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Journey to financial freedom is not a race.

Tuesday, March 25, 2014

I get letters from readers of all ages. 

Obviously, all of them have different circumstances and they have different motivations for writing to me.

However, many are interested in achieving financial freedom on a sustainable basis. 

What does this mean? 

It means having regular and consistent passive income in sums big enough for them to stop working for an earned income, if they so wished it.

Questions such as, "Is this possible?" and "How is this possible?" are rather common. 

Of course, I have blogged about such topics often too.

Once in a while, I would get an email that is like a cry of despair. 

These emails are usually from people who are in their 40s like me or in their 50s. 

They are people who have yet to start or are "late" to start on their journey to financial freedom.

Although I have blogged about how we should start our journey to financial freedom as soon as possible and that the young have the advantage of time on their side, the best time to start our journey is always "now".

We might be 40 or we might be 50. It does not mean that because we are "late", we should give up.

Remember, we are not "late", we are only starting "later".

What we have lost in terms of time, we could compensate with a stronger determination to achieve financial freedom and by putting aside a bit more money each month, investing prudently in sound income generating assets.

Even if we are not able to generate sufficient income from our investments to replace our earned income, being able to have enough recurring passive income to take care of all our regular expenses by retirement is already an achievement. 

If we must delay our retirement by a couple of years to do this, so be it. 

Would we rather have at least this or nothing at all?

Don't be demoralised by how much someone in our age group has achieved. 

Don't envy people who have started the journey at a younger age. 

The journey to financial freedom is not a race.

Each of us have our own circumstances and priorities. What matters is that we achieve the goal of financial freedom. 

Some might get there faster. Some might be a bit slower. 

Everyone who arrives at the destination is a winner. There are no losers at the end point.

Unless severely disadvantaged, all of us can do it.

Believe it.

Related posts:
1. What is $1 million at retirement?
2. Achieving $1 million in retirement funds.
3. Save 100% of your take home pay. What?
4. Man collects rent from his boss.
5. 7 steps to creating passive income from stocks.


Ray said...

it's a race against time, isn't it? while u're still having a day job to accumulate the invest-able capital.

Steven said...

Hi AK,

Sad thing is that, in Singapore, whatever thing we do, we do it as if we are in a race. Since young we have been inculcated this.

But Race to where? Race to financial suffering? I have no idea... lol

Best Regards,

Tien Song Chuan said...

Money is not everything in life you know.

AK71 said...

Hi Ray,

It could be, if we look at it that way. So, if we want to retire by 55, then, we must have a plan in place to reach financial freedom by 55. Time is involved.

However, we can also think of it as a progressive process and time is helping us meet our goal. Then, time is actually a friend. Compounding is magical but it needs time. :)

AK71 said...

Hi Steven,

Yes, the environment here is one of competition. It is everywhere.

To Singaporeans, it would be a luxury not to have to compete for anything. :(

AK71 said...

Hi Tien,

You are right, of course. There is more to life than money.

Unfortunately, money is a big part of modern day life and more so in a country with high costs like Singapore. :(

Derek said...

Hi AK,

I concur. We may be late but that doesn't mean we have lost. You lose only if you have given up. This does not only apply to Financial Freedom but also many other aspects in life. It could be in your career, education, social or something as simple as picking up a new skill.

I know of people learning K-pop dancing in their 30s and the piano in the 40s. My friend in his 40s is learning the guitar and singing, I think he is the oldest in his class, and that includes his teacher.

In finance, everyone is advocating starting early but very few talk about how you can still succeed even if you start late. Maybe some readers here can share?


AK71 said...

Hi Derek,

I am pretty sure that there are examples of people who started on their journeys to financial freedom only in their 40s and made it in their 50s or people who started in the 50s and made it in their 60s. How they have achieved it would be interesting stories to share. :)

My 15HWW said...

Hi AK71,

I believe that it's only too late if one has given up. After all, nobody learnt everything at a young age. =)

Using myself as an example, I only managed to learn how to swim properly recently at the age of 27. Think that can be considered "late" for most.

Previously, I had been procrastinating even though I knew it was an important life skill to have. The "fear" of being laughed at or mocked at in the pool was probably more scary than gobbling water.

Luckily with the encouragement of my wife, I didn't give up.

I am proud to be able to swim today, just like how some readers will be proud to have started their financial freedom journeys today after reading your article. =)

AK71 said...

Hi Stoical Keynes,

Till today, I still cannot swim very well. I guess I could spend time learning to do it better but I have never really found a good reason why I should. ;p

So, it also depends on whether something is important enough to the individual. If something is important enough to us, we will do it and try to do it well. :)

Little Boy said...

Hi Ak,

Thanks for sharing a great article!

I love this paragraph,

"Don't be demoralised by how much someone in our age group has achieved. Don't envy people who have started the journey at a younger age. The journey to financial freedom is not a race."

Well said AK! It's true that there are many people out there that are better than me or you or whoever. 一山还比一山高. At my age, I already heard of people working for big bank names or making big bucks. Of cause I do feel envious about it. Probably due to the nature of Singapore's environment where we are sub-consciously drilled to be competitive in nature.

But, I always tell myself what I have in possession may not be what he has. Each an everyone in this world are born with a reason and a talent in us. We just have to find our strength and continue working on it.

Little Boy

INVS 2.0 said...

Life is indeed a race like getting certain tasks done during your younger days. But financial freedom requires patience. I see so many young ones can't delay gratification due to impatience of buying the things that they so dearly want (eg. BMW, condo).

AK71 said...

Hi Little Boy,

Indeed so. Many people my age or younger are far richer than I am and more successful in the corporate world. If I keep dwelling on that, I would become quite depressed. -.-"

AK71 said...

