Dear readers, this is part one of a multiple part post. In these posts, I will be discussing the steps to be taken to achieve an early retirement, mainly in the context of Singapore but I'm very sure it applies in most countries as well. These are my views and beliefs which you are welcomed to share.. or not. Either way, you comments and criticism will be well accepted.
I feel that many of us these days are more enlightened to the fact that there are ways to escape the much mentioned rat race. Many personal finance bloggers have been popping up in recent years stating the merits of proper financial planning, frugality, saving and investing of money. I have read through dozens and dozens of them and I definitely share their thought. Some more than others.
There are many schools of personal finance beliefs, many are mixes and matches of one or the other. Everyone has to seek and find the right mix of beliefs and strategies to match their lifestyle and circumstances. There is no such thing as a definite path, there are many.
As for myself, I subscribe to the belief of an early retirement which will be achieved through being frugal, avoiding excessive consumerism and careful investing for passive income which brings me to my step 1.
No matter how much money you earn, be it a $1000/month to $100,000/ month, you will never be rich or financially free if the amount of money you spend exceeds the money you earn, even by a single dollar. To remedy this fault, there are only 3 routes you can possibly take, besides windfall gains. They are either to cap your spending and increase your earnings, cap your earnings and reduce your spending, or the best option which is to increase your earnings and decrease your spending.
For the majority of us common folks, increasing our earnings would not be easy. Ways to do so would be to get a second or third job, ask for a pay raise or start a side business. These methods would either be tough to administer or would take too long, which might cause your interest of being financially free to wane.
What would be an easier and more immediate path would be to reduce our expenses and be more frugal. Studies have shown that most of our purchases end up as waste. This means that we are not effectively utilizing what we purchase. If we could cut these waste and purchase only what we could effectively use, it would not only save our wallets but also the earth simultaneously.
Taking a look at an example close at hand would be food. If like the majority, we buy so much of it and end up throwing away the excess when they expire while continuing to buy some more. This is an endless cycle. What we should be doing is to make sure we finish up whatever we have purchased before going out to purchase more. One simple way of making sure you do not waste is to monitor which products are expiring and use them first.
Another example would be electronic products. These things get obsolete so fast and since they have become such a major part of our lives, we find it very difficult to live without them. As part of the consumerism movement, we are programmed to keep up with the latest gadget even though the changes and upgrades to them are ever so minor. We love being trendsetters but this is something that we have to change if we want to reduce waste and increase frugality. We should use our gadgets till they are no longer useful.
There are millions of other examples that I can list out but I'm sure that you are able to think of them.
So for today, list out your list of things that you commonly spend on. Break them down into 2 categories, needs and wants. The list under wants should be cut down first before the list under needs. Make the choice and effort to really reduce these expenses. If you are seriously and truly searching for an early retirement and/or financial freedom, start by following step 1 and you will be a step closer.
I am pretty sure there are many items which can be reduced and many items which can be used more effectively without the need to consume more. I am looking forward to hearing your thoughts on this matter.
As always, save more, spend less and invest wisely.
P.
Showing posts with label Retirement. Show all posts
Showing posts with label Retirement. Show all posts
Tuesday, 8 October 2013
Monday, 8 July 2013
Financial Compromise = Long Lasting Happiness
Due to the weather being pretty warm and humid last Sunday, my wife and I decided to go for a swim.( To be brutally honest, all we did was soak.) On past occasions that these soakings occurred, we always got to talking about our future and also our financial plans and goals and this time was no different.
Sometimes, we would disagree and more often than not, irritation would get the better of us. Thankfully this time, this was not the case and I found this discussion to be extremely insightful. The main topic revolved around what we valued more and what we valued less. I found that we had very, I repeat very different views on money and material items. I realized that the reason why I prefer to save and invest is because I value money and freedom high above any material items I could purchase.
That being the case, why would any normal person want to trade something he/she loves more for something he/she loves less. I would not want to trade money to buy new clothes but I would trade money to invest to earn more money to give myself financial freedom.
My wife on the other hand stated that she would want to work till the normal retirement age of 65 as she wants to be able to continue buying anything she wants....which is practically everything. I felt that is was fair as she would be trading something she loves less(money) for something she loves more (bags, shoes, clothes..and the list goes on..)
