Heart to heart talk on achieving financial freedom (UPDATED).

I have heart to heart "talks" with readers sometimes and those whom I have "talked" to know that the conversations could last an hour or more sometimes. 

Although I am not a financial planner nor a trained counsellor, I try my best to put things in perspective for everyone and, hopefully, throw some light on issues.





I know that Singapore can be a bit of a figurative pressure cooker sometimes and a topic that is evergreen in our very green garden city has the same color. 

Green is the color of money or so they say. 

Yes, the topic is "money".

There are more than a few readers who have, in the past, left me comments, sent me emails and chatted with me in FB who told me that they want to be like me. 

They want to achieve financial freedom. 

However, they think it is really hard to do so in just 20 years which is more or less the time I have taken to do the same.





Some readers even told me that although they are inspired by my blog, they also feel some depression at the same time. 

This, of course, is not what I want to achieve through my blogging efforts. 

If this is what my blog is doing to people, then, I should stop blogging.





Not too long ago, I had a chat with another reader in FB and I think that a few "bubbles" from me neatly encapsulate what I want to say to readers who are 

1. married with children, 

2. who make above average salaries, 

3. who have a mortgage to service 

and 

4. a car to maintain. 





Here it is:

I keep saying that all of us have difference circumstances in life. 

We might make very different choices in life and with those choices, there are pluses and minuses. 

We must make the best of our situations and, if possible, improve on our situations. 





Incidentally, I believe that it is almost always possible to improve on our situations. 

More often than not, it depends on how badly we want things to change.

So, some might take 20 years, some might take less than 10 years and some might take 40 years or, maybe, more. 





The important thing is that we all get there in the end or at least try our very best to do so.

Anyone who is diligently working towards financial freedom in a responsible manner is, in my opinion, already a winner and we should never forget that.





Related post:
Journey to financial freedom is not a race.

If I had done this, I would have hit the minimum sum too.

-------------------------
This is my reply to a comment by a reader and because I want as many people to read this as possible, I am publishing this as a regular blog post.

See qook's full comment: here.
".... I just ran some numbers and they were illuminating. If I'd done the same as AK, I would have hit my minimum sum too!"

AK's voluntary contribution in March 2014.

AK's reply:

Hi qook,

Yes, absolutely! That is what I have been trying to tell people for a long time. :)

Feed our CPF-SA early and feed it well. If we do it early enough and well enough, we would only have to do it for a few years and time will do the rest for us.

4% compound interest is powerful. 4% compound interest risk free is very attractive. 

However, we need a more substantial base to see more meaningful results. 

So, we need to help it along to help ourselves. ;)







Once you hit the ceilings for the SA and MA in any year, your monthly CPF contributions for the rest of the year will go to your OA and SA but not the MA.

So, the money in the SA will continue to grow into something much bigger. 

At age 55, there could possibly be a small windfall for us and not just a $5,000 payout. 

The rest of the money goes into a newly created RA and at age 65, CPF Life will kick in.

Like many things in life, the outcome depends on the decisions we made in the past. :)







Want to create a risk free and more conservative portion for our portfolio and not very sure about bonds? 

I hope this blog post has provided some food for thought. 

There is still quite a bit of time before the year ends.

Related posts:
1. Towards retirement adequacy before the year ends.
2. Videos on reaching 55 and CPF Life. (6 minutes in all.)
3. Build a bigger retirement fund with CPF-SA.
4. Do the right things and transform our lives. (Real story.)
5. We do better managing our savings than the CPF?