It's the sentimental time of the year when everyone starts to sink into their thoughts reflecting about the things they did and the things they hoped they did, before proceeding to set up flags new year goals to keep them motivated at least for the first week. So let me join the review party dance floor and see what move I've got for the finance aspect of my life.
This month marks the 36th month of full time employment after graduation. I count in months because there's a couple of gap months I took for soul searching while making a career switch. I would say that my savings could have been in a better state if I had been more careful with my spending - while some are actually worth it, some spending are just unnecessarily wasteful that I feel compelled to take the time machine back in those moments and shoot death glares of despise to my old self(s). Anyway, I'm good at moving on from learnt mistakes since there's no use crying over split milk. I just have to be more careful will the milk dish in the future
Nonetheless, I am satisfied with my financial achievement, hitting the 100k mark some time during the first quarter of the year, and the 150k mark by end of this year. Divide it by the 36 working months that'd average out to be 50k per annum. Yes, a lot of people have done it before, and I know of more who didn't write about it just because they are more keen to pursue other hobbies or they simply don't care about those milestones. Yes, I know it's not a super huge sum of money. Again, there are other people who amass greater wealth within a similar, or even lesser time frame. (There's always this 'other people',isn't it?) And yes, I included the CPF monies.
Let's forego the eternal debate of whether if CPF should be treated as our assets or just an alternative to additional tax in other countries where you are being taken care of from cradle to grave. It will just get complicated: e.g. If I do voluntary contributions to my CPF, is that money still part of my savings, or do I write it off as expenditure? Different people have different circumstances, perspectives, opinions and faith. The fact that I do voluntary contribution should already be a testament that I believe in the system, thus I would regard it as part of my savings.
For this year, I'm still contemplating on whether I should top up more funds into Medisave Account (MA) till I max out the annual limit after doing the '$7,000 voluntary contribution to Special Account (SA)' drill (7KVC for short), so as to let the 4% compound magic work and have lesser taxable income, or should I keep the cash in case the market crash like how everyone is speculating it to be? As for next year, should I do the 7KVC drill in Jan so that I can have 20% more interest, or should I just wait and see if there's any opportunity before committing it in Dec?
My conservative side votes for the former. Initially, I plan to max out the MA and SA as soon as possible, before I start to build up my savings in the ordinary account for a potential property down payment. It is not the most efficient way to manage finances, but I wanted to get the nagging thought of hitting the ever-increasing Full Retirement Sum out of my mind. Furthermore, I don't have plans to be a home owner anytime soon, and I'm positive that I will be able to save up enough for the down payment when the time comes, so maxing out the SA and MA is on my priority when it comes to strategising with CPF.
On the other hand, the once-in-a-decade market crash that everyone's anticipating poses an opportunity that my risk taker side is so unwilling to miss. It'd be a pity if I have to miss the opportunity to invest in some good companies just because I don't have enough cash at hand. I haven't work out the perfect numbers yet but I will most probably be going for somewhere in the middle, i.e. topping up some into MA and setting aside some for investment.opportunities.
For this year, I hadn't give much thoughts about investing so there isn't much action in that area, but I do intend to focus on keeping myself updated and properly educated while waiting for the market crash to happen. The last thing I want is to have my savings drained because of an ignorant mistake.
I'm also expecting my savings rate to drop next year, given that I plan to unwind a little and focus more time and effort on exploring new hobbies/ projects (like writing a blog!), brush up on financial knowledge, and focus on other aspect of my life (which is going to incur a significant cost). This is probably complacency, since the normal advice is to work really really hard and save up a hell lot in your 20s. However, I also know that this world never runs out of opportunity to make money, but we'd run out of time eventually.
And hey, it's not like I'd stop saving and start spending all the money. I still aim to save 50k and hit the 200k mark in 2020, make wise decisions and take calculated risk to grow my money. It's just that I'm challenging myself to achieve this in a more efficient and productive manner so that I can pursue other things with a peace of mind that my financials are well taken care of.
And that's freedom.
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