The Road to Wealth

Look through the Forbes’ list of the richest people in the world and you’ll find the majority of billionaires to be successful business owners, from Technology companies to Retail Shop owners to Property Developers. So what does this implies? That the surest way to wealth is to have your own business.

I guess no one became a billionaire just by working for others, in a 9 to 6 job. However, not everyone have the passion, drive, guts, and interest to be business owners or entrepreneurs.

So what are normal folks like us to do to even become remotely wealthy? While not everyone can be a billionaire, most people can amass a million or two (or even more), within their lifetime or by the time they retire. All it takes is discipline and determination, having the right mindset, and good planning. Or like what a friend like to say, have a good system in place.

I do understand that everyone is different, and not all are interested in being rich or to be able retire comfortably. Some just want to enjoy life, be lazy and comfortable, and not work too hard in life. However if you are like me and dream of being rich enough to have a comfortable retirement or to leave at least a million or two behind for your next generation, then you should seriously be following these steps.

1) Earn more
If you’re lucky enough to be born in a first world country like Singapore, then you should realized that there’s opportunities everywhere for you to make more money. From starting your own blog shop to teaching tuition to taking up a second job. I have a few friends whom I totally admire, who are sacrificing their time and energy to earn more while they are still young, or fulfilling their dreams of being an entrepreneur on the sideline while working for others. Either that or be so good at your main job that you are getting good increment and bonuses year after year. Don’t complain that you’re not earning enough. There’s always something that can be done to improve your current situation.

2) Avoid lifestyle inflation
How many of us are spending more now that we are making more money? So much more than when we first came out to work. I sure am guilty of that. I remember during my internship days, $600 a month was more than enough for me to both spend and save. And now, with many of us having a salary of 10times over, we are finding ourselves not having the ability to save. It is important to look back at our younger days and reminisce of how “free” we were from material wants and stick to that. Resist the urge to spend your increment from now on, and try not to splurge your bonuses away.

3) Save the differences
It is so simple, but many of us are not doing it. You earn a paycheck, you pay for needs and some wants, and you save the rest. The bigger the gap between our salary and spendings, the faster our savings will grow. I have friends who are not exactly high earners, yet they have an impressive amount of money amassed due to prudent spending and wise investing. They end up doing better than most high earners!

4) Invest
Once you set aside your emergency funds, you should invest to grow your wealth. Learn to study and pick up good businesses and invest in them. There are many things we can look at. From ETFs to Blue chips to REITs. It is important to invest in order to beat inflation and to slowly build up a portfolio that generate passive income to fund your dreams, which at the same time, offers capital appreciation so that you are not faced with a declining net worth as you grow older.

I know the steps sounds really simple, but not many can do them, or are willing to do them. Those in their 20s and 30s think that they have all the time in the world to start when they have their fair share of fun. However, time passes in such a way that before you know it, the bulk of it is already long gone.

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Diamonds a girl’s best friend?

The French are glad to die for love.
They delight in fighting duels
But I prefer a man who lives
And gives expensive jewels.
A kiss on the hand
May be quite continental,
But diamonds are a girl’s best friend.

Most of us girls have heard this song before, and many would have agreed that Diamonds truly are a girl’s best friend.

I’m initially unwilling to write this post for fear of offending other females, especially friends. But heck, I’m entitled to my own opinion, and they should know the truth too.

So why isn’t diamond our best friend?

1) you can’t measure love with a “thing”

Most girls would love the idea of having their significant half propose to them with a one carat (if not bigger) diamond ring, believing that the bigger the rock, the deeper the love the guy has for them. But how does one measure love (a feeling, something intangible) with something tangible, like, a rock?


2) it is not as rare as you think

Fact: there’s actually more diamonds than they let on (thanks to De Beers).
It is a marketing gimmick by the big diamond companies telling us that diamond is as rare as true love. Their “scarcity” is due to one company monopolizing the entire diamond trade. Other precious stones such as emeralds, rubies, and sapphires are all more rare, and much cheaper than diamonds.

