TheFinance.sg » Personal Finance

Lifestyle Design and Retirement

PanzerGrenadier — Sat, 24 Jul 2010 01:00:26 +0000

Photo by Francisco Belard

The more I read about lifestyle design and think about how it applies to retirement, the more I realise that my paradigm on what constitutes retirement has fundamentally changed.

Previously, I used to think like what many of us did, that retirement was an age and it was not to work. But increasingly, my own research and reading of books such as Tim Ferriss’ “The Five Hour Workweek” and thinking about the day-to-day trends we see in Singapore has led me to re-evaluate what it means to retire when I advance another 20 years in life from today.

Retirement is Not an Age

The CPF system and the traditonal life of study-work-retire is under pressure. First of all, increasing life expectancy sees us living longer and hence needing to fund our living over a longer period of time. Secondly, the concept of lifelong employment and having a job for life is under threat from today’s volatile world. Thirdly, research has shown that mentally we degenerate if we do not keep ourselves active mentally and physically after we transit from a full-time career to a post-career lifestyle of not going to a routine of working from 8.30 AM to 6.00 PM Mondays to Fridays.

I see retirement as more a lifestyle design issue in that one needs to plan for how one can live on possibly reduced cash flows from a full-time job and transit more into a lifestyle dependent on less certain cash flows supplemented with some freelance type of work and passive income from CPF or other sources.

Continuing Cashflows Post Career

To continue to thrive post-career when one is close to the “official” retirement age of 62 (will probably be 67 by the time I hit that age bracket), one needs to plan for cashflows or a source of income then. Our CPF will only allow us a very subsistence type of living if we have minimum sum. Many will barely have it as most of our CPF is parked in our homes. Thus, I realise that one of the paradigm shifts that occurred for me was to be open to monetising my home through renting it out. Read more…

Cost of Car Ownership Calculator

Drizzt — Tue, 13 Jul 2010 10:00:49 +0000

Photo by stevoarnold

I used to think that buying a car involves paying for car loans and paying for petrol. It turns out that there is more spending and budgeting that needs to be done when it comes to planning for car ownership.

As a finance blog, my research is not to show you the best way to choose a car or the best car recommendation to you. At Investment Moats, we hope to equip you with a good estimate of how much it will cost you to own your prospective car.

What is Cost of Car Ownership Calculator?

My cost of car ownership calculator aims to provide you with a summary of information detailing:

How much is your car loan
How much you have paid in interest + car loan
How much is your total expenses in car ownership
How much is your yearly or monthly total cost of car ownership as a portion of your income

This will be a good budgeting tool to estimate whether you can afford a car comfortably monthly. It is design more towards a Singapore user but is flexible enough for other country’s car owners. Read more…

Money, Wealth and You

Alvin — Thu, 01 Jul 2010 14:45:46 +0000

Photo by eva101

I have heard from different sources about value creation brings about wealth. You get richer only if you increase the value that you give to others. Zig Ziglar said, “you will get what you want if you help enough people get what they want.” Initially, I am not sure about this principle even when teacher Dennis mentioned about providing value and not to aim for financial freedom as a goal. If I give something to others, wouldn’t it make me worse off? As I continue to learn and inquire about money, that I start to understand this principle. When you provide a service or product that is needed by the society, you solve problems and people who need the service or product will pay you for it. They become better off consuming the service or product, and you become wealthier. It is a win-win relationship. The more value you can create, the more money you can make. Hence, it is contrary to what most people believe, in order to have more, you need to take more. Instead, in order to have more, you need to give more.

Thanks to La Papillion for recommending “Killing Sacred Cows” which gave me a better understanding of this principle. I cannot explain better than the author, Garrett Gunderson, so I shall quote his passages:

“Focusing on accumulating money is like wanting to harvest the fruits of a tree while ignoring the roots. As we accept the accumulation theory, most of us become frustrated with the lack of fruit on our tree – or lack of money in our bank accounts. And what do we do to solve this problem? Read more…

It Comes From Within

Eng Tiang Chuan — Tue, 29 Jun 2010 10:00:48 +0000

Photo by Tony the Misfit

If you have been approached by an Independent Financial Adviser (IFA) before, you would probably been told that IFAs can offer products from many providers and put client’s interest first. There is a fact and an opinion in the statement. The fact is that IFAs does have access to many different products from different providers while putting client’s interest is an opinion. Having access to different does not mean the IFA will put the client’s interest first and source for the best deal. The adviser might take advantage of the situation and opt for the products with the best commission structure instead!

In an Straits Times article on 26th June 2010, Excuse me, are you an independent adviser?, the issue of volume bonus was raised by Lorna Tan. Read more…

Do not live below your means. Learn how to own it!

