Showing posts with label Retirement. Show all posts
Showing posts with label Retirement. Show all posts

Jul 17, 2023

Cory Diary : Managing Volatility Emotion

Managing Emotion

Emotions can have a detrimental effect on average investors who have worked hard to build up their portfolios over a lifetime. These investors typically have a monthly income ranging from $4,000 to $6,000. Through frugality, investments, and perhaps even inheritance, they may have accumulated a million-dollar portfolio after 30 years of employment.

However, when the global financial market experiences a downturn, these investors can face significant drawdowns, sometimes as much as 50%. This means that they could see half of their lifetime of effort evaporate, or $500,000 vanish into thin air. When portfolios experience such losses, it can be financially devastating if investors are unable to maintain their composure. Assuming the fundamentals of the portfolio remain intact, realizing these losses can be detrimental to one's financial well-being.

To manage these challenges, diversification becomes crucial. I personally employ a diversified portfolio consisting of property, stocks from SGX/US markets ( 15 - 20 stocks ), pensions, SSB/T-Bills/FD, as well as funds in my Multiplier and investment accounts. Throughout my investment journey, I make adjustments to the allocation of these assets to effectively manage my emotions and, hopefully, improve my ability to overcome them.

Successfully managing emotions allows me to adopt an investment mindset even when the market is experiencing a drawdown. This mindset enables me to seize investment opportunities. It is important to be mentally prepared for such scenarios and be willing to make necessary adjustments.

Conversely, during bullish market conditions, it may be prudent for me to accumulate cash reserves, known as a "warchest," if the need arises.

In conclusion, I wanted to share these insights to encourage thoughtful reflection. Cheers to overcoming the Monday blues!


Cory
2023-0717

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Disclaimer: The articles presented in this blog reflect personal opinions and are intended for informational and sharing purposes only. Readers are advised to seek professional guidance when making financial decisions and should take full responsibility for their choices.


Apr 21, 2023

Cory Diary : Family Income Stress Test

In light of the ongoing COVID pandemic and the economic restructuring that has followed due to high interest rates, I am concerned about the possibility of both my partner and I losing our regular sources of income. As I am not as young as I once was, it may be difficult for me to find alternative income streams that are suitable for my level of experience, which is why I have been considering what would happen if we were forced into early retirement income before reaching the official age.

To better understand our financial situation, I decided to calculate the passive returns we would receive assuming that neither of us is working. 



To prepare for this scenario, I calculated the passive returns we could expect from our assets assuming we are no longer working. The table above shows our asset allocation and the expected annual returns for each type of investment.

Please note that the table does not include expenses such as property tax, loans, and maintenance. The figures presented are based on the minimum return scenario and possible current returns given the dynamic nature of the market. The maximum return is not relevant to our situation.

Assuming expenses in the range of $8k to $11k, we hope that this simple table provides a sense of our financial situation. As always, readers should seek professional advice before making financial decisions and take responsibility for their choices.


Cory
2023-04-23

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Apr 10, 2023

Cory Diary : You only young once

It is important to note that the decision to retire is a personal one and depends on individual circumstances, financial goals, and personal preferences. However, here are five reasons to retire as soon as you can, as suggested by Azul:


Health: Stress can have a significant impact on our health, and working longer may exacerbate stress-related health issues. Retiring earlier can provide an opportunity to prioritize health and well-being.

Time: Time is a limited resource, and as we age, it becomes increasingly important to use it wisely. Retiring earlier can provide more time to spend with loved ones and pursue passions and hobbies.

Build Relationships: Building and maintaining relationships requires time and effort. Retiring earlier can provide more time to invest in existing relationships and build new ones.

Passion and Hobbies: Retiring earlier can provide the freedom and time to pursue passions and hobbies, which can bring joy and fulfillment to our lives.

Avoid Procrastination: The desire to work one more year can lead to procrastination and delaying retirement. Retiring earlier can help avoid this tendency and provide a sense of accomplishment and satisfaction in achieving retirement goals.


Cory
2023-04-10

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Articles in this Blog is personal take and sharing purposes only. Reader should seek their own professional help when making financial decision and be responsible for their decision.

Jul 22, 2022

Cory Diary : F.I.R.E - Financial Independence Retire Early

There are many ways to Rome and therefore different people different strokes. Being FIRE and retiring early doesn't mean we cannot do some work we like. It just gives us more options while fulfilling our personal goals.




Current Cory Plan

Layering Strategy is still emotional preferred way for me. Lesser stress and something to do !

- CPF ( RA = FRS at age 55 )
- SSB ( Max )
- Multipliers ( Max )
- Equity Dividends ( sizeable portfolio more than 1M )
- Equity Growth
- Rental Income


Plan B

For above not everything will be perfect and if specific goal failed or changed, there needs to be adjustment aka modification below depending on needs.

