Frugality And The YOLO Lifestyle

Have you ever envied those people who live a YOLO lifestyle? If you don't know what is YOLO, it means "You Only Life Once". This is a mindset that since we really only live once, why not just enjoy life first? Why think and plan for the future?

When I was younger in secondary school, I had a classmate who came from a rich family. The parents gave him $50 a day. At that time, my allowance was only $20 a week which was just sufficient for my meals in school. Each meal cost about $2 then. With $50, this classmate could buy lots of stuff he wants. He was the envy of many other classmates and friends surrounded him to get some benefits from him.  Sadly, later on he got suspended from school and in the end got expelled because of some police case. Later I found out he was caught stealing from a book store in a shopping mall. It was an irony that he has the most money but still steals from a book store.

The YOLO Lifestyle

Money can cause a lot of problems. Just last week, MAS and CAD raided a few trading firms such as DBS vickers, Maybank Kim Eng, Phillip securities and OCBC secutiries. Some remisers were taken away for questioning. The MAS confirmed on Friday that together with the CAD, it is investigating possible contraventions of the Securities and Futures Act. Money can cause people to do things that breaks the law.

I'm sure all of us have friends who live from pay check to pay check. They empty their bank accounts and enjoy life to the fullest. They travel around the world, enjoy the finest food, enjoy luxuries and live for the moment without thinking about the future. This is even better than my classmate who has $50 to spend everyday. It is possible to spend hundreds of dollars per day.

I am not against enjoying life. In fact, I've ditched my budget and spend as much as I can currently. I wrote a post on this previously here.

The Frugal Lifestyle

The frugal lifestyle on the other hand is a life of prudence. This person spends wisely and thinks for the future. He tries to save as much as he can because he thinks he will need the money in the future. There are also extreme frugality cases where a person saves and saves and forgets what enjoying life is all about. Both the YOLO and frugal lifestyle becomes a habit. Both can be bad or good.

There is a fine line between frugality and cheap. Our lifestyle ultimately affects the people around us. A person with a YOLO lifestyle may have spent all his money and can't even pay the bills on time for his family. Or he may have got into too much debt and made the family suffer. On the other hand, a frugal person can also affect the people around him negatively. He may have saved too much and compromises on quality. The family doesn't get much enjoyment in life and live on a tight budget.


How To Balance Frugality and the YOLO Lifestyle?

Saving money for the future and enjoying life needs to have a balance. This is easier said than done. But with a conscious effort, we can balance the frugality and the YOLO lifestyle. First, we have to identify are we more prone to spending or saving. Most of us will lean more to one side. For me, I'm definitely more prone to saving money so I have to make a conscious effort to spend more on the things that are important.

For a person who saves more, it is sometimes hard to spend. $50 for a meal per person seems too expensive and it is very hard for him to indulge in luxuries.  To balance up, a frugal person can indulge in luxuries occasionally. It doesn't hurt to spend a bit more once in awhile especially for the people he loves.

Just last year, I decided to celebrate my girlfriend's birthday in one of the fine dining restaurants in Singapore. This was at a restaurant called Pollen, right inside Gardens by the Bay's flower dome. This is the first time I've ever went to a fine dining restaurant and I must say the experience is worth every single cent. The service is good, every dish is carefully selected and prepared with unique taste in every single bite.

Bread and mini bun with truffle cream served before the meal

Appetizer: Some figs and goat cheese

Mains: “Risotto”, hazelnuts, brie and pears

Mains: I forgot the name of this fish

Desserts

Desserts

As you can see, every plate is an art work. Delicious and full of flavours. Their service is so good that they gave us a holder to put our bags, explain every dish in detailed and even provide a scarf for my girlfriend in case she's cold. They also provide buggy service before you come and after you finish your meal. The buggy sent us all the way to MBS after our meal. And I forgot to mention they actually reply to my emails very promptly. I actually arranged for a surprise birthday cake with candle to be sent in after our meals.

The meal also includes an entry into the flower dome, another plus points if your girlfriend likes flowers. Just a few steps away and you're in the flower dome full of beautiful flowers. This is definitely a place to consider for a date or to celebrate special occasions with your other half.

To me, now it doesn't hurt to spend a bit more just to enjoy. In the past I was probably too tight on money and am slowly changing it. I am now more focus on increasing my income than just saving money alone.

How about the person who lives a completely YOLO lifestyle? To this person, luxuries are too common in his life till it becomes a norm. He has no savings and always complains of not enough money. Yes he's enjoying life fully now but when crisis strikes, he loses his job or one of his family member gets sick, he has no money for all these. The family goes through a period of tough time.

As long as we have plans for the future, spending a bit more doesn't really hurt. Just $100+ on food on that special occasion doesn't hurt if you still have savings. If you borrow money to enjoy, then that is a red flag. If you use your credit cards to enjoy and cannot afford to pay the bills, then it will be disastrous. If we just use a part of our income for enjoyment while still paying ourselves first, then I think this is perfectly ok.

Frugality and YOLO lifestyle, do you think it can be balanced?

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The Day I Stop Tracking My Daily Expenses

I have been tracking my expenses daily for the past few years using an app called expenses manager. But... just recently, I stopped tracking once and for all. After a few years of tracking, it has more or less become a habit and it has enabled me to restrict my expenses and save up well for my future. Now the question comes... if its good, why stop tracking?

There are a few reasons and I will list them all out in this article. It doesn't mean I give up managing my money from now onwards. It just means I have come to another stage where I do not need to track as rigorously as how I used to. I will also share what I will do moving forward.

