to want to go into trading and starting a business. From what I see, these two are the most common ventures young people in their 20s would get into.

However, what most of us read on the internet or through advertisements from the newspaper is often not suitable for most of us. If you dig deeper, there are more cases of losers than winners in trading and business. It is an illusion that one can be successful in a very short time.


The Reality

Most people get rich by having a frugal lifestyle and slowly growing their money. You mean I have to sacrifice and control my spending then still need to have patience to wait to get rich? Yes, this is the real way to get rich which most people do not want to hear. That is why no matter how the number of millionaires are increasing, it's always a small portion of the population. In this case for Singapore, its only about 2% of the 5.5 Million population.


Secrets of the rich revealed 

In my course of work for the past 4 years, i've got the chance to interact with a few of the rich because they are the VIPs I had to handle. They are CEO of big mega corporations and also influential business persons.
My observations are mostly similar for most of them. More often than not, they have common traits which separates them from the poor and middle class. I will share some of the traits which I observed but will not reveal who they are for obvious reasons.

1) They are nice and humble people

Every time when I meet these successful people, they will always provide the best hospitality that they can. Most of the time I'll be there at their house to solve their problems which they complained about. Rather than being nasty since they have the right to complain, they prefer to talk nicely and be reasonable to listen to possible resolutions. Many of us think that rich people look down on average people but in actual fact, they respect each person regardless of the background you come from.

2) They have good living environments

Yes, they are rich and they spend on creating a good environment in their house. There will always be a small corner with books and music players where they can relax and spend some time reading. There will also be a balcony with a dining table and some plants or even a garden for them to have their meals. Their house is always neat and tidy. Well, this is because they have a maid or even 2 maids in one house.

3) They love to read

That's why they have a reading corner. But the shocking fact is the amount of books they have. I reckon its more than 500 books seen in each house. Most books are on personal development, business development and management.They also have a huge biography of books of other successful people.

4) They are confident in the way they act and speak

They talk very well. This is the one trait that I noticed. Because of their experience and the time they spent reading and interacting with people, they have a lot of knowledge which enables them to talk intellectually.

5) They have a good network

I have heard from them personally that they know this CEO and that CEO. They also have networks with politicians and even ministers. Whether they developed their network before they are successful or after they became successful is not known to me.

6) Their children have the best education

Most of their children are either studying in an overseas university or studying in a private International baccalaureate program in Singapore. I saw a few of their test papers and they had quite good results too. Must have been really hard working to study.


These are the few things which I observed so far. It seems like knowledge and a good network are two important factors to be successful. To achieve either one, it will take hard work and a lot of time to build up. Trading requires hard work and an extremely strong psychology state of mind which most people are not able to achieve. Starting a business requires knowledge and a good network to be sustainable. If you have no knowledge of how a business is run internally or have not even started working at all, then starting a business is extremely risky for you. Wanting to be a successful businessman without any working experience may be just a dream for many. Get rich quick is certainly a myth for most except for a few lucky ones. However, the luck will fade away one day and its back to square one in the end.

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I went shopping!

Oh no, why is a finance blog talking about shopping? Yes i went shopping and bought lots of stuff. Before you accuse me of asking people to splurge, let me explain.

The reason behind the shopping was because i needed some clothes for my cousin's wedding in about 2 months time. Being me, I started sourcing for discounts on the internet to see if i can find some good deals. Then i remembered it was the great Singapore sale (GSS) season so there might be really good deals. I went to Google and type GSS and out came the GSS website. There were discounts at various departmental stores all around Singapore so i went down to check it out. I went to this departmental store called BHG. Apparently, on the GSS website, they stated there are discounts of up to 70% for many items. I went there and true enough there were discounts but i couldn't find any clothes which suited me. Some were too expensive in the range $80-$90 per piece while some were cheaper but i did not like it. In the end, i only bought a pair of leather shoes.

I still needed to buy clothes so I went to shop around. I passed by Uniqlo shop and went in to take a look. Some of their items were on discounts but i did not find any suitable ones for me again. The cheap ones don't look nice while the nicer ones are priced above $60. Still too expensive.

Then i went on to a G2000 shop which has many nice formal shirts which is suitable for wedding. But, they were even more expensive and the ones i like was more than $90. All in all, I spent almost 2 hours walking around but did not manage to buy any clothes. Just a pair of leather shoes.

2 days later, I saw that expo has a John little mega expo sale and there were many brands participating in the sale. I went down to take a look and immediately saw some nice G2000 shirts which was selling there. Those shirts and pants selling above $60 were priced at $23 there. Looks good and affordable to me. I guessed they were priced much cheaper because the had too much stock to clear, or they have new designs and these are the old ones or there were some defects? I don't know the real reason but I tried to check for defects as much as I could and everything look al-right to me so it should look ok to others as well. Its still from G2000 so I guess it shouldn't be that bad. The quality of the clothing material was good too. Anyway, I bought a formal pants, a pair of shirts and a belt. In total i spent $143 on 5 items (including the shoes I bought earlier) instead of one item at $99 if i had bought 2 days earlier.

I can afford to buy the expensive clothes but I just don't find that its worth to buy at that price. I can buy the cheap clothes but if its not nice and the quality is not that good. I won't just save the money for the sake of saving. Getting good quality stuff at a cheaper price is what I like. I'm happy with my newly bought stuffs and the shopping experience this week.  

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