Modification 1 : Part time work maybe 500 to 1k monthly
- This is low hanging fruit if we just miss a little monthly income to supplement. It can be from hobby.

Modification 2 : Down grade Apartment to Studio or 3 rm
- Downgrade of lifestyle but still acceptable to lower expense and boost additional cash

Modification 3 : Hit/maintain Senior Position in current work that requires experience than time
- Significant Compensation and likely have Ample Lifestyle


Flexibility

Currently prefer just Modification 3 as option upon age 55. The reason simply of my expertise in my current work and strong compensation renumeration on efficiency return of income. Time is precious. Obviously it can provides uplift in living standard to family.

There are other options such as renting out rooms, lowering expenses, migration, 1M65 etc. This is not preferred personally but it can be good for others depending on their situation.


Cory
2022-0722

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Jul 5, 2022

Cory Diary : Building Up Passive Returns - Income Streams

Equity Portfolio ( link )

The market has been on bad patches in recent months or years depending on the make-up of one portfolio. Not sure about investors but personally this can be one of the best time to re-balance, strengthen and build up a dividend portfolio.


One of the weakness in the portfolio is the persistent under representation of Finance stocks. Therefore, has been buying into DBS stock which provide good dividends. Size wise still not there yet due to concern with digital banking competition. Nevertheless, need to have enough investment into this area.

What best is to be able to buy with current yield reaching 4.9%. Price can get lower and recession might comes knocking. USA side there is speculation that we are in recession already. Currently preference is to go in slowly.

Competing against budget for Bank is the need to also buy Reits on the cheap which produces good yield. Need to constant inject in this area too.


Singapore Saving Bond, Multipliers, Pension and Private Bond

Have not been utilizing fully the CPF scheme. Only did top up in recent years with the elimination of company bonds. This money tied down long term so we can't touch it till later or 65 mainly for FRS amount.

With Rising Rate, the interest rates of CPF is falling behind. Decided to try some Astrea bond which is becoming more attractive as the price falls. There is capital risk so starting small. Nothing is permanent I guess.

SSB is also getting more interesting. Multipliers can be switched out any time. The idea is that as the equity portfolio grows bigger, the reserve in SSB and Multiplier can be managed down. Rich get richer rings here ?


Property Investment

Unlike Reit, property investment requires large sum of money even with leverage. The potential rental income is quite attractive. However one has to make sure the rental income keeps coming in which can be easily 50% of equity dividends received. For long term diversification, property is nice to have. Have to watch the loan payment consistently and making sure there is cash reserve in SSB for sufficient run way if one get retrenched and out of market permanently.


In Summary

Returns excluding salary works out to cover a big portion of Life Style Creep expenses. There is still a gap to close. Need to look around on making remaining cash works harder while smothering down the expenses (cost). 


Cory

2022-0705

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Articles in this Blog is personal take and sharing purposes only. Reader should seek their own professional help when making financial decision and be responsible for their decision.




Jun 26, 2022

Cory Diary : Realization of Key Financial Variables and Sensitivity to Retirement Wellness

Has been working on a new set of key parameters of determining how it is going to work out with my retirement planning adding in logic on cash flow into play. The goal is try to make it more realistic. However this means a lot more mathematics using Excel. To save some headache, not going to show the spreadsheet on how it is calculated but just the results and variables which will described here.


Inflation

The first thing to hit the wall is how much inflation figure to use when current inflation is sky high. A quick search into the internet seems to suggest 3% is a figure of reasonable value. Putting too high and you will find money never enough whereas putting too low might undermine your lifestyle in the midst of your retirement. That's how scary inflation can be when you try to incorporate inflation into your assets and probably explains why Fed is desperate to tame it even if this causes recession. In another perspective, once we hit 80s spending will be slower and this will help mitigate expense rate misjudgment.


Expense

From below table achieving $8220 will be nice. Currently Portfolio is at 5% yield due to some growth stock and Non-Reit lower yield counters. An All Reit portfolio probably can achieve 5.5% yield. A market correction may give the opportunity to push for 6% yield which at this point of time will need some major correction to arrive but provided there is cash reserve to invest.



Investment Returns

On the flipside of inflation is portfolio returns. Unless one has gigantic net worth, most people may have to depend on retirement program and investment returns to support a reasonable expected lifestyle.

Some would say their expense is low and this could be very well be the choice when option is limited. Another pitfall is if one is to consider investment equation, there is not much room to wait for market to rebound in a market correction which can last for many years. Dividend strategy could be the better key to enable planned retirement with greater certainty and there maybe decision to make on how much to allow for growth stocks on the point of retirement. So using dividend yield will be a good gauge for equity which can be around 5%. One could also use decade performance to move up the needle a little due to growth stock or capital gains. Say 8%. So a middle ground of 6.5%.

