My Full Year Financial Report for Year 2011

Year 2011 is almost over, and now it would be a good time to generate my full year financial report for 2011 (Jan 11 to Dec 11).

My Passive Incomes:

The above table shows the total for each of my passive incomes collected from Jan 11 to Dec 11. For my passive incomes, I have managed to collect a total of $25080 for the whole year, which is about $2090 per month. If include the realised gain of $8385 from selling some of my shares, the total extra incomes for this year will be $33465, which is about $2788 per month.

My Monthly Expenses:

The above table shows my total monthly expenses. There are no changes since the beginning of the year. I am still following my old rule to keep my expenses as low as possible by not spending money on the things that I will not need.

My debt:
As for my only outstanding debt from my housing loan, it has reduced from $33000 to $14000.

Conclusion:
This year is quite a fruitful year for me though I did not able to achieve one of my New Year resolutions of having a passive income of $2400 by end of 2011. I give myself a "B+" grade for this year performance.

My Passive Income (Month of Dec 11)

CPF(OA): $175 (from interest and dividends)

Cash: $1642 (from dividends and other passive incomes)

Total: $1817

Target: $3200

Achievement: 56.8%

There are no changes in my passive income 1, 2 and 4

For passive income 3, there is an big drop as I am diversifying my investment portfolio.

How much debt do I have? (Dec 11)

In Sep 11, I had recalculated my total debt which is totally from the mortgage loan of my flat to be $19K. The calculation is based on using the outstanding housing loan amount minus away my total family CPF OA amount.

Today I have recalculated my total debt again, and it has reduced by another $5k. In my post on "What I hope to achieve in 20 years?", I mentioned that I wanted to reduce my total debt to $0 within the next five years, Based on my conservative estimation, I think it is achievable before the end of next years. I will stop keeping track of my passive incomes from my CPF in my blog for next month onwards.

Last but not least, wish all of you a MERRY CHRISTMAS!!!

Lasik treatment for both my eyes.

I have my epi-lasik treatment done for both my eyes this wednesday. As the recovery will take about two weeks, sorry to say that I will not be able to do any posting due to poor vision now.

Diversifying my investment portfolio (Part 2).

This week, I have continued to diversify my investment portfolio to contain more types of shares.

For a summary for the changes in my portfolio, I have further reduced my Singtel to 10 lots and have sold all my CIT shares. At the same time, I bought 10 more lots of Singpost, 2 more lots of SGX and 10 lots of SMRT. The above is the pie chart of my overall investment portfolio based on current market price.

If you have any comments or questions for my portfolio, please feel free to let me know.

My Passive Income (Month of Nov 11)

CPF(OA): $247 (from interest and dividends)

Cash: $1698 (from dividends and other passive incomes)

Total: $1945

Target: $3200

Achievement: 60.8%

There are no changes in my passive income 1, 2

For passive income 3, there is an big drop as I am diversifying my investment portfolio.

For passive income 4, there is an decrease of $4. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

Diversifying my investment portfolio.

For those who have been following my investment blog would have noticed that I have been doing quite a number of transactions in the last few weeks. The reason is mainly to diversify my investment portfolio after seeing that many good stocks have fallen greatly in prices since last year.

For a summary for the changes in my portfolio, I have reduced my Singtel holdings from 72% to 50% of my portfolio with 15% diversified to SIA and 7% diversified to Singpost.

I will continue to diversify until I will not have more than 30% of my portfolio invested in one stock alone.

Do you have fear after making investment?

In Star Wars Episode 1, Jedi master Yoda once said, "Fear is the path to the dark side: fear leads to anger, anger leads to hate, hate leads to suffering." If you have followed the Star Wars stories, Anakin Skywalker’s fear of losing the ones he loves is main reason why he eventually turned to the dark side of the Force.

For investor, the fear may come from falling price of the stocks he owned. As the result, he may start to be angry and hate himself for buying in before the stock prices start to fall. Next he would be suffering for holding these stocks and eventually forced to sell them at a loss.

As a pure investor myself, I have overcome the fear of investing by taking the following measures:

1)Always have a saving that can last me for at least one year in case of any unexpected situation.

2)Always invest with the extra money that I will not be touching for the next ten years.

3)Always pay up in full for any stocks that I have bought. I will totally ignore CFDs, warrants and other leveraging investment instruments.

4)Never do shorting on stocks.

5)Always buy stocks from companies with strong fundamental.

6)Always set my own fair price to buy in stocks and be able to hold even the price might fall.

