Financial Planning for Singles

[koxinga]

What to look out for?

I am in my mid-20s at the moment, drawing average of 2K per month. I am making some plans for staying single.


I dun have much cash now so I am concentrating on savings n and some investing. Looking around 7-10 years down the road, is property a good idea? I hope to have my own place eventually I guess.

[blacklotus]

Originally posted by koxinga
What to look out for?

I am in my mid-20s at the moment, drawing average of 2K per month. I am making some plans for staying single.


I dun have much cash now so I am concentrating on savings n and some investing. Looking around 7-10 years down the road, is property a good idea? I hope to have my own place eventually I guess.

My advice:

Read Bolts 7 steps to financial freedom. Then implement it.

In brief, what I did:

1) Record all down your expenses daily and diligently. Do it for about 3 months. You can then gauge where your money is going to.

2) Start by going thru the list and cut down on the non-essential items. e.g. I used to buy all the hottest movies on DVDs every month. Then I realised I only watched them a few times only. And watching movies alone is very boring. So now, no more DVDs except for Pixar and Disney animations. That means 2 DVDs per year only. :)

3) Once you have a proper budget : How much to spend on food, transport, entertainment, phone bills, internet, etc, you can then know how much you can save every month. Only when you know how much you can save every month, can you then plan for your future.

4) Save about 6 months of your gross salary in cash in liquid deposits for emergency use. That means no long term fixed deposits. 1 month or 2 fixed deposit may be ok, but no longer. Remember, the key here is LIQUID funds. 6 months is an estimate and is dependent on your monthly expenses. e.g. If you are earning five figures every month and your expenses every month comes out to only 1.5K including insurances, you can safely just save 1 month in liquid expenses and use the rest for investments.

5) Drop the idea of owning a car in SG unless your company is fully paying for it or you have a big family or you wanna show off your wealth. There are better ways to use of the S$100K than to buy a piece of scrap metal. Remember, I can buy the same piece of scrap metal for half the price in Australia and own it for more than 10 years. In Australia, I can enjoy driving for hours on end without the need to stop at a stupid traffic light every 30 seconds.

In SG, make use of the affordable public transport. My transport expenses if I take a cab 2x per day for 30 days = S$900 per month. Your running expenses from owning a car will be at least S$1000 per month, excluding the S$100K you have to pay for the car itself. Use the BMW way of transport - Bus/bicycle MRT walk. Good for your health and good for your wallet. When I do that, I cut down my travels expenses to about S$150 per month.

6) Wanna buy a property in SG, think HDB 4 room flat. 3 rooms is too small, and 5 rooms means minimal subsidies when the govt starts handing out goodies. However, this is only applicable if you can guarantee yourself a job for the next 15-20 years and if you can form a family unit which will last for the next 15-20 years too. When I say family unit, I don't mean just a wife/husband. It can be your parents, siblings or even relatives. But I stress the need for a family unit that will last at least as long you need to pay off the loans because I've seen too many friends whose marriages or relationships with their parents/siblings/relatives broke down and they are forced to sell the flat because they can no longer stand living with each other under the same roof.

If you cannot meet the criteria I list above, then it's better for you to stay with your parents and help them to pay the pub bills. This way, they are happy, and you can save your money for better investments that come along. If you insist on staying by yourself, then think about renting a place. But I strongly suggest you stay with your parents and make them happy by paying their pub bills rather than pay rent to outsiders. :)

As for buying private property, Do that only when you know you can afford it and not when you think you can afford it. And only buy private property in countries where the economy is growing or can grow and where you want to retire in the future, and not in countries where their glory are already passed but property prices are still ridiculously high. I am not going not name countries, but you can guess. :)

7) My favourite investments with my spare cash:
a) Fixed deposits in currencies that has depreciated alot due to temporary shocks but has lots of room to improve. In 1995, I bought US$. In 1998, I bought Indo Rupiahs. In 2000, I bought Anzacs. In 2003, I am buying Filipino Pesos.

b) Stock market investments in markets where I know the companies very well. That's means I am limited to SG and USA markets. But that's more than enough targets for me to chase.

c) Property purchases in countries that have a strong rental market and is still relatively cheap. This again means growing economies, not stagnant or dead economies. My current targets: A country where Singaporeans have a love/hate relationship for the past 38 years and countries where alot of stupid Singaporeans think maids come from. I used to like Australia property, but it has appreciated too much for my comfort. I had cashed out on one and kept one for my retirement, which I am renting out to earn some A$.