Other returns of different yield from equity such as SSB can do direct addition on capital returns. So are CPF returns.

Click to see sharper picture


How Lasting is the Portfolio

What is a divergence portfolio ? Meaning over time the portfolio is growing in retirement phase therefore above consumption needs. This is a goal.

When I first started, the plan is to have a divergence growth in the portfolio. That's not easy which I found later and will need sacrifices once I have to feed my home loan. It will be good to plan one's lifetime in decumulation phase. Is counter intuitive in eating into one portfolio that generates income but that is probably likely most people will have to for their retirement. Able to last till age 100 will be reasonable as chance are there are some sandbagging already.


Buffers

At this point of time, the buffer is Insurance policies, War Chest and Emergency Cash. Later retirement can be a good option too.

In-addition, Part Time Work for those who do not have choice. The retirement cashflow is greatly relieved for one who can find some part-time work for a few hours. Reason being likely it will scaled with inflation on top of CPF contribution into SA and OA, and will supplement overall return even if is a fraction of previous full-time employment work.

For those who has strong preference for Inheritance, either Property or Divergence Portfolio can do. If one can do both that means likely far ahead from the rest financially.


Returns consideration into the Cashflow
Assuming one retired and no other alternative of income.

1. Equity
2. CPF
3. SSB
4. Rental
5. Multipliers


Scenarios

Scenario 1 simulated a lifestyle that requires 1.5M of 7% annual return to support $8220 expenses at 3% inflation rate. Portfolio able to last 50 years.

Scenario 2 bump up the portfolio to 1.6 M reaching divergence goal. Just $100k makes s a difference.

Scenario 3 pulls down the portfolio annual returns to 6.5% while maintaining 1.6M Portfolio size.
Portfolio able to last 50 years. Just 0.5% return difference.

There are many other variables depending on age, rental income, home loan size, CPF size etc. Many scenario one can do.


Cory

2022-0626

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Sep 17, 2021

Cory Diary : What I have been doing lately ( ... calculating my way to FI )

Specifically Retirement Financial Calculation. Another term will be Financial Independent Capability Analysis. And end goal intent is to without a regular job. There are two key opposing forces which could well determine future well-being. Namely, Portfolio Growth ( taking dividends into consideration ) and Core Inflation.


The key variable Core Inflation Rate is not within our control as they are driven by government and marco conditions. Surprisingly, per Trading Economics we are on multi-year lows which current stands at 1%. There's a gradual reducing trend from high of more than 4% in Year 1990s.

As stated in their website, in Singapore, the core inflation rate tracks changes in prices that consumers pay for a basket of goods excluding changes in the price of cars and accommodation, which are influenced more by government policies. This aren't ke-long statistic as in if we look at other countries inflation, there is a similar trend or low level of figures except for those that mismanaged their economies where Argentina rank no. 1 which in my opinion meet the hyperinflation mode definition.

Is kind of relieve despite the ever lowering interest rates as this goes against common sense logics on why is this happening. Firstly, Housing/Utilities, Food and Transport continue to be major expenses. And therefore this is closely watched by governments. This could also means that a lot of this money is not used to chase after this goods disproportionately and that is a good thing.


So where did the money goes ? Saving, Investment, .... and probably more financial literate population to manage expenses.

For retirement household, the percentage is quite different. See picture below.


For one to retire young with kids, the first chart maybe more applicable. A situation where we still tap fully to life engagements. Expenses will be high and where we have dependents especially for sandwiched class. Even if we have no plan to fully retire, we know where we are financially.

To protect what we have from inflation, we need to grow our portfolio, tap it for expenses and even protect the golden duck by putting most of the money in a diversified manner in companies that mitigate regulatory and hyperinflation situation which later scenario is not likely but not impossible to hit semi-hyperinflation range.


Cory
2021-0917

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Jun 30, 2021

Cory Diary : Perpetual Portfolio - Legacy

In one of my earlier articles, I used Excel to compute how long the draw down of one's portfolio can last. Ideally we like to able to expense it till we died. The problem with this methodology is that we do not know when we will died and the portfolio may dried out before we do. There is also some who like to have legacy and uplift their children ahead. So Perpetual Portfolio design maybe nice to have.

There is also linearity issue as in certain year we may have higher expenses while in major market crash. Working on borderline is risky. Furthermore with advance in science and maybe space travel, our life may be much longer than we expected though saying this now is quite speculative.

Nevertheless, trying to attain a goal of ever lasting portfolio is not that difficult once variable points have been reached. The question is what are they.

