How Much to Save?

What percentage of your income should you be saving?

I was reading Tan Kin Lian's book on financial planning where he advocates saving a total of 50% of your income (inclusive of CPF savings). That works out to be around 15% to 35% of one's take home pay depending on your income bracket with the rest of the savings coming from your contribution to CPF.

This is interesting because most advice that you get nowadays is that one should save 10% of your take home pay. Personally, I feel that TKL is correct. Saving 15% to 35% of your take home pay in addition to your CPF savings should put you in good stead for your retirement planning.

Too often, people think that just by saving 10% of their savings or by just relying on CPF savings, they will have enough for retirement. That simply cannot be the case. If you only have a working period of 40 years in your life (age 25 to 65), saving 10% of your income will add up to only 4 years worth of salary.

How can that be possibly be enough for retirement with the long life expectancy in Singapore?

So throw the idea away that saving 10% of your take home pay is enough. You ought to aim much higher just to be sure.

Breaking the Psychological Barrier

I have related this story to many people before.

Most people have a psychological barrier when it comes to saving. If they have been saving 10% of their income, they find it hard to increase the absolute amount they are saving even as their income increases.

This is because with a rise in income, their expenditure also goes up. So if they have been saving $300 per month since they first started work, it is not uncommon to find that they will STILL be saving only $300 per month even when their income has already doubled or even tripled.

Some people are savers and some people are spenders. So I guess the savers have developed better money spending habits over time. The way to go about saving more is to practice paying yourself first. Make sure that you save a portion of your money before you even spend it. And do make sure that the amount you are saving is minimally 10% of your income.

If you could heed TKL's advice, a savings of 50% (inclusive of CPF contributions) of your income will be a good start.

COE Relief of Up to $8000

While I was travelling by Alexander Road which is littered with car showrooms, I passed by this advertisement put up at one of the showrooms which proudly read:

"COE Relief of Up to $8000"

That was pretty funny and I was kind of amused at the efforts the sales and marketing team must have come up with to attract customers back into the showrooms.

With the increasing COE prices, a "relief" for the customers reminded me of the various reliefs that one can file for during income tax declaration. It also reminded me of the GST credits (GST Offset Package) and stuff that the government gives out as a temporary relief for the increase in GST.

So it is really a bit amusing to see a car showroom offer reliefs for COE. I was just laughing to myself when I came across another advertisement from Volvo. I didn't really get to catch the exact words but it read something like this:

"With the 7 seater Volvo, you can have more Tiger babies."

Okay, the advertisement did not sound so crude but it was something to that tune.

How funny is that! Car dealers coming up with such creative advertisements to get people to buy cars. They are offering reliefs and now even helping Singapore to boost its birthrate!

Those two adverts really made my day. =)

Great Book - The Forever Portfolio

I spent the weekend reading a book that I borrowed from the library. It was titled : "The Forever Portfolio" by James Altucher.

I don't really like to write book reviews but this book really got me blown away as it was easy to read and it also contained lots of gems from a person who truly knows what he is talking about.

In fact, I finished reading the entire book in just 2 days!

The Forever Portfolio basically focuses on 2 simple questions to determine the stocks that one should hold in his or her portfolio:

1. What are the tidal wavelike demographic forces taking shape around the world that we can surf on top of?

2. What companies are best positioned to take advantage of these long-term trends?

The book gives lots of tips on which stocks to look out for and also simple advice on how to "piggyback" on various investment gurus.

While it is written in a US context, I believe that most people will find a gem or two in this book.

That being said, I thoroughly enjoyed reading this book and now have a much better understanding of various US businesses and certain stocks that I might want to purchase in the future. I wish I could share more but let me just do some of my own research first...

Profile for IM$avvy

Hi people,

I have been working on crafting my profile for the IM$avvy webpage. I was thinking between revealing myself versus remaining anonymous and decided to go for the latter.

Do give me your comments on what you think:

Financial Freedom

FF is in his late twenties and believes in the need for people to be informed and educated about personal finance so that they can make better financial decisions. He writes to keep himself updated with the latest developments as well as to inform, educate and entertain the public. He hopes that through his writings on personal finance, people will be able to learn from his experiences and mistakes. He writes frequently at his own blog about his journey towards financial freedom and encourages readers to embark on their own financial journey. Blogging serves as a platform for him to express his thoughts as well as to engage the online community to share their experiences with one another.

