Paying Yourself First

Hi friends! Do you think that having a pile of cash on hand will be useful? 

Regardless of whether it functions as a tool to generate more income, or to function as your emergency stash for rainy day, having cash savings on hand will be useful, wouldn't it?:) 

BUT! Are you always left with just dimes and pennies at the end of the month, without making any saving? If so, you are just like me many years back when I was a teenager.

After some time, I kinda grew sick of seeing an empty bank account all the time. So I decided to open another bank account which I termed my "savings" account. This account is where I immediately deposit a portion of my income (usually 25%) into once I receive any income. Additionally, if I receive any extra income, such as dividends or bonus, I will also deposit 90% of it into the "savings" account at once.

Once the monies have been deposited into my "savings" account, it will not be touched except for investment or education usage. 

All discretionary spending, such as dating, movies, eating out and daily expenses, will be covered by the monies I have in another account, which I termed as my "spending" account.

Surprisingly, after some time, I realized that this method of saving has a terminology ("Paying Yourself First") dedicated to it and it is in fact, a very popular saving method advocated by peoples who are financially literate.

So how has this method of saving helped me, a sandwiched middle-class citizen residing in Singapore, considered the world most expensive and yet exciting country to live in.  

Well, for one thing, in terms of measurable benefit, I can see how my savings are growing consistently throughout the years. This is definitely much better than seeing an empty bank account at every months end, all the time.

However, it is the intangible benefits of this saving method that appeals to me more. By putting aside my monies into my "savings" account even before I have the chance to spend it, it means that:

• I never ever have to fret that I will sub-consciously over-spend and end up not being able to save;

• I can spend however much I want, as long as I still have monies in my "spending" account;

• I have a darn good reason to say "NO" to purchases or events when the monies in my "spending" account is getting low (pssst..it's easier to decline invitation to eat out when you claim that you are broke);

• I am happier as I see my "savings" account grows;

• I am more motivated to save more monies when I see my "savings" account grows;

• I do not have to worry that I will end up broke yet again at months end, and thus being unable to save.

So how's that for the benefits of paying yourself first when you get your paycheck? :D Want to give it a try?

It's easy to start this saving habit. All you have to do the next time you have monies coming your way is to immediately put aside a portion of it (maybe 25% for a start?) into a dedicated account. 

In fact, it can be even easier and convenient with the automated services the banks are providing nowadays. Check with your banks on setting up an automated transfer to your "savings" account on every payday and you will have made a good start on your journey to financial independence! :D    



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Street art. Oriental style. Photo taken along Jonker Street at Malacca, Malaysia.

Goals Review and Setting - 2016

As 2015 draws to an end, it is time to review the goals I made for 2015. 

There are some hits and misses with the goals I set. Nonetheless, I am still glad that I have put down my goals in writing as I can see some improvement in my life compared to the period when I was goal-less.

Anyhow, here's my goal review for 2015!

1) Increase Monthly Dividends Income to $150

My monthly dividends income at the end of Dec'15 hits a grand total of only $100.58. Quite some way off from my target of $150.

I'm not giving excuses, but it's probably because I partially divested from one high-yielding counter earlier in Feb'15, and I sat on my cash pile for the majority of the year without making my monies work for me.

Gotta make my monies work harder for me for 2016!

2) Get Through My Studies Without Failing  

I passed all the modules I took! By a comfortable margin to boot! However, still some ways to go from acing my modules and results can be better if I put in more effort.
 

3) Posting At Least Two Blog Post

I have posted a total of 21 blogpost this year, which is still 3 posts away from my target for this year.

Nevertheless, we can all see how goal setting is helping me as the total blogposts I put out for 2015 far exceeds the numbers I put out for the previous three years combined.

4) Make New Friends With Two People Having Interest In Financial Literacy

Nil. Zilch. Nada. 

I have made no new friends with similar interest in financial literacy. Despite repeatably reminding myself to be more outspoken online, I failed to take the initiatives to mingle more with people who are financially literate.

Whats more, I kinda like being myself and not molding myself into a different persona just so that I can make friends online. If a genuine friendship occurs, great! awesome!

Otherwise, then too bad. I guess I'll just be a silent stalker and glean some wisdom off the blogs of financially wise individuals then.

