Wednesday, December 13, 2017

How I Save Almost 100% Of My Salary In 2017 And How You Can Do It Too

2017 has been a crazy year for me. Firstly, this is the year I spent the most. My expenses almost doubled from a year ago. This was probably the result of me foregoing tracking my expenses like how I used to in the past. My goal in 2017 was still to save at least 50% of my income which I would not have been able to achieve if I just relied on my main income alone.

In 2017, I changed job for a higher income role. It didn't really make up for the increase in expenses. My savings rate would have suffered tremendously. However, because of a change in focus, I didn't just complain that my salary was low and sit there and do nothing. In the end I managed to revive my savings rate and save almost 100% of my salary for 2017.

How is it possible to save 100% of my salary? The reason is simple, it is the answer to financial independence too. I created more side income (lots of it), to cover almost all my expenses. Even when my expenses doubled, I still created more side income to cover it. This is the strategy of financial independence which I learnt from the book "Rich Dad Poor Dad" almost 8 years ago. In the book, it taught me to use assets to create cashflow that puts money in my pocket. Do this until it covers all your expenses and there you have achieved financial independence. Although the book talks more about investing in real estate for cashflow which is difficult for average Singaporeans, the concepts taught were still applicable.

Here is a summary of my income and expenses for the year 2017 (up to Nov 2017):



The additional income created is almost enough to cover my expenses for 2017. The expenses are not in thousands but in tens of thousands so it wasn't easy creating the income to cover it. It took time and effort and lots of hard work. It is a far cry from the passive income which we are all familiar with.

With the additional income created, I am on track to save almost 100% of my basic income in 2017. If not for this, just by relying on my main income will achieve only a savings rate of about 33%.

How You Can Do It Too

There are many ways to create income by doing what we enjoy and using the skills that we have. The world has changed and we can virtually work anywhere in the world. Yes we all want the passive income so we can sit back and relax and wait for the money to come in but that does not happen overnight. We have to create active income first then slowly transform it into passive income. This is my strategy for next year and moving forward for my life.

Active income is necessary to create passive income. Without cash, we can't buy assets that generate passive income. For now, our assets are our hands and legs and our mind and skills which we can invest in to generate active income.

I have created 3 diagrams below which sums up my strategy and which also explains the path to financial independence and retirement.

The first chart below will be where most of us are at. In fact, most people do not have the side hustles part where you have created additional income. Side hustles is a word very well known in the west where many of them leverage on technology and freelancing to create more income. This accelerates the path to financial independence if we can save more from the additional income.

Path to financial independence - Diagram 1 (Normal Life)

If you manage to get a high main income and can still save quite a sum of money at a young age, then side hustles will be optional for you. However, there is a problem with relying on main income only which brings me to the second diagram.

The second diagram is where we can depend on our side hustle to continue living our life. The main income is removed in this case as we no longer need it. Most of the time, we will be doing side hustles which we like and there is always the freedom from office politics and all sorts of nonsense in the corporate world and the rat race. This is the gig economy which I wrote about in a previous article. There are about 9% of the workforce in Singapore who are in the gig economy as compared to 30% in the US.

Path to financial independence - Diagram 2 (Out of Rat Race)
When we do not need to depend on a salary to continue living our life, then we would have effectively gotten out of the rat race. The real financial independence will be on diagram 3 below.

In diagram 3 below, this is how financial independence will look like. We are able to generate enough passive income through out investments to cover our expenses. At this stage, we can choose not to do any work or continue with the side hustles we like to do. The main benefit here is the freedom from the work which we do not like.
Path to financial independence - Diagram 3 (Financial Independence)

The maths behind early retirement

It is not difficult to chart the path to early retirement. The maths shows that it can be done and how it can be done. The maths shows that just by saving 75% of your income, you can retire in 7 years base on a 4% withdrawal rate and assuming your expenses stays the same.

In Singapore, many people do retire in their 40s. It is achievable as what has been done by various financial bloggers. What they do is they save and invest early in their lives and also try to earn a decent high income. Most generate additional income through other means as well including investing in stocks, properties or freelance.

As for myself, I have the option to call it quits for my job and still be able to continue living my life but I'm not going to do that anytime soon. There's still a lot more work to be done to stabilise the foundation. One thing for sure is I'm looking to do more meaningful work instead of just working for money. Many things have happened in 2017 which changed my perspective of life. Seeing my loved ones falling ill one by one is not an easy thing to go through. Life is definitely more than working. The stress and burdens that creates the illness is not worth it at all.

Many people see the dramatic positive effect to their health when they stop working in the corporate world and have the freedom to do things they like. High blood pressure, back pain, headaches, gastric disappear when people stop working. Those are health problems that comes with stress and can cause even serious life threatening illnesses. We should know when to stop but its easier said then done when you have no choice but to continue working. When you have a choice, then you can choose your health over the work. We can all aim to be financially independent one day.

