AmericanLit Summative Blog

Recently, in this modern world, there are more and more cases related to violent video games which effect children of all ages. Studies have provided a statistical comparisons between large groups of children who do and don't play violent video games. And it turned out to be the groups of children participate in violent video games have a higher violent thoughts, emotions and behaviors.

      

I know that nobody really actually know what was up with Eric Harris and Dylan Klebold and the reasons why did they cause the Columbine massacre. I know that it is not right to blame a single thing. But the two of the things that I think that affect and cause such violent thoughts and behaviors of them are violent video games and the US Gun Law. I think the society and the authority should do something to prevent such painful death and lost. I think the gun law in US as well as every where in the world should be stricter and tighter.Also, I think parents should really care about what games their children play. Is it violent? Is it appropriate?

There was several articles about kids kill people after playing Grand Theft Auto (GTA). Basically, Grand Theft Auto is a video game encouraging violence and awards points to players for killing people. It allows the player to make a crime, to go crazy and to simply shoot up anything in vicinity, to steal a car you like, to stomp a person you don't like, to blow away a cop in your way. 

In 2005, an eight-teen year-old boy Devin Moore lived in Alabama was convicted for the 2003 shooting at a police station. He had played Grand Theft Auto day and night for months. It had been told by a police man, Devin Moore shoot two police officers and a dispatcher as he was being detained for allegedly stealing a car. He grabbed one officer's .45 pistol and killed all three before fleeing the station in a police cruiser he stole from the station. After arrested, Moore is reported to have told the police: "Life is like a video game. Everybody's got to die sometime." The game industrial gave him a menu that pop up in his head, which offer him the decision to kill the officers, shoot them in the head and then flee in a police car, just as the game trained him to do. 

Recently, in another similar case, where an eight year-old boy intentionally shot and killed his grandmother after playing video game with a gun. The police believed that he had been playing Grand Theft Auto IV just minutes before the homicide occurred. This shows children does affect by violent video games. But another aspect of this ... where did the gun purchased? Why did they even have it?  How did he get it? Where was it placed? In the US, any eighteen and above can purchase and freely use guns. Such as in the state of Florida, you don't even need to register to purchase a gun or even a license. I am agree that during the time of war, the gun law wasn't that strict and it was stated in the American constitution that every man had a right to defend themselves. But looking at a situation, where an eighteen year-old girl could just walk in a gun show and purchase a weapon with no questions asked. Isn't it about time that the gun law in American be revised?

     

Multiply 25 Rule and 4% Rule

I learned something new in my Personal Finance class last week. I found it really cool and interesting. I would like to ask you a question. Do you know how an estimate of much money you will need in the future for your retirement? Well, when my teacher ask my class at first, I have no idea how much will i need. I was wondering is it even possible to know it. And then Mr.Hallam introduced us to this multiply 25 and 4% Rule. So basically, these 2 rules will help to guide how much you will need for your retirement and how much should you withdrawn each year so you don't go broke or bankrupt. 

So to estimate how much money you will need for your retirement, just simply multiply your desired annual income by 25. And to guide how much you should withdraw once you're retired 

• For example: 
• Multiply by 25
• I want to live on $40,000 per year in retirement; I will need to have $1 million dollars in my retirement portfolio. ($40,000 x 25 equals $1 million)
• 4% Rule
• When I retire with $1,000,000 in my portfolio. In your first year of retirement, I will withdraw $28,000. ($1,000,000 x 0.04 equals $40,000.
• The following year I withdraw the same amount, adjusted for inflation. Assuming 3 percent inflation, so I will withdraw $41,200. ($40,000 x 1.03 equals $41,200.) 

And you might ask, what if the money is running out. Well, I would say, If you have you current in an investment account, you should not worry to much. Because, eventually the money left after each month you withdrawn will continue to growth over time. 

Reflect: I was taking with my dad about one of the thing i was really considered about was the Central Provident Fund. It was really confusing, hard to understand. My dad also reminded me of this one story. One time, my family was going home on a taxi which the driver was a Singaporean, he was really open, he shared with us his story, he was complaining about the CPF. And one thing, he is really old, he should have been on his retirement. He was saying that when he was young, the government was saying all kind of thing to encourage the citizen to put their money into the CPF and promised them that will give them back their money with interest. Now, he is old, he needed that money to take care of his family and his old life. But the amount that they give out is not enough. So he still have to drive taxi everyday until now. At the time, I did not know what he was talking about, because I did not know about the CPF. I made me refuse to put a lot of my money in there because of his story. I don not is it true or not but I will have to make a lot more research about this. 