Reason 1: Tracking expenses daily restricts my spending

Yes, its good to reduce and restrict spending so we can have more for our future but having a tight budget and tracking it so rigorously every day really limits my spending. Readers would have remembered the last I posted my income and expenses update, I mentioned that I have doubled my budget which means double the expenses. However, its still too restrictively in my opinion. I have had problems when I realise I spend a little bit more this month or if I realise towards the end of the money that I have spent too much. I began to cut and restrict myself toward the end of the month. This is not the life I want to live.

Reason 2: Tracking expenses daily doesn't make sense for me anymore

When I say it doesn't make sense for me anymore, I mean that even if I track my expenses daily, it does not allow me to save more. Throughout the years, I've built the habit of saving up and for me myself, I don't really spend a lot. I'm really not prone to overspending but more prone to underspending. In fact, now I want to spend more, more on the people around me and the people I love. Ever since I started dating, I knew I had to spend more so I made an effort to double my expenditure budget. In a way, it has worked well in terms of planned spending but still restrictive for unplanned spendings. When I don't spend just on myself, there are many unplanned spendings which I'm not used to. Focusing on a budget will cause a lot of problems for this.

Reason 3: I have gone past the stage of budgeting

I've written a few times on why increasing income is important than just focusing on savings alone. Since last year, I made a goal to increase my income. Not just in my main job income but income from other places as well. I set up a system where it will force me to think of creative ways to increase my income and get me out of my comfort zone. This has worked well so far and moving forward, I will continue to do this which I will elaborate more below.

What I will do moving forward?

So now with the daily tracking of expenses gone, this is what I'm going to do. In fact, I've been doing this but will do it more aggressively now. Previously, I set up auto fund transfer to another bank account so I will not touch the money at all. This was about 75% of my salary being transferred out every month. For the past 1 year, the bank account which had 75% of my salary transferred out did not become empty. In fact, it grew healthily and continue to grow even more. How is this even possible? Does it mean I only spend 25% of my salary every month?

The only explanation that the bank account can still continue to have money inside is this act of fund transfer changed my mindset to increase my income. It is impossible to survive on 25% of my salary only. According to my tracking, I spend close to 50% or more of my salary each month. Income from other sources goes to this bank account as well so any extras which I get, I can actually not worry and be able to spend it all as I already have a fixed amount transferred out for savings every month.

Moving forward, I will be transferring out slightly more than 100% of my salary to the other savings account. This means I would totally not rely on my main job salary for expenses. Let's see how this goes and whether the bank account survives this later on. The transfer will start this month.

Even though I don't track my expenses daily now, I will keep a track of it on a monthly basis instead. Through the transactions on my bank accounts which I can see easily using internet banking online, I can add up all the expenses and get a rough gauge of how much I spend each month. Tracking the expenses monthly will not restrict me to spend lesser towards the end of the month. I can just spend as much as I want as long the expenditure bank account does not become empty. If income manages to increase and I realise I can save more, I will transfer more out and adjust accordingly.

This has been a tough decision to make to give up tracking of my expenses daily which has already become a habit for me. But, after considering all the factors, I decided this is the best way moving forward.

The Why, What, How In Our Journey To Financial Freedom

It has been quite some time since I wrote about financial freedom and more specifically my journey towards it. Over the years, I realised there are many different views towards financial planning. Some would think it is not necessary to plan ahead and don't have to worry  too much about money. Others will think its important to save money and plan ahead. Ultimately, what I strongly believe in is different mindsets will lead to different outcomes.

For example, if a person thinks his retirement will be taken care of by the government or his children, most probably this person will not plan for his own retirement. I would say everyone worries for their own retirement and whether they have enough to live during their old age but how they see that the retirement is provided will determine what they do now. If they think that other people will take care of them during retirement, what they would do now is nothing.

Financial freedom or financial independence is a different form of retirement. It is not about retiring from work and do nothing but its about making the best out of our lives. In essence, it is about living life to the fullest. More often than not, we humans focus on the what and how of our lives. What can we do to make more money? How can we achieve financial freedom? But, before we focus on the what and how, we should actually think about the "why". Thinking about the "why" will give us a sense of purpose and meaning of what we are doing now.

Why do we work? Why do we want financial freedom? Why do we want to live our lives? Knowing the "why" clearly in our minds will steer us in the right direction. If we just know the what and how, we will start to feel emptiness in what we do at some point in our lives.

I saw a video on the why and what we do which will show you why thinking about "why" we do is important. Check this out:

Comedy is "what" I do
You gotta see WHY this video is AMAZING
Posted by Michael Jr. Comedy on Friday, September 18, 2015

If you know your why, your what has more impact because you're walking in or towards your purpose. This made me think about why I started this blog.

For readers who are new to my blog, I actually started SG Young Investment back in 2013. It has been almost 3 years since I started writing. Back then, it was the busiest period of my life where I was juggling between full time work and part time studies for my degree. It took me a long time to decide which course I want to take. I made a decision why I wanted to go back to studies after working for about 2 years. My motivation was not the certification which I would get, it was the things that I could learn during the course of study.

I was interested in economics and doing research. Throughout the course, I had to do lots of research and reading up and also writing essays after essays. I realised my love for writing and started this blog. But, the main motivation of starting this blog is to reach out to more people on the importance of financial planning. I always feel sad when I see people or families who get into financial problems. All these can actually be avoided if we just have a little knowledge and live our lives more prudently. More than that, I actually believe in financial freedom and financial independence. I believe we can live our lives to the fullest and do what we really like. I don't want to live my life doing what I don't like just for money.

