Mentally and financially prepared for retrenchment.

This is part of an email a reader wrote to me after reading an updated blog post. (They invested in multiple properties and are now retrenched.)



Reader:
"Their experience is getting more common. I am in my late 50s and I see many friends and relatives in my age group being asked to go. I am sure it will be my turn soon as the company has not been doing well. 

"I have been reading your blog since 2010. I have invested in the REITs you suggested, including Saizen. I am not rich like you but I think I can cope if I lose my job today. I found out that many won't be able to cope. CPF and some savings cannot be enough.

"In a way, your blog saved me and I told my sons that they should learn from you too. Their future can be so much brighter than mine because they can start early."





Sometimes, when readers in their 50s or 60s ask me what should they do to be like me, I find it hard to give them an encouraging answer. This is because what I have achieved today took me almost 20 years. So, you can imagine how happy I felt reading the above email.

As long as we still enjoy a meaningful and regular earned income, we probably could and should make an effort to invest to have another stream of income, passive income. Age shouldn't matter.

When we are in our 50s and 60s, if still employed, we are in our final years of employment. If we want to have a chance at getting rich quick, put aside, maybe, $50 each month and buy BIG SWEEP or TOTO. 

Think again before signing up for some courses or schemes with get rich quick promises. If it sounds too good to be true, it might just be.

Also,

Think again before buying some life insurance or complicated financial product. Don't buy just because they are giving you some freebies.




What should we be doing?

Click on the suggestions below for some ideas:

1. Make good use of our CPF account.

2. Take part in CPF Life for lifelong income.

3. Invest in bona fide income producing assets and think of monetising our home.

Notice I put investment last in the list. This is because the CPF is a risk free and volatility free option.

Investments are rarely risk free and definitely not volatility free.

If you are in your 50s or 60s and if this is the first time you are reading my blog, remember, no one cares more about your money than you do. 




In your golden years, you should enjoy life a bit more if you can afford it but don't do anything stupid with money.

At your age, you cannot afford to make big mistakes with money.

What would be considered stupid and big mistakes?

Anything that might force you back into the workforce if it should go wrong even if you must become a cleaner making $1,300 a month.







Always ask yourself what is, realistically, the worst case scenario and if it should manifest itself, would you be able carry on with your life as usual.

Then, you would know what to do.

There are many examples of seniors who are foolish although they say wisdom should come with age.

Our golden years should be financially secure. Don't be foolish and you can make it so even in the face of retrenchment.





Related posts:
1. How many 20 years and $29K do we have?
2. Withdrawn CPF money in excess of MS.
3. Financial strategy for the elderly with spare $.

They chose financial independence over home ownership.

This is somewhat extreme but watch how this Canadian couple chose financial independence over home ownership. 

They are in their 30s and, well, they are retired.








If we qualified for a BTO HDB 5 room flat which costs, maybe, $500,000 today, why do we need to buy a condominium which costs $1.5 million, for example?

If we didn't need so much living space, would a BTO HDB 3 room flat in Choa Chu Kang which costs less than $180,000 be good enough for us?


Now, would you rather have $1 million in income producing assets (e.g. income stocks) or a $1 million home (which doesn't generate income but instead would incur expenses)?






Very often, people over consume when it comes to housing and, not surprisingly, they might also be the people who find financial independence out of reach despite enjoying higher than average earned incomes.

Reader says:
"Today I had a conversation with a colleague. She has a relative who is very unhappy at work due to unfair treatment and feels like quitting. 

"However, this relative's family intends to buy a condo while retaining their HDB. 

"The wife of this relative told him that if they go ahead and buy the condo, he MUST not quit. 

"If he buys a condo, he is stuck between a rock and a hard place, and that is not good for mental well-being."





AK says:
"Often, it is peer pressure.

"Keeping up appearances is more than just financially destructive.

"Do you believe me when I say that when I tell people I downsized from a 2 bedroom apartment to a 1 bedroom apartment, most of the time I would get a negative response?

"Recently, when I told my new banker that I bought a small car, he said the same thing as my dad that he would not buy a small car unless he could not afford a bigger one.

"It is peer pressure but it is also how we deal with it."





----------------------------------------------------

Reader says:
"maybe i have the wrong perception. 

"i thought AK got the funds from property investment.

"thats why you have the funds to invest in stock market."

AK says:
"You might have missed this:
How did AK create a 6 digits annual passive income?"







It doesn't hurt to have some advantages in life but unless severely disadvantaged, all of us can be financially independent.

Related posts:
1. Housing and the CPF.
2. To rent or to buy?
3. The biggest and most expensive.
Purchasing a 3-Room BTO flat: