F.I.R.E. AK still needs $136K p.a. Growing richer or poorer?

This blog is just a bit longer than the video because I had a bit of problem with the voice recording.
----------------------

I have been asked many times before if I was ever bored in my early retirement.

To be quite honest, I find that question boring.

It was never something I was worried about because I was never married to my job.

I had many things I wanted to do but just didn't have the time for them.

So, I tell people that I am as busy now in my early retirement as when I was gainfully employed.

What I did worry about was whether I would have enough funds to retire early?

I was worried if I planned it right as I didn't fancy the possibility of rejoining the workforce.

That was during a time when I didn't know what was LEAN F.I.R.E.

Of course, if you have been following my blogs, you know what I think of that idea.

Having said this, all of us have different circumstances and, to be fair, LEAN F.I.R.E. could work for some people.



However, for people like me who have aged parents and for those who have children, if we want to retire early, it is financially more demanding.

We cannot afford to be too optimistic that things will work out on their own somehow.

There is only so much belt tightening we can do if things do go wrong.

For people who have dependents, early retirement is more demanding as we have to ensure our financial resources are sufficient to support more people.

Although my passive income seems massive to some people, once we take into consideration my expenses, it doesn't leave much room for error.

I don't track or blog about my expenses in detail, but I have blogged about my budget in whole numbers before.

In an earlier blog in 2019, I said I would need around $120,000 in passive income to cover my own expenses, parental support and CPF contribution.

$40,000 per item.

Then, in another blog sometime later, I said that given the higher inflation we were seeing, I would increase by 20% the money for my own expenses and parental support.

That would bring total passive income required yearly to $136,000.

Fortunately, passive income generated by my investment portfolio, excluding interest earned in my CPF account, has been able to cover this.



Of course, regular readers know that I will not be making any voluntary contribution to my CPF account in 2023 and 2024.

This is because money earmarked for this purpose has been used to buy Singapore Savings Bonds when they offered 10-year average yields of more than 3% p.a.

My plan is still to continue saving money in my CPF account or buying Singapore Savings Bonds till I turn 55.

When I turn 55, I could continue with this plan, or I could decide to enjoy life a little more.

I was more inclined towards continuing to save more money in the past, but the COVID-19 pandemic got me thinking.

Life could be cut short quite unexpectedly.



Yes, the COVID-19 pandemic changed the way I look at many things, including investments.

So, there is a high chance that in another few years from now, I would only need $96,000 a year in passive income as I stop earmarking money for CPF contributions.

Just need money to cover my own expenses and parental support.

Of course, we don't live forever.

Although I wish my parents would be around for a long, long time, I am not sure they want to outlive me.

The day I become an orphan, I would only need $48,000 in passive income per year, all else being equal.

When I think of this, melancholy sets in.

It is bittersweet.

OK, I shan't be maudlin about it.

I am just going to talk about finance here.

Well, it seems that, over time, I will become richer than I ever was without having to do anything differently from what I am doing now.

My investment portfolio should still be generating passive income and even if that doesn't grow, over time, my wealth could grow as my expenses shrink.



I don't think I would ever need to draw on my CPF savings.

So, over time, just from compound interest, that should grow too.

Anyway, what is the message here?

Early retirement is definitely financially more demanding for people with dependents.

However, if we are able to achieve this, we are likely to do better financially over time even when we become aged.

Just remember that we cannot be too adventurous, and we should be able to avoid financially catastrophic mistakes which might force us to rejoin the workforce.

Anyway, this is just me talking to myself about my experience and perspective.

If you have made it this far, you could be just as mental as me.

If AK can talk to himself, so can you!

Related posts:
1. How much passive income is enough?
2. Inflation, passive income and my budget.
3. Retirement drawdown strategy.
4. Retirement adequacy for late bloomers.
5. 59% want F.I.R.E.
6. LEAN F.I.R.E.

F.I.R.E. lean or shaky? AK still worried? Confession.

Change is the real constant in life, many would say.

Back in June 2020, I published a blog on how worried I was. 