That was the essence of why I started the blog. I still hope to reach out to more people and make an even greater impact. What and how I do has more purpose because of the why. Do you know the "why" in what you are doing in your life now? If you are lost in what you do, consider taking some time to think about the why in what you do. You may just find the purpose to live your life to the fullest.

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My Life In 2015 And New Year Resolutions for 2016

This is the last week before the year 2015 comes to an end. Another year went pass just like that again. I wrote some reflections for the year 2015 at the beginning of this month. You can read the post here if you've missed it out.

I did not write much about my investments and also my financial journey in that previous post so I will put it in this post.

Stocks Investment for 2015

This year was not really a good year for investments. A couple of the stocks which I invest in were down quite badly with a few others gaining such as the biggest holding in my portfolio, Saizen Reit, which was acquired by another company. This helped to offset the losses on the other stocks in my portfolio. Overall, the STI is down about -15% for the whole of 2015.

To date, my portfolio is close to $40K now which is about 50% of my investment capital. I have added in some counters such as the banks (DBS and OCBC) and the STI ETF when the market went down badly. All these which I added recently are all in positive territory at the moment. Overall, the portfolio is only up by about 3%. In total I have 14 stocks in my portfolio now. The returns are not that fantastic but I should be happy that my portfolio is not as bad as a -15% loss as that of the STI. 

Income and Expenditure for the year 2015

Having a financial blog is incomplete without writing on my financial journey. This blog is about my financial journey and how I strive to achieve financial independence. Although money is not the most important thing in life, it is still necessary to provide for our families and for our livelihood. 

Since I started this blog, I learned to create more income including passive income. The main purpose of this is to not rely just on my main job for income but to create contingency plans. I have seen people, both young and old, being retrenched by their company and its not a good feeling to have. 

My income now comes from these sources: Salary from job, income from blog, dividends from stocks and commissions from freelance consultancy work. 

Here's the chart which shows my financial journey:

My expenses has increased which is what I also wanted. I am going to focus on creating more income instead of just saving for the sake of saving money. I want to live a more fulfilling life where there is certain enjoyment and spending more on my love ones.

Passive income and other income has been rather consistent this year and adds up to about $9K for the whole year of 2015.


New Year Resolutions for 2016

2015 has been a year of experiences for me again. I felt like there were a lot of things happening and felt tired for the year. I haven't took much leave this year and no MC as well. In fact, I only took 2 days of leave so far for the whole year.

Nevertheless, it was a fulfilling year. The people I met, the new things I embark on and starting a new relationship was the summary for 2015. Now, its time to look forward to a new year 2016. This is what I hope to achieve or do next:

1) Advancing in my career

I've been in the same job for the past 5 years plus. Its a long long time especially for young people nowadays who change jobs every few years in order to advance and climb to a higher level. It seems like in most companies, employees who stay long do not advance as fast as people who change jobs.

I have been looking for more opportunities and will continue to look for more opportunities to advance in my career. I hope to at least get to the management level where I can do more and learn more. This will also greatly increase my income. I will be looking into policy or research related jobs which has been my interest all these while.

2) Eating Healthily and exercising

I have been eating more vegetable and more salads and will continue to do so next year. I have also been going to the gym every week and will continue this habit that I build into the new year. All these were a result of motivation of my girlfriend who is health conscious. I am happy to live more healthily. Health is wealth.

3) Having a more balanced life   

As mentioned earlier, I will be less tight on money and will spend when necessary. For example, I seldom took taxi in the past but am taking more now to save time. I am increasing my expenses but will still keep it in check. I have almost doubled my expenses as compared to the beginning of this year. Its not so scary to spend a little bit more money on people and things that matter to us.

4) The 100K savings challenge

I set a financial target of $100K to reach by year 2016 since I started this blog 2 years ago. Next year is the year already. I am on track to reach that target by mid of 2016. The focus will still be on increasing my income. Its not just about earning money but about believing that I have the potential do more and achieve more.

5)  Loving people in my life 

Life is all about relationships. I've been meeting many people since I started blogging. In the midst of busyness, I will constantly remind myself to set aside time and love the people who are in my life. In the new year, I will make more effort to keep in touch with old friends and continue to spend time with my family and also continue to put in effort for my new relationship with my girlfriend. I am looking forward to the new life I will embark on with her.



Its the new year in a few days time. I will be going for a short overseas trip over the new year to recharge and relax to prepare for a better 2016. Thank you all readers who have been supporting and reading my blog all these while.

Here's wishing all of you Happy New Year and a greater year ahead!

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After 2 years of blogging...

Time really flies... It's been more than 2 years since I started blogging and this blog has grown tremendously and I have also grown as a person too. I'm a person who likes to reflect and think a lot so here's this post on my thoughts for the past 2 years. Some of you may have followed my blog since the early days and I thank each and everyone of you for reading, recommending my blog to your friends and family, sharing on social media and showing your support with words of encouragement either through email or comments on my blog. This blog has officially crossed 2 Million page views and I'm deeply humbled by the readers who supported the ideas that I write.

There are ups and downs to blogging. Fortunately, the experience for me has been a more positive than negative one. I've heard of bloggers who get criticised so badly that they decided to give up. Thank God nothing of that sort happened to me. I've been quite lucky that people have mostly been quite kind to me. The past 2 years plus was an amazing journey. Being a blogger exposes me to a whole lot of things, meeting up quite a number of people as a blogger even though I'm still anonymous on my blog.

My blogging experience has expanded far beyond just the online world. Right from the start, I thought blogging was just something that I'll do at home, writing at the comfort of my bedroom and nothing else. I was completely wrong. I had so much more experience through blogging than just typing away on my keyboard.

