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.
Portfolio B : Living standard upgrade to have longer distance travel. Better or more gadgets.
Portfolio C : Living standard further upgrade to have Car. More external activities.
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.
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.
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