Dan*, a partner at a major Boston law firm, was due at the office, but instead, he was curled on his bathroom floor, unshaven and in his pajamas, crying into a towel.

– What Happens When Your Career Becomes Your Whole Identity

This feels more like a scene in a movie than from a Harvard Business Review article but it was actually from the latter.

The worse part of my job did not reduce me to this level but I would imagine some of my peers would have experienced something similar. Your friends would ask you seriously why put up with this, just quit it. However, if they were in your shoes, I wonder if they would take their own advice seriously.

Parts of your work is going to struggle and sometimes we do not know whether this is an acceptable struggle or that this is beyond our limit. As a new bird, you would not know which is which, thus the answer is not so straightforward.

Navigating work has always been an important aspect of financial independence. But perhaps not in a way that you think.

It is important not in the sense that the money allows you to be financial independence.

Rather there can be many conversations about work and financial independence. For example, are all work suppose to be repulsive? What if we do not find work repulsive?

How do you “survive” the period where you have set up your financial system and are just effectively waiting for the “cross over point” where your cash flow from your portfolio is more than your expenses?

Over the weekend, I came across three articles about work and I realize they are applicable to the topic of financial independence as well.

When Your Work is Your Identity

The first article explores some of our existential crisis: Who am I if I am not the highly paid, senior manager?

Many of us started liking what we do, but as we progressed in the career, we started being more and more unhappy in our career.

Progressing in our career usually means an emphasis on spending time at work, versus time for other things. We start to wonder if we would be happier if they have more friends and a happier family if we had spend our time out of the office instead.

But we are afraid to hate our job because our career has been such a big part of our identity that if we hate our career, it would be similar to hating ourselves.

Psychologist called this enmeshment with your career. Usually, it is used to describe the blurred boundaries between 2 people. However, in this case, it is between you and your career.

Being enmesh means your identity cannot be developed independently.

When you engage in any intense activity for a great majority of your waking hours, that activity will tend to become more and more central to your identity. It displaced other activities that you might identify with.

For some of us, our career achievements are highly valued in our family or community. There are high value placed upon professional and financial achievements. We fear failure will make our family disconnect with us. And thus this drives our identity to be more work focus.

We have also reached a certain socioeconomic class. It may not be the glamorous things but that you have succeeded to have access to your friends you are comfortable with now. Our identities are highly influenced by how we present ourselves to them.

Whichever level in this socioeconomic class, your identity is focused on certain wealth, achievement and influence. To maintain these 3, you need to maintain this good career.

Some of the better suggestions provided sound very cliche:

1. Rebuild your network. Reach out to friends and family. recent research on adult friendships has shown that having just three to five close friends is associated with the highest levels of life satisfaction.
2. Decide what is important to you. Review your principles and values. “Values Clarification”: Reflecting on your desired direction in areas like relationships, community, careers, and parenting. Rank their importance to you as well.
3. Look beyond your job title. Reframe more in terms of skills at work that can be used across different contexts than on your job title.

Tasting the Extreme Ends of Working and Living Life

Julian Hebron at The Basis Point shares his reflection of working, not working and ultimately coming back to work on his own terms.

1. Career success is measured by metrics such as money, expertise, and credibility.
2. Life success is measured by something much more personal.

To gain career success it requires you to put in hard work and often, it involves some sacrifice of time from personal and family time. This will win you money, expertise or credibility or a combination of all three.

If you continue down this path you will either

1. Taste career success through a combination of money, expertise, and credibility
2. Gear down career success ambition and gear up life success ambition
3. Pursue #2 but eventually settled for a blend of #1 and #2

What I understand from Julian is that when you have a taste of two extreme ends, you tend to understand where you would not wish to go. The most comfortable position might be a blend of somewhere in the middle.

Julian was able to gain this perspective because he climbed high enough that he has seen some form of success. He was able to weigh the tradeoff between career success and life success.

Not everyone has attained that privilege.

At the same time, we cannot discount that successful people have accumulated wealth capital, wellness capital, and social capital.

Why are Older Workers Less Anxious at Work?

Washington Post has a good article questioning if we reduced our ambition as we age. I thought the article explain the heck care attitude that people tend to stereotype older workers.