Alvin — Sat, 26 Jun 2010 04:00:10 +0000

Photo by Sir Mervs dose

I am not sure if thrift is part and parcel of Chinese’s culture. What I know is that I was brought up with the thinking that there are alot of things in this world that my family cannot afford, and I should not compare my situation with other rich people. Failing which, I would make myself miserable. Thus, I must be contented with what I have, even though there’s a little unhappiness or a tinge of envy hidden somewhere. I must say my mindset is shaped in this way. Only when I was exposed to the concept of law of attraction, that I see the root of all successes begin with the correct thinking. If I think in terms of lack, I will limit myself and abilities to have what I want. The converse is true, if I think abundance, I will have lots. That is why I changed the tagline of this blog to “living a life of abundance“.

Teacher Keane said before, “live below your means” is one of the most limiting phrases to be used. It tells you subtly that you should know your limits and stay in there! Read more…

Perception

Aaron Lau — Fri, 25 Jun 2010 10:00:16 +0000

Photo by peasap

In the book “The Black Swan” by Nassim Nicholas Taleb shared about misleading perceptions.

He mentioned about the turkey problem. The turkey is fed every day, and each day it grows to expect food, lowering its guard against unforeseen risk. Suddenly, on thanksgiving, the same hand that feeds it abruptly ends everything for the turkey.

An another example he used is the treatment of cancer. The doctor does the diagnosis and concludes that there is no evidence of cancer. There is no way to check every single cell, so the test is done by sampling. However, all it takes is a single cancerous cell to be undetected for it to start spreading. A stronger conclusion would be to state that there is evidence of no cancer.

Statistics can be such a misleading tool. Not seeing a person commit murder for 99% of his life does not mean we can conclude that he is innocent. However, seeing him commit murder is definite evidence that his is guilty. Read more…

Illusion of Winning

Credit Card Debts

Kay Toh — Thu, 10 Jun 2010 10:00:18 +0000

Photo by RogueSun Media

I read with interest on the article titled “Younger Singaporeans biggest debt defaulters” posted on Channel NewsAsia. This article talks about percentage of default for the age group ranging from 21-29 years old has the highest rate of defaults among the other age groups.

This is the age group where most of them have just graduated and are heading to the working force. It is at this stage they suddenly have much more disposable income to spend on as compared to before thus they may not have experience in dealing with credit cards and doing budgeting. Besides, they may not be well informed in the area of personal finance and it is not a wonder that this group may be the most susceptible to the ills of credit cards usage. Here are some opinions of mine regarding the usage of credit cards. Read more…

Not knowing what you do not know is most dangerous (Type I & Type II ignorance)

Wilfred Ling — Wed, 09 Jun 2010 10:00:33 +0000

Photo by DerrickT

There are two types of ignorance. The first type of ignorance is: Knowing what you do not know. For example, I know I do not know anything about sailing. Don’t ask anything about sailing because I know I am completely ignorant about it. I label this as “Type I” ignorance. For Type I ignorance, if someone ask me about sailing, I’ll confess I am ignorant. The other party knows I am ignorant. If one day I need to do sailing, I’ll immediately seek help from someone who knows sailing. There is no pretence of knowing about the subject matter because of being self-aware of ignorance. Read more…

No related posts.

Life time savings

Tan Kin Lian — Tue, 08 Jun 2010 06:00:40 +0000

I posted a story of a non-working woman who invested all of her savings in a 21 year endowment policy. She would have paid $18,000 in premium and obtained a return of $16,000 on maturity. This gave a negative return. Part of the premium went into paying for a rider to provide additiona insurance protection, but this was over-priced.

She obtained a meagre return of less than 1% per annum on the savings portion of the premium. The insurance company would probably have earned an average yield of 5% per annum. More than 80% of the gains went into the commission, expenses and profit. The meagre return could not even cover the inflation during the years. To this woman, it represented most of her lifetime savings, which has been denied of a fair return for a financial plan that was traditionally supposed to be trustworthy. Read more…

How to Manage Change in Financial Freedom

PanzerGrenadier — Wed, 02 Jun 2010 01:00:47 +0000

Photo by Street_Spirit

I have spent the long weekend shifting from my current place to my new place. It has been a tiring but interesting journey in finding out about managing change in financial freedom.

Changes in life are inevitable. As we progress along this journey towards financial freedom, things change all the time. Our financial situation, our health, our relationships at work and at home. Change is the only constant is the common phrase we hear but are we truly able to embrace change in our quest towards financial freedom?

Managing Change

1. Be Open

Human beings are creatures of habit and like to continue to be in the comfort zone. It takes a fundamental mindset change to be open and receptive to new ideas, environments and situations. It was the same for me when my spouse first brought up the idea of moving house. At first, I was quite resistant because I hated the idea of packing and unpacking all my stuff and also spending money on renovation, top-up in home equity for new house and related administrative and monetary costs.

However, the more I listened and opened up myself to the possibility of moving, the more I realised that it was not all bad and the change would result in a shorter commute time to work for me, better rest and sleep for the whole family and a family friendly location near to a park and other green areas.

Thus being open to change to a new residence did result in outcomes that were more positive than I had envisioned. Read more…