Today, I spent 8 hours on a Saturday at Singapore’s largest personal finance event – Seedly Personal Finance Festival 2019. I repeat, 8 whole hours! That’s the number of hours I spend in the office on a work day.
Who would have thought that young adults would pay to wake up early on a Saturday morning to attend a 1-day event to listen about personal finance? Great job, Seedly!
I’m not going to do a full recap of what the speakers have said because that’s 8 hours worth of content and a blog article will not do the speakers justice.
What I’m going to do instead, is to highlight 6 key takeaways that resonated with me and I will take action on.
Please note that this article is my interpretation of what I heard from the speakers and may differ from the original meaning of the presentation.
When I planned my insurance needs, I looked at it from the perspective of how much do I need to recover from a critical illness or survive when I have problem taking care of myself. What I have not considered, is how long should I keep my insurance policies.
Christopher Tan, CEO of Providend and Executive Director of MoneyOwl shared his approach in deciding how long you need to have insurance. The income replacement component of an insurance plan is no longer relevant if you are of no economic value to anyone.
Let that sink in a bit.
If you are retired and no longer earn an income, you can consider not having some insurance policies such as Disability Income insurance and Critical Illness insurance that are meant events where you need to replace your loss of income.
Likewise, if you no longer have a dependent that needs to be supported by you, why should you continue to maintain a life insurance with a high death insurance coverage?
Action: I will examine my insurance plans and plan a cut-off age where I will reduce the coverage or even terminate some policies based on my retirement plans and dependent needs.
In his presentation, Christopher Ng from Tree of Prosperity talked about how skillsets are deteriorating at a much faster pace. I totally agree with this comment.
In the past, if you were to study accountancy, you could work as an accountant for many years, or even decades using your accountancy skills. Today, if you graduate from university to become an accountant, your skillset will probably last 1-2 years (or less) before you need to learn new skills such as data analytics to perform high-level tasks as the industry continues to embrace automation.
Workplace toxicity is also present in many companies. Employees in Singapore are working much longer working hours than many other developed countries. The work life balance that we yearn for are not materialising.
Action: Identify skillsets that will improve my employability and take up courses to acquire these skillsets.
Loo Cheng Chuan from the 1M65 movement shared his story about achieving 1 million in CPF and talked about the benefits of acquiring a financial safety net through CPF before investing in the stock market.
I have to agree that knowing you have 1 million dollars waiting for you in your CPF accounts at 65 can provide you with a peace of mind. This peace of mind can be very powerful as you can afford to take more risk in your investment knowing your life isn’t over even if you incur some losses.
While I’m not planning to accumulate 1 million dollars in my CPF accounts, I intend to continue to pursue my mid term goal of achieving FRS in 5 years.
Action: Continue to top up my CPF Special Account to achieve Full Retirement Sum in 5 years’ time.
Christopher Ng talked about the need to grow what he calls, your financial knowledge stack. Folks from the tech industry know the term, ‘stack’ very well. Essentially you equip yourself with knowledge on a set of technologies and programming knowledge that allows you to create and manage an application.
Likewise when we look at financial knowledge stack, it’s about equipping yourself with a set of financial knowledge to make informed financial decisions that’s tailored to your personal needs.
This is important because if we outsource the work of managing our personal finances and investment portfolio to what he calls, ‘financial salespeople’, these people are going influence you to act against your best interests if it conflicts with theirs (to earn commission).
Here’s the Financial Knowledge Stack that Christopher Ng shared.
Action: Put together my own Financial Knowledge Stack, identify what I lack in and work towards equipping myself with the relevant knowledge.
What I loved about the Seedly Personal Finance Festival was the diverse investment topics that the speakers presented. There’s no one-size-fits-all investment strategy that works for everyone. We have look within ourselves to identify the investment strategy that works for us. The one that allows us to sleep peacefully at night.
We had 3 speakers talk about 3 different investment strategies – Alvin Chow from Dr Wealth talked about Value Investing, Joel Sim from Mr Finance Savvy talked about Trend Trading and Victor Chng from The Fifth Person talked about Dividend Income Investing.
These speakers shared about their approach towards investment on a high level given the amount of time allocated for their sessions and provide some insights into why their investment strategies worked for them.
