Dennis Ng, founder of housingloansg.com and masteryourfinance.com wrote an article for MyPaper on 11 Aug 10. I have translated it into English here. For the mandarin version, pls refer to the attached pdf file: 为退休准备，不能延迟了
“I’m still young, why worry about retirement?” This is a rather common answer. Do you have the same thinking?
Suppose you are 30 years old now and intend to retire at age 60. Given that the average life expectancy is about 80 years old, you would have about 30 years to accumulate wealth and live the rest of the 20 years without working.
30 years is a short time and you better start to build your retirement fund. You must remember the mantra, “you are the young person that can take care of yourself at old age”.
Nowadays, Singaporeans are mostly having 1 or 2 children. Given that the standard of living will increase in the future, it is getting harder for our children to survive and take care of us when we turn old. It is not sensible to depend on our government too. Hence, the best way is to prepare now, so that we can enjoy our old age without worries.
2 common errors for retirement planning
Procastination – If you start to save $600 every month from 30 years old, and grow your money at 6% every year, you would have a fortune of $600,000 at age 60. If you start from 45 years old, you would need $2060 every month to grow to the same amount of $600,000! This is the price of starting late!
No ‘real’ savings – Almost 99% of the people will say that they have savings. But is it true? Based on my observation, most people would spend their monthly salary on necessities like food, clothes, travel etc. The remaining money, if any, would be saved. If required, the surplus from previous months would be withdrawn to meet spending needs. Hence, the truth is that this “money” cannot be considered as savings, but simply an emergency fund. It is also not wise to practice consumptive savings, saying that you are saving for a holiday trip at the end of the year. The correct way to save is to really set aside money consistently, and only use it during retirement.
3 common errors for saving
Save too little – Many people save around $100-200 per month. This is not sufficient if we want to retire at 50, and living a decent lifestyle (travel once a year and eat out once a week). If you save $200/month for 30 years at 6% growth per year, you would only have $200,000.
Start too late – When we are in our 20s, we save for marriage and children. In our 30s, we save for our children’s education. It is only when our children are much older, we begin to start saving for retirement. By this time, we are likely to be in 50s. Even if we begin at 40s, we may have to risk our savings for higher yielding investment to meet our financial goal. If not managed properly, we may even lose our savings.
Playing it too safe or too risky – If you keep our money in the bank, the interests paid are not sufficient to beat inflation. Hence, your money is actually shrinking. On the other hand, if you do not know how to invest but just went ahead playing the stock market, you are likely to lose a lot of money. There is a product in the market that has capital guarantee and yet giving returns around 4-8% per year. It is known as UK Endowment Policy. Recently, it has become more attractive as UK pounds is at its 30-year low against Singapore dollar. Hence, you should choose such products that are safe and provide decent returns.
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- Automatic Millionaire by David Bach
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- 10 Things You Need to Know About CPF Life
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{ 20 comments… read them below or add one }
This is very true…you have to start young….3 years back I could save $4000 a month….now I can barely save $1500 a month….actually this is mainly due to women….gf wants Chanel Miu Miu Prada bag….lucky she let me off with a Larry’s ring and not a Tiffany’s ring…mistress wants this wants that…I think the best way to be rich is not get married!….but then it will not co-exist with happiness because we can’t live without women….
So what to do if you can’t save as much? You have to invest whatever little money you have for greater returns…for example I had abit of rental income to cover my expenses in the past 2 years which I regret selling off the property abit too early….but I am definitely not going into property right now…it’s at an all time high…only buy one to stay in…prices already surpass the 2007 and 1996 all time peaks….buying equities now as it is still abit off the 2007 peaks….
However I can tell you it’s not so easy for the average man out there….give ytou an example….i graduated at 26 and came out to work during the SARS crisis…my pay was only $1500 a month…even if we take current standards of averagely $3000 a month…..I have worked six years….say each year increases by $400…your pay is only $5400 a month…..to achieve financial independence is going to take a long long time….I don’t think that everyone can work till 60…if you don’t make it by 40…you will just be retrenched and be out of job with no income….so I think if there is a strategy to retire by 40 will be much more useful
This is very true…you have to start young….3 years back I could save $4000 a month….now I can barely save $1500 a month….actually this is mainly due to women….gf wants Chanel Miu Miu Prada bag….lucky she let me off with a Larry’s ring and not a Tiffany’s ring…mistress wants this wants that…I think the best way to be rich is not get married!….but then it will not co-exist with happiness because we can’t live without women….
So what to do if you can’t save as much? You have to invest whatever little money you have for greater returns…for example I had abit of rental income to cover my expenses in the past 2 years which I regret selling off the property abit too early….but I am definitely not going into property right now…it’s at an all time high…only buy one to stay in…prices already surpass the 2007 and 1996 all time peaks….buying equities now as it is still abit off the 2007 peaks….
