Early Retirement vs Semi-Retirement

Early Retirement
A study conducted by Melbourne University shows that after working for intense long hours will cause brain damage. For workers age 40 years old and above, the ideal number of working days should be just 3 days per week. This will keep the brain active yet will not over exert oneself due to undue stresses.

Seriously, who does not want to work just 3 days a week? I always believe in there is a price to everything. If you work for 3 days a week, I will think this is considered a form of part time work or sharing of work. Part time work can be considered as a subset of semi-retirement. Be it semi-retirement or early retirement, you need to be financially and psychologically prepared. Before you think about early retirement, you need to envisage what sort of lifestyle you want to live when you are retired. With this in mind, then you can work backwards to decide what is to be done to get you there.

Step 1 - Set your retirement goals. When will you like to retire? At what age, will you like to retire? How long will you be retired for? During your retirement, what sort of monthly income or draw down from savings will be required?

Step 2 - You need to work out your personal balance sheet to understand your personal assets and personal liabilities. You can also make use of CPF retirement calculator or some of the online retirement calculator tools to make some simplify forecast and estimation. You can also determine the differences to make up for in order to achieve your retirement goal.

Step 3 - If there is no gap to fill, congratulations, you are well prepared for retirement. If not, proceed to Step 4.

Step 4 - You may want to increase your time frame for wealth accumulation, delaying your retirement age.

Step 5 - You may want to reduce your post retirement monthly income or draw down amount per month.

Step 6 - Reduce your present monthly expenses to increase your monthly savings.

Step 7 - Increase the rate of return of your investment. Remember higher return comes with higher risk.

Most of the people feels that to retire is to stop all forms of work, they will depend on their passive income to maintain their lifestyle to enjoy the finer things in life. If your definition of early retirement is to lead a more prudent lifestyle, reducing your expenses which is more practical and sustainable.

Semi-Retirement
Most of us in their mid-life will strive to have work life balance to have more quality time with the family. I am sure you too will like to have early retirement. The age group between 40 - 50 years old will be commanding the highest income level during their working lifetime. However, this is the age group where their family expenses will be  highest as well due to children education, ageing parents and home mortgages.

If you will like to maintain a certain level of lifestyle and your savings cannot last for the entire duration, you can consider another form of retirement. You can find a part time job to keep yourself active while maintaining your lifestyle.

Many Singaporeans are over dependent on their CPF as the main source of retirement fund. However, you can only draw down after an age of 65 years old. If you wish to retire before 65 years old, then you need to have other source of income.

For early retirement and semi-retirement, the expense will be at a similar level compared to your working days. Early retirement is to enjoy the same level of lifestyle, usually people will not reduce their expenses. In the worse case scenario, it will be even higher than before.

In order to retire earlier, you need to do the following:

1) Be very thrifty
2) Invest alot

When it comes to investment, do not have a gambling mentality in order to make money in the shortest time, thinking this will allow you to retire earlier. What if you are wrong? This will set you back in terms of your retirement fund and retirement age.

If you are 40 years old this year and will like to retire at 55 years old, you have 15 years to save and invest to lead the retirement life you desire. If you have already accumulated sufficient CPF, you can consider contributing to your CPF voluntarily to earn a higher interest and reduce your taxes.

3 Tips towards Semi-Retirement
1) Ensure that you have sufficient savings to cater for retired lifestyle. A part time job will have lesser income than your full time job. You can depend on your part time job to save up on your retirement fund.

2) Part time employee may not have health and medical benefit, you need to ensure that you have sufficient health and medical insurances. A drastic medical event may wipe out your retirement fund if you are adequately covered by insurance.

3) Part time income may not be stable and as high as full time employment. Therefore you need to change your spending habits. For example, cook your own meals or eat mixed vegetables rice instead of going to posh restaurants.

Finding Value in Today's Market

We are officially in a correction which can go up to 19% drop in terms of share prices. If the market price drops >20%, then we are into a bear market. What should value investors do at this moment?

