Reaching the next milestone

A lot has been written about F.I.R.E (Financial Independence Retiring Early).

I guess we all have a ‘number’ in our mind. It is this target you want to hit, the magic amount. Some people are aiming for $10,000.00 or $100,000.00 or $500,000.00 or $1000,000.00, $2000,000.00….

For some, beyond this amount, there is really no need to want for more since they can already cover their yearly expenses via the passive income. However, for me, I reckon it is a moving target.. as I have yet to devise a sound passive income stream.

Ultimately, it doesn’t matter. It is my goal that I have set and I am aiming towards it at my own pace.

Initially I thought I can see myself reaching my first milestone soon…. I can see the light at end of the tunnel. As recent as the start of 2018, I thought I would be reaching this target by mid 2018.

However, things don’t always turn out the way you wanted them to. Cash outflow (either via investment losses or daily expenses) has been more than what I have anticipated.

 

1. Poor stock portfolio performance.

I haven’t been ‘mining’ for stocks for a while. Basically, my intention is to keep the proportion of my stock holdings relatively low (currently, it is at approx. 20% of my net worth). And just slowly tally up the capital increment from my monthly salary.

After all, market valuations are relatively high.

In fact, this stock proportion (in relation to my overall portfolio) has not been that low for years.

Unfortunately, I have kept a few under-performing stocks in my portfolio and it hasn’t been pretty. I reckon like many, I’ve sold some of the profitable stocks to keep the profits while waiting and hoping for those under-performing ones to turn for the better.

For instance:

• Sarine Technology stock price has been languishing for a while now. The company has been dealing with the infringement of their intellectual property rights, and earnings have yet to pick up robustly despite the slight improvement in market sentiments.
• Golden Agri-Resources share price has also been in a slight downtrend, in line with the CPO (Crude Palm Oil) prices. The decision by the European Parliament in Jan 2018 to ban the use of the Palm Oil commodity in motor fuels from 2021 to prevent deforestation and meet Europe’s more ambitious climate goals appears to have dampened prospects for CPO price rise drastically.
• Shinsho Corporation: It appears that the trade war started by US has some ramifications on its stock price, although, not as much as I would have expected. Still, its stock price has been uninspiring at best.
• Creative Technologies: This is a really a small holding. I reckon it is more of a rash and speculative buy. I guess after so many years, I am still prone to making impulsive decisions. Well, its stock price has been on a down-trend.  I am curious as to how the launch of the Super X-Fi affect the stock price come mid 2018.

I have retained some of the stocks which I would classify as the long term holdings eg. Colex Holdings Limited, Riverstone Holdings Limited (for the latter, albeit at a much smaller amount).

Generally, I don’t expect this year’s passive income from dividend to be much.

So far, the stock market has been more volatile this year, as compared to 2017. Perhaps, I could have made more if I held on to some of my better shares, but it is a decision that I have made in late 2016 (to reduce stock holdings), and so far, I have been able to sleep soundly at night.

I can’t really put a figure to my losses so far for this year, but if I must, the damage would be approx. $20k to $30k (despite the small proportion of stocks in my overall net worth).

2. Work and Personal expenses

I know, currently, the Singapore job market is relatively stable. Retrenchment is at 7-year low.

• Singapore retrenchments at 7-year low and unemployment rate dips but further improvements ‘harder to achieve’: MOM (read here)

However, at the same time, I feel that the construction industry is not doing as well. Developers, consultants (architects, engineers, designers….), contractors appear to be facing a tough time. Maybe it is just the people whom I meet, but my sensing is that the industry isn’t doing great… I could be wrong.

These days, there appear to be more public sector projects, or even up-coming private residential projects from Chinese property developers (which kind of left many local developers and contractors in the dust).

The retail & commercial property market seems to be still struggling.

2017 was not a great year for my company. Across the board, there was no annual increment (aka pay freeze) for all staffs in our company for year 2017. Luckily, this year (2018), the annual increment was reinstated. This is probably because many staffs resigned in 2017.

So work-wise, the salary wasn’t that great.

 

My personal expense has been kept rather low as always.

