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Free "e-book": Don't depend on wage increases for higher income.

Tuesday, June 3, 2014

I am sure you have read the news and it is sobering. Wages are increasing more slowly and actually if our wages did increase, we should count ourselves fortunate. Some people I know are not seeing any increase in wages.

One of the things we must never take for granted is that wages will always increase year after year. There will be years when we might not get any increase. There will be years when we might have to take a pay cut. What? You have never experienced a pay cut before? Lucky you.

What could be worse than not getting any wage increase? Getting a pay cut, of course. What could be worse than that? Retrenchment! What could make that worse? To see inflation marching on. That would make everything a double whammy.

What to do? Take on another job? I guess we would have to do that if we didn't have a choice and if we could get another job. There would be bills that still need to be paid, wouldn't there? There would be expenses that could not be avoided. It could get very depressing but human beings have the tendency to feel invincible when things are going swimmingly their way, never preparing for how things could go wrong.



Of course, if we had money stashed away, it could lessen the pain. This is why an emergency fund is important. Having said this, even emergency funds could get depleted. So, for double protection, we should own assets which consistently generate income. Indeed, this is something that should benefit all of us who want a secure financial future.

These are topics I have blogged about often enough. So, here are a few chapters in another "e-book" which you might be interested in reading. Don't depend on wage increases for higher income:

Chapter One
People who depend on their monthly wages just to get by are wage slaves. Don't be a wage slave.
See: Wage slaves should be fearful.

Chapter Two
We need to put aside a meaningful emergency fund. This is probably the most basic thing we must do to have a measure of financial security.
See: A meaningful emergency fund is important.

Chapter Three
In order to own income producing assets, we need to have money. How do we have money?
See: The first step to becoming richer.


Chapter Four
We always hear about how we should start investing to grow our wealth as soon as possible. Starting young would give us more time to grow our wealth.
See: At what age to start investing?

Chapter Five
Remember, however, that it is never too late to learn how to invest for income. The best time to start is always "now".
See: A letter from a 66 year old retiree.

Chapter Six
It is also important to always have a war chest ready. I would never ever be 100% invested. Why?
See: Ready to come out on top from a recession?

Chapter Seven
As we embark on our journey towards greater financial security, try to involve everyone in the family. Mutual understanding and support will make the journey perhaps more enjoyable and, hopefully, easier.
See: Achieving financial freedom is a family affair.

If you are new to my blog, I hope that this "e-book" has inspired you. If you are a regular reader, you might want to share this with people you care about, especially people whom you want to journey towards financial freedom together with.

17 comments:

Henry Kalei said...

Hi ak,

I managed to save up around 90k. May I know how much stocks should be aiming to accumulate. I'm 26 this year and wondering would an end goal of 200k in dividend stocks be a good ending point before I start diversifying into other asset classes like real estate and bonds.

Ray said...

find a publisher! :) great compilation.

AK71 said...

Hi Henry,

I cannot give any advice. Not allowed to. :)

However, if I were to talk to myself, I would say that there really isn't any particular order when it comes to investing in stocks, real estate or bonds. To me, it is about getting value for money.

If I can value for money deals in an investment, I will consider plonking down some money.

So, the question you want to ask is whether a particular investment, be it stocks, real estate or bonds, is a value for money investment at any one time.

At any one time, I would like to have 50% of my assets in cash although it might not be that way all the time. ;p

Having $90K in savings is an achievement for someone your age. I am very impressed. You are probably doing the right things and you will be financially free very quickly. :)

AK71 said...

Hi Ray,

Actually, I received an offer but decided not to accept it. ;)

I don't think I will be creating more value for readers by publishing physical books which they have to buy. My blog is free to read.

Also, publishing a book sounds like more work. I am lazy. ;p

EY said...

Hi AK,

I like the title of your post. Wage increase comes either through (i) yearly increment, (ii) promotion, or (iii) by snagging another higher paying job.

If it is (ii) or (iii), the additional compensation might not commensurate with the time and effort demanded from the new role. May have to slog till no life.

Of course, if it is (i), then it is most ideal. Do the same thing and get more pay. However, this often won't last. Either we hit the pay scale ceiling or end up being retrenchment and replaced. Because chances are, the people belonging to this category are probably not considered to be in the high potential group which organisations would take effort to groom and keep.

