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"E-book" by AK

Second "e-book".

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More passive income than "richer" friends.

Tuesday, May 2, 2017


Reader says:
"I would like to share a personal experience.
"My wife and I have relatively high paying jobs - and we work like dogs for it. But unlike our friends who make about the same amount and stay in condos and semi-d, we are the only couple staying in HDB 5-room.

"We find it very comfortable already. Altho I often have to answer younger colleagues (I work in a very big organisation, very hierachical) why I still stay in HDB.

"But one outcome of such a choice is that my housing consumption is very low, compared to my friends who consume the terrace or semi-d.

"AND that allows me to invest! Albeit haphazardly. Even then, that helped me to create a passive income that is way bigger than that of my friends who consumed a lot of their salaries via terraces and semi-d.

"Imagine if I have been more financially-literate and had read AK's blog earlier. My passive income would have been stronger.

"So, some points I want to make :


"1. don't consume so much via housing choice regardless whether it is invstment or consumption, live below your means,

"2. be financially-literate,

"3. don't bother to keep up with Jones'

"4. be comfortable to ignore people who wonder why you so kiam-siap and stay in HDB,

"Do an honest day's job by paying full attention to your organisation's business do make it a point to mind your own business and your own financial literacy and passive income portfolio building."


Looking for a spacious home in Singapore.

AK says:
I know many people believe in buying the largest home and, sometimes, the most luxurious home they can afford. Embedded somewhere in the belief is that our homes are investments. 


Of course, regular readers know my money mantra by now when it comes to our homes.

What we want to remember is that we could see home prices rising over the years but unless we are willing to monetise our home in some way, in Singapore with property prices the way they are, we could become a member of the asset rich and cash poor club.

Our home might be worth twice as much as when we bought it years ago but unless we are willing to sell it, we don't see the capital gain. We don't see the money.

For those of us who invest in stocks, if we find an investment that holds assets which do not generate cash flow but instead drains cash every month, what would be a good reason to plonk some money down?

There are many rich people in Singapore. There are also many people who stay in private properties and who drive luxury cars to look rich.

When the tide goes down, we will know who was swimming naked. Now, who said that?

Related post:

Worried about upgrading your home?

16 comments:

Sammy said...

Well said! Too many young couples are buying flats that are 600-800k. Easily way over their paychecks. I work with young couples as my job, hence I learn about their housing choices often. To do so will place them in such a huge debt they are often stranded to their jobs for decades, afraid to quit and venture out to pursue the things that they love.

AK71 said...

Hi Sammy,

Unfortunately, wage slaves are more the norm than the exception.

I like being able to work because I want to and not because I have to. :)

owq said...

I don't understand why my friend bought an expensive 5-room flat when they only have 1 baby. There are only 3 of them in total.

People may ridicule Josephine Teo saying that you don't need much space to have sex, but I wonder who will have the last laugh.

To each their own, I guess.

Kevin said...

Hi owq,

I have friends who does that too and the reason they gave me is that they would have the ability to rent out the room or rooms when they become senior citizens in future if they really need to have the source of income as a additional form of financial safety net. :)

Henry said...

To each their own. I value peace of mind more than anything. Debt free at 40. Almost bought a semi-D but luckily did not on second thoughts. Took a year break from career to spend time with family. Work became a personal choice like AK.
Counting money from dividend every quarter (like AK) is more fun than seeing bank account deplete every month paying off mortgage loan and worrying when retrenchment will come. Peace of mind is invaluable.

AK71 said...

Hi Henry,

I agree. Peace of mind is priceless. :)

Ana said...

I started building up my portfolio some 10 years ago, thanks to bloggers like AK. thanks so much. While I wish I started earlier (like you), it is better late than never. I have been living off my passive income for a few years now, and all of my income is set aside either for investments or savings. Just last year, I had a baby.... at the same time, I encountered some difficulty at work --- basically, the company wants to show me the door.

I decided to leave the company eventually. I am able to do so only because of some prudent lifestyle we decided to adopt. I work in a bank, and know of many highly paid friends (their pay is easily $400k and above), but they cannot afford to lose their jobs. Sad.

AK71 said...

Hi Ana,

Recently, my banker who makes a lot of money told me that he cannot stop working and that he needs his monthly salary. He makes a lot more money than I used to make as a salaried worker but he spends most of it. I told him what I thought and asked if he would not enjoy having the option of not working without money worries?

chin soonyuen said...

there is 2 side to a coin, you are being paid to stay in the bungalow is the other side, how about that?

AK71 said...

Hi Chin,

You are talking about two different coins and not two sides of the same coin. ;)

redponza said...

Hi Sammy,
Buying a property or not will be the same.
If they are to live in Singapore, those couples will need to work hard to cover their means no matter they buy a property or not.

Shiva said...

Hi guys,

Hope you don't mind a guy from H.K. dropping a line. Indeed I used to stay in Sin for a few years back 2o years ago. As far as I know Singaporean at that time liked luxury items, and home as well of course. It is kind of face, isn't it?

Glad to find AK's blog which share a different view from the majority (Forgive me, if this sounds offensive, on my poor English). Personally I do agree with your mentality but I think You would appear a bit odd in the main stream?

AK71 said...

Hi Shiva,

I think having face is more important in Asian societies compared to western societies. I could be wrong but this is from my own observation and Hong Kong is probably the same as Singapore in this respect. Me? I am crazy. ;p

Shiva said...

Hi AK,

You are right that face matters in Asian community so does it in H.K. as well. I am not sure if I still understand Singaporean correctly now but as far as Honkies, I think they are more pragmatic than their counterparts. I don't say they don't care face but when it comes to money, they prefer money more than face. People on the street don't put many luxury branded things on them. I think they like the (saved) money better.

I did find that you guys discussed a lot on financial freedom but don't you guys have the CPF which is supposed to support the post retirement living? Is it not adequate for the purpose or you guys just want a better than standard living, apart from the possible and unpredictable retrenchment? Guys here in H.K. also has a growing concern about financial freedom because our MPF, a copycat of CPF but much less effective, is just a joke. We really need to be on our own feet after retirement.

No la, you are not crazy at all but just pragmatic and rational.

AK71 said...

Hi Shiva,

Thank goodness we have the CPF! :)

However, not every CPF member knows how to make good use of it. For those who know, who are able and willing to, they could have a million dollars in their CPF by the time they retire from active employment at 62. Enough or not? That depends on the individual. ;)

A problem with our CPF system is that the government allows members to use their CPF savings for too many things and people forget the primary purpose of the CPF.

More and more CPF members who have used their CPF savings to pay for their homes might find out as they grow older that they might not have enough CPF savings to fund their retirement:
Unemployed, almost 55 and worried about CPF.

SkinnyOldMan said...

Hi Shiva,
So good to have someone from another country chiming in. Welcome!
AK is right - not every CPF member knows how to make good use of it. I am one of them. If I was more financially literate at the earlier part of my career, and if I had paid some attention minding my own financial affairs (and not working like a dog for my employer - but to be fair, they paid me well - and neglecting my own financial affairs), then I would have used my CPF properly. Can you imagine this - I used my CPF to pay for my flat, and then we have a cash pile earning close to peanuts for interest and did not invest them. This is the result of being financially illiterate, and being too busy minding my boss' business and my career and not focussing on my financial affairs and my financial literacy.
So, to the younger ones reading this, please don't make the same mistake as my wife and me.

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