I do not think older workers do not care about their work so much. Perhaps I have seen some older workers who are more dedicated, always telling the younger ones to maintain certain standards.

However, perhaps as we get older, our philosophy about working have gradually shifted:

1. We find contentment with the station in our life. We wish to perhaps learn to enjoy this setup in our lives.
2. We may start becoming more selective in pursuing gigs and less anxious about how they would turn out.
3. Started shrugging instead of worrying whether the kids will be late for school.
4. We accept that we will die one day and are selective about who we spend our time with.

A lot of studies have indicated adults’ happiness over the years resembles that of a U-shape. We started off in our grown-up years feeling pretty good about ourselves. This falls over time until our 50s to hit our peak happiness around 65 to 72 years old.

All this seems to set us up for a period where we feel like we are more in control, and that we are least anxious about things (in terms of our work, not life). This might free us up to do better work.

I think what was not explicitly spelled out was that as you stay in the industry longer, some of the skills that used to take you a long time to do well became much easier for yourself. You tend not to forget how to do these things and you could customize these things well to suit what is required.

Trying to refine these areas of your work might not yield the highest benefit. The biggest wins tend to be able to selectively carry out those projects that you are best suited for.

Unfortunately, not everyone can be in such a privileged position to be able to do this. What I do see are very competent, older folks being overloaded with more work, from acceptable load to unsustainable load until it breaks a person.

Overall, the theme seems to be that if you are able to move up to a higher part of the value chain, all this advice will work for you. However, if we have not, then you would find these advise a little unrealistic.

Do Like Me on Facebook. I share some tidbits that is not on the blog post there often. You can also choose to subscribe to my content via email below.

I break down my resources according to these topics:

1. Building Your Wealth Foundation – If you know and apply these simple financial concepts, your long term wealth should be pretty well managed. Find out what they are
2. Active Investing – For the active stock investors. My deeper thoughts from my stock investing experience
3. Learning about REITs – My Free “Course” on REIT Investing for Beginners and Seasoned Investors
4. Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG
5. Free Stock Portfolio Tracking Google Sheets that many love
6. Retirement Planning, Financial Independence and Spending down money – My deep dive into how much you need to achieve these, and the different ways you can be financially free
7. Providend – Where I work doing research. Fee-Only Advisory. No Commissions. Financial Independence Advisers and Retirement Specialists. No charge for the first meeting to understand how it works

When I shared my annual expense last week, I was not expecting much negativity.

This was because it was not the first time I shared these kind of figures. Things are as it is. You could imagine that there is a household having 2 breadwinners earning a combine of what I earn.

They would likely wish to do the same thing as I do: Not spend on what is unnecessary. They may have young children, and their expenses will be higher than mine.

That is OK.

The best response that I got was that many saw my figures and wonders how much THEY spend on expenses this year.

I got 50% of the job done there. Unfortunately, it is pretty difficult to get people through 100% to track how much they actually spend. Ultimately, I would attribute that to not understanding the deeper virtues of tracking their expenses and not being deep enough in the shit hole (if they are in one)

Perhaps the best response that I got was Benjamin’s sharing of his spending philosophy @ Rangosteen.

I think it is worth a read for my readers because firstly, Benjamin writes a million times better than myself.

Secondly, Ben challenges certain weaknesses in indulgences that you may have encountered in this tug-o-war between being discipline and indulgences. I have a feeling that the areas he brought up are where his peers constantly have their attention and wallets.

I will pick out a few that resonated with me.

On Fashion/clothes:

If you quiz your friends on what you wore, they won’t recall.

The body and physique is more important than the clothes. Toss a singlet and shorts to a well built person and it’ll immediately look like a runway piece. I once saw an unfit person decked from head to toe with the most expensive of brands – he looked no different from the next person on the MRT. 

The first quote, I have never thought about it this way. I would say people may not recall, but they would notice that you have consistently put in effort to look the part not to mention spend a sum on it.

Is there an objective to looking the part? That is debatable. Perhaps for some profession, you have to look the part.

We hope that the accessories hides some of our deficiencies. Which is easier? Buying something to look better or maintaining a reasonable physic?

