Financial Freedom

Poll Results: Starting Pay When You First Started Work

I polled my readers on this blog on what was their starting pay when they first started work. This poll was really started after I wrote the article on Starting Pay for Graduates. Anyway, here are the results of the poll:

57% of respondents reported a starting salary of less than S$2000 when they first started work. 27% of respondents reported a starting salary of between S$2000 and S$3000. The remaining 16% reported a starting salary of more than S$3000 when they first started work.

So how do you measure up?

Citigroup CEO thinks Another Financial Crisis Unlikely

Vikram Pandit, CEO of Citigroup thinks that the chances of another financial crisis hitting the global economy is unlikely, mainly due to world banking system that has been overhauled since the last global financial crisis in 2008.

He remains confident that the "Europeans will figure it out" and that there is no need to worry about a financial crisis. This seems to be a far cry from the doom and gloom that has been over the markets for the past few months.

He remains bullish about Asia as he thinks that the Asian growth story will continue to be robust, even if it is impacted by any global economic slowdown. It is quite surprising that Citigroup's CEO is so optimistic about the trends going forward.

Alpine Total Dynamic and Alpine Global Dynamic

Sold off my stake in Alpine Total Dynamic and Alpine Global Dynamic soon after buying it because I realised that the dividend payout had been dropping over the years. In addition, the dividend capture strategy that they are supposedly using does not sound robust enough for my liking. Anyway, I bought the stock just before the slight rally in the markets so I was able to lock in some gains.

It looks like my search for another monthly dividend stock will have to continue.

Posts to Read

Dear reader,

You might have just stumbled upon this blog and I thank you for taking time to go through it. I hope you find lots of interesting articles even as you navigate around this blog. I thought that I might as well just highlight a few articles which I have grouped according to topics to make it so much easier for you to navigate: I must be frank that reading through some of these posts, I have entirely forgotten that I actually wrote them. It almost feels like it was a different person writing some of these articles then.

Personal Thoughts and Reflections

Salary and Personal Finance

Salary Discussion
Starting Pay for Singapore Graduates
Are You Ready to Manage Your Cashflow?
Are You Ready to Take Charge of Your Healthcare Costs?
1001 Frugal Things to Do
How Much to Get Married (Part 1) (Part 2)

Other Posts of Interests

10 Steps to Financial Freedom

How to Earn Extra Cash & The Hidden Difficulties

I read with interest a certain article on AsiaOne that gave ten ways on how one could earn extra cash. The article was well written but I wasn't too sure how helpful it was to people who actually read it. I mean what was listed down was really ten ways to earn extra cash but I guess the difference really lies in how difficult it is to make extra cash (especially if one holds a full-time job) and also what I would term as the "work-reward" ratio (i.e. how much work you have to put in versus the magnitude of the earnings/reward).

For example, babysitting was listed down as one of the ways to earn extra cash. Sure, this advice applies well to stay-at-home mums but even if $1000 is paid out for you to babysit a child for all weekdays throughout a month, is it a worthwhile effort? Likewise, Adsense was listed down as one of the ways but seriously, how long does it take for a newbie to earn $1000 through Adsense?

Why it is probably easier to babysit

These are difficult questions and will probably require difficult answers. But looking at it, I can safely tell you that it will be easier for most people to earn $1000/month doing babysitting compared to earning $1000/year from Adsense. And the context is really important. And the reason for this apparent difficulty or disparity lies in a really simple answer that probably plagues many of Singapore's local businesses too: Singapore is too small.

Imagine an American blogger. With a total resident population in the United States of 300 over million people and a high internet penetration rate, it is fairly easy for this American blogger to reach out to his target group of audience (i.e. customers) in America. Even if he was only able to capture % of the audience per day, that will amount to 3 million readers per day already. The same Singaporean blogger has no such luck. If he managed to reach out to 1% of the residents per day, it only amounts to 50,000 readers. Of course, the 1% target is really arbitary but it shows that for the same amount of effort, the Singapore blogger (with his/her Singaporean content only interesting to the locals) is placed at a severe disadvantage.

The Solution?

Well, the solution actually seems pretty straightfoward. Go global! Blog about things that the global audience can identify with and relate to. But this is challenging and extremely difficult. Unless you know what the global audience wants to read, you will probably find it extremely difficult to build up a site that will be visited by visitors. This is not to mention the language barrier, culture barrier, and other impediments that you face. And one can safely say that most people who try to eke out a living on the internet will rarely succeed. But that being said, it is not entirely impossible. There are good Singaporean bloggers who are making a living through their blogs.

How to Earn Extra Cash Passively

So I will give my own version of what I think is one good way to earn extra cash passively without much effort on your part. . Well, surprisingly, I have found out that passive income is sometimes much easier to earn than active income (e.g. blogging). I have earned a lot more from dividends paid out from stocks/shares I own compared to any other area. Of course, this pre-supposes that one has sufficient capital to invest in stocks that pay out a good yield. But this method has worked for me and has brought me fairly stable returns without me having to do a single thing. Talk about earning extra cash without putting in much effort!

Of course, not all is rosy and one must expect that there could be a possibility of the dividends being cut or the share price dropping. Nonetheless, dividends probably ranks pretty high up in my list of "How to Earn Extra Cash".

Are You Ready to Take Charge of Your Healthcare Costs?

I wrote about CPF's "Are You Ready" campaign recently and also did a quick check in my previous posting about "Are You Ready to Manage Your Cashflow". Anyway, there is a contest also ongoing on the Are You Ready site and there are MacBook Airs and shopping vouchers to be won just by sharing your stories. So do visit the site here and share your stories.

