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AK is a lazy fellow who is always thinking about retiring and how he doesn't want to have to work for money.
So, when AK read a recent article on how most fellow Singaporeans who want to retire before age 60 are unable to do so, the blogging bug bit him.
The article appeared in CNA and in summary:
1.
54% of Singaporeans would like to retire before 60 years old. Only 36% believe they are able to.
2.
48% believe that they will have less than $2,000 a month at 60 years old.
3.
More than 90% have savings.
4.
56% have started to save for retirement.
Read the article here:
http://www.channelnewsasia.com/news/singapore/many-s-poreans-doubt-they/1122962.html
I believe more than half of the respondents have taken the very important first step and that is to save money for retirement.
However, nowhere in the article was the word "investment" mentioned.
There was also no mention of how we could use tools available to us to help grow our funds for retirement.
Give us enough information to worry us but not give us the solutions?
Read the article and see if you can find the reason why.
Anyway, as this is a topic I have blogged about frequently, I decided to put together what could be 6 chapters in an e-book which could be useful to anyone who might be interested.
Chapter 1.
Be prudent when it comes to expenses, especially the big ticket items.
Do we need to stay in a condominium?
Do we need that car?
Do we need to send our children to universities overseas?
We could seriously boost our efforts to save for retirement by having our feet firmly planted on the ground.
Read: Why a wealthy nation cannot afford to retire?
Chapter 2.
If we are saving specifically for retirement, use the SRS.
Many people I know still do not believe in the SRS.
I don't understand why.
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. Charlie Munger.
Read: A brief analysis of the SRS.
Chapter 3.
Time is required for compounding to do its magic.
I still believe that the CPF-SA is a relevant tool and that we should let time help us meet the minimum sum required.
There are quite a few examples of people who have done this.
It works.
Read: Securing risk free returns early for retirement.
Chapter 4.
Don't hold on to too much cash.
We should put aside a meaningful sum of money every month as we save towards retirement but just leaving the money in a savings account is not a good idea.
Inflation and paltry interest rates mean that our savings will shrink in real value.
Read: Have huge amount of savings and work till 70?
Chapter 5.
Get rich slowly and retire a millionaire.
Put aside an emergency fund and invest the rest of our savings.
Never depend on single income. Make investment to create a second source. Warren Buffett.
Invest for income and that is what I have been doing.
Read: Retiring a millionaire is not a dream.
Chapter 6.
As we save money and build wealth for retirement, we should not forget to also protect our wealth.
Read: Millionaire or not, plan for retirement.
Unless severely disadvantaged, if we do the right things, there is no reason why we would not have enough money to retire comfortably in Singapore.
We can do it!
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You might also be interested in:
How to upsize $100K to $225K in 20 years?
(Published in August 2014)
An update on AK's CPF-SA.
(Published in January 2016)
Bloggy Award
12 comments:
For majority folks, leaving most of saving as cash is really a bad move long term.
Hi Cory,
There is some comfort in holding on to cash. I can understand this and I hold quite a bit of cash as well but to be mostly in cash or 100% in cash is a scary thought. -.-"
Most people would rather have their desires fulfilled as quickly as possible than to delay it.
Having the latest mobile device, the latest car and the newest of all flats or home is a must. It allows them to demonstrate their financial muscles,
helps them to portray an image of success and being current.
And to do all this, they must work very hard to earn the money to pay for it. Retirement will not happen early!
Retirement for me means being master of my own time & space. Not constrained by a schedule dictated by someone else.
To achieve this, passive income will allow this to happen. Each month, money ( income ) just flows in... provided you do the homework first!
Then, going on holidays, watching movies or simply strolling the shopping malls ( without buying ) on a weekday is ultimate. All paid for with passive income and yet having capital preservation.
The true test of financial freedom is sustainability. Can the lifestyle continue indefinitely, at least for the next 10 years and more?
What lifestyle?
1. Holidays above 14 days and off peak or cusps periods, 2 or 3 times annually
2. Dinning at restaurants at will.
3. Accepting work contracts at will
4. Exercising for fitness daily (2hrs)
5. Enjoying performance theatre on weekdays
This is retirement.
What does retirement mean to you and your readers?