Going for Lasik treatment this December.

While I guess most of the people have decided to plan for a holiday on December, I have decided to go for Lasik treatment instead. Well I have been wearing spectacle since I was primary six and have been wearing it for almost thirty year. I feel that now is a good time to break free the pair of glasses in front of me since the Lasik treatment has become much safer, accurate and affordable.

I will be going for the new type of Lasik known as Epi-Lasik whereby the vision correction is done surface of the cornea without cutting the cornea flap. My wife did it last year and has no complains so far. For those interested, you may want to google “Epi Lasik” to find out more.

Pay increment vs inflation

This is a simple post to explain the effect on how inflation affects pay increment. I will first start with a scenario. There was a new company which had four workers. The boss of the company paid each employee $100 per month as salary.



After working for a year, four workers requested a pay raise for their hard work. The boss agreed to the request and decided to give a raise based on the performance of each employee as shown in the below table.


The question now is should all the employees be happy with their pay raise assume that the inflation rate is 5%? We can easily found out the answer by using the simple formula as shown below.

Real % change in salary due to increment and inflation =

% change in salary - inflation rate =

[(New Salary - Old Salary) X 100 / Old Salary] - inflation rate

After using the formula, the result is tabulated as shown in the table below.



For the table, well as long as % increase in salary is less than inflation rate, there will be a pay reduction in real value. Hence worker A and B in fact had their pay reduced in real value.

My Passive Income (Month of Oct 11)

CPF(OA): $246 (from interest and dividends)
Cash: $1844 (from dividends and other passive incomes)
Total: $2090
Target: $3200
Achievement: 65.3%

There are no changes in my passive income 1, 2 and 3.

For passive income 4, there is an increase of $7. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

Importance of Warranty

Today, I have sent my HP notebook for servicing as some of the keys suddenly cannot be used. Luckily that the notebook is still under warranty and I will not need to pay for the repair cost.

For expensive electronics device, I always make it a point to buy new one that comes with standard warranty. It is to ensure that I am “insurance” from any servicing costs. Warranty gives me peace mind after buying the device.

Buying a second hand item without warranty seems to be a "gamble" to me. Though such item can be much cheaper, the repair cost may not come cheap when something suddenly goes wrong.

Bought Xbox360 console with Kinect

I will start with some gaming history about myself. I have been a console gamer since I was in primary school. Atari was the very first console that I had played in one of my friend place and since then I am very interested in console games. The first console that I owned was NES (Nintendo Entertainment System) which was bought by my father. Other consoles that I owned were Sega Mega Drive, Playstation 1 and Playstation 2, and hand-held Nintendo DS lite.

I am seeing great improvement in term of graphics, music and videos from one generation to next generation console. However there are not many changes in the game play until Nintendo Wii was introduced. I quite like the idea of motion controllers in Nintendo Wii and I had enjoyed playing with it in one of my relative house. With the introduction of Xbox 360 Kinect, motion control is now more advance whereby the game play can be controlled by your own body movement. I am amazed with this technology and hence decided to buy one to try out.

Currently I have five Kinect games and I feel that they are fairly easy to play with easy instruction to follow. Even my toddler is able to enjoy playing them straight away without much problem. The only problem that I have so far is to consistently tell my toddler to move back in order for the Kinect sensor to track her movement.

One good thing about Xbox 360 is that you can download trial demo for certain new games for testing. This will prevent the gamers from wasting money to buy the game in case they do not like the game play.

My Butterfly Effect

Recently I had watched an old movie with title “The Butterfly Effect”. It is about a young man who has the ability to go back in time through his lost memory. By doing that, he is able to make small changes for events in the past which will greatly alter the life of people around him which include him. If you have not watched the, I will encourage you to do so. The movie will somehow change your prospective when dealing with changes.

So why am I talking about “The Butterfly Effect” in this post? In August 2009, before the creation of this blog, I have been thinking about my current life and my future. Well it is very easy to project my life linearly since I am having a normal job. However is that what I want? Going through my life working till retirement age and having barely enough for my retirement?

I began to look at myself and think what can I do to improve that? At that time I remembered that I had read the book “Rich Dad, Poor Dad” by Robert Kiyosaki when I was seventeen. I recalled from the book that one has to look into cash flow in order to improve personal finance. Also I discovered that collecting rental income and dividends from stock investment are two ways for me to create passive incomes. I decided to take both approaches at the same time. In addition to that, I have created this blog in September 2009 to share out my approaches and my results.