Personal Finance in the 21st Century

Just before I was going to sleep last night, I was just brainstorming on certain ideas that I could further develop in the future for my postings. After all, there are those "desert" days when I have lots of topics that I would like to write about but when I start writing them down, I realise that I do not have much "meat" to add to make it a worthwhile posting.

I was just thinking about the concept of personal finance and how it is different in the 21st century compared to the previous centuries.

I personally feel that the concept of personal finance has changed over the hundred of years.

In the past, people had a shorter life expectancy, had close family support and most probably did not have the concept of retirement. These three factors alone were perhaps the reason why most people perhaps only practiced basic money management concepts like saving. Let me expound on the three factors a little more.

In today's developed countries, most people can expect to live way past the age of 70 or 80. Very often, they will no longer be physically fit to carry out any form of employment and thus need to save up to make sure they have enough to survive on when they are no longer working. This was different in the past where people just worked their entire lives (probably because they owned their own business too).

In addition, they no longer live with their children as some even migrate to other countries to live. In the past, families used to stay pretty much together and one could rely on your immediate family members to take care of you once you are old.

The concept of retirement must also be a pretty new concept as people used to work all the way till their death beds. They simply did not have the concept of retirement!

So with these changes, comes the need for people to understand personal finance. When we live longer lives, expect not to receive financial support from our children and expect to enjoy our retirement lives, we will need to actively plan our finances to ensure that we secure a good financial future for ourselves.

The questions we need to ask ourselves are these:

How long do we expect to live?

Do we expect to be financially independent or will we be reliant on our children or family members during our retirement?

Do we even expect to retire by a certain age?

If we know the answers to the questions above, we are better prepared to face the future.

Money Saving Tips

A little while back, I wrote an article on 1001 ways to save money. I thought that I could expound on some of the common money saving tips proposed by various experts and see how it can actually work out in the Singapore context.

One of these money saving tips that you commonly hear is this:

Shop at outlet stores. You can find a lot of nice, even brand names, clothes for a fraction of the price.

Outlet Stores in Singapore

In the first place, I don't really know where to find outlet stores in Singapore. I am not much of a shopper so I would really appreciate if everyone can share the best outlet stores in Singapore to get stuff like clothes and shoes.

Outlet Stores in Malaysia

Over at Malaysia, I frequently come across Factory Outlet stores and also the Reject Shop. These shops often carry certain branded shirts at really a fraction of the price. And that is in Ringgit also! Tell me about a good deal.

The shopping mall just opposite the new immigration complex is where you can find a Factory Outlet store and a Reject Shop. If one does not mind making the trip across the causeway, you can find pretty good deals there.

Out of My Comfort Zone

Today, I did something which I never imagined I would actually do in my entire life.

There are alot of things that I have been doing lately which I never thought I would have done but this single step really brings me out of my comfort zone.

For the longest time, blogging has always been something which I have done anonymously. I have never met any of my readers or met up with any of those from the online community.

Today, I took the first step and met someone from CPF regarding the possibility of me contributing as a guest blogger at IM$avvy. It was a scary thought for me as this was the first time I was actually meeting someone regarding my blog.

The feeling was actually like me going for a job interview except that the interviewer had lots of personal information about me!

Most of you will know that I feel that this blog is certainly not like a masterpiece. I would actually be embarrassed to showcase it to anyone. Afterall, my writing has at best been incoherent and at its worst, totally incomprehensible. I don't spend much time editing my work so it is really not amazing that I feel inadequate.

Yet, I came across this quote recently that really inspired me to step out of my comfort zone and to embrace myself for who I really am. I share with all of you this quote:

Our deepest fear is not that we are inadequate.

Our deepest fear is that we are powerful beyond measure.

It is our light not our darkness that most frightens us.

We ask ourselves, who am I to be brilliant, gorgeous,
talented and fabulous?

Actually, who are you not to be?

You are a child of God.

Your playing small does not serve the world.

There's nothing enlightened about shrinking so that other

people won't feel insecure around you.

We were born to make manifest the glory of
God that is within us.

It's not just in some of us; it's in everyone.

And as we let our own light shine,
we unconsciously give other people
permission to do the same.

As we are liberated from our own fear,
Our presence automatically liberates others.

—Marianne Williamson


Well, I am glad that I actually took this step out of my comfort zone.