Good luck in your effort to become happy. And yes, luck plays a very important part in our lives on whether we are happy or not. Even Wee Cho Yaw said so himself. And he is born rich. :)

[cho09]

wow... theres so much :eek:

[koxinga]

1) I have done that. My breakdown is 40% (expenses) +40% (savings) +20% (parents). It is fairly accurate and is a constant theme over these past 5 years that I am working. I am a low- expense person. I dun own a car and do not intend to, I do not club, drink nor smoke. Running is a cheap way of keeping healthy.

I am actually hoping to buy a 3 room around 30+. But u are right, property is a major investement and a money sucker. I am trying to realise this dream. I dun see myself with anyone or my parents beyond that.

How to move overseas? Employment is a big concern. I have friends in Aus and the complaint that finding a job is sometimes a problem. Aus is a good place to retire to. But work?

[blacklotus]

Planning for one's future is never easy, but I don't consider it a chore. After all, it does affect one's own happiness in life. :)

Originally posted by cho09
wow... theres so much :eek:

[blacklotus]

Originally posted by koxinga
How to move overseas? Employment is a big concern. I have friends in Aus and the complaint that finding a job is sometimes a problem. Aus is a good place to retire to. But work?

Aus is not a good place for us SGers to go look for a job anymore. It's expensive and the job market is like SG - all being outsourced to cheaper countries like China and India.

When I went in 2000, yes it was a good place to look for employment and buy cheap properties. But not now. Timing is indeed everything.

[blacklotus]

Originally posted by koxinga
1) I have done that. My breakdown is 40% (expenses) +40% (savings) +20% (parents). It is fairly accurate and is a constant theme over these past 5 years that I am working. I am a low- expense person. I dun own a car and do not intend to, I do not club, drink nor smoke. Running is a cheap way of keeping healthy.

I am actually hoping to buy a 3 room around 30+. But u are right, property is a major investement and a money sucker. I am trying to realise this dream. I dun see myself with anyone or my parents beyond that.


At 35 as a single, you qualify to purchase 3 room resale HDB flats, provided there is no change to govt policy by then.

As for investments, how much do you know about financial reports and the stock market? And how much risk are you willing to take?

"Safe" stocks: Banks, CapitalMall, SMRT, Singpost and the upcoming Power stocks. e.g. SingPower.

"Risky" stocks: SIA. Because the airline business model has changed.

"Dangerous" stocks: Construction sector stocks. e.g. BBR. Or newly launched tiny cap IPOs since they have no track record at all. (3 straight years of profitability is not a track record.)

As for unit trusts, as bolts said, since picking the right fund is as difficult (if not more so) as picking the right company to invest in, you might as well do the latter. Furthermore, costs of buying shares is definitely more transparent and cheaper. You pick a stock to buy, you pay for it and the commissions to SGX, broker and gst up front. End of story.

As for unit trusts, after buying the stupid funds, you have to pay them "management fees" every year you hold the stupid funds even though the fund values keep dropping. :angry:

Never buy unit trusts if you are a smart investor. Do you see a Warren Buffet counterpart in smart funds investing? Enuff said.

[koxinga]

hmm.. I am aware of the HDB policy. I guess I will wait until then. The last thing I want is to be tied down by a fixed asset so soon.

