I am a regular reader of the “me and my money” column every Sunday in Straits Times. Although I have considered doing the feature, I am hesitant lest the loss of my privacy. But sometimes I wonder if any new doors will open if I just have the courage to share.
And so, for this blog, as my first written article in a long while, is who I am if I do appear in “me and my money” in Straits Time.
Regular employee strives for financial freedom
Born without a silver spoon but armed with discipline and grit, I dream of the day when I can stop trading my time for money in a regular job. I envy not the frenzied life that the rat race brings, but seeks to live a fulfilling and purposeful life.
Like many people in Singapore, I paid my dues in education for 15 years, graduating from university and getting a regular job. When I was young, I was taught that studying hard and doing well in school will guarantee success. I believed in that dream and worked hard to get my As. But life didn’t turn out as good as I hoped. Time flies past so swiftly and yet I wake up everyday to routine and it gets harder to be excited by life. Surely, there must be more than just this.
I am now a salaried employee, taking regular holidays to recharge from work, then going back to work to earn the money for the next holiday. The salary chains me to the job for I cannot get the same salary if I change my job. But about 10 years ago, I started on a plan to get myself off the hamster wheel. I begun my financial education, hoping that I can someday stop working for money’s sake. This doesn’t mean that I will stop work, but it means that I can work by choice, and not because I have no choice but to work.
Q: Are you a spender or saver?
Definitely a saver. I am very disciplined in monitoring my financial life. I have a monthly budget I follow closely and track all incomes and expenses with an app installed on my phone. This has been going on for a few years so it is now instinctive for me to record. Sometimes, I feel that I operate my financial life like a company as I have balance sheets and income/expense statements. As I am using my time to exchange for money in my daily work, I am only willing to spend on stuff that really matter. My time is a precious, non-renewable commodity and I will only want to spend on worthwhile experiences.
Q: How much do you charge to your credit cards every month?
A few hundred each month. My personal monthly budget is not high, so I do not spend much on my credit cards. But I do charge whatever I can to a single card so that I can consolidate the reward points. I also enjoy the benefits that come with some credit cards like dining privileges and travel perks. I pay off all bills at the end of the month and do not pay annual fees for my cards.
Q: What financial planning have you done for yourself?
I am seeking financial freedom i.e.being free from financial worries so that I can lead the life that I want to. That will happen when my passive income covers my expenses comfortably. I am heavily influenced by Robert Kiyosaki’s Rich Dad Poor Dad concepts, and try to buy assets and reduce my liabilities. Luckily, I am on track as my current passive income can already cover my fixed expenses. But I am aiming for a sizable safety margin so that my passive income can also cover inflation and unexpected costs. My current assets include stocks, bonds, gold and cash.
To me, cash is an asset class and despite what some financial advisers say about inflation, I will still hold cash when markets are volatile or overpriced. I use gold as a hedge against the flood of paper money and buy gold bars annually. My bond holdings include my CPF, which pays 4% for my SA and MA accounts, a risk-free return I consider acceptable. My stock portfolio are mostly blue chip dividend stocks and I also have a monthly RSP that buys into low cost ETFs. I have term and regular insurances to transfer my risks for critical illnesses and hospitalization.
The current bull run is into its sixth year and I am now more wary. For the past year, I have been about 20% invested. I am waiting for a good entry opportunity so that I can get some good assets at sale prices. Then perhaps, I can be truly financially free.
Q: Moneywise, what were your growing up years like?
I grew up in a low income family, and my parents were often arguing about money. Dad’s work was irregular and he also spends his money on smoking, gambling and other vices. Mum was really frugal and held the family together. But sometimes, money was so tight that I didn’t have any for school fees and food. I started helping my dad at odd jobs since primary school and worked at various jobs till I finished my university education.
Mum was always saving what little we had. She did all sort of odd jobs so that she could make more money for the family. Her health suffered but she refused to let my dad stop my schooling as he wanted me to work to help with expenses. Luckily, I was good with books and managed to graduate from university.
Q: How did you get interested in investing?
When Mum passed away, I was shocked to see that she had managed to leave me some money. Her last words about being frugal woke me up from my spendthrift ways. I was determined not to squander away her “blood and sweat” money and decided to learn to grow her money. I started reading financial books and tried various types of investments. Fortunately, I entered the financial markets at a good time and my forays made money. That got me even more interested and I continued learning and investing.
I know now that markets move in cycles and yet it is impossible to time the market. So I invest regularly every month in low cost ETFs, add on to my gold position annually, and will invest in riskier assets when I feel that there is a suitable chance. Meanwhile, I am contented to be patient, and build my war chest for the inevitable opportunity that is sure to come.
Q: What property do you own?
Now I only have the HDB that I am staying in. I had owned private properties previously and made some money after selling them. My last private property was sold in 2010 and since then, the market have moved beyond my comfort level. Despite the chase by so many to upgrade to private property, I have no problem staying in a HDB.
Q: What’s the most extravagant thing you have bought?
It is likely to be my last car that I drove for 7 years before selling it away. I paid for the car in cash and the COE then was only 12k. I consider the car to be my most wasteful expense as I paid 60k of hard cash for a depreciating liability, but yet it had brought me many hours of pleasure. The car provided convenience and I could drive my loved ones to inaccessible venues. In that sense, the car may not be so extravagant after all.
Q: What’s your retirement plan?
I am now an employee, running the rat race. Recently, I have started saving my entire monthly salary as my expenses are already covered by my passive income. My monthly pay goes into my cash account, earning about 1.3% pa in a bank account. The funds will wait there till I can deploy it more purposefully.
In mid 2013, I experimented with retirement for a year. I took a year off work and traveled around the world. During the year, I lived on passive income and experienced how it was like to retire. After the year, I have a good idea of what retirement is like for me. There are many aspects that I enjoy but there are some issues I will need to work on. Now that I am back to full time employment, I am planning for the day when I will eventually retire for good.
Q: Home is now….
the HDB I am staying in. It is in a mature estate, with unblocked views and lots of privacy. It is also near the MRT and close to many amenities. It may not be a private property with security guards and a swimming pool, but it is fully funded and is my personal space to rest from the day’s labor.
Q: I drive….
the BMW. That is, I take the Bus, MRT and Walk as much as I can.