How to maintain lifestyle in retirement?

Reader says...

My friend each month spends about $2k on tuition for her only child! 😮

4 tuition each cost about $500!! 😱







Money is a scarce resource for the vast majority of us.

What do we do when a resource is scarce?

We try to conserve it.

That is what the government keeps telling us when it comes to the use of water in Singapore.








We should have the same attitude towards money.

Of course, if you are very rich and have money sloshing around, ignore this blog.

I believe that for the rest of us, we can easily strengthen our balance sheet just by reducing unnecessary expenses.






A reader in his 40s who makes more than $8,000 a month told me that he used to save about $500 a month of his take home pay but now he saves $2,000 a month.

What motivated him to save more money was my blog on how we can save 100% of our take home pay.

$2,000 is not 50% of his take home pay but it is already a vast improvement from $500.








Some of the changes he made:

1. He downgraded his car and although not what I would advocate, has a much smaller car loan to service.

2. His family eat out less often and he was very impressed by how much money they could save by not going to restaurants.

3. Extra classes for their two children were reduced to only what they thought were essential.

He also decided not to upgrade to a condominium but will continue to stay in their HDB flat.

Becoming a better saver is the first step towards a financially secure retirement for him and his wife.






What kind of lifestyle we can have in our golden years, to a large extent, depends on the kind of lifestyle we have today.

Don't want to downgrade our lifestyle in retirement?

Don't upgrade our lifestyle too much before our retirement.

Quite simple, really.






Related post:
Saving 100% of our take home pay.

"Should I give up on my husband?" (Warren Buffett's late wife saw him as a challenge.)

Reader says...

I simply LOVE your blog!

However, reading your blog makes me a bit regretful.

I got married a year ago to a very kind and loving man.

He is very obliging and we never had an argument, ever.

I decided he was the one after a short courtship.

He is not rich and doesn't make a lot of money at work but it doesn't bother me because I earn my keep.

I did not think that it could be a problem until a few months into the marriage.





He is very caring and sweet but he doesn't seem to know much of anything and doesn't seem interested in learning.

A big problem is his inability to understand basic money management.

I thought he understood budgeting but had trouble with impulse buying but by now I don't think he understands.

I feel bad for flaring up but he would literally spend the very last dollar of his salary by end of each month.

When I tried to show him how bad his financial situation was, he would hug me and said I was worrying too much.

I love him but I am also thinking of giving up.







AK says...

Welcome to my blog. :)

First, I must say that I mostly blog about personal finance matters.

I am definitely not an expert on relationship matters and I am definitely not an expert on marriage.

So, based on this, I know if I were in your shoes, instinctively, I would dump that guy like a sack of rocks.

Too heavy a burden to be carrying around for even a moment, I would not dream of dragging the sack around for life.

Yikes!

Who threw a shoe at me?

Who? Who?





Let me continue.

However, there is a Chinese saying:

爱屋及乌
"Love the house and love the crows on the roof."

It is about taking the good with the bad.

So, although, instinctively, I would dump that guy, rationally, I would urge you to consider the big picture.





If not being financially prudent is his only shortcoming, maybe, you shouldn't give up.

"Love the house and love the crows on the roof."

As long as the number of crows are not too many, it isn't too bad unless you care about appearances.

However, if the crows are so numerous that the roof might collapse under their weight, you should run for the hills.





I always tell people that investing in stocks is a little like getting married.

We could also say that getting married is a little like investing in stocks.

There is bound to be some rough patches.

For example, Warren Buffett's late wife, by his own admission, saw him as a challenge. ;)

I am just borrowing someone else's wisdom here.

I don't have any in this area.





Related post:
Scolded by wife!

1H 2018 passive income exceeded $96k.

Reader says...

I just started reading your blog last week and I am already a fan!

Your passive income is amazing!

Totaling first two quarters for REITs and non-REITs, you have already exceeded $96k!

How old are you now?






AK says...

Welcome to my blog. :)

I am 47 this year.



Reader says...

Oh, I see.

I thought you might be a retiree in your 60s or 70s.

A bit difficult for me to reach your level by 47.






AK says...

When you say you are my fan, it follows that I am your idol.

Honestly, I don't want to be your idol.

Seriously, you should not be my fan.

Don't compare what you have with what I have.

Don't focus on what I have achieved.

Instead, focus on what you can achieve.





Whenever I say,

"If AK can do it, so can you!"

I am referring to achieving financial freedom.

I am not referring to an early retirement from employment.

I am not asking readers to have the same amount of passive income that I have or more.






AK's 1H 2018 passive income exceeded $96K?

So what?

You don't be "kiasu", ok?

Alamak!

Who threw a packet of tissue paper at me?

Who? Who?

In Singapore, a packet of tissue paper is not just a packet of tissue paper hor.





Related posts:
1. 1Q 2018 income non-REITs.
2. 1Q 2018 income S-REITs.
3. 2Q 2018 income non-REITs.
4. 2Q 2018 income S-REITs.

Free income producing assets. You want?

Has it really been 10 years since the Global Financial Crisis?

Time really flies.

What triggered this blog post?

Messages from two readers.

Reader #1 says...
First Reit dropped quite a bit recently.

Not sure if it is due to rising interest rates.

Am thinking of buying more for retirement income.

What is your view? Thanks.

AK says...
I have not been paying attention but it is probably because I am not thinking of adding.






Reader #2 says...
BTW i was looking to increase my shares in first Reit but Cloudy Outlook On Sponsor Ownership for them made me feel wary.

not sure will it be market noisy or a good opportunity.

current price was my entry price years ago.

AK says...
I haven't been paying attention to First REIT much because my entry prices were so low. 😛






Of course, regular readers know that no matter how sneaky they are, they cannot out sneak AK.

Trying to get me to tell you to buy or to sell?

Sneaky!

OK, I know.

Bad AK! Bad AK!

Anyway, sneaky AK has a few things to say in this blog.






1. Ignore the noise.

When I bought First REIT in a big way and blogged about it, I received messages from people telling me not to.

I ignored them.

It wasn't the first time and it wasn't the last time.

As long as we feel that we have our facts and reasons right, ignore the noise.





The fact that many people disagree with us does not mean that we are wrong.

Of course, we might not always be right but if we spend our time listening to the noise, it messes up our minds.

We might not always make the best decisions but if we are approximately right more often than we are wrong, it is good enough.






2. Time matters.

I have been invested in First REIT for many years and it is probably as old an investment as AIMS AMP Capital Industrial REIT in my portfolio.

It is an investment that generates income for me year after year.

The longer I stay invested in First REIT, the safer the investment becomes.

In a blog published in 2010, I said that my investment in First REIT made during the Global Financial Crisis would be free of cost in five and a half years.





In fact, I have recovered all of my capital and more by now.

This is including investments made in First REIT before the Global Financial Crisis.

Want an absolutely free of cost investment that generates a regular income?

Unless we are lucky enough to inherit income producing assets, with some work and a healthy dose of luck, dreams do come true.

I haven't been paying attention to the share price for a long time.

Why?







When we buy an asset, thinking about its income generating ability, we are investors.

We should be able to value the asset and decide on how much is worth paying for it.

When we buy an asset simply because people who bought such an asset made money in the past or because everyone else is buying it now, we are speculators and more concerned with prices.






Of course, both investors and speculators, if they know what they are doing, can make money.

I am both investor and speculator although I invest more than I speculate these days.

So, to buy more First REIT (or any other asset) or not to buy?

First ask if you are an investor or speculator?







Related posts:
1. First REIT is for keeps.
2. Investing or speculating?