In the end, soaked and wrinkled like raisins soaked in rum, we came to a compromise which would invlove 2 step.The 1st step was that we would, together, work towards reaching an investment portfolio value which would give us enough passive income to cover all our basic needs. This would include stuff that we could not live without like utility, mobile phone charges, food and stuff like that.
The 2nd step would proceed after we have achieved step one. It would be that whatever else we earned after step one would be used to do whatever we wanted, or more likely, whatever she wanted. The 1st priority will no longer be to save but to spend. Although this goes heavily against my nature, I felt that it was only right since she went along with me for part one.
That said, the important thing was to have no more debts and enough investment income to last till the end.
What kinds of compromise have you made with your spouse or even yourself? Are you happy with the compromise? We must always seek balance and try to provide happiness for our significant other. If one party is not happy in a relationship, it will be extremely hard for it to blossom.
As always, save more, spend less and invest wisely.
P.
Sometimes, we would disagree and more often than not, irritation would get the better of us. Thankfully this time, this was not the case and I found this discussion to be extremely insightful. The main topic revolved around what we valued more and what we valued less. I found that we had very, I repeat very different views on money and material items. I realized that the reason why I prefer to save and invest is because I value money and freedom high above any material items I could purchase.
That being the case, why would any normal person want to trade something he/she loves more for something he/she loves less. I would not want to trade money to buy new clothes but I would trade money to invest to earn more money to give myself financial freedom.
My wife on the other hand stated that she would want to work till the normal retirement age of 65 as she wants to be able to continue buying anything she wants....which is practically everything. I felt that is was fair as she would be trading something she loves less(money) for something she loves more (bags, shoes, clothes..and the list goes on..)
In the end, soaked and wrinkled like raisins soaked in rum, we came to a compromise which would invlove 2 step.The 1st step was that we would, together, work towards reaching an investment portfolio value which would give us enough passive income to cover all our basic needs. This would include stuff that we could not live without like utility, mobile phone charges, food and stuff like that.
The 2nd step would proceed after we have achieved step one. It would be that whatever else we earned after step one would be used to do whatever we wanted, or more likely, whatever she wanted. The 1st priority will no longer be to save but to spend. Although this goes heavily against my nature, I felt that it was only right since she went along with me for part one.
That said, the important thing was to have no more debts and enough investment income to last till the end.
What kinds of compromise have you made with your spouse or even yourself? Are you happy with the compromise? We must always seek balance and try to provide happiness for our significant other. If one party is not happy in a relationship, it will be extremely hard for it to blossom.
As always, save more, spend less and invest wisely.
P.
Friday, 28 June 2013
No one Likes the Downside.
Dear readers, we have often read or heard about the positives of having an early retirement. Some might feel that it's pretty easy to achieve, but is it really? The answer is no, unless you have a huge inheritance, strike the lottery or invented a cure for cancer.
The road to an early retirement is filled with sacrifice, people putting you down and loads of complaining and grumbling. Here is a list of downsides that we might experience depending on our individual situations.
The Want That Now Syndrome - As humans, we are often tempted by advertisements of new and interesting "toys". Companies spend millions to create and cultivate this 'want that now' syndrome in all of us. However, in order to retire early and still maintain our current level of lifestyle, we have to learn to cut off this habit. We have to sacrifice what we might want but not need now in order to have an early retirement with all our needs satisfied. You might not have what your friends are having now, but 10 - 20 years down the road, they will not have what you will have then. Freedom.
Where's Dad/Mom? - This might not be applicable to most people, only to those who are really hardcore about early retirement. I would not say whether this sacrifice of current family time is right or wrong. It's a matter of your personal preference and priority. However, I do have something to advice. If you sacrifice too much family time now, you might not have the chance in the future to spend time with them. Second or even third jobs will bring in that extra money and cut that time to retirement down. Worth it or not, you have to decide.
