Let's Talk About Investment...

Hehehe... back to posting again. I guess I was just a bit down the last time round n sort of in the mood for drama. But thank you very much for all the kind and supportive comment.

Well, the topic for today is "Investment" and (as I commented in earlier post) investment is any form of instrument that make $ work for you and NOT you work to get $. The most simple form of investment is also known as "Ownership Investment" where we own something in order to generate a return for us be it in capital gain (e.g. profits from sale of stocks, unit trusts, options, futures, etc) or regular income (e.g. rental income from investment property, interest from bonds, etc).

What I'll be highlighting today are the key features which makes an investment suitable for whatever goals we have in mind.

1) Initial Capital;
2) Liquidity or ease of disposal with available ready buyer
3) Physical and mental effort involved
4) Time horizon
5) passive income

To further illustrate this, let's have a look at the table as below:
Let's assume we start investing at the early age of 20+. We just started working, we don't have a lot of money, and we have loads of things that will be going on with our lives which requires more money (e.g. further studies, get married, buy house, support our families, etc). So what we should be looking at is 'stocks, shares, unit trusts, mutual funds' as they requires relatively low capital (range from S$500 to S$5000 depending on investment) and minimal effort (pick something we can understand and stick with instead of something that's in the trend) and more importantly can be dispose off easily when we need the $.

Next, we go to our 30s and 40s... We are probably happily married with kids and wanna save for their education and at the same time start thinking about our dream retirement. We would have accumulated a bit of cash and also some good investing knowledge over the years. So if the spare cash is enough, we may wanna invest in some properties(this way, we get regular passive income) but at the same time leaving just enough still in shares, unit trust, or bonds for liquidity convenience. With good contacts or networking, we may also found some good business opportunities which we venture in n be our own boss. ;p

As we reach our 50s n 60s... we look back in time to our accomplishments n at the same time look forward to our retirement. Most of our $ will be in some form of investment and what we really want is some form of pure passive income which will pay for our regular expenses when we retire. Ideally the passive income will be more than our expenses so that the capital will in fact appreciates over time and leave a legacy for our next generation.

Wow.... such a perfectly "happy ever after story". Are your story gonna be the same? Or are you still struggling to take the first step? Let me assure you that it's never too late to start be it you are in your 20s or 50s. But it is crucial to note that there is no one perfect investment solutions. There may be some slight variation or even lowering in expectation. However, what we want to avoid at all cost is... "I'm 70 and I'm still working because I don't have enough $$$ to pay for the food, water n electricity." Neither do we wanna say "Gosh!!! If only I had so n so shares or properties back then my $$$ would have been ten-folded now."

So what are you waiting for? Start thinking, planning, evaluate options, implementing and most importantly setup review as nothing stay the same forever. And if you feel the work is just too much, get someone like me to help you out. ;p

Let's Talk About Money (",)

I remember a time when I was an ignorant and clueless fool about my own finances. I was a typical employee with a monthly paycheck, spends most of it before the month is out, always complaining that money is not enough and always struggling to save more for my future. Hahahaha. . . . Thus, I got myself landed into the industry (afterall, this is a very high paying career if you can perform) and surprisingly one of the first thing I learn is "financial planning is not hard at all". A bit on the long and tedious side but not hard. I have also come to realized that a basic understanding of anything by answering all the 'WH' question also applies to financial planning. I am a strong believer that if you are able to solve these questions for every problem or situation that you encounter, whatever decisions you make will be done without regrets and hopefully the outcome will also be of our desired result.

So what is Financial Planning?

Financial = MONEY
Planning = PROCESS

Simple enough, rite? Now, let's look at it in a slightly different perspective.

1) work = get $$$
2) life = spend $$$
3) balance $$$ = savings
4) savings in bank = $$$ in idle
5) savings into investment = $$$ in management
IMPORTANT: $$$ in idle can never out-perform $$$ in management

MOST IMPORTANT: cover ourselves with good backup plan i.e. insurance

So the next question is 'What is Investment'?
Well, investment is an instrument that make $$$ work for you and NOT you work to get $$$ (details to be available in later post)

And how do I connect this back to Financial Planning?
The emphasis now lies with the word 'PROCESS' where we:
a) assess situation and identify options
b) evaluate options
c) implement choice
d) review and revise the plan

Hmmm... this should cover most of what I do everyday at work where I help my client throughout the whole process as above with me absolutely loving the whole process. (",) It feels great to be able to make a difference to the people I know, to help them achieve their financial dreams n get paid for helping out.

So, care to join my industry n be my colleague? ;p