However I can tell you it’s not so easy for the average man out there….give ytou an example….i graduated at 26 and came out to work during the SARS crisis…my pay was only $1500 a month…even if we take current standards of averagely $3000 a month…..I have worked six years….say each year increases by $400…your pay is only $5400 a month…..to achieve financial independence is going to take a long long time….I don’t think that everyone can work till 60…if you don’t make it by 40…you will just be retrenched and be out of job with no income….so I think if there is a strategy to retire by 40 will be much more useful
Hey Chemmie
One thing often not mentioned and overlooked is that many millionaires also have capable wives to help them maintain their finances. Dennis is a good example. More often than not, you come across newspaper articles where the man divorces and has to hide his finances to avoid paying a hefty alimony. So choosing a good girlfriend and hopefully wife-to-be next time is also very important. Make sure your expectations are compatible when it comes to finances.
Hey Chemmie
One thing often not mentioned and overlooked is that many millionaires also have capable wives to help them maintain their finances. Dennis is a good example. More often than not, you come across newspaper articles where the man divorces and has to hide his finances to avoid paying a hefty alimony. So choosing a good girlfriend and hopefully wife-to-be next time is also very important. Make sure your expectations are compatible when it comes to finances.
well….i already bought a house with her and put her as jv even though i came out most of the money…so no choice lor….ok la….she only demand 3 presents a year…v day birthday and xmas…about 6k a year..
well….i already bought a house with her and put her as jv even though i came out most of the money…so no choice lor….ok la….she only demand 3 presents a year…v day birthday and xmas…about 6k a year..
As long as you two are happy together
As long as you two are happy together
if your girlfriend will leave you becos you don’t buy her an expensive gift, then better let her leave now, as it is clear that she does NOT really love you. Imagine, if another Richer guy appear and can buy her all the things she want, she might choose the Richer guy.
Remember that beauty does not last forever. Don’t choose a spouse based on Looks, a spouse is a lifetime partner.
Choose someone who have common values, who Love you for who you are, and not becos of your Money or Status.
I will not think my wife love me less just becos she does NOT buy me expensive gifts, neither does she think this way.
Life is more than just making money for ourselves and our family, most of us actually can live quite a comfortable life, spare a thought for the less fortunate in the society, think of what we can do for the society as a whole, other than just for ourselves and our family.
Cheers!
Dennis Ng
if your girlfriend will leave you becos you don’t buy her an expensive gift, then better let her leave now, as it is clear that she does NOT really love you. Imagine, if another Richer guy appear and can buy her all the things she want, she might choose the Richer guy.
Remember that beauty does not last forever. Don’t choose a spouse based on Looks, a spouse is a lifetime partner.
Choose someone who have common values, who Love you for who you are, and not becos of your Money or Status.
I will not think my wife love me less just becos she does NOT buy me expensive gifts, neither does she think this way.
Life is more than just making money for ourselves and our family, most of us actually can live quite a comfortable life, spare a thought for the less fortunate in the society, think of what we can do for the society as a whole, other than just for ourselves and our family.
Cheers!
Dennis Ng
Hey chemmie
Looks like you have to focus on your defence for the next 5 years at least.
Let your strikers rest in this period of high tide. I think your defence needs to be patched up. Guess its ok if you have the confidence to maintain it for the rest of your life. I will deploy defensive midfielders at the moment. This is perhaps the best answer to your question in the previous article.
Hey chemmie
Looks like you have to focus on your defence for the next 5 years at least.
Let your strikers rest in this period of high tide. I think your defence needs to be patched up. Guess its ok if you have the confidence to maintain it for the rest of your life. I will deploy defensive midfielders at the moment. This is perhaps the best answer to your question in the previous article.
They say love is blind…so that’s something I have to adjust to…it’s not easy to find someone with the same ideals in life…
I keep 200K for defence la….and use 80K for offense….the problem is…hard to score goals in the current market situation…
They say love is blind…so that’s something I have to adjust to…it’s not easy to find someone with the same ideals in life…
I keep 200K for defence la….and use 80K for offense….the problem is…hard to score goals in the current market situation…
Sometimes the best strategy is not to make any investment. Patience is a virtue. I advise you to save the 80k for the time being. Usually you don’t hear a good soccer club spend 200k for defensive players and 80k for a striker. Often they boast they spent 280k for a striker of good quality. 80k could be a good opportunity fund when the right opportunity comes along. Spend more time with your girlfriend and family in the mean time.
Sometimes the best strategy is not to make any investment. Patience is a virtue. I advise you to save the 80k for the time being. Usually you don’t hear a good soccer club spend 200k for defensive players and 80k for a striker. Often they boast they spent 280k for a striker of good quality. 80k could be a good opportunity fund when the right opportunity comes along. Spend more time with your girlfriend and family in the mean time.
Best advice yet from Raymond….yes…health and family is often the most important things in life…in our pursuit of greater wealth we should not neglect this two aspects…only when you lose it then you will realise that wealth is meaningless without these two….
Best advice yet from Raymond….yes…health and family is often the most important things in life…in our pursuit of greater wealth we should not neglect this two aspects…only when you lose it then you will realise that wealth is meaningless without these two….
Hi! What is the product you are referring to that has the uk endowment policy? Can we get in in fundsupermart? Sorry I am new to this investing thing.
Hi! What is the product you are referring to that has the uk endowment policy? Can we get in in fundsupermart? Sorry I am new to this investing thing.
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