As for stocks, yup, I can take risk. Got my fingers burn afew years back so to speak and I have learned by lessons. Not into unit trust. It is a waste of time and I trust my own judgement better. Having ur fingers burn is a good experience.

Yes, I can read and understand a basic finanical report. Did my MBA recently. :D

Currently, my investing strategy is based on my funds breakdown. CPF is going to REITS(Accendas/Fortune) and bluer that-thou blue chips like SPH. May consider SGX after their special dividend, at around $1.3

The rest of the cash is tied down in stocks for punting and mid term. Creative 50 -> target year end/X'Mas period. PKTech-> end of the month.

I only have liquidity of around 2-4 months at anyone time.

[chipmunk]

Originally posted by koxinga
hmm.. I am aware of the HDB policy. I guess I will wait until then. The last thing I want is to be tied down by a fixed asset so soon.

As for stocks, yup, I can take risk. Got my fingers burn afew years back so to speak and I have learned by lessons. Not into unit trust. It is a waste of time and I trust my own judgement better. Having ur fingers burn is a good experience.

Yes, I can read and understand a basic finanical report. Did my MBA recently. :D

Currently, my investing strategy is based on my funds breakdown. CPF is going to REITS(Accendas/Fortune) and bluer that-thou blue chips like SPH. May consider SGX after their special dividend, at around $1.3

The rest of the cash is tied down in stocks for punting and mid term. Creative 50 -> target year end/X'Mas period. PKTech-> end of the month.

I only have liquidity of around 2-4 months at anyone time. U had not let go PKtech since the CE?

[chipmunk]

Ok here my case. Can help to advise on the route to financial freedom...

Receiving $420 monthly from MIndef as cheap labour for the next 10 mths. Saved ard $400 monthly from the National service allowance. Receiving a sum of another $500 from some trust monthly for the next 3 yr... ( This suM is untouchable as it will be used to fund my university tuition fee)

SO what are the things to look out for and where should i invest my spare cash.

[koxinga]

Originally posted by chipmunk
U had not let go PKtech since the CE?

Yup. I dun like to lose. I got 50 lots at 0.1 now. More than average out, I can cash in at a profit pretty easily now.

If i were u, I think u should concentrate on ur studies than play stocks. Else get something safe and reliable and park whatever spare cash there. Dun speculate. U are not working now and the last thing u should do is to get urself into debt.

[chipmunk]

Originally posted by koxinga
Yup. I dun like to lose. I got 50 lots at 0.1 now. More than average out, I can cash in at a profit pretty easily now.

If i were u, I think u should concentrate on ur studies than play stocks. Else get something safe and reliable and park whatever spare cash there. Dun speculate. U are not working now and the last thing u should do is to get urself into debt. Most of my stock are for mid-long term. Not for speculative purposes

[blacklotus]

Originally posted by chipmunk
Most of my stock are for mid-long term. Not for speculative purposes

I take it your mid to long term is 3 years and above.

If so, after saving aside a sum of money for emergencies, look at the safer stocks.

e.g. Singpost, SMRT, SingPower and SingTel.

1)Singpost - monopoly until 2007 and is profitable.

2)SMRT - duopoly. Price is now below ipo price of 61 cents. Profits should recover the next few months, unless SARS return again. But I'm sure SMRT transport fares will be going up to match NEL's.

3)SingTel - it's waiting to unload its ownership of Belgium Telco, but may have to wait. Optus recently paid money to settle out of court, but Australia's economy is again picking up. And broadband is a very profitable business with very little penetration yet.

4)SingPower - another monopoly, should be ipoing next year. Save your money for this stock if the current prices of the other 3 are not attractive to you.

I would also try to buy a bit of SGX if the price dips before the XD date. The dividend is very attractive, and although lots of "analysts" said this dividend has already been priced in, if the STI index breaks out of 1650 and hits 1800 in Dec 2003, those holding SGX will have a very good Xmas. :)

p.s. the same "analysts" also said the same bullshit about Natsteel when it was going for S$2.3 before XD. After XD and collecting a nice big dividend, the price is still at S$2.38 now. Goes to show you what these analysts know. All pian jiat pian jiat one. (pian jiat - Hokkien for cheating for a living)

Always take their views with a large tablespoon of salt, especially when the advice comes from house analysts.