So what is my "Butterfly Effect” after two years? Firstly, I have collected more than $50,000 extra incomes without too much effort. Secondly, with these additional incomes, my wife now is also able to become a home-maker to take care of my kid full times at home. Thirdly my kid will not feel lonely as there is always a parent around her all the time. Some time I wonder if I did not do anything two years ago, what will happen to me? I believe that I will still be someone who keeps complaining about having not enough money. And also I am not able to share my posts in this blog.

Lastly a message to all, “Though we are not able to make changes in the past, however we are able to make changes at the present which will affect our future. “

My Passive Income (Month of Sep 11)

CPF(OA): $245 (from interest and dividends)
Cash: $1837 (from dividends and other passive incomes)
Total: $2082
Target: $3200
Achievement: 65%

There are no changes in my passive income 1 and 2.

For passive income 3, there is an increase as I have adjusted part of my investment portfolio this month.

For passive income 4, there is an decrease of $30. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

Happy 2nd birthday to "Lifelong Freedom in Singapore" Blog.

"Lifelong freedom in Singapore" blog has turned 2 year old! For those bloggers who have been following my blogs and have commented on my posts, I would like to say a big THANK YOU for your support. Hopefully my posts have helped you in term of wealth creation and finance management.

What have I achieved for the past one year?
I am managed to gain $26200 in term of pure passive incomes this year as compared to $20100 last year. That is an increase of $6100 which is quite inline with my last year aim of hoping to achieve an increase of $6000.

There is no realised capital gain for this year as compared to $6300 last year. The reason is because I did not sell any shares this year.

My current total unrealised capital gains or losses have amounted to $3095. But since I am looking more on wealth creation, having unrealised capital gains or losses are not as important as having pure passive income.

What do I hope to achieve for the next year?
Well, I hope to increase the earning from my pure passive incomes by $3000 per year or $250 per month for next year. It may be quite tough, but I will try to achieve it. I also hope that all of you can continue to support my blog and I will be continue to post more articles on my journey towards financial freedom.

Having a child is never easy.

Raising a child takes up a lot of time, money and energy. Parents must spend time and energy with their child to guide his/her every step. Parents have to provide her kid with protection as well as strict guidance so that he/she will not learn the wrong things or habits. Parents will need to engage in their playing activities so as to build up bonding between them.

As a father, I always make it a point to come back home immediately from work so as to spend time with my daughter. As for my wife, since she is a stay-at-home mother, she is able to take care of and discipline our daughter while I am not around.

Having a child is a long term commitment; parents will need to spend a lot of money during his/her growing process. Milk powder, seeing a doctor, enrichment classes, and insurance are not cheap, and these are just part of the cost. Due to that, I find it very hard to have another child as I might not be able to save enough for my retirement fund. I don’t except the money in CPF will be enough, or my daughter is able to support myself and my wife in the future.

Do I need a smart phone and a data plan?

It is quite commonly seen in buses and MRT trains that quite a number of people are carrying a smart phone. Other than just making calls or sending messages, most of them used it for listening to music, watching video, playing games and surfing web. So do I feel “pressure” to own it too?

Smart phone indeed has many functions with tons of application available. But the question is whether I have the time to use all these features and applications. It does not make any sense to me if I buy a smart phone just to use 5% to 10% of the functions. And also a mid range smart phone is not very cheap if I buy it without signing up for any mobile plans. Dropping it on the floor will definitely cause a pain in my heart.

Surfing internet is one thing that I might want (not need) to do when I am outside home or office. However that will require me to sign up for a data plan (free WIFI connection is not available everywhere). Based on my own scenario, a basic mobile plan which includes data usage will cost two times of what I paid for my current mobile plan. Again, it does not make any sense to me again just to pay more for the service that I seldom use.

In conclusion, I will not buy a smart phone at the moment unless the phone costs less than $100 (with or without signing basic mobile plan). I also will not sign up for any mobile plan with data usage as it is simply too expensive currently. Lastly to all my blog readers, don’t be “too pressure” to follow the trends, think logically and don’t waste money on things or services that you do not need.

How much debt do I have? (Sep 11)

In Jun 11, I had recalculated my total debt which is totally from the mortgage loan of my flat to be $22K. The calculation is based on using the outstanding housing loan amount minus away my total family CPF OA amount.