Sometimes being too fixated on the wage increment is detrimental to our personal growth. Once we have moved higher up, we will find it very hard to accept less and can be trapped.

AK71 said...

Hi Endrene,

Thanks for sharing how "wage increase" could be achieved. Appreciate it. :)

When I was writing this blog post, it is obvious that I was referring to yearly increments which is what most people look forward to. Well, at least I hear people talking about it a lot.

All of us hope to have a higher income and there are so many ways of achieving this. For me, I have always tried to achieve more with less. So, it is about how to have a higher income with less work for me. So lazy, I know. -.-"

Bad AK! Bad AK!

pf said...

Nowadays can we really consider wage increment for wage increase?

From my knowledge of my peers and people in my industry at least, wage increment for most is a 3 to 5% per year. That just barely overcome the inflation. Employers don't pay extra for nothing. ;)

Passive Income Builder said...

I think the same way as AK. How to achieve more with less. Minimum effort, maximum impact. :p

AK71 said...

Hi PIB,

I wouldn't have it any other way but, of course, sometimes life throws us lemons and even though we could make lemonade out of lemons, it still needs work. ;p

So, we just have to cross our fingers and hope things turn out the way we want them to most of the time. :)

pf said...

Actually I don't think that thinking and planning for "financial freedom" is any less work than normal working. At least, to me it is a lot of work! And since many financial bloggers are doing that by being dependent on the market that nobody can really control.

For me, I enjoy my work. Thinking and planning my career path is probably less work perceived than planning for "financial freedom". Haha.... ;)

AK71 said...

Hi pf,

I remember someone saying before that if we have a good career, we don't need to invest for passive income. Something like this.

While I don't agree with that, I can see where he is coming from especially if the job is an iron rice bowl.

Definitely, all of us have different circumstances. Our own beliefs and skill sets will determine the path we walk. As long as we are happy with where the path is leading us and as long as we are able to deal with the pitfalls along the way, I guess we are OK. :)

pf said...

Nowadays where to get iron rice bowl?

Even if there is such, employers don't pay very much above inflationary rate if such employees don't add value to their organization.

Yeah...have some passive income is great. But really hard work to me to think what to invest in.

AK71 said...

Hi pf,

Aren't jobs in the civil service iron rice bowls? Teachers, for example? No?

Investing for income is not too difficult compared to people who trade stocks for a living, for example. Well, at least I think so. ;p

“Never depend on single income. Make investment to create a second source.” Warren Buffet.

pf said...

Civil service yes, in the sense that no retrenchment. But considering if they want wage increment higher than inflation rate. Not easy.

Teaching could be iron rice bowl if can take the stress. I have so many friends who are teachers working long hours. Think they are really squeezed for what they are paid.

Anyway, my point was for real wage increment, need to add value. Or else, if the increment comes at below inflationary rates then probably ppl who can't put up with such would just leave for another job...if they can find. :)

AK71 said...

Hi pf,

I get the sense that you have a job that pays well and more than compensates for inflation and more. Good on you. ;)

Yes, we should always pursue value creation. I agree. How do we create value is up to us.

Hopefully, people will realise that we are creating value and choose to reward us. However, there will always be people who will always want everything for free. ;p

Luck is also important. Crossing fingers. :)

Tribevirus said...

Hi AK,

Would like to know what is your strategy on dealing with recession? If you happen to know a recession is just behind the corner, but knowing some of the stocks that you have is fundamentally strong, what would be your approach? Sell all of your portfolio, put your cash in your war cash and wait for appropriate price to enter again and forgo any dividends during this recession period ? Or perhaps still keep these stocks generating a decent amount of dividend over the recession period, and buy more using your remaining cash in your war chest at a lower and appropriate price.

Would like to hear your advice and comments. Thanks!

Thanks!

AK71 said...

Hi Tribevirus,

You will probably be interested in my blog posts titled:

1. "Are you ready to come out on top from a recession?" Parts One and Two.

2. "When to be fully invested in the stock market?"

3. "AK71's simple strategy."

Just use the "Search ASSI" box at the top of the blog and you will find these blog posts. ;)

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