3) it’s a poor choice for investment

Try selling your one carat diamond during emergencies. You’ll be surprised at how much (or how little) it’ll fetch. There is actually not much of an active resale market for diamond due to it’s abundance in supply, and that it can be artificially produced into it’s desired colour, cut, clarity and carat. Also, there is no true measure for diamond, as no two pieces of diamonds are entirely similar.

4) there’s other things to save for

Come on, spare the poor boy this full 3 months’ salary, or a year’s saving just to buy something that is highly inflated by marketing strategies of some very large corporations. The price you pay for the diamond actually goes to the middle man, the jeweler (Cartier, Tiffany and Co etc) for their own branding and packaging, each taking a cut of the profit before ending at the hands of the poor boyfriend/husband.

Moreover, there are other things to save for other than a piece of stone, such as wedding, down payment for the house, or renovation of your new home.

5) try GOLD instead (you can’t go wrong with what Cleopatra loves)

Gold has stood the test of time for thousand of years, unlike diamond, which only gain popularity less than a century ago. Gold is a hedge for inflation, and unlike diamond, has an active market for it, is highly liquid, in limited supply, and cannot be artificially produced.

So baby, give me a piece of gold bar over a diamond ring any day, and hope no friends decide to disown me after ing reading this post 🙂

Total Expenses for 2013

Total Expenses for 2013

Total Expenses for 2013

I’ve been diligently making a conscious effort to cut down on expenses, pay down debt and save money, and seems like my hard work has paid off!

My expenses still seems to be on the high side mainly due to the fact that my parents have retired, and I’m giving them close to 1k a month. I’ve also contributed slightly over 8k for debt repayment. It’s still a painful reminder of the amount of debt I’ve dug myself into, but am glad I finally have control of my financial life!

Without debt repayment, my total expenses amount to $33,944 which is a comfortable $2,829 per month. I don’t think I can cut my expenses down much further as it is already on the conservative side.

So the golden question. How much do I need upon retirement?
Looking at this table, I probably need about $14,600 per annum for living expenses, which is about $1,217 per month. Do note that these figures have yet to be adjusted for inflation, it’s just a rough guide.

Here’s the breakdown on an annual basis:

Insurance – $3,000
My insurance premium is a 15yr term insurance which I’ll stop paying when I turn 39. However, I believe I need to step up on health care insurance due to old age, and premium usually cost more the older we are.

Phone – $600

Transport – $1,000

F&B – $5,000
I’m a foodie and I don’t plan to scrimp on food.

Travel – $5,000
I’ll probably not shop much or have much entertainment, so I’ll reserve $5,000 a year for traveling and vacations.

So what’s the minimum amount I need to have for retirement? A quick calculation shows $300,000 is enough to fund my retirement. A $300k portfolio with an average return of 5% per annum is enough to generate me $15,000. Just enough for the expenses listed above!

Why we need to have Emergency Funds

Lately I’ve been thinking about my emergency fund.

To most people, emergency fund means having a pool of cash to fall back on in case anything bad happens, such as to tide over a job loss, or to pay for unexpected medical bills. Besides saving for “bad” emergencies of cos, an emergency fund is useful even when our life is a bed of roses. (I don’t like to just focus on negative things).

Here’s why:

– you decided that you have enough of your boss and fire him/her. You can use your emergency fund to travel for awhile before looking for a new job.

– you decided to have a career switch. For people around me, most are already holding senior executive or mid management positions. We used 6 – 8 years of our lives to build up our existing careers, but we may realised it’s not what we actually wanted and decide to make a complete career switch, where we may have to start from the bottom all over again. We may then need to use our emergency fund for the short fall in salary.

– being a woman, it’s common to leave our jobs to care for our kids especially when they are still young, or at least for the first few years. Imagine you and your husband do not have an emergency fund and both your salaries are needed to fund your family expenses. You’ll be caught in a situation whereby you want to take full time off to take care of your kid but can’t.