Today I have recalculated my total debt again, and the total debt has reduced by $3k to $19k. In my post on "What I hope to achieve in 20 years?", I mentioned that I wanted to reduce my total debt to $0 within the next five years, Based on my conservative estimation, I think it is achievable by the end of next years.

My Passive Income (Month of Aug 11)

CPF(OA): $245 (from interest and dividends)
Cash: $1832 (from dividends and other passive incomes)
Total: $2077
Target: $3200
Achievement: 64.9%

There are no changes in my passive income 1 and 2.

For passive income 3, there is an increase as I have bought more shares and more dividends are given this year.

For passive income 4, there is an increase of $12. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

Spend more time with my kid

Raising a kid is never a simple task as parents are constantly exposed to three type of stress, namely physical stress, emotional stress and financial stress. Coping with these stresses is never simple especially if both the parents have a full time job.

I believe that the best person to discipline a kid is the parents. Hence I feel that it is important for at least one parent to be with the young kid most of the times. By doing so will allow parent to provide necessary guidance and assert “authority” immediately on any wrong doing by the kid.

As for my family, my wife and I have decided to switch to single-income so that my wife is able to spend more time with my kid. I also try to come back home immediately after work so as to teach and play with my kid. This precious time spends on our kid can never be replaced by any amount of money.

Total $15K of dividends collected in last two years

It is almost two years since I have become a pure investor in shares. My main objective for investing is to increase my cash flow (passive income). Up to now I have received about $15K of dividends (or average of $625 per month for the two years).

Till now my objective has not changed. I will continue to buy share of companies with strong fundamentals and give good dividends. I also reinvesting the dividends collected by buying more shares which is stated on my cash flow framework.

Well this is the method that I use to increase my cash flow from shares. If you have other good investment strategies, maybe you can share with me.

Sold unwanted stuff and bought a new netbook.

For the last one month, I had sold two old laptops, 1 old desktop and 1 hard disk for a total of $790. The sole reason of selling is simply because these items are no longer necessary. Furthermore, most of them do not have any more warranty. Since currently they still have some value, I feel that it is best to sell them now.

I also had hunted a new laptop (or netbook) that suits my need. Basically I wanted a laptop that is portable, with long lasting battery and be able to view HD contents. Well after doing some research, I finally landed up with two options. They are Asus 1215B and HP DM1z netbooks. Then I proceed to Challenger to try out both the netbooks. After testing out the two netbooks, I felt that HP DM1z will be a better one for me, as the keypad and touchpad feel better. I bargained with the salesman and paid $649 for it with free RAM upgrade. See below for my new netbook :).

My Passive Income (Month of July 11)

CPF(OA): $238 (from interest and dividends)
Cash: $1771 (from dividends and other passive incomes)
Total: $2009
Target: $3200
Achievement: 62.8%

There are no changes in my passive income 1 and 2.

For passive income 3, there are no changes too.

For passive income 4, there is no changes. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

Getting more by having less

In my post, “Learning points from tidying my house”, I have mentioned that I have gotten rid of many unwanted stuff in my house. I give, sell or throw those things that have no more value to me rather than keeping them in my storeroom. Somehow I have a “lighter” feeling in my house after doing that.

So how do I meant by getting more from having less? Well by owning fewer things, I can focus more than those things that I have. For example, I used to have two laptops in my house, and I can only use one at time. After, selling one recently, I can now utilize more on the reminding laptop. I have quite happy being able to utilize most of my necessities now. Having extra things laying around don’t make me feel good.

In financial sense, it is not a good thing to own extra necessities. These things mostly will depreciate over the time and will become zero value eventually. In Buddhism, there is a saying that “form is emptiness, emptiness is form and I am starting to appreciate this saying.

Learning points from tidying my house

Recently I had taken a few day of leave to tidy up my house. It has been an every three months routine for me, as I am the type of person who does not want my house to look very messy. This also serves an opportunity for me to consolidate and remove all the rubbish that has been around for three months. For this round, it had been very amazing that I have thrown 8 bags of rubbish into the dustbin.

During the tidy up, I realized that I have some unwanted items that have some monetary value. For example, old digital camera, wireless router etc. For these items, I hope try to sell them by creating some posts on those buy/sell forums. If I couldn’t sell away these items, I will just give them away for free.

Things that I have learnt when tidying up my house:

1)Don’t collect rubbish. I have learnt to quickly identify things that are going to become rubbish. Once I have classified them as rubbish, I will immediate throw them away.

2)Put all things in proper place. By doing so will allow me to find thing easily. Imagine that you cannot find the item that you have, you may end up wasting money to buy the item again.

