Money story Archives - Page 7 of 27

May 21, 2021July 8, 2022

Late Starter to FI Series #29 – Hi Fi-ing Auntie

Welcome to the Late Starter to FI series!

I am a Late Starter – I discovered the FIRE (Financial Independence Retire Early) movement when I was 47. This was way later, I thought than others who seem to have it all together in their 20s and 30s.

Since I started to write about my own journey, I have discovered there are many more Late Starters like me, yay! It’s such a relief knowing I’m not alone.

I want to share our stories, our unique perspectives and show that it is absolutely not too late for us.

So in this series, I particularly highlight those of us who start our FI journeys in our 40s, 50s and 60s. And explore questions such as ‘where do we start’, ‘can we still retire early(ish)’, ‘what are the specific challenges for us late starters’. We look at our past, not to castigate ourselves but so that you can learn from us.

Please join in the conversation in the comments below. I encourage you to share your story if you fit the profile of a late starter. You absolutely don’t have to be a blogger or podcaster to share your story.

Please email me at info@latestarterfire.com or connect with me on Twitter or Facebook or Instagram.

If you’ve missed any of the previous stories, you can catch up here – Late Starter to FI series

And if you can’t wait to start on your own FIRE journey, check out my step by step ultimate starter guide, Late Starter to FIRE Action Plan.

Disclosure: Please note that I may benefit from purchases made through my affiliate links below, at no cost to you

Today’s late starter is Hi Fi-ing Auntie from Singapore, whom I first connected with on Facebook and later on Twitter.

Auntie is our first late starter from Singapore and second from South East Asia – this goes to show that FIRE is not limited to residents in the US (where it seems the majority of FIRE folks live!)

She shares her journey at Hi Fi-ing Auntie and calls herself “Auntie” because in her own words …. “For those who are not familiar with “Singlish” (the brand of English spoken in Singapore), an “auntie” is a middle-aged unfashionable woman concerned with ~~cheap~~ ~~bargains~~ value-for-money purchases, gossips, and all sorts of useless facts that may be useful to… someone. In that sense, I’m not really an auntie, but I own the stereotype and proudly call myself one.”

You can connect with Auntie on Twitter too.

Take it away, Auntie!

A little about me

I live in Singapore and am in my late 40s. I am a Communications manager in the transport industry. I live in a government (HDB or Housing Development Board) flat that is fully paid-up with my partner who is an engineer.

You need to understand that I’m by nature a very risk-averse and lazy person. This explains to a large extent how my FIRE journey evolved.

Light bulb moment

My light bulb moment was reading “Millionaire Teacher” by Andrew Hallam and checking out his blog articles. This is the first time someone presented a plan for someone based in Singapore.

I was in my early 40s and recently made redundant when I came across these resources. After more than 15 years, leaving the company prompted a reassessment of my financial situation and retirement goals.

I realised that you can never depend on remaining employed until the official retirement age. Ageism and age discrimination is a huge problem in Singapore, particularly for women who tend to assume the bulk of parent-care. At the back of my mind, I knew I had to deal with this but the redundancy forced me to be more serious about my retirement plans.

Are you READY to TAKE ACTION today?

🔥 practical tips & strategies

🔥 step by step guide

🔥 cut the overwhelm, second guessing & paralysis by analysis

My financial situation at light bulb moment

I have been very thrifty ever since I started working after graduation (more than 20 years ago). After graduation, I paid down my study loan very quickly and proceeded to accumulate cash. I saved $100k before I was 30.

However, options for investing were thin at that time and it was between the local stock market (stock picking), unit trusts (high fees) and investment-linked insurance policies. Online brokers were just coming on but the process of getting an account, transferring funds and trading was so complicated that I did not bother, not to mention my concerns about the security of my funds.

So I continued to accumulate savings but in the meantime, started stock picking some blue chips on the Singapore stock market. However, being a lazy person by nature, I did not bother to monitor the shares much. So my portfolio continued to languish at the $100k mark for a very long time through stock splits, share distributions and other corporate actions that diluted the value of my shares.

