Archive for July 2016

Route to Passive Income

It is never too early to plan for retirement

Home Archive for July 2016

After driving for the last 8 years, I decided to "throw in the towel" last year. It was a painful decision as I had to familiarize myself with the public transport again.

What have I gained? Money. More spare cash.

What have I lost? Some convenience.

After 8 years...

Taking the train was initially uncomfortable - the crowd during peak hours, the stuffy trains at times (when the air-con does not seem to be working), etc. There are always reasons not to like public transportation.

However, it has, technically saved time. The morning commute to the office is shorter now. I am working in the city and it is a direct station to station travel. There is no need for additional transfers, in my case.

Driving in the morning is not necessarily that convenient with the morning traffic jam. Taking the train also excludes the annoyance of paying the ERP and FINDING PARKING LOTS. Furthermore, I have began reading during the morning commute and this is something I appreciate a lot.

Uber, Grab Car, and Taxi

Apart from the train, I rely, occasionally, with taxi trips. At times, I will choose the mode that provides me with the earliest pick-up. But most of the time, I will just compare the prices and go with the cheapest option.

I like Uber and Grab because their pricing are pretty straightforward. Of course, having to choose the option of UberX and GrabCar (Economy).

UberX - Base Rate: S$3.00; Per KM: S$0.45; Per Minute: S$0.20
GrabCar (Economy) - Base Rate: S$3.00; Per KM: S$0.80.

Taxis, on the other hand, have so many sur-charges that even a Singaporean like me can't remember. There are peak hour charges (25%), midnight charges (50%), CBD charges ($3), booking fees etc.

Having said that, I do notice that Taxi fares might be comparable (or even cheaper) to UberX and GrabCar (Ecomony) during non-peak hours excluding the booking fee. If you flag down a taxi, chances are, the fare will be cheaper during non-peak hours.

For the record, I personally feel UberX has cheaper fares compared to GrabCar (Economy) as long as there isn't a massive jam. I will also stay away from UberX or GrabCar (Economy) if there is a price surge.

Money Saved

I never really knew how much exactly was it to maintain a car monthly. There are always the additional hidden costs in some months - maintenance, extra parking fees, ERP charges, traffic fines, parking fines etc. The total amount could range from S$1,200 to S$1,800 a month.

My transportation cost now, is down to only S$300 to S$400 monthly. It can even be as low as S$200 if I did not splurge on taxi/private car hire fares.

Conclusion

I do miss the convenience of driving - when I want and wherever I want. But, the money saved is definitely a big sum and it could be put to better use. I am still considering if it will be wise to buy a small weekend car when we have kids eventually.

Dilemma indeed. #firstworldproblems

Few days ago, I felt so lazy to get out of bed, with my sleepy eyes, I lazed in bed reading a blog post - My talk on Funding your child's University Education at the Lifelong Learning Library.

And this paragraph caught my attention - "Along the way, I was able to blend in some ideas from economists along with some statistics to get parents to start thinking about the opportunity costs of paying such a large amount of money to tuition teachers and enrichment seminars and think about how large this money stash can get if it was invested in the stock market instead. This forms the heart of my dangerous idea : Money paid to tutors and enrichment schools could have been used to pay off dividends starting from the day your child graduates from a polytechnic."

What really got my attention - Dangerous Idea?

Not that I have any kids. But I decided to download the presentation deck to find out more details. The dangerous idea was presented in the following 2 slides (Source: Funding your Child's Education):

I did not attend the talk. My assumption and interpretation will be a tuition-free education environment for the child, relying sorely on the school, the child and the parent (i guess).

Would Singaporean parents actually consider it?

I believe nearly eight in 10 parents with children pay for private tuition in Singapore. The paper chase begins really early and tuition is considered a means to improve their children's grades and to help them keep up with others. I came from a non-tuition background and I did not have really good grades (average student). However, in this current era and context, I am not sure how receptive parents are to not providing any tuition to their kids. In fact, some parents might put in the extra hours at work just to provide tuition for their kids.

Controversial indeed.

Would you consider investing the money for your child instead even though there might be a need for tuition?

Even though, I never had a tuition day in my life, I am not sure.

What about the child?

The child will definitely be very happy not to spend the hours on tuition. This is an assumption. I believe there are kids that genuinely want tuition for better grades.

If I had inherited a S$340,000 portfolio immediately after I graduated from polytechnic, I would be ecstatic. At that age, I would not have managed such a big sum of money before. $10,000 was already a big sum. The tendency of spending the inherited portfolio will be high. I probably would not know how to manage it in the first place. It might be a case just like how many millionaire lottery winners lose their fortune eventually.

Really wonder how many parents would consider this plan.

People are probably more familiar with "Eat, Sleep, Train, Repeat". More commonly heard and I believe it is the mantra of many fitness enthusiasts throughout the world. I do often hear it from my slightly "crazier" peers that wants to be fit with a nice body.

“Eat, sleep, train, repeat” really simplifies what is essential for every successful fitness program. In fact, it is essential for a successful fitness enthusiast.

Now, "Salary in. Invest. Re-invest. Repeat" is not exactly my mantra but subconsciously I have been doing the same for a long period of time.

Started with learning how to Save

It all started with "Salary in. Save. Repeat" many years back. We all know the inflation in Singapore can be a nightmare for Savers, particularly with the low savings interest rates in our local banks. However, "Salary in. Save. Repeat" gave me a good foundation to build a sizable portfolio when I started to invest.

Read: Did I Manage To Save S$100K Before 28?

Discipline is still the key

At the end of the day, a mantra doesn't mean anything if you do not have the discipline to execute it religiously. Ask any fitness enthusiast, their good fitness, good body and good health did not appear overnight. It was years of effort.

Many people will be entice by get-rich-in-months schemes or training courses. But I still believe in the most traditional method of taking a step at a time to build my wealth. This is just my personal opinion. I am not bashing any get-rich-in-months schemes or training courses. These trainers had put in years of effort to build such expertise. These courses could kick start your investment journey but you still have to build your expertise over time.

Discipline + Right Knowledge is probably a better way of putting it.

Salary in. Invest. Re-invest. Repeat.

To sum-up, reasons for doing it:

1. I can't rely on bank interest rates.
2. I need my money to work for me.
3. I really do not want to have to work during my retirement years.
4. Most importantly, it has become part of my DNA to do it.

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Without a car, one year on... Uberizing!

Forgo Your Child Tuition; Invest the $ Instead

Salary in. Invest. Re-invest. Repeat.

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