A Short Story

        A widow had to work hard to bring up her son.  This was after her husband left her when their little son had turned two. Being a widow, having no permanent job and supporting her son, she is not well-off. Mary and her son, Max lived in a small rental house nearby the country side.

        The silence of the night was broken by the sound of typing keyboard. It was already twelve, but Mary was still trying to type as many documents as she can. It was one of her extra job which she hoped to find some extra money. There were so many times that Max had persuaded her to quit that extra job, because he was worried about her health condition. Nevertheless, she just brushed aside.

         As she tirelessly typed those countless documents, Max took a peek at her as he was lying on bed. She looked haggard recently and even her eye bags were getting darker. Max couldn’t stand to look at her any longer. He shut his eyes and silently cried through the night.

      Mary didn’t want Max to have the same life as she did. She wanted him to concentrate on his studies and get good results. As time flew by, Max finally graduated his high school with honor and received scholarship from a university in USA. Mary was really happy yet sad and went round telling her neighbors. She couldn’t wait till the day he would be successful and the day she will move to live with her beloved son in the crowded modern country. But on the other hand, Max was really happy to live far away from his mom who he thought an old unfashionable ugly woman.

      Time passed by, Max had his own family; he married to a lovely girl and had two adorable daughters. He would never tell them anything about his single mother. Six years away from home, yet he had never visit his mother. The only thing he did was sending a plenty of money for his mother each month. He thought that it was enough to pay back her for raised him up.

     One day, Max’s wife opened the main door and there was an old ugly woman. Max was in shock when he recognized that it was his mother.

         “My little son, my son, I miss you so much.” Mary cried out.

         “Who is your son, granny? I don’t know you!” Max busted out.

         “What are you talking about? I am your mother, Max. I miss you” she said.
        “Go away. I said I don’t know you. Otherwise, I am going to report to the police!” Max screamed.

       “Oh, I am sorry, I got the wrong person. Wish you and your family healthy.” she said in a deep voice. She walked away in tears. Max was too crying pain inside.

        Two years later, Max went back to his country side. He went back to the small rental house where he spent a quarter of his life. He knocked on the rusty metallic door and hoped to find his mother running out and hug him. As he was knocking, a neighbor came and asked him “Are you Mary’s son? Where have you been for the last seven years? Your mom passed away one year ago. I am sorry to say that but she left you this letter.” My finger could hardly open the letter; they were frozen after I heard that news. The letter was stained with his mother’s tears. Max couldn’t stand it and his tears started dropping down.

        “My dear little son, I know that one day you will receive this letter. I know that it is too late for me and you to meet again. But son, don’t be sad. Just read what I am going to write and you’ll know that I am always with you. The money that you sent to me, I didn’t use anything because I know that it is going to be useful for you, not me. Remember the time I ran for jobs, I save every single cent to send you to school and provide you everything. With this money, you will have to use it wisely, okay! And there’s another thing that I never did tell that you injured your right eye when you were three. Doctors were hopeless and there were no other ways to save it. So I gave my eye to you. My wish came true, I will always be with you, I can see what you are seeing, I can feel what you are feeling, and I will cry and laugh with you, my dear. Lastly, I wish you and your family happy. And I do really miss you my little son. Good bye. Just remember that I will always be with you no matter what.”

      “I will always be with you no matter what” Max regretted for neglected his mom. He finally realized what Mary did for him and all the love she gave to him. “Mom, I was wrong, please come back with me, I deserved to die, not you. OH… what did I do? Mommy…!” Max screamed and shouted and felt more regret than ever. He collapsed on the floor and tears ran down his eyes. Memories flashback in his eyes and he would never forgive himself for what he had done.

Progress Blog

In my Personal Finance class, we are assigned a final project called Real Life Project, which we have to create a realistic scenario of yourself 3 to 4 years after we graduated from colleges or universities.

The aim of this project is to help us with our future finance, to get an idea how to deal with these situation later on. I am sure that almost everyone will have to deal with the income and the living costs. Even if the situation is not the same with what we've planned, we still have an idea and will have to change the plan in order to adapt the new situation.

