Wednesday, June 23, 2010

Time and Money

Unless one is born in an ultra rich family, our initial assets are very limited. True wealth can only be gained when we understand how to make the best use of our limited assets. This is the same for businesses as well; if you can make better use of your limited assets than your competitors, you will emerge stronger and better over time.

There's opportunity cost for your time or your money
For every second spent on our current job, we incur the opportunity cost to earn more on another job for the same amount of time spent. Why work on something that pays less? There are opportunities out there for us to grab to earn more for the same amount of time spent. Everyone of us has 24 hours a day, 7 days a week. Why are some earning more than others? The reason is because those earning more know how to maximise and scale up their value and monetize it.

The same goes for money. For every dollar spent reducing a loan and thus the interest charged, the money could have lost the opportunity to build up assets at a higher return! This is the reason why I have not fully paid up my education loan (interest at 2.6%) but instead, chose to put it in SPH with a dividend yield of 6.8%. The difference in 4% p.a. is what I earn.

It isn't that smart to earn more by working more!
Well, would you take 3 full time jobs and work 22 hours days to earn 20k a month? I wouldn't.

To me, it would be better to work more productively, that means get paid more per hour. And why not spend energy on improving this aspect of our income generation?

In case anyone is mistaken, I don't mean that we should be lazy and work lesser and lesser.

Look after our asset of Health!
While in the quest for financial freedom, inevitably, some might fall out due to health issues. Health is a necessary asset for us to grow our wealth over time and to enjoy the fruits of our labour. It is the main pre-requisite behind our financial freedom journey.

Health is priceless, for everything else, there's MasterCard. :)
No point exchanging a priceless asset for something that's more quantifiable.


  1. Would you consider shares financing and invest in dividend yield stocks at 8-10% and pocket the difference?

  2. Hi cw8888,

    I did consider it before. And I mentioned it before in another blog post that I will consider this option when shares are cheap and safe enough for me.

    Only thing is, I still do not really know what is the interest like.


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