Starting early is always Prudent (06-Jun-10)

Recently, I was talking to a couple of my friends and it came to my surprise that their net worth is many times more than their peers.. that really puts me to shame even as a financial adviser. What's the big secret? It's as simple as prudent savings ever since they start to work.

What is the lifestyle of a typical working Singaporean? Let's have a simple illustration. Mr X, a young man 28yrs old, earns $3,500 as an engineer. Take home pay after CPF would be $2,800. House loan would be settled by CPF deduction automatically. Every month, he spends the following: $400 on meals, $300 on all sorts of bills (internet, mobile, PUB, SP, Town Council, etc), $300 for parents allowance, $150 on groceries. Balance is $1,650. Sounds gd isn't it? Wait... he now owes a car (w.insurance & season parking)... $900 gone.... + entertainment fee $200....+ holidaes in between... + an occasional luxury gd (e.g. iPhone?), then almost whole monthly savings wipe out.

Sounds familiar?

So how can we resolve this issue of money no enough?? Either you win toto, dump all your money on a World Cup underdog and pray hard, or the other way I can impart to you is via prudent savings in a good instrument. Says for example, we use back the same scenario of Mr X. For the same $2,800, he puts aside 15% of it to savings (somewhere), that's around $400. Balance is $2400. He spends the following: $400 on meals, $300 on all sorts of bills (internet, mobile, PUB, SP, Town Council, etc), $300 for parents allowance, $150 on groceries. The balance now $1,250. He now continues to own a car.... but maintain control on his entertainment fee and luxury items... still manageable.

What's the big difference? In the 2nd scenario, Mr X has put aside buffer for his future consumption... be in for investment account, retirement account, emergency fund account, he is definitely in a better position than before. Don't you agree?

So are you going to do something about it? Or remains status quo?

Never too early to build your nest egg (16-May-10)

Whether you want to retire in comfort or maintain a simple lifestyle, you should take retirement seriously. Yes, I do mean it. With the increase in life expectancy, as well as rishing inflation rate that runs so much faster than your bank interest rate, it's very logical to ensure your nestegg is well prepared for.

Ideally, the best time to start planning is the moment you start work. When you have time to build your nest egg, you do not have to play catch-up. You do not have to take a higher investment risk to meet your retirement goal.

BUT, be it whether you just started working, in your prime working years, or approaching your retirement, it is important to understand your own financial status at this very moment so that you recognize how to progress from here.