3)Quickly sell away unwanted things as soon as possible. I felt some sort of regrets for not selling unwanted things earlier so as to fetch a higher price.

4)Don’t bring back home unnecessary things even though these things are free. A lot of things that I had thrown are things that are given to me for free. For example goodies bags that are given during carnivals. Personally I feel that these items are not free as I have wasted a lot of time to dispose them.

My Half Year Financial Report for 2011 (Jan 11 to Jun 11)

Half a year of 2011 is over, and now it will be a good time to generate my first half financial report for 2011 (Jan 11 to Jun 11).

My Monthly Expenses:

For my monthly expenses, there are no changes as compared to Dec 10. I always keep my expenses as low as possible by not spending money on the things that I will not need. For this part, I will give myself an "A" grade.

My Passive Incomes:

For my passive incomes, I have managed to increase it from $1953 (Dec 10) to $2007 (Dec 11). That is about $54 increase per month. In my New Year resolution for 2011, I have set two milestones for my journey towards financial freedom. The first one is to achieve a total passive income of $2200 by end of June 11 and the second one is to achieve a total passive income of $2400 by end of Dec 11. Though I have missed my first target, I will still give myself a "B" grade on this portion.

My journey towards financial freedom:

I am getting closer to achieve my financial freedom. I will need to generate an additional passive income of $1193 per month (Total Expenses of $3200 - Total Passive incomes of $2007) in order to achieve my aim.

My Assets:

These are the assets that I have. I am proud to say that I do not have any liability.

My Debts:
My only debt is from the housing loan. Based on my calculation, the current total debt is about $22k. The calculation is based on using the outstanding housing loan amount minus away my total family CPF OA amount.

My Passive Income (Month of June 11)

CPF(OA): $236 (from interest and dividends)
Cash: $1771 (from dividends and other passive incomes)
Total: $2007
Target: $3200
Achievement: 62.7%

There are no changes in my passive income 1 and 2.

For passive income 3, there are no changes too.

For passive income 4, there is decrease of $3. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

How much debt do I have? (Jun 11)

In Mar 11, I had recalculated my total debt which is totally from the mortgage loan of my flat to be $25K. The calculation is based on using the outstanding housing loan amount minus away my total family CPF OA amount.

Today I have recalculated my total debt again, and the total debt has reduced by $3k to $22k. In my post on "What I hope to achieve in 20 years?", I mentioned that I wanted to reduce my total debt to $0 within the next five years, Based on my conservative estimation, I think it is achievable by the end of next years.

My Investment portfolio has reached S$120k

For those who have been following my other blog "My Investment portfolio in Singapore" would know that I have been slowly building up my investment portfolio. For every one or two month since Sep 09, I have been buying shares regularly and till today I have build a portfolio of $120k. The dividend yield of my portfolio is about 6.67% per year, which is about $8000 per year or $667 per month.

I always like to buy shares of companies that have strong fundamentals and give good dividends. And also I have come out with my own version of "My Investment Rules" which help to prevent myself from making any investment mistakes. To me, buying shares is like buying a system that creates a source of passive income to me. Unlike trader or speculator, I am not so worry about making losses in stocks as long as the company is still giving good dividends. In fact, I like to see market to crash as it will provide me with the opportunity to buy good stocks at cheaper price.

Shorter distance means shorter time to travel?

Recently I had taken a cab home from work. In the cab, the driver asked me which way to go. I was given two routes; first is to travel through the small routes and second is to use the expressway.

The first route is a more direct that has a much shorter distance than second route which needs to go a big round before reaching my home. As I had used the second route before, I decided to go for the first route to see it is faster or not.

Though the distance is shortest, the cab was slowing at a slow speed due to the many cars around and the speed limits imposed on the small roads. Furthermore the cab had met with many red traffic lights and had to stop occasionally. In the end I had taken a longer time to reach home as compared to using the second route. The cab fares are almost the same for both the routes.

In conclusion, shorter distance does not necessary mean shorter time to travel. A direct path might take you more time to travel as compared to indirect path.

Family Outing at Singapore Flyer (4 Jun 11)

I had brought my family to Singapore Flyer on 4 Jun 11. Everyone was excited as this was our first time there. In order to avoid any crowd, we took a cab in the morning and reached there at around 10am. One good time about being early is that we can our own cabin without sharing with any strangers. Here are some photos that I had taken on that day.