Let me share some of the thought processes:

1) The Sale that you have been waiting for is here, it does not mean that you need to enter the market but with cash seating on the sideline means you can deploy them when the stock price comes to your ideal price range. This means that you have done your homework, created your watch list of stocks and understand what are the intrinsic values. I am going to deploy the last 100k into different tranches to absorb China A50 ETF and Tracker Fund to focus mainly on China and Hong Kong market. The dividend will allow my wife to settle some expenses such as charity and bills. I will not deploy margin money for correction. I will only deploy it when there is a bear market and there is a strategy to peg to margin to make it work.

2) Investor Mindset - Investing is all about managing your emotions. That is the reason why the gurus always say a good temperament is essential for investment. Everyone likes to think they can be a contrarian but when the fire is here, everyone shit in their pants. Especially with the past 1 week, there is so much volatility in the market, the market can drop 1000 points on alternative days, you will not know how to react. I will like to take this as a form of training. You need to be calm and see this as an opportunity to re-enter the market. We need to control our natural human instinct to flee when there is danger and avoid the herd mentality to follow everyone to sell when the market prices hit low.

3) Be like an ostrich - I recalled just 2 years ago when I thought with the rising interest rates environment, OCBC should benefit from it and I took a huge stake in OCBC (about 30% of my portfolio back then). Then OCBC started to drop till $8+ as Singapore STI took a correction. It was very painful to keep looking at your price and your total portfolio value. The pain of losing money is much more severe than the feeling of winning money.  Prices will not miraculously increase in a downturn just because you keep pressing the refresh button. The only thing that holds is Value which is not based on market pricing. For example, Apple has its ecosystem of products and services in tact and a share price of USD 100 or USD 200 does not affect the business. In a market downturn, people are still buying iPhone X (maybe lesser). Focusing on value instead of just price itself, you can sniff out undervalue stocks and rebalance your portfolio. Mr Market is offering you a good price for these coming few weeks as a form of Ang Bao for Chinese New Year. For example, if you are yield player, Singtel is offering a pretty awesome 5% yield. Unfortunately, I have already deployed my cash into the market but the bulk of SGD 200k is been bet on a specific counter. I was lucky to consolidate the money before the correction into this defensive counter. So far it has corrected 7%. I will switch out to AAPL or a few other stocks depending whether there is sufficient margin of safety.  I have learnt in times of downturn, I will be like an ostrich, I will not check the prices and unrealised profit/losses. I continue to build my stocks watch list.

4) Find a Hobby or Things to do other than spend time looking at the screen - Do something that keeps your mind away from the market. It can be in the form of exercise such as cycling, running, swimming, etc. It can also be working hard at work. It can be spending more quality time with the family.

There are companies which counter the down trend and there are bargains out there. Hope you can find value stocks and enjoy life! Stay healthy, stay wealthy. Health comes first. Do not let the market affect your health. Close the screen and go exercise now!

Wealth Coaching 31st December 2017

I saw my friend post in a closed group for eCommerce and I privately messaged him. I asked how has he been and what sort of questions he has for eCommerce. I spent some time trying to answer him on the specifics of drop shipping business in terms of the challenges I experienced previously with my friends.

He shared that now he has two children and he wants to discover different sources of income to supplement his main stream of income. He has started online MLM and Shopify eCommerce store. In addition, instead of watching Korean dramas, he is spending time in front of his laptop thinking how to improve his sales. I applaud him for his attitude. I encourage him not to give up and continue to develop other sources of income. 

We chat using Facebook messenger to discuss about wealth and business.

I felt that I need to help more people to improve their lives, change their mindset, improve their financial literacy, create more businesses and crave their own destiny. This will make my life meaningful as well.  

Reflections 2017 and Plans for 2018

Reflections on 2017

This was the most turbulent year for me as I experienced retrenchment twice in a single year. Nevertheless, it was one of the most prosperous year. Looking at the start of 2017, JC Fund was standing at SGD 870k in total for cash and cash equivalent and at the end of 2017, JC Fund is at SGD 1,200k. I am estimating the capital gain (inclusive of dividend) to be about SGD 170k. Total return is approximately 19.5%. I took a very "kiasee" (afraid to lose) approach, trying to be conservative when everyone is aggressive. I hoard cash and re-balance portfolio. I don't think 2018 will be a stronger bull and I will be happy to consistently do a 10% return on JC Fund.

