13 August 2014

It's Never Too Late to Plan For Your Retirement

Welcome to my blog here, the objective of this blog is to educate investors in managing their hard earned money, that is why you hardly see that I post out technical chart for short term trading purpose, as I believe that there is a time lag effect. What I encourage most of the investors is that to separate themselves from speculating and focus on the real value of the investment.

One of the reasons why we wish to have investment with our excess cash is to better utilize that amount of money other than just save it into the bank account and earn for the tiny interest. Maybe you think that the government should do something in order to protect our retirement life, such as giving subsidies in healthcare sectors, but it is time for us to play our part here to continue with our retirement lifestyle by making smarter choice.

According to some experts, it is wise to set your spending budget to about 50% - 70% of your net income before you get retired. So let's say if you earn about 5,000 upon retirement, you may require about 2,500 - 3,500 in order to have a comfortable retirement life style. CPF minimum sum may help you to have a sustainable retirement fund, but I believe it is still not enough for you to retire comfortably. So to achieve that, you may need to Do It Yourself for excess cash that you have in your hand.

I believe that real estate is a good investment tool for most of the people here, especially for those whose risk and return tolerance level is medium to low. The average compound annual growth rate is around 7% for residential buildings over a period of 40 years. Part of the reasons is due to the inflation that reduce money purchasing power (In other words, our monies could buy lesser things if we just keep our monies in bank saving account over a very long period). The best thing about real-estate investment is the "leveraging" factor. With 10% - 20% upfront, you could purchase up to 5 times or 10 times worth of value real estates. If you could cover up the monthly mortgage loan payment with the rental income, you can be very sure that your real estate value could increase after a very long period of time. However, we may not be able to cash out from real estate investment if we do not rent it out to others. Furthermore, there is additional charges related to real estate purchases that may hinder you from invest for short period, say 3 - 5 years time. You may also find it troublesome in selling the properties at the price you wish during the bad time, as it is not liquid asset.

Besides the real estate, shares investment seems is a better choice for average investor if he knows how to perform the stock diversification across different market / sectors. He can reduce the standalone risk by putting lesser than 10% for each counters that he have in his stock portfolio, so that he can still sleep soundly without worry of disappointing performance of a single counter. But you cannot avoid the market risk by investing in the stock market. The first step the newbie investor can do is to find out the Top 20 richest man list in the country, find out what stocks / listed companies they own, and further dig out the details of what makes them remains richest for so many years (It could be due to the fact that the counters / listed companies that they own are fabulous business that worth to be hold for long term and it would reduce default risk or standalone risk as those businesses normally have stronger fundamentals compared to other counters/businesses). The smartest investor is business-like investor. You have to find out the reasons of buy and sell yourself, so that you can still be calm during the bull market or bear market. Just to give you a tips, majority of the richest guys in Singapore started off from real estate business / investment first, thanks to the government's efforts to create such as safe and dynamic environment for the MNCs to operate their business here.

Always start your retirement planning with small investment amount (in order to gain the experience of investing) but with big picture in your mind. It's never too late to plan for your retirement. Always remember that Fail to Plan is Plan to Fail.

1 comment:

  1. What I encourage most of the investors is that to separate themselves from speculating and focus on the real value of the investment.what is retirement planning solution


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