If you’ve been reading my blog, you’d find that I don’t write a lot about investing because that’s not a topic that I am well-versed on. I’ve only invested in index ETFs and done so through a Robo Advisor.
I had the opportunity to chat with Dawn Fiona from SG Budget Babe during the break and her recommendations for a newbie who is learning to invest for the first time. Here are some of her recommendations.
Before starting on your investment journey, ask yourself first these questions. What are you investing for? What’s your time frame in the market? And which methodology matches your personality and lifestyle better?
For some of us who are busy (e.g. parents) and don’t have time to check the markets regularly, strategies like fundamental momentum investing or trading will not be suitable for us because we cannot react in time and grab opportunities when they appear. In such cases, tools like ETF RSS plans or DCA methods would serve us better.
But if you enjoy analysing and have time and effort to spend on it, then why not value or growth investing which might be more suited to us.
Figure out which suits you better, learn more (through books or courses) and then apply and stick to it.
I intend to do something about that this year.
Action: Learn more about the 3 investment strategies shared in the festival and pick 1 that suits my preferences. Spend a lot of time to study on the chosen investment strategy.
Most of the festival attendees are young adults who are in the early stages of their careers. That means they don’t necessarily have a large sum of money to invest in their retirement portfolio today.
I love how Christopher Ng presented his lego-brick analogy to help young adults get started on building their retirement portfolio, one brick at a time. His example of ultimately forming a middle finger with 48 bricks that you can show to your unappreciative boss when you FIRE was the icing on the cake.
His take on starting your retirement portfolio was very simple. Save $20,000 and invest it on stocks, bonds, and REITS that yield better than 7%, and you will be able to get at least $1,400 a year.
That’s your first brick.
Action: Take a hard look at my retirement expenses and calculate the number of bricks I need to build in order to retire.
Did you attend the Seedly Personal Finance Festival? What were your takeaways from the festival? I’d love to hear about them in the comments section below.
According to experts, the bull run is almost over. While there are mixed reviews on whether we are heading into bear market territory, what we know for sure is that the markets are very volatile right now.
For most investors, their portfolio is most likely in the red. My investment portfolio with Autowealth is down by close to 4%. It’s not as bad as the rest of many investors because my portfolio consists of a diversified portfolio of ETFs and I continue to average down every month.
I’m no investment expert so I’m not going to tell you what are the stocks to sell and what are the stocks to buy.
What I’m going to tell you (or think of this as a reminder if you have heard them before) in this article are common sense investment advice that everyone should follow.
“Running back to town and tell everyone the sky is falling when an acorn drops and hit you on the head while sleeping under a tree, was such a silly thing to do.” I’m sure that’s what Chicken Little would say now that he is 14 years older (the movie was out in 2005).
All you need to do is to look up and realise that the sky isn’t falling.
Stay calm and clear your head before you make any investment decision.
Everyone has their own unique profile and circumstances. That’s why we create our own investment strategy that works for us.
In my case, I plan to retire by 50 so I have another 14 years of investment runway and a strong savings rate to my advantage. I can afford to have an aggressive asset allocation and wait for the market to recover. On the flip side, my lack of knowledge in investing techniques also means that I have to keep my investments simple and easy to understand.
I believe that what I’m doing is right so I am going to stay on course.
If you are feeling stressed about the market downturn, I advise you to look back at your investment strategy and decide if it’s still relevant. If it is, stay on course. If it isn’t, time to spend some time to update it.
And if you don’t have an investment strategy, this is the perfect time to create one.
Unless you have the time to do tons of research and attempt to predict future market price movements and have a huge cash stashed away to afford to make mistakes, I don’t recommend trying to time the market.
As the saying goes, time in the market is better than timing the market.
Markets are unpredictable so it would be wiser to spread your risk by diversifying your investments in a longer term strategy.
If you’re the nervous Nellie who checks the prices of your investment portfolio every day to chart the prices, you might want to consider not looking at them for a while.
When the going gets tough, remember the long game.
You have a long term investment strategy and I trust that you will do well if you stick to it.
2018 has been a good year for me, both financially and career-wise.