This picture was taken at the second floor. Too bad, it was a raining day, so most of my pictures were not very clear.


A top view of a cabin below us.


Picture of "Gardens by the Bay" taken in our cabin.


ArtScience Museum at Marina Bay Sands.


Picture of floating platform.


A heart shaped drawn at a contruction side just below the Singapore Flyer. My toddler was the first who discovered it. We were wondering whether the constructor worker drew it on purpose?


A picture taken in Rainforest Discovery.


A venting machine to buy fish food for the fishes. We spent about $5 on it.


These are the three tortoises that we had fed. Remember to feed them if you see them there.


These fishes were swimming peacefully initially. But when we threw in the fish food, they will immediately charged towards it.


A human-size model of Syndey Opera House.


A human-size model of Eiffel Tower.

My Passive Income (Month of May 11)

CPF(OA): $233 (from interest and dividends)
Cash: $1774 (from dividends and other passive incomes)
Total: $2007
Target: $3200
Achievement: 62.7%

There are no changes in my passive income 1 and 2.

For passive income 3, there are no changes too.

For passive income 4, there is decrease of $12. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

More and more pawn shops

In the last seven years, I have seen the growing number of pawn shops around my neighborhood. I remembered that there was just one pawn shop in the past, but now, I am seeing at least three of them. And also on the local TV channels, I have seen a lot of advertisements on pawn shops recently. I don’t recall seeing such advertisement seven year ago.

I understand that the purpose for pawn-broking is to help people tide over urgent times. And that explain the existence of the pawn shop. My question now is why is there an increase in the number of pawn shops? Am I right to say that there are more people in need of money urgently now as compared to years ago?

No one is indispensable!

Last week in the “Great Event” in Singapore, it has proven again that no one is indispensable. No matter how high are your position, how much experience you have and how much effort you put in, you may just lose your post due to some reason. Well, it is quite sad to know that is the truth in today society. So what can one do to protect oneself financially before the day really come?

Have zero or minimum reliabilities.
As you probably know that reliabilities are the thing that constantly take money from you. An example for reliability is buying a car just to drive to your work place and does nothing else. Having too much reliability will definitely add up to your financial burden. As for me, I have achieved to have zero reliability.

Commit only when you can afford.
Make sure that you only commit when you can afford. For example, buying a big house which stretches your financial boundary is not a wise thing to do. As for me, I can only afford a 4 room flat and will not be planning to do any upgrading at the moment.

Multiple income streams instead of just one.
Well this is one of the best protection again any income loss. Focusing on just one income stream is very risky. It is because once you lose it, you will not have any other income streams to support your living. As for me, I am having a main active income stream and 3 passive income streams.

Take good care of your health and have enough insurance coverage.
Make sure anything that you do will not affect your health. It is because once your health is lost, you are prepared to pay for huge amount of medical expenses and you may not be able to work again. And also, make sure your family and yourself have enough insurance coverage to provide all the protection you need. Currently I am spending about $500 per month on insurance to ensure that.

Is it worth to buy a big flat now and downgrade it when approaching retirement?

I happen to hear from people saying that they would be buying the biggest flat that they can afford and downgrade it when they are approaching retirement. The reason to downgrade is to take out some cash to support themselves during their retirement. But is it really worth to do that? Let us do some simple calculation to find out.



I am using example of a 4 room resale flat which costs $400,000 and an EA resale flat which costs $600,000. The payment for both the flat will be using CPF. So based on my calculation, buying a 4 room flat instead of EA flat will provide a saving of around $800 per month. The total saving without any interest after 30 years will be around $288,244. But assume that CPF is giving 2.5% interest per year for the next 30 years; the amount will compound to $428.337.

So conclusion, if the difference between the selling price of EA flat and buying price of 4 rooms flat is more than $428.337, then it is worth it. If not, it is not a good idea to buy a big flat and downgrade it later. And also please note take I did not include the possible agent commission and renovation cost when doing the downgrading.

My Passive Income (Month of Apr 11)

CPF(OA): $233 (from interest and dividends)
Cash: $1786 (from dividends and other passive incomes)
Total: $2019
Target: $3200
Achievement: 63.1%

There are no changes in my passive income 1 and 2.

For passive income 3, there is an increase as I have subscribed 8 lots of CIT right shares and bought another 8 more lots of CIT shares this month.

For passive income 4, there is decrease of $1. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

Have you started your journey towards financial freedom?