Hi Veronika,
I really enjoy reading your comment. It should really be a guest blog. Many don't read the comments section, unfortunately. -.-"
My lifestyle is pretty simple and I am sure that if I were to retire tomorrow, I will be able to continue living my kind of life indefinitely. There are things which I want to do which would enrich my lifestyle but they are not going to cost an arm or a leg either. I guess I am lucky. :)
It all depends on the kind of lifestyle that you want. If you want the latest gadget, luxurious holiday resorts, branded goods like gucci, armani and LV, then I would think that one would have to strive and work even harder and might be more unhappy (unless others are working for you to make it happen)
For me retirement simply means I can do what I want when I want. When you can sustain your existing lifestyle for an infinite amount of time, that is when one is truly retired and free to do as he/she pleases.
If one's lifestyle is basic, then all is well if your cashflow and beat the basic lifestyle required.
Hi AK,
I know you are more of a value investor but have you considered companies like Singpost? That is companies with potential to grow but not neccessarily cheap at the moment?
Do share your views on companies like these?
Hi Cindy,
We have to give Singpost credit for recognising challenges in its business and for trying to re-invent itself. In the process, I think there is ample evidence that it has been burning lots of cash.
However, if it should be successful in the rejuvenation process, it could be another growth company.
Today, an announcement was made that Alibaba.com is taking a stake a bit bigger than 10% in Singpost to help grow its international e-commerce business. The price is about $1.42 a share and Singpost's EPS will see an immediate dilution of about 10%.
If I thought that $1.35 was a bit expensive, obviously I would think that $1.55, the closing price yesterday, was too rich for me. Now, with a 10% dilution in EPS, the immediate valuation has become even richer.
I don't know but if I am not able to get in with a good margin of safety, I rather give it a miss. ;)
Thanks for replying me so quickly.
I have been waiting for Singpost since last year when it drops to 1.23 and with the current price, it's also impossible for me to enter.
Anyway, I look forward to more of your analysis of Saizen Reit cos the price has run up abit and I wonder if the margin of safety is still ok.
Hi Cindy,
If you are comfortable with the valuation at the higher price, there is no reason why you cannot buy some. After all, valuation is always subjective. :)
I am working on a blog post on Saizen REIT right now! How did you know what I am doing? :o
Two in five Singapore residents are not confident about their retirement preparations, according to a report by DBS Bank and Manulife.
The report, which focused on the retirement attitudes, expectations and preparedness of those between 40 and 60 years old, was released yesterday.
The DBS-Manulife Retirement Wellness Study, as it is called, surveyed 6,000 people aged 40 to 60 in Singapore, Hong Kong, China, India, Indonesia and Taiwan.
It surveyed 1,008 people here online in November.
It found that 56 per cent of those who have started retirement planning have not sought any form of advice.
Only 36 per cent believe they can retire comfortably with their current savings and investments, while 30 per cent expect to downgrade their current lifestyle and habits when they retire.
Also, 38 per cent are worried about their ability to afford medical costs when they retire, while 32 per cent are not sure how much buffer they would need for healthcare costs when they retire.
Source:
http://news.omy.sg/News/Local-News/story20160106-399599
Reader said...
I used my CPF savings to pay for my flat, and then we have a cash pile earning 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 focusing 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.
Yan said...
It actually makes a lot of sense to downgrade to a HDB flat in your retirement years. For a start, we will actually need more healthcare services in our silver years, and if you remain in a private apartment or landed property, you will not be entitled to the subsidies provided for by our government. You will have to cater for your medical needs with your medisave, or your retirement stash, all of which will not last very long if you are a private patient.
Secondly, as your apartment ages, it will require more fixes and repairs. Having stayed at a private development before, I know that workmen generally charges more for work done at a condo than a HDB apartment.
Besides having reduced or no income in your silver years, you will have to pay a lot more towards the development's Maintenance and Sinking Fund. Maintenance fees for HDB is a fraction of what you will pay if you stayed at a private establishment. Sometimes, the government chips in and helps to pay a month of your maintenance fees too.
However, I feel that renting out the apartment is not a good idea as you will still have to be responsible for fixes and repairs. One will have to sit down, realistically decide what accommodation type you want, and do your calculations to see if it makes sense to move.
There are many benefits and advantages of staying at an HDB apartment. (near market, near amenities, near mrt station, etc) but ultimately the decision rests on the individual. It is important to know what you want.
From:
http://singaporeanstocksinvestor.blogspot.com/2018/06/should-i-sell-my-home-and-downsize-or.html
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