1. Portfolio Size
The starting point is important at the point we retire because it gives us the critical mass needed to cover the expenses. Therefore able to compound them from young helps.

2. Portfolio Returns
If the expense is lesser than the portfolio growth and yield, we hit an inflection point where the portfolio will keeps growing.

3. Inflation and Expenses
Both of this are tied to purchasing power and needs. A low inflation couple with controlled expense will help in a long way to be below Portfolio Returns.


In today article, I will assume my performance maintain for the past decade, Inflation I cannot change, therefore the only key variables will be my portfolio size and therefore expenses I could afford.


Portfolio A : A design for middle class family. Probably upper. Lives in Condo. Simple Travel.

1.3M Portfolio Size


Portfolio B : Living standard upgrade to have longer distance travel. Better or more gadgets.

1.5M Portfolio Size


Portfolio C : Living standard further upgrade to have Car. More external activities.

1.7M Portfolio Size

One could do some item exchange as needed depending upon preference such as switch to HDB, and this will provide a good uplift elsewhere such as fully paid loan, better renovation and other upgrades listed in B and C. And this is where physical asset is very useful. Frankly this is my Plan "D" as my wife preferred to live in HDB for living space. I prefer in case my performance screwed up.

Touchwood.

Cory
2021-0629

Articles in this Blog is personal take and educational purposes only. Reader should seek their own professional help when making financial decision and be responsible for their decision.

Apr 3, 2021

Cory Diary : Retirement Income Sources

Has been squeezing my brain cells a little on how I can stay liquid if I am to retire despite my financial status and investment returns due to my expenses. I am really hard pressed on expanding the list of possible ways. Fact of the matter is I am in good financial health today is because I have a regular job to boost my annual income. Tax will be reduced so I would think my expense will come down if I am retired. So keep this in mind.

In this article I decide to list down all possible practical income sources I could think of excluding discretionary types such as Life Insurance and post retirement salary incomes. They will be more like buffer and back up plans.  Obviously personal loan is not income. Raiding parent home is not counted as it's on parent expenses to generate Rental income but maybe the delta. Inheritance no count as well though the sum could be really good to some.

How about profit from stock market ? I think no as is not guaranteed and I could lose in down years. The return is inconsistent for the past 20 years even though I have relatively sufficient track record as income source. But this can be the engine to build up my dividend base which I could count on.



After listing them in the table, I find it rather interesting. It shows how constraints I am  without regular source of salary income. There are basically 3 main types. Equity dividends, Rental and CPF. Of all of them Equity Dividend is rather important to me. It forms the basis of my retirement funding. Without it in which most locals are adverse to stock market, I wonder how they can do without it.

The 2nd major source of income is Rental. So ability to get more apartment helps except that property curbs have put a stop to this charade. With Covid and constraint on immigrants, this has put a lid on a practical source of retirement income for Singaporeans. No wonder many locals want to try oversea. Maybe I should when I can ! Nevertheless this is a playground to middle income and above generally.

The final major source of income will be CPF. Yes good old CPF except that I won't be able to touch the RA till 65. We could get some interest out from the leftover of FRS to supplement from age 55 though. Keeping in mind BHS will increase till Age 65 so this portion of interests will unlikely be touch for now.

And then lightning strike me that Reverse Mortgage could be a potential source as well. Wonder why this is not popular locally or maybe I am out of touch which is likely. Nevertheless I have no plan currently so is 0 for now. ( Option available )

SSB listed and which provides a baseline stability. It has a cost attached to it though as I could get 5% yield in market today. So the cost probably 5k annually today. If I can plan something, maybe this can be de-commissioned such as additional rental income. 

Others miscellaneous. Anything else ?  Is good to have things listed. 


Thinking.

Cory
2021-0403
Articles in this Blog is personal take and educational purposes only. Reader should seek their own professional help when making financial decision and be responsible for their decision.

Jul 11, 2020

Cory Diary : Retirement Calculator and a Miracle find !

The Math - Quite sometime since I last do the Math on how much to retire, to invest and to expense. If we are to do a perfect computing, this will be almost impossible or hassle. This doesn't mean we can't do a quick and dirty plan which can be representative.

The first table right below generate $60k per annum. Investment Money runs out only at age 98. However there are CPF, Bome, Saving, FD and SSB (aka Buffer & Legacy) which would easily extend the age to 110. More than enough to retire safely.

Table 1 : Retirement Math

The Second Table is what I like to show you. What-if I increase my investment just by 100k right below. At the age of 99, portfolio still has 1.8M ! That's so magically about compounding effect by just have a little more additional saving.

