Investing for retirement gets more and more important as time goes by. Yes, in Singapore, there's a safeguard against old age by the government named CPF. However, it is only sufficient for the bare essentials and should only be relied on as a last resort.
When is the best time to start investing for retirement? I would say, right now! The earlier you start, the better. Yes, I'm already thinking and planning for retirement at the present age of 25. That's because I don't want to wake up one day and discover that I have little cash/assets, and yet no longer have the ability the earn a steady income to support myself.
About a year ago, I was still putting money in fixed deposits at a rate of around 2% p.a. Happily, I thought my money was growing. How wrong I was! Inflation was at around 3%, and so I was losing money at a rate of around 1% p.a. to inflation! If I spend the money, I would have little left; yet if I save and put it into fixed deposits, I would still lose it to inflation.
This is where investing comes in. We invest for higher returns. Invest to match or beat the inflation rate. Invest for a comfortable retirement nest egg. Investing is a way of attaining the things that you want, such as a new home, a college education for your children, or expensive ‘toys.’
Of course, your financial goals will determine what type of investing you do. The final destination when we embark on investing is to create wealth and security. It is of utmost importance to remember that you will not always be able to earn an income; you will want to retire eventually.
An investment is a plan, a plan for the future, a plan for retirement, a plan to enjoy life and live it to the fullest. My plans and strategies have been discussed earlier; I invest in blue chips, and I invest my time in creating websites (virtual assets). It is a plan/strategy that should be refined, tweaked, and optimised as we go along.
Stocks, Personal Finance, Personal Development,
Wealth, Income, Trading, Investing, Business
test4
Monday, November 10, 2008
Saturday, November 8, 2008
Multiple Streams of Income
We are living in a world where it is tough to get wealthy without having more than 1 stream of income. Most people thinks that it is least risky to get a full-time job, and slog for your company till you retire. But in fact, that is an extremely risky move! The current recession shows it: retrenchments are everywhere. There's no guarantees that you will be able to work till you retire at your current company.
Let me tell you a short story of my friend. He was working in Company A. Recently, he switched job (perhaps it seems like it has better prospects) and started working in Company B. One month after he started work (which is about 2 days ago), he received a letter of termination. He got retrenched due to company downsizing. Right now, he's busy sending out resumes and hoping someone will employ him, although not much hope is harboured given the current economic situation.
As conventional wisdom, risks can be spread out and reduced with diversification. Why not apply that same wisdom to our income streams as well?
For me, someone who was only 'enlightened' a few months back, this is my strategy:
(6) was just started 2 days ago.
(7) popped out as an idea during tuition, when students ask many questions in which I can explain and answer in ways different from those found in textbooks.
As life moves on, I try to think if I can come out with any other income sources in which me as a fresh grad (graduated June 08) can embark upon. Do you as well?
Let me tell you a short story of my friend. He was working in Company A. Recently, he switched job (perhaps it seems like it has better prospects) and started working in Company B. One month after he started work (which is about 2 days ago), he received a letter of termination. He got retrenched due to company downsizing. Right now, he's busy sending out resumes and hoping someone will employ him, although not much hope is harboured given the current economic situation.
As conventional wisdom, risks can be spread out and reduced with diversification. Why not apply that same wisdom to our income streams as well?
For me, someone who was only 'enlightened' a few months back, this is my strategy:
- Full-time job
- Part-time tuition going to move to 'full-time' group tuition in the near future
- Dividend stocks like SPH and SingPost
- Blogs with adsense, in which I have now 2 blogs (including this)
- Fixed Deposits & Money Market Funds
- Just started with EmailCashPro as well
- On plans: Guide books to complement my tuition
(6) was just started 2 days ago.
(7) popped out as an idea during tuition, when students ask many questions in which I can explain and answer in ways different from those found in textbooks.
As life moves on, I try to think if I can come out with any other income sources in which me as a fresh grad (graduated June 08) can embark upon. Do you as well?
Friday, November 7, 2008
Simple and Brainless way of Investing
The current financial crisis has brought many economies down, along with their indexes. Dow Jones, S&P500, Nasdaq, Straits Times Index, Nikkei, Shanghai Composite Index, Bombay Sensex, Hang Seng Index, etc, you name it.
In particular, Straits Times Index (STI) has fallen from its high of 3900 to a current ~1800 situation, with expectations of 1500, 1200, or perhaps even lower. Many stocks are at a very low and attractive price. To invest and benefit from this recession, we should have a strategy.
As a newbie in the world of investing, and someone who has just graduated and started work just months ago, I wouldn't have much cash to invest in. My current strategy is thus a very conservative one.
My simple and brainless strategies:
Strategy 1
To me, SPH and SingPost are considered very 'safe' play. Reason?
SPH is the monopoly for local newspapers. It's also one of the main propaganda tools of the incumbent ruling party. It's long term trading price is around $4.40, and it is current trading at around $3.40. My average price is $3.905 at the moment, 4 lots.
SingPost is also the monopoly for local postage. Companies still have to send out financial reports by post (I just receive mine from SPH), we are still posting letters here and there. In any case, we still need to use SingPost's service. It's long term price is around $1+, and is currently trading at 78 cents.
These are two companies whose dividends are acceptably high (at least higher than fixed Ds), will likely still be around in the next 20 to 30 years, and are trading way below their long-term average price. The risks are near to zero in my opinion for these. My strategy would be to accumulate on these two as I earn more from my full-time job and part-time tuition.
