Author: Finance Smiths

Mar 2016 Financial Update – P&L

I’m going to try and start a regular series of Financial Updates, probably monthly for now to see if I can maintain it. It will be structured in a Profit & Loss (P&L) and Balance Sheet (BS) style in what I hope is a clear and concise manner. I will go in the following order: Income, Expenses, Assets and Liabilities and summarise the main points of consideration that impact each item. This post will cover Income and Expenses while the next post will cover Assets and Liabilities. Income Salary income for my wife and I have been consistent so far...

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How we manage our Retirement Funds

In my previous post, I wrote about how we distinguish between Financial Independence Funds and Retirement Funds. Although their purposes are not mutually exclusive, it’s the timeline of drawdowns that differentiates the two. Before age 65 – 70, we intend to rely on our Financial Independence Funds heavily to enjoy “financial freedom”. After age 65 – 70, we expect to rely more on our Retirement Funds to enjoy “retirement”. As such, the management of our Retirement Funds is something we do in the background now for future use. Weekend trip to Penang By the way, I went to Penang for the long weekend with...

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What are Retirement Funds

As an accountant, I find the P&L approach towards my Income & Expenses and the BS approach towards my Assets & Liabilities to be an effective way to approach my personal finances. After all, the numbers don’t lie and are less open to interpretation. Every month, some of our income goes towards managing our expenses and reducing our liabilities, while the remainder of our income goes towards increasing our assets. However, there is a portion of our monthly income that we never receive as cash and this refers to the Central Provident Fund (CPF) contributions from our employers and us....

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Global Bond ETFs

This is going to be a short update about actions I’m taking with our ETF Portfolio. The comment on my post about Choice of ETFs from Heidi Chua at Money Never Enough got me thinking about including a global bond ETF in our portfolio. Although I considered her recommendation on the Vanguard Total Bond Market ETF (BND) trading on the NYSE, I decided to go with the following Vanguard Bond ETFs trading on the LSE instead: Vanguard UK Government Bond UCITS ETF (VGOV) Vanguard EUR Eurozone Government Bond UCITS ETF (VETY) Vanguard USD Treasury Bond UCITS ETF (VDTY) For your information, VETY and VDTY were just...

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Overpaying for rent

Picking up from my previous post about blogging on the personal finance mistakes we have made, I was discussing how we graduated in 2009 in Melbourne. One of the most important decisions we made then was that we should move in together after graduation. This decision was borne out of necessity as it would have helped to reduce our cost of living in Melbourne when we started working. That being said, we enjoyed each other’s company and wanted to take the first serious step in our relationship by moving in together officially. I will walk through how we came to the...

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Looking back at the mistakes we made

I just realised I have written 3 consecutive posts on bank accounts for expense, emergency and investment funds. Goes to show how much I value taking the time to sort out your bank accounts. I actually went through this exercise with my sister. Her monthly salary was being credited into a POSB eSavings Account that was earning 0.05% pa. My sister submitted a form to HR to change the bank account to the OCBC 360 Account and now earns 1.2% pa just from the salary credit. It was easy enough to make 3 monthly bill payments online or through GIRO since she just had...

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Which Bank Account – Investment Funds

This should be my last post on the bank account series for now. Previously, I had blogged about accounts for expense funds and emergency funds. This post will be about investment funds i.e. cash holdings held for the purpose of investing in ETFs, shares and bonds. The account housing these investment funds should have more banking activity than the one for emergency funds but less banking activity than the one for expense funds. Ideally, there should be no link to a credit card since it’s only going to encourage you to spend more to meet the requirements to obtain the higher interest. In our case,...

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Which Bank Account – Emergency Funds

This post is a continuation of my previous post on which bank account to use for expense funds. As I have mentioned previously, a good starting point for your personal finances is to sort out your bank accounts to maximise the interest earned. It’s a one-time exercise to work this out and you get rewarded with subsequent higher monthly interest earned as long as you meet the requirements of the bank account. In Singapore, there tends to be a link between your bank account and credit card to earn the higher interest. For example, our OCBC 360 bank account third bonus...

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Which Bank Account – Expense Funds

When we were in Australia, the bank accounts to be opened were quite straightforward. We opened transaction accounts with the major banks and the interest rate on these accounts is about 0.01% pa. To get a higher interest rate,  we opened online saver or isaver accounts and put most of our savings there and the interest rate on these accounts vary according to the cash rate set by the Reserve Bank of Australia. In the current low interest rate environment in Australia, the interest rate on these online accounts is about 2.50% pa. In Singapore, the process gets more complex if you want to...

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Other and Investment Portfolio

I have decided to take a break from writing about Google Sheets. I should go back to it eventually since there is a lot of material to cover but I might write about other topics in the meantime. Previously, I didn’t think I was going to disclose any more personal finance information as I had written about our ETF and Share Portfolios as well as the passive income received. However, I reckon it would be good to show the Other Portfolio to have a better illustration of our Investment Portfolio. What does the Other Portfolio consist of? Bonds We hold corporate bonds...

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Google Sheets – Assets – Cash and Stocks

As discussed in my previous post on why you should use Google Sheets for personal finances, I will outline how to use it in this post. I will be referring to my Google Sheet and how it is set up for illustrations purposes. However, I recommend you take the time to prepare your own Google Sheet instead of using templates that are available online. By building your own Google Sheet one cell at a time, it will give you an insight into your personal finances since you have to work out why the information is in the Google Sheet and...

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Why you should use Google Sheets for personal finances

I only started tracking our net worth on Google Sheets in 2015. It’s unbelievable how useful this tool is and I can never quite understand why I didn’t do it earlier. It was only after the size of the investment portfolio becoming significant that triggered the need for me to have a better tracking system. That being said, I track our Singapore portfolio on SGXcafe and it’s a great tool for monitoring the portfolio. I use Google Sheets to monitor our total assets, liabilities, income & expenses; so the market value of the Singapore portfolio is included but I rely on...

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Index ETF Allocation

Although my recent posts have been focused on our asset allocation, I should be discussing our liabilities, income and expenses in later posts. Typical accountant approach – construct our personal finance BS and PL. This makes us accountable to our goal of achieving Financial Independence and hopefully tracking our progress will motivate us to stay on the path! This time round, the reveal would be on our index ETF allocation. The figures have been rounded to the nearest S$1,000 for now but should get more accurate as I update our index ETF allocation. February 2016 Our target index ETF allocation is somewhat evenly split...

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Our Asset Allocation – Feb 2016

It’s been a good CNY 2016 and we enjoyed the long weekend. Thought it might be a good time to reveal our current asset allocation and start tracking it from here. For illustration purposes, we have combined our assets to be shown as The Finance Smith Asset Allocation. The figures have been rounded to the nearest S$5,000 for now but should get more accurate as I update our asset allocation monthly. February 2016 As you can see, I have highlighted the assets that I have over-allocated to in orange and the assets that I have under-allocated to in red....

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Asset Allocation – Total Approach

I realised I have been writing quite a bit about index ETFs and it’s probably time to write about something else. Just to keep things interesting! Asset Allocation – Total Approach We have a Google Spreadsheet that tracks our entire net wealth. It contains information about our assets, liabilities, income and expenses – essentially our Balance Sheet and Profit & Loss statements. We never used to track these things but decided there first has to be a starting point before there can be a goal. It took us a long time to get the spreadsheet up and running and it continues to be...

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