Through my blog, I had the opportunity to experience things that I would not have been able to experience if I was just a normal salaried employee in Singapore. The best part of it was meeting new people and discussing on how to spread the importance of financial literacy better. I still believe that if we have the knowledge and build good financial habits from young, we will be much better off and avoid all the financial sufferings later. Credit, debt and retirement issues are still causing a lot of problems for many families because of a mismanagement of money.

I've met up with people who are passionate in bringing financial literacy to the next level. People from various government ministries, educators, investors, businessman, financial bloggers, finance professionals, students are part of the groups of people whom I've met so far. I am careful to meet only those people who are sincere in bringing good to the society through finance and not just about making money.

Earlier this year, I had the chance to work and interact with NTU interactive investment club all thanks to my cousin who introduced me to the club and link me up with the people there. I had the opportunity to contribute and I personalpy saw how young people's lives can be impacted in the areas of financial planning. Students as young as 13 were able to understand the importance of financial planning through games and competition.

I've been busy with lots of things in my life. Working as a freelance mortgage consultant was a role that I took up a few months ago which has given me a lot of experience working with various banks and understanding how mortgage loans work. I could help people get the best rates for their housing loans and at the same time earn some extra money also. Besides this, in July this year, I met the love of my life. Yes I've been dating and in love for the past few months. It has been an amazing journey with her, creating our own experience and memories. I want to thank my precious girlfriend for being who she is and supporting me, encouraging me all these while.

As you can see, money is not the most important thing in my life. Experiences are far more important than what money can bring. However, money is the most basic for our livelihood. I always say take care of the money and you can then pursue the more important things in life without having to worry about money.

The end of the year is coming. Its the festive season as we celebrate Christmas, the season of giving, and cross over to the new year 2016. Have your life been good for the year 2015? Even if its not, I hope all of us will look forward to a greater year in 2016. Happy holidays ahead!!

My First Experience Speaking as a Blogger

Last week on Saturday, I presented a topic on accumulating wealth for your future to a small group of people at an event organised by a group of young working adults who have the heart to reach out to young people to increase financial literacy. There were 3 speakers and each of us presented for 30 minutes followed by a forum where the audience could ask us questions.

This picture was taken just before I went up to the hot seat:

Even though I've been writing on financial stuff for the past 2 years, giving a talk on finance is still my first time experience. I would never have thought that one day I would stand up on stage to inspire people on the importance of financial planning.

The main gist of my speech is to change our mindset towards money. I said that if we can get money out of our lives, we would be able to pursue the more important things in life. Many people are just too burdened by money problems where they cannot pursue their real life purpose.

I shared a video which showed that kids will always smile when asked what they want to do for their future while adults feel stress when they think about their future. Kids would say their dream is to help others while adults will aim for money, status and material possessions.

Have money also must have time, have money also must have health, have money also must be happy. These were the thoughts I implanted to the audience last week. If we pursue money and end up sacrificing too much of our time, our health and our happiness for it, then it doesn't make sense at all.

So what's the strategy to have both money and time? The answer: "financial independence or freedom". The way to gain financial independence or freedom is through creating passive income. When we can live on our passive income, we are said to have achieved financial independence. Even when we are not at the financial independence stage yet, having passive income still allows us to have a little more freedom in life. It helps to lessen our burden in life. I shared on my journey in creating passive income and how it is possible to do it.

Lastly, I shared on 3 simple ways to create passive income. I've actually wrote quite a few articles on passive income on my blog before so its really nothing new for readers who've been following my blog.

What are the 3 simple steps?

1. Start saving up to buy assets

We always need to start with saving money. I spoke about auto transferring your money to another bank account. I've listed down the steps to set up an auto fund transfer. You can read it in this post: Readers' Challenge - Cutting Down Your Expenses in 2015 To Save 50% of Your Money

2. Learn how to create passive income

Passive income can come from different sources. I shared 5 of the more common sources where passive income can come from. They are: "properties, stocks, bonds, intellectual property and business".

3. Start as early as possible

Compound interest is powerful. Albert Einstein describes compound interest as the eighth wonder of the world. Learn more about compound interest in this post: The benefits of investing when you're young


Overall, it was a good experience speaking for the first time on finance. Thanks for those who came up to me after my talk and gave me encouraging words. Securities Investment Association of Singapore (SIAS) was there too and they kindly invited me to speak for a youth event which they would be having later part of this year. I guess this won't be the end of my speaking engagement now...

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Income and Expenditure From January to April

Its the time of the year again to review my income and expenses for this new year 2015. Reviewing my financial situation once every 4 months is certainly not too much work to do. The bulk of the work will be the recording of my income and expenses everyday in order to track it. This is what I've been doing for the past 4 years.

Here's the familiar chart which shows my financial journey from January 2013 till now:

The year 2015 has been a good year for me so far. I've all along set out to create passive income apart from the income I have from my job. Passive/other income has been rather consistent for the past few months. In April last month, passive/other income increased substantially which was a surprise. This came from dividends of the many st

As the saying goes, when our income increases, our expense increases as well. Last month, even though passive/other income increased, expenses increased as well due to my phone dying out on me and I had to replace with a new one. One thing to confess is I succumbed to the temptation of buying the latest Samsung S6. However, I could still save more than 100% of my salary just because I created passive/other income. This is what I wrote in a previous post: Spending on Luxuries The FIRE Way

Moving Forward

Creating multiple streams of income is what I've been trying to do since 3 years ago. After entering the workforce, I realised nobody is immune to the fact that we could lose our jobs anytime. I've seen a few instances of restructuring that caused hundreds of people to lose their jobs. It could be worse when a financial crisis hits. Having multiple streams of income will cushion this impact of stress in the event we lose our income.

