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They chose financial independence over home ownership.

This is somewhat extreme but watch how this Canadian couple chose financial independence over home ownership.  They are in their 30s and,...

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New year's resolutions to impact your financial security.

Tuesday, December 30, 2014

There are two points to note in this reply I made to a reader:

"Well, in your case, with $157K in the SA, at age 53, 10 years from now, even without another contribution, the money in the SA will grow to be at least $236K. I say "at least" because I have not taken into consideration the additional 1% interest for the first $40K.

"$236K in your SA at age 53 and without any risk. Sounds good? ;)

"... Yes, it is harder for older workers (to rejoin the workforce). This is also why I said during a discussion in FB that
a bigger emergency fund is necessary as we grow older."

The two points are:

1. Help the government to help us meet the CPF minimum sum. Beef up our CPF-SA as soon as possible and let time and the government do the rest for us.

2. The size of our emergency funds should not be static. Depending on our financial commitments and depending on our age, we should make adjustments to reflect new realities. The number of dependents we have and our age are important considerations.

Point 1 has worked out well for me but, of course, past results are not a guarantee of future performance, as some readers have pointed out. 

Point 2 is something I am always mindful of and I keep an emergency fund that is enough to cover 24 months of routine expenses.

With the new year just round the corner, giving some serious thought to these two points could be great new year's resolutions and greater still if some decisive action should be taken.

Related posts:
1. Get a lifetime income of >$2K a month (from age 65).
2. Emergency fund: How much is enough?



Hi AK,

Happy New Year to you! Took some time during this festive season to "take stock" of all my various financial accounts, eg, cash, stocks, CPF, etc. This would serve as a base for 2015.

As you say, no one cares about our money than ourselves.

A good gift that I gave myself this year was the gift of topping up SRS and CPF-SA as I believe that delayed gratification not only helps us to be more mindful of what we spend our money on but also stands to fortify our lifestyle when one has retired and not working.

Thanks for another great year of great posts :)

AK71 said...

Hi Solidcore,

Well, you know what Charlie Munger said:

“Spend less than you make; always be saving something. Put it into a tax-deferred account. Over time, it will begin to amount to something. This is such a no-brainer”.

I do believe that your SRS account and CPF-SA will help to form the solid core of your retirement adequacy plan. Love the pun. ;)

AK71 said...

Hi AK, starting from zero, what I can and will do:
For long term income > RSTU $7k and also enjoy the max tax benefits
For short term emergency fund > to save 12 months of expenses. Unstable job security.
However I do not have extra cash for medium term passive income growth. What do you think about this missing piece? Should I adjust the above?

Do what we can.
Don't overstretch.
All in good time ๐Ÿ™‚

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