Table 2 : Retirement Math


Retire Plan - To retire most people depends on few income streams or reserve. Local Saving, SSB and FD are typically low returns safe investments. They are the reserve. The other common between most of us is CPF which provides one of the safest returns for marginally higher returns if one is not politically bias. 

Income stream typically comes from Rent, Bonds and Equity Investment. As we know Bonds are quite risky if they are higher yielding. You could lose all your capital and reset your retirement plans for good. Even lowering yield ones need to do homework because is not guaranteed. Nevertheless I wouldn't want to take riskier products for income if is not necessary to meet certain level of my retirement goal. Renting out a room could be an alternative though a little inconvenience. If one could manage, additional property will help a lot but we need to take care of loan.

Equity wise, investment class various widely as it tied to business and market conditions of the stock. Singapore STI ETF is one good way to invest however if we are to compared to other global general market indexes, STI don't do as well. This I feel got to do with how fast they update the stocks in the index and the listed companies performance. Oil price has significantly battered a number of them. The introduction of 4th Telco put a spanner to the Telcos. The developers gains are curbed. Most importantly the under lying stocks are not updated quick enough. A good example is Reit sectors which have been doing well for many years but only more of them are introduced in recent times at much higher price.

Finally, one can do businesses as sleeping partners but I wouldn't bet on it that we can feel relatively safe for most people. This segment is for the rich which have additional money to play but for average or middle class, every bullet counts in retirement.

In Summary, I have all above mentioned products. Relatively diversified but not as wide for some people. To able to do this, we must be able to build a nest out from having a stable job, saving and years of investment compounded. Unless we are born with silver-spoon this is a necessity. And the danger of having one is that we tend to less appreciate them and lose them.

There is also one additional bonus is that I have decided to stay employed till told not. This will help to support expenses without need to draw down my investment for now in-addition to growing my Nest. I do this because is dangerous to feel rich and quit however I have no plan to stress myself out while being employed. The health cost could breaks everything.


Last Message

One very last important concept today I found is that a little additional saving has a huge impact to my portfolio whether it is still viable at Age 99. See table 2 again. Please read them closely. Is a miracle. You want legacy and buffer. This is the true wonder step to take and not leaving your HDB flat for your children.

And we can do this without taking unnecessary risk in our portfolio as one saving grows that could set us back for years. One thing to note the parameters are there to product the table results. As one buffer grows, we can do  tweak to them to adjust to one needs.

For example, if I want a lifestyle of $8k monthly assuming other parameters same, I would need a portfolio of $2M. This tell you how realistic your expectation. All this can be done easily with Excel Spreadsheet.

Table 3 - Retirement Math

Have a nice day.

Cory
2020-0711



Jul 4, 2020

Cory Diary : Medical Bills

Technically I think we can never retire if we are to cater for the most expensive medical expenses where Insurance may not cover or is limited. Life is priceless or so to speak. So we technically can never retire if we buy-in to this idea regardless of cost. Hence, where do we want to draw the line to be practical for retirement planning ?

I take the time to ponder this morning questions. I am sure there are many scenarios.

1. If we have 2M dollar, do we spend all in order to prolong our lives say for another 6 months ?

2. What-if we survive and need life long care and a burden to family after ?

3. What-if we are young and recover completely ?

4. What-if bed ridden for rest of my life ?

This are real hard questions.  No good answer but something to think about.

One key insurance I am happy to pay is hospitalization bills. The cost is not high and reasonable. CPF wise I can max whatever inside complement with Medi-save.

Anything beyond that, maybe I would define certain percentage of my net worth for it. That could an answer. I dunno. Simply Medical condition can be Wills of God. Meantime we try to stay healthy by living healthy. But we are limited by genes and external factors.

Health is important to enjoy the fruits which people tends to neglect. I got a scare a year ago and realize life can be short. Too short. ( "Wife, I want to retire ... really  ...  😗 )


Cory
2020-0704


Apr 5, 2020

Cory Diary : Preparation of a life time

It has been many years Cory has been preparing from being retired. Don't get me wrong, I am yet to be retired and I am not that old. However, team development is catching up with me and my passion has been waning recently. The Covid-19 makes management worries and company decided finally to promote one of my senior staff who has been working for me for 18 years to management position. Her promotion is not easy because I have been spending time coaching a few whom declined. I hope they are just being humble.

With this move, I will also be taking some new learning of another group of colleagues who recently lose their manager through attrition. This is in-addition with multi-tasking to help the new manager. I need to spend time to convince her that there is nothing to worry because I will support her as long I could. And it is better for everyone that she has time to take on the role while I am still around collecting money happily. Why I say that is because if the business get whacked or there is business rationalization, I could be on the chopping board, and the team could be impacted.

