30 years old with $150K in liquid assets.

The Chinese have a saying that "one type of rice feeds hundred types of people". All of us are different and in many ways too.

So, I am somewhat wary of giving anyone specific advice as to what they should do in their plans for the future, especially when it has to do with growing their wealth.

I share general ideas regarding how to be prudent when it comes to personal finance matters as well as some ideas that have to do with investing in stocks and, sometimes, real estate. They are scattered throughout my blog.

I would say that before we set out on our journey, have our goals in mind. What do we want to achieve? Then, we must choose the route which we think is the most suitable for us.

To expand on the analogy, there could be a very short route available but it could be quite treacherous. Do we have the equipment and skills to take that path? There could be another route, longer but less of a thrill. Would that be a better choice?

Some might remember a blog post in which I shared my plan to retire by 45. Some might also remember how the plan was tweaked. In reality, I am sure it was tweaked more than once too.

Set goals and, with that, have plans but don't be too rigid. The only constant in life is change.

Y

Suppose you have such assets @ age 30 present:
-130k savings -20k stocks (50% bank, 50% REITS) -
less than 5k in CPF-OA, less than 5k in CPF-SA
-average monthly 3k savings (after all expenses)
How should one plan for short and long term investment goals?
short term - 1k savings to dividend stocks? long term - 1k saving per month to CPF SA account self top-up?
Would like to know how best to plan for the next 25 years! ty ty!

sorry master AK! trouble you to shed some light on investing. grin emoticon

 

Assi AK

Hi Y,

This is a difficult question to answer because it would depend on each individual's circumstances and what they want.
 

I cannot answer in specifics but I have blogged about what fresh grads or young working adults might want to look at first. The blog posts are found in the right side bar of my blog.

 

I would say that prudent personal finance comes before investing and with plenty of savings, you seem to have done that well. smile emoticon

 

Then, we have to consider your personality. That would help determine if you might want to invest mostly for income or mostly for growth, for example.

Basically, understand yourself and understand your motivations and you will know where your money should go. This will help you avoid regrets. Peace of mind is priceless. smile emoticon

Assi AK

What I have done in my blog is to share my journey which includes sharing my motivations and my methods.

I invest mostly for income. I have done fairly well. However, this is not to say that this is the method for everyone. I am not dogmatic.

You are welcome to read my blog and see if what I do gels with what you would like to have. If it does, then, you could possibly do something similar. Cherry pick. wink emoticon

All the best on your journey. smile
 

So, spend some time to think of what you want in your life if you have not done so yet and see if what you are doing now will help you achieve your goals.

We probably can't get it absolutely right but having a plan and being realistic enough to recognise the need to change along the way will help us get it approximately right.

Honestly, that is good enough.

Related posts:
1. Have a plan, your own plan.
2. To retire by age 45, have a plan. (My goal, my plan.)
3. Blog posts in "Reads for undergrads and fresh grads" in the right side bar.
4. A conversation on the CPF and investing in stocks.
5. How to grow my wealth as I approach 40 years of age?

Real life lessons in matters regarding insurance.

This might sound familiar to some of us but I am more interested in sharing this with readers who have yet to buy insurance products or who are thinking of buying insurance products soon. Be careful.





Reader says...

Thank you so much for reading my email. More thank yous for the advice. 

I have a cousin who sold a whole life insurance to my dad (when he was 40+) for sum assured of $60,000 with CI rider. 

The monthly premium is $208 and my dad will have to pay the premiums until he turns 88 yrs old. 

Back then, I was only 20 and still studying. When my parents mentioned to this cousin (already resigned from AIA years ago), how they are going to pay as they most likely won't be working in their 70s and 80s, the cousin replied, "Your children can help to pay." Unknowingly or rather without consent, my sisters and I were in debt. 

Before purchasing the AIA whole life insurance, the cousin knew my dad had another whole life insurance with NTUC for sum assured of $25,000. 

The thing that pains me was that my cousin was starting out as an insurance agent, sales target became the motive.

Don't ask why. You just buy.

If I had the knowledge then, I would have questioned my cousin for not recommending a term insurance instead. 

For example, term insurance for sum assured of $50,000 or $100,000 until he is 70 or 75. Then the NTUC whole life ($25,000) will cover until 99 years of age. 

Of course, her commission will not be as much. Then again, what is the primary role of a financial planner?

Now my dad is 61 yrs old, I'm trying to convince my dad to cancel this AIA whole life insurance (yearly expense of $2500) and purchase a term insurance of $50,000 for the coverage period of 10 or 15 years.

Another case was my husband's brother who became a Manulife insurance agent and sold him an ILP. He has since resigned. 

In order to meet his sales target, he paid the premiums on behalf on my husband who was still in university that time. 

