Sunday, December 28, 2014

Economics Explained in Thirty Minutes by Billionaire Ray Dalio - Time Well Spent Watching this Video

This 30 minute video by Ray Dalio explains how the economic machine actually works.  Spend the next 30 minutes watching it and I assure you that you won't regret it.  Beats any Economics module offered in the universities.

Tuesday, December 23, 2014

Simple secrets to building wealth

There are probably tons of books written on how one can get rich or become wealthy. Yet, the secret to building wealth is probably much simpler than most people can imagine. If I could choose three words to describe it, I think the appropriate words would probably be "income", "invest" and "persistence".

Firstly, without income, it is very difficult to become wealthy. The only instances one does not require income is probably if you have a large inheritance or you are starting a business (when you have the intention of selling it). At the end of the day, one cannot accumulate assets if one does not have income.

Secondly, one will need to invest.This can be in any instrument. But the idea is that you are only able to invest if you have money left over from your income after taking into account all your expenditure. In most instances, one is able to invest only when spare cash is available.

Lastly, it boils down to persistence. spending money today always seems more tempting and rewarding then saving it for a rainy day. This is especially so when instant gratification seems to be a large part of our culture today. We rather be seen with a Starbucks coffee in hand rather than saving that money and investing it. This is an everyday battle where our heart will tell us to spend when we really ought to be saving. In addition, one also needs persistence to continue saving and investing even when the markets are bad. This is probably very hard since we are all probably wired to try to avoid risk and danger. But the best time to buy is probably when the market is in its doldrums.

Monday, December 1, 2014

How Long Singaporeans Are Going To Spend in Retirement & Why Women May Be In Trouble

According to survey findings released by Manulife Asset Management's Aging Asia Research Series, many people in Singapore are underestimating the length of time that they will actually be spending in retirement.

Many Singapore individuals are expecting the retirement period as a married couple to be 19 years when it is actually closer to 24 years.  The projected retirement duration was estimated by analysing the mortality rates from Singapore' Department of Statistics.

Elsewhere, other surveys done by other companies have also shown that 4 in 10 Singaporeans want to retire at 55.  Four in 10 Singaporeans also have not started saving for retirement.  These are all worrying figures.  It shows that there is probably a general lack of good retirement planning amongst Singaporeans.

Expected length of Retirement 

Retirement and life expectancy is something that is closely linked.  Given the longer lifespan of women, women are also likely to outlive their male counterparts by another 11 years.  That brings the typical male retirement length to be 24 years and females to 35 years.  This assumes a retirement age of 62 years old.

This seems to be a worrying figure as it probably means that most people will have far less than sufficient money to afford an early retirement or even a comfortable retirement.

It also spells trouble for women as they will be spending a considerable portion of their retirement alone, as the sole survivor.  And this has deeper implications as women often exit the workforce much earlier to their male counterparts and would thus have accumulated much less for their retirement spending.

The long life expectancy and the inflation rate is also probably some reasons why the CPF Minimum Sum needs to increase to cater for the changing needs of an ageing population.

Retirement Period Longer than Working Life?

Assuming an individual starts work at age 25 and retires at say age 55, they would have only worked a grand total of 30 years.  For a male, it would mean he would have to save up enough money to spend for another 24 years while for a female, it would mean she would have to save up enough money to spend for another 35 years (which is even longer than the period of time she has spent in employment).

Many people are probably making all kinds of retirement planning mistakes by making wrong assumptions about their retirement age and the amount they need to save up.  If the time spent in retirement is going to be almost as long as your entire working life, one better start planning early and carefully.

Basically, should not wait until they are only 40 or 50 years old before they start saving for retirement. They better start saving for retirement at age 30 or even much earlier. In my opinion, it is good that people start thinking about their desired retirement age and retirement planning as soon as they start working.

Time to Re-think Retirement?

So is it time to re-think retirement? My thoughts on retirement have changed over the years.  When I first started working, I thought retirement was something to be desired.  But after thinking about it, I have come to view retirement differently.  Given the long life expectancy, it is perhaps one remains employed and continue to contribute to society.  After all, spending 20 over years in retirement is not going to be fun when you have nothing to do.

For those who are interested, do check out the following links

Articles on retirement, savings, financial planning and investing:
Real Estate Investment Trusts (REITs)



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