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Work because you want to and not because you have to.

Friday, November 28, 2014

Recently, I had a chat with someone on my preference to invest for income and how I am now able to work because I want to and not because I have to.

He said he would like very much to quit his job and focus on making money from the stock market.

He asked when would he be able to do that if he should follow my methods?

I told him that it really depends. 

For some, it could take just a few years. 

For some, like me, it could take almost 20 years. 

For some, it could happen by the time they retire at age 62. 

For some, it might never happen.

He wasn't impressed and told me that a couple of presentations he went to told him that he could retire within a few months if he should follow their methods. 

I said that I am aware of such courses and claims out there but I really cannot comment much on these apart from saying I would exercise caution.

To his credit, he did not walk away but instead he asked when I said "it really depends", what did I mean?

Well, following my philosophy, how soon a person can choose to work because he wants to and not because he has to depends on:

1. How much money does he need in life?

2. How much money is he saving (not making)?

3. How much money are his investments making?

We went through his answers to these questions and he was shocked to find out that he probably would not be able to stop working till he is in his 60s. 

I reminded him that it is actually not too bad. Some people cannot stop working even in their 70s.

He said he would like to stop working in his 50s although if he could stop working before he hits 50, it would be better. 

What should he do? 

Well, the answer is in those 3 questions mentioned above again.

1. How much money does he need in life?

Are the needs really needs?

After all, we only need so much money in life and the rest is for showing off, someone said.

2. How much money is he saving?

To save more money, he has to increase his income and reduce expenses.

It is quite simple. Find legitimate and ethical ways to do so.

3. How much money are his investments making?

If he is leaving the bulk of his money in savings accounts, he is doing himself a disservice. He has to make his money work harder.

One way is to make use of weaknesses in the stock market to accumulate some good stocks that will generate good income.

When we parted ways, he said he had plenty of thinking to do.

I do not know if he would become an income investor or if he would take up courses which would allow him to retire in a few months. 

The choice is definitely his.

Related posts:
1. How much do we need?
2. Common advice on saving money.
3. To protect our wealth, we have to take risk.
4. Retiring before 60 is not a dream.
5. How to have a comfortable retirement?


MK - don't know much, want to learn more said...

Hi AK,

Been a lurker on your blog for awhile.

Since this post is about knowing or estimating enough / not enough based on costs of personal lifestyle & choices, i thought this Google Sheet may be of use for your readers. Feel free to edit the so-so "usage instructions" if U think the Google Sheet is useful or approve if it's "dangerous" - just sharing what i've built for my friends/colleagues.


Just created this on Google Sheets for layman to "see" and play-with, for visualizing & planning future cash flow.
U’ll need to have a GOOGLE a/c (I assUme U have lar – using Android phone) to copy to YOUR OWN Google Drive (ie private to U only & editable)

Thus - thought it'd be useful to others too.
Please note:
1. Please make a copy to your own Google sheets in order to edit at your own private pleasure.
U won't be able to edit the version i shared.
To make a copy: File >> Make a copy

2. EPF variables - specifically tailored to Malaysia
If U do not have any such items (it's like 401K, CPF, etc), just zero-rise the variable in yellow

3. Goals 2 to 7:
If U do not have them, zero-rise them.

4. Does NOT calculate taxes on investment or trading returns.
Please factor taxes in to get the net returns pa % expected.

5. Focus on Column D, Row 14 onwards - this is the cash-related investments that will be funding your retirement and goals.
If the row's cell is NOT red, U should be ok.
Red = no more investments to fund anything from that year/row onwards

6. Anything else?
drop me a line here and i'll see if i can incorporate the idea OR clarify usage of existing.

BTW, hint hint (and real life):
Try placing in cell G14:
Net Salary * 1/3 *12 (ie. U save 1/3 of your net salary - may be tough but do-able) +Net Bonus *1/3 (ie. U save 1/3 of your bonus - do-able)
Net Salary * 5% *12 (ie. U save 1/3 of your net salary - may be tough but do-able) +Net Bonus *1/3 (ie. U save 1/3 of your bonus - do-able)
Net Salary * 10% *12 (ie. U save 1/3 of your net salary - may be tough but do-able) +Net Bonus *1/3 (ie. U save 1/3 of your bonus - do-able)

See the column D when turn red - which year for all 3.
Notice a big enough difference even with 10% vs 5%?
This shows that DEFENCE is very important as well (keeping $), not just making $ (returns pa%)
With this, U can literally see the future visually (RED = must die liao, no $)

Other than that, one can also use the sheet to ascertain how much death insurance required.
Eg. i change the retirement year to 1 or 2 from now, simulating my death thus no more income and need to eat into cash investments' returns.
Also no more savings

Then scroll down lor to see how long family can live off current VS what i want/thought.
See the variance if any, and i can agak agak how much more death insurance i need.