  

5) Career Advancement In My Regular Job

Well, I did not get promoted. After all, how could I still be promoted after the conversation I had with my previous boss? 

Did I just say previous boss? 

Yupp I certainly did! 

After getting my increment and bonus from my previous job, I made the decision to change job, with an increment of about 7.5% to boot!

Okay. While the increment was not much, I just felt great leaving an organization where I do not feel valued and was not given much opportunity to grow. 

And it gives (yes, gives, not gave, cause it's still giving me:p) me immerse pleasure when I told my non-appreciative boss that I'm giving him the boot!

With 2015 gone, we should look forward to 2016 with renewed optimism. After all, we are one year older and one year wiser. With the lessons learned, 2016 should be a more rewarding year for us! 

For 2016, I have set the following goals:

1) Increase Monthly Dividends Income to $200  

This is one my main goal and I hope that eventually, the dividends that I obtain will be able to fully cover my living expenses.

At $200 a month, my current portfolio will have to yield about 5.21%. Which is quite achievable provided that I sought out income yielding equities during early 2016, and not leave it till late like what I did for 2015.

2) Graduate and Score 2 A's for My Last Two Modules  

I am two modules away from graduating and I want to give it my best shot, hopefully graduating with at least a 2nd Lower Class Honours.

3) Posting A Blogpost Every Week

Well... if my 2015 goal of two blogpost a month yielded me 21 blogpost, imagine how many more blogpost I can produce if I set myself a target of posting weekly!

“Shoot for the moon. Even if you miss, you'll land among the stars.”

― Norman Vincent Peale

4) Increase View Count to 10,000 

Okay.. a very ambitious goal I admit. But hey, I did not pluck out this figure from thin air!

To have a good shot of hitting 10,000 views, I will have to acquire skills in Search Engine Optimization (SEO) and online marketing, which are very practical skills to possess in our current new age economy anyway.

I think.

 

5) Remain in my Current Job Unless Elsewhere Offers Increment of 25%

Hmm. This is not really a goal but more of a reminder to myself.

I have been changing jobs ever so frequently, with most job stints lasting less than a year. This does not look very good on my resume and additionally, I have remained in the same position, with no additional job responsibilities,  despite my multiple job hops.

Which means that I'm basically hopping on the same stones again and again. Pointless.

Hence, I endeavor to remain in my current job for at least 2 years, unless another positions offers an increment of at least 25% over my current package.

I have come to the end of my goal review and setting friends. Hope that everyone has achieved what you endeavor for this year, and wishing everyone success for 2016!

Happy New Year!And enjoy the upcoming long weekend!

Damn, I am going to miss this long holiday :( Don't you?


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Photo taken during Christmas period at Garden by the Bay, Singapore. My country can be so mystically beautiful too!

Portfolio Updates: December'15

Merry Christmas and a Happy New Year friends!

Guess we all had a hell loads of fun in recent days, exchanging gifts, feasting and most importantly, meeting up with friends and relatives to usher in the festive periods.

That is why I burned a hole in my wallet and have to tighten my belt in the coming days :(

Luckily, I implemented the system of 'paying myself first', and separate the monies I have for spending from my portfolio assets. Hence, my portfolio asset was not affected.

On the market front, the STI ETF, which I have always been monitoring and nibbling at, fell to $2.89 at one point, which made it extremely tempting for me to purchase. However, I followed my plans made during November'15,  and only got in at $2.95 during the last week of this month.   

I am not entirely sure if following the plans so strictly will be any good. I guess I will only know how well this system will work only with time and experience. Or..do any you have any advise for me?

Anyway, I'll be quick for my last portfolio update for 2015 which is as follow :D

Portfolio updates for the month of December'15:

• Purchase 700 additional shares of STI ETF at $2.95 apiece. This brings the average price down to $3.13 for my total shares of STI ETF.

• $700 in cash was injected into the portfolio. 

• Received my first dividends from the global ETF, the VWRD, which comes up to a grand total of.... $23.26

    

Actions I will take for January'16:

• In the super unlikely event that the price of STI ETF drops to $2.065, which is a 30% drop from the last purchase price of $2.95, I will make another purchase of about $2000 worth of STI ETF.