On Cafes and restaurants:

I know the price of ingredients and the work that has gone behind putting a dish together. Trust me, many cafes are not worth the prices they charge. These places sometimes charge more than 300% the price of ingredients. Steamboats are one of the silliest cuisines – it’s really just a stock base and everything else is raw.

This is true.

After I learn how to grocery shop for my ingredients, I realize it became harder for me to look at the food on offer and pick something out to eat. You could say the food at the restaurant tastes better than food cooked by Kyith, but some of the good experiences were so fleeting.

If you try to recall how well the food tastes, I am sure for a lot of food, you may or may not go back and select the same thing.

A lot of us cycle our food. You will eat chicken, fish, this vegetable, that vegetable, this rice, that noodle. The difference is the sequence in which you eat it in a week. You eat it so often, there isn’t much novelty. Most of the time you select that dish because those are the few food that you feel generally OK to eat.

Even posh cafes have given me food poisoning on a few occasions.

Not to beat down on posh cafes, but a lot of people I realize are more particular about how their family members prepare their food, the preparation environment of hawker centers and to a certain extent food that is past the expiry date or collected for free.

These 2 years, I have heard on the news about food poisoning in a few eating places. I sort of think Benjamin is right that we overrate or sort of believe if we paid a high price for our food, the hygiene factor is also higher class.

On Toys we Like:

These days, I curb my excitement about these toys by imagining it in its dusty, discharged state.

Somehow or rather, I realize a lot of what I bought eventually left me disappointed.

So I will do the same thing as Benjamin in my head when I am considering if I should really go ahead and buy something.

What Happens to the Stuff When You Passed Away?

In my mind, I’m quite aware that we can be called to die at any moment. And when we do, someone has to go through our stuff and decide what to sell, what to throw and what to keep. I don’t want to burden this person, so I try to keep things to a minimum.

This does not hit me so much as it hit Benjamin.

However, it got me thinking: If I am gone, what kind of perception would your relatives form of you through the stuff you left?

We can all be frugal like Benjamin (he might not admit to that), but I have seldom heard of people explaining their thought process on some of the things he should be indulging.

If you are pursuing some financial goals, or financial independence, being as clear as you can on how you perceive things that come across for you is important.

If you are not sure, you need to plan a lot of buffers.

If you are more sure, you may need more money or less, but there is a likelihood you do not need so many buffers.

Do Like Me on Facebook. I share some tidbits that is not on the blog post there often. You can also choose to subscribe to my content via email below.

I break down my resources according to these topics:

1. Building Your Wealth Foundation – If you know and apply these simple financial concepts, your long term wealth should be pretty well managed. Find out what they are
2. Active Investing – For the active stock investors. My deeper thoughts from my stock investing experience
3. Learning about REITs – My Free “Course” on REIT Investing for Beginners and Seasoned Investors
4. Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG
5. Free Stock Portfolio Tracking Google Sheets that many love
6. Retirement Planning, Financial Independence and Spending down money – My deep dive into how much you need to achieve these, and the different ways you can be financially free
7. Providend – Where I work doing research. Fee-Only Advisory. No Commissions. Financial Independence Advisers and Retirement Specialists. No charge for the first meeting to understand how it works

Mathematician James Simons founded Renaissance Technologies LLC. Their flagship fund is the Medallion Fund.

Renaissance is atrocious when it comes to charging fees.

As I always say, your cost has a profound impact on your fund’s performance. Your compounded returns are variable, but your costs are always incurred before you get your return.

Medallion charges a base fee of 5% a year and their performance fee is 40%.

Over a 30 year period, from 1988 to 2018, these atrocious fees reduced investor’s return from 66% a year to a measly 39% a year.

$1,000 in 1988 could have grown to $4 billion. Instead, it only grew to $19.5 million.

That is why I say beware of active fund that charges high fees. Even worse, this fund makes short term bets instead of taking a long view on the markets. They do not buy and hold.

You would not be able to detect what is wrong with my commentary above if you do not have a good baseline on some financial matters. I believe most readers would not be misled because you would recognize that whether the returns are 66% a year, 39% a year or even 20% a year, they were crazily good returns.

What if Some Strategies Cannot Work If The Capital Gets Too Big?

There are other things that I picked up on the recent commentary on the book The Man Who Solved the Market. This is a book on James Simons and Renaissance Technologies LLC.

