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Heart to heart talk on time to achieve financial freedom.

Thursday, December 18, 2014

I have heart to heart "talks" with readers sometimes and those whom I have "talked" to know that the conversations could last an hour or more sometimes. Although I am not a financial planner nor a trained counsellor, I try my best to put things in perspective for everyone and, hopefully, throw some light on issues.

I know that Singapore can be a bit of a figurative pressure cooker sometimes and a topic that is evergreen in our very green garden city has the same color. Green is the color of money or so they say. Yes, the topic is "money".

There are more than a few readers who have, in the past, left me comments, sent me emails and chatted with me in FB who told me that they want to be like me. They want to achieve financial freedom. However, they think it is really hard to do so in just 20 years which is more or less the time I have taken to do the same.

Some readers even told me that although they are inspired by my blog, they also feel some depression at the same time. This, of course, is not what I want to achieve through my blogging efforts. If this is what my blog is doing to people, then, I should stop blogging.

Not too long ago, I had a chat with another reader in FB and I think that a few "bubbles" from me neatly encapsulate what I want to say to readers who are married with children, who make above average salaries, who have a mortgage to service and a car to maintain. Here it is:

I keep saying that all of us have difference circumstances in life. We might make very different choices in life and with those choices, there are pluses and minuses. We must make the best of our situations and, if possible, improve on our situations. 

Incidentally, I believe that it is almost always possible to improve on our situations. More often than not, it depends on how badly we want things to change.

So, some might take 20 years, some might take less than 10 years and some might take 40 years or, maybe, more. The important thing is that we all get there in the end or at least try our very best to do so.

Anyone who is diligently working towards financial freedom in a responsible manner is, in my opinion, already a winner and we should never forget that.

Related post:
Journey to financial freedom is not a race.


la papillion said...

Hi AK,

Can I share a link here? Delete this if you feel it's not appropriate.

It's just some thoughts regarding my 3 'girls' LOL!

AK71 said...

Hi LP,

I enjoyed the article thoroughly!

Yes, I agree with what you said:

"All of them are winners, in their own right and in spite of their own circumstances."

Thanks for sharing this. :)

Whowillbe said...

Hi AK71,

I thought I shall chime in when you share in your bubble that your reader weren't comparing apples to apples.

My situation is abit in between that of your reader and you. Now I am assuming that your reader started a family pretty soon after marriage.

Now let me explain. I married relatively early, barely a year after graduation. Thus I did not spend much on my wedding cause I did not have much to spend on.

We wanted to started a family within 2 years after we wed but as the journey was much longer. Most probably due to our stressful environment. So while our friends children are 7 yrs old, our eldest is only 3. But we realised that there's a silver lining in having our kids later (not that we chose to).

First the waiting made us think through a lot of issues like the purpose of having children, what's really important for them, do we want to go into the crazy enrichment rat race. Thus we are much more measured now and does not consider it important to bring our kids to children's gym, Shichida method and the like.

The second is that our financial muscles were much stronger. We saved quite a bit of our income and invested in assets which we most probably wouldn't be able to if we have kids earlier.

However by saying this, I am not telling people to have kids later just so that they can have a brighter financial future.

Everyone will have a path to walk. The problem is we will look at other people and wonder why we are not having what they have. In other words, we want to have our cake and eat it too.

I think its important to count our blessings. Eg, having kids earlier means that you will also be able spend your fifties free from parental obligations. :-)

qook said...

AK, thanks for your post. I fell off the wagon for quite a few years, but am now determined to work harder at achieving my goal of financial freedom. Your blog has been a great inspiration, and I have learnt many things along the way. My biggest challenge now will be trying to stay the course while having a partner who is the exact opposite, i.e one of those who spend more than they earn.

pf said...

Wah wah wah.....

Why being single can save more money? (Many things r cheaper by way of economies of scale...can buy bto, can combine resources, etc)

Why married couples difficult to achieve financial freedom leh?
(If your partner has the same goal as you, surely its not that bad )

Maybe you are speaking from experience, I dunno.

Anyway, still not too sure what you're gonna do with your early retirement and "work not for money but what you like". I also hv this question for all the bloggers who state this as their objective.

No wonder some readers felt depressed when they see ur blogs. Lol....

Recently, I attended a wealth mgt course. The trainer is in his 50s. 3 children....he told us he was from a poor family, when he graduated he only had 1k to his name. He took 2 jobs to pay for his first his balance sheet is several pages long and in 7 currencies. Next year his 25 yr old son is getting married. He is going on a 1 month travel with his wife and friends.