However, to myself every time I think about such possibilities there is a little unease as well. The sense of suddenly losing monthly income and bonuses. The beautiful constantly increasing Net Worth. The insecurity. This reminds me of why people chasing to buy toilet paper. We cannot change others easily but we can change ourselves. So when the time come, if I am to fall into desperation, I have no one to blame but myself but I aren't going to compete with others to buy toilet paper !

Daughters teach me that life is more than money. I probably bought 10 boxes of Pampers for the elder alone in case the market starts chasing for supply. This are non-perishable items and my thinking is that this is something which I could control and not spoiling the market if I get them before there is any crunch. There aren't so far and unlikely will. But as a father cannot do without Pampers and Milk Powders, I do not want to take the risk fighting over it with others. Neither do I want to be behind the horde just to get a pamper home. So this is the only two items I technically "hoarded" for my kids. Frankly, they use up pretty quick to my surprise. And maybe this also help to send signals early down the supply chain on the needs for greater supply buffers. Talking about vested interests.... that's how we push for more supplies.

So how is my dividend investment plan going ? Last year achieved almost $53k annual dividends. This higher figure is unplanned. Some amount due to the mergers and cash-out from rights issue. For current portfolio, to-date theoretical max $56k. The DPU compute is before Covid-19 so there will be cut however the believe is when this is over the DPU may returns in time. About 70% warchest left to play with which potentially due to this crisis to allow higher target than original allowed by another 30% to 45% more with current market condition. This will still leaves me with ample cash for loan payment for 6 to 7 years parked in SSB and FD mainly. I could reduce this amount but prefer not as it can also be used to pay down loan if needed. We never knows how the markets will move as time goes.

One thing for sure, every month I worked, the better my buffer. If I could hit year end bonus, that will be awesome. I know is annual event. I always appreciate that. Never takes good things for granted.


Cory

2020-0405

Oct 3, 2019

Cory Diary : Expenses 2019

This year is quite special .... I have a lot of one-off items ...for example baby expenses. However we know that to bring a baby to adult, there is probably a string of one-off expenses over many years. Maybe "amortization" probably is a fairer way to deal with it. We need to recognize it as regular cost of business ! 

There are many other one-off items such as Renovation, Alter, Cremation Niches, Medical Surgery, Hospitalization, Medical checks, Confinement  ... this are debatable. Nevertheless they can be big ticket items or summation in total. Ignore them at your perils.

And we have the regular ones like Taxes, Nanny, Parent Allowances, Installments, Holidays, Baby Misc ...

If one plans to retire, make sure we plan them into our annual expense plan with good buffers. Don't simply jump into FIRE through hard core saving. You will be surprise like I do this year on how bad it can goes on how expenses blow up. After totaling up major items that i could find, the expenses YTD is S$117 K... ( ouch ). 

The fortunate thing is that my Liquid asset and Net worth are still trending up. The first is due to Stock Market and Regular Job, and the later with added Property Valuation Growth (Cashless by the way).

Anyone like to retire now ?

Cheers

Cory
2019-1003

Jan 11, 2019

Cory Diary : My retirement just got pushed back

Kind of shocking headline. One of my past lovers arrived. ( ... here's your Karma ...)
39 weeks and more to come but is all worth it, and I have done my part for my country. ;)



Welcome to the family ! My best investment returns. Priceless !

Cory
2019-0111



Aug 19, 2018

Cory Diary : Managing Risk and Goal update 2018-0819

Every investment has risk. In a theoretical situation if we lose a portion of our money into a few risky bonds or shares, we just need one to fail and there are good chance we will retard our financial freedom by years. If we could lose a large portion, then it maybe better not to do anything as this could severely impact our financial situation. Why ?

Currently Singapore Saving Bond is about 2.4% long term guaranteed for 100k limit, Bank deposits range 1% and CPF about 2.6% - 5% for now with specific restriction and benefit applies. Depending on investment size, combination of it may apply. But I could see that for relatively safe returns are about 3% for retirement size fund. This return is not enough for retirement and could only supplement in my opinion. Why ?

For a million dollar investment size that's about $30k annually or about $2.5k monthly excluding inflation. This may not fit my lifestyle as I feel there is no point in surviving on basic or bare minimum. And for a family, this may not be ideal as this could reduce options in what we can do with life. 

So I decided to come out with 3 scenarios below and conclude what I need. Do note that while doing this exercise, 0.5% difference matters.

Scenario #1: $1M capital, Expense $2,500, 3% returns, 2% Inflation and Capital draw down
Allowance of $2,500 with 2% increment annually. At Age 48, this method will last me for 42 years. And my capital used up at  89 year of age. Is a draw down in investment capital. The problem with this is that I could survive beyond 89. Secondly, I still have to ensure 3% annual return on average. And will not be enough for a family. Neither is there enough buffer for investment fluctuation nor better lifestyle.

