2015 Annual Letter To Readers of BigFatPurse

I didn’t have the intention to write an annual letter for our readers until Jon persuaded me to do so.

He forwarded this annual letter from Farnam Street, and I had the same sentiment with what Shane have written,

You trust me with something far more valuable than money: your time.

You gave BigFatPurse your time and we should respect it by reciprocating with content that would be useful in your lives.

Thank you for all the support and trust these years.

In this annual letter, I will talk about a few things that are close to my heart, and hopefully, could possibly be useful for you in some ways.

First, my thoughts, feelings and experience in these two years of entrepreneurship. Second, my observations and views about the personal finance landscape. Third, a glimpse of BigFatPurse in 2016.

Entrepreneurship

A question always bugged me – why doesn’t Singapore have a truly international company that is known throughout the world? We are probably more successful in Southeast Asia, but hardly beyond.

I think the main reason was due to widespread Actychiphobia – fear of failure.

Entrepreneurship is a high risk endeavour and people know it. The fear of failure keeps people from attempting it.

Jon went a step further and said that the fear is accentuated by societal pressure. In Singapore, you will be judged useless if you have failed in a business. Whereas in the West, failed entrepreneurs would probably experience a lesser dose of that stigma. That makes risk taking and failing more palatable.

The second reason was because of the way Singapore use talents. Our civil service is known to groom bright Singaporeans to hold office in high positions. Singapore benefited in many ways from this system, but this also resulted in less talents in the private sector.

It is not unthinkable for a straight-distinctions-who-is-also-good-in-sports-music-and-art student with the amount of scholarship benefits and promising career prospect in the civil service, to give entrepreneurship a total miss. The opportunity cost is just too great.

The pursuit of other career paths such as in the arts, music and sports, suffer the same talent issues.

If you remembered the GOAL 2010 which was made by our ex-Prime Minister, Goh Chok Tong, to put Singapore’s Football Team into the World Cup. The plan was to import sporting talents because we need success stories to spur more Singaporeans to join sports, else it would be a chicken and an egg issue. But that parachuting of talents did not work in football as well as in table tennis, maybe largely due to the number of players required in each sport. To be fair, we have more achievements in sports now than before. But the lingering question would be, how many potential Singaporean winners in sports have we denied because the opportunity costs were too high? Would you let your kid pursue sports as a career?

I am not saying a talent would have a higher chance to achieve success in entrepreneurship. Talents will face failures too because business is part luck and part skill. As Nassim Taleb said, individuals fail (fragile) to make the system stronger (anti-fragile). Collectively, if we have more talents pursuing entrepreneurship, the quality of the businesses improve as a whole. But the failure rate would probably be the same.

My third reason is the education system that brought us up. I know, things are changing. But the current working population belonged to the memorising-information-and-regurgitating-in-the-exams generation. The education system created good managers, which was required for implementing good systems and keeping them well-run. But we are not good innovators who have ideas and the courage to do things differently. Our good friend, Chris Ng, wrote about grinders, minders and finders. If I may add, the innovators are missing in the equation.

Those three reasons were my thoughts to satisfy my curiosity to the question I asked myself. You may disagree with me.

Don’t get me wrong. I am not saying all things are broken in Singapore. Our system have served us well in the past 50 years but I don’t think staying on the same path is a wise move going forward. Things have to change for SG100.

Since entrepreneurship is so risky, why did I do it?

Why did I give up a cushy pay check in exchange for an uncertain outcome?

Simply put, I want to make an impact to society by doing the work I love.

I had enough of mediocrity. The mediocrity to be a cog in an organisation, receiving work from one department and then passes it to another. Dan Ariely explained my issue in The Upside of Irrationality or in this short Ted article. Humans are more motivated to work when we are involved in the whole process of the production.

In this business, although a small enterprise, I get my hand in all aspects and it becomes dearer to me.

It sounds foolish. But I am foolishly happy. I look forward to work every day.

Do I still feel the fear of failure? Yes.

I fear denying my family a comfortable life if the business fail. This is what I fear the most. Entrepreneurship is not about suffering the consequences myself, it involves the people around me. I have no problem drowning alone, but I do not wish to drag my loved ones together.