I prefer to trust myself to do my own analysis and know my own risk appetite.

[chipmunk]

Originally posted by blacklotus
I take it your mid to long term is 3 years and above.

If so, after saving aside a sum of money for emergencies, look at the safer stocks.

e.g. Singpost, SMRT, SingPower and SingTel.

1)Singpost - monopoly until 2007 and is profitable.

2)SMRT - duopoly. Price is now below ipo price of 61 cents. Profits should recover the next few months, unless SARS return again. But I'm sure SMRT transport fares will be going up to match NEL's.

3)SingTel - it's waiting to unload its ownership of Belgium Telco, but may have to wait. Optus recently paid money to settle out of court, but Australia's economy is again picking up. And broadband is a very profitable business with very little penetration yet.

4)SingPower - another monopoly, should be ipoing next year. Save your money for this stock if the current prices of the other 3 are not attractive to you.

I would also try to buy a bit of SGX if the price dips before the XD date. The dividend is very attractive, and although lots of "analysts" said this dividend has already been priced in, if the STI index breaks out of 1650 and hits 1800 in Dec 2003, those holding SGX will have a very good Xmas. :)

p.s. the same "analysts" also said the same bullshit about Natsteel when it was going for S$2.3 before XD. After XD and collecting a nice big dividend, the price is still at S$2.38 now. Goes to show you what these analysts know. All pian jiat pian jiat one. (pian jiat - Hokkien for cheating for a living)

Always take their views with a large tablespoon of salt, especially when the advice comes from house analysts.

I prefer to trust myself to do my own analysis and know my own risk appetite. Thanks for your advice. :D

[koxinga]

take care when it comes to SGX.

[bolts]

The government slight singles. Their policy has always been oriented towards couples. The most glaring example is that silly HDB policy that only couples can buy HDB flats. I can go on and on about this. But, will leave this as it is right now.

koxinga, since you are young (25, rite?) you have a very good chance to become financially free. Actually, you are now in the top 10% of the SG population who actually have some kind of plan. If nothing else happens, you should be free by the time you hit 40. maybe earlier.

chipmunk, I think you are doing ok as well. keep learning. you'll get there.

As for blacklotus, I think you will probably retire in a few more years.

As for staying single, you'll never know when love will strike you. I was under the impression that I would have to remain single until I met my wife at age 29. The trick is this; you must be like the 'kelong' and not like the 'fisherman' when it comes to looking for a spouse. Here is what I mean,

if you are a kelong, you catch many fishes with your net. Then you choose the fishes with potential. So, what you do is you go on MASS dates (SDU is very good in doing this, and so is your circle of friends who can organise big, fun trips to Malaysia, Thailand etc with a few single members of the opposite sex). Then, you see if you can meet someone nice. I know this very well, because that was how some of my circle of frens got hitched.

A fisherman is this : you throw a line and then you wait for a fish to come along. After you catch it, you take it in and see if the fish is something u like. So, if you go on single dates, you are like a fisherman. It's harder to find a spouse. Single dates work after you have done your kelong thing, and when you looking to deepen your relationship.

Think about it for a while. Maybe you can organise a singles trip and get all your single frens to join in!

:D

As for me, I can only retire at age 45. Although my wife and I have high net worth (close to 2 mil), our passive cashflow is still not enough to sustain our lifestyle. The main reason is the properties we own are for living in, not for renting out.

[blacklotus]

I agree with Bolts assessment on being a kelong when looking for a relationship.

It's easier to become friends first then lovers later. The other way around usually doesn't work. :)

And in large informal gatherings, you get to see the persons as they are, and how they react and interact with people.