We have moved to our house for almost a year and we have fully redeemed the mortgage loan. It feels good to be debt-free as we do not have any stress on liability. At certain times, without the fear of a mortgage to pay for, I can raise my voice at my immediate bosses when I do not agree with them. Maybe that is the reason I will be seating at home in April 2018 without a job haha. Please do not follow what I have done unless you want to lose your rice bowl too. 

My priority towards work has also changed as I want to focus more on creating our wealth as we have our first pot of gold. I feel that I do not want to create assets for others by working as an employee. As an employee, I will be building their empire, making them wealthier at the expense of my time and health. 

Time is the most scarce element. We have limited time on this Earth. Please stop thinking linearly, exchanging time for money. Think non-linearly. Think leverage. 

My mentor approached me after knowing that I was retrenched on 22nd December 2017. He offered me the option to join him to start a hedge fund. The timeline is to apply for Registered Fund Management License in January 2018.

I am going to pump in 250k for working capital and the remaining JC Fund will be injected into the AUM. I will be one of the founder, taking the role of an investment analyst.

Currently we started discussion with fund platforms to understand in depth on the CAPEX and OPEX. My mentor has already started the process to understand various cost half a year ago. 

Next we need to draft out a compliance plan and business plan.

I spoke to my Managing Director on 28th December and he is a personal friend who brought me into the company. His uncle was the one who terminated me. He felt that this hedge fund business is feasible but I need to think of it the internet way where everything is free. He suggest the approach of “You make money then I make money.” 

1) make your business trustworthy- compliance and systems in place to safeguard the investors 

2) run the day to day business smoothly

3) bring in funding

4) continue to perform in terms of portfolio

5) set up processes to create a system

However, today on 31st December 2017, my mentor told me that his return this year is close to 30% after including dividends and his networth is close to SGD 4m. He is thinking of just retiring and manage his own fund. If that is the case, I need to rework my plans for 2018.

2018 Personal Goal

1. Improve investment skills 
• Read newspapers, books, articles, scientific/business magazines
• Key target for 2018 is to finish reading all my books
• Search and study companies on Qualitative and Quantitative 
2. Health - Exercise 
• Skipping x 300 x 3 times a week 
• 3 x rounds of training cycles x 3 times a week
• Chin ups x 10-20 x 3 times a week
3. Friendship 
• Meet friends to catch up for coffee

2018 Family Goal

1. Spend time to date wife 
• Have in-depth conversations
• Have couple time
• Plan short trips with wife to nearby getaways e.g. Penang, Bali 
2. Spend time with ah boy
• Teach and lead him
• Introduce him to play group
• Learn swimming
3. Family Dinners and Trips 
• Meals with Parents-in-law
• Trips with Parents 
• Monthly dinner with Family

Alpha Lab Investment Mastermind Group and Revelation

What do you do after work and during your free time determines how successful you will become in life. A few friends who are interested in investing came together on a Saturday afternoon to discuss individual investment approach, circle of competence and various stocks we are interested in. It has been very insightful and always refreshing to meet like-minded friends.

Going forward, we are going to share our individual research so that we can gain access to more good stocks. This can help us expand our warchest of ideas. Then when the opportunity presents itself, we can utilise our warchest of money to respective stocks.

After the event, I had dinner with my friend to catch up on his latest business endeavors. I shared with him our family project which is for my wife to retire in 4 years time. He pointed out that this should not be the goal post but I should look into the definition of financial freedom. 

Financial Freedom is when your passive income exceeds your expenses. 

I explained that my active income from Options Trading has reached about USD 2,500 and I hope to replace my work income so that I can stop working for someone. He reminded me of the original definition of Financial Freedom, I should work on getting the Options Trading income to exceed my total expenses instead.

I came home and reworked my household Cashflow Statement.

