Flickr image "beautiful stream" by holl_and

My blog monetisation efforts has been one of my greatest achievements in moving myself towards financial freedom. I started out serious blogging to see if I could establish an income stream that would allow me to quit my day job and to retire without working (as what many of those make money online scams and advertisements promise!)

Can Quit Your Day Job?

But the reality was that it’s quite difficult to make enough for you to quit your day job. Thus, my explorations into blog monetisation has been coming to 2 years and I am able to generate S$100 to $350 per month with minimal effort after the first six months. Nowadays, my main blog that brings in real income is fairly passive, I receive updates on the information from a forummer I know whom I give a share of the advertising revenue.

Some of you may scoff at the amount, but I am thinking ahead that if I can sustain this type of income stream with the level of effort that I’m already putting in, this could be one of my personal CPF Life type of scheme.

Your Personal CPF Life Income Stream

For those of you who may not know, CPF Life is the compulsory life annuity that will kick in when you hit the retirement age of 62 (now) or 67 (in the future). It pays you an income for life and is funded by locking away a portion of your CPF minimum sum amount.

Planning ahead means that I am also looking around and thinking of how to create such income streams that are self-sustaining and require minimal effort. In addition, I realise that I need to continually invest in myself in terms of skills, knowledge and relevant experience that can be monetised when my career transits from an 8-5.30 job to a freelance/self-employed basis.

On that note, I’ve volunteered to develop and deliver in-house training to my fellow colleagues on top of my regular work assignments. This initiative helps me to boost up my visibility within the organisation as well as to hone and develop my training skills. I intend to build up this skill set and the networking so that it could be a viable second career when my daughter becomes independent and can fend for herself.

It is these series of small steps in changing habits that result in more enduring change. My blog monetisation started out as a small experiment which I intend to continue so long as I have breath and it pays for itself and more. My experiment in eating healthily for breakfasts (rolled oats and raisins) for coming to two years have given me a figure that I once lost for many years but only regained from healthy eating and moderate exercise.

My investment returns for 2009 were the result of efforts since 2003 to invest in the Singapore stock market and to learn until I was competent enough to make 8%+ returns way above any “risk-free” returns on 1-2% on fixed deposits or money market instruments.

Take small but concrete steps.

Do, learn and grow.

Exploring Possibilities

The more I travel along this journey towards financial freedom, the more I realise it is about being open to possibilities and taking a plunge to do small experiments to see if an idea can work out or not in bringing one closer to financial freedom.

What are you thinking of during this Lunar New Year period that will bring you closer to financial freedom?

Be well and prosper.

Flickr image Planet - Jones Valley Urban Farm by Southern Pixel

Those of you who are readers of science fiction author Douglas Adams would know that the title of my post is taken from one of his book titles.

It’s a useful title because it can be used for more philosophical posts which touch on many topics and come back to the key theme of my blog, i.e. achieving financial freedom and the reasons we pursue financial freedom.

Knowing the Why is Important

The whys of doing something become increasingly important the older one gets because Death is literally waiting for us at the end of our lives. The day we are born is also the day we start dying.

For some, the dying starts in the 40s or 50s when mid-life crisis hits and we start to wonder, what has our lives been for? What has the slogging, hard work, providing for ourselves and family got us? Are we happy?

For others, the dying could only start when we are literally near Death’s door, in our 80s, 90s and even 100s when we have lived a life filled with purpose, reason and happiness.

I see financial freedom as a means and not the ends in itself. Being financially free allows you to get out of the rat-race, if you so choose, and explore other facets of life besides being stuck in a 9-5 life behind the desk or out in the world doing what others tell you to.

Of course, some already have lives of their choosing, i.e. they enjoy the 9-5 life if their interests, skills and passions are aligned with their careers and jobs.

The important thing I have realised in my own journey towards financial freedom is to define what financial freedom means to me and why I want to pursue it. My key reason is to be free to choose how I can retire rather than be constrained by the rules put up by the Government to lock up my Central Provident Fund (retirement savings) through the CPF Life and Minimum Sum schemes.

I want to be financially free so that I can spend a more time with pursuits that give me immense satisfaction, i.e. my toastmasters journey where I get to touch other people’s lives through public speaking. That ability to influence, motivate and inspire people through public speaking is something I only realised after 5 years in the toastmasters movement.

