17 January 2013

My Financial Master Plan

My wife is not working and I intend to keep it that way because she's not very healthy like most people are, and to achieve that, I need to be very clear of where I'm going financially. One thing for sure is, I'm not cut out to be an entrepreneur so I'm better off just working for others instead.

My ultimate 4-steps plan!

1. Have a stable job with a steady stream of income

I have already achieved this as my company does not have any history of retrenchment (at least none that I know of) even during the last 08/09 financial crisis; what they did was freeze hiring and annual increment, but bonus was not affected though. Prospect-wise, I believe anyone in my company who is willing to put in extra effort will be rewarded, I have personally experienced this as I got slightly more bonus (and some other stuff) than my peers. And this company pays accurately and on time. My only complain is that they pay noticeably lower than other companies, but then again, job stability is what kept me from hopping.

2. Save part of my take-home salary every month

Right now I don't really save a specific amount every month because some months I don't save at all (occasionally), then some months, I save a lot. This happens because of my wife's medication, immigration pass renewal, festive season spending, paying stuff for my mom and sister and etc. But when I get my bonus, I do put aside a significant amount though. Currently I have about $2600 cash flow but of this amount, $2000 is to be set aside for our Thailand trip in coming April.

3. Invest all spare cash in stocks

I have to be very clear on this part, spare cash means money that I don't need to touch for at least a year or more as I don't want to end up having to dump my shares at the wrong time just because I need cash. From Nov 2012 until now, I have invested a total of $5800, and yes, I only started dabbling in stocks for about 2 months, so far so good, haven't lost any money yet and I intend to keep it that way by buying the less risky stocks with at least 5% dividend yield annually.

It's not my first investment though, previously I invested in unit trust, but I didn't do it myself, my first agent did it for me (he's a good friend of mine), made some money during China boom in 06-08, but before 08/09 financial crisis, my second agent (my friend left, this guy took over) actually advised me to buy and I foolishly bought at peak price without doing any research (investment was still a strange concept to me at that time), and almost 3 years after the crisis, the price never fully recovered, I sold it and ended up breaking even with my China boom profit after factoring the interest I could have gotten if I left it in my CPF account, I'm considered very lucky for a fool. A good lesson learned though.

4. Be insured

Currently I have a total of 3 insurance policies; 2 life insurance (term insurance and Dependants' Protection Scheme) and 1 health insurance. In the event when something bad happens to me, at least I have money to help, and if I'm not around, my parents and wife will have money to help them. I pay about $138 in CPF and $$661.90 in cash per year, it's purely protection, no investment component, I think it's a small amount to pay  for peace of mind.

1 comment:

Brooke Claudio said...

This is a remarkable financial plan. I’m glad there are people like you who spend their time focusing in financial planning. Strategies like this will definitely help you see your path clearly, which will enable you to reach what you aim in your life. Good luck! :]