Not too shabby life, eh? :)

AK71 said...

Hi Whowillbe,

Thanks for sharing your personal experience. Much appreciated. It enriches the space here by giving a much needed alternative perspective. :)

One of the things I have suggested in my blog is to look at children as consumption items. I was criticised for being cold and even heartless. Of course, trying to be rational in an area that is mostly emotive is difficult but when there is a lot more at stake, we have to be rational.

What is our attitude towards having children?

So, in your case, you delayed "consumption" and it has worked out well for you. This is the concept of delayed gratification in practice. :)

I am not saying that people who had children very early in life are wrong. However, they will have to take the good with the bad, like with all their other decisions.

We should always count our blessings and roll with the punches along the way. :)

AK71 said...

Hi qook,

I am happy that my blog has been an inspiration. Very happy. :)

If I were in your shoes, I would have had to work hard at convincing my partner to come on board the boat to financial freedom. This might actually be the trickiest part of the equation, I know. -.-"

Achieving financial freedom is a family affair.

I wish you all the best in your efforts and look forward to updates of your journey. :)

AK71 said...

Hi pf,

You have to look at the 4th "bubble" in my reply to the reader here.

Obviously, this trainer you spoke of took steps and improved on his situation and achieved better financial health. :)

Staying single is in many ways less complicated. It is the choice of the lazy like me who would rather choose easier ways. I like to avoid complications, if possible. ;p

There are couples I know who have achieved financial freedom and some of them have children. Some don't.

There are also couples I know who are light years away from financial freedom. Some are bothered by the fact while some are not.

Like you say, having the right partner in life is important. :)

Generally, I believe that in Singapore, if a couple have children, a mortgage and a car, with a single income, it is going to be a challenge to achieve financial freedom unless that sole breadwinner has significantly above average income.

We have to think carefully about what we want in life and if our actions will lead to the outcome that we want. Often, there is a mismatch and that is the cause of much unhappiness. :(

Whowillbe said...

Hi AK71,

I'm not too sure whether you misunderstood me on this point. We did not 'delay gratification' instead the kid came 4 years later than planned despite our best efforts. So instead of feeling like an old parents when we see our peers with primary sch going kids, we count our blessings and one of which is stronger financial muscles.

Because of our savings and investment while we try our utmost for our 1st kid, we ended up setting aside enough assets for our retirement and thus we do not have to feel stressed up about our kids' education and our retirement needs.

Now regarding education needs, our belief that the best form of enrichment is really time with parents, play at playground etc. Enrichment is fine if really enrich and not the 'to gain an edge type of enrichment'. So you can imagine we won't be spending a lot of money on enrichment.

So because we don't have as much financial stress, we find that we are much more comfortable able letting our kids explore. It's okay if they aspire to be bakers because just as we had acquire life skills such as financial savvyness, which is something that we can pass on to them, we believe that they can be happy bakers and other less highly paid workers because they know how to managed their resources. :)

AK71 said...

Hi Whowillbe,

Ah, I see, the "delayed gratification" was not by choice. ;)

Still, it was a good thing to have happened, I feel, all things considered. One just has to read paragraph 2 in your last comment again to realise this:

"Because of our savings and investment while we try our utmost for our 1st kid, we ended up setting aside enough assets for our retirement and thus we do not have to feel stressed up about our kids' education and our retirement needs."

I really enjoyed reading your comments, especially your parenting experience. I like your philosophy and your approach. I think you make good parents. :D

shun said...

Hi, AK,
got the folowing from cpf website, seems that cash top ups to our SA cannot be used for investments at all? Thought they could be used for limited invetments. Appreciate ur comments. Thks.
Q: Are there any restrictions on the top-up monies received under the Minimum Sum (MS) Topping-Up Scheme?
Top-up monies are meant for your/recipient's retirement needs. Therefore you/your recipient cannot apply to withdraw the top-up monies:

a) under any CPF schemes for payment of education, investments, insurance, housing, etc;
b) by pledging your/his property in lieu of the MS; and
c) via exemption from the MS Scheme.

Chua Poh Huat said...


I am lucky a have a decent dual income family with two lovely kids (12 & 15 Yrs old). We had always work hard,save, invest and set the objective of having financial freedom at 50 yrs old. I think we might need another 10 years to achieve it. So guys cheer up, work hard, save and invest smart (with luck). Happy investing to reach your FF.


AK71 said...