I’ve met quite a number of retired people who enjoy fulfilling lives with the help of toastmasters because it helps people who are no longer working in touch with a social group and a common purpose.

Moving Through Life with a Purpose

Your own reason “why” for financial freedom is personal. It can be as simple as the need for financial security for yourself and your family. It can be because you want to do whatever you want and don’t want to have someone i.e. your boss or your customers to tell you what to do.

But when you’ve set your own reason towards the path of financial freedom, your decisions in life will be guided by the goals, i.e. to live within your means, to save and invest, to grow and protect your means.

Going through life with a purpose beats meandering around it aimlessly and waiting for things to happen. One of the benefits of setting myself the goal towards financial freedom is that it prodded me to take action and gain greater control of my finances. I now tracking my income and expenditure and net-worth Mondays to Fridays.

It allows me to eliminate fuzziness on how much I earn from my career and receive from investments, how much I spend on myself and my family and how much is left to grow my net-worth towards my investible target of $1m (excluding residential home).

The interesting thing is that as I track my journey and inch closer to my target each day, month and year. I become more encouraged to do more to move myself towards my target. There is progress, there is growth and there is also knowledge that I am moving towards my objective.

Smell the Roses and Drink the Cappucino

Yesterday, my staff told me that her father had been diagnosed with cancer which looks likely to be terminal. Thus, she would be taking a break from work to spend more time with him. Her father is only 55 years old.

Life can hit us with unexpected surprises. You can plan and plan but you cannot predict what will happen.

I now realise more than ever that even as one moves towards growing our net-worth by saving and investing, we should also allocate some money e.g. 10% or more of bonuses, windfall gains and other investment receipts for small luxuries in life.

That cup of cappucino at Starbucks or Coffeebean. That nice iPhone 3GS. That good looking outfit in the store.

Yes, live within our means, save and invest while growing and protecting our means.

But also live a little, enjoy life a little and take deep breaths of air and give thanks that we have our lives, our families and our health.

Be well and prosper.

Flickr image "Epiphany 3" by Felipe Venancio

The ultimate paradox of financial freedom has been revealed to me.

All this while, I’ve been reading, researching and writing about financial freedom. It took a recent episode of moving my net worth from one asset class to another that an epiphany struck me.

What is this ephiphany that Panzer encountered?

Financial freedom is in the mind

Financial freedom first and foremost has to begin in the mind. It’s where you conceive the very idea that you can take control of your finances by living within your means, saving and investing, growing your means and protecting your means.

As I started with this idea, and implemented it in the various posts I’ve outlined in this blog, I started to gain new insights about myself. For instance, tracking where every single dollar I earn and spend helped me modify some of my habits when it comes to spending. It has allowed me to evaluate where money (that represents life energy) goes and how that either adds value or subtracts value out of my life.

I also started some projects on growing my wealth. My blog monetisation efforts have given modest returns but they are positive returns. While I’ve managed to beat fixed deposits returns for the past 6 years since I started managing my own money, I’ve also under-performed for 2009 year-to-date and I hope I can end the year with a positive return.

Throughout all these experiences, I realised one thing.

I am already financially free.

Financially free

Huh? What is Panzer talking? Is he smoking a banned substance and high?!

No, what I’m saying is this.

I am not financially free using my traditional definition of being in a position where passive income from investments exceed my living expenses. I still need to get up and go to work in the mornings to make bread for my family.

But what I’ve realised is that in my current situation, my income exceeds my living expenses. My current career suits me as I look forward to go to work in the present environment. Because even if passive income exceeds living expenses, we can never predict if our life is taken away or our health is taken away. Thus, ultimately, happiness in life is wanting what you already have.

That means, in many respects, I already have a form of financial freedom.

Wanting what you have

For too long, I’ve waited to be happy only if I’ve achieved this or that and only if I’ve managed to hit financial freedom. It is still a goal I am striving for, but I realise that enjoying the process towards financial freedom. Being able to enjoy and appreciate what I have, does wonders towards my sense of well-being.

The target of financial freedom drives me. But the awareness and consciousness that being grateful for where I am now is also important liberates me from being dependent on achieving financial freedom to be happy.