On the career front, the new company I joined in late 2017 treats me well and the team is pretty awesome. The work I do there have been meaningful and fulfilling. The monthly income derived from this work is more than sufficient for my monthly expenses and save a decent amount of money for retirement.
On the personal finance side of things, being a disciplined saver paid off for the year. After completing the purchase of my overseas property in Cambodia, I channeled the same amount that I used to save for the property into my investments through Autowealth’s robo-advisor platform and started building my diversified investment portfolio of international ETFs.
Compared to last year’s net savings rate of 59.84%, this year’s net savings rate grew to 63.32%. It’s an improvement, but still lower than the net savings rate in 2015 and 2016.
But to be fair, most of my monthly net savings rates are hovering above 70% except December as I splurged on a 2-week backpacking trip in Eastern Europe.
When I track my expenses, I would typically split them into 3 broad categories – necessary expenses, discretionary expenses and excess expenses.
Necessary expenses consist of spendings on ‘needs’ on food, transportation, insurance, etc. while discretionary expenses comprises of expenses on ‘wants’ like travel, entertainment, shopping, etc. I maintain a category called excess expenses to document seasonal and celebratory expenses during Chinese New Year, weddings, etc.
In 2018, necessary expenses accounted for close to 40% while discretionary expenses took a big slice of the pie at 54.8% and excess expenses only accounts for 5.3%.
Almost half of my discretionary expenses (47%) was spent on shopping. There’s definitely a lot of fats to trim on that in 2019.
My annual expenses for 2018 ended at $37,042.12 which was higher than expected having taken 3 overseas holiday and making one too many purchases this year.
After my net worth became positive in Oct 2016, it continues to to grow year on year, just falling short of my target by a little due to the bear market for the past few months.
For those interested, my net worth consists of all my assets including my CPF accounts but I chose to exclude the value of my HDB flat since it’s for own stay. However, I chose to include my mortgage loan as part of my liabilities.
I’m not a big fan of new year resolutions. Instead, I prefer to look through the past year to see what’s working and whats not.
For the things that are working for me, I believe in putting in effort and discipline to maintain and improve on these things. As for bad habits and activities that aren’t helping me, I want to allocate time to change them.
Then I would think about mid to long term goals that I want to achieve and insert some incremental milestones into 2019 that will help me reach these goals in the long run.
Here are 2 mid to long term milestones that I’m tweaking my 2019 budget planning in to achieve.
I have not been cycling as much in 2018 compared to the past few years so I intend to get back on my road bike and cycle more often. My target is to achieve a total of 3,000 kilometres in 2019.
My lifelong learning goal in 2018 was to learn about Data Science. To study Data Science, I signed up for a 12-month subscription on Datacamp.com with the objective of completing the 22 courses in their Data Scientist Track.
Sadly, I’ve only completed 17 out of the 22 courses so I will have to catch up and complete the remaining 5 courses in early 2019. Once that is done, I plan to complement my Data Science knowledge by upgrading my coding skills to build better websites and mobile applications for the rest of 2019.
I ended 2018 with a 63.32% net savings rate. In 2019, I will strive for a 70% net savings rate by reducing some of the discretionary expenses like shopping.
While some of the folks in the personal finance community choose to hold more cash and start investing when the stock market starts to show signs of recovery.
I’m no investment guru and that’s why you don’t see any stock picking recommendation in my blog. Neither will I be able to predict when the stock market will recover.
Therefore, I choose to stay invested in this bear market and continue to make dollar-cost averaging investments monthly through Autowealth, my preferred robo advisor in 2019 while the stock market continues to fluctuate.
To achieve the first key milestone of accumulating Full Retirement Sum in my CPF Special Account by the age of 41, I intend to make monthly cash top ups of $995 each month for the next 5 years.
Based on my calculations, this should be able to help me achieve this milestone in 5 years’ time.
Benjamin Franklin supposedly once said, “If you fail to plan, you are planning to fail.” Sir Winston Churchill is credited with another saying: “Those who fail to learn from the past are doomed to repeat it.”
What changes do you intend to make in 2019 to improve your personal finances?
I’d love to hear about your plans. Please share them in the comments section below.