– having an emergency fund also means that you can grab hold of any opportunity that comes along, like setting up your own business, or buying more equities during crisis time (50% sale!). While some may argue that we have our opportunity fund for that, sometimes, such funds are already being fully utilized and an emergency funds serve to step up on our exposure to such opportunities.

Now, where do you save your emergency funds? For me, majority of my funds are in a UOB Fixed Deposit account, and the rest in a UOB saving account. It is advisable to keep your emergency fund liquid so it’s best to save it in a Fixed Deposit account, or a saving/current account where you can have easy access to.

So how does one determine how much emergency fund to have? One friend suggested 6 months’ worth of salary, and another recommended 12 month of living expenses. After giving this piece of information some thoughts, I’ve decided to use the higher of 6 months salary, or 12 months living expenses, just to be on the safe side.

Unknowingly, I’ve been saving aggressively (I saved about 45% of my salary last year), and now have up to more than 12 months of living expenses up my sleeve. It’s time to step up on investing and I’ll move the excess funds into my opportunity funds for investments whenever the opportunity arises. I’ll also stop contributing my monthly savings into this account and to channel it to my upcoming Europe trip in Sep. Yay honeymoon!

How to maximize your savings

I don’t know about you, but I do find it harder to save money now than ever before. For the first 8 years of my working life, I had never saved a single cent. We live in a consumerist society whereby we are constantly being tempted with products and services, promising us a more fulfilling life, with many buying into the story of how materialism can brings us happiness. From driving luxurious cars like BMW to Audi being the epitome of success, to owning designer brands like Chanel and Hermes to showcase a woman’s high earning power. Like the saying goes, “fake it until you make it”, people are flaunting what they own materially to make themselves look good and feel good. More and more people are going into debt as a result. I was one of them and recovery was painful. The path to wealth accumulation is actually a stimulation of simple steps, attainable by most.

So how does one accumulate wealth the sure but steady way?

1) Track and cut down on expenses

I used to wonder where all my money went at the end of the month, leaving me pretty penniless and having to live on credit. Tracking of expenses helps to add up my individual expenses to see where my money went exactly, and I was surprised at how much money I spent and how much the small stuff can really adds up. For example, I used to buy dresses from online shops thinking it’s just $30 for one dress and before I knew it, I spent over $600 on shopping just for one month. If you’re like me and are constantly wondering if there’s a silent thief quietly stealing all your money away, you better start tracking your expenses. You’ll be surprised at how much you spent on eating out, on a months’ worth of Starbucks coffee, or on taking cabs each month.

2) Develop a budget and stick to it

After tracking your expenses for a month or two, spending patterns should emerge and you now have a clearer picture on where your money goes to each month. Categorize spendings into different types of expenses incurred. Start recording your monthly income.
Salary – Expenses = Savings
I know you’re probably laughing at this simple equation. But how many of us are fully aware that having wealth starts from the leftovers from our earnings? Start looking on where you can cut back on and trim accordingly. The greater the balance is, the more money you are able to save. Many people yawn at the thought of following a budget but every business and corporation has a finance department and a budget in place for very good reasons. After tracking my expenses and sticking to a budget for a few months, my savings actually start to grow and I realized it’s actually possible to accumulate wealth. It just requires discipline and sacrifices.

3) Automate your savings by paying yourself first

The very first thing I do when I get my salary is to transfer a portion of it into a separate (untouchable) saving account. After a few months of sticking to a budget, you should be comfortable enough to know how much you need to set aside for living expenditures. However, do remember to budget for adhoc/ surprise expenses like birthday gifts for friends and family members, for festive seasons, renewal of yearly health insurance, provision for yearly vacations etc. This is to avoid digging into your savings/ emergency funds when these situation arises.