Why was I worried?

Dividends from my investments during the COVID-19 pandemic reduced pretty significantly.

The central banks were also lowering interest rates again in order to keep their economies alive. 

That meant even lower interest income for my fixed deposits.

It was a double whammy. 

Without an earned income, the double whammy was pretty impactful for me.

Fortunately, being a worrier, I built buffers before retiring early so many years ago.

I had an emergency fund which I was prepared to dip into if things got even worse in the same way our country dipped into our reserves during the pandemic.

It is imperative to hold a buffer against possible crises.

Our country has reserves and we should have emergency funds.

Readers who have been following my blogs for some time know what I say about regular folks like us keeping our needs simple and our wants few if we want to achieve financial freedom earlier.

It means to live well below our means.

There are people who then retire early once their passive income is able to cover their basic necessities in life with very little or no room for error.

They call it lean F.I.R.E.

I think it should be called shaky F.I.R.E.

OK, maybe I am just mental but I like to have buffers in case things go wrong.

If I didn't have buffers, with reduced dividends and interest income during the COVID-19 pandemic, I might have had to look for a job in a very difficult environment.

Just thinking of the possibility is giving me an anxiety attack.

Yes, PTSD moment right there.

What is the opposite of lean F.I.R.E. then?

Fat F.I.R.E. sounds unhealthy but maybe that is what it is.

While lean F.I.R.E. is about having just enough passive income to cover basic necessities in life, I suppose fat F.I.R.E. means being able to afford some luxuries as well.

There is a limit to how tight lean F.I.R.E. can be while the sky is the limit for fat F.I.R.E.

If I am a very sensible person, I would live like I am on lean or shaky F.I.R.E. when I have already achieved fat F.I.R.E.

This is because we don't know what we don't know.

However, I am not very sensible, so, I live in a shoebox condominium and I own a car, both of which are so expensive in Singapore.

Hence, when things took a turn for the worse like what happened during the COVID-19 pandemic, I worried as I also wished to provide my parents with greater financial support.

Don't be like AK.

Be sensible, very sensible.

Anyway, two and a half years later, how have things changed?

Things have changed a lot.

I have made changes to my investment portfolio in the last two and a half years.

The aim was to have a more resilient investment portfolio.

Passive income received from my investment portfolio has grown significantly, year on year.

Inflation has shot up and it has remained elevated.

Interest rates have increased rapidly as central banks try to tame inflation.

Cost of living crisis has become a trending topic for some time now.

However, this development is good for the financially prudent people who have been living well below their means.

Inflation affects them too but not by very much as they are used to keeping their needs simple and their wants few.

Higher interest rate is good for them too as they have ample savings in the form of a meaningful emergency fund and also a float.

Interest income is not a negligible sum anymore.

I see my interest income increasing many folds. 

In fact, the percentage increase is very much higher when compared to the increase in dividends and distributions received from my investment portfolio, year on year.

So, is AK worried no more?

I shared in a recent blog that we could see a recession this year and with inflation staying high, we could see stagflation.

So, people like AK might be quite comfortable now but don't be complacent.

Give ourselves a little treat from time to time but don't overdo the "revenge spending."

Remember, swans are not always white in color.

It is safer to stay worried!

Wishing all readers good health and abundant wealth in an energetic Year of the Rabbit!

Essential reading:

Survivability and opportunity...
Recently published:
Using CPF-OA for 4% T-bills...

References:
1. Worried as dividends and interest income reduced.
2. Largest investments updated (4Q 2022.)
3. Full year 2022 passive income.

$32m luxury goods scam and a victim who lost $18K.

Some people must be wondering why AK has not blogged in so many weeks?

Regular readers of ASSI shouldn't be surprised anymore as AK spends most of his time in other worlds.

I am still spending time in Neverwinter and Genshin Impact.

I had to drop Black Desert Online and Star Wars The Old Republic.

Just don't have enough time especially when I am trying to get back to a healthier way of living by having some physical exercise which is either climbing 80 floors of stairs or walking 10,000 steps a day.