When I grow up, I want to be a... - It extremely rare to have everything in life, God is fair. You win some you lose some. More often that not, we have to sacrifice what we always wanted to do or be in order to achieve a goal, which in this case is early retirement. To achieve early retirement, we first have to get at least a moderate paying job. Being a writer or an artist probably won't get you there - unless you are some kind of a genius in that field. We all have to be realistic. We might have to get a job we do not like so much but pays well in order to have enough money to invest for an early retirement.
Vice President XXX - A high post would be something that we have to admit will not be attained if we are to choose early retirement. We would be retired before we are able to reach that level. There is just not enough time. One of the traits to reach early retirement is to be contented. Knowing when is enough. Well, technically you could still hold a high position in a company and still be retired. It all depends on what your definition is. It could be - Not working for the rest of your life OR Having the CHOICE of not having to work when you do not want to. I prefer the latter as working kinda keeps your mind active. Working whilst retired takes out all the stress and pressure of having not enough to survive. ( I hope you understand what I'm trying to say)
Why's the Grape so Sour?? - I think that I have talked about this point in a previous post. People are always jealous of what they cannot have or achieve. They will try to talk you out of it, say nasty things behind your back or simply ignore you. Guess what, we should not care. It's our life and we own it. We should live or die by our very own rules and choices. If you have made the choice, stay committed no matter what. No one every achieves anything by backing out of everything.
There you have it, some of the down sides en route to an early retirement. Hope you get pass all these downners and emerge victorious. All these are temporary. Freedom( If well planned) is forever.
As Always, save more, spend less and Invest wisely.
P.
The road to an early retirement is filled with sacrifice, people putting you down and loads of complaining and grumbling. Here is a list of downsides that we might experience depending on our individual situations.
The Want That Now Syndrome - As humans, we are often tempted by advertisements of new and interesting "toys". Companies spend millions to create and cultivate this 'want that now' syndrome in all of us. However, in order to retire early and still maintain our current level of lifestyle, we have to learn to cut off this habit. We have to sacrifice what we might want but not need now in order to have an early retirement with all our needs satisfied. You might not have what your friends are having now, but 10 - 20 years down the road, they will not have what you will have then. Freedom.
Where's Dad/Mom? - This might not be applicable to most people, only to those who are really hardcore about early retirement. I would not say whether this sacrifice of current family time is right or wrong. It's a matter of your personal preference and priority. However, I do have something to advice. If you sacrifice too much family time now, you might not have the chance in the future to spend time with them. Second or even third jobs will bring in that extra money and cut that time to retirement down. Worth it or not, you have to decide.
When I grow up, I want to be a... - It extremely rare to have everything in life, God is fair. You win some you lose some. More often that not, we have to sacrifice what we always wanted to do or be in order to achieve a goal, which in this case is early retirement. To achieve early retirement, we first have to get at least a moderate paying job. Being a writer or an artist probably won't get you there - unless you are some kind of a genius in that field. We all have to be realistic. We might have to get a job we do not like so much but pays well in order to have enough money to invest for an early retirement.
Vice President XXX - A high post would be something that we have to admit will not be attained if we are to choose early retirement. We would be retired before we are able to reach that level. There is just not enough time. One of the traits to reach early retirement is to be contented. Knowing when is enough. Well, technically you could still hold a high position in a company and still be retired. It all depends on what your definition is. It could be - Not working for the rest of your life OR Having the CHOICE of not having to work when you do not want to. I prefer the latter as working kinda keeps your mind active. Working whilst retired takes out all the stress and pressure of having not enough to survive. ( I hope you understand what I'm trying to say)
Why's the Grape so Sour?? - I think that I have talked about this point in a previous post. People are always jealous of what they cannot have or achieve. They will try to talk you out of it, say nasty things behind your back or simply ignore you. Guess what, we should not care. It's our life and we own it. We should live or die by our very own rules and choices. If you have made the choice, stay committed no matter what. No one every achieves anything by backing out of everything.
There you have it, some of the down sides en route to an early retirement. Hope you get pass all these downners and emerge victorious. All these are temporary. Freedom( If well planned) is forever.
As Always, save more, spend less and Invest wisely.
P.