A 42 year old successful CEO recently passed away at the OSIM International Triathlon. By all accounts, he had a good life. But it was taken away all so suddenly. Going forward, I’ll try to take each day at a time and to want what I already have.

I may or may not achieve my goal of being financially free with property investment (which I’m still considering and evaluating suitable properties) or perhaps go back to equities or even stay sidelined and wait for the big “correction”.

Whatever it is, health, family and happiness is important.

Financial freedom is a journey. If you enjoyed the journey, you won’t fret too while having your eye on the destination.

Be well and prosper.

Flickr image "Apartments Croatia" by Kavanjin Croatia Apartments

The more I experiment and try out different ways to achieve financial freedom, the more I learn about real concepts of financial management of my own money.

Moving from One Asset Class to Another

As you live within your means, you start to have savings. Most personal finance books advise you to keep some buffer or emergency funds enough for 3 to 6 months of expenses or income. The additional savings you should invest in fixed deposits, mutual funds, stocks and shares or other asset classes that fit your risk-reward profile.

Different asset classes have different liquidity. Liquidity refers to how easy it is to sell your assets and convert it to cash. Sounds simple but can be fraught with challenges as I found out now that I’m selling most of my equity portfolio into the currently rising market to move into property investment.

Why am I moving most of my net-worth out of equities at this point in time?

Reasons for Going Out of Equities

I have been selling some of my share holdings when they are at reasonably high prices relative to the troughs experienced during the crash in August to November 2008 time when subprime and the global financial crisis reared its ugly head.

I’m moving from a ratio of 80% equities : 20% cash to progressively almost 0% equities : 100% cash mainly because I’m now scouting for completed properties for investment. The downpayment for an investment property sucks up a lot of cash

1) Property market

I am relatively bullish about the property market in the long term, i.e. to invest for the next 15-20 years and even beyond. Singapore is still a place that has limited land and space for living and giving our Government’s continued approach of “grow GDP at all costs” plus lax foreign immigration policy, I see the drivers for residential property demand to be intact.

Property valuations rise and fall and sometimes also sharply depending on sentiment and overall economic outlook. But at the end of the day, with a long enough investment horizon and with sufficient holding power, it is a decent hedge against inflation and provides slightly more predictable cash flows if you are not into flipping for quick capital gains.

As I intend to rent out the investment property so that the rental income covers interest and part of the principal of the bank loan to finance the investment, the rental market has to be there for it to work.

Despite the current recessionary conditions, not all is gloom and doom, there are sectors that are doing all right and there is still rental demand for affordable private housing. The rental income from this will help offset the investment in property in that it is self-financing to a certain extent.

2) Volatility of Equities

Equities are volatile instruments. During the peak of the global subprime financial crisis. My equity portfolio plunged almost 50% after marking-to-market. It was pretty scary. I was fortunate that I have a stable job and had holding power to ride out the storm until the rally in the beginning of 2009.

Now, my equity portfolio is only showing slightly paper losses of $8k or so which I am prepared to accept as this is nothing compared to what I saw when things were at its worst in the stock market.

The dividend cash flows from equities are also quite volatile as companies can change their dividend policies to conserve cash during poor economic conditions. Thus, it’s more challenging to predict cash flows from investing in shares.

3) Low Interest Rates

The current environment has been helpful that it allowed me to get out of equities with my net worth mostly intact and allowing me to consider switching into another asset, i.e. investment property.

I’ve enquired around some banks and one is offering as low at 1.88% for the first 2 years (of course the caveat is that no matter what rate is being offered, banks can change it giving you 30 days’ notice). This is at around 80% financing for investment property.

Movable Net-Worth

Equities are relatively liquid as compared to property but I also learnt that you have to make sure your limits for selling is raised when you are trying to sell more equities than your normal trading limit imposed by your broker.

Fortunately, a phone-call to my broker solved that problem though I still had to “time” the market to extract maximum value out of my holdings as I move from equities to cash.

Going forward, I’ll be doing a very focussed search for suitable investment properties and I’ve actually got a very good idea of what I want and how much I’m prepared to go in.

I’m looking forward to a period of relatively illiquidity although from cash flow perspective it’s relatively netural as I project rental incomes to cover financing plus a chunk of the principal repayment of the bank loan used to finance this pending purchase.

Be well and prosper.