I still stay updated on money matters as much as possible like how Sabana REIT's DPU went up but ESR REIT's DPU went down.

Sabana REIT's gearing level is lower while ESR REIT's gearing level is higher.

Sabana REIT is trading at a 15% discount to NAV while ESR REIT is trading at a 15% premium to NAV.

Just saying.

I like climbing stairs more because it is efficient and it is also safe to read the news when I do it as it is unlikely that there would be anyone else climbing 80 floors at the same time and in the same block which might result in an accident.

I don't always read serious stuff.

I am only human and like gossip from time to time.

Just now, I read about how a couple ran away with $32 million which customers paid them in advance for luxury goods.

There are so many things that I could say about this but a friend told me before to live and let live.

Hanor.

Rich people can afford and if they don't buy luxury goods, they cannot bring their money with them when they die anyway.

Right?

Eh, I don't know.

You say leh?

What?

You say AK is 铁公鸡?

Of course, readers who have been following my blog for a long time would know what AK would have said in the past.

AK changed liao.

Alamak.

Cham lah.

But hor I really couldn't tahan when I read the case which was mentioned at the end of the article.

Some person helped a friend to order an $18,000 Rolex watch from the scammers and said that the friend is very pissed now because that is a big part of his savings.

Of course, I don't know if really is bought on behalf of a friend or too shy to say is for himself.

$18,000 is a big part of his savings?

What percentage would be a "big" part?

It is different from person to person but if $18,000 is a "big" part, why buy a Rolex watch with it and from a dubious source too?

Face palm like that.

It reminds me of what a friend told me before.

Once we are making $5,000 a month or more in employment, we should go and buy a luxury brand watch like a Panerai or Longines to show people that we have arrived.

Who are the people?

AK blur.

People care meh?

I don't care.

Also, arrived where?

Obviously, wherever it is, I have not been before.

AK blur again.

How like that?

Jialat.

I only know that I didn't get to where I am by using a "big" part of my savings to buy luxury goods.

References:
1. $1 million and stair climbing.
2. Not successful in SG unless you do this.
3. Retiring by 40 is a fantasy for most.
4. Buying a $500,000 watch...
5. Sabana REIT: Closer to 52c NAV.

Sell property worth $3.5 million and retire from work?

A couple both age 38 with 2 young children (ages 4 and 6) are thinking whether to sell their fully paid up investment property valued at $3.5m?

If they were to sell the said property, the wife could become a stay at home mom. 

The other option is to keep the property and continue to have dual income.

A part of the comment:

I am publishing my reply to this comment as a blog to see what others have to say since I don't have all the answers.

What do I think?

This is my reply:

"Congratulations to this couple because what they have is a first world "problem." 

"I cannot provide an answer as to which option is better because it all boils down to what is more important to the couple at this point.

"The choice is not between two evils and to determine which is the lesser evil here.

"The choice is between two outcomes which are good in their own ways. 

"Is time spent with the children in their formative years more important or is greater certainty in money making more important?

"What I do know is that kids grow up very fast.

"Growing up, I didn't get to spend much time with my parents as both of them had to work long hours.

"If our family had been financially better off, then, things might have been different.

"Taking the feelings of children into consideration in financial matters is a luxury for most families but for this family, it could be a luxury which is affordable.

"We have to ask how much is enough and I can only speak for myself." 

Recently published:
Avoid this when interest rates rise.

References: 

1. When can I quit my full time job? 

2. My family almost went bankrupt.

3. Financial freedom and not enough time.

"Lying flat" is better than financial freedom?

I just watched a YT video on the "lying flat" movement that originated in China.

What is this?

"Tang ping (Chinese: 躺平; pinyin: tǎng píng; lit. 'lying flat') is a... movement in China beginning in April 2021. It is a rejection of societal pressures to overwork , such as in the 996 working hour system..." 

Source: Wikipedia.

996 means working from 9AM to 9PM for 6 days every week.