To all my blog readers, I have created my first poll in this blog. The purpose of this post is to find out how many of you have started your journey towards financial freedom. Please feel free to select any one of the six choices in the poll and press the vote button.

Poor service from DBS

Company that provides good customer service will make you coming back to continue to its services. On the other hand if the company is providing bad customer service, it will simply cause frustration and will make you think of discontinuing its services. And you only know you are getting good or bad service when thing happen.

Recently I am receiving poor service from DBS. The incident goes like this. DBS sent me a letter which comes with an application form to apply for my entitled shares. By following the instructions given, I sent back the application form by post promptly (1 week before the closing date of the application). As my entitled shares have not been credited into my account, I called back to DBS to find out the reasons. They just simply reply that they did not receive the application form and they are not able to do anything for me since the application period was over.

My question now is why they never update me that they have not received my application before the closing date. I believe not many people are entitled to buy these shares due to its requirement. In my opinion it is very unfair to a customer who is following all the instructions given by the company and yet not able to get its service. As a customer, I did nothing wrong. But when problem surfaces, they are not able to solve my problem or to do any form of compensation. So do you think they value us as a customer?

After searching through the internet, I realized that there are many other complaints make to DBS. My advice to all is to be careful if you are engaging their services. Don’t be a next “victim” like me.

Is it wise to clear your housing loan if you have enough money in CPF?

I believe that this is a common question that most of us will ask when there is enough money in the OA account to pay for the outstanding housing loan. So for this post, I will analyze whether it is better to clear the entire housing loan at once, or continue to service the loan and at the same time use the money for investment to get better return.

The example that I used is based on an outstanding housing loan of $100k with loan interest rate as 2.6%. The loan period is 10 years, and the monthly payment will be $947.25.

In the table below, I have listed out seven options. Option 1 is based on clearing the entire housing loan. Since the housing loan has been cleared, $947.25 will be saved each month to earn interest in CPF OA account for the next 10 years. For option 2 to 7, is based on $20k in the OA CPF to earn interest (as currently the first 20K cannot be used for investment). And the rest of the $80k will be used to for investment with different return ranging from 2.5% to 5%.



As you can see in the table, you may be better off to keep your money for investment if your investment return rate is 3% or more.

How much interest do you pay for your housing loan?

The monthly interest for the housing loan can be easily calculated using the below formula:

Monthly interest = (Outstanding Housing Loan X Loan Interest Rate) / (100 * 12 months)

For example, if the outstanding housing loan is $100,000 and the loan interest rate is 2.6%, monthly interest will be (100000 x 2.6) / (100 * 12) which is about $217.



Increase in housing loan rate can cause a burden to the house owner especially when the outstanding loan amount is huge. Let’s take an outstanding loan of $300,000 as an example. Based on the 1.6% interest rate, the monthly interest is $400. Every 1% increase in the interest rate will increase the monthly interest by $250. In my opinion, this is quite a huge sum of money to fork out.

So my advice to all is to spend some time calculating the monthly interest before you commit to use any floating rate housing loan. Low interest rate may not last forever and an increase in loan interest rate will definitely increase your financial burden.

Finally achieved a passive income of $2000

It has been one and a half year since I have taken my first step in the journey towards finance freedom. And finally I have reached another milestone as my passive income has amounted to $2000 this month.



I have done a projection on the growth of my passive income as shown below. This is based on the assumption that I continue to invest $30k per year on shares that give me a dividend of 5%.



The projection is quite in line with my next 20 years goal. If nothing goes wrong in the next 5 years, I should be able to achieve a passive income that covers 80% of my expenses. And next 10 years, a passive income that covers 100% of my expenses.

My Passive Income (Month of Mar 11)

CPF(OA): $215 (from interest and dividends)
Cash: $1785 (from dividends and other passive incomes)
Total: $2000
Target: $3200
Achievement: 62.5%

There are no changes in my passive income 1 and 2.

For passive income 3, there is an increase as I have bought 2 more lots of Singtel shares this month.

For passive income 4, there is an increase of $22. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

How much debt do I have? (Mar 11)

In Jan 11, I had recalculated my total debt which is totally from the mortgage loan of my flat to be $29K. The calculation is based on using the outstanding housing loan amount minus away my total family CPF OA amount.

Today I have recalculated my total debt again, and the total debt has greatly reduced by $4k to $25k. The big reduction is contributed mainly from the bonus and the dividends from my shares. In my last post, I mentioned that I wanted to reduce my total debt to $0 within the next five years and I think it is achievable in less than five years.