Total Monthly Cash Outflow S$6,207

Rental Income S$400
Dividend Income S$3,333 (Assume I deploy S$1m and just 4% yield)
Option Income S$3,712
Total Monthly Alternative Income Inflow S$7,445.83 

Damnit! We are already FINANCIALLY FREE! What a revelation!

Then I should be asking myself what I should be pursuing next - my passion. Recently, I am reading Ray Dalio - Principles and his definition of Work is to do something that you enjoy and be paid for it. Also, who you choose to work with and spend time together at work will determine your happiness.  

*Disclaimer - Option Income needs to be stable at this level. Losses will disturb this equilibrium. At the end, it is still active income. You can consider this as money you put in your Opportunistic Fund.

After thinking through, I will not just throw in my resignation letter on Monday, I will wait at least a few more months to make sure my Options Income can be stable and need to test a crisis model on JC Options Fund.

20/10/2017
Last night, I met up with my trusted financial planner friend. He felt that my definition of Financial Freedom has some room for errors. He thinks that as a family man, my expense is still fluctuating and there is a strong likelihood that it will increase in the near future. This depends on whether I will send my children to enrichment classes and tuition.  His advise is Financial Freedom is not the end goal but the journey matters more. 

His advise is continue to work hard, we are too young to retire, do what you believe in and increase your income level to cater for unexpected situations. 

He showed me his trade of 200 contracts of MOS SP 22. That is USD 440,000! He has many multi-baggers. Wow, the session humbled me. Stay humble, stay foolish, stay hungry!

Meeting with my financial planner friend

Today I have a great catch up with my financial planner, he is my first 3 months SAJC friend. He is a great guy who advocates DIY insurance, conduct holistic wealth planning and never did push sales. He provides a good blueprint on how to achieve financial freedom through protection and wealth accumulation through investment.

In fact, he attended both VIC and OMP courses and explained to me the pros and cons of options investment and trading. He shared how his profit of USD 15k was wiped out due to greed because of constant winning streaks. Then he devised a proper system like a checklist before executing his trade. He asked whether I have this checklist system in place:

1. Do your fundamental analysis on the company
2. Do your technical analysis on the company
3. If it passes both then execute on the trading platform
4. Do your portfolio positioning

After that, he shared with me his ambition of having multiple streams of income. Well, birds of same feather flock together. I asked whether we should be like Ken Teng having at least USD 900k in options. Trading options is still considered active income. His response is he wants to accumulate assets and generate cashflow without him doing anything. That is passive income. His strategy is:

1. $3k rental income (he shared a rental property among his family members) 
2. $40k dividend income (he aims to have S$1m of Singapore stocks) which is present value of $1k/mth
3. $1k/mth from options income
4. income from CPF Life

I will start working on CPF strategy by shifting from OA to SA. It is good to meet like-minded friends! We need to encourage each other in this journey towards financial freedom.

Wealth Management is an important subject

Wealth management is a very important skill and it is a life long learning journey. Wealth management involves learning value investing, financial planning and wealth creation. Especially, we are at the crossroad where there are alot of disruptions because of high technology. Just look at how Amazon is slowing affecting the business of Kroger and Alibaba's ecommerce causing headwinds for traditional retail business.

We need to constantly increase our financial knowledge to keep up with time. There are a lot frauds and hypes out there, we need to be able to discern the gems from the dirt. You will come across news which mentioned that even traditional investment will have instances where millions of fortune are lost overnight. Why will even these wealthy guys trip and fall? Shouldn't they be more privileged with better information than us commoners?

I see that the common problem is we will spend more time on wealth creation and neglect wealth management. The end result is money in and money out. This is highly prevalent in the media, the actors and actresses, singers, sports superstars, etc. They look brilliant on stage but debt ridden in reality. 

In China, there are a lot of speculators (including me at times) for shares and properties. We should learn how to differentiate between speculating and investing. Speculating is gambling, it will be almost equivalent to playing at the casino. My dad always think that I am gambling with stocks. Sometimes but not all the time.

The real value investors must be prepared to walk the lonely path, it is not based on luck as luck will only bring this far, value investors are willing to take the right bat (not bet) at the right time and stay with their decisions for many years until proven right or wrong.

