Recollection time! Looking back, it has been 2 years since I started taking a serious re-look at my own personal finance, 2 full months since I started writing.
PHASE I: SAVING
I started really saving just months prior to the birth of my child. Most of us (if I could safely say to a certain degree) save for a specific purpose or objective. And most of the time, this goals were short-term ones. Long term objectives like planning for retirement sounded “airy-fairy”.
So parents and would-be parents know that prenatal care and delivery cost is not cheap. Delivery costs starts from mid- $2,000 to $4,000 excluding doctor’s professional fees and non-standard services. After baby is born, I targeted the essential needs like food (formula milk), health (medical checks and insurance), care-giving (confinement nanny and infantcare) and possibly others which I can’t recall now.
I was cutting expenses and just frantically save up for almost-immediate goals. At some point in time, I realised that my monthly balance sheet was constantly at a net zero and this didn’t cut it well with me. I was working my personal finance at a very basic level and this isn’t going to work out for the long-term.
PHASE II (a): INVESTING
I started investing.
It wasn’t the case that I did not start investing EARLY, but that I did not start investing RIGHT. I probably should share my “top 10 investment mistakes” some time, but that is another story for another time. I was eager to get richer fast. I understood the concept of compounding returns perfectly, but I applied it on a month-by-month instead. I was probably more hot-headed in my younger days and the expectation (of returns) versus reality didn’t match. I became frustrated.
So I started reading up on investment first and by reading, I really mean to read up a lot on Investment 101s. There is so much going on in the financial markets, so many financial instruments and abundance of financial knowledge out there to be read. You would probably be able to find areas that you are interested in or your niche. At the macro level, you should minimally understand the basic workings as everything is tied to everything else. For example, Options 101, Futures 101, FOREX 101, Stocks 101, Bonds 101 and so on and forth. By reading and understanding, you probably understand more about yourself on your risk appetite and comfort level investing.
I have tried Demo accounts, virtual competitions, small accounts with real money. If you just read and not apply it, you just end up being a “virtual guru”. The one thing that stops people from investing is the fear of losing. Nobody makes good money right from the start. Hats off to you if you do. Most of us learn from the pain, or what the gurus term as “tuition fees”. The more important point is how fast and how much you learn AND actually apply it in tweaking your investment strategy. Personally, I learnt it the hard way as well.
PHASE II (b): INVESTING
I continued investing, but with more than my balance personal income.
I was only investing what remaining I had at the end of each month. Some months I had more capital, some months less. It was inconsistent and irregular. I begun to allocate a fixed sum at the start of each month which then formed my investible funds.
Over the months, my hunger for investing grew so much that I started to explore more direct and indirect ways of doing so. I cut down on my expenses even more, buying house brands, travelling to Johor once a month for household essentials, buying online with cashback etc. I was once a miles person, but am now a converted cash rebate folk. I gathered my spare change most frequently for my child. I explored my CPF savings and its alternatives for the highest interest return.
Life goals were more long-term now. Children’s education, retirement planning, estate planning. All of these require money. And the key is to start off early with a disciplined approach is your financial planning. The other reason why people shun off from personal finances or financial planning is the notion that it just means buying insurance. It isn’t!
PHASE III: INNOVATING
To innovate is to make changes in something established, especially by introducing new methods, ideas, or products.
What I was doing so far was strictly within the family nucleus. I was looking at my immediate family members and I realised that they have the same problems I faced but have accepted it as a fact of life. They were earning a good income but they were not exactly saving or investing properly. I decided to step in and assisted them in reducing their tax rate further, reassess their insurance coverage and updated maturity benefits, brought up some investment approaches they could take with their provident funds and cash assets in savings or fixed deposit accounts. This had helped to change what was established and cleaned up their portfolios as compared to before.
I then moved on to communities. One initial misunderstanding that happens up to this day is that I am selling investment products or advice. Under MAS Guidelines on Provision of Financial Advisory Service, I am neither licensed nor authorised to do either. However, general investment know-hows and “101” knowledge is too beneficial not to pass off to the masses. That was and still is my personal mantra for this blog “I write, We learn”.
At the National level, the financial literacy level is still not up to par. I reiterate the importance of focusing on the retirement issue affecting many senior aged citizens. The young must start early on their investing journey. This can only happen if they being to take an interest in investing, and from a level prior, paying more attention on their personal finance.
It is in its early works, but we are planning an event in 2020 that looks at all of these financial issues any adult will face in society today, and how he manage it. Let us bring up the financial literacy level in Singapore, bit by bit.