Another reason for creating multiple streams of income is for financial independence or freedom. Not only will I not be afraid if I lose my job, I also have the freedom to choose whether to work or not to work. This is the freedom of choice. For my life, I realised that after I have more passive/other income, I no longer worry about money matters. It gives me more freedom to spend knowing that my financial state will still be in good state even after spending on luxuries.

Moving forward, the way to create more passive income is to save up and invest more. Right now, I've only invested about 40% of my investment capital in the stock market. If I bump it up, passive income can be doubled. With a savings rate of >100% or close to 100%, my money grows faster every month and year. The next move is to reinvest the passive income so it gets compounded. However, to invest heavily when the market is at a high will not be a wise move. I will invest more when some opportunity presents itself.

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Related Posts:
1. Income and expenditure update for the past one year plus
2. How I Amassed More Than $120,000 After 4.5 Years of Work

How I Amassed More Than $120,000 After 4.5 Years of Work

Is it possible to save up $120,000 in just 4.5 years of work? Just a few days ago, I was doing a financial health check for myself using an excel spreadsheet which has since became my best friend for financial planning. I was surprised that after adding up, I had more than $120,000 (Inclusive of CPF). How did it happen?

In this post, I'll show you what happened over the past 4 years plus and try to think back on what I did to accumulate more than $120,000. If you think that I started with a high paying salary, you're wrong. I started with just $1700 per month back in October 2010 as a diploma graduate and to make things worse, I had to pay close to $20,000 for my part time university course fees all within the 4.5 years.

How did the $120,000 came about?

1. 5 figure savings before I started working full time

I saved up about $10,000 before I started working full time. The money was saved up from the allowances given to me by my parents while I was still a student, saved up from the many part time jobs which I worked as a student, and saved up from the NS allowance which I got.

$10,000 is not a huge sum of money bearing in mind that it was saved up over many many years. But, it is the habit of saving up in my younger days which made it easier for me to accumulate $120,000 earlier than later.

2. Monthly and Yearly Savings Goals

Is it that hard to save $120,000 in 4.5 years? If we break it down, to have savings of $120,000 in 4.5 years, we need to save about $30,000 a year which is $2500 a month. Most of us will not be able to save $2500 a month when we just started working.

Thus, besides having monthly savings goals, yearly savings goals would make more sense for most of us. If we factor in our bonuses and other income throughout the year, it may just work out to an average savings of $2500 a month.


3. CPF contributions helps us to accumulate more

I know there are many negative sentiments on the CPF out there. But, the truth is the money in our CPF accounts are part of what we have. We contribute 20% of our salary to our CPF accounts and our employer contributes an additional 17%. This adds up to a saving of 37% of our income which is quite a significant amount. Currently, I have more than $30,000 in my CPF OA account in just 4 years of work. This will come in handy when I need to buy a house in the future.

Moreover, CPF gives interests in the range of 2.5% to 5%. Right now, I can receive about $2000 in interest on a yearly basis.

4. Increase income and savings exponentially

My salary has increased more than 60% over the past 4 years. This is more than 15% increase every year. I've also built up additional income through stocks investing and writing. As I earn more, I can save more which leads to both income and savings increasing exponentially.

Most of the time, we spend more when we earn more. That is perfectly normal but we have to bear in mind to control such that the increase in spending does not exceed the increase in income. If we earn $300 more this month, we may want to increase our expenses by $100 but should not increase by $300 or more.

5. Save more than 50% of income

We can save almost 100% of our gross salary if we save more than 50% of our take home pay. Confused by this statement" Don't worry, let me show you an example:

Let's assume we earn a gross salary of $2500 per month currently. Our take home pay after deducting 20% for CPF would be $2000. If we save 50% of this $2000, it is $1000 in savings in cash. The 20% we contribute to our CPF is $500 so that is additional savings. Our employer contribute another 17% which is $425 as savings in our CPF accounts. Adding up all of this, we get $1000+$500+$425= $1925. When we save 50% of our take home pay, we can easily have a savings of $1925 per month.

Saving 50% of our take home pay:

Gross Income	Net Income	Expenses	Cash Savings	CPF employee	CPF employer	Total Savings
$2,500	$2,000	$1,000	$1,000	$500	$425	$1,925

$1925 is a savings rate of 77% from the gross salary of $2500. If we can save 50% or more of our income, accumulating wealth is not difficult.

I generally save more than 50% of my salary and in certain months, I could even save close to or more than 100% of my income due to the passive income which I've built.

Here's my income and expenditure chart for 2013 and 2014:

Let me summarise on how the $120,000 came about in 4.5 years:

• Save up early in life even when you are still studying. If you're a student, you can save from your allowance and part time jobs. Aim for a 5 figure savings. 
• Set monthly and yearly savings goals. 
• Remember CPF is part of your savings too. It helps us to save for a house so we do not have to worry about it
• Increase income and savings. Save more when you earn more. Create passive income.
• Save more than 50% of income to accumulate wealth faster. A 50% savings on our net salary plus 37% savings of our gross salary in CPF adds up to a total of 77% savings altogether on our gross salary. 

Throughout the past few weeks, I've heard a lot of feedbacks that young people are pessimistic for their future. They are worried that they would not have enough money for their lives. I hope that through this post, young people would feel more optimistic for their future. There is no lack of money when we set our path right.


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Related Posts:

1. Save 75% of your income to retire in 7 years
2. Income and expenditure update for the past one year plus

A Personal Message To My Readers

I have been so busy the past 2 weeks that I didn't manage to write a proper post for this week. As such, I thought of just writing a personal message to all of you here during my lunch break at work.