Anyway, thought I will do a continuation of what I did in the previous post and check my own readiness in terms of taking charge of my healthcare costs. I went through the list of questions in the checklist and here are my answers (as honest as can be):

I Make/Receive Monthly Medisave Contributions

Yes. My CPF contributions go towards the Medisave Account. Thus far, my Medisave account has only been used to pay a certain part of the hospital bills when my first child was born. I guess this question is really aimed at those who are self-employed and who ought to make contributions to their medisave account.

I Am Aware of the Importance of Medisave, Medishield and Eldershield

Wow, this is a pretty tricky question. I guess I generally know these 3 terms mean thought I must admit that there might be some inaccuracy in my understanding. But here it goes:

Medisave - An account held under CPF that can be used to pay off hospital bills (if certain criteria are met).
Medishield - A basic hospitalisation insurance plan.
Eldershield - A severe disability insurance scheme. Especially useful if you require long term care in the future. It provides a monthly cash payout and is available when you are of age 40.

And the importance of them all, I think I can say I know the importance of them all even though I am too young to be covered under Eldershield now.

I am Insured by Medishield and/or an Integrated Shield Plan

Yes, I upgraded my coverage to an Integrated Shield Plan offered by Aviva. I have covered my entire family with it.

I Exercise At Least 3 Times A Week

Errrr.........Okay, no. I hardly exercise at all these days. Have been making too many excuses not to exercise and this is a timely reminder that I should really be exercising more. Maybe for a start, I will try to exercise once a week?

I Keep A Balanced and Healthy Diet

Well, generally, I would like to think that I eat rather healthily. At least I do not have any health problems. But I certainly think I could eat healthier (i.e. more vegetables, more fruits and less meat). I am certain that I have room for improvement in this department. Interestingly, somebody once did a guest post on this blog regarding the linkage between financial health and obesity so you might want to check out the article.

Conclusion

So done. I have checked off the checklist and I think that while I am financially prepared to take charge of my healthcare costs, there is definitely room for improvement in terms of keeping myself healthy (by exercising) as well as eating right. A good and timely reminder indeed.

Are You Ready to Manage Your Cashflow?

Well, the IMSavvy site has recently launched an "Are You Ready" activity/movement/campaign. And I was really glad that such a topic was actually chosen as it is a timely reminder for people to make sure that they are READY in terms of their personal finance. It basically covers the 4 topics of:

• Managing Your Cash Flow

• Buying A House Within Your Means

• Taking Charge of Your Healthcare Costs

• Securing Your Retirement

Just thought that I would share some thoughts about my own personal experience regarding the first topic of managing my cashflow. Based on the checklist provided at the IMSavvy site (http://www.cpf.gov.sg/imsavvy/ayr_list.asp?catid=1), there were a few questions and I hope to answer these questions as honestly as I can. So here I go:

I Spend Less Than What I Earn Monthly

Yes, I do spend less than what I earn monthly most of the time. The only times that I ever spent more than I earn was when I was either going on a holiday or spending on my wedding preparations/home renovations. Otherwise, as a whole, I would like to think that for a typical month, I make a pretty conscious effort to spend less than what I earn monthly. This discipline I guess was instilled in me since young - you never want to spend your pocket money before the week is over. So likewise, when you are working, your monthly cash outflows should not exceed your monthly cash inflows unless for very good reasons (e.g. once-off big ticket items).

I Save At Least 10% of My Income

Generally, I would like to think that this is a YES for me too. It really depends what is the definition of saving. My definition of saving is basically income that is not spent on consumption. So saving to me includes putting money in the bank, putting it in a regular savings plan or investing in stocks. Well, some people will include their CPF contributions as part of their savings (and that isn't entirely wrong). So different people probably have very different ideas about what actually constitutes savings. For me, I do save >10% of my income over and above my CPF contributions.

Again, I must qualify that there are some months when I am a little less disciplined and splurge a little. But with a regular savings plan that I have set up through an ILP bought years ago, more than 10% of my income does go into saving (at least based on my own definition).

I Have At Least 6 Months Worth of My Income as Emergency Funds

A big YES to this question too! This was really something that I put off in the past and it was advice that I did not heed which I regret. During then, I was young and rash. I decided that the bank was paying me too little interest and decided to invest the majority of my money in stocks. I had less than 6 months worth of my income in emergency funds even though I originally had set aside that sum of money. Then came the time when I had to pay for some big ticket items and I was left with little choice but to liquidate some of my investments at a loss. So if this is not good enough warning for you, please do set aside 6 months of your income as emergency funds first before you even start investing. The last thing you want to do is to be liquidating your investments at a loss when a certain crisis (e.g. job loss) hits you.

I Pay My Credit Card Bills and Other Debt Obligations, in Full and On Time Each Month

Generally yes. All my debt obligations are paid through GIRO so I do not lapse on it. I do pay my credit card bills in full at the end of each month though not always on time. This is simply because I forget to pay them or miss the due date as the credit card bill was lost in my stack of letters. I usually call up the bank to waive the late charges since it is basically an oversight. I must have done that more than 5 times but they have always been more than willing to waive it.

I Have Adequate Financial Protection

Well, this is perhaps the toughest question to answer. And my answer to this is probably a "MAYBE". I know that I ought to be insured to certain levels (e.g. 10 times my annual pay for death coverage). But all these are really rule of thumb calculations. My protection level is slightly below those levels. I would like to think that I am adequately insured with coverage for death, TPD, critical illness, hospitalisation and personal accident.

This is perhaps a good time for me to dust off the dust on my insurance plans and see whether it is time to review the insurance coverage for myself as well as my family members.

So how did you fare in answering these questions? Any action you need to take if you have answered a "No" to any of the questions above? Are you ready to manage your cashflow?