4) Earn more

There’s only so much you can cut back on, but there’s literally no limit on how much you can earn. (Stop complaining, you can always get a part time job if you are too poor to save money after covering basic necessities.) Over a one year period, I have optimized on cutting down on unnecessary expenses and am saving exactly 20% of my monthly salary. However 20% is just the bare minimum on how much we should be saving, and I’m working on maximizing my earnings. I aim to complete my ACCA by the end of this year, and the qualification has the potential to earn me a higher salary and a brighter job prospect, If your company is giving you a 3% increment every year and you’ve been with the company for over 5 years, then it’s probably time to ask for a promotion or seek greener pastures. Always upgrade yourself and learn whenever the opportunity arises.

5) Widen the gap

Aim to widen the gap between your income and expenses. The bigger the gap is, the greater and faster your savings accumulate. Avoid lifestyle inflation by not treating your salary increment and bonuses as an increase in spending power. While it is important to reward yourself (by spoiling yourself to something you’ve always wanted using the first month’s increment, or a small part of your bonus), do treat the increase in salary as a chance to save more. Or rather, ignore the increment and spend as budgeted, as though you did not get a raise at all.

6) Stop comparing with others

There will always be people driving fancier cars, owning more designer bags or living a more glamorous lifestyle. They may be earning more, have lesser commitments, or simply just come from rich families. Life is unfair that way. Comparing in term of owning material goods get you nowhere close to having a million dollar anytime soon. Prioritized and understand what is important to you. Is having a comfortable retirement and not having to worry about your child’s education more important than owning countless Hermes bags?

7) Avoid debt

I never get to save money when I was in debt. Simple reason being interest and late charges always eat into the little savings that I had. Being in a 18k debt means a couple of hundreds of dollars flushed down the drain (and into the banks’ pockets) every month. Now I avoid new debt at all cost and pay my credit card bills on time every single month. If I find myself thinking of breaking up my next purchases into installments, it means I just can’t afford it.

8) Invest regularly and prudently

Saving money is great. But remember banks pay you peanut interest of between 0.05% to 1% (for the case of fixed deposit) for parking your money with them. Once you have built up your emergency fund (I’ll talk about emergency funds in another blog post), invest the excess cash to earn more than the pathetic interest from banks and slowly accumulate/ reinvest to generate passive income for retirement. Don’t know what to invest in? While I’m no investment expert, I do recommend buying ETFs (exchange trades funds) to gain access to a pool of underlying assets for diversification which earns a dividend return of 2-3% annually. Instead of buying blue chips, the STI ETF pools together investors’ resources to dabble in a mixture of blue chips like the major banks in Singapore (DBS, UOB, OCBC), Singtel, Starhub, Keppel Corp, Jardin, Sembcorp, Capitaland, Olam, Noble etc. This ETF is also a close reflection of how the Singapore economy is performing.

So there you go. These steps worked for me, and I hope they work for you too 🙂

Retirement in Pattaya?

I just returned from a trip to Pattaya and Bangkok to visit my uncle who is currently staying there with his family.

My uncle is looking at the possibility of getting a retirement home in Pattaya for it’s happening nightlife and gorgeous sea view, and it helps that it’s only a 2hrs drive from Bangkok, where they are currently staying.

Being a fan of properties, naturally I went along with him. I was in awe with the good quality renovation and furnishing, cool facilities, nice layout, good view of the sea, and above all, the attractive prices of condominiums in Pattaya.

Here, do feast your eyes on the photos below.

The Riviera is simple gorgeous. It is my favorite development among the 5 projects I went to.

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After Riviera, we head to Palm, which is even nearer to the beach. It’s beautiful as well and already fully sold.

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The cloud:

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This one is my least favourite, so I had forgotten the name of the development.

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My favourite unit at Riviera cost around SGD110k for a one bedroom unit (35sqm), which requires a 15% down payment. There will be a 50% balance payment upon completion of construction, and the balanced 35% to be settled using a 30years mortgage loan.