When I was made redundant, I received a huge payout which I diverted to my mortgage, paying it off in full. Now I realise it’s a financial mistake but it is a decision that I do not regret.

First steps on the path to FI

My very first step on the path to FI was to cancel my investment-linked policies and put the redemption sum into a global stock index fund.

I sold a large portion of my Singaporean shares and put them into a local stock index fund.

And diverted almost 70% of my emergency funds into investments. That still leaves me with one year of savings.

How my relationship with money has changed

It is changing very slowly.

I tend to equate a money value with everything. For instance, if I wanted to start a hobby, I would think about whether or not I could eventually monetise it. It skews my values and I have missed out on so much because there is always a money element in my considerations.

Thanks to Ramit Sethi (author of I Will Teach You to be Rich), I realised it’s costing me enjoyment in life. This tendency is hard baked into my psyche and today I am constantly reminding myself to let go of this money mindset.

Other factors affecting my finances

My mother had been working up until around 3 years ago so she had savings of her own. However her mental health has been declining and I foresee that I will need to chip in in some way in the future. If there is a reason why I feel the pressure to continue earning an income, it is her.

I am divorced and do not have children. Not having children really frees up my financial resources and mental space to take care of my own retirement.

My current financial situation

Andrew Hallam introduced 2 portfolios – the Couch Potato Portfolio and the Permanent Portfolio. Both are suitable for lazy folks like me. I decided on the Couch Potato Portfolio as I did not relish the idea of holding gold.

In short, the Couch Potato Portfolio’s fund distribution is:

50% stocks, 50% bonds

So the way I customise my Couch Potato Portfolio to fit the Singapore context is as follows:

Stocks

Local: I invest about 10% of my annual fund allocation via a retirement vehicle into a Singapore stock index fund. There is a tax benefit in doing so – you can lower your tax bracket. The flipside is that you cannot withdraw from this account penalty-free until after the statutory retirement age (62 currently).

Currently, the Singapore stock index fund returns around 7% annually

Global: I invest 40% of my annual fund allocation into global/US index funds. The historic returns of the funds are around 11%

Bonds

In Singapore, we have a compulsory retirement savings scheme called the CPF (Central Provident Fund). Every working person must contribute 20% of their salary into this fund, with the employer matching up to 17%. So I have a healthy balance in the CPF at the moment. However, I cannot withdraw from the fund until I am 55 years old. It pays 2.4% to 6% interest at the moment.

Many Singaporeans use their CPF to buy homes, which to me jeopardises their retirement. This strategy may work in a booming market where one can hope to sell their properties at a profit but who can guarantee that? In fact, I feel that using CPF for housing makes one tend to overextend. I used the CPF when I first bought my flat but quickly paid off the sum within 6 months.

Currently my portfolio stands at 40% stocks, 60% bonds / CPF.

I hold one year of emergency funds that can be stretched if I am really, really thrifty.

Currently I have zero debt other than a monthly balance on my credit card which I pay off in full.

Specific challenges or advantages of starting late

One of the challenges is the fear of losing it all by changing our financial pathways. For example, it was difficult for me to decide to drastically reduce my emergency funds and divert the money into stocks.

How far along the path to FI am I now?

I am at what some people call LEAN FIRE now. But it’s not my ideal state of retirement. So I hope to be able to continue adding to my retirement funds until I am 55.

Feeling Overwhelmed?

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How Covid 19 has affected my strategy

Lower job security and possible loss of income are two concerns. The industry my company is in is directly affected by travel restrictions. It has been going through major retrenchments. I am mentally prepared that I may be affected by it.

I would consider adding more to my emergency fund to stretch it to 1.5 years perhaps. But the investment strategy would not change.

What's next?

Because I am an employee, my financial plan is dependent on me remaining employed. So this is one weakness in my plan. And because of the prevalence of ageism in our society, sometimes, retirement is not up to me!

If I somehow lose employment, I would still want to continue earning an income. So instead of a stable full time job, I might switch to contract work which usually comes with lower pay.