Investors are categorized to the following few:
1. "I know nothing" - some of the retail investors will just listen to tips, have the herd mentality, not interested in fundamental of the business, worship the buy low sell high to profit. Very often, they tend to buy high and sell out at low in panic. 80% of this category investors lose money.

2. Slightly Brighter than the earlier - short term trader type, he tends to stick to the screen everyday , will get excited with a small price movement (+3-4% will get excited, yes, I fall under this category most of the time).  He will do some homework on the companies but not in depth. Sometimes when he is lucky, he will strike a small homerun.

3. The clever type - Medium to long term investor - will hold the shares for more than one year and make himself available for shareholders' meeting aka AGM.

4. The absolutely brilliant type - Understand the in and out of the business and industry, investing on the potential future returns of the business.

5. The sage - can differentiate between the great and the wannabe, has a portfolio management and investment strategy, once invested, he will wait years to reap his reward.

Most of the retail investors belong to 1st to 3rd category. There will be more pitfalls in investing and we will bound to experience a market downturn sooner or later. We need to continue to read:

1) investment books
2) business books
3) financial reports
4) biographies of great businessmen 

(If you don't like to read, listen to audio books, or watch videos)

After reading, we need to learn and put them to good use to become our own knowledge. We should be thirsty for knowledge and continuously seek to better ourselves, excel in both wealth management and wealth creation. 



      

Financial Consultation for my colleague

Last Friday, my colleague asked me for some advise as she felt stuck in her situation. She wanted a career opportunity with increment and annual bonus. However, I shared with her this is the riskiest choice as she is risking for a 3% increment each year when the boss is able to give her the golden handshake. I am not saying my boss will do that but he can do that. So why let your boss determine your livelihood? She is interested in how I make money while I am sleeping (according to her theory). This is slightly exaggerated but I tried to explain to her the theory of cash flow.

From the above image, if you can save $500/month which is $6,000/ year, she can generate a 4% return every year, compounded till she is 65 years, her initial capital inject of $168k will double to $324k. 

I explained to her on the differences between the Poor, the Middle Class and the Rich.

The Poor - Their income comes in at the end of the month and it will immediately goes into their expenses. They will spend all of them and sometimes spend even more than what they earn using credit cards.

The Middle Class - They use their income to gather more Liabilities. Liabilities are things that take money out of your pocket. For example, when you buy a property, you may perceive it as asset but actually it is considered a Liability as you have monthly loan repayment. Only when you fully pay off your property then it becomes an asset if it generates cashflow via rental income. Other Liabilities can be the likes of a new BMW.

The Rich - They use their income to gather more Assets which create more income (cashflow). 

2nd half 2017 review with my wife

Last night, we were having coffee at Starbucks and I brought along my notebook. I decided to follow up with a 2nd half review. I was putting on the wealth coach hat and she is my customer. I reverse engineer the process to understand the present need.

I understand that there is a total annual insurance expense of HKD 44k and annual donation to charities at HKD 18k. Hence for her HKD expense will be HKD 62k. Her requirement is whether her HKD 586k can be put to better use. It has reduced from HKD 591k to HKD 586k.

After the session, we derived two key actions to take away from the session:
1) Her critical illness policy guarantees USD 300k at the end of 25 years tenure. However, the premium is very expensive. The first action is to check whether our SG term policy for critical illness covers her needs. If yes, then we will either terminate the HK critical illness policy or downgrade to save on premium.
2) If this happens, the extra premium saved will be used to invest so that we will have a larger pool of money for medical expenses. 

We also agreed that HKD 486k will be deployed for investment. I suggest that 50% into HK Tracker Fund and 50% into CSOP A50 ETF. Both are ETF and the purpose is to reinvest all dividend into the funds. HKD 100k will be reserved as emergency funds.