Hi shun,

Money in the CPF-SA is meant to be a risk free cornerstone of our retirement funding efforts. So, the investment options are more limited compared to options available for money in the CPF-OA.

I did invest the money in my SA during the GFC in an approved unit trust. :)

If you would like to have the freedom of investing your retirement funds, then, you might want to choose to contribute to your SRS account instead. :)

AK71 said...

Hi PH,

You are very blessed and I am very happy for you. :D

Financial freedom is a family affair and it is obvious that every member of the family is on board with you on this. ;)

shun said...

Hi, AK,

Thks for ur input. If it's ok, may I also find out
1)some of the investments available for CPFIS(SA)(brief summarized list or some egs. would be enough)
2)the bank-related custodial, transaction, etc. charges?
3) if we invest thru' CPFIS, do we pay the normal brokerage charges, CDP clearing fees, etc. on top of bank-levied charges(charged by bank we open our CPFIS with)?
Thks, pls pardon me as I can't seem to find any info available easily.

AK71 said...

Hi shun,

This is where I point you in the right direction and you do the rest. ;p

List of unit trusts approved by the CPF Board (correct as of 11 December 2014):

I used my CPF-SA money to purchase a unit trust through Fundsupermart during the GFC. If you send the other questions to them or the bank you would like to start a CPF-IS account with, they should have answers for you. ;)

shun said...

Hi, AK,

Thks, guess i am a bit lazy, hate calling or visiting the bank coz a lot of time is wasted waiting or selecting the right options. Anyway, thanks for the valuable input.

Whowillbe said...

Hi AK71,

Don't mind if I chime in a bit more. Would just like to share how in our case, my wife and I are better together than alone.

First of all, our financial strength is only possible because we played to each other strengths.

My wife is a superb saver and a very disciplined and industrious person and I am the one who is more imaginative, spontaneous, actually more of a daydreamer. Thus I enjoy reading up and increase in knowledge and understanding.

My better half spends very little on herself. There were times when I had to tell her that its okay to spend a bit more for quality.

I myself ain't a spendthrift but somehow I know that my hands might get a bit itchy if I have a sizable sum in my bank.

So this is how we manage our financial affairs. I load most of the expenditure including hers like insurance premiums onto me. I also pay for most of the meals. So my savings account is normally in the hundreds before payday. But hers will be growing. Then we will use the savings for investment when appropriate.

This arrangement only works because it is underpinned by trust.

So I alone will not be able to make it as I won't be disciplined enough to accumulate the savings. Possible but tough and will probably take a very long time. My better half will have her savings eaten away by inflation.

AK71 said...

Hi shun,

Hey, you are welcome. Lazy? Me too. LOL. ;p

There is no rush. Take your time to find the answers.

The CPF-SA's 4% to 5% risk free rate is hard to beat. If not for the really tempting prices in the last GFC, I would not have used the money in my SA for investment. :)

AK71 said...

Hi Whowillbe,

You say she is your better half. I would like to say that the two of you make a better whole! ;)

I totally enjoy reading your comments. It is always heartwarming to read accounts like yours. I am very happy for you. :)

I always say we should count our blessings and you certainly have a lot of counting to do. LOL. ;p

You write really well too. So, if you ever feel like writing a piece on personal finance or investment or just something meaningful to share with others, you are welcome to guest blog for ASSI. Just drop me an email in such an instance. :)

Lim Der Shing said...

To chime in for readers, there is another route to take where you can have it all if you and wife have the right skills and temperament. I know many entrepreneurs who are in their mid late 30s to 40s and who are financially free. Many are married with 2,3,4 even 5 kids.

the only problem with this route is that usually both husband and wife are super busy with business still. The only time both can be as relaxed as a portfolio guy like ak71 is when they have sold their business or when they have built professional mgmt and scale is large enough (read in excess of 1m profit consistently) to sit back. And even then , they need to curb their competitiveness to grow even more and take control. Of course the benefit of this route is that usually the net worth is very much higher and there is no need to scrimp and save.

AK71 said...

Hi Der Shing,

Oh, definitely. Not everyone has the temperament to be an entrepreneur. I always say that self-knowledge is the most valuable knowledge of all. I like to think that I know myself a bit better and that my temperament is probably more suitable for scrimping and saving. -.-"

Whowillbe said...

Hi AK71,

Thank you very much for your compliments and the invitation to guest blog.

Actually one of my good friends once mentioned that I should share more of my story to encourage others which I do. However I am always mindful that there was always a huge dose of luck involved.

