Good stocks to invest
Sometimes we take for granted what was afforded to us all too easily.
Howard Marks said that when times are good, it is usually then, people do not see the increased risk. If risk is uncertainty, then the greatest uncertainty is when you least expected it.
The bigger risk for many isn’t investment risk, or volatility in the markets.
Yes the stock market is not having a good time now (depending on how you look at it) but the stock market is usually the canary to how well the general economy does.
The bigger risk here is to your human capital, or in simpler terms your job.
Losing your job creates a host of problems. And this is not constrain to Singaporeans. The permanent residents and employment pass folks are just as affected.
The employment pass holders have to be away from Singapore in 1 month’s time:
- How do you find work within this short window?
- How easy is it to find work within your niche competency?
- Whether you are renting, you may have family and its not a pleasant experience up rooting and going back home
Times are bad in certain industry.
My good friend in the banking sector was telling me about a recent company hiring case study. They hire a person through a job agency and not some form of direct contracting on a 1 year contract.
The person was earning $9500/mth in his previous company and accepted $7000/mth in this contract position. The previous role do not pay much bonus (probably due to Basel Rules) and so does this.
To some of you that may look like a lot of money, but think about it, we all work within what we earned. You have a home mortgage to service, he probably has it. You have children to feed and he probably has it.
It might be worse when his home has a bigger mortgage then you.
The same friend used to remark to me that his acquaintance once told him, no matter how he jumped, his salary will always be higher than the previous.
What a concept.
And the amazing thing is whenever year end, each see a number of colleagues leaving the company, and if everyone is leaving, where are they going to?
Having awareness of your financial situation
Coming back to the recruit, you must very much need that cash flow to accept a $2,500 pay cut.
If you were him, do you have an awareness of how does your spending look like?
If you do not have that, you are going to worry yourself more than perhaps the actual situation.
Prudent budgeting would have provided that awareness in how you deploy your cash outflow.
War-gaming your lifestyle scenario
In the past, I talked about whether you have identified what are your basic survival expenses and those expenses that enables you to live a rich life. A good example would be how I review my annual expenses and come up with a rough annual basic survival expenses estimate and what is in each categories.
You should at least think about: If I lose my job what would I do first? What are the considerations? Does my wife agree with my rough plan?
When you do not pre-plan or what I termed war-game through such a scenario, you tackle the shock and the after effects together and that could be rather draining.
Had you worked out your survival expenses, you need to be bold and roll out what was planned previously. This is likely to entail cutting out the rich life expenses.
How else are you going to make $7,500 work?
The Emergency Money
When you are out of work, the emergency money tide you through a while. Read the comprehensive emergency fund guide.
Without this, you probably have to do more drastic actions.
What happens to others will not happen to myself
What I realize is that conversation about money do not occur and planning does not occur because most would think retrenchment won’t happen to them until it is too late.
This is how we are wired probably.
One blogger talked about their recent “change in company strategy” and you can see the tone realizing the impact to the company morale but also how suddenly vulnerable you become.
The concept of emergency fund, having buffers, having alternate wealth machines to generate cash flows become more real than last time when things are rosy.
Is the situation on the ground much worse? I don’t feel it as much here.
But please don’t muck around with not being aware of where your money is going only when its too late.
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– Good stocks to invest