Apparently, the movement has even moved to the USA which is partly why it is harder for American businesses to find workers now which contributes to inflationary pressure as well.

"Lying flat" is different from achieving financial freedom.

It is about living a very low maintenance life to make our money last for as long as possible without having to work and then going back to work when we have run out of money.

Then, go back to "lying flat" until our money runs out and then going back to work for some money.

Many things boggle my mind these days but this idea of "lying flat" takes the cake.

Some readers might remember that someone said that financially free AK should be ashamed of himself.

See: 
Financially free AK should be ashamed...

I actually felt pretty good about myself after watching the said YT video.

One of the things I always say is that everyone's life can be and should be better.

Is "lying flat" a better life than working towards financial freedom?

Hmm.

Watch the YT video and decide for yourself:

Mind boggling.

While a low maintenance lifestyle sounds appealing to me, I don't think "lying flat" is the way to go.

I have always believed that we should work hard and plan for a good retirement.

People who are "lying flat" now will probably have a big problem in their old age and they could become a burden to society.

It is not just dangerous not to think ahead but it is also socially irresponsible.

Very short sighted.

Since people who are "lying flat" do work sometimes, is it a form of semi-retirement?

Well, maybe.

While I agree that a 996 work culture is bad, "lying flat" sounds like escapism to me.

People who are "lying flat" work whenever they need to while people who are "financially free" work whenever they want to.

I have also mentioned "wage slavery" in my blog many times before and how we can free ourselves.

"Lying flat" does not free us from "wage slavery" but instead shackles us forever as wage slaves.

Having pleasant dreams while lying in bed is quite nice but "lying flat" could lead to nightmares.

References:

1. Freedom from wage slavery!
2. Die faster if we work harder?

3. Plan early for retirement.

Retiring by 40 is a fantasy for most and AK talks to himself.

Imagine a guy in Singapore who is in his 20s.

Imagine he is in love with a female and they decide to get married right after graduation.

Imagine they decide to buy a flat or a condo right away.

Imagine them having 2 or 3 children in the next three years.

Imagine the wife becoming a stay at home mom after having their first child.

Imagine them buying a family car.

Can they retire early?

Well, if they are born with silver spoons in their mouths, yes.

Otherwise, early retirement is highly unlikely unless they got very lucky.

The title of this blog might look familiar to some readers because part of it is taken from a much longer title from a recent article in Today.

Links to financial planning sites littered that article but I guess that is normal since Today isn't a hobbyist blogger like AK.

Anyway, if we want something and if we don't plan it right, we won't get that something.

So, if an early retirement is what we want, then, we must know what will help and what won't.

How to achieve early retirement?

In a nutshell:

Build wealth and avoid wealth destruction.

In more than a decade of blogging, this is something I have blogged about extensively.

I won't rehash since I am lazy.

Instead, I will point interested readers to some blogs here in ASSI which might provide food for thought.

1. A happy marriage is worth waiting for!

2. Do you want to be richer?

3. How to upsize CPF savings from $100K to $225K?

4. Good habits now for a comfortable retirement!

5. If we are not rich, don't act rich!

6. 3 good reasons to buy a car.

7. How to have children and a comfortable retirement?

Finally, we need insurance but know what is necessary and don't overpay.

See:

What is the purpose of insurance and are we overpaying?

To be fair, retiring by 40 was a fantasy for AK too.

AK only retired a few months before he turned 45.

See:

To retire by age 45, start with a plan.

There are so many blogs in ASSI and I might have missed some useful ones. 

However, the above blogs should be good enough to make many readers lose sleep for many nights.

Jokes aside, for an average person in Singapore who wants an early retirement, it isn't impossible.

It does need good planning and disciplined execution.

Now, why is an early retirement a fantasy for most in Singapore?

If AK can do it, so can you!

Believe it!

Gambatte!

Related posts:
1. Planning for retirement early made early retirement possible.

2. Why did AK want an early retirement?

If you are using the mobile version of ASSI and would like to read more related posts, go to the full web version of ASSI by scrolling to the bottom of this page and clicking on the link.

