Archive for the ‘Personal Finance’ Category

Posted on March 11, 2010 - by Wilfred Ling

Should you terminate your lemons?

I have many clients who bought unsuitable products and as a result have to postpone their retirement for many years. Let’s say if they had just bought simple products, they would have retired at age 55. But because of the unsuitable products, they have to postpone their retirement to age 70.

Most of the time the unsuitability arises due to two reasons:

1. The product has an extreme high expense ratio and thus much of the returns are taken away through effect of deductions and Read more…

Posted on March 9, 2010 - by PanzerGrenadier

Personal Growth and Financial Freedom

I attended a Thai language workshop that my organisation offers as part of the self-development training that staff can apply for and realised that personal growth comes from trying new things all the time.

Personal growth by itself is rewarding. You feel that you gain mastery over a skill, ability or technique and you are also exposed to a new world, culture and reality that makes your life that little bit more interesting.

In today’s globalised world, personal growth also helps you move nearer to your goal of being financially free because you gain skills and abilities that if matched with the right market who demands it, you can achieve a new source of income or alternative second career that could be your ticket to financial freedom.

Planning Your Personal Growth

Financial freedom comes when our lifestyle expenses is met by passive income from investments e.g. rental from property, interest, dividends etc. Many of us can build up our investible capital only through savings from employment income which will remain as the key contributor during our productive years.

Planning projects for personal growth increases your abilities and skills and life-long learning is about about life-long earning! Read more…

Posted on March 7, 2010 - by Aaron Lau

Estate Planning (Part 6 of 8)

Estate planning addresses lifetime needs like permanent mental or physical disability and post-death arrangements.

The objectives are unique to the individual but generally include:
- Distribution of property in accordance to one’s wishes
- Sufficient liquidity to pay off debts
- Appointment of executors
- Security for dependents
- Contingencies

The 4 step process:
(1) Determine goals
(2) Preparation of plan
(3) Implementation of plan
(4) Reviewing of plan

Determine Goals
A lot depends on one’s attitude towards security, philanthropy, risk, work and money. Important areas to consider are:
- Any known problems with a particular property (Do not leave the burden behind)
- Unresolved family issues (Relationship problems, children from other relationships, etc)
- Financial security for dependents
- Views towards chartiy
- Attitude about extraordinary life sustaining medical treatment
- Contingencies in the event of mental or physical incapacity

Preparation Of Plan
The following tools are used for the plan
Read more…

Posted on March 6, 2010 - by LatteMoney

Save Money By Asking Yourself 7 Questions Before Making Any Purchase

You will need to be creative in finding ways to reduce your expenses that will not negatively impact your current standard of living.

However, no matter what you need to buy, if you invest time and energy into shopping around for the best possible deals, you will almost always save money. 7 questions you may consider before making any purchase are as follows:

1. Is the purchase absolutely necessary?

2. Do you have the money to afford what you are buying?

3. What options are available to save money when making this purchase? Can you use coupons or take advantage of a sale or special promotion? Read more…

Posted on March 5, 2010 - by PanzerGrenadier

Reviewing Your Lens Towards Financial Freedom

This post arises from the gentle prodding of La Papillion (aka Bullythebear) on the state of my personal finance and financial freedom blog posts of late. He commented that I seemed to be busy and the frequency of my posts had gone down.

The reasons for me posting less are several. The most obvious one is that some of my spare time is spent looking after my daughter at home as well as handling a couple of admininstrative issues relating to buying my new place.

Another is that I’ve started to think and reflect more about what it means to be financially free and how I’m starting to fundamentally relook at whether investments and a superior rate of return is the way to achieve financial freedom or to build up my income generating skills and abilities to get the maximum salary and bonuses in my career to build up investible capital.

Developing Lenses and Frameworks

I’ve attended a three day workshop on strategy and from my discussion with the trainer, I’ve realised that the models and frameworks to review and develop strategy really are lens in which we perceive the world around us.
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Posted on March 5, 2010 - by Jay

On Financial Freedom

Just some thoughts on this term “financial freedom” that has become a much coveted goal in life popularized by Robert Kiyosaki in Rich Dad Poor Dad. Btw apparently Kiyosaki was never as rich as he proclaimed. He got rich after selling his book. Well, some of his ideas are refreshing though.

What is the definition of financial freedom?