Now, when we reviewed this ILP policy, a total of $8000 premiums paid but the surrender value was only $5000. I told him that out of nowhere, you have lost $3000 within 5 years. 







Could have been better to put it in a bank let inflation erode or go for a holiday, which has at least some form of "payback". 

Although we felt very heart pain, at least it is a good lesson for both of us. If don't know, don't any how buy =p

Sorry for the ranting. These two cases are the best lessons learnt. 

I wish to have a good week and great health to write more posts. :) hehe 

Taken on a trip to Hong Kong:
The giant Buddha in Ngong Ping.

AK says...

I am quite happy to read your emails which put a smile on my face. :)

I am sorry but not surprised to hear of your dad and husbands' experience. 

My parents also had similar experience and the policies were all sold to them by relatives and friends. -.-"

With regards to your dad's case, unless he still has dependents, he doesn't even have to buy a term life policy till age 70 or 75. 






I don't know if you read my blog post on how I advised my dad to terminate his whole life policy because he no longer has dependents. 

We, his children, are all grown up and making our own money.

So, your dad could consider terminating his whole life policies and his cash flow will improve. 

Of course, he will probably be receiving a lump sum payment as well which he could use for a holiday or something else he has been thinking of doing. 

He should enjoy his golden years and not worry about paying for an insurance policy that has outlived its purpose. :)








The truth is nobody cares more about our money than we do.

Related posts:
1. Should I terminate an expensive ILP from a friend?
2. A true story about life insurance and grapes.
3. Consider terminating whole life insurance policies.
4. AK responds to Sumiko Tan's expensive lesson.
5. MediShield Life, free medical insurance and hospitalisation?

Saizen REIT: TKs.

When I was a soldier in the Singapore Armed Forces, I learned a Hokkien phrase with the abbreviation "TK". It was one of those inane things that I picked up during those two and a half years that somehow got stuck in my mind. If you don't know what the abbreviation is, here is a hint: It has to do with size and a part of the male anatomy. OK, no more.

Anyway, today, I replied to an email from a reader about TKs. However, these are TKs of a very different nature. These are the TKs of the Japanese business world.

Hi AK,

I am currently trying to understand more about Saizen Reit, a stock that you happen to own. Hence, I would like to ask if you could share with me the structure of the REIT. I was reading their annual report and I could not understand the jargon.

Can you kindly explain about what is the relationship between Saizen and the TK operators because I do not understand who actually owns the properties. Thanks in advance for your help. 

I am a noobie trying to learn more about this Reit and I got confused by its structure.

Warm Regards,

KF

Hi KF,

The TK structure is one way foreigners can invest in Japanese real estate. It is a typical Japanese real estate investment structure, in fact. The TK or Tokumei kumiai is a legally binding contract.

So, when we buy into Saizen REIT, we are buying into a foreign investor that has a stake in these TKs. Saizen REIT has contributed money to the TKs and has the right to share in the profits but Saizen REIT is not allowed to run the TKs. This is why there are TK operators who are actually the local operational managers in Japan.

In case you are wondering, Saizen REIT is entitled to 97% of the profits generated by the TKs.

The investors own the assets in the TK, not the TK operators. Saizen REIT has invested money and they own the assets.

Best wishes,
AK

OK, I think I am going to have some rice and "tau kee" stewed in soya sauce for lunch.

See the TK? ;p



Related posts:
1. Deeply undervalued but is it a BUY for you?
2. Saizen REIT: Still a good investment for income?

A money tree, a candy store and some eggs in a basket.

A friend just congratulated me on my purchases made earlier this week in the stock market.

He said:

"You were like a kid in a candy store."

I said:

"Nope, I was an adult in a candy store."

He asked:

"Got difference meh?"

I said:

"Yup, a kid would not have the money to buy like I did. A kid would probably have enough money to buy one type of candy but I bought a variety."

I hope my friend got the messages I was trying to share and didn't think that I was trying to show off.

1. Money doesn't grow on trees. For most of us, to have money for investments, we need to save money from our earned income and, later on, save the passive income generated by our investments.

2. Avoid concentration risk unless we are very sure about the investment choice. As most of us are "know nothing investors", it is a good idea not to put all our eggs in one basket. This is sensible not only in the stock market but in other forms of investments too.

Remember,
"Putting all your money in a single investment to have the income it generates cover all your household expenses exposes you to concentration risks."
From:
What would I do if I had $750,000 to invest with?

  

Related posts:

1. Wealth is attracted or repelled by habits.

"As my blog becomes more popular, it disturbs me that people think that I am some investment guru. Of course, I am not. I might be a bigger retail investor than most of my readers but I think that is where the difference mostly ends."

2. Concentrate or diversify?
"You have, however, rightly pointed out one of the weaknesses of such a strategy, especially if our funds are limited."