2nd try using an infographic

How much I think I need to be financially free

Today I have some free time to write while waiting for my hubby to cook lunch, so am taking a rest and also doing some reading of other financial blog.

I was reading Seedly blog when I came across an article detailing how much savings one should have to retire at age 62.

For me, I plan to retire at age 40.

To derive how much I need a month, assuming I have retired and have no income, I first write down all my current fixed expenses:

1)  Insurance 450
2) Transport costs 80
3) Utilities 100
4) Telco and cable 150
5) Food 900
6 ) Groceries 300
7) Car loan 550
8) Costs associated for owning a car (petrol, car park, insurance, road tax) 380
9) Shopping 100
10) Exercise membership 170
Monthly total 3,180 = 3200 (rounded up)

Next, with this above list, I will go through each item and ask, how would this cost look like if I have retired.

1)  Insurance 450
2) Transport costs 80
3) Utilities 100
4) Telco and cable 150
5) Food 900  600 (I will be eating less expensive food at home)
6 ) Groceries 300
7) Car loan 550 Switch to taxi 320 (assume I go out every sat and sun and take taxi to and fro)
8) Costs associated for owning a car (petrol, car park, insurance, road tax) 380
9) Shopping 100
10) Exercise membership 170 (I would be exercising at home/park nearby)
Monthly total 3,180 = 3200 (rounded up) 2,020 = 2,000 (rounded up)

With this above, I know that I would need minimally 2k a month to retire. This means I need 24k passive income a year.

working backwards once again, I use 24k/rate of return from my investment (around 4%) = 600k.

This means I would need to invest 600k with a return of 4% every year, to support my retirement.

Currently I have already invested 250k. I would need 350k more.

With my goal of retiring by 40, this means I would need to invest 120k a year. Seriously, this is next to impossible because my annual income is less than 100k. So knowing that I can't do this, i need to be realistic about retiring at age 40.

Let say I delay my plan by 5 years, each year I would need to invest 44k (this is comparably more achievable). I then subtract another year

Retire at age 45 - invest 44k a year for 8 years
Retire at age 44 - invest 50k a year for 7 years
Retire at age 43 - invest 58k a year for 6 years
Retire at age 42 - invest 70k a year for 5 years
Retire at age 41 - invest 87k a year for 4 years

As I look at the figure above, I think i could aim to achieve retiring at 44. This is not something I could do easily, but it will be a challenge that I set for myself for the next 7 years counting from this year.

Lazy sundays

Writing this post on my sofa as I just finsihed eating a macdonald breakfast for lunch.

Weather is sweltering hot. 

Every sunday, one of my routine was to surf the net for new blogs in personal finance. 

Some of the blogs I frequented are seedly, simple sum, woke salaryman, dollars and sense.

Today I decided to search for something different - don't listen to everything the financial gurus preach.

I myself, have read a few books like the Automatic millionaire, the millionaire next door etc, and many other books on personal finances.

Personal finances is not a one-size-fit-all mainly because everyone has a different goal and personality.

For instance, my financial goal is to earn passive income that can cover my expenses which differs from person to person. My timeframe is also different because I want to reach there in 3 years time. I would prefer fuss-free way to do this. Because of this, I would accumulate savings and put them into stocks. And accumulate passive income through dividends.

Another person with a similar goal but who has a different timeframe and expenses, may want to save and accumulate enough for a condominium and earn income from renting it out. To accumulate for the downpayment, likely 200k could take 5 years or more. This could resonate as at the end, you end up with a tangible asset.

Others prefer to set up a side business etc.

With this knowledge of myself, I try to reach up on books or articles to further my knowledge. 

Making money in a Reccession

2020 will be the 2nd time I experienced a recession as a working adult. First time was during 2008-2009 Financial crisis.11 years later, would be the global pandemic.

Singapore would be in a soft lockdown from 7 April onwards. For me, I would likely be working at home from my laptop. Life goes on as normal just that I can't go to my fightzone for exercise. This means I would need to exercise at home if I could.

Well I have a stationary bike at home, been collecting dust and acting as my bag holder for a little while. I may start to go running again ( I stopped running since joining fightzone), so good to restart this. Luckily I have brought my running shoes back from office.

Talking about recession, there was some regrets that I had, as I missed the opportunity to buy big chip stocks there were selling at very low price. OCBC was selling for less than $5, F&N $1 plus.

But I didn't, partly because I was new to investing. I only started investing in 2008 and I was not confident that my job would hold.

Luckily my job was stable but there was no pay increase and bonus. Even after times improved, there was no bonus. Back then, I was drawing a salary of 2450. This was not a bad salary during times then. Beggars can't be choosers. Actually I had some savings then, but I was not confident enough to like buy 30k worth of stocks at one go.

So now, the opportunity arose again. I do not feel that the stocks have fallen low enough as at the time of my writing, I think it is only halfway there.

so my game of plan is to save as much as possible and buy stocks when they are near bottom. 2 stocks that I am waiting for, are City development and Singtel. Target price is $5 for CDL and $2 for Singtel.

I believe this 2 stocks have the ability to double in price when the economy recovers maybe in 1-2 years time and if they do, I will be almost 3/4 my way to my financial freedom.

In a nutshell, my financial freedom plan is to build a 500k portfiolio and live on the dividend income from them. My return rate is around 4%, so if I have 500k generating 4%, I would have 20k per year without working. So far, I have invested 223k cash (Cost price) in stocks, another 30k using CPF monies. On hand, I have around 15k left, I am aiming to save 2.2k every month and to invest them whenever the opportunity arises.

If my stock holdings can double in 2-3 years, I would have reached my financial freedom, by 2023 which is my 40th birthday.