Monday, 20 May 2013
Just.One.More.Dollar
Dear readers, somewhere along the way, roughly in the past 2 years, I have come to realize something. Sometimes, the extra dollar saved is not worth the sacrifice you have to make. Yes, I know that every dollar counts but there must also be a limit to how much we can compromise our lifestyle and the lifestyle of those around you.
After achieving your set target for the month, saving those extra dollars will not bring forward the earlier retirement date by much. I would say at most a year or two. Now let me ask you this, would it be worth it to sacrifice for the next 20 years or so just so that you can retire that one or two years earlier? I say no. I do not want to compromise my current lifestyle too much for that. You must know when enough is enough.
What I think we should do is to create a smooth path, one that we enjoy all the way till the end. In moderation of course, and not one where we have to suffer first and enjoy later. In everything we do, we have to think about the people around us, our spouse, our children or our parents. It does not mean that if you do not mind the suffering, they won't mind it as well. They might be appearing to do so just because they do not wish to let you feel disappointed. Spare a thought for them, and if you can afford it, spend those extra dollars to make their day brighter and happier.
I guess this will be a short post. Got so many things to do, so little time.
Anyway, I hope we will not be so overly obsessed with savings that we forget the reason to which we are saving or neglect our loved ones.
As always, save more, spend less and invest wisely.
P.
After achieving your set target for the month, saving those extra dollars will not bring forward the earlier retirement date by much. I would say at most a year or two. Now let me ask you this, would it be worth it to sacrifice for the next 20 years or so just so that you can retire that one or two years earlier? I say no. I do not want to compromise my current lifestyle too much for that. You must know when enough is enough.
What I think we should do is to create a smooth path, one that we enjoy all the way till the end. In moderation of course, and not one where we have to suffer first and enjoy later. In everything we do, we have to think about the people around us, our spouse, our children or our parents. It does not mean that if you do not mind the suffering, they won't mind it as well. They might be appearing to do so just because they do not wish to let you feel disappointed. Spare a thought for them, and if you can afford it, spend those extra dollars to make their day brighter and happier.
I guess this will be a short post. Got so many things to do, so little time.
Anyway, I hope we will not be so overly obsessed with savings that we forget the reason to which we are saving or neglect our loved ones.
As always, save more, spend less and invest wisely.
P.
Friday, 17 May 2013
My Fears Related to Early Retirement
I have often wondered how would people around me feel or perceive me should I tell them that I will be retired before the age of 40. Most would just assume that I either struck the lottery, inherited a massive amount of wealth or that I command a massive paycheck. All these are not true. Early retirement, for me is gained by saving hard, cutting the amount of money I spend and also taking the effort and time to find the correct stocks and bonds to purchase.
I also have this fear that should I retire early, especially in Singapore, many would see me and those like me as lazy. Questions would start flooding in, from both relatives and friends. "Why don't you continue working to earn more money?". " Why are you doing non constructive stuff". "Why are you no longer a productive member of the society?" .... So many whys. Well, @!$!@4 you that's why. Just kidding.
I seek early retirement because I do not want to work the best part of my life away. There is only a finite amount of things you need to purchase in life. I want to live, do the things I want to do while I am able. I want to be able to travel without fear of work piling up while I'm away. I want to be able to have a 2 hour lunch followed by a 1 hour stroll and not a 1 hour lunch. I want to be able to take the lessons and courses I have been wanting to take but have no time for. French, bike, diving and powerboat. All these things and many more. You get my drift.
Working will usually drain you of your energy, and at the end of the day, all you want to do is laze on the couch and watch some TV. Is that how you want to live you life till you are 65? I damn well do not.
Therefore, I have come to a conclusion. I will only care what the people directly affected by my early retirement think - A.K.A. My wife and future children. I feel that as long as we are happy, and my wife and I are able to provide for all our and future children's needs, other people can say anything they want and not mean a thing to me.
You know yourself best. If you have set an intended course, do not let anyone sway you from it. Many will sway you out of jealousy. Do not be brought down by their petty remarks. As long as you and your family are happy and contented, nothing else really matters.
Phwoar..really needed to let that out because it has been bugging me for quite some time. Sorry for the rant.
Anyway, as always, Save more, Spend Less and Invest Wisely.
