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.
I didn’t get a response from Mrs Josephine Teo, our Minister of Manpower. But you know who contacted me? The friendly folks from the CPF Board. I had a 1-hour long call with them to share my feedbacks and here’s what we have discussed.
In this article, I’ll attempt to be specific about things that are different for CPF members under CPF Life and those who are under the Retirement Sum Scheme (RSS).
CPF members are required to provide their banking details when they would like to start receiving their payouts for both RSS and CPF Life. They can do this anytime between 65-70 (because doing nothing means you start your payout at 70) to start receiving payouts. For example, if you wish to start receiving payout 3 months after you reach age 67, you can do so.
For CPF members under CPF Life, CPF members are required to select a CPF Life plan (Standard, Basic and Escalating), provide their banking details when they would like to start receiving their payouts. They only have to choose a plan when they decide to start their payout.
In my conversation with the folks from the CPF Board, I found that the easiest way to provide all the necessary information to CPF Board is through the CPF website.
PS: It’s also on the right side of the letter in the recent CPF fiasco but everyone got caught up with the body of the letter.
After logging in to my CPF account, I can find the everything related to my CPF Life plan in the “My Requests” section.
As a tech-savvy individual, I’ll definitely get mine done online when the time comes. But for the non-savvy folks, they can consider using the CPF Retirement Planning Service (CRPS) offered by the CPF Board to get a one-on-one session better understand their options.
I feel that for those who aren’t up to date with the latest CPF changes (and there are so many of them), it’s always good to have an unbiased expert from the CPF Board to list out the options available for them. It can be very time-consuming and I applaud the CPF Board for offering this service.
What everyone agreed in the call, was that the current letter to CPF members explaining what they need to do to start receiving their payouts needs to be reviewed. My opinion is that we should just start from a blank page.
I would have preferred something that’s clear and concise with visuals. Maybe a step by step guide or flow chart could help explain things better.
In fact, I would even reconsider the method of communication. Would a SMS or email with links to the CPF website with more details be a better option instead?
Lastly, here are 2 suggestions I’ve made to the folks from the CPF Board.
I’m glad that CPF has sufficient data and insights to help policymakers make decisions. In a recent article, it was revealed that almost three-quarters of those getting monthly payouts from CPF Life or Retirement Sum Scheme receive less than $500 a month. Ouch!
About 6 in 10 active members who turned 55 in 2017 had, at least the basic retirement sum of $83,000 in their Retirement Accounts and that will give them a monthly payout of between $700 and $750 for life.
Let’s look at the recent CPF letter saga. If our Minister for Manpower started the conversation with insights derived from the data before explaining why the CPF payout process is what it is today, it would have been easier to help the general public understand why the process is done this way.
I asked myself, what would I expect from the CPF Board when I’m 65?
I would want to be able to start receiving my CPF payout in a frictionless process once I reach 65. While the existing process allows everything to be done through the CPF website, I still question why I would need to take any action to indicate the age I want my CPF Life payout to start at all.
If I look at the payment process itself, CPF Board has already implemented making payouts using PayNow and they already have my existing mobile number. They can easily find out if I have linked my mobile number with a bank account for to transact using PayNow.
As I am under the CPF Life scheme, I need to indicate the CPF Life plan I want to enroll in. I intend to do this once I reach 65 and at this point, I’m planning to take up a CPF Life Standard Plan with Full Retirement Sum, with payout to commence at 65.
While the existing process does not take up too much time to complete, I hope CPF Board can make use of design thinking to examine what its members really want and make bold changes to make the entire CPF payout process frictionless and automatic.
On 10th September, the richest man in China, Jack Ma has announced that he is retiring.
The Chinese billionaire would step down exactly a year from now, with CEO Daniel Zhang succeeding him.
With that much power in the most valuable company in Asia (not to mention all that money), why would Ma want to give it all up and retire?
The fact is that with great power comes great responsibility (thanks Spiderman!).
Even after retiring as chief executive officer of Alibaba to become executive chairman in 2013, Ma had to put in even more hours at work than before. In an interview with CNBC on 21 June 2017, Ma mentioned that he has spent 870 hours in the air, flying to countries to push the Alibaba towards globalisation in 2016 and he says that he may be spending around 1,000 hours in the air, visiting world leaders and companies.
Working that many hours is exhausting and Ma was caught in a video, dozing off uncontrollably at a conference in January and that went viral on social media.
Ma famously said his “biggest mistake was I made Alibaba”, because of the enormous pressure and responsibility he has had to shoulder to steer the company with a net worth of $84.4 billion and more than 66,000 employees.
“If I still can have the next life, I will never do a business like this. I will be my own self; I want to enjoy my life,” he said.
Let’s look at some of the lessons we can draw from Jack Ma when it comes to planning for our own retirement.
Before you can definitively say that you want to retire you need to first visualise what is retirement to you.
Retirement could mean a million different things to different people because we all have our unique personalities and life experiences.
In his letter to employees, Jack Ma highlighted his plan on continuing my role as the founding partner in the Alibaba Partnership and contribute to the work of the partnership. Philanthropy is on to-do list and he plans to dedicate time to this. Ma also wants to return to education because that is what he loves to do. By giving up the massive responsibilities at Alibaba, Ma intends to try new things.
As you can see, Ma has a meaningful and purposeful retirement plan in mind.
Retirement doesn’t mean giving everything up and relaxing at the pool all day (unless that’s what you really want).
What will retirement be like to you? Are you able to visualise, articulate or verbalise what you intend to do when you retire?
Like it or not, retirement needs to be sustained by many things. In most cases, it would be money. For some, it could be specific connections, knowledge or skillsets.
Despite all the challenges faced in life, Ma worked hard and went ahead to create the most valuable company in Asia and become the richest man in China. After 20 years, he has amassed massive wealth and fame that will help him reach his vision of retirement.
While we don’t necessarily have to amass incredible amount of wealth and fame to retire, we have our own list of goals and activities to accomplish in order to achieve our vision of retirement.
Write those goals and activities down on a piece of paper or electronically on Microsoft Word. Whichever works better for you.
Now that you know what you need to achieve retirement, you can take concrete steps to complete your list.
You don’t get to retire without lots of hard work. Create a plan and start taking steps towards accomplishing your goals and objectives.
Alibaba didn’t become a multi billion company overnight. Ma brought the company to where it is today with grit, hard work and lots of sacrifices. Are you willing to make sacrifices to achieve your retirement goals?
The thing is, you don’t have achieve all your goals in one day. You just need to prioritise them one by one and decide which one to tackle first.
One of the easiest way to start is to reverse engineer your retirement vision.
Start from the age of 65 to the age that you think you will live up till, how much do you need to have in order to retire? Calculate your lifestyle needs and take action towards growing sufficient wealth to pay for that lifestyle.
What other skills do you need to achieve your retirement vision? You might want to learn how to cook your own meals or build a few skills to run a small business of your own.
Now that that’s done, how about from 55-65? How much more do you need to accumulate if you want to retire at 55?
Sorted out your needs from 55 onward? How about between 50-55. Can you squeeze a bit more effort to accumulate more wealth to cover the expense for that extra 5 years?
Depending on how early you wish to retire, you can keep planning backwards and identify tasks and activities that you need to start today to enjoy the benefits later on.
Have you started planning for your retirement? I’d love to hear about your thoughts in the comments below.