• Continue my purchase of VWRD by investing my second tranche of S$5000 when the price of the VWRD drops to USD$54.72, which is a 20% drop from my last purchase price of USD$68.40.

• The third and last tranche of S$4000 will be vested when the price of VWRD drops to USD$38.30, which is a drop of 30% from the last purchase price of USD$54.72.

• In the event that the VWRD and STI ETF does not drop to my target price, I will rebalance my portfolio in the month of May'16 and Nov'16 accordingly to my asset allocation strategy.

	Percentage
Portfolio Allocations
Cash/Bonds	18%
Equities	82%
Total	100%
Equities Allocations
ETF	50% (25% STI ETF, 25% VWRD)
Income Stocks	40%
Growth Stocks	10%
Total	100%

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Photo of Melaka river, taken at dusk during my last oversea trip to Malacca, Malaysia.

Portfolio Updates: November'15

November came and went like the wind and so did my memory.

Seriously, by writing such a late blogpost now, I really cannot recall any significant financial highlights for November. All I seem to remember was that the price for the STI ETF, which I have been monitoring for some time now, appears to be declining for the month of November.

Hence, I made an additional purchase of about $2000 worth of STI ETF since the price remains at below $3.00 at the end of Nov'15.

Which is part of my plan! I am sticking to the plan I made during October'15.

Let's see where does 'sticking to plans' bring us in the future. But for now, let's have a glance at my Nov'15 portfolio summary:

Portfolio updates for the month of November'15:

• Purchase 700 additional shares of STI ETF at $2.92 apiece. This brings the average price down to $3.17 for my total shares of STI ETF.

• $500 in cash was injected into the portfolio. 

• Received dividends from the following counter which was injected back into the portfolio:

         - Lippomalls REIT - $115.50
         - Starhill REIT - $52.40

    

Actions I will take for December'15:

• In the super unlikely event that the price of STI ETF drops to $1.988, which is a 30% drop from the last purchase price of $2.84, I will make another purchase of about $2000 worth of STI ETF. 

• If the price of STI ETF remains below $3.00 until the last week of December, I will make additional purchase of about $2000 worth of STI ETF.

For my investment in a Global ETF, which is the VWRD, I have the following plans:

• Continue my purchase of VWRD by investing my second tranche of S$5000 when the price of the VWRD drops to USD$54.72, which is a 20% drop from my last purchase price of USD$68.40.   

 

• The third and last tranche of S$4000 will be vested when the price of VWRD drops to USD$38.30, which is a drop of 30% from the last purchase price of USD$54.72.

• In the event that the VWRD does not drop to my target price of USD$54.72 and USD$38.30, the second tranche of S$5000 and the final tranche of S$4000 will be vested by the end of March'16 and the end of June'16 respectively.

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As mentioned in my previous post, I shall post a photo taken by my iPhone for every single blog post being put up.

Here's one for this blog post! :D

Having tea at this quaint little cafe located at Jonker Street, Malacca. 

My First Million

No no no no no. I have not struck the jackpot.

I was just wondering how long it will take for me to earn my first million given my current rate of saving. 

I'm not day-dreaming by the way. Having my first million is not a dream. It is my goal. Albeit a longggggg-term goal.

Afterall, it's always good to have a long-term goal in mind right? And who doesn't wants to be a millionaire!

Counting money all day long~~

Hence I decided to run the figures just to see just how long it will take me and what can be done to propel me towards being a millionaire earlier!

First, let's have a look at my current financial standing to determine when I'll be a millionaire:

Age: 27 years old

Current Assets: $45,715.53

Current Monthly Saving: $600

Estimated Annual Return on Investment (ROI): 5% (Quite achievable I believe, since my main holdings, STI ETF and VWRD, are giving returns of 7.21% and 13.87% on an annualised basis respectively)

So with the above parameters, I ran the figures, starting from when I'm 28 years old. Any gains I made during this period will be poured back to be compounded.

And here we go~~

 

Uh oh. Doesn't look too good. I initially thought that I'll be able to hit a million when I'm 50 years old. But it seems that I'll only be a millionaire when I'm 64 years old! Noooooo~

Time to revise my rate of savings then.

In my earlier estimation, I adopt a constant rate of saving, putting aside $7200 on a yearly basis. However, in reality, my rate of saving and salary will fluctuate accordingly to the different stages of life I will be going through; single, married, being a dad, being made obsolete at work, etc.