I am mostly anonymous on my blog but in recent times, I've started to slowly meet up with people out there and reveal my true identity. More and more people have come to know of my blog and while talking to a few friends recently, I mentioned its getting more scary that people all around me are reading the stuff that I write. I have friends and family members coming to tell me that their friends are also reading my blog and I see my own friends sharing my posts on Facebook as well. One of the most surprising thing was I got to know that one of my articles was actually used as reading materials in a local university.

The articles I write caters mainly to young people as what many of you might have realised. I know that finance topics can be quite complicated so I always try to keep things simple. I like simplicity in life.

This year, I will be even more busier with events, writing more articles, more networking sessions and meet ups and speaking engagements. I would never have imagined that I would get involve in all these 2 years ago. A passion, which started the blog, to reach out to young people, had created opportunities for me. I had the chance to meet up with high profile and influential people which was a humbling learning experience for me.

I always say that finding your passion in life is important. It does attract opportunities into your life and it also attract successful people into your life. Money comes after that. Talking about money, just this 2 months alone, my estimated passive and extra income is set to cross over 1.5k now.

Some of you may be experiencing financial difficulties in your family which made you realise the importance of financial planning. Some of you may have gotten yourself into financial problems because of bad financial decisions in the past. But, no matter how big your problem is, always remember to look ahead to a better future. Change the way you think, change your lifestyle, choose wisely the people whom you associate with and you'll be on your way to success.

Chinese New Year is just around the corner. Here's wishing everyone Gong Xi Fa Cai!! Enjoy the reunion, the gatherings and the holidays!!

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Reflections for Year 2014: A Year of Amazing Experience

This is the first time i'm writing my reflection for one full year of blogging. SG Young Investment was started in June 2013. Till now, it has been just 1.5 years. The experience so far was just unbelievable that I thought I've been a blogger for much longer than that.

Never would I have expected that a blog which started out of nowhere could survive till today. I really have no idea what got this blog started. Perhaps its the desire to share on finance and investment. But, I wasn't really investing a lot of money back then in 2012 and in fact was just recovering from losses I had back in 2011. It was only in 2013 that I got back the confidence in investing and made some money. Looking back, it took me almost 2 years to come back again.

My first post was on My investing journey. I read my own writings again and it was just a sharing of my story in the stock market. Reading it made me think back on what I had gone through. In an instant, more than 1 year had passed.


Blogging Highlights of 2014

Took more than 6 months for the blog to reached 100,000 page views which I wrote a post on it on 2nd February 2014: 100,000 page views! This was right after Chinese New Year.

It quickly went pass 1 Million page views on 30th October: SG Young Investment crosses 1 Million

Writing on HDB, Condominium and marriage

I went on to write on topics such as buying a HDB flat, buying a condominium, cost of getting married. Researching and writing on these topics actually helped me to see what I need to plan ahead for. Naturally, because young people are worried about all these costs, these blog posts attracted a lot of views. I hope the posts have helped you plan better as it has helped me too. When we know the numbers and can see ahead, the future doesn't look that scary any more.

Writing on CPF and attending events

Another highlight is the post on the CPF. This was a hot topic among Singaporeans this year. I wrote a simple posts on the CPF minimum sum and CPF life. To say the truth, I have very little knowledge on the CPF prior to writing that post. It was only after hours of reading up that made me understand it better. After that, I was invited to the Forum on CPF and retirement adequacy. This was my first event attending as a blogger. Some other bloggers were there too but I didn't get to meet any of them as I only know that they were there after the event. Later on, I also went for the CPF Focus Group Discussion. It was fulfilling to contribute and interact with the other participants who were there.

Meet up with other bloggers and making new friends

Making new friends was one of the highlights too. From commenting on each other blogs to chatting on Facebook to meeting up face to face. It was great to be able to meet up with like minded people where we could just talk for hours and hours.


My Financial life in review for 2014

For the year of 2014, my active income increased, passive income increased while expenses remained stable. Actually, expenses did increase also but at a lower rate. I've been writing on passive income and this is the result of creating other streams of income. You can see it below from the green bar. This is a distinct difference from 2013 where there is very little passive income.

For the year of 2014, passive/other income has been quite consistent except for the months of Jan, Feb and June. This income comes from adverts such as Google adsense, sponsored articles, direct banner adverts and dividends from stocks. All in all, this income adds up to $3028 for this year.

On average, I've invested about 20k in the stock market this year. I've increased my stocks portfolio to 30k as of today and would probably increase again next year. This still makes up about 50% of my investment capital only.


Promoted and graduated from University

Besides focusing on passive income, I did not forget about my active income as well. This year was a tough year considering I was still studying part time for the first half of the year. But, I was still able to manage everything well and got promoted. Bonus was also better for this year.

Another relief is I finally graduated from the part time degree course which I was taking. This freed up a lot of my time for me to do other things such as meeting friends and writing more. I also took more time to reply the emails from you guys. I just checked and realised I've received more than a thousand emails so far. It's becoming a part time business to manage now.


Meeting new friends

This year is a year of meeting new friends. Through events, I got to network with more professionals. In summary, I got to know a lot more people who are passionate on finance and investments. Its amazing that as I set my path on the world of finance and investment, I start to know all these like minded people as well. Its the law of attraction at work. That is why if we want to attract positive people into our lives, we should also be positive.

As mentioned earlier, I also met some of the other bloggers. As for readers, I recently met the first one just before Christmas. This year, I been contemplating with the thought of forming investment groups for people to learn and interact together to know other people who are into personal finance and investments as well. There are students and young people who want to start managing their money better but do not really know where to start. Forming this group will create a platform for new friendships with like minded people. Let's see how this will develop.