The prices are really attractive compared to housing in Singapore. For a one bedroom unit, it cost about SGD800k which is a total turn off. Regardless, overseas retirement is just a thought. I’m still decades away from my retirement and I should focus on building my capital first.

How I got out of debt (Part 2)

I’ve previously posted the first part on how I got out of debt here. Being in debt for years was really painful. I had totally ignored my debt situation and make no efforts to get out of it. However deep down, as much as I tried to ignore it, I know a certain part of my life was pretty screwed up.

Getting a good bonus, working out a debt repayment plan, and sticking to a budget were the first few steps I took to get out of my debt situation. I have to ensure not to fall back into debt again, like how I did before.

1) Changing habits/lifestyles

– Quit shopping

I realized whenever I’m bored, I’ll go online hunting for things to buy. Be it dresses, bags, accessories, or even gadgets. Shopping keeps me occupied and happy for awhile, until I received my new loots, then I’ll get bored and hunt for something else again. The first step to implementing a change is to identify the problem. In my case, it was the lack of self control, and the need for instant gratification. I made it a point to stop online shopping and I avoided shopping malls too, until I’m comfortable enough to just look and not buy. I also stop visiting designer bags forums, and stopped looking at advertisements of luxury products.

– Stop eating at restaurants

I used to dine at places like Ding Tai Fung, Crystal Jade, Ichiban Sushi and Sushi Teh whenever I meet up with friends or my boyfriend for dinner, which is like almost every other day. I even spent over $20 for lunch during weekdays. Now I eat at food courts and coffee shops, and I have to say I enjoy such local treats too! I still dine at my favourite places, but it’s usually reserved for weekends. Now on normal weekdays, $10 is more than enough for both lunch and dinner. One tip here, stop ordering drinks when eating out, just order plain water. They are not only free but much healthier too! I completely stopped buying bubble teas and Starbucks coffee back to the office post lunch too. It’s usually the small amount that adds up.

– Stop taking taxi

Compared to spending a few hundred dollars on transport previously, I now only spent about less than $100 a month on public transport.

2) Goals setting and setting of priorities

I never knew what I want in life and was just drifting through and enjoying life as it is. I guess everyone went through that stage when they were younger. After getting my bonus, I really sat myself down and started thinking of what I want to achieve in life. I want financial freedom. I want to be debt free, to enjoy the small things in life, not be bound by material things, and to finance my lifestyle using passive income. It is then that I realised I need very little to make me happy. Good health, being surrounded by people I love, good food (not necessary expensive), and self development are what matters. All these does not cost me a lot of money.

Once I sorted out my priorities, decisions making became easy. I know clearly what I want, and what I do not want. I’m no longer tempted by designer stuffs and the “finer” things in life. I no longer have temptations to shop and buy thing. Even for my upcoming wedding, I planned and budgeted in such a way that even if we make losses for the banquet, it is still affordable for my fiancé and I. I don’t care if it’s not extravagant. What I want is an awesome marriage, not be debt ridden after all the glamour is over. And we all know the number one problem couples usually face is financial difficulties. I don’t want that to happen to my fiancé and I.

3) Change in environment

I would say the biggest catalyst in helping me get out of debt and turning my financial situation around is due to the fact that I changed my job. I made many good friends from my banking days, and they are still some of my closest friends. However, I’m not entirely agreeable on their spending habits (sorry folks!).

My current colleagues on the other hand, they aren’t the most exciting or fun loving people. They are in their late 30s to early 40s, but they sure know a thing or two about amassing wealth and they know the importance of being debt free. One repaid his HDB loan within two years, and one within seven. My Finance Manager fully repaid his 5 room BTO the day he moved in. They are frugal, yet generous people. Being in such an environment prompt me to save and work hard for my goal of attaining financial freedom.

So all in all, without my current job (for the bonuses and the good influences), I’ll probably still be in debt, and most likely carry debt into my marriage and into my 30s.