Strategy 2
Economy goes in cycles, although on a long-term upward trend. It sort of follows a x sin x curve. At the moment, it is near the bottom of the curve, i.e. at a recession.
Previously, empirical statistics show that one cycle (between a boom to the next boom) lasts around 10 years. Recently, however, it seems like the cycle has shortened to around 5 years, perhaps due to the fact that we are living in the Information Age where news travel around the world in a matter of seconds. We can thus expect STI to crawl back to the 3000 level within a few years, before encountering the next recession.
With the above knowledge, it seems almost brainless that if we start to invest in STI ETF from 1200 and below, we will highly likely achieve a capital appreciation of at least 150% to 200% when STI reaches between 3000 to 3600. Suppose it takes 5 years (might be less) to reach that amount, we would have averaged off nearly 30~40% a year! This excludes the ~3% dividends we get from investing in this ETF.
What are the possible risks?
It's time to be excited about making your dollars work for you, with minimal effort :D
In particular, Straits Times Index (STI) has fallen from its high of 3900 to a current ~1800 situation, with expectations of 1500, 1200, or perhaps even lower. Many stocks are at a very low and attractive price. To invest and benefit from this recession, we should have a strategy.
As a newbie in the world of investing, and someone who has just graduated and started work just months ago, I wouldn't have much cash to invest in. My current strategy is thus a very conservative one.
My simple and brainless strategies:
- Buy and hold blue chip reasonably high-dividend stocks like SPH and SingPost.
- Buy STI ETF (Straits Times Index Exchange Traded Fund) when STI reaches 1200 and hold till STI reaches 3600.
Strategy 1
To me, SPH and SingPost are considered very 'safe' play. Reason?
SPH is the monopoly for local newspapers. It's also one of the main propaganda tools of the incumbent ruling party. It's long term trading price is around $4.40, and it is current trading at around $3.40. My average price is $3.905 at the moment, 4 lots.
SingPost is also the monopoly for local postage. Companies still have to send out financial reports by post (I just receive mine from SPH), we are still posting letters here and there. In any case, we still need to use SingPost's service. It's long term price is around $1+, and is currently trading at 78 cents.
These are two companies whose dividends are acceptably high (at least higher than fixed Ds), will likely still be around in the next 20 to 30 years, and are trading way below their long-term average price. The risks are near to zero in my opinion for these. My strategy would be to accumulate on these two as I earn more from my full-time job and part-time tuition.
Strategy 2
Economy goes in cycles, although on a long-term upward trend. It sort of follows a x sin x curve. At the moment, it is near the bottom of the curve, i.e. at a recession.
Previously, empirical statistics show that one cycle (between a boom to the next boom) lasts around 10 years. Recently, however, it seems like the cycle has shortened to around 5 years, perhaps due to the fact that we are living in the Information Age where news travel around the world in a matter of seconds. We can thus expect STI to crawl back to the 3000 level within a few years, before encountering the next recession.
With the above knowledge, it seems almost brainless that if we start to invest in STI ETF from 1200 and below, we will highly likely achieve a capital appreciation of at least 150% to 200% when STI reaches between 3000 to 3600. Suppose it takes 5 years (might be less) to reach that amount, we would have averaged off nearly 30~40% a year! This excludes the ~3% dividends we get from investing in this ETF.
What are the possible risks?
- If Singapore economy fails to recover, which would probably happen if the govt run out of funds to help steer it up, and in which case, fixed Ds cannot be 100% guaranteed anymore.
- If the issuer of the fund, StreetTracks, collapse, which to me is of extreme low probability.
It's time to be excited about making your dollars work for you, with minimal effort :D
Wednesday, November 5, 2008
Invest with money you can afford to lose... Really?
Sometimes I just wonder... Why do people keep saying invest with money you can afford to lose?
To me, I would see it as: invest with money you do not need in the near term (~5 years).
You see, when we approach with the mindset that we are investing with money we can afford to lose, we are already preparing ourselves to lose the money. Think about it... Is that really investing? Let us look at Warren Buffet's rules.
Rules of Warren Buffet
Rule Number 1: Do not lose money
Rule Number 2: Do not forget rule number 1
I would suggest that we approach monetary investments, not with the idea that this is money we can afford to lose, but rather, money that we can afford not to use in the near future. The thinking, the mindset, is different between these two. To me, there's no money I can afford to lose in the stock market; there's only money I do not need to use in the near future. But of course, this doesn't mean you will not lose money in the stock market.
Afterall, small-timers like me dabble in monetary investments to make money, not lose money.
To me, I would see it as: invest with money you do not need in the near term (~5 years).
You see, when we approach with the mindset that we are investing with money we can afford to lose, we are already preparing ourselves to lose the money. Think about it... Is that really investing? Let us look at Warren Buffet's rules.
Rules of Warren Buffet
Rule Number 1: Do not lose money
Rule Number 2: Do not forget rule number 1
I would suggest that we approach monetary investments, not with the idea that this is money we can afford to lose, but rather, money that we can afford not to use in the near future. The thinking, the mindset, is different between these two. To me, there's no money I can afford to lose in the stock market; there's only money I do not need to use in the near future. But of course, this doesn't mean you will not lose money in the stock market.
Afterall, small-timers like me dabble in monetary investments to make money, not lose money.
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