That's all for my year in 2014. Its just 1 day away to the year 2015. I hope you had a good 2014 too. If not, always look on the bright side and 2015 will be a better year.

Happy New Year!! 

Related Posts:
1. New year resolutions and investment strategies for 2014
2. Reflections for 2013

Planning For Retirement Isn't About Sacrificing All of Your Current Lifestyle

The word retirement in itself sounds old. It seems like only old people talk about retirement. You may ask "Why do I have to plan for retirement when I'm so young?". Some may say "Retirement planning means sacrificing my lifestyle now. I have to save money and spend lesser to save for retirement". Sacrificing their current lifestyle is probably not what young people would think of. Come on, its at this young age that we should enjoy life to the fullest isn't it? If we're old, we won't be able to enjoy that much already.

Credit: pixabay.com

What if I told you today that retirement planning is not about sacrificing all of your current lifestyle? You don't have to hide at home and eat bread everyday just to save money for your old age. To me, that doesn't make sense at all. What I want is whilst planning for retirement, I can still dine out at restaurants, travel overseas to explore the world, probably own a car (maybe not one in Singapore) and even live in a moderate luxurious house. How do we do that?

You see, many people thought that they need to live a very cheap life so that I can have more money in the future. But to be honest, even though I plan for retirement, I still own smart phones like many other people out there (but I don't change phones that frequently now). I still eat at restaurants. I still travel overseas. I also wear branded clothes (not a lot though). I have a shirt from Levi's, jeans from TopMan, shoes from Pedro and a bag from Zinc. I'm definitely not living a cheap life. Although we should not spend too excessively, we don't have to sacrificing everything either. If you've read my previous article, you would remembered I mentioned that frugal and cheap is different.

I still could travel to Taiwan for an overseas trip:

I dine in at restaurants like every other person:

Dim Sum anyone?

Korean BBQ Yum Yum

Japanese Ramen. Love the thick soup base 

Japanese Deserts. Green tea Ice cream

Deserts again

I even had a VIP experience at the Singapore F1 this year (It was free!!):

Sky Terrace. So relax...

Some weird looking food. Its actually chilli sauce inside the small syringe. Very smart idea.

As you can see, the life I live, although not too luxurious, is not too cheap either. Well, I didn't started out like this. I was saving excessively at the start. It was needed to get me on a head start. As time goes by, things got better and I could be less tight with money. But, I still eat at hawker centres and coffee shops everyday for normal meals. It doesn't make sense to eat at restaurants for every meals every single day. For young people, its ok to go clubbing and have drink to chill out but if you're doing it too frequently, then I can't help you if you got no money left at the end of the month. If you've read my financial goals page, you would know I've set myself a target to save 100k by the age of 28 which is less than 2 years from now. I am confident that I can still meet that target even while living a moderate life. What is the key to planning retirement while still enjoying life?


Here are 4 points to retirement planning without sacrificing too much of your current lifestyle:


1) Increase your Income

You've probably heard a lot of people tell you that you need to decrease your expenses to save more money for retirement. While saving money is important, we don't want to save every cent and be a miser or live a cheapskate life either. If we have all the money in the world but no friends or family to share it with, then there's no point in it.

We need to socialise. To socialise we need to spend money. A young person's greatest asset is he or she can increase income easily. Go for courses, upgrade your skills, get a degree, excel in your work and you can easily get a higher income.

You could even earn some side income by starting a part time business. Are you good in web designing? You could earn some money by promoting your skills and doing freelance web designing for other people out there. Are you good in drawing and art? You could earn some money drawing and selling your art pieces. Are you good in music? You could teach some music lessons for some side income. The ways to create more income is endless.


2) Create passive income


While active income is important, we don't want to work and work until we have no time to spend it or no time for our friends and family members. Creating streams of passive income through stocks investing and through creating products and intellectual property is a good way.

The key is to create money for your luxuries and enjoyments. These are your wants instead of your needs in life. Your savings goals cannot be changed. If you've set yourself a target to save 100K in 5 years, you know you need to save 20K a year. That 20K is non negotiable. Now if you want to have some luxuries, learn to create the money you need. Create passive income and let the passive income pay for your luxuries.

If you have 100k, invest it in a well diversified portfolio of income and growth stocks with an average dividend yield of 5% and you can get $5000 in dividends every year. This $5000 probably will be able to let you live a better life without affecting your financial plan.

For the whole of this year till now, my passive income came up close to $3000. This is not a very huge sum of money but it allows me to be less tight with money and I could use it to give my friends and family a treat. I could even go on an overseas trip and still come back in a good financial shape because of this extra passive income. That's the essence of having passive income.


3) Start early and you don't have to save too much

Retirement planning should never start when you're near retirement age. The reason is simple. The later you start, the more money you have to save and the more sacrifice to your lifestyle you have to make. I learnt this through my colleagues when I started working 4 years ago. Many of them are in their 40s and even 50s. Most of the time they will regret on not starting to plan early. Time lost can never be earned back. I know it sounds depressing for people who are older now but if you're really at an older age but still want to plan for retirement, then you have to catch up at a much faster rate. Its still possible to plan but its just harder.

Using numbers, we will be able to see and understand better why starting early is better. If you start saving $1000 monthly at the age of 24, you'll have $384,000 by the time you're 55. But if you only start saving $1000 monthly at the age of 35, you'll only have $240,000 by the time you're 55. Well, you may say $384K and $240K is still not enough for retirement in Singapore. You're definitely right. Which brings me to my last point below.