I am aiming for a very comfortable retirement at 55 – I feel impatient!

Back to Latestarterfire

Thank you, Auntie for sharing your story and strategy to achieve FIRE at 55. Congratulations on making the necessary changes to ensure you’ll arrive at your destination.

I think the fear of losing one’s hard earned savings if we were to change our financial paths later in life is very prevalent among late starters. And yet, if we carried on as usual, our hope for financial independence at retirement is also diminished.

Singaporeans have long been envied for their CPF – I didn’t realise that employers provide a match of up to 17% – what a fantastic start to retirement savings!

I am hoping that as more of the world is vaccinated, your industry will recover soon and redundancies will not continue. Keeping my fingers crossed for you.

I love that name – Couch Potato Portfolio – I too am risk averse and lazy so this would have appealed to me immensely had I come across it earlier 🙂 I’m off to read Millionaire Teacher now!

Do you have a Couch Potato Portfolio?

February 18, 2021June 29, 2021

Finances after 40

This is the last year of my 40s … yikes!

Two years ago, I wrote a guest post for The 76k Project for her Finances after 40 series – an interview series for women in their 40s, discussing what they’ve learned and what they would’ve done differently now that they are in their 40s.

76k has moved on to an exciting new project – Financial Superstar where she will encourage and support you on your journey to be a financial superstar. I have her permission to publish my guest post here.

It’s kinda fitting as I leave my forties behind?

Disclosure: Please note that I may benefit from purchases made through my affiliate links below, at no cost to you

Waking Up to an Epiphany

I dreaded my 47th birthday – I don’t know why, precisely. Just that I woke up one day, really stressed and anxious that I would be retiring with not ‘enough’. At this stage, I did not know what my ‘enough’ was or when I could possibly retire.

I panicked merely at the thought of retirement being on my horizon. After all, retirement was for the oldies, not me. What would I do in retirement? What if I hadn’t saved enough for retirement? How do I know how much I would need after I retired, to sustain me for the rest of my life?

Coincidentally, ABC TV was advertising a new podcast about personal finance aimed at women, hosted by comedian Claire Hooper. As I quite liked Claire Hooper as a comedian, I started listening. It was fun and hilarious and I felt hey, this personal finance thing wasn’t that hard or intimidating after all.

Then I was introduced to my first personal finance book, The Barefoot Investor by Scott Pape, a phenomenally popular personal finance guru who has been described as having a cult following. From him, I learned about investing in low cost Listed Investment Companies (LICs) and Exchange Traded Funds (ETFs).

While googling “how to calculate how much I need in retirement”, I stumbled across the FIRE community and discovered there were people who retired in their 30s – I mean, wow! Here I am, panicking about retiring at 65 …

As I read more and more blogs and listened to podcasts, I wondered if I too could achieve FIRE even though I was such a late starter. I decided to try anyway.

I must admit, I do feel old in this space of young 20s and 30s who are crushing it with frugality, minimalism and living with intention on their relentless journeys to FI. It is one of the reasons I started blogging – I want to add an ‘older’ voice to the mix as someone who discovered FIRE later in life. Many of the bloggers and podcasters in their 40s have already reached FIRE – that was how it came across to me, anyway.

(Edit: I have since come across many late starters like me and am grateful that many of them have shared their stories in my Late Starter to FI series)

Feeling Overwhelmed?

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Looking Back ... My Twenties

I spent my twenties and thirties working very hard – lots of long hours – 12 or more hour days, 60 hour weeks or more, earning a decent wage as a health professional. I never earned six figures but was privileged to have a company car to use. This benefit alone has saved me thousands of dollars in petrol, insurance and registration fees over the years.

My only financial goal was to save enough to put down a deposit for a house. Owning a house was every Australian’s dream – maybe it still is, but stratospheric property prices have made it very difficult for today’s 20-somethings. My parents, especially my Mum, had also drummed that into me: owning your house provides you with security. So I saved for this deposit.

