Financial Freedom

Retiring on Dividend Earnings

All investors like to make a return on their investment, and stock dividends give a great return on your investment. There is no guarantee of dividend payment, but it is unusual for most companies not to pay out every year. Investors can use these dividend payments to fund an expansion in their portfolio or just take the money out.

Most companies that are doing well issue dividends to shareholders annually, but this depends on the company being successful. If a company exceeds targets it can pay a larger dividend and if it is struggling it can cancel the dividend payments completely.

What are Dividends?

Dividends are a bonus paid out of profits to shareholders, with a small amount paid to the holder of each stock. For investors with a small stake and few shares it might not amount to much, but it can add up for large shareholders. Pension schemes and other large investors use this income to supplement the proceeds of their investments, and you can use them in the same way to help fund your retirement without having to sell your shares.

In fact, many investors use the dividend yield of a stock to help influence their buying decisions. One trading theory is that a high dividend yield indicates that the stock is selling cheap and might increase in the future. This can make it a desirable investment, but investors should take care to ensure that the company is not falling on hard times.

The size and frequency of any dividend payments are issued to stockholders when the company files its accounts. These should be issued to all shareholders, who can use them to see how their investment is performing.

Using Dividends

While you are working and amassing shares to build a nest egg, it makes sense to invest the dividends back into buying more shares. This is a great way to increase your stock portfolio without having to spend any of your own money.

Alternatively, people use the dividend payments to pay for the nice things in life. They spend the money to pay for a holiday, a new car or anything else they might need a lump sum to pay for.

In Retirement

Once you retire, you can continue to use dividends in exactly the same way as you did previously. However, most retired people are on a reduced income and might even struggle to survive on their pension. For these people, the extra income that comes from the dividends certainly makes life a lot easier. It is important, however not to rely on these dividends as the companies can decide not to issue them at any time. Shareholders should treat them as a bonus rather than part of their income.

For most retired people, it makes sense to hold onto any investment in the stock market for as long as they can afford to. The long term benefit to their income from the dividends might very well outweigh the short-term gains from selling the stock and living off the proceeds.

Valentine's Day and Gifts

Valentine's Day is coming up on 14 Feb and I believe it is the season of gift buying again. Most couples will probably be wondering what gifts to buy each other. I remember the days of my youth when I had to literally crack my head to figure out what gifts to buy. I am not a good gift buyer actually.

If you asked me how I will buy my gifts, I will probably tell you that I will buy them online. Shopping online has almost become second nature to me. I can surf the net in the comforts of my home and still literally browse through the many online shops like Ebay to buy a gift. And I think this trend of shopping online will perhaps get more and more common to many people.

Another thing I realised is probably that married couples don't really celebrate Valentine's Day in as big a manner as the unmarried couples. I could be wrong on this but will like to think that my generalisation should be pretty accurate.

So how are you spending your Valentine's Day? And what gifts are you buying for your loved ones? Have you stopped buying gifts for your husband/wife because you are married?

How Much to Give for Chinese Wedding

A frequent question that is often asked by many people is this: "How much to give in terms of money for a Chinese wedding?" For the uninitiated, there are many traditions that are followed in a typical wedding involving a Chinese couple. One of these traditions is the giving of red packets (or what is known as ang baos) to the bride and groom during the wedding day itself.

While the red packet symbolises good luck and is meant to "ward off evil spirits", most younger Chinese couple do not really make this association with red packets. It is more of a tradition that has been passed on from generation to generation and we just carry on this tradition as a form of blessing that we hope to give the newly weds. This giving of red packets (with money stuffed inside) is somewhat similar to the Western culture of giving wedding presents I guess, with the exception that money is given instead.

While the amount of money packed inside the red envelope is not meant to be much of an issue, the amount given is usually meant to "reimburse" the newly wed for the expenses involved in hosting the wedding lunch or dinner. Relatives, business associates and close friends of the couple and their parents might sometimes feel obliged to give more than that as it is seen as "blessing" the couple and also forging good ties with the family. It is not unusual for parents to give a large red packet to their children during the tea ceremony.

For most people though, the amount to give in the red packet will just be what is sufficient to cover the expense of the lunch or dinner that you are invited to. For example, if it costs $1200 for a table of 10 people, most people will give around $120 to "cover the costs". Of course, some might give a little extra just in case they are uncertain about the "per table cost". In Singapore, if the wedding banquet is held in a hotel, be prepared to fork out anywhere from $120 to $160 per person. For the more expensive 6 star hotels, it can go as high to $200 per person.

For info, the amount given by each guest is usually recorded down so it is assumed that the giver of the red packet will write his or her name down on the red packet to facilitate this process. The reason for these records is so that the married couple can "give" back an equivalent or even higher amount of money in the event that he or she is invited to your wedding or even your children's wedding. It is a weird concept even for many younger Chinese couples but it is part of the "do and die and don't ask why" kind of tradition we keep.