4) Invest as early as possible

All of us know we must invest early to see our money grow at a compounding rate. Even though all of us learnt the effects of compounding since secondary school days, most of us actually do not realise its significance impact on our money. Let's use the example of saving $1000 monthly again. If you save $1000 per month at age 24 and invest it at an investment return of 4%, this money would have grown to about $750,000 by the time you're 55. This is double of the $384,000 hardcore savings if you did not invest at all.

Investing seems complicated to a lot of people. When I tell my friends about the importance of investing, most of them know that but are clueless on how to actually do it. For those who are not into picking your own stocks for investing, you would be better off just investing in index funds instead of buying other funds or unit trusts with high management fees and charges.

I wrote an article on index funds investing here:  Investing Basics - Low Cost Index Fund investing (Passive Investing)

Now, even POSB and OCBC offers index fund investing. Read the above link to know more about it.

The even more interesting part is $1000 per month savings invested at a 4% rate of return will grow to more than $1 Million before you reach age 65. 4% rate of return is not too difficult to achieve. I hope this will be enough for our retirement by that time.

Below shows how a person's wealth will grow if he saves $1000 per month and invest at a 4% rate of return:

Age	Income	Expenses	Additional Yearly Savings	Total Savings	Investment returns
24	$36,000.00	$24,000.00		$12,000.00	4%
25	$36,000.00	$24,000.00	$12,000.00	$24,480.00	4%
26	$36,000.00	$24,000.00	$12,000.00	$37,459.20	4%
27	$36,000.00	$24,000.00	$12,000.00	$50,957.57	4%
28	$36,000.00	$24,000.00	$12,000.00	$64,995.87	4%
29	$36,000.00	$24,000.00	$12,000.00	$79,595.71	4%
30	$36,000.00	$24,000.00	$12,000.00	$94,779.53	4%
31	$36,000.00	$24,000.00	$12,000.00	$110,570.72	4%
32	$36,000.00	$24,000.00	$12,000.00	$126,993.54	4%
33	$36,000.00	$24,000.00	$12,000.00	$144,073.29	4%
34	$36,000.00	$24,000.00	$12,000.00	$161,836.22	4%
35	$36,000.00	$24,000.00	$12,000.00	$180,309.67	4%
36	$36,000.00	$24,000.00	$12,000.00	$199,522.05	4%
37	$36,000.00	$24,000.00	$12,000.00	$219,502.93	4%
38	$36,000.00	$24,000.00	$12,000.00	$240,283.05	4%
39	$36,000.00	$24,000.00	$12,000.00	$261,894.37	4%
40	$36,000.00	$24,000.00	$12,000.00	$284,370.15	4%
41	$36,000.00	$24,000.00	$12,000.00	$307,744.95	4%
42	$36,000.00	$24,000.00	$12,000.00	$332,054.75	4%
43	$36,000.00	$24,000.00	$12,000.00	$357,336.94	4%
44	$36,000.00	$24,000.00	$12,000.00	$383,630.42	4%
45	$36,000.00	$24,000.00	$12,000.00	$410,975.64	4%
46	$36,000.00	$24,000.00	$12,000.00	$439,414.66	4%
47	$36,000.00	$24,000.00	$12,000.00	$468,991.25	4%
48	$36,000.00	$24,000.00	$12,000.00	$499,750.90	4%
49	$36,000.00	$24,000.00	$12,000.00	$531,740.94	4%
50	$36,000.00	$24,000.00	$12,000.00	$565,010.57	4%
51	$36,000.00	$24,000.00	$12,000.00	$599,611.00	4%
52	$36,000.00	$24,000.00	$12,000.00	$635,595.44	4%
53	$36,000.00	$24,000.00	$12,000.00	$673,019.25	4%
54	$36,000.00	$24,000.00	$12,000.00	$711,940.02	4%
55	$36,000.00	$24,000.00	$12,000.00	$752,417.62	4%
56	$36,000.00	$24,000.00	$12,000.00	$794,514.33	4%
57	$36,000.00	$24,000.00	$12,000.00	$838,294.90	4%
58	$36,000.00	$24,000.00	$12,000.00	$883,826.70	4%
59	$36,000.00	$24,000.00	$12,000.00	$931,179.77	4%
60	$36,000.00	$24,000.00	$12,000.00	$980,426.96	4%
61	$36,000.00	$24,000.00	$12,000.00	$1,031,644.04	4%
62	$36,000.00	$24,000.00	$12,000.00	$1,084,909.80	4%
63	$36,000.00	$24,000.00	$12,000.00	$1,140,306.19	4%
64	$36,000.00	$24,000.00	$12,000.00	$1,197,918.44	4%
65	$36,000.00	$24,000.00	$12,000.00	$1,257,835.17	4%

Retirement planning isn't as scary as what we think. Some people assume that they need to live a extremely cheap life and forgo their lifestyle if they start retirement planning. That is absolutely not true at all unless you are living a lifestyle of luxurious houses and cars that is far above your means. The first step you need to take is to determine the amount of money that you want to save. Be ambitious. Go ahead to plan for a savings of 1 Million. Then work downwards to determine how much you need to save each year to achieve that amount.

If you find that your current salary is impossible for you to reach 1 Million, then you need to start the 4 steps which are: "Increase Your Income", "Create Passive Income", "Start Early" and "Invest Early".

No matter how old you are now, start planning right away. Even though the older you get the harder it is, starting late is better than never. For young people, starting early makes the process less painful. Put aside the notion that you need to sacrifice and live like a cheapskate just for retirement. It doesn't work this way. If you plan later, you might have to become a cheapskate but not if you plan early.

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