What do I hope to achieve in the next 20 years?

Currently, I have managed to generate a passive income that covers 61% of my expenses and my net debt has reduced to $28,000. The below are what I wanted to achieve in the next 20 years:

Next 5 years
I hope to generate a passive income that covers 80% of my expenses and my net debt to be reduced to $0.

Next 10 years
I hope to generate a passive income that covers 100% of my expenses.

Next 15 years
I hope to generate a passive income that covers 120% of my expenses.

Next 20 years
I hope to generate a passive income that covers 150% of my expenses. I hope to retire by then if possible.

I am spending more than $100 per day.

I had posted in this blog a few month ago that my expenses have amounted to $3200 per month. That means that I am spending more than $100 per day. I have listed all types of my expenses and sorted them according to greater amount first.

As you can see that on top of the list, I am spending about $27.42 per day just for my one kid. This is more than one quarter of my total expenses. Food and Insurance are ranked 2nd and 3rd, and their total amount is about one third of my total expenses. Housing loan is ranked 4th, which is about 12% of my total expenses. Other items are less than 10% of my total expenses.

Can magnet heal?

These are some links to read about.

http://www.howtodothings.com/health-fitness/how-to-avoid-magnetic-bracelet-scams

http://www.sillybeliefs.com/magnets.html#heading-1j

http://www.consumerwarningnetwork.com/2008/09/16/magnetic-therapy-cure-or-hoax/

http://lockergnome.net/questions/114389/what-do-you-think-about-magnetic-bracelets-and-necklaces

Ten reasons why I don’t want to invest in private property.

I have been thinking whether I should invest in private property in the future. After giving some thoughts on it, I realized that it is not a wise choice for me to make. I have listed ten reasons why I am not interested in investing in private property.

1) Buying and selling Stamp fee (these add up to a huge amount)

2) Illiquidity (cannot be sold easily)

3) Cannot be diversified (can only buy one, cannot do averaging)

4) Need to leverage (definitely need to take loan)

5) Maintenance fee (this will take away money each month)

6) Agent Commission (can be a huge amount)

7) Finding Tenant (difficult to find a good tenant that will take good care of your property)

8) Unpredictable Loan interest rate (interest rate may increase when market picks up)

9) Cannot grow in size (definitely the size of the property cannot increase)

10) Unpredictable events (you can never know what will be built beside the property)

My Passive Income (Month of Feb 11)

CPF(OA): $209 (from interest and dividends)
Cash: $1738 (from dividends and other passive incomes)
Total: $1947
Target: $3200
Achievement: 60.8%

There are no changes in my passive income 1, 2 and 3

For passive income 4, there is an decrease of $5. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

Single Income Family

It has been a month since my wife has quit her job to become a stay-at-home mum. She is now able to focus more on the “inner part” of the family. Every day, she is able to send my daughter to nursery school in the morning, and pick her up after the school. In the afternoon, she will teach or guide my daughter on her home work. In her free time, she will make herbal tea for the whole family to improve our health.

As for me, I can now focus more on my job. As my wife is guiding my daughter on her study, I can now play with her after my work.

We think that we have made a right decision to do the switching to single income family.

Reviewing of my cash flow framework (Feb 11)

I have created and been using my cash flow framework for over a year already. It has been helping me to understand the inflow and outflow of my money. It also helps me for my journey towards financial freedom. The core areas in my cash flow framework are namely Income, Expenses, Saving, Buying Asset and Passive Income. I shall review these five core areas in this post.

Income:
I am not unable to find new stream of incomes to enhance my cash flow. The reason is because I am spending less time on this core area. Now may be a good time to think how to improve on this core area.

Expenses:
Total expenses have been increased since last year as my toddler has been sent to some enrichment classes. However I do not have any liability, and will continue to stay in the current status.

Buying Asset:
I have been buying shares since Sep 09. My total portfolio value is about $110,000 currently. I will continue to buy more shares whenever I have extra cash.

Passive Income:
I have been receiving passive income since Sep 09. This includes the dividends from my shares which amount to about $7800. I will continue to reinvest the dividends to buy more shares.

Happy Lunar New Year to Everyone!!!

Wishing all of you who has been reading my blog a happy Lunar New Year. Enjoy yourself with your family members and friends in this holiday.

I will explain what the chinese character (福) above means for those who do not know Chinese language. This chinese characters is pronounced as "FU". It can mean happiness, blessing and lucky. So hope that everyone can have 福 all the times.