I guess to most people, it would be having enough money in your bank to last a lifetime living the same quality of life and thus having the freedom to choose not to work for money.

In the first ever post on this blog, we worked out this amount is probably slightly more than half a million dollars for a conservative guy and $3mn for someone more aspiring. And this amount is highly unreachable with normal jobs since annual salary is about $30,000 to $40,000 on average in developed countries. (Well actually it’s doable given enough time: like 30 years, as we shall see but that defeats the purpose I guess :)

Hence there is a need for passive income (another term from Kiyosaki) to help fund monthly expenditures. However passive income can only come from a few sources:

1. Dividends from stocks
2. Interest from fixed income instruments (bonds, T-bills etc)
3. Rental income from property
4. Pension or annuity payout
5. Cash flow from businesses (which you don’t have to run it)
6. Royalties from books, songs etc
7. Others: sponsorships, fees etc
Read more…

Posted on March 4, 2010 - by Aaron Lau

Tax Planning (Part 5 of 8)

The objective of tax planning is to arrange transactions to minimize tax legally.

Tax evasion, on the other hand, involves the use of unlawful methods to eliminate tax. It is illegal and punishable by law.

The Basics (Who, What, When, Where, Why, How?)

(1) Who?
Tax residents include:
- A Singapore citizen or permanent resident who resides permanently in Singapore;
- A foreigner who has worked in Singapore for 183 days or more.

(2) What?

- Total Income: Includes income from business, salary from employment and rental income.
- Assessable Income: Total income less deductible expenses and donations.
- Chargeable Income: Assessable income less qualifying reliefs.
- Tax Rebate: The reduction of the amount of tax payable. Read more…

Posted on March 4, 2010 - by La Papillion

Daring to dream big

After a night of chatting with AK, who is truly inspirational, thoughts began to come to me until I can formulate a 10 yr plan. This plan occurred to me while I was on my way to work this morning. As a ‘big-picture’ kind of plan, it must be simple enough for me to be able to work out the sums with just a handphone or mentally, and also simple enough to be able to explain it to someone without that person going ‘duh’.

Let me share with you:

The goal of the plan is to be able to stop working when I wish to, that is to reach financial freedom. Since my average monthly expenses is around 2.5k, let’s put a good passive income as 3k per month. I thought of 2 plans.

Plan A:

Since I need to get 3k per month, the sum goes like this:

3 k per month x 12 months = 36k per year

If I’m able to invest at 10% yield, I’ll need 360k of capital base in order to get 36k of income stream. So the question is how to get that 360k capital base. For simplicity, let’s round to 400k. Let’s ignore all the complicating compounding and keep it simple. If I’m able to save 50k per year, I’ll need 8 yrs of savings to reach that capital base.

10%?? Too much? Let’s put it at 8% – which means I need 450k and that will take 9 years. Let’s put it as 10 yrs savings at 50k per year. Read more…

Posted on March 3, 2010 - by Kay Toh

Make full use of interest free study loan

If you are or you have kids who will be entering university soon, you should take advantage of the interest free study loan and tuition fee loan and use the funds to invest. The returns that are generated can be used to offset the cost of a university education slightly.

Fresh undergraduates who will be entering into any of the 3 local universities which includes NUS, NTU and SMU are usually able to take a tuition fee loan of up to 90% of their course fee. Depending on the selection of course, it ranges from around $6500 for most courses such as Engineering or Science to slightly less than $19,000 for medicine. Subsequently, they may be eligible to take up a study loan that can pay for the remaining 10% of their course fee and a living allowance of $3,600. For most courses, this means that the recipient can receive up to a potential amount of at least $10,000. Throughout the entire course of study, interest will not be charged on the loan amount. As such, if you have enough funds to pay off the tuition fee, my suggestion is that you should not pay it off straightaway but keep it to generate some returns and try to get the study loan too.
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Posted on February 24, 2010 - by Aaron Lau

Retirement Planning (Part 4 of 8)

Advances in medical science has resulted in people living longer. This increase in life expectancy makes retirement planning even more crucial. Furthermore, with better affluence, there is also an increase in demand for a better lifestyle during retirement.

The objective of retirement planning varies depending on circumstances, and normally includes:
- Maintaining a self sufficient pre-retirement standard of living
- Coping with increasing health care cost
- Protection of property and against personal liability
- Providing for dependents
- Estate planning
Read more…