RECENTLY, during what was my sixth visit to Singapore this year, I had to replace the left headlamp bulb of my car. A new friend I made on a previous trip, Hui Ling — a private-hire driver — checked with her car-salesman husband and recommended a reputable accessories shop.
The bulb was competently changed and even with workmanship, the total bill came to just S$220. This was on Oct 10, my 25th wedding anniversary, which was why my wife and I were in the republic for a brief, somewhat pricey, silver anniversary celebration.
After I left the workshop with my car lights in working order, I checked that day's ringgit to Singapore dollar exchange rate. It was RM3.47 = S$1; so, in "our" currency, the replacement bulb plus workmanship had actually cost me RM763.40.
While that's a sizeable sum, it was still (much) less than what I had braced myself for considering how expensive things are in our more successful southern neighbour.
While I am sensitive to the escalating costs of day-to-day life everywhere, driven by the greatest economic challenge our world has contended with over the last couple of years — inflation — its effects are glaringly obvious each time I visit Singapore. My rising costs (in ringgit terms) of Singapore dollar-denominated goods and services have been evident to me over the last 27 years…
SINGAPORE STINT
I worked briefly in the city-state from January 1996 in the original editorial team of then-startup magazine Smart Investor (SI). SI's offices were a walking distance from the Outram Park MRT (mass rapid transit) station in Singapore's Chinatown.
Most weeks, I worked there from Monday to Friday; I caught the Keretapi Tanah Melayu (KTM) overnight train on Friday nights from the now-closed Tanjung Pagar station to the Seremban station.
I would return on Sunday nights on the overnight train in the opposite direction (usually) in time to reach my Chinatown editorial office on Monday morning.
During that stint, I earned a respectable Singapore salary, which converted magnificently from S$1 to RM1.80. I returned to Malaysia late in 1996 as the founding editor of the freshly launched Malaysian edition of Smart Investor.
It was to be my last stint as a conventional employee because sometime in 1997, I dove into full time self-employment and began the — arduous, volatile, exhilarating, terrifying and rewarding — process of business-building.
From that time, I've observed the Singapore dollar surge in strength against our ringgit from 1.80 to the 2.00 level, and then to continue marching to 2.20, 2.50, 2.80, 3.00, 3.30 and — as mentioned, when I checked on Oct 10 this year — 3.47.
As a much younger adult, it irritated me having to spend more and more of my sinking ringgit at the money-changer to secure a modest amount of Singapore dollars for basic travel, food and incidental expenses in the pricey republic.
Eventually, as I grew savvier, it made sense to park some funds in Singapore, both as cash in bank savings accounts and — far more effectively — in yield-generating stocks and unit trust funds.
So much so, it's probably been at least 15 years since I've changed physical ringgit notes at a Malaysian moneychanger with the express purpose of having Singapore dollars to spend during my few brief trips there each year.
Much of what I now spend there is the harvested yield of Singapore dollar-denominated dividends from a modest portfolio there. I consider such investments good assets because — as financial guru Robert Kiyosaki has written — they literally put money into my pocket. Conversely, Kiyosaki also teaches that bad assets take money out of our pockets.
GOOD AND BAD
While it was necessary for me to quickly replace that blown headlamp bulb, nonetheless, by Kiyosaki's definition, such car maintenance expenses mean my cherished mechanical steed is a "bad asset". But not everyone agrees with him.
Many accountants resent Kiyosaki categorising even the homes we live in as bad assets because of the taxes we pay on them and the endless maintenance expenses we fork out to keep things functional.
Interestingly, Kiyosaki deems cash flow positive investment real estate to be "good assets" if the total outlay — including mortgage, taxes, and maintenance charges — per month or year is less than the rental collected in the corresponding period. Bottomline: They are good assets because on a fully netted out basis, they consistently put money into our "pockets" (bank accounts or portfolios).
Nowadays, as I work with my financial planning and retirement funding clients, the distinction between good assets and bad assets is a foundational lesson that I constantly circle back to when guiding them.
Another piece of advice I give them is to be sensitive to the effects of currency swings. As such, it makes sense for us all to spend less than we earn, to save and invest the difference, and to do so for a long, long time.
The goal of disciplined lifelong saving and investing is to accumulate good assets to progress economically as we move through what we hope will be a fiscally healthy, fascinating, and ultimately fulfilling life.
© 2023 Rajen Devadason
Rajen Devadason, CFP, is a securities commission-licensed Financial Planner, professional speaker and author. Read his free articles at www.FreeCoolArticles.com; he may be connected with on LinkedIn at www.linkedin.com/in/rajendevadason, or via rajen@RajenDevadason.com. You may also follow him on Twitter @Rajen Devadason and on YouTube (Rajen Devadason).