On hind-sight, so far, for me personally, the biggest expense I can think of, is my new laptop, which I bought this month.

I recently bought an ultra-book, after my previous ultra-book crashed. The previous ultra-book was with me for around 6 years. I like carrying my laptop around during the weekends, hence I wanted a light and portable ultra-book.

I have been trying to keep my old mobile phone alive. To me, my smart-phone is basically there as a tool. To do simple messaging, voice calls and online surfing. I really don’t see the need to upgrade to a newer smart phone unless my current phone is spoiled. As my phone age, the battery life also get depleted faster. What I have done one year back was to buy new battery online. I also bought a cheap case online to protect the phone.

However, I must confess, I normally buy myself a cup of tea from Ya Kun every weekday morning at work. Yeah.. bad habit.

Nevertheless, I can say, entertainment wise – expenses is really low. I go to the library to read (whenever I am free), I swim at the public pool nearby, and take public transport wherever I go. I reckon my life would be really ‘boring’ if I don’t have a family.

Again, I can’t put an exact figure to my personal expense, but if I must, I would say it would be around $5k to $7k so far for this year. It would have been far less if I did not buy the laptop.

3. Family Expenses

I reckon it is different leading a frugal life as an individual as opposed to leading one as a family man. Or maybe if my wife’s concept of money management is the same as me (but it isn’t).

Yes, both paths have their own difficulties.

Of course, yearly expenditure in my case – would be the monthly token I give my parents, and the yearly red packets I distribute out (during Chinese New Year and weddings). And not to forget the token given during funerals.

These seem to be increasing, which I feel, sometimes, can be beyond my control. Perhaps I am at the age, when the more senior generation prior to me start passing away or get sick more often. Many of my cousins are also married and have their own kids.

Within my own family, in my case, I am perhaps glad that my wife doesn’t always think like me. Or shall I say, she is not as extreme as me when it comes to money matters. Enrichment classes for my son is something which we have differing views. Nevertheless, eventually, between us compromises will be agreed upon. I currently pay for my son’s Chinese enrichment classes while my wife pay for my son’s English enrichment classes.

We also eat out quite often on weekends, sometimes at restaurants and sometimes at fast food restaurants or food court.

This year, as a family we will be going for a short trip to Malaysia Lego-land in June, together with my parents and my siblings (and their family).

As extreme frugal as I would like myself (and expenditure) to be… I don’t really enforce it on my family. It is always a balance. Initially, the differences (between how I think and how my wife thinks) were hard to accept, but after years, it sort of iron out.

However, truth be told, they don’t also spend much. My son is at an age when he is sensible enough to understand that we are not rich and can’t spend recklessly. My wife also doesn’t buy a lot of stuffs – when she sees something she likes while shopping, she doesn’t always buy it immediately, but rather give herself a couple of days to think about it, and if she really wants it again, then she would buy it.

Again, to have an exact figure for the amount is hard. I am guessing, if I include the trip to Malaysia, amount given to parents, amount spent during CNY / Weddings / Funerals, kids’ expenses, dining out, etc… a ball-park figure will be around $12k to $15k.

 

In Gist

Perhaps I would have a more structured (and controlled) approach to my path in reaching my financial goals, if I am single with a job in a more stable industry. Life sometimes throw me ‘curve balls’. And it gets messy at times.

Looking at the above, I think the amount lost/spent to be around $37k to $57k. My stock portfolio losses took a big bite out of it.

Hmm.. the target seems further as the year progresses. So far, despite these, I wasn’t that stressed out. My net worth may not be a lot, but I reckon beyond a certain amount, I think me and my family can survive. It might take me a while longer to reach my target, but I do think I will reach it (well, at least for my own personal mile-stone).

 

Now here’s what I’ve been reading this week:

• Who Benefits From Rising Interest Rates?
• How I became financially independent in 5 years – Part I
• Why so few succeed 
• Investing Ideas: April 2018
• $500,000 Cannot Buy You Pleasantries from Your Ex Employee
• How easy is it for Singaporeans to fall victim to herd mentality?