I fear running a mediocre business that is not worth my time. A mediocre business pays the bills but not significantly higher than what an employee would get. A mediocre business makes little impact to society that it would not be missed if it disappears overnight.

I believe many entrepreneurs fear these too. I felt that the business decisions were much easier to make than the personal ones.

These struggles are necessary for entrepreneurs to go through in order to enjoy the successes. And Mark Manson said it best which you should definitely read it in this reflective period.

Because if you want the benefits of something in life, you have to also want the costs. If you want the beach body, you have to want the sweat, the soreness, the early mornings, and the hunger pangs. If you want the yacht, you have to also want the late nights, the risky business moves, and the possibility of pissing off a person or ten thousand.

Personal Finance

When we first started the business, we had an investment approach to offer to retail investors. We had learned a great deal by seeing different perspectives during the tour of our business and it opened our eyes to a bigger world.

Our investment objective is to grow our capital at a higher rate of return, better than the index returns, by picking small and unfamiliar stocks. This approach and objective might not bode well with everyone.

Some people want to derive a passive income from the deployment of their financial capital would go for high dividend stocks, bonds and even SME notes.

Some people want to participate in growth stocks and benefit from super big winners.

Some people want to leverage their smaller capital and make higher rate of returns by timing the market.

Others are happy to match their returns with the indices, and they would stick to low costs index ETFs.

Different strokes for different folks and there is nothing wrong about it.

The key for our business was to market to a more targeted group which our product would meet their objectives.

That said, we are still talking about a small pool of people who are interested to manage their own money. Majority of the people do not want to spend time and effort to understand personal finance or investments. They would rely on the financial advisers to do it.

However, I believe a baseline financial knowledge is necessary to protect oneself against scams and ill-advice that benefit the salesman more than the client.

And with the rave of all the fintech disrupting the financial industry, financial education is still required for B2C fintech because finance is not a shampoo where my grandma can buy and use. It takes education to promote trust and adoption.

I wrote an article about financial education becoming an important new industry earlier this year and my stance has not changed.

It addresses a national need in Singapore at this point in time. Our standards of living is high and so are our costs. We have enjoyed the lifestyle and it is difficult to go back to a lower standard. We have been reaping our human capital by exchanging labour for money in the entire career. But come retirement, the only way to sustain our lifestyle is to make use of our financial capital. We are good at monetising our human capital, but most of us are not used to monetising our financial capital. It is a waste in my opinion. And as you read, our baby boomers are entering retirement age soon.

With an aging population, the only way to be self-sufficient and not burden the next generation is to fund our own retirement. Gone are the days where people look to their children to take care of them in old age. In current times, it would be considered a blessing if the children don’t get into financial difficulties that they need help from aged parents.

BigFatPurse in 2016

BigFatPurse.com will continue to strive to provide high quality and useful content for readers. It will remain free too!

Jon and I have each committed an article per week. This would continue in 2016.

But there would be some addition to the content we have been writing.

First, we would like to get more voices and perspectives through interviews and stories about people in relation to their money decisions. In 2016, it would not be about us, but about you. If you feel that you have a story to share, please come forward and use BigFatPurse.com as a platform to generate conversations.

Second, we would like to address money queries and concerns you are likely to have as a Singaporean. We want to talk about money as if we are at the kopitiam – Bak Kut Teh for the Soul, Singaporean style.

We have conducted numerous low-cost workshops on the weekday evenings. There workshops were very well-received as many attendees have showed their satisfaction and even amazement about the quality of information they have got out of them.

Our flagship course, Value Investing Mastery Course, will be hosted on CNAVpro.com, including the course information and members access. This is in line with our observation that this investment course serves a more targeted group of people and not the masses. Hence, do head on to that website only if you are keen on value investing.

The immediate activity in 2016 is our series of lunch time talk with National Library Board and Workforce Development Agency at Lifelong Institute. Do join us if you can, and you can find the first session here: NLB’s event page.

It has been a meaningful journey to serve you.

Thank you for the company and we hope you would continue to stay with us.