Leave the boring pension topic behind for now. Life is meant to enjoy and we have to live it to the fullest. Why save a lot in our early days and live a miserable life and then find that we still don’t have enough money for retirement? Yes, it is going on even in Singapore. Individuals who scrim and saved before still don’t have enough for retirement. This somehow prompted teenagers to spend almost all their money since they see that even if they save money, they would still not need much money anyway.
You see, the problem above can be explained mathematically. 1000, will you have a lot of money? 360K. Would it seem just like a lot of money to you? It sure doesn’t seem just like a lot if you ask me 30 years from today. Therefore, even if we save 50% of our income but have a minimal income, its not going to make a complete lot of difference.
However, this can be solved by a straightforward solution. Before we go into the solution, let’s understand a fresh term which I came across lately called FIRE. FIRE in its full form is know as “Financial Independence, Retire Early (FIRE)”. It is a idea which has been discussed and extended on by some financial bloggers in the western world. Gaining financial independence and retiring early can’t be done through savings alone if our income is too low. We are able to enjoy some luxuries and gain financial independence and retire early still. How do we do it? Just how do we reach status and still enjoy luxuries FIRE? This is explained using a simple mathematical illustration. 360K cost savings 30 years later.
720K 30 years later. 1000/month previously and still have more money 30 years later. If you did not manage to understand how the above mathematical illustration works, read it again. I’m going to expand on a deeper idea below nevertheless, you must first understand the idea above. Once you’re ready, let’s continue. The road to financial independence or independence is not about living a poor man’s life now so you can be considered a rich man later.
Yes, saving money is important but the truth is we can not save much from scrimping on the tiny things. What we have to do is to focus on increasing our income but at the same time make sure we do not overspend far beyond our means. Many years while I used to be still a student back again, I came across a thought which said “if you’d like to enjoy luxuries, create the income for it”. This income should not result from our main work but from supplementary sources (aka passive income). 1000/month for a certain period of time, we have to create a secondary source of income to fund it.
That’s not all. After the supplementary income source is created, it can be long lasting and after fully paying for the car even, in every month we still have that source income coming. We got the automobile AND the extra income Now. That was such a robust concept that it stuck with me even today.
Now the question is, how do we create the supplementary source of income? Buying properties and renting away is one of the most typical ways to create a secondary income source. Many people in the global world do this. The best thing about buying properties and renting out is your tenants purchase the house and by the end, the property belongs for you.
- 3 percent interest on 150000 is 4500
- Equity Capital Markets
- Chart is from June 1993 (inception time) to June 2014. Standard Premium was $111.71
- CME Group Inc
- 3 years back from United States of America
- The firm’s highest risk-adjusted discount should be applied to: (Points: 5)
- Proposed dividend distributions
Not only do you get local rental cash flow each month, you own the asset too. However, the nagging problem with buying properties in Singapore is the high cost included. 100K in upfront capital. This might not be possible for young people who just began in their careers but is definitely a consideration when we have more money. Investing in stocks and shares will give us a secondary income stream through dividends. REITS can be one common way to get passive income. A REIT, also known as a genuine estate investment trust, has a collection of properties that they rent out to gather income. Investing in a talk about of you are created by the REIT a shareholder of the numerous properties it has.
For example, if you get the shares of Capitamall (renamed capitalandmall) or Suntec, then you truly turn into a shareholder and own area of the shopping malls the thing is at City Hall, Tampines, Jurong, Woodlands and a great many other elements of Singapore. A few of these Reits have properties in other areas of the world too. The rental collected is distributed to all or any the countless other shareholders and each will get a part of the income according to the amount of shares they own. Reits outlined in Singapore typically pay a variety of 5-8% in dividends.