    So far, I've done my first and second phase of my Real Life Project. But there is one thing I was questioning myself many times is about the "Transportation" part. Since I have to include in the taxi cost for my transportation after i graduate since I am not getting car, I don't really know how much should I factor for the taxi. I kept asking myself how much should i factor for it.
    For "Home savings", i think it's fine because I used the previous project that i've done, which is the real estate project. I am going to buy a house in Kuantan, Malaysia and lease it for rent. By doing so, it will also help me pay off the mortgage quickly.

Discussion with parents:

As i was doing the "Transportation" part, i wondered whether to buy a car or not. So I asked my parents during our dinner time. My mom said it depends on my finance and also the job that I chose. And she also reminded me how expensive to buy a car in Singapore. So since I am going to be a chemical engineering, I don't think I will need a car to travel place to place like a salesman. It's also convenient to go by the Mrt and buses in Singapore since the government recently and will increase the price of the COE and ERP. Added to this, I think I will need a little more time to settle in my job, to find a fix, stable job. I don't want to not have enough money to pay for the car insurance, maintenance,... in the worst case like loosing my job.

American Expat? Should not buy Actively managed funds!

If you are an American expatriate, you would probably live oversea for sometimes now. You would probably also have invest a small amount of your money to a IRA, which you can only put up to $5000/year if you are under 50 years old, and $6000 if you are older than 50. But just by invest this little $5000 a year, that will just give you nuts when you're retired. That means your investment mostly would be put in banks or invest in taxables accounts.

So far we know Actively managed funds and Passively managed funds are taxable accounts.
But which of these should American expats invest?
Based on a study: http://www.nerdwallet.com/blog/investing/2013/active-mutual-fund-managers-beat-market-index/

That shows the Average Returns for active fund are likely higher than index fund by 0.12%. Wait, now, have a look at the Average Returns, which is telling active fund now gives you less than the amount index fund gives you. From the Average Returns before Fees and Average Returns without looking at the fees yet, you can conclude that active funds would have higher fees and higher taxes compare to index. It is also proved by this data. 

• There are 2 main ways that you could make money by invest your money in taxable accounts:
• Dividend - A share of profits received by a stockholder or by a policyholder in a mutual insurance society
• Capital gain (price appreciation) - An increase in the value of a capital asset (investment or real estate) that gives it a higher worth than the purchase price

And these money will be taxed as it is an income, roughly 2% from dividend, and roughly 8% from capital gain.

• For capital gain, it will be taxed in two ways:
• Short term - taxed at a higher rate
• Long term - taxed at a lower rate

Now, what is a active fund manager do to managed his fund? Yes, he keeps buying and selling stocks. If you invest in his fund, you would likely to have different stocks each year. By doing so, they will have to pay SHORT TERM tax - which is held within a year, taxed at a high rate. But the other way around with passive funds.

Reflect:

Article: Hello passive, goodbye active: fund investors make a switch
Link: http://www.ft.com/intl/cms/s/0/3aa2cd62-d4da-11e2-9302-00144feab7de.html#axzz2kRquihXV

This article shows that investors finally realize how the high fees and costly active funds are. The number of investors in passive is increasing recently.  In the past four years, assets held in passive investment funds have more than doubled, and the sector now accounts for $1.3tn of US investors’ assets – just under one-tenth of the country’s gross domestic product. People turned their backs on active fund and favor low-cost passive fund mainly because of the feeling of dissatisfaction. They realized that they usually have to pay for indifferent service by active managers as well

Tulip mania ( Tulip Craze Bubble)

Tulip Mania

• Generally considered to be the first recorded economic bubble

• The Tulip Mania of 1636-1637 was an episode in which tulip bulb prices were rising to incredible heights before collapsing and plunging the Dutch economy into a severe crisis that lasted for many years.

But,WHAT IS ECONOMIC BUBBLE?

• Economic bubble is a situation in which prices for securities especially stocks, rise far above their actual value.
• This trend continues until investors realize just how far prices have risen, usually, but not always, resulting in a sharp decline.
• Bubbles usually occur when investors, for any number of reasons, believe that demand for the stocks will continue to rise or that the stocks will become profitable in short order

Where and Where did it occur?

• Where: Holland
• When: 1634-1637

• Tulip Mania mostly occurred in Holland but England and Germany did experience small amounts of the mania
• In 1593, botanist Carolus Clusius brought tulips from Constantinople to Holland for research. He refused to give or sell any to the locals, so some of his neighbours stole some of these exotic new bulbs.
• This started the Dutch tulip trade. Tulips popularity and price increased dramatically  

How did it occur?