Hence,  I tried my best to picture which stages of life I will be at, as the years goes by, and calculate my estimated rate of saving accordingly.

And so, here we go again~~

28years old to 30years old: 

The rate of saving will be low as the bulk of my salary will go towards the clearing of an estimated $50,000 renovation loan when my house is ready next year.

31years old to 37years old:

My salary will have increase during this period and I will be able to save more if I am a SINGLE. But I am planning to start a family during this period and household expenses are expected to rise correspondingly.

38years old to 48years old:

I expect my salary income to peak when I am about 40 years old. Thereafter, due to my increasing age, I might face a 5% reduction in my salary on an annual basis. Hence, my rate of saving will decrease once I hit 41 years old. 

Additionally, my rate of saving will also be reduce when my kid/kids enter school. This is after witnessing how all the children are getting more materialistic nowadays, especially when they meet their peers in school. 

For those with kids, is this not true? :(

49years old to 52years old:

Yay!

My kids will have gotten pretty old by now and I am going to make them work for their own upkeep and any materialistic wants they have! I am serious.

After all, I did the same thing too when I was 19 years old.

And with this burden of providing for my children gone, I believe I will be able to increase my rate of saving.

53years old to 60years old:

I will be old. And again, my salary income will probably be cut by 5% annually as my company finds me more and more of a liability:(

But hey! Guess what? 

If I continue to stick to my plan of investing wisely and systematically, I will finally be a millionaire at 60years old! 

Old but rich :D

So there's that. With sufficient patience and perseverance, coupled with some sacrifices along the way, I would think that any young adult who is not born with a silver spoon has a pretty good shot at being a millionaire eventually.


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By the way, recently, I started to get into the hobby of iPhonegraphy, which is the taking of photos using the default iPhone camera.

Dear readers, if there are any readers at all:p

Please let me have your honest view on each photos that I post at the end of each blogpost, starting from today. Are they good? What could be further improve, etc.

Much thanks!

Growing old. Both buildings and man.

Taking the Easy Way Out

The past few days has set me thinking about why I ended where I am now; A below-average salaried worker struggling to achieve financial independence.

I became extremely demoralised after realising that most of my peers (especially my fiancee!) are earning at least 30% more than me. I got even more despondent when I read about how bloggers around my age have amassed much more wealth than me!

Thoughts just ran wild in my head as I pondered about why I am earning significantly less. Finally, I realised why.

"Life had offered me choices and I always took the easy way out.".

All my life, I have been taking the easy way out and not the path that rewards me the most. I was always being plain lazy and have set low standards for myself. When life posed challenges, I aim to achieve the minimum requirements as I wanted to put in as little effort as possible. Eventually, I just failed to challenge myself in life and have fallen into a life of mediocrity!   

Education

Well, let me starts from my primary education. In primary school, I was consistently one of the top performers in class all thanks to my mother. She had a very effective way of teaching me and getting me to do my homework via the CSB method (Caning, Shouting, Beating).

Hence, it was no surprise that I was a top student because I was putting in the effort!

Slowly, my mother grew weary of teaching me (the nightly shouting and caning sessions can be exhausting). Moreover, she was not highly educated and she did not have the capability to guide me in my studies once I progressed beyond Primary 4.

Without her watching over my studies, I started to slack and I was no longer submitting my homework on a regular basis. Within 1 year, I have fallen behind in class and was no longer a top student.

During PSLE, I was even watching TV programs the whole day before my exams. Luckily, I managed to obtain a rather respectable PSLE result and life presented me with my first major choice!

Do I choose to go to a top school further away, without my close friends and where standards will be higher? Or do I choose a neighborhood school closer to home where most of my close friends will also be entering?

I could have choose the top school instead which might have presented me with a tougher but more rewarding journey in life.

Instead, I chose the neighborhood school as I could sleep more without all the travelling. How immature. The easy way out.

In secondary school, I had total freedom from my mother and a free rein over my own studies! I became even lazier and was consistently the weaker students in class. All I wanted was to get promoted to the next level every single year. Hence, I studied just enough to pass my exams every time.