Flickr image "Singapore Botanic Gardens" by chooyutshing

I brought my family (spouse + 16 month old daughter) to the Botanic Gardens for a leisurely walk on Sunday afternoon.

It was a relatively inexpensive excursion, just the price of petrol to get there and $0.54 parking fee and some drinks at the basement food court.

The older my daughter gets and the more I can bring her out to public parks and places of nature, the more I realise the simple pleasures of life in Singapore can really be had for a small price.

Enjoy what your tax dollars pay for

NParks (National Parks Board) has invested millions of our tax dollars in sprucing up our nature reserves and parks to be enjoyed by all. There are websites such as Seen This Scene That that feature reviews of places of interest (including public parks).

There are many public parks in Singapore scattered all over the island. I was recently at Labrador Park and walked along the tree covered path from the broadwalk area (next to the sea) up to the top of the hill overlooking the park.  The parking there is free as most NParks public parks have free parking. The only downside is that they are not so accessible if you take public transport. But parks such as Botanic Gardens are quite accessible by bus.

Take a break from consumerism

Sometimes we need a break from the cycle of shopping, eating out and buying stuff. A home-made picnic or a weekend outing to a public park allows us to break free from the hustle and bustle of city living and mall hopping to let us get some fresh air, sunshine and to sweat out the toxins in our bodies.

If you are planning to do something this weekend, why not plan to take pleasure in simple things like a walk in a public park?

Be well and prosper.

I’ve decided to incorporate a new feature into my blog. Besides blog posts on topics related to financial freedom, I’ll feature interesting news and reports that are interesting or useful as general knowledge to help you grow your biggest asset you have, your brain and your knowledge about financial freedom.

Today, I’ve selected some infographics from this website called Visual Economics. “Life Time of Debt” shows the average American life towards debt. I find it useful to refer to our own circumstances.

Be well and prosper.

Flickr image "Do you find my brain? - Auf der Suche nach meinem Gehirn" by alles-schlumpf

Your journey towards financial freedom is dependent on how well you grow your brain to its fullest potential, so that you empower yourself with its ability to think up of ways to:

• Live within your means;
• Save and invest;
• Grow your means; and
• Protect your means

Your brain may stay the same size physically in adulthood, it’s not the same brain as you age. The reason is that the connections between the neurons can keep growing and growing as we experience more of life and life experiences that make our lives so diverse and unique.

1. Feeding your brain

You have heard of brain food such as fish and omega 3? Feeding your brain with nutritious foods is one of the ways you can maximise its potential. Did you know that the brain is the not the biggest organ in the body (it’s actually the skin) but it draws a lot of resources from the body. To be fully support your brain, do provide it with the nutrients it needs to function effectively.

A well balanced diet with sufficient proteins, cabohyrates and fat will help fuel your brain (and body) for you to be effective in your journey towards financial freedom.

2. Use your brain

“Use it or lose it.”

This simple but important quote is applicable to our brain. It’s either we exercise it or we lose it. Scientists now recognise how mental games such as mahjong help the elderly mitigate the risk of dementia and degenerating brain function due to aging. Even before you hit the age of 62 to be withdrawing your Central Provident Fund, you should constantly be building up your brain.

Learn something new everyday. One of my recent finds on the internet is the Technology Entertainment and Design (TED) conference. It’s a conference where speakers touch on varied topics with a common theme of  “spreading ideas”. The useful thing about TED is that the conference videos are available online free to the world. I’ve been downloading a video or two every week to listen to speakers expound on ideas relating to success and delaying gratification using marshmellows as a real-life experiment.

I’m also reading a book every weekend on topics that will help me. I make use of the Personal MBA book list by Josh Kaufman to develop management and personal effectiveness skills through reading the recommended books.  The last book I was reading was “Presentation Zen” by Garr Reynolds whose blog got me into watching TED videos. I picked up “Presentation Zen” as I would be doing a 40 minute presentation at a local conference soon and thought it was time to update how I make use of powerpoint and to maximise my own effectiveness as a speaker since I’ve had five solid years of experience in toastmasters.

Learning as a means can be rewarding. Learning to be more effective in your journey can be even more rewarding. My blog monetisation efforts yielded me around $1,700 last year. It’s small money but significant enough to be worth my time in learning and applying web 2.0 technologies. My investments in social networking tools such as twitter and facebook has also allowed me to tap into networks that were buried deep and beyond my reach until I learnt to dig them up.