At this point, the Medallion fund is mostly run for its own fund employees. The fund size has been kept at $10 billion. They have been giving back capital to their investors.

Of course, the investors are disgruntled because if you have a fund that performed this well, would you want to exit?

There is also another data point in that at one point the fund was doing very well in the commodities and futures space. But Simons was not satisfied just being successful there.

If they could not find a formula that works in the equity markets, they cannot scale up. And they nearly could not, save for some good fortune, among other things, the discovery of a bug in the system. Had they not discover the bug, how differently might history turned out.

Probably, they could only operate in the commodities trading realm at that size. If they had become bigger, they would have affected the prices themselves.

Medallion fund was deliberately kept to this size because if they were bigger, the model would not work, or not work as well.

Medallion are not the only ones giving back money. Value fund managers like Seth Klarman also gave back investors money. However, in those cases, it is likely due to the lack of investment opportunities that fit their criteria.

There are some strategies that might not be able to scale.

Illiquid, Small Companies

For example, if you are a fundamental investor, you could prospect small companies and find companies that are worth more than their currently traded price.

Large funds could not get into them because they are so illiquid. If they get in, there is not enough liquidity that they will not move the stocks share price themselves.

But if your capital is $20,000 only, you could do it.

Forex and Futures Trading

In a conversation, I was privileged to listen to in the past, I manage to learn a bit of the inner struggles of some traders, trading for a long time, trying to do it consistently.

My friend and his acquaintance came to the conclusion that for a lot of strategies, there is a certain size which your strategy could still be valid.

If your trade size gets too big, somehow, your trade would “disturb” the markets.

So usually, what they would do is that they will start from a certain trade size, build a process and do it consistently. They will scale up the trade size up to a certain limit.

Once they build up their capital to a certain size, say, $300,000, they would take the money off the table and start off again with a small initial capital.

Rinse and repeat.

In trading your returns can be really impressive, but it is a matter of money management and risk management. The strategy entails enough unsuccessful trades that you lose but in controlled amounts.

It would seem that you cannot compound your money in the way we know it.

The strategies are meant for individual traders with their own small capital size. If they are good and they start a fund to help third party manage their wealth, and trade for them, they might realize their existing strategy do not work.

This is where Property and Bonds come in

In the past, I have always wonder why if a strategy is so robust, why won’t the trader or investor put 100% of their allocation into it?

Surely if your strategy gives you 20% a year return as what you have touted, you should just concentrate your capital in one strategy.

Unless that strategy has certain flaws that are seldom discussed, unwilling to be discussed. These flaws are large enough that even expert traders need to diversify across strategies.

It would seem that the popular one are individual bonds and investment property.

The total return from these 2 asset classes is comparatively very low compared to these trader’s strategy.

So why are they the favorite amongst traders?

They are seeking a barbell approach to investment management. Due to the high risk, they take with their trading strategies, the majority of their wealth are in lower returns, but much lower volatile, predictable, seemingly safe assets

Perhaps this ceiling of trading strategies means it would be more lucrative to teach folks how to do it, then they did it themselves.

Some wealth-building strategies may have a ceiling. Sounds good on paper but given different circumstances (read a high net worth investor with $10 million in investable assets), their mileage may vary.

For the traders out there, am I wrong? Are you able to scale up to $10, $20 million and it would still work well?

Do Like Me on Facebook. I share some tidbits that is not on the blog post there often. You can also choose to subscribe to my content via email below.

I break down my resources according to these topics:

1. Building Your Wealth Foundation – If you know and apply these simple financial concepts, your long term wealth should be pretty well managed. Find out what they are
2. Active Investing – For the active stock investors. My deeper thoughts from my stock investing experience
3. Learning about REITs – My Free “Course” on REIT Investing for Beginners and Seasoned Investors
4. Dividend Stock Tracker – Track all the common 4-10% yielding dividend stocks in SG
5. Free Stock Portfolio Tracking Google Sheets that many love
6. Retirement Planning, Financial Independence and Spending down money – My deep dive into how much you need to achieve these, and the different ways you can be financially free
7. Providend – Where I work doing research. Fee-Only Advisory. No Commissions. Financial Independence Advisers and Retirement Specialists. No charge for the first meeting to understand how it works