Scenario #2: $1M capital, Expense $4,000, 6.8% returns, 2.5% Inflation and Capital draw down
Allowance of $4,000 with 2.5% increment annually. At Age 48, this method will last me beyond 100 after with some bonus years to go. I have increase the expense by 0.5% for buffer. The problem with this is the ability to achieve 6.8% return on average with 100% confidence. Even then, the income is average for a small family. Is alright if the kids are grown up though.

Scenario #3: $1,350k capital, Expense $5,000, 5.2% returns, 2.5% Inflation and Capital draw down
Increased allowance of $5,000 with 2.5% increment annually. At Age 48, this method will last me till 98. I am happy with this variables.  More room for flexibility in income and expense variations. To be clear this scenario is retirement without saving needed.

Cory Analysis





To draw this further, I could ask for 1% growth in underlying portfolio.This will retard investment capital reduction. Now, for $1.35M investment size, returns can be lowered to 5.2%. The next question will be what investments will allow me to support the draw down and to secure $5K monthly expense ? One thing for sure, I do not need to take too high risk to achieve financial freedom but how to protect my investment to obtain desires.

Once the above Portfolio is achieved, every month salary is technically bonus to my financial freedom. Goal has become clearer. Obviously, real world do not work in straight forward manner so is good to have buffers and lengthen our retirement age.


Cheers

Cory
20180819



Jul 14, 2018

Cory Diary : Financial Literacy

I have a group of ex-secondary school classmates which by chance get to meet again since last year. Since then we have been active in chat group. After more than 30 years, they all look more or less the same. Not sure about others, but there has been attrition, re-join and mia individuals. Surely there will be difference in opinions, a little offline gossips and past grudges.

There were quite a few who are dead against institutions aka government in the chat group. So whatever PAP do, there is motives. Mistrusts ran high. One of them use to be my close buddy.  Lost touch with him as we go on separate way after our "O" levels. In those days there aren't smartphone. Let me describe his life now from my perception that I have formed.  We were one of the pioneer batch of normal stream education. As I could remember, his family appears to be below average as they have problem paying utility bills some time. We often go for mini-hike in the afternoon after school. And would comb the forest hill on our way home. It is as close to nature as we could get in developing Singapore. There were a lot of adventures. He went on to technical institutes whereas I am fortunate enough to excel in my study and manage to get a place in a Junior College.

My impression is that he do not have good jobs for past decades and he has in-depth frustration with the government. And in recent time probably for 5 years found a stable job that he is good at. A manager and has some work across the causeway. His salary about S$4k appears to be below average considerating his level of technical soundness and knowledge. There were some considerable stress and sometimes appear to need to work till late into the night. Married and has a son who just finished his primary with average score. He owned a car and stays in HDB.

Here's his financial status I think. In his late 40s, he do not have much saving. And probably about 5k to 10k in stocks the most at any one time. Mindset for him is that this are "vice trade". He would also like to take out as much money out from CPF as soon as regulation allowed as he do not trust them at all. And the money will be use for his son education. Singapore Saving Bond is just another outlet for the government to tune up their national Ponzi scheme. Inflation grumbling is always from water hikes to hawker meals. Every time where is a bad news by Temesek or GLC investments, they will point out that the funds are losing nation money which could have reserved to help the poor and needy. There is a believe tax is too high locally.

With such mindset, there is no way I could advise him to even go for safe investment like SSB which technically safer than saving account or fixed deposits. How nice if he could sell his SSB allocation which I would gladly take up to increase my limit. At least there is some use for him. I think we finally agree to disagree. At late 40s, trying to change each other mindset is next to impossible. He is still a good friend that I cherish over political divide. I view myself nationalistic and wish to keep the game going with the right formula to succeed.  I wish him well.


Cory
20180714





May 1, 2017

Cory Diary : What do people live for?


Saw this from a friend message link.


Investment is for quality retirement. Don't retire for sake of it and live like a beggar.
Strive for Quality Living. That's will be the benchmark

Once I realized that, things become clear. Investment for Income has become more important so that I have the money to do what I can with my time.

But I need to remember too ...


Being Rich is not about how much you have but how much you can give.

Start small.

Happy Labor Day !

Cory
20170501

Apr 22, 2017

Cory Diary : Quality of Life


I often seen posts on best place to retire. Be it daily necessity, bills or health care. One of the primary reason is cost. Frankly I think this people get it all wrong.

The Best Place to retire is where Love is. Where friends are. Where Home is. Going to faraway land, cheap and lower standard of hygiene ... that's escapism. Out of no choice. Desperation. Worst still, alone. Sorry if I poke too hard. Is a poke anyway. Greener pasture is always on the other side till you are on the other side.