 
This morning after looking briefly at the specification of the funds (I used to invest in both funds), I suggest to Invest HKD 400k in 2822.HK. The rationale for investing in CSOP A50 ETF is because of the PE ratio of China which is still low at about 7.4 whereas HK PE ratio is at 18. China's "One Belt One Road" should bring the country towards a greater height in the long run. Therefore we invest in this not for the short term but cater for 30 years later. This 2822.HK will go in immediately. It may retract but we are focusing on the long term.



This morning I read up on both the HK policy and the existing term policy, the critical illness portion is identical. We are looking at terminating the critical illness policy. This will help us achieve financial freedom earlier without compromising our downside. It is a matter of "over-protection" in insurance which has became an unnecessary expense. 

Differences between Mr Poor and Mr Rich

1. Learn how to invest
From the above table, the rich are wealthy because the crux lies in willingness to invest time in reading and learning.

2. Time spent on learning
The rich and free spent almost twice the time on learning than the poor.

Create your own retirement plan

1. The peril of longer life expectancy
Are you ready? Most of the elderly aged 65 years old and above do not have sufficient retirement sum and they depends on their children and the government to assist. The age group between 45 - 64 years old needs to depend on oneself and may need to extend their retirement age. Hence, a lot of people who are not ready will find themselves working beyond 65 years old.

As one ages and lose the ability to provide, there are other insecurities such as fear of deterioration in health, run out of money and need to take care of spouse.

2. How to get yourself prepared?
A lot of people like to comment on how some entrepreneurs are very thrifty and they become wealthy out of their thriftiness. Actually, their wealth comes from their leverage through business and not through saving on small money such as your favorite daily Starbucks coffee. Thriftiness is good but it can only create small amount of money. In order to create wealth, you need to invest in shares.

In 3rd century BC, Greek philosopher Archimedes discovered the principle of mechanical advantage in the lever. His famous remark with regards to the lever,"Give me a place to stand on, and I will move the Earth." In the world of investment, the pivot is "investment knowledge", with this knowledge, you can choose the right investment tools such as ETFs, bonds, shares, forex, futures, etc. You can gain leverage through investment knowledge.

From our previous post, assume our example character is a 30 years old single man, his annual salary is between SGD 36k to 48k and he is able to save SGD 12k per annum. Assume he works from 24 years old to 30 years old, see below for illustration. 

By 30 years old, he should be able to achieve a total saving amount of about SGD 100k. Based on SGD 36k annual income, SGD 12k is a saving rate of 33.3%. If the single man stays with the parents, a saving rate of 33% is highly feasible.

The above illustration is based on a very conservative investment of 4% return.

3. The rich makes more money with money and sometimes with other people's money
After 31 years old, with SGD 100k can be used to pay for property down payment or invest in more shares.

The rich makes more money with money. In 2013, Capgemini and Royal Canadian Bank published a report on 2013 Global Wealth Report and those with asset of USD 1m and above will have access to different financial tools and investment products. They are able to accumulate more wealth than the lower income group.

4. At the start, it is very slow but after 40 km/hr, it will be faster
Remember the momentum theory we learn during our college days, the vehicle/car when it first overcome its inertia, it is moving very slowly and once it hits 40 km/hr, it starts to pick up and can accelerate. The SGD 100k we seen earlier will roll and compound and grow over the years. When the man reaches 60 years old, he will achieve SGD 980,426 and by 61 years old, he will achieve SGD 1,031,644. Imagine if he can change his return from 4% to 10% or increase his saving rate or increase his income.

If he can achieve 10% return, he can achieve SGD 1m by age 47 years old.

If he can achieve 10% return and double his savings, he can achieve SGD 1m by 40 years old.

It is highly doable. All it takes is a bit of discipline and willingness to invest for your future. 






    

Money not enough? That's why you need to invest

In Singapore, the property price is expensive and based on the average salary, it will take a lifetime to pay off the house. Currently, it is still a person's working life time, if it increases to 2 generation to pay off the house, it will become very scary.

1. Life time income of SGD 1,946,880

The below table is from Ministry of Manpower, the average salary in 2016 is SGD 4,056/month. Based on 40 years of working life, the total income is SGD 1,946,880. 