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Wednesday, December 6, 2017

The Dangers of Credit Cards And How To Use It Smartly?

All of us know that credit cards can be dangerous if we overspend and end up not being able to pay the bills on time. The interest on credit cards is extraordinary high because it is an unsecured debt, different from home loans which are considered secured debt. Interest on credit cards are around 24% which is 2% a month if we could not pay the full sum. There are also advantages of credit card which we will explore in the later part of this post as well.

Dangers of Not Paying Your Credit Card bills in Full

There is always a minimum sum we have to pay on the credit card bill. It is always important to pay your credit card bills in full and NOT just the minimum sum. Paying just the minimum sum will incur the interest on your outstanding amount.

For example, if you have a credit card bill of $1000 and you just pay the minimum sum of $50, the interest will still be charged on the $1000 which is:

2% x $1000 = $20 (assuming 24% annual interest)

The minimum payment will be used to pay the interest charge first before reducing the outstanding balance. So, out of the minimum sum of $50, after deducting $20 to pay interest, there is $30 left to pay down the outstanding balance.

The outstanding balance is now = $1,000 - $30 = $970

Moneysense has a good illustration on how long it takes to pay off your bills if you just pay the minimum sum:
As we can see, even just $3000 outstanding credit card bills can take as long as 5 years to pay up if we just pay the minimum sum only. It is not advisable to delay any of your credit card bill payments as the interest is unbelievably high. If you do not even pay the minimum sum, your credit rating will be affected and it will affect your eligibility to get any other loans later. Legal action will also be taken against you if you continuously fail to pay the bills.

Advantages and benefits of credit cards - How To Use it smartly?

However, credit cards can also be beneficial for those who know how to use it to your advantage. I've heard and said a lot about the different cards out there (cash back, miles card, discounted items etc) which all helps us to be smarter in our spending. I also have some of the cards myself and it has given me lots of cashback and benefits.

In this post, I will specifically look at which card is the best for each of our life stages.

Before we get into the specific cards, I would like to offer a deal to all readers here. If at the end of this post you do not need any credit card or even if you applied for a card yourself, you can consider signing up as a referral and refer any friends whom you think will need any credit cards. You will get $25 choice of vouchers and your friend will also get extra $25 choice of his/her vouchers as well (choice of vouchers include NTUC fairprice, Grab, Lazada or Qoo10). Click here to be a referral.

Here are the cards for different life stages:


1) Fresh Graduate who just started working or adults who love cash back

For fresh graduates who just started earning a decent pay above $30,000 annually, a basic cash back card is a good one to start with. Both Standard Chartered and American Express provides good cash back cards with no minimum spend and no limit to the cash back you can get. Its a simple card with no strings attached. You just get cash back on everything you pay with your card including student loans or any other bills etc.

The cards to consider is the Standard Chartered Unlimited and the American Express True Cash back credit card. Both cards give 1.5% cash back on all spend without any minimum spend. For the AMEX card, they even give you 3% cashback on the first 6 months.

If you want to up your cash back even further, you can consider the Standard Chartered Spree card which was just launched recently. This gives you 2% cash back on all online and contactless transactions. Its what most young people will be doing nowadays.

Deals available for each card:
  • Standard Chartered Unlimited card is giving away $138 instant cash back which will be credited into your card upon approval
  • American Express True Cashback card application entitles you to $50 choice of vouchers (NTUC fairprice, Grab evouchers, Lazada or Qoo10)
  • Standard Chartered Spree card is giving away $138 instant cash back which will be credited into your card upon approval
  • In addition, if you are not referred by your friend through his or her referral code, you can use this code 1963671 to get extra $25 choice of vouchers
* Instant cash back is given and fulfilled by the bank subjected to terms and conditions. Please refer to the bank's page for more detailed information

Apply for any of the above cards here

2) Couples getting married or individuals and families who love to travel

For couples getting married, there is sure to be some big expenses for the photo shoot, the booking of the banquet and so on. These big expenses can be greatly taken advantage of using the right credit card. Apart from the above cash back cards, miles card are the best for couples getting married.

How attractive is the miles card for couples getting married? Do you believe you can get free tickets for your honeymoon to places like Europe, Maldives, New Zealand, Tokyo or even San Francisco or New York? Yes this is possible. It may be complicated but let me explain below:

The Citibank Premier Miles card has the best miles offer now. It is especially good for couples getting married as they give bonus miles upon $10,000 spending in the first 3 months. Paying for the wedding expenses easily goes above $10,000 in this case. For the Citi Premier miles card, they give 15,000 miles on your first spend (any amount) and additional 27,000 miles upon $10,000 spending in the first 3 months. This is already 42,000 miles which you get as a bonus. For wedding expenses especially the banquet, it can easily cost more than $40,000 for the banquet alone ($1200 per table x 35 tables=$42,000). As the Citi Premier miles card earns 1.2 Miles for every dollar spent, this is additional 50,400 miles earned.

