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9 wealth building blog posts!

Saturday, July 26, 2014

"Most people believe the key to wealth is a high-paying job.

"Yes, it's easier to amass assets if you have more money coming in each month, but the true secret to increasing your net worth is to spend less than you make.

"It is a cliche; but it is the fundamental, absolute, non-negotiable reality of money.

"To escape this trap, you need to understand that income is not wealth

"The level of your wealth should be measured by the length of time you could maintain your standard of living without an additional paycheck." J. Kennon

I see, I want, I buy?

Want to see how someone in his 20s is becoming wealthier by the day?

I am talking about Matthew Seah.

The chart he shared with me will blow your mind away:

Becoming a millionaire next door.

It is about saving as much money as we can by keeping expenses low.

This means that we should not buy luxury goods especially not in order to impress people when we have made some money!

I understand that we are human and sometimes we need to pamper ourselves a bit but, please, don't go  Buying a $500,000 watch after 3 years of work to make a point.

The long and short of it, If we are not rich, don't act rich.

Chances are that once we are rich, we won't bother.

Finally, don't get tempted by the dark side. Learn The secret to avoiding financial ruin.

5 more and we make 9 wealth building blog posts complete:
1. Two questions to help us build wealth.
2. An essential habit to becoming richer.
3. The millionaire next door.
4. A fast track to wealth building.
5. From rich to broke?


AK71 said...

Hi Capricon,

Older readers sometimes get a bit demoralised by my blog posts saying that we should start as early as possible because it takes time to grow wealth.

A starting age I like to use is 25 just because that is probably when gainfully employed male fresh graduates could start saving some money regularly. OK, AK is sexist. Bad AK! Bad AK! -.-"

Seriously, however, people who started on the journey to financial freedom in their early 40s are not too late in the game, only later. ;)

Like you have said, people starting in their 40s will just have to work harder and for them, because their income is probably higher than someone who is 25, all else remaining equal, it is just a matter of reducing expenses relentlessly. They can grow their savings relatively faster.

All the wants go out the window. Try to economise on the needs.

Being single and staying with parents is generally a huge advantage in personal wealth building. I know. I was doing it too. :)

I think you are doing the right thing now by building up cash while waiting for opportunities to invest for higher income. There is nothing wrong with sitting on cash but try to maximise returns from your most liquid of assets as they stay liquid. ;)

Lastly, I will encourage you to calculate what a year's worth of expenses is to you and put aside enough money to cover at least 2 years worth. Don't keep the emergency fund in your war chest. There is a good reason why and I think you know this.

All of us have to start somewhere. It is better to start than to stay put. I hope your friends will realise this and join you on your journey one day (soon). :)

AK71 said...

Hi Capricon,

I am glad that you are glad you stumbled onto my blog. I will try to make the paths more even so that readers can find my blog without stumbling in future. ;p

Thanks for the encouragement. It gives me that little push to continue talking to myself here and I hope many more will benefit from this. :)

pf said...

Keep reading abt saving money is no fun. Makes me feel like life is passing by without any participation.

I find that if i spend money investing in myself, to attend classes and learn something, i hv no time and money to spend on frivolous things. At the same time, i increase my income. Sounds like a more fulfilled life, no? :)

AK71 said...

Hi pf,

A case of different strokes for different folks, perhaps? LOL. ;p

Well, as long as we are able to increase our level of savings, we are in the right direction, be it increasing revenue without increasing expenses or maintaining revenue while reducing expenses or, the best choice, in my opinion, increasing revenue and reducing expenses. :)

I am not dogmatic about which avenue is chosen. ;)

Art Collector in SG said...

I started the plan at 33, now still on track but long way to go.

My lifestyle is quite heavy in food, travelling, etc. For those who want to enjoy life, I would recommend to plan a portfolio of expenses the same way as your investment. For example, I spent a lot on MBA education recently, so I cut heavily on fine dining. Only after that I increased it again.
Because compound interest investment required 1st 3-5 years to be critical to build up a base, your expense should be low when younger and higher when older to let your capital run faster.
Btw, recently opened ocbc 360, suitable for war chest :-)

AK71 said...

Hi Tony,

Sounds like you have a balanced approach to wealth building, maintaining a good quality of life as your journey towards financial freedom. :)

I agree that building a strong base earlier on will help immensely if we are relying on the magic of compounding. It is just like how I transferred all my OA money to my SA in the first 4 years of my working life. Then, simply let time and the government do the rest. ;p

OCBC 360 is definitely a great war chest. Earning up to 3.05% for our most liquid of assets while waiting for opportunities. How wrong can it go? LOL.

AK71 said...

My blog has gained many new readers since this blog post was published.

Weekend reading material for newbies. ;)

AK71 said...

Matthias Mar says...
Ak i see 5 blog posts, where’s the post for the first 4 to make 9 blog posts? Lol
Ak must be thinking... always must have this kind of pple asking this kind of questions LOL

AK says...
Where's Wally? ;p
The other links are "hidden" in the blog post.
Try mousing over suspicious looking phrases in green. ;p

Yv said...

Hi AK, came across your blog while starting to read up on how to generate passive income to fund retirement. I am amazed how you have built up your passive income portfolio with pure cash/savings without utilising your CPF for investments. Regretted that I am only now starting to look at investing now that I am in my early 40s. Like you said, better late than never, hoping to learn from you more as I browse through your older posts. Thank you and I look forward to learning more.

AK71 said...

Hi Yv,

Welcome to ASSI. :D

I will say that you are starting later but you are not late because the best time to start is always now. ;)

If AK can do it, so can you!


Don't thank AK but thank yourself in future.

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