Passive Income 10000 (cpf interest)
10031 (bank interest)
Passive Total 52883 (exclude cpf)
Invest 273082 (exclude BCIP)
Despite not working for the last 4 months of the year, I have managed to save 91k (67k from active income, 24k from passive income). At the start of the year, I had a financial goal to achieve passive income of 50k for 2016. It seems that it is achieved with a 52k sum (62k if I add the cpf interest). I have even managed to sock away about 23k (44% savings rate) from my passive income.
Because I can survive entirely on my passive income, it gives me the courage to walk away from my full time work this year. Even if I do not work next year, I should be ok if I maintain my current expenses. For 2017, I will aim to increase my passive income to 60k (without cpf) and save >40% of it again.
My stock portfolio, despite a post Trump run up, is down about 3%. It has recovered from its Jan lows and through the year, I have added 273k. I buy mostly blue chips, reits/trusts and etf. I have some US$ exposure but my entire portfolio is 99.9% Sg (my house, assets, cpf, family, friends etc). Not a wise decision considering that US equities have done well but Singapore is flat. I have too much geographical risk. Currently, I am about 40% in cash, 40% in stocks, 17% in bonds, 3% in gold. For 2017, I will diversify my risk and start investing in US markets.
I have also topped up my CPF accounts. As I did not work the full year, I did not hit the $37740 limit. I decided to contribute as I see my CPF as a long term bond maturing when I reach 55. I am more keen on the SA but I cannot add to it except via normal contributions. For 2017, I will continue to max out my CPF through voluntary contributions.
I paid my annual insurances ($3500 pa) and contributed to SRS ($15300). Most of my current endowment insurances mature at age 50 so I am likely to replace them with new term policies. This SRS is likely my last, unless I have to pay taxes, I will not be contributing anytime soon.
These are the major financial decisions I made in 2016. Some were for immediate needs, some were for my future. Like what the ntuc advertisements advocate, I hope my future self will thank me for the choices I made today.
So for 2017, these will be my financial goals:
- increase my passive income to 60k and save >40% of it
- invest in US markets
- max out my CPF contributions
While it is not easy to be financially independent in expensive Singapore (too many temptations), the wealth formula to be so is actually quite simple: Earn as much as you can, Save as much as you can, Invest as wisely as you can. In the process, don’t make too many major mistakes. Keep the losses small and the winnings will compound themselves over time. It helps a lot to be lucky too (being in the markets at the right time).
There have been many early retirees who spoke of the same method. The famous Mr Money Mustache (MMM) retired at 30 years old in 2005. Some years into this new life, he realized his peers were still stuck in their well paying jobs but yet barely able to meet their increasingly inflated lifestyle bills.
(Coincidentally, my blog site, My Money n Me, is also MMM) 🙂
MMM created a blog to teach people on how to live a simpler life in order to amass a surplus of money to put to good use. The blog has since reached over 16 million people and become a study on life, happiness, and the joy of focusing on meaningful work.
“The purpose of work is to create. Whereas the purpose of earning money is to have enough money.”
At a recent conference, he spoke in public for the 1st time on How to be Happy, Rich & Save the World. Watch the video to see how retiring early can actually make the world a better place.
“Money is a really powerful thing. It really has the power to completely improve the world we live in, or it could also trash it overnight, just depending on what choices we make with it.”
My retirement so far has 3 main concerns: finances, health, time.
Finances: I have always been financially prudent. Steve Jobs said that the dots will only connect when you look back. In my life, there were a few dots that proved to be turning points. In 2003, I became interested in FI. In 2006, I invested in my first property. In 2009, I continued investing when many turned away. In 2014, I started living independently of my salary. In 2016, I quit from full time work.
I am hoping that moving forward, even without a regular salary, I am able to sustain myself till my end. And that the money worries I experienced when I was growing up will never haunt me ever again.
Health: I am fit and healthy now. Except for some sports injuries and dental nags, I am free from physical ailments. I exercise regularly and though I do not attend to my diet too much (I basically eat anything I want to), I am conscious of my weight and health. I have been overweight before and I do not want to go back to those days.
I am more concerned about my mental state. Not working and having too few social interactions can lead to issues. I find myself not forming new meaningful relationships (I used to get there a lot more with my students and some colleagues) and some days, I can be too quiet for a too long a time. It becomes depressive and I don’t like how it feels. I probably need new experiences with new people. Ironically, working (for pleasure) again may resolve this.
Time: LKY was right after all (at least for me). He said that it is good to work because it keeps you occupied and engaged (and it is good for the economy). He advocates working for as long as you can to stay healthy. After 4 months of non work life and watching too much Korean dramas, I have to agree with him. One perk of retirement is I get control of my time, but this can be a bad thing when I don’t manage my time well. I have to be disciplined and stay engaged with the community.
I thought I left all the admin behind with work, but I am still planning my days, reading emails and waking up to the alarm clock. I still have a good 50 years ahead (I hope) and I do not want to idle my life away. Pursuing FIRE (financial independence, retiring early) was to get control of my life & my time, so that I can spend them meaningfully.
I have been working for money since I was 15 years old till now. In my last 13 years, I had been diligent in my quest to achieve FI. If I live simply, I am now free from the need to work to live. Compared with having expensive cars and big houses, having this freedom is already the greatest luxury for me.
I give thanks to the many good things, and wonderful people that blessed me in 2016. I am grateful that I finally have the courage and faith to be true to myself, despite the fears. In the new year, I intend to work on matters that matter more to me.
Happy New Year 2017 🙂 may it be filled with blessings and opportunities.