In the meantime, I also spent lots of money. Even back then, property prices were increasing rapidly. I would be discouraged by what I could afford and after so many open house inspections and missing out at auctions, I would decide to go on a holiday instead – to New Zealand, China, Europe, Singapore, Malaysia, the Whitsundays …

I was and am still not very good at delayed gratification. (Edit: I am much better at it two years later!)

My Thirties

Eventually, I saved enough to buy a townhouse in my early 30s and put down a 40% deposit. My mortgage was very manageable and I had no other debt. My salary was deposited directly into my loan account. And as long as I was ahead in my repayments, I could withdraw the extra payments whenever I needed it.

My parents taught me to be debt averse, to never borrow money for depreciating assets such as a car. They nagged me to pay off my mortgage quickly. But I was also seduced by the conventional wisdom that everyone has debt these days, and that it is perfectly acceptable to enjoy yourself while paying off a mortgage. After all, one has to live.

So I continued to go on holidays – to Italy, France, London, the US. And I proceeded to fill my house with stuff – I loved buying things ‘for the house’. I enrolled in short courses – baking and cake decorating, mainly.

The biggest mistake I made then was to stop making extra contributions to my superannuation, my retirement account. My employer continued to make their compulsory contributions. I was content now as I had achieved my goal of owning a house (even though I still owed the bank at this stage).

(Edit: You can read more on My Money Mistakes)

My Forties

In my early forties, an opportunity came up to part own a business – I took it. I still worked part time in the original business. Financially, it was a mistake. I used the equity I’d built up in my house. It was tough – we did not make any money. But I learned that I could live with a lot less and still survive. After 3 years or so, I walked away from the business and returned to my previous full time role.

I’ve since paid off my mortgage completely and can really say I own my home. This is probably my biggest financial achievement. It was such a weight off my shoulders. I know there are great debates in the FIRE community about whether to own or rent. For me, the security that comes with a paid off home is priceless. No one can kick me out of this house. I will always have a roof over my head.

Being single also plays a big part in me wanting to be financially secure. There is no backup plan – I am it. I cannot rely on anyone else. At times, this is scary. Especially as I age.

In your forties, retirement is looming whether you like it or not, whether you are prepared for it or not. Health care and aged care are potentially two big unpredictable upcoming expenses. In Australia, the health care system is very good (particularly if you compare it with the US, sorry!) but I would still buy private health insurance for peace of mind. I do not want to depend solely on the public system and be at the mercy of waiting lists for surgery.

Aged care is another matter. The federal government funds part of the cost but as yet, I do not understand how it works fully. The standards of living arrangements differ greatly, with some new facilities looking like 5 star hotels while others are run down and dilapidated. I would like to be able to choose a level of care that I am comfortable with, not be forced to live in a run down facility that smells of urine.(Edit: I wrote about this in Will My Money Last Till I Die?)

Additionally, there is dementia in my family so at the back of my mind, I wonder if I too will be susceptible to the disease. If dementia is in my future, then I need to make doubly sure that at the very least, my finances are in order and that I will not be a burden on anyone.

Are you READY to TAKE ACTION today?

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🔥 step by step guide

🔥 cut the overwhelm, second guessing & paralysis by analysis

Advice for Other Women

I drifted through life, particularly after I bought my house. So my advice is don’t drift! Pay attention to your life, your finances, your relationships, your work. Stay engaged.

Looking back with perfect hindsight, I should have continued to salary sacrifice into my superannuation. That would have boosted my retirement savings. I weep now to think of the opportunity costs with compound interest.

As I did not care or think about my finances then, I certainly never cared about what sort of investment vehicle my superannuation was in. Even though it was my money, it didn’t feel like it. Because I wouldn’t be able to touch it till I turned 60 – and hey, that is decades away. I still have time to worry about such boring things.

I should have chosen the high growth option and be 100% invested in equities. Instead I just left it in the default balanced option. Ah, another lost opportunity.

So my advice to young people in your 20s and 30s is to think about retirement, whether or not you want to retire early. Keep chipping away and save towards that retirement – contribute towards whatever retirement accounts you have at your disposal. Let compound interest do the hard work. You won’t then wake up in a cold sweat at 47 years old wondering if you have saved enough to retire at 65.