Just a thought

AK71 said...

Hi MK,

I am very much a pen and paper person. I know, I am a dinosaur. -.-"

So, I really appreciate your selfless sharing of what I consider to be rather high tech stuff.

I usually depend on guest bloggers like Matthew Seah to help me do stuff like this. ;p

Thank you so much for coming out from lurking. Looking forward to reading more comments from you in future. :)

coconut said...


have you give a thought on whether you want to be in the market (invest or trade) or you need to be in the market?

it quiet contrary in that i started with i want to trade and becomes i have to trade.

opposite of what you preach.

AK71 said...

Hi coconut,

For me, I need to be in the market. It would be nice to not need to be in the market and still not worry about not working for a living. That is another level.

Invest because you want to and not because you have to! That is something else. :)

coconut said...

we are on the same boat than.

i wish i could think this way for my investment also but it seems like time and time again i don't really need it.

is there a way to change that mind set?

AK71 said...

Hi coconut,

We can invest because we want to and not because we have to if we have so much money that we cannot possibly use it all up in a lifetime.

Of course, we will have to answer the question of how much money do we need in a lifetime and we must also remember to take into account inflation.

The other way is to "walk out from family" and be ordained as a Buddhist monk. Om Amitabha.

Unknown said...

Hi AK,

I also have a similar spreadsheet which I share with people who asked me to help them with retirement planning.

In the spreadsheet, I need to state certain parameters (yellow cells)like starting amount for each category of savings and growth projections.

Then the spreadsheet will project the retirement age where investment income is more than 1.5 times your annual expenses.

However, I DID NOT include expected withdrawals for future life events like marriage, buying of flat, children's education, etc. MK has done a great job his projection for these planned expenses.

I might add them in for my future "real-life Tea with Matthew" sessions. Haha.

AK71 said...

Hi Matthew,

I can always rely on you for such high tech stuff. Kamsiah you. :D

Sounds like it is time for another guest blog from you. ;p

yeh said...

I only have a simple spreadsheet to list down the cash+ntuc investment link ( can sell anytime) +share+ bonds of me and my hubby have.

So far didn plan any retirement in the near future. Just think that if still can work then I will still working.

Both me and my hubby still at early 30, still a long way for us to retire.

pf said...

Want to work and have to work.
how abt getting used to ppl meant to work.
so, just work lor. Lol....

AK71 said...

Hi yeh and pf,

Singapore needs more hardworking people like you. Gambatte! :D

pf said...

Actually its not abt hardworking or not leh...
even after u retire....what do one do to keep life meaningful? How to keep oneself going?

AK71 said...

Hi pf,

It is about being able to do stuff that we enjoy and being rewarded with a sense of satisfaction or fulfillment instead of money. I think this is what I am trying to say. :)

pf said...

Yes, i think having satisfaction beyond monetary rewards i what ppl want to achieve. But I'm just thinking that satisfaction at a job and monetary rewards are not mutually exclusive.

AK71 said...

Hi pf,

Of course, some could be lucky enough to have a job that they enjoy and pays well at the same time. I think, however, it is not the norm. -.-"

AK71 said...

Reader says...
Must thank you AK
U teach so much on everything
Grateful to you 👍
My only regret is why I did not read your blog earlier
I want to be like you no need work. 😛

AK says...
Work if we want to and not because we need to.
This is freedom.

WTK said...

Hi AK,

You are right. The financial freedom is achieved when one works because he/she want to do so and not having to do so. Having this option is awesome!


AK71 said...

Hi Ben,

I just published an updated blog on this topic:

Free ourselves from wage slavery now.

Gambatte! :)

WTK said...

Hi AK,

Thks for informing me on the new post.

To add to my opinion, the wage slavery reveals the sense of hopeless on one can have in the course of wilderness. This is indeed a terrible feeling to have for one. Therefore, it is important for one to be free of such terrible slavery. I cannot comment for others. Like what you have mentioned that there are instances in which one does not mind to be in such slavery. I can only say that these are their decisions. As long as they do not mind such circumstances, I can only comment "to each of their own".

On your decision to retire early, I am of view that this is an excellent decision made by you. You are right to comment that our time is limited. It is more worthwhile focusing on things which we want to do. Such decision is the way to enjoy life as my perspective. Likewise the same, such decision may not be applicable for others.


AK71 said...

Hi Ben,

Definitely, to each his own.

It is never my way or the highway. :)

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