P.
I also have this fear that should I retire early, especially in Singapore, many would see me and those like me as lazy. Questions would start flooding in, from both relatives and friends. "Why don't you continue working to earn more money?". " Why are you doing non constructive stuff". "Why are you no longer a productive member of the society?" .... So many whys. Well, @!$!@4 you that's why. Just kidding.
I seek early retirement because I do not want to work the best part of my life away. There is only a finite amount of things you need to purchase in life. I want to live, do the things I want to do while I am able. I want to be able to travel without fear of work piling up while I'm away. I want to be able to have a 2 hour lunch followed by a 1 hour stroll and not a 1 hour lunch. I want to be able to take the lessons and courses I have been wanting to take but have no time for. French, bike, diving and powerboat. All these things and many more. You get my drift.
Working will usually drain you of your energy, and at the end of the day, all you want to do is laze on the couch and watch some TV. Is that how you want to live you life till you are 65? I damn well do not.
Therefore, I have come to a conclusion. I will only care what the people directly affected by my early retirement think - A.K.A. My wife and future children. I feel that as long as we are happy, and my wife and I are able to provide for all our and future children's needs, other people can say anything they want and not mean a thing to me.
You know yourself best. If you have set an intended course, do not let anyone sway you from it. Many will sway you out of jealousy. Do not be brought down by their petty remarks. As long as you and your family are happy and contented, nothing else really matters.
Phwoar..really needed to let that out because it has been bugging me for quite some time. Sorry for the rant.
Anyway, as always, Save more, Spend Less and Invest Wisely.
P.
Thursday, 16 May 2013
Set Mini Crossover Points to Spur you towards the Ultimate Crossover Point
The ultimate crossover point is when your passive incomes are finally more than your total expenses. This is when you know you have reach financial freedom. At this point, you will no longer be bound by the need to have a job. You will have this very special reward called choice. Choice to work or just to stay at home the entire day. Choice to travel for an entire year and choice to never work again.
The only problem is that the journey to this crossover point is long and tedious. Different people set different points as spending and saving needs and powers are different. For example, if you spend very little and save a lot, you will reach your crossover point very quickly. And if you spend a lot and save very little, you will reach your crossover point very late in life or never at all. No pain no gain.
However, for the average folks like me who save a decent amount and are not mad spenders, the journey would still be quite a long and arduous one. To keep ourselves motivated and to prevent the thought of giving up, we should set mini crossover points. These are like mini goals to reach, one step at a time.
Here are some mini crossover points to help you generate more ideas.
As always, save more, spend less and invest wisely.
P.
The only problem is that the journey to this crossover point is long and tedious. Different people set different points as spending and saving needs and powers are different. For example, if you spend very little and save a lot, you will reach your crossover point very quickly. And if you spend a lot and save very little, you will reach your crossover point very late in life or never at all. No pain no gain.
However, for the average folks like me who save a decent amount and are not mad spenders, the journey would still be quite a long and arduous one. To keep ourselves motivated and to prevent the thought of giving up, we should set mini crossover points. These are like mini goals to reach, one step at a time.
Here are some mini crossover points to help you generate more ideas.
- Positive Net Worth - In Singapore, I assume that when we get a house, we will fall into negative net worth. Getting back to positive net worth will require work but will definitely be a welcomed crossover point.
- No Debts - Another point to cross would be to have no debts. Student debts, credit card debts or renovation loans.
- Passive Income to cover certain Expenses - Break your expenses up into different categories. For example, telephone bills, water bills, electricity bills or groceries and such. Every time your passive income cover one of the expenses totally, you have reach a mini cross over point. It feels good to know that at that point, you will never need to worry about paying for that expense again.
As always, save more, spend less and invest wisely.
P.
Friday, 3 May 2013
The Spine of Early Retirement
I'm sure that most of you are familiar with some of the steps you have to take to reach early retirement, but bear with me as I repeat them once again for the benefit those who do not. These steps are not concrete and you can choose to take them or not to attain your early retirement but I believe that paths are similar to these. Only difference being your personal tweaks, luck and mistakes.
Without further ado, here they are:
As always, save more, spend less and invest wisely.