3. Focus your brain

Your journey towards financial freedom requires you to focus on the objective. If you don’t set objectives and prioritise how you spend your time to meet those objectives, you’re not living, you’re just existing.

Financial freedom means to learn, apply and make changes to parts of your life that help or hinder your progress. Wasting money on magazines. Minimise buying them, make use of the library to borrow old issues for free. Spending too much time on World of Warcraft? Set aside only 1 or 2 nights out of the week to play computer games and the rest of your remaining free time reading investment, personal finance and personal effectiveness books.

I’m focussed on financial freedom and increasingly I can see how each of my day-to-day decisions in life affect how I progress or deviate from my plan to be financially free before the age of 45.

Your life your rules

Your life is in your hands. Your brain directs your body to do the actions that help you (or not) towards being financially free. I realise that the more you take control, the more you realise there are a lot of things you can change in your own life to make yourself move closer to being financially free.

You too can grow your brain towards financial freedom.

Be well and prosper.

The path towards financial freedom for many of us lies in getting a good (and relevant) education, pursuing a career and living within our means to generate the savings that will fund our future retirements.

Your career would be one of the most important areas you need to focus on besides living within your means, saving and investing as well as growing and protecting your means.

For those who are fresh graduates from ITE, polytechnic or university, being able to clinch your first job is the beginning of your journey towards financial freedom.

But how do you clinch that first job? I’ll share some of the insights based on my own experiences in career moves as well as my recent experiences in recruiting my staff.

5 Tips to Clinch That Job and Career

1. Be Punctual or Early

This is such a simple thing to get right and yet some people get it wrong. I have two candidates out of eleven whom I interviewed who were late. One underestimated the time required for the bus journey while the second went home to wear another outfit as a friend commented that her outfit was not suitable for interviews.

An interview is the first formal meeting between you and the organisation. If you mess up the first impression, it is hard to salvage unless you really have a good reason and you can do quick damage control.

So far, I’ve always been on time or early for interviews. Decide if you wish to pursue that job or career opportunity and give it your best shot. Half-hearted attempts do not work well.

2. Dress for Success

I’ve always worn a shirt and tie for interviews even if I know the culture of the organisation doesn’t require it. This is because I want to convey the impression that I’m serious and will do my best to look the best that I can and for guys it’s minimally a long sleeve shirt and tie and business pants and formal shoes unless you are going for an interview for a personal fitness trainer position. For ladies, formal business dressing is also important if it’s an office type of job.

My own sense is that it’s better to be overdressed than underdressed for the first impression. So come better dressed to project that professional image.

3. Customise your Resume

I’ve gone through scores of job applications in the past weeks and note that there are two main types of applicants. Some do not attach their resumes and leave you guessing about who or what they are like because application forms typically require basic information about particulars, job experiences, last drawn pay, education results etc but doesn’t ask for qualitative information such as what did they learn from their experiences in school/current job.

A resume helps to flesh out who you are and gives the recruiter a way to assess the more qualitative aspects. What did you achieve in your previous job. What skills did you learn and apply in your projects or work assignments. How did you feel about dealing with tough bosses, challenging customers and irritating colleagues. What are your aspirations?

All these add up to determine an important part of the selection criteria by the recruiter: is there a fit between you and the organisation and the job? Does your personality, attitude, skills and experiences fit with what the organisation and recruiter is looking for?

I’ve interview candidates who didn’t attach their resumes. While I do not immediately write-them off, I would need to ask more questions to flesh out the qualitative aspects not covered in the application form. I’ve also interviewed candidates who had resumes attached, but it was for roles not related to the job available.

If you want a decent shot at the job, you have to customise your resume either by having a cover letter explaining why you think there will be a fit between you, the job and the organisation. Saying you are looking for a human resource position while applying for a finance one doesn’t make a lot of sense as the recruiter will ask the magic question, “why are you applying for this specific position?”

4. Relax Yourself and Project Confidence

Before meeting the interviewer or recruiter, take a few cleansing breathes and remember to smile. Project confidence! First impressions last.