Links to more posts in the left and right sidebars can be found.

1M50 CPF millionaire in 2021!

Ever since the CPFB introduced a colorful pie chart of our CPF savings a few years ago, I would look forward to mine every year like a teenager would wait in line for a cup of bubble tea.

Do you know that bubble tea is wealth and health destruction incarnate?

Expensive carbohydrate and sugar.

Expensive empty calories.

Oops, I digress.

So, what does my CPF pie look like?

It looks different from previous years.

I shouldn't say "it" because this year we get more than one pie.

I prefer the old pie because it looked cheerful with bright colors.

These new ones look really dull.

Anyway, I will just show the first pie:

Are you disappointed?

Oh, you are but not with the colors of the pie but with the numbers?

Right, where is the one million dollars AK hinted at in the blog title?

Well, this is where AK got tricky.

Some of you might have guessed it.

Voluntary contribution of $37,740 this month to my CPF account means I have more than one million dollars in CPF savings now!

Maybe, AK is an overgrown hobbit. 

"Stupid hobbitses, tricksy hobbitses."

Gollum reads Donald Trump's tweets:

Yes, I know.

Bad AK! Bad AK!

My CPF savings in January 2021:

Total:

$1,012,703.70

Hurrah!

We know of 1M65 which is to have one million dollars in CPF savings by age 65.

We might also have heard of people who have accumulated one million dollars in CPF savings before age 65 and now AK is one of them.

AK is 50 this year.

So, AK is a 1M50 CPF millionaire!

Technically, AK is a 1M49 CPF millionaire as he is a year end baby but 1M50 looks more wholesome.

So, 1M50 it is.

Anyway, 49 or 50, eh, who cares?

Indeed, I would argue that it doesn't really matter if it is 1M50, 1M55, 1M60 or 1M65.

I said before that the journey to financial freedom is not a race and as long as we achieve financial freedom, we win.

See:
Journey to financial freedom is not a race.

The same spirit should be applied to growing our CPF savings as just like the quest to achieve financial freedom, each of us could go at a different speed because each of us have our own circumstances to deal with.

Think of it as a rewarding journey that should provide some pleasure along the way.

No pressure, just pleasure.

As long as we are doing the right things as much as we can, we should give ourselves a pat on the back.

Growing my CPF savings over the years has been very satisfying and although I can only see the pie now, I will get to eat it one day.

Growing old is definitely not all doom and gloom if we are well prepared and we should help the CPF to help ourselves.

If we have not done so, start now.

Stay the course and, over time, we will see results.

Remember, compound interest might seem like magic but it really is simple math.

We don't have to be talented like Harry Potter to make it work for us.

If AK can do it, so can you!

AK says one hor. ;)

Related posts:

1. Retirement adequacy.

2. VC to CPF in January.

3. 2019 CPF savings in a pie.

Recently published:

1. 4Q 2020 passive income.

2. Interest income from CPF in 2020.

Reference:
Saving $1m through CPF, The Straits Times.

Chinese New Year of the Rat 2020. (Of rats and races.)

In a few days from now, my year will be over.

We will be going from year of the "oink, oink" to year of the "squeak, squeak".

Good bye to Piggy.

Welcome to Ratty!

Yes, AK is not a rat.

AK is a pig.

Unless we are Chinese, saying that we are a rat or a pig would probably sound rather strange or even offensive.

However, if are familiar with the phrase "rat race", then, all adults would have been a rat at one time or another.

"The origin of the expression is from laboratory experiments where two rats are trying to outrun each other in order to get a piece of cheese."

Source: Quora.

Interesting bit of trivia but rather depressing when we think about it as an analogy.






What?

Mr. XYZ is the number one rat in the race?

I don't care?

I am not a rat anymore.

Mr. XYZ and his friends can be rats and they can race each other all they want.

Take a break and have a Kit Kat?

Sorry, if Mr. XYZ and his friends take a break, there is no Kit Kat and they might not get that piece of cheese either.

Having said this, I do understand that we are all wired differently.