P.
Without further ado, here they are:
- Start as Early as Possible - This applies not only to those seeking early retirement or financial freedom but to everyone. The earlier you start, the more time you have to allow the magic of compound interest to work. What's more, having more time allows for more margin of error. No one is perfect therefore we should always make allowance for mistakes.
- Manage your Consumption - One of the main reasons why most people are not able to save enough for an early retirement is because they spend to much. We are all wired to consume and many of us can't help it but conform. However, there is this rebel within us that does not want to conform, we want to break free from the norm - these are the people that are able to achieve extremely early retirement. Reduce spending now, stop spending money on too much wants, stick with the needs. You do not need that new hand phone just because it has a battery life of 1/2 an hour more than yours or a screen 1/2 an inch bigger than yours. Remember, you choose your enough, not your neighbor.
- .Cut down on Excess Spending - I know it's often hard to form new good habits, but trust me, this will benefit you. For just 1 or 2 months, track every dollar you spend and at the end of the month, you will be able to see where you have been spending unnecessarily. These are the parts of your spending tree that you must prune away. If you feel comfortable keeping track of your expenses by then, you can continue doing so. If not, try to stick to your current monthly expenses less those unnecessary expenses and do a follow up 6 months later to find out your monthly expense status.
- Be Frugal - This step is an acquired taste, once you get it, it becomes something you actually enjoy doing. However i urge you to do this is moderation if you are not alone in your journey. Your significant other might not share the same joys as you in being frugal. You have to take baby steps to let them see the benefits of being frugal. What you must do to be frugal is to view money as an extremely precious resource not be to exchanged for something of lesser value. For me, i feel that lesser value means items that bring no benefit or new experiences to your life. Most of the time, these items just bring you momentary satisfaction that last for a month at most. Not worth it.
- Never Trade Early Retirement for Happiness and Family - This is the last and most important key. You should never trade anything in this world for happiness and your family. What is the point of forsaking your happiness and family to gain early retirement? The point of early retirement is to be able to have time for both. Don't be over obsessed with retiring early that you forgo your current happiness or spend so much time tweaking your spreadsheet or monitoring your portfolio that you neglect your family. You have to set your priorities right.. what is most important in your life. For me, its family, for without them life would be quite meaningless even if u have all the riches in the world.
As always, save more, spend less and invest wisely.
P.
Wednesday, 24 April 2013
My Checklist for Retirement
Since i have decided to document my journey, i feel that it is only right to roughly state where i am on it. Honestly, i am only at the beginning, i would say that I am at about the 10% to 15% point ( I will show my portfolio allocation in a later post). The requirement for me in order to declare myself retired would be that i would have to have completed the following tasks.
45 is also an age whereby I am not too old to do the things i want to do such as travel, hiking and other such stuff. I would still be physically able to backpack Europe at that point, i dream i can only dream of now.
Clear my mortgage
Not clearing the mortgage during retirement would mean that 2 things, i have an added expenditure that is not within my control( cannot choose not to pay ) and my income would be reduced due to the fact that i will not longer be contributing to CPF thus I will have to pay cash for my mortgage. Not a wise choice.
Have different income streams that equals a minimum of my expenses
I would prefer not to draw down on my investment portfolio as i would like to leave it as a form of inheritance to my children. I would therefore try to create as many streams of income as possible to live on comfortably. Currently, my wife and I are working on several projects which should reap fruit in the near future. If not, we are still young and will learn from our failures and try again.
Have $0 debt
Unlike many who believes in good debt and bad debt, i am one who thinks otherwise. To me, all debt are bad debts as it only means that you are owned by someone either directly or indirectly. At the point of retirement, i do not want the chains of debt binding me. No car debts, no housing debts and definitely no credit card debts.( I always pay my credit card bills on time.)
Have an emergency fund of at least 1 year worth of expenses.
In life, nothing is ever certain, you never know when you will need extra money. I hate to think that i would have to borrow from someone to support my family in times of need. Instead, i will have an emergency fund containing at least one years worth of expenses. This would also be a safety net so i will, hopefully never have to sell my businesses or investments at a downturn to fund my living expenses.