Looking Forward

Strangely, taking action to sort out my finances after discovering FIRE in my late forties has led me to question how I live my life and where I would like my future to be heading.

This is totally unexpected. But it makes perfect sense. Why else would you agonise over ways to increase savings rate, frugality, side hustles, living with less crap if you don’t know how you want to use that money?

I have always been a workaholic – work always came first. I am not overly ambitious but I do want to do a good job and be good at my job.

However, the stress is now getting to me. I honestly don’t know if age is an issue or that I’ve come to my limits after years of working in a demanding job. Or perhaps I am less resilient because I now yearn to retire. And I’m sick of being time poor – coming home mentally and physically drained every night. (Edit: I have transitioned to a less stressful role)

So I am learning to live with intention and carve some time out of my day/week to think about what I want out of life and dream a little.

This is the decade where I realise there is no dress rehearsal for life. This is it.

It goes without saying, that it has been a huge learning curve since discovering the FIRE movement. It’s not just the numbers and how to nuts and bolts of the various strategies. That is the ‘easy’ part for me – automating savings and investments then leaving time to do its thing … (Mind you, there is a lot of anxious calculation and recalculation!)

The hard part is having the courage to live the life I want to live (and find out what that is!) This is where the FIRE community is really brilliant – there are so many inspiring people living lives that inspire me and that I am continuously learning from. I am looking forward to the future now, not with trepidation and fear, but with enthusiasm and zest.

Retirement, here I come!

Final Thoughts

When I wrote this post, my retirement plan was still a jumble of figures and what ifs and maybes. Since then, I have a more concrete plan to retire at 55.

I can’t help but reflect on how anxious I was then, compared to how I feel now, nearly 3 years down the FI path.

And the last thing I want to say is that despite starting late on the FI journey, it is possible to make incredible progress, just by taking action consistently along the way.

I’m so looking forward to more sunsets in exotic locations 🙂

Category: Money story

Late Starter to FI Series #29 – Hi Fi-ing Auntie

A little about me

Light bulb moment

Are you READY to TAKE ACTION today?

My financial situation at light bulb moment

First steps on the path to FI

How my relationship with money has changed

Other factors affecting my finances

My current financial situation

Specific challenges or advantages of starting late

How far along the path to FI am I now?

Feeling Overwhelmed?

Use this FREE Checklist to start your journey to Financial Independence

How Covid 19 has affected my strategy

What's next?

Back to Latestarterfire

Do you have a Couch Potato Portfolio?

Finances after 40

Waking Up to an Epiphany

Feeling Overwhelmed?

Use this FREE Checklist to start your journey to Financial Independence

Looking Back ... My Twenties

My Thirties

My Forties

Are you READY to TAKE ACTION today?

Advice for Other Women

Looking Forward

Final Thoughts

How did your finances change in your 40s compared to your 20s and 30s? Do you regret anything?

Are you READY to TAKE ACTION?

Where can I send your
Monthly FIRE Goals Plan?

A little about me

Light bulb moment

Are you READY to TAKE ACTION today?

My financial situation at light bulb moment

First steps on the path to FI

How my relationship with money has changed

Other factors affecting my finances

My current financial situation

Specific challenges or advantages of starting late

How far along the path to FI am I now?

Feeling Overwhelmed?

Use this FREE Checklist to start your journey to Financial Independence

How Covid 19 has affected my strategy

What's next?

Back to Latestarterfire

Do you have a Couch Potato Portfolio?

Waking Up to an Epiphany

Feeling Overwhelmed?

Use this FREE Checklist to start your journey to Financial Independence

Looking Back ... My Twenties

My Thirties

My Forties

Are you READY to TAKE ACTION today?

Advice for Other Women

Looking Forward

Final Thoughts

How did your finances change in your 40s compared to your 20s and 30s? Do you regret anything?

Are you READY to TAKE ACTION?

Where can I send your Monthly FIRE Goals Plan?

Where can I send your
Monthly FIRE Goals Plan?