Here are some pointers when giving the red packet:

The red packet is usually collected at the reception area where you slot it into a box. There might be different boxes used so do slot it in the correct box. The receptionist will often ask you whether you were invited by the groom or the bride and should be able to advise you accordingly.
If you happen to be late and the reception is closed, the bride and groom will usually go around the tables to take photos and greet the guests. You can pass the red packet to the groom then.
Don't give a red packet just because it has chinese words printed on it. The chinese words printed on it might mean "Happy New Year" .
If in doubt of how much to give, you can always check on the internet what is the existing table rate for the hotel. If necessary, just call up the hotel and ask them to give you a rough estimate.
As the number "8" sounds like "prosper" in chinese, people often give amounts that end with a "8" (e.g. $128, $188). This is however not really necessary but is a good gesture nonetheless.

Hope this posting helps to solve the mystery of how much to give for Chinese weddings. Will like to hear your views on this: How much do you usually give for Chinese weddings?

March 2016 Update:
The Straits Times newspaper came up with a guide on how much one ought to give for hotel weddings in Singapore. The figures are quite astounding add it is meant to just cover the cost per pax (see below):

The above indicates that if you are invited for a wedding dinner at Capella Singapore or St Regis, you should be prepared to give a red packet of around $234 per pax.

Video by Jade Seah on How Much to give for Weddings:

》How much is Nikah in Singapore

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

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Retirement Planning Mistakes

[Photo credits: Image by kwerfeldein]

For most people, retirement is probably the best part of life they look forward to. Yet, many people often make certain mistakes in retirement planning. In this article, you will find out what are some of the common mistakes made and how you can probably avoid them.

Introduction

Retirement is a time when you will no longer need to work for income and when you can spend time doing the things you like to do, such as spending more time with your family or travelling. In order to enjoy this time it is important to plan properly for your retirement.

The best way to enjoy your retirement is to be financially secure. The only way to ensure that is to start saving towards your retirement fund early, and let compounding returns do its work. Of course, you will also have to hope that you do not get caught out by any of the common retirement planning mistakes.

Start Early

The sad fact is that to get the maximum benefit for your contributions to a retirement fund, the money has to be in the account for as long as possible. This means ideally starting to contribute as soon as you start work and using 40 years of compound interest to increase the size of your fund. Many people often think that they have time to spare and only start planning for retirement when it is too late.

The best time to start retirement planning is actually when you have just started work. By planning early, you will get a good overall idea of how much you need for retirement and how much you ought to save to reach that amount. Retirement planning and life expectancy also goes hand-in-hand. One basically needs to know how many years you are expected to spend in retirement in order to save up sufficient money.

Taking Risks and Failure to Diversify

When you are younger it is tempting to take risks with your investment to increase the size of it faster. This will usually give you a bigger return much faster. However, the downside is an increased risk of the investment going wrong and turning sour. This matters less when you are young as the fund still has plenty of time to recover, but when you are approaching retirement age, it is best to be more prudent with your money.

At a point about ten years before you are planning to retire, consider moving your funds from a high risk investment to a lower-risk investment. This should reduce the risk to your money and make sure that as much as possible is available for your retirement.

The mistake that people make when planning their retirement is to put all of their funds into the same place. This might give you the best return on your money, but if it encounters a problem you might lose some, or even all, of your investment. If possible diversify your investment so that the money is in several different places and invested in several different markets to keep it safe.

As people frequently mention, asset allocation is probably one of the biggest mistakes that people fail to take care of when doing investments. How often it is that we hear about people who are near their retirement and lose all they have because of some risky investment. This can be avoided if we allocate our assets properly.

Consult Independent Professionals

Can you trust your financial advisor? As well meaning as they might be, your friends, family and bank manager might not have access to the best information or access to the best products for your needs. While they might be sincere in their intentions, they still might be sincerely wrong. When you start retirement planning, avoid the common mistake of consulting the wrong people to help you plan your future. The best advice is always available from an independent professional, who will be able to find you the best retirement products for your situation.

Once you have chosen a retirement plan, it is important to reconsider it on a regular basis. Life changes, like getting married or starting a family, will need you to re-examine your situation and perhaps change your investment priorities.

Conclusion

We are all not financial experts, so it is easy to make retirement planning mistakes that will affect the quality of life during your golden years. Get independent advice from experts and diversify your investments to protect your future and make the most of your retirement.

Overview for January 2012

The first month of 2012 is over. January has been pretty uneventful for me except for quite a few large ticket items that I have spent on. Passive income and dividends were $0 but I am expecting a bumper crop in the month of February since that will be when all the dividends from my REITs will most probably come in.