Although I think that there is nothing wrong with people who would like to achieve financial freedom and to stop working, there will be people who think that such people are just lazy.

Some might even think that AK is being irresponsible and should be ashamed of himself.

See:
Financially free AK ashamed?

AK, on the other hand, doesn't have anything mean to say about people who are gainfully employed.

See?

AK is such a nice guy.

The fact that AK doesn't like being a rat doesn't mean that others should feel the same way.

However, to those who enjoy being rats, the question to ask is this:

"Can I be a rat and not be in the race?"

Work not because we need the money from working and we would be such a rat.

Simple.

See:
9 wealth building blogs.






That piece of moldy cheese?

Other rats can have it.

I don't need it.

No more hunger and no more suffering.

Nirvana in Buddhism leads to the release from the cycle of birth and death.

Nirvana for rats leads to the release from the rat race.

We can still be rats but we don't have to take part in the racing.

Hope this is food for thought for some and, no, I am not referring to a piece of cheese.

Sincerely,
Not a rat AK.

Wishing all readers 

a happy and prosperous 

Chinese New Year!

Published recently:
Investors eat crusty bread with ink slowly for peace of mind.

Related post:
Scolded by wife for thinking about financial freedom.

Investors eat crusty bread with ink slowly for peace of mind.

Older readers will remember an older blog of mine which asked

"How to have peace of mind as an investor?"

In that blog, I suggested that we should

"Eat bread with ink slowly."

Using mnemonics, it stood for:

1. Emergency fund.

2. Borrowings.

3. War chest.

4. Income.

5. Sizing.

If you cannot remember the details or if you are new to my blog, you might want to read the blog: HERE.





Actually, there is something missing from the list and I have been thinking of doing an update for a while but long time readers of my blog know that I have such a busy life.

This week, in fact, I have spent tens of hours adventuring in a new world.

Yes, a new world.

It is likely that I will spend hundreds of hours in this new world in the coming months.

It is an ARPG this time which is quite different from the MMORPGs like Neverwinter and Guild Wars 2.

ARPG stands for action role-playing game.

The name of this ARPG?

Path of Exile.







Once Mod 18 in Neverwinter goes live on 21 January, I will be busy adventuring in Avernus, the first layer of the Nine Hells of Baator.

Path of Exile and Guild Wars 2 will provide me with alternative worlds to adventure in each time I wait for new Mods from Neverwinter.

I can never be bored in retirement as I enjoy adventuring in such fantastic worlds.

The amazing thing is that I don't have to pay a single cent (and I don't) in order to enjoy these larger than life adventures.

Some people say:

"Aiyah, you can do this because you are rich mah."

This might sound a little sour but, to be honest, they are right.





We want to be financially free so that we do not have to exchange the most precious resource we have (i.e. time) for money anymore.

Why do many average income workers find this impossible?

Do you believe me if I were to say it is not because they make an average income?

If you are a new reader or if you don't remember, read this blog:

Average income workers have a choice to be rich.






To be richer, learn to be better savers first.

This brings me to the crux of the blog or in this case, the "crust".

"Eat crusty bread with ink slowly."

Using mnemonics again.

The letter "C" in the word "crusty" stands for CPF.

I have said in many blogs before that having a rather significant safety net allows me to invest the way I invest with peace of mind.

My CPF savings is a very big part of this rather significant safety net.

In fact, I said that the CPF would continue to be an important part of my passive income strategy even after I had made $1 million in dividends from my many investments in equities and trusts.

Now, when was this?

This was back in October 2016.

See:
The AK passive income strategy after making $1 million.

So, to have peace of mind as an investor, not only do I eat bread with ink slowly, I choose to eat crusty bread with ink slowly.

1. Emergency fund.

2. CPF.

3. Borrowings.

4. War chest.

5. Income.

6. Sizing.






I rather like this update.

Definitely sounds complete now.

Sounds a bit more yummy too.

Sedap!

Don't you think so?

Related post:
CPF is all we need unless we are very rich.