I remember when I was 17 and went for a scholarship interview. Then I was ignorant and naive so when the interviewers asked me which subject I was good at, I thought I had to be modest and claim I was just okay. The interviewer did me a favour by chiding me saying, “This is a scholarship interview, you must SELL yourself WHY we should award it to you!”

That lesson has been with me since and I can always recall back at age 17 how the interview is to some extent a sales pitch. Your educational qualifications and resume will get you shortlisted for an interview, but how you convince the recruiter(s) on your suitability can determine if you clinch that job (or not!)

5. Be Yourself

While leaving good impressions is important. It is also important not to fake it too much. The interviewers if they are more experienced and mature people will have seen all the many reasons people come up with why they are suitable for the job. Beyond that, they want to see some sincerity and genuine interest.

I’ve shortlisted candidates mainly because I felt they were being genuine. They didn’t oversell their skills and experiences and were relatively upfront about their aspirations and goals. Of course, one or two of the candidates exuded confidence and I’ve decided to give them a shot at the final interview.

Doing well in job interviews mean the difference between getting a good job or staying in a dead-end one. The days of lifelong employment by one employer is gone. Typically, many of us will go through several employers in our lifetime.

Being able to clinch that job that allows you to grow both in skills and experience as well as income is one key strategy towards financial freedom.

What are some of your interview stories and experiences you would like to share or ask Panzer? Do give your views in the comments section.

Be well and prosper.

[This article was first posted on Five Cents Ten Cents at blogspot on 17 March 2008]

The picture above shows the token of appreciation given by the Singapore Armed Forces to me last year when I completed my 10 years of reservist duty to the State as a Conscript in the Lion City. It comprises a Hamilton Khaki watch, a collar pin and a medal as a form of recognition of my services to the nation.

The watch’s face is broken after being worn for 1+ year while I have consigned the box to the depths of my cupboard to gather dust as a remembrance of something I would rather forget.

My quest for financial freedom
The relentlessness of my pursuit of financial freedom is to some extent driven by my experiences as a conscript in the Lion City. As a able and fit male citizen of Singapore, I went through two and a half years of full-time military service when I was 18 and this was followed up by 10 years of annual in-camp training that ranged from short two day BCTC courses revising basic infantry techniques to 3 week long operational duty at key installations in Singapore.

Whilst I was on reservist, I saw how my responsibilities were taken away from me and given to a lady staff who did not have reservist. That meant my performance for that year was impacted since a key work area was taken out of my hands and given to someone else. Over the internet, I read of anecdotes where Singaporean staff were discriminated by some employers as PRs or foreign talent were preferred for their lack of NS liabilities. There were even reservists who were afraid of changing jobs because they were on remedial training for failing their individual physical proficiency test (IPPT).

Recently, I read of a case where a NSF lost 85% of his sight due to oversight by his superiors and allowing his eye condition to worsen.

The reality is that as an NSmen, you are disadvantaged economically against your competitors in the career arena. Ceteris paribus, an employee who does not have NS liabilities i.e. Permanent Residents or foreigners on employment passes / work permits are more attractive to hire and retain than Singaporean men. That is the BRUTAL TRUTH that is Singapore Inc.

Yes, the gahmen gives you NSmen tax reliefs and top ups. Reliefs and top-ups help little when you don’t have a job or when your job is at risk due to your NS liability. Safra clubs does little for you if you cannot afford to pay its subscriptions without a career.

Forget duty, honour and country, and let’s talk about growth, GDP and money!
The relentlessness in which this administration pursues economic growth tells us one thing. Making money in Singapore Inc is the reason we exist. I believe in economic growth. What I don’t believe in is a system that penalises its own male citizens with conscription which provides inadequate compensation mechanisms for the risks we take. Hence, now that I have served my duty to the country, it’s time for my duty to my family to maximise our family’s economic growth through making more money.

Volunteerism? Donations?… Been there and done that.

Now it’s time for living within my means, saving and investing and growing my means.

Singapore Inc has abolished estate duty, so you can leave it ALL to your family so let’s make economic hay while the sun shines.

My pursuit of financial freedom is to truly contribute to the country through taxes and to receive through income streams from career and investments. It is a win-win arrangement that no true economic maximiser will refuse.

After all, “welfare” IS a DIRTY word in Singapore.

Be well and prosper.