Hi INVS 2.0,

The vast majority of people want to satisfy their materialistic desires as soon as they can afford to. This is the reality.

One day, I hope to do things differently and reach out to more people. I hope to make a bigger difference then. :)

L said...


Given finite means and having to choose one of the two, which of Saizen and Croesus would be a better investment for1) future income and 2) growth potential? Just to clarify, 1) is dividend income stability/growth and 2) is share price appreciation.

Thank you in advance!

AK71 said...

Hi L,

Thank goodness I did not see your comment last night or else I might not have been able to sleep. ;p

I would just split my funds equally between the two. Why? They are not comparable, strictly speaking.

Saizen and Croesus own different types of real estate. So, it is not comparing like for like.

If we value stability more than growth, Saizen. Residential real estate has relatively inelastic demand. If we value growth more, then, Croesus. The positive double digits rental reversions we are seeing in Mallage Shobu tell us that retail sector in Japan is seeing a revival after years of stagnation.

Saizen REIT also has a much stronger balance sheet compared to Croesus Retail Trust. So, if we are willing to sacrifice growth for strength, purely based on this, Saizen REIT is the choice. ;)

L said...

Thank you for giving your take on this. It's been quite a dilemma. I guess it will boil down to my risk appetite. :)

Unknown said...

Hi, AK,

What is your view on Ascendas Hospitality Trust on the acquisition of Osaka Bambang Washington hotel? Is it fair to buy at $0.73?

AK71 said...

Hi L,

Indeed so. Hope you could arrive at a decision that is most comfortable for you. :)

AK71 said...

Hi ching wei,

I think you have been eyeing Ascendas H-Trust for a while now. ;)

When you asked me this question earlier this month, the price was also 73c. My opinion of the Trust has not changed. :)

Before this acquisition, the Trust had trouble meeting its yield forecast of 8% based on its IPO price of 88c. This translates to a DPU of 7.04c.

If we look at the announcement, distribution yield is currently 7.5% based on 72c a unit or a DPU of 5.4c. The yield could bump up to 7.7% to 8.2%, post acquisition. Not a big improvement.

Having said this, at 73c now, all things considered, it more value for money compared to 88c at IPO. So, if you really like it for some reason, you could consider getting some.

Personally, I would be interested if it were able to deliver on its IPO forecast of 7c DPU at today's price. ;p

AK71 said...

Ascendas Hospitality Trust (A‐HTrust) has priced its $50mil placement of 73.53mil new stapled securities at the 68‐cent issue.

Proceeds will be used to pay for the Osaka Namba Washington Hotel Plaza in Japan.

There goes the DPU accretion.

AK63 said...

Hi AK, it's a great pleasure to have stumbled upon your informative blog, thanks for all the invaluable stuff you posted here which helped us all....

I am a very late starter, I will be 51 soon and always wanted to invest somehow but lack the funds....

My wife and I have been DINKs but on the lower end of the spectrum with a monthly household income of less than $3k, until about 2 yrs ago when I was down with a mysterious medical condition that 'disabled' me for life, I had to quit my job and my wife gave up hers to work part time in order to take care of me....

Our savings depleted very fast due to the medical expenses and we have difficulties making ends meet, but thank my 1st lucky star that I have sold my 3-yr-old car at a profit which helps reduce some medical costs, and no worries for our hdb flat cos it's fully-paid....

But still money won't last what with these unpredictable medicals, so we thank our 2nd lucky star that we decided to sell our flat last yr and managed to secure a buyer right b4 all the new hdb cooling measures kicked in....

Sold roof over our heads then where to stay? Thank our 3rd lucky star that we were successful at our 1st try as a 1st timer for bto and got a ready flat almost immediately, and here comes the whammy, need to settle bto by Nov and proceeeds from selling old flat onky comes in Jan this yr....

Thank our 4th lucky star that we managed to get housing grant that settled 50% of the bto price, almost $10k from our cpfs and the rest came from surrendering 2 insurance policies and our remaining cash.... Total cash left to tie us over till end Jan = $584.15....

Thank our 5th lucky star that we have always lived within our means and although difficult, we managed to have almost $67 left when we received our BIG cheque from hdb....

So, until today, I have invested 83% of total cash-in-hand in 5 REITs, 1 Biz Trust and 1 blue chip after researching them from all the resources available....

I am investing not to become a millionaire or to have luxuries or such, I am investing for passive income to substitute my inability to work, to supplement our measly income, to help with medical expenses and to live a frugal but comfortable life, that's all....

And you are so RIGHT about gearing and debts and such, with zero debt we can afford to live knowing that we have exactly what we have, and everything else is a bonus....

Thank you for your time and patience, and Good Health always....

AK71 said...

Hi AK63,

Thank you very much for sharing your story with us here. Indeed, if we live way below our means and do not overly depend on leverage, we stand a better chance of having a peace of mind. :)

SnOOpy168 said...

AK 63

Thanks for sharing. You are very lucky that everything falls in place, right place & right time.

We wished you the best & smooth journey on your recovery and continuation of your financial freedom.

Solace said...

Hi AK63,

Your story is an inspiration to many.

We have lots to learn from you about not giving up and making full use of what we have to improve our life.

I wish you good health and a smooth financial journey in the years to come.

AK71 said...

Don't be demoralised by how much someone in our age group has achieved.

Don't envy people who have started the journey at a younger age.

The journey to financial freedom is not a race.

(This blog from 2014 gets a new look.)

AK71 said...

Peter Somtam says...

Hi AK, this is the best and simple down to earth encouragement I read.

To each own time to able to reach Financial Freedom.

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