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Rising interest rate worries many people, including investors.
How like that?
Deja vu.
Taken from my 2016 interview with The Fifth Person:
History doesn't repeat itself but it rhymes.
Same, same but different.
I will stay calm as I stay invested in good income producing assets.
Stay calm and game on!
Gambatte!
Related posts:
1. Dumping all my S-REITs.
2. Benefiting from interest rate hikes.
AK's YouTube channel.
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2 comments:
Hi AK,
Its me again, third time I am writing something in your blog, after having overcome my shyness. 😊
As a person with an outstanding home loan, rising interest rate is a concern. But what is more concerning is the rising inflation rate going in tandem with rising interest rate. Housing loans will eventually get paid off but inflation does not go away. Its either high or low. I have seen how retirees are tightening their belts to cope with inflation.
In our (wife & I) retirement planning, we try to have some assets that will hopefully be able to grow with inflation and correspondingly generate higher passive cashflow for us. The below is our projected passive cashflow to sustain our retirement (figures are for couple):
Now (we are 61) :
Dividends : $65K (last year achieved $67K)
Rental : $36K (last year achieved $36K)
Interest from CPF OA&SA : $60K (last year achieved $60K)
Projected total : $$161K
62 to 69
Dividends : $65K pa
Rental : $36K pa
Interest from CPF OA&SA : $60K pa
SRS drawdown : $49K pa
Projected total : $$210K pa
70 onwards
Dividends : $65K pa
Rental : $36K pa
Interest from CPF OA&SA : $60K pa
CPF Life : $60K pa
Projected total : $$221K pa
The very assets (investment property & stocks) that may have a chance to grow with inflation are also assets that can get hammered down in a crisis. So at end, we are prepared to live within the interests from our OA & SA, CPF Life payout & SRS drawdown.
So many unknowns to plan for.
Hi MSI,
Thanks for sharing your secret with us here. ;)
Inflation is an evil thing, an invisible tax which makes all of us poorer but it is the lesser evil compared to deflation.
If we invest in good income producing assets, we should be able to deal with some inflation.
We want to keep a war chest ready so that we can buy more of such assets and for most of us, they are equities, if their prices plunge during a crisis.
We CPF members are so fortunate.
People only truly appreciate the good which CPF brings to the table during hard times.
Reference:
Retirement adequacy 101.
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