When we go for single dates, we will put up a facade to impress the other party. Too much wayang liao. We usually won't find out too much of a person this way. :p

[chipmunk]

Originally posted by blacklotus
I agree with Bolts assessment on being a kelong when looking for a relationship.

It's easier to become friends first then lovers later. The other way around usually doesn't work. :)

And in large informal gatherings, you get to see the persons as they are, and how they react and interact with people.

When we go for single dates, we will put up a facade to impress the other party. Too much wayang liao. We usually won't find out too much of a person this way. :p LOL becoming dating forum le.

[koxinga]

hahaha... u are so right chipmunk.

Being at this age and at this time, I gotta admit, finding a partner is not high on my mind. Most of my cohorts (friends from poly, uni) tell me the same thing, keeping their jobs is the only thing immediate thing on their mind.

I am lucky because as a civil servant, I have a stable if somewhat easy job with lotsa free time. But as relationships goes... I dun really like going out with people at all n hence I know I have no chance of meeting.

Sounds crazy, but I enjoy my life as it is right now. That special someone has to cope with me... which is abit difficult as most of my friends consider me abit oddball and dense.

Example, I do odd things like juggling and read books that most of my contemparies cough blood over. (History, literature, economics, politics, philosophy and sci fic). Finding someone that shares similar pursuits is very difficult. My auste approach towards life is also a turnoff.

[chipmunk]

Originally posted by koxinga
hahaha... u are so right chipmunk.

Being at this age and at this time, I gotta admit, finding a partner is not high on my mind. Most of my cohorts (friends from poly, uni) tell me the same thing, keeping their jobs is the only thing immediate thing on their mind.

I am lucky because as a civil servant, I have a stable if somewhat easy job with lotsa free time. But as relationships goes... I dun really like going out with people at all n hence I know I have no chance of meeting.

Sounds crazy, but I enjoy my life as it is right now. That special someone has to cope with me... which is abit difficult as most of my friends consider me abit oddball and dense.

Example, I do odd things like juggling and read books that most of my contemparies cough blood over. (History, literature, economics, politics, philosophy and sci fic). Finding someone that shares similar pursuits is very difficult. My auste approach towards life is also a turnoff. How come u are already a graduate given ur age of 25?

[koxinga]

I am a part-time degree/master graduate. Simple? Actually not yet finish the MBA. Still stuck at my thesis. I chiong all the way continously studying from NS until now.

we are getting abt OT here, its abt money, not the life of koxinga so lets get back to the moolah.
:cool:

I still dun feel good abt my current position. Even if I can save a average of 10k a year, it still doesnt leave me with alot in 10 years time. I am of course, taking the approach that my pay/savings remain constant, excluding returns from my investments. This is to me, the baseline. Any extra will be from the above.

[bolts]

There are 4 areas where you can accumulate wealth;

1. Business.
2. Intellectual Property.
3. Real Estate.
4. Investments.

What areas does your plan cover?

I will tell you what areas my wife and I have for our plan;

She's in business, while I take care of investments. Next year, our intention is to go into real estate and invest in rental properties. We have multiple sources of income to help us achieve our financial freedom.

The more sources you have, the faster your achieve your dream.

[koxinga]

the problem is, u need money for all 4 options to start with real estate and investments as the biggest money sinkholes of them.

The chinese saying "money begets money" describes it best.

Business seems to be the only option left.

[bolts]

Originally posted by koxinga
the problem is, u need money for all 4 options to start with real estate and investments as the biggest money sinkholes of them.

The chinese saying "money begets money" describes it best.

Business seems to be the only option left.

Not really, for $300 you can buy a lot of Hongguo. Is that big money sink holes?

[koxinga]

Originally posted by chipmunk
U had not let go PKtech since the CE?

Cleared PKTech today at a profit
:D
Bought 50 lots at 0.1, let go at 0.12.
Looks like going to the next speculative favourite.