We are in the last month of FY2024. Today is 8th December when I write this. This is probably the final post for the year as we are heading for our family trip. When you are older, your year seems shorter. I still remember that when I was young, I wished to grow old faster so that I could do the things I wanted. Now that I am older, I still cannot do the things that I want.
Or is this something that I self impose on myself?
There are a lot of what-ifs. If I have continued to stay in our fully paid HDB, there is no stress at all. Imagine a fully paid HDB coupled with an SGD 3 million equities portfolio that pays you a dividend of SGD 120-130k per annum. I can choose to work or not to work. I can choose to drive Grab or become a librarian. I can choose to become a barista and work in the F&B industry if I wish. There are unlimited possibilities. You can refer here for our financial freedom status.
I am stranded with SGD 2.2 million in mortgages. This will become stressful for the household if any of us lose our primary income. In short, we are slaves to our houses.
Don’t get me wrong, we are in a very strong financial position, in my definition. We are just highly leveraged due to mortgages. In the worst-case scenario, both of us lose our primary income, we still have dividend and interest income. It will be sufficient to tide through the mortgages assuming that there are no tenants at all. At the moment, we have sufficient tenancy duration to cover till the Minimum Occupation Period (MOP).
I am trying to be prudent.
Speaking to my friend who I have invested with for most of my life before he started his hedge fund, he asked me to sell only when I lose my job. If not, there’s no need to as the interest rate is low. Furthermore, the price range for my properties is in the low to mid-range compared to the new launch prices. The risky ones in times of crisis will be those in the high range where the volume is lower. The quantum that they can correct can be higher as the number of buyers is generally lesser.
Since I touched on my hedge fund friend, he has guided me from 2007 to 2017. Then he asked me to learn how to lose money. I did not understand that at first. Looking back, I appreciate now why he mentioned to me that it is better to learn how to lose money when you have SGD 1 m than lose money when you have SGD 10m. It is good to learn how to lose money when you have less. It is less painful. Also, you need to lose money in the game of investing before you can learn how to make money. It is an inevitable tuition fee. If you meet gurus who tell you that they have never lost money before, run as fast as you can!
Do I feel wealthy? The truth is not really. I feel the pinch but maybe not as much as before. I can feel the shrinking power of money due to inflation. Everything is getting expensive. A coffee at a neighbour hawker center used to cost SGD 1 and now is at SGD 1.40. It is not just in Singapore. Most countries will feel this impact of inflation. Inflation is better than deflation. Some are truly wealthy and considered as high net worth. That’s defined as a minimum SGD 25m and above. I do not aspire to be one. I am easily contented. I am getting closer to knowing what’s enough.
I have been trying to learn more about mindfulness. Every day I will write down 3 things that I am grateful for, be they big or small. It could be I am grateful that I can have my favourite curry rice. Life is too short. It cannot be just an endless chase for more money. I am very grateful for the time that I can spend with my family. I always remind myself that I have only today. Tomorrow is a gift from God.
updated on 31st December 2024
I sat myself in a quiet corner away from distraction to conduct a family financial planning and forecast for FY2025.
Below is based on end FY2024
The family liquidity ratio = cash & near cash/ monthly expenses = 15.12 => This is slightly excessive at the initial look. If I remove the cash requirement which I park to have priority bank status, the liquidity ratio drops to 3.14 which is still reasonable within the 3-6 range.
Liquidity Ratio
Liquidity Asset/ Net Worth = 74.5%
Savings Ratio = Savings/ Income = 109.41% => Exceptional
Debt Ratio
Total Debt Repayments/Total Income = 46.64% => Debt service ratio of <35% is healthy. This is high and borderline high risk.
Total Non-mortgage Debt Repayments/Total Income = 0% => Debt service ratio of <15% is healthy. We don’t have any credit card debts here. Everything is cleared on time, every time.
Total Debt/ Total Asset = 35.26% => less than 50% is healthy. So far ok
Asset Utilisation Ratio = Total Invested Asset/ Total Asset = 45.85% =>Measures the amount of asset working hard for you
Solvency Ratio = Net Worth / Total Asset = 64.74% => >50% is healthy
Books that I read in FY2024
2024 is the year that I experienced long-sightedness. This is due to aging. I find it difficult to read as my eyes become tired after reading for a while. I struggled to read in the evening after a long day of work. I still squeezed time to read to reclaim my sanity after a stressful day. I managed to read 45 books which is good.
The Quality Growth Investor book coupled with the MoneyWiseSmart course is changing my investment philosophy.
Goals in my 40s
My number one priority is to clear all mortgages. I do not want to be straddled with debt as we enter the 50s. I hope to achieve this goal by 45 years old.
I want to start a business in my 40s. It could be self-employment. It could be starting a YouTube channel. I would like to do work that I am passionate about and can challenge myself. This could be done while holding on to my day job. I had started dropshipping with friends before but it did not work out. I had started other part-time businesses with friends but those are not what I am passionate about. This time round if I want to do something, it will be one that I am passionate about. It does not need to bring in the dough.
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