Expenditure wise, I have probably burnt some holes in my pocket from some large ticket items:

Car Servicing. Sent my car for servicing and maintenance during the weekend. It was long overdue and so, since I was free, decided that it will be a good time to spruce the car up a bit. The costs added up quite a fair bit - over $560++. That was for a 36 point check (normal servicing, don't ask me what the checks were), changing a new battery, change of transmission oil and new wipers to go along with it.

Term Insurance. Just made annual payment of S$347.50 for my wife's coverage. Necessary expenditure but expensive nonetheless.

Investments wise:

Invested in First REIT mainly for dividend income. First REIT is listed on the Singapore stock exchange and holds hospitals and nursing homes in various countries. It gives a quarterly distribution of around 1.9 cents per unit.
Invested in Gamco Global Gold &Natural Resource Trust (GGN) - provides US$14 monthly dividends. Yet to receive the first batch of dividends for January since it usually takes some time before the cheque is posted. Expecting this to come in for the month of Feb 2012.

Blogging wise:

Started an ad campaign and have spent close to US$100 on advertisements and promotional costs for this site.
Also exploring new ways to generate content (either by hiring a freelance writer or through other means).

Best Steak in Singapore?

Just ate at Astons today and felt that I had just eaten one of the best steaks in Singapore. Okay, I am pretty certain that there are better steaks around but this has to be the cheapest, most affordable and tastiest steak that I have eaten.

For those of you who know Astons, it is an unassuming Western restaurant that supposedly started out in a hawker(?) or foodcourt(?) somewhere in Singapore. It slowly expanded and has several restaurants in Singapore. It is a little like the Botak Jones stalls except that it is much better.

Ordering the Steak

I don't usually order steak when I eat from western food stalls in food courts or hawker centers. The quality overall has been quite bad - at least based from my experience. Many of the steaks are from dubious cuts and are either overcooked, tough or tasteless.

However, I decided to try the steak at Astons today. They are after all quite well-known for their steaks (well, at least if I remember the food reviews correctly). The last few occasions, I actually ate the burger so was thinking whether today was the day that I ought to jump out of my "comfort" zone.

I ordered a prime ribeye for $13.90. The two side orders I chose were the coleslaw and onion rings. Service was prompt and the dishes were ready in under 15 mins.

My Verdict

Loved the steak. It was tender and cooked to perfection. Other than the mushroom sauce which they seem to drizzle on everything (including their burgers), everything was perfect. The onion rings were nice and crispy, the coleslaw was "oh so delicious"... In fact, I wolfed down both the side orders before finishing the steak.

Will definitely eat it again if I visit Astons! Yum yum!

Saving for Retirement at 30

It’s starting to become the dream of more and more people, to be able to retire just after you leave your 20’s. So saving for retirement at 30 is sort of the new thing, the thing that many young professionals strive for and something that can be in the back of people’s mind when they choose their occupation. The better job, the more money, and the earlier they can retire.

In a fluctuating world economy you have to take several things in to consideration if you’re seriously thinking about going in to retirement when you’re in your early 30’s. First of all, you need to look at how much money you can make in a month and in a year from your occupation. After that, the amount you can spare for an investment portfolio.

Let’s face it, unless you get a job that pays 8-10 thousand US Dollars every month you won’t have enough to get by for the next 50 years when you turn 30. So the best way of increasing your money if you have a steady job is by getting an investment portfolio. Invest your money in stocks, bare bonds, commodities, oil, gold and silver, and currency to get the best rate of return on your money.

Saving up for retirement at 30 with the help of an investment portfolio isn’t the easiest thing if you haven’t got
an idea how these things work. Then what you can do is get an investment adviser that can give you the best advice on where to invest your money for the best return.

We said previously that the money has to last for 50 years, and that’s true. The average life of a human is around 80 years, so if you’re looking at retiring at 30 you have to save up enough money for the coming 50 years. Now during your 20’s it is all about building your capital, that means a higher risk on your investments and putting more money in to markets that can have a large pay off.

When you decide to retire you will be thinking about keeping your capital, so making safe investments where you will have a much lower pay off rate but much more stability.

The next thing to do is to choose where you’d like to retire to. The most common and cheapest places would be the Philippines, Thailand and even Singapore. South East Asia is becoming a more and more popular destination for Asians looking to retire early. Find out basic costs such as, average rent per month, health care, food, transportation and all the other things that you will spend money on in a month. When you find a reasonable estimate of what you need to get on well every month it’s time to start doing a bit of math.

Take your average monthly spending and multiply by 12. That’ll give you your annual spending. Take your annual spending and multiply with 50 and you get an estimate of what you’ll need to get by for the next 50 years. So for example in Thailand you might need 50 000 Baths per month, 600 000 Bath in one year and 30 000 000 Bath for the next 50 years. A way to save on your monthly cost is to purchase a house or apartment when you move over but that would mean you’d have to increase what you need before you actually move.

[This article is a guest post by a writer in Philippines. Read more about retirement planning]