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Perspectives... from an older friend

Had catch-up drinks with a much older (more than 12 years) friend that I hadn't seen in nearly two years. Our common experience of having worked overseas led us to talk amongst other things: Money, work, mid-life challenges, investing, investing in real estate, and the state of the economy in China.

Economic lifespan.

The state of working in banking and finance.

It becomes incredibly hard to find something in between. You are either senior management or not. Besides, those who earn up to the S$5,000 range are typically younger folks with 3 to 5 years of experience on their backs.

Salaries for banking and finance are often above-mediocre. Those in banking and finance work round the clock with no night or day. You are basically on call 24-7.

Regardless of whether you are in the front or mid office, you basically work round the clock, constantly on your phone and replying emails.

The markets today are digitally powered with information that move at the speed of light. Singapore today, more than ever, serves the international market, therefore warranting that we work across all time zones.

While there are many who still struggle with finances in their fifties, the unspoken truth is that money shouldn’t be a focus anymore at this stage.

Grey hairs.

Also, people expect you to act your age for the role you are in. When you are an analyst, you are expected to do the grunt work. When you are an associate or director, you lead execution. When you have more than ten years of experience on your back, you are meant to assemble and manage a team, impart knowledge, and on occasion, demonstrate thought leadership and disseminate advice.

No more upside...

Take REITs for example: investors could make compounded returns by re-investing the dividends, and relying on further appreciation of the share prices because of insatiable demand for space.

Over the last year or so, distributions and share prices for REITs have declined quite a fair bit. Higher interest rates have hit distributable income margins but rental reversions are also taking a hit. This is not only the fault of inflation and borrowing costs impacting their own businesses but also impacting the businesses of their tenants, crimping the ability to accommodate the higher rents.

REIT managers today have to weigh between higher rents and lower occupancies, or otherwise run them at the same occupancies at lower rents. Not an easy decision.

A bleak world...

To re-stimulate the economy, we have to rely on the next generation to accumulate wealth and buy homes. For this generation of folks who can’t afford to buy houses, they will simply just move in with their parents.

Furthermore, China is also faced with an ageing population, which means that when the older folks pass on, there will be possibly an over supply of housing. It might take at least 8 years for for this segment of the economy to recover.


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