Does the miles calculation sound confusing to you? Let me summarise below:


ItemCostMiles Earned
First spend (Any amount)$xx15,000 (bonus)
$10,000 spend within first 3 months$10,000 27,000 (bonus)
Wedding Banquet$42,000 50,400 (42000x1.2 miles)
Miscellaneous (photoshoot, wedding gown etc)$10,000 12,000 (10000x1.2 miles)
Total104,400

Just like that, we can get 104,400 miles. Where can 104,400 miles fly you to? I went to Citibank website and found the air tickets which we can exchange for to which destination:

For economy class, the miles can bring you to almost all countries across the globe. You can easily get free tickets for both you and your spouse on a honeymoon to Maldives or even New Zealand.




You can even fly for free in business class to some of the countries below.

The miles card doesn't just apply to couples getting married but also individuals and families who likes to travel. Share this with your friends who are getting married or who love travelling.

Deals available for each card:
  • Citi Premier Miles card entitles you to get $100 choice of your vouchers (NTUC fairprice, Grab evouchers, Lazada or Qoo10) on top of the up to 42,000 free miles given
  • In addition, if you are not referred by your friend through his or her referral code, you can use this code 1963671 to get extra $25 choice of vouchers
To sign up for any of the cards, click on the card names below:

Many more cards available with vouchers up for grabs here.
The voucher deal ends on 31st December 2017

How To Be A Referral And Earn $25 Vouchers for each friend you refer?

Not interested in any cards but want to earn vouchers? Be a referral and refer your friends to sign up. You and your friend can each get $25 choice of vouchers (NTUC fairprice, Grab evouchers, Lazada or Qoo10) for each successful sign up. Sign up to be a referral here.

After you get your referral code, simply refer them to my blog post for them to apply for the cards above or just send them this link to apply for any cards they need.



Get The Benefits, Pay Off Your Bills On Time - The Smarter Way To Spend

Nowadays, I seldom have much cash in my wallet. Wherever I go, as long as credit cards are accepted, I'll just use paywave to make the payment. Its easy to use and I get the benefits by spending smartly as well. I even pay all my credit card bills through my OCBC 360 account to get the higher interest.

However, always remember never pay just the minimum sum for your credit card bills. Make the payment in full and on time to avoid interest charges and late payment fees. This is the smarter way to spend.


PS: I have both the AMEX True cashback card and Standard Chartered Unlimited card for cash back. Will be looking at miles card soon to fulfill my travelling dreams

SG Young Investment is an affiliate partner of singsaver.com.sg so I get a referral fee for every sign up.

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Monday, December 4, 2017

Summary of My Investment For 2017

How time flies, its near the end of 2017 already. We are now in the month of December which is just less than one month away from the Christmas and new year celebrations again. In this post, I will do a summary of my investments and what has happened in 2017. Nearer to the end of the year or early start of next year, I'll write another post on the investment strategies for 2018.

For 2017, it has been an extraordinary year for investments. You may ask how extraordinary is it? Using the Straits Times Index as a benchmark, if we have invested at the start of the year and did nothing, it would have gained about 18% return on investment by now.


The STI ETF started at 2.95 at the beginning of the year. It is now at 3.48. I did invest some of my money into the STI ETF back when it was $2.80 last year. To date, it has gained over 30% inclusive of dividends.

For this year, I only had 14 buy and sell transactions. Most of the stocks were bought near the end of last year where I thought valuations were attractive back then. Some of my stocks were acquired, especially the Japanese Reits, which had been a good income investment (7%-9% dividends) and also capital gain (more than 80%). For 2017, I invested more into the hospitality sector namely Far East Htrust. I also subscribed to the rights of CDL Htrust. Both investments have been good especially CDL HTrust which has seen its value went up close to 30%. I also invested into Comfort Delgro seeing the distress in the taxi industry. It has yet to be proven whether this investment will work out so there's still much monitoring to do.

There was another rights issue by Capital Commercial Trust (CCT) which I also subscribed to it. I manage to get quite a lot of excess rights which was a bonus. The investment in CCT has gained over 50% (inclusive of dividends) to date. Office Reits are performing quite well currently where there are expectations that office rents and occupancy will continue to do well. Another investment I have in office Reits is Suntec Reit which also provides stable dividend income for me.

All in all, the average dividend yield of my investment portfolio is about 5.14% and the XIRR this year is around 21.17%. My portfolio value is slightly above $60K now. The next plan will be to increase my investments to $100K whenever opportunities to invest comes my way. There remains a few weeks left to the end of 2017. I may still have some other transactions in December and also there is one more dividend from Singtel where there will be a special dividend paid out.

We shall see how the market performs for the rest of the year. Elsewhere on the news, Bitcoin has been really hot these days where I see people everywhere talking about it. This is a sign of a bubble which we do not want to see. I'm not into this investment and will stay away from it as far as I know. It is never a good thing to have greed in investments.

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