Of course there are always exception so for these people, be relieved there is an escapism mental route for your reasoning. But I know deep in my heart, when I died, I like my grave, ash or whatsoever to be near home of my birth just like our elders who were from China they want to go back to mainland and visit their childhood days.

For average doe in Singapore, who are willing to work for a decent living, manage your saving and invest prudently, frankly is not hard at home. The most expensive is housing and compared to many countries, locally is relatively way better and cheaper for same quality of estate, environment, law, safety, medical and salary scale. We also have the option to rent like many people do in others countries as well which are a norm there. It boils down to expectation.

I have a single friend, who are wealthy enough to buy a small Condo but instead go for 3 room hdb. I question why not a 5 room but to him 3 room is just what he needs. And he decides from day one not to drive which save another huge sum of expenses and hardly affects his life. Personally to me he is a little too frugal but what am I to him ?


My Country, My Home.

BTW is a Poke. To make myself think on my reasoning,. I will never ... hopefully ... due to mainly cost.

Cory

20170422

Jan 21, 2017

Cory Diary : Financial Updates 20170121


How I will approach this is to have my Financial Charts up for evaluation. This data is computed automatically through excel. So theoretically I am able to produce them everyday with little effort.

The first chart is my Net Worth. I have this tracked since 2007 to see the Market crash horribly the next year. Unfortunately this is the furthermost that I have tracked as I would like to have data for another decade more. I find this chart fascinating because I am curious how net worth chart looks like in data over a long period. There is more than 9 years worth of data.

This year I added RED line to truly measure my Net Worth which include my Pension, CPF, Insurance Values and CPF Shares. I have the $ scale removed as usual for privacy.
















There is a slight divergence to my surprise between the lines. Does this mean my "locked Investment" is doing better in growth than my investable assets.

The other chart below is asset allocation. Net Property means Value after deducting outstanding loan.
I am still not investing enough. Feel rather bad myself so I may have to reduce it down to 30% this year. And if Market allows to 26% cash and FD.

Cash Buffer for property payment in SG Bank is over 6 years.  This may continue to go up if I stay employed as I am a Value Saver. I plan to maintain this high level of buffer.

Investment wise, 14% in Structured Returns lowers my overall portfolio returns. I hope to expand my Stock Equity if market allowed, by 6% allocation more to achieve better yield..



I am not doing much with CPF other than shifting enough into SA account to earn higher interest rates. The remaining OA CPF to further backup my housing loan. Overall, as you can see I am rather conservative in my financial but I am happy because I could be worst.

If you notice something striking or concern, feel free to comment.


Cory
20170121



Jul 6, 2016

Cory Diary : Read up on Retirement

The whole idea of Investment is so that we have more money. People who say they don't probably already have enough. That's the reality unless we are trying to poke holes into exceptions.

Instead of re-inventing the wheel I should tap on other brains. There are plenty strong logics out there as anonymous I like to share.

Here you are.

Cannot imagine that after working hard for 30 - 35 years, you would want to cut back everything and live like a hermit upon retirement?

Retirement is a time to take back your life and live! Do the things you want to do, travel to places and experience other cultures and pamper yourself.

When planning for retirement, always plan for more. For eg., if you think you would only require $84k pa ($7k pm) in retirement, aim for $100k pa ($8.5k pm).

It is better to continue working now as long as you can, than having to re-enter the job market at 60 when you find that your money runs out!

I think these comments about retiring early at 40 or 50 are coming from middle-class folks stuck with average income in jobs they hate, and they spend their time online dreaming about retiring early cos they can't in real life. 

What's wrong with working until 60 or even 65? The wise are happy to contribute back to society and nurture the younger generation. Some people like me enjoy every day at work.

The irony of working towards retirement: the higher the person's salary, the faster the wealth accumulation process, and the earlier one can retire. But the opportunity cost of retiring is also higher, and it becomes so much harder to retire.

I'm a retired millionaire who've worked very hard for many years. Long hours, frequent travels. It's good to finally stop my rat race. Made millions from my salary, bonuses and investment gains. Time to smell the roses. Also to take better care of my body. I was at a high risk of heart attacks and stroke had I continued my rat race.

Life now is so much more peaceful and serene. No more getting stuck in early morning traffic and late nights. Can spend a lot of time exercising in my condo gym and swimming pool. I can also do ad hoc projects and volunteer at charitable organisations which I choose. 

Life is much more meaningful now. I've never been happier in my life. My passive income from my portfolio of investments gives me more than what my family's needs.

Choosing the right high paying career and being excellent in investments are key ingredients towards financial success and financial independence.


So much Collective Wisdoms and Experiences out there. Hope you enjoy  !

Cory
20160706