• People started to buy the bulbs and store them
The price was getting higher and higher due to bulbs was getting less and hard to find. 
• Bubbles usually occur when investors, for any number of reasons, believe that demand for the stocks will continue to rise or that the stocks will become profitable in short order
• Others started selling house and assets or any thing that could change into money to get those bulbs
• The Dutch made a huge profit by fooling the foreigners and those not knowing much about tulips.

Why Did It Occur?

• People started to value tulip bulbs so much that they could sell their assets to get one
• In the market like this, people started to act irrational
• They started to invest to the bulbs when they see other making money from doing it

HOW MUCH A SINGLE TULIP BULB CAN TRADE WITH!!

Item	Value (florins)
Two lasts of wheat	448
Four lasts of rye	558
Four fat oxen	480
Eight fat swine	240
Twelve fat sheep	120
Two hogsheads of wine	70
Four casks of beer	32
Two tons of butter	192
A complete bed	100
A suit of clothes	80
A silver drinking cup	60
Total	2,500

***A good trader could earn up to 60,000 florins in a month-- approximately $61,710 adjusted to current U.S. dollars

Bubble Burst!!!

• The height of the bubble was reached in the winter of 1636 – 1637
• So one day, people concerned about the price. It isn't worth paying that huge amount of money for just a single bulb
• And since people start realizing it, the price went down a lot
• When the price went down, they realized that if they don't sell it fast. They are going to go broke
• People started to panic
• Everyone started selling tulip bulbs all at one time. 
• As we know, when everyone start selling things all at time, there is no market. No one want to buy them anymore. 
• And when no one want to buy, as we know, it happened recently, the market go down. 
• It caused A CRASH!

What Can We Learn From This?

Don't chase and buy things just because many people are getting lots money from it. It may benefits you in the short run not in the long run. 
Not to invest in only a single stock or a single bond.
Make sure you DIVERSIFY YOUR PORTFOLIO! and REBALANCE YOUR PORTFOLIO!

Relfect:

Article: http://business.time.com/2013/09/16/explaining-the-financial-crisis-why-do-we-still-not-know-what-happened/

This quote shows that there are lots of book written about the economic bubbles in the past and how to recognize or how to avoid the bubble and the burst. But it seems like they don't help anything at all. I think this would have something to do with human psychology, the way we think. I think that people just crave to have a lot of money in a short run but they don't think about what will have next, or what will happen if they invest their money in a long run. Because no one will know when the market is going to drop. 

How non-americans invest their money

Essentially, a non-american can't just go and buy or sell stocks in US market. But there's no law against non-citizen trading U.S securities. To do so, you need first open an account either with brokers or on a trading online site or in person from the offices or one of bank group branches. They can put conditions on your access to the market and will require some basic information -- as well as money -- to open an account

So Mr Hallam showed us how a non-american can invest their money with a Singapore based brokerage called DBS Vickers. As he already opened an account, he can easily log in anytime with a DBS security device, which the password change every time you press the red button. Everything become really easy to do. You just need to follow the steps. One thing that is really important, that you need to know what stock you are going to invest in and how the quantity you are going to buy or sell. Example: Vanguard Total Stock Market ETF , the ticker (aka symbol) is VTI or Vanguard 500 Index Inv, it's ticker would be VFINX. You also need to know where you are going to trade your stock at, such as American Stock Exchange (AMEX), Toronto Stock Exchange (TSX or TSE). 

After you enter everything, things will be automatically go to where they should be. BOom! Your money will be ripped off and you will receive the amount of shares you wanted. Sometime, after you submitted your order, it may appear something like PEND, which is pending, the stock market have not open. But don't worry it will automatically do the magic when the stock exchange open. 

Reflect: I was asking my mom about the shares that I recently knew about. I asked her that did she buy it through the brokerage. She did not buy it through the brokerage. There's some offer within the company that they offer her an offer that she can buy shares directly from the company. They will give her half of the money which she invest when she buy the shares. She can buy the shares but she can only sell it back to the company and they will have no reason to deny it. And just like buying stock in the market, she can sell them with the market price. I think it's kind of cool how we non-american can buy shares directly from the U.S company and paying no transaction cost or any fees, which save us lots.