Have the min sum in my CPF
The reason for this option is purely personal. I feel that having an additional income coming in at the age of 65 would be something to look forward to. This extra stream of income would be gotten by putting the minimum sum from both my wife and I into CPF Life which should provide a nice extra monthly income for several years. An extra benefit would be that after my wife and I leave this place for a better one, our kids would get whatever is left.( Since the earlier we travel to a better place the more our kids get, i seriously hope they will love us enough not to wish us an early voyage.)
These are my requirements i set for myself before considering myself retired. What are yours? I would love to hear about them so please leave comments.
As always, save more, spend less and invest wisely
P.
- Clear my mortgage.
- Have an income from different streams equal to a min of all my expenses.
- Have $0 debt.
- Have an emergency fund of at least 1 year worth of expenses.
- Have the min sum in my CPF
45 is also an age whereby I am not too old to do the things i want to do such as travel, hiking and other such stuff. I would still be physically able to backpack Europe at that point, i dream i can only dream of now.
Clear my mortgage
Not clearing the mortgage during retirement would mean that 2 things, i have an added expenditure that is not within my control( cannot choose not to pay ) and my income would be reduced due to the fact that i will not longer be contributing to CPF thus I will have to pay cash for my mortgage. Not a wise choice.
Have different income streams that equals a minimum of my expenses
I would prefer not to draw down on my investment portfolio as i would like to leave it as a form of inheritance to my children. I would therefore try to create as many streams of income as possible to live on comfortably. Currently, my wife and I are working on several projects which should reap fruit in the near future. If not, we are still young and will learn from our failures and try again.
Have $0 debt
Unlike many who believes in good debt and bad debt, i am one who thinks otherwise. To me, all debt are bad debts as it only means that you are owned by someone either directly or indirectly. At the point of retirement, i do not want the chains of debt binding me. No car debts, no housing debts and definitely no credit card debts.( I always pay my credit card bills on time.)
Have an emergency fund of at least 1 year worth of expenses.
In life, nothing is ever certain, you never know when you will need extra money. I hate to think that i would have to borrow from someone to support my family in times of need. Instead, i will have an emergency fund containing at least one years worth of expenses. This would also be a safety net so i will, hopefully never have to sell my businesses or investments at a downturn to fund my living expenses.
Have the min sum in my CPF
The reason for this option is purely personal. I feel that having an additional income coming in at the age of 65 would be something to look forward to. This extra stream of income would be gotten by putting the minimum sum from both my wife and I into CPF Life which should provide a nice extra monthly income for several years. An extra benefit would be that after my wife and I leave this place for a better one, our kids would get whatever is left.( Since the earlier we travel to a better place the more our kids get, i seriously hope they will love us enough not to wish us an early voyage.)
These are my requirements i set for myself before considering myself retired. What are yours? I would love to hear about them so please leave comments.
As always, save more, spend less and invest wisely
P.
Tuesday, 23 April 2013
About me and my goals
Where do i start? So many things to say but so little time.. I guess it's the same with life. So many things to do and goals to achieve but with such a limited time to do them. What if i could give myself more time to do the things i want to do? No, not by extending my life, ( although that would be nice in the distant future) but by retiring earlier than what most Singaporeans would call the norm. In order to do this, sacrifices will have to be made and rules will have to be strictly adhered to.
Through this blog, i will try to record my thoughts and methods i will use to achieve this early retirement. I am currently in my late twenties working in the engineering sector and I plan to retire no later than the age of 45. I am currently married and am waiting for my home. (Mortgage payments are a killer to my early retirement planning). As for kids, i am definitely planning for at least 1, hoping for 2. I am pretty sure that if i plan my finances well enough, my wife and I, together with our future kids would be able to live pretty comfortably when we retire.
I hope that through this blog, more Singaporeans would be encouraged to save more, spend less and invest more in order to be able to spend more time with their loved ones instead of sitting alone in a cubicle wherever they are in Singapore.
I'm kind of running out of time and would have to sign off here. Loads of work to do and daylight is running out. I'll be trying to post as often as i can with a minimum of 1 post a week. Till then, see you and live well.
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