Which type do you belong to?

There are different types of Finance people. There’s those who live, breathe and eat Finance, they’re excited and consumed by the theories, news and happenings. There are those who are in it to get well-paying jobs. There are those who wants a piece of the action and those that are pressurised to be in Finance because everyone else is doing it.

There are those who likes to read, practise it but will rather not work in the field. On the other hand, there are those who wants to work in the field but do not have the capabilities, skills, knowledge and even luck.

Then, there are some who simply cannot understand the finance concepts and yet, is working in the field. Some who hate and abhor it and some who simply cannot be bothered by it.

Which type are you ?

When are we going to see our first million?

I think I have neglected this blog but I can’t seem to find anything worthy to say. I always have this great idea after a while, I’ll just think that it’s too immature to be blogged.

Anyway, I did up a life savings plan a few months back. The plan was to save $500 monthly, which is a total of $6000/annum. At 10%  annual compounded rate, I’ll take about 30 years to earn my first million. That’s when I’m 50+? years old?

Wait wait, that is too long. Way too long. So…  I did up this excel table. (For the purpose of the sole discussion of saving up to a first million, let’s assume a world of no inflation.)

First, to speed up my million dream, I have to save more. So what’s an attractive sum? Let’s say $15,000, which sounds a lot but is honestly managable. Back to the $3000 monthly pay, you try to save up $1000 each month and an extra $3000 from your bonus, angpao and whatever windfall.

A $15,000 savings yearly, compounded 10% , your first million will happen in 21 years and notice, the second million occurs at year 27. It takes about 6-7 years to double your money. At 15% annual rate, you will be a millionaire at 40 years old. What I want you to notice is… it only takes you another 5 years to double that. And another to double that $2M. Amazing, isn’t it?

Well, this is hardly a new concept. In fact, this is one of the earliest concept I learnt in finance.

The rule of 72 : To double your money, just divide 72 by the rate of return.

Now now, the next thing we need to worry is… HOW DO WE GET A 10% or 15% return?

On occupations.

So, someone said that I should introduce myself more. Well, I am a product of a local business school and was schooled in pretty decent schools along the way. I enrolled into the school and fell in love with Finance. But finance whiz-kid, I’m not. Instead, I am the girl who struggles to do her every assignments and no matter how much she studies, always clams up during exams. But exams are a thing of the past.

I am looking forward to start work and weighing my options on job offers. I can’t decide what I want to do and which job will be right for me.

As I said, I am a product of a local University and in my school, almost everyone is obsessed with entering a bank. It’s scary, sad and I say this with no judgements. I don’t know if this is part of becoming an adult but whatever happened to dreams and passion?

I have a friend who gave me this fantastic piece of advice and till today, I think it still is the best piece of career advice I have heard. “Doesn’t matter what you do, just make sure you like it. As long as you’re the top 5% of your profession, you have it made.”

 

On CPF contribution and personal taxes

I just thought about this, while checking up on CPF and personal tax.

Imagine you are earning 3,000 a month, so that’s about 36,000 per annum.

You have to make a contribution of 600 per month to CPF, 7200 annually. At 2.5% interest rate (the bank rate for Singapore), at the end of the year, your balance is about 7380.

Then, you have to pay your taxes. First 30,000 is taxed at a gross rate of $350. The next 6,000 is taxed at 5.5%, which means your personal tax expense is $680 per annum. So that’s roughly about 1.89% of your income.

Considering that you have no other savings, your CPF contribution yields roughly… 0.61%? That’s quite miserable isn’t it? In case you cannot see the percentage figure in decimals, it’s 0.0061.

I admit that this reasoning has many flaws and loopholes. For example, you can actually get a higher return of 4.5% if you lock your money into your SA account, instead of OA. (Capped at the first $60,000, i think. Need to research more.) But If your money is in SA account, it’ll be locked and you can’t use it for property.

The point is… this makes me realise how important it is to invest your money and get a decent amount of return.

What do you think? I’m on my way to getting more opinions from fellow friends that I respect

On motivations.

People often ask me why I am so motivated financially and some thinks that I am scary. Others commented that I take the fun out of life and relationships by being so precise in my planning. I have plans because I don’t want to go off course but that is not to say that I will follow every single detail. Life is unpredictable and I know that more often that not, plans do not turn into realities. But I’d still rather have some plannings because even if I don’t reach my destination, I know I should be halfway there.

But back to the discussion on motivations. I am motivated because I never had a silver spoon in my life. When I was younger, I used to envy rich kids who had everything, whose parents can supply them with their material wants. This does not mean that they’re happy or that I’m unhappy with my parents. Far from it.

But my point, succinctly, is that money/wealth gives you choices and I want to have those choices. Be it for myself, for my parents, for my future family. I want to provide my parents with the lifestyle they never get to enjoy, I want to own the rights to having choices and if I have kids in the future, I want them to have the priveledges I never had.

But to achieve this, I need to practise self-restraint, to endure some pain and to be rational and meticulous. I understand that and I am willing to give it a shot.

Introduction to the blog.

Why, hello!

I am not sure who will actually read this but I doubt anyone will. Let’s start the introduction. I was previously blogging in 2 other blogs before I become disconcerted at how voyeuristic people are and how a lot of people think they know me just because i blog. But that’s life and the trappings of having a blog.

For this one, I want a fresh start. This blog aims to be more serious, more mature and will relate my life after ending my university education. It’s time to be responsible because I had lived in regret for the way I lived the past few years. It’s now time to make amends and start planning early.

This blog attempts to showcase my thoughts on financial planning, on investing, on making your money work for you and on planning. Plan now, save now and earn big. Y’know, the works? But more importantly, this blog hopes to be a reminder to myself on the financial goals I want to achieve, so that I won’t succumb to emotional spending and extravangace – the trappings of credit and instant gratification.

So, I have some ideas that I will like to share and maybe they will be more relevant to the female pysche. Emotional spending, shopping sprees, compounding, plans and being dependent without a man.

To sum up, I do not aim to be an analyst or a superior voice in Finance and the works but I want to make the theories simple for everyday use and for the average person (aka, myself). Personally, this is my diary to remind me of the financial milestones I had set for myself. =)