2. Life time expenses of SGD 2,704,000

a. Expenses during single-hood

In Singapore, the average man age is 30 years old and woman is 27 years old. Assume that the man graduate when he is 24 years old, he will take 6 years before he get married. Assume that he has an average monthly expense of SGD 2,000. His total expense for 6 years will be SGD 144,000.

b. Expenses from 31-60 years old

Assume that the house is SGD 1m including incurred interest over a lifetime will be SGD 1.25m.

Assume that he bought a car for SGD 150,000 including COE

Assume that he has a kid, the cost of bringing up will be SGD 200,000 (conservatively speaking).

Assume that monthly expense from 31-60 years will still be SGD 2,000. 30 years will be SGD 720,000. I did not take into consideration pay increment and increase in expenses for the illustration.

Hence, total expenses between this age group will be SGD 2,320,000.

c. Expenses between 61-80 years old

Assume that for retirement the man just need to go downstairs to drink kopi o and eat mixed vegetable rice, his monthly expense is only SGD 1,000 including occasional visit to polyclinic for medical expenses.

His expense will be SGD 240,000.

Therefore, this friend of ours will face a shortage of SGD 757,120.

Yes, he can buy a HDB and if he is married, both can help to pay down the house. However, I do not foresee any surplus for a better and earlier retirement.

From the above picture, it shows a conversation between myself and a friend. He was burnt previously before because he invested in get-rich-quick scheme through gold investment. However, he should learn from the mistake and educate himself in terms of investing. He has another good 25 years of working life and with proper planning, he can achieve a fruitful retirement. "Not much money" is not true because he saves a big portion of his income and if there is not much money then it will become a real headache. When he says that he has no interest, he is rejecting me not at the notion of investing. Will anyone be not interested in money? If I tell you that you can make a lot money, will you be interested? Yes, I will definitely be. That's why I am on this quest to understand how to crush this shortage between income and expenses and retire earlier. I will choose to work on my own terms because I am financially free not because I have to. 

In my next post, I will share about how you can gather small wealth through savings and middle class wealthy through shares investment.

Let's talk about money

1. How much is enough? 

In 2013, Robert and Edward Skidelsy wrote a book "How Much is Enough?" highlighted that most of the people are already blinded by greed and this has already compromised their quality of lives.

2. How will your wealth affect your next generation?

Your wealth will have a direct impact on your life, it will have an effect on your choice on your spouse, senses of happiness and life expectancy. Your wealth will also have an impact on your next generation.

a. Spouse
According to a 2013 survey conducted in China for online dating services, 52% of the man will focus on the looks and 63% of the woman will focus on income level and wealth of the man. 

b. Level of Happiness
In 2015, the average GDP of Americans stands at 55,600. Most of the people feels that an annual income of USD 110,000 will be the happiest.

c. Life Expectancy
The rich can afford better medical health treatment than the poor. In 2013, there was a study conducted in 2002 in South Korea, the highest 20% man income level group has an average life expectancy of 77.1 years old whereas the lowest 20% man income level group has an average life expectancy of 67.4 years old. That is a difference of about 9.7 years. The highest 20% woman income level group will be 82.6 years old whereas the lowest 20% woman income level group will be 78.8 years old. There is a small age difference of 3.8 years old. 

d. Effect on next generation
If the parents are poor, they won't be able to afford tuition for the children and their results cannot compete with the classmates, affecting their ego and confidence level. Except for a few minority who are self motivated, most of the children from low income family will be faced with disadvantages and challenges.This will create a vicious cycle in poverty. 

3. If your money is not enough, what will you do?

a. Part time work
Most of the people will like to make additional income and they tend to trade time for money. There are people who held two jobs to make ends meet. However, as time goes by, it will take a toll on the body and affect the health. In addition, most part time work only pays miserable hourly rate. I do know friends who will drive Grab and Uber to supplement their income.

b. Wealth Management
76% of the wealthy people are the first generation entrepreneurs, investors and top management. The remaining 24% inherited their wealth and they belong to the 2nd or 3rd generation business owners.

In next post, I will touch on how investment will help to shortcut this journey to achieve financial freedom.