When it comes to my education after "O" level, I took the easy way out again. I decided to select a polytechnic education as I heard that it'll be more fun. I could have study harder and scored well enough to take the JC-University route. However, since I choose the easier polytechnic route, I studied just enough during my "O" levels to scrape through and enter the polytechnic.

During my polytechnic education, I scored extremely well during my 1st semester despite aiming to pass my exams only. I could have still enter the university if I manage to maintain the standard.

However, I took the easy way out once again.

I decided to put in less effort in my studies since it seems easy to score well.

And that is how I ended up where I am now. Aged 27 years old, armed with just a diploma with sub-par results, and struggling in my part-time studies to earn my degree.

And I am certainly aware that what I am doing is only just sufficient to catch up with some of my peers who have put in the necessary hard work in their education, and hence, earning at least 30% more than me now.

Even if I have completed my part time education, I will still be earning less compared to some of them who have degrees from the more reputable schools.

Education is indeed important. A tad too late for me to realise it:(

Career

Beside my education, I took the easy way out in my career too. 

During one of my previous job stint, I was rather looked upon favourable by my boss. Moreover, I was learning a great deal in my work. While promotion was not a certainty, a career there does look promising. However, I found the workload heavy. 

When I was "promised" an opportunity to earn more in a sales related position, with an increase of a measly $130, I jumped at the opportunity. 

Fast forward 2 years later, and I have returned to my former job. To my great disappointment, I realise that my former colleagues from 2 years ago have progress well in this company, while I am back to square one. 

The irony. And they say job hopping is a good career move. 

I guess all these events are part of life. However, I resolve never to let mediocrity ruin my life any more further.

Step one: I shall strive to complete my part-time degree as soon as possible, with respectable grades. 

Step two: Continue to give my best in my current job, and not quit unless the other position offer at least 25% more.

Step three: Continue to put away at least $600 and all my bonus for my investment portfolio. 

Step four: Start up a new project to start a new business (some sorta delivery/transportation business)

NEVER EVER LET MEDIOCRITY EXIST IN YOUR LIFE. Set high standards for yourself or you will live to regret.
 

Portfolio Updates: October'15

I shall start off this blogpost with some rants.

Gosh, I have missed out on purchasing the VWRD at my target price of USD$66.63 due to the delay in setting up my Standard Chartered settlement account.

When I managed to get the account set-up, the price had already rose to $68.40. In my anxiety to purchase the VWRD as soon as I can, I made a blunder of purchasing S$6000 worth of VWRD instead of S$4000 for my first tranche.

Big mistake.

We should never be hasty in our investment lest we make bad decisions. Much less a novice mistake like the one I just committed.

Lesson learnt.

Anyway, here's a look at my portfolio at the end of Oct'15:

 

Portfolio updates for the month of October'15:

• Purchase 500 additional shares of STI ETF at $2.84 apiece. This brings the average price down to $3.23 for my total shares of STI ETF.

• Kick start my purchase of VWRD by purchasing 60 shares at USD$68.40 (S$95.96) apiece.

• $600 in cash was injected into the portfolio. 

• No dividends received for the month of October'15.

     

Actions I will take for November'15:

• In the event that the price of STI ETF drop to $2.84, which is a 20% drop from the 52weeks high of $3.55, I will make an addition purchase of about $3000 worth of STI ETF. 

• In the super unlikely event that the price of STI ETF drops to $1.988, which is a 30% drop from the last purchase price of $2.84, I will make another purchase of about $3000 worth of STI ETF. 

• If the price of STI ETF does not drops to $2.84 but remains below $3.00 until the last week of November, I will make additional purchase of about $2000 worth of STI ETF.

Moving on to my plans for world domination the rest of the equities markets beside Singapore, these are the actions I will take for the month of Nov'15.

• Continue my purchase of VWRD by investing my second tranche of S$5000 when the price of the VWRD drops to USD$54.72, which is a 20% drop from my last purchase price of USD$68.40.   

 

• The third and last tranche of S$4000 will be vested when the price of VWRD drops to USD$38.30, which is a drop of 30% from the last purchase price of USD$54.72.

• In the event that the VWRD does not drop to my target price of USD$54.72 and USD$38.30, the second tranche of S$5000 and the final tranche of S$4000 will be vested by the end of March'16 and the end of June'16 respectively.