One of the highest yield instruments you can have

Saturday, 7 February 2015 00:35

Posted by owq frugal 0 comments

The bicycle.

Let's consider one of the necessities in my life: transport.

If I took public transport, it would cost me about $50 a month.

My bicycle cost me about $200. Let's assume that the maintenance costs are negligible. Using public transport as a baseline for comparison, the yield will be 25% per month. Don't forget that cycling also keeps you healthy, which is priceless.

The only problem is that it doesn't scale, that is, you can't increase the returns as you put in more money.

$2 chicken rice vs $4 chicken rice

Sunday, 9 November 2014 16:21

Posted by owq frugal 0 comments

I was quite inspired by this post: The $2 Chicken Rice Story. It talks about how people are a sucker for "cheapo" $2 chicken rice.

You see, we tend to have a psychological bias when it comes to prices. We see them in relative terms. Something expensive in absolute terms seems much cheaper when placed next to something much more expensive.

How is this important when it comes to stocks? The unit price is very important. In other words, the value for money. The business might be very outstanding, but if you have to pay a 10x premium, it may not be so worth it in the end. Everyone has their own way of valuing a stock. And the price you are willing pay depends on the value you give it. Don't overpay for something just because it looks good.

Saving money

Thursday, 6 November 2014 21:46

Posted by owq frugal 0 comments

Every dollar saved is worth more in the future (if invested at a decent rate).  Especially so for technology products. I was wondering whether to exchange my Galaxy S3 for a new phone this year, but I decided not to since it fulfills my needs and is fast enough. Technology is likely to improve and I can get a better phone for the same amount of money in the future.

How do I save money for my daily necessities?

Transportation
I cycle to work everyday, rain or shine. Upfront cost: ~$200 (bicycle, rain wear,). Upkeep: <$50/yr
If I took public transport, it would be about $600/yr. Let's not even talk about cars...
I think a reasonable travelling time for cycling to work is about 1h 15mins. That would be about 10km. So probably the only place too far for me would be Jurong or Choa Chu Kang area. Of course, the further the distance the less incentive to cycle because public transport gets cheaper.

Grooming
Cutting my own hair, I save about $10 a month. Cutting a similar hairstyle every month yourself isn't difficult. You can also ask your hairdresser for tips.

Learn to sew. You can save a few of your bags/clothes that way.

Food
I don't really save much on food. Fortunately I work in a heartland area so my meals cost about $3 on average. If I really wanted to save money, I would make my own lunch but it would probably save only a dollar or two? Not worth it in my opinion. A tip though -- never buy beverages. Drink plain water. (I buy packed juices once in a while to satisfy my craving, though)

Entertainment
I don't know why people pay so much for entertainment. Movies, for example. Is sitting there to rot that fun? It's true, the best things are free. And my hobbies don't require much money. 1. I love nature and Singapore is full of parks and reservers, believe it or not. 2. Books. Our libraries are damn good. Seriously.

The money saved isn't that much, but I don't earn much so it's quite significant. I hope to earn more in the future so I can worry less about saving too aggressively.