After my recent property transaction, a portion of my liquid assets are now parked into home equity as I had to use proceeds from sale of my existing property plus some savings to fund my new property.

In terms of net worth position, it actually doesn’t change much except that legal fees and property agent commissions has eaten into my net assets.

I am fortunate in that because I had earlier paid up in full my mortgage loan for my existing property, my current property can be paid up anytime as I have more than enough in my CPF ordinary account balances plus my cash on hand to redeem the loan in full. The reason why I took the loan in the first place was the timing difference between receipt of sales proceeds and payment of monies for completion of purchase.

Financial Freedom Target Still Some Distance Off

My net worth now is still a fair distance from my target of being financially free with $1 million in investible net assets (excluding value of home). However, it is a reasonably sound figure that puts me in good position to continue my journey towards financial freedom.

I will be making a significant capital repayment on the loan by end of July 2010 which will result in me having an cash-equity split of 67% : 33% . This means every dollar invested in equities in the SGX is matched by two dollars in cash. A financially conservative ratio that suits me because I am totally clueless about how the equities market will take. My sense is that volatility is still here due to European economic challenges that some pundits have forecasted could potentially be the reason for the implosion of the European Union as an economic and political bloc.

My focus now is on growing my means. Call it coincidence or fate, but I met someone during a recent conference who was in a position to help me grow my means through becoming  a paid director of a company. This was something that I had been thinking about and was in my mid to long-term plan but I didn’t count on such an opportunity presenting itself so early.

While there is nothing concrete now, at least the path towards this potential way to grow my means opens up real possibilities.

The more I travel along this journey along financial freedom, the more I am starting to develop a strategy that has one eye on what Nicholas Nassim Taleb shares in his book, “The Black Swan”. I am inclined to treat the stock market as more a game for small speculative plays and a temporarily respository of my net worth. The real cash flows will still have to come from earned income from my career and possible directorships in companies that can pay a reasonable directors’ fee. Of course, being an independent director has its share of risks of being liable for the mistakes or wrong-doing of the company management. But investing all your monies in the stock market also has the risk of seeing your net worth halve or become a quarter of what it’s worth if the stock markets go south.

Ultimately, I have to develop my own strategy towards financial freedom that is suited to my personality, skills and abilities. There is not set formula to ensure financially freedom. But I continue to believe in practising the principles of living within my means, saving and investing and growing/protecting my means.

How has your personality helped you towards your own style of investing?

Be well and prosper.

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