Also many of the decisions made earlier in my life and how it impacted me were something that I could not foreseen. Eg. my wife.
I think it will be foolhardy of any guy to just go looking for a future spouse who is frugal so that he can have a better chance of securing their financial future. It is just too utilitarian. Too narrow minded in the approach.

What's important are the principles that would make a great marriage. Things like communication, share values are top of the list. But crucially what many people missed out on is themselves. They look for Mr Right and Mrs Right and forgot to ask whether are they the right ones.

So just like investing done right, we as individuals need to ask deep and honest questions like 'why do I like this person'.

I always share with younger guys that I am aware that as a guy, I am visually stimulated and its just naturally to be taken by the physical beauty and because of this natural bias, I always tell myself that I must not fall for a girl because of her beauty. The reason being that I will not be able to trust myself that if another prettier girl comes along, that I would not ditch my girlfriend for her. Therefore my reason for liking a girl must go beyond the appearance but must be her character, beliefs and values. In short her unique personhood.

Ah... paiseh that I talked about relationship but somehow I believe there's a link somewhere with matters like investing. :)

AK71 said...

Hi Whowillbe,

Out of curiosity, is your nickname from the time you were wondering "who will be my wife"? ;p

I agree with you that luck is always an important component in everything we do in life. People who have succeeded should not forget this. People who are still trying to succeed should remember that things could always go wrong and have contingency plans. :)

So, whenever I share my ideas and experience with people, I am mindful not to give people any idea of absolutes and I like to remind people that luck plays a part.

What really matters is whether we are happy, comfortable and secure in our lives. If we are, I think we are doing OK. :)

Whowillbe said...

Hi AK71,

Hahaha. You are 95% right... I came up with this nick when I was 17. It was more of 'who will be my girlfriend'.

AK71 said...

Hi Whowillbe,

Hahaha... My salesman's instincts are right again. ;)

Time for a change of nickname? "Sheistheone"? ;p

I would keep the old nickname though. Memories are impossible to replace. :)

Whowillbe said...

Hi AK71,

You are in sales?

I for one cannot imagine myself to be in sales.

In my first year in uni, I went to work as a telemarketer selling credit line during the holidays.

There were 2 occasions when after my sales pitch, the recipient went "Sounds good but I'm not too sure whether I should get it because I am not too good managing money." Guess what did I say?

I went "Yeah in this case, it is better that you should not get it."

Lol! All these conversations are recorded too for training purposes. But I really cannot go ahead and sell lah knowing that credit abuse can destroy lives.

I know of others who in my shoes will say something like "Hey in that case all the more you should take it up because when you are in need of money, the credit line will come in useful."

So guess what, I only lasted in that job for 2 weeks. :p

AK71 said...

Hi Whowillbe,

Well, if you work for a single product company, it is more difficult to do well in sales although not impossible. I will explain why.

I like being able to give my clients options and they get to choose what works best for them. I am also known for telling them to avoid certain options or to avoid giving me any sales at all if I think that the options are not good for them or if they are not ready.

So many times, I had clients who told me that I was a strange salesman because I would tell them not to buy this and not to buy that. LOL. Strangely, I ended up with more sales because of that. ;p

Your heart is in the right place. You will make a good salesman in the right environment. ;)

Whowillbe said...

Hi AK71,

You know what? I had friends who are successful either successful entrepreneurs or in sales who told me that I would do well in sales. Maybe I will but I currently love what I'm doing to explore new fields.

Anyway I like honest pple. I will pay extra for their service! That's why I believe you that you have more sales because of your sales ethics. You built up a good reputation that compounds in value over time. You are like a rare diamond, once found must be kept!

AK71 said...

Hi Whowillbe,

I feel that it is important to do what we love doing but very rarely do we get to do what we love and make lots of money from it at the same time. For me, a good example is blogging. Love it but it doesn't pay well. ;)

So, many of us end up doing stuff we don't love but we just do it for the money. If we are lucky enough, one day, we could retire and do stuff we love and not be too bothered by the much lower income it generates, if any.

Yes, I do believe in having a good reputation and it is because I have been honest with people that I was able to do quite well over the years. I try to do the same in cyberspace too.

A diamond? Me? LOL. Diamonds are formed under extreme heat and pressure. They were some bits of carbon before. In a way, I wish I am a diamond and that my days of extreme heat and pressure are over. Thanks so much for the kind words. :)

Gary said...

Nice reading through all comments! We are all winners eventually! Ganbatte! =)

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