Panzer's Guide to Financial Freedom: It's Your Money and It's Your Life

panzergrenadier

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Hi raptor0x

I think people like poems because it has fast execution. That has been my experience for SGX trades. I've not done US trades so cannot comment.

The risk of US trading is foreign exchange. You need to factor in both market risk of stocks going up/down as well as forex. So there's more variables to be concerned about.

Be well and prosper.
 

supergmail

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Hi panzergrenadier,

you might want to give 3 in 1 coffee a miss. There are studies the claim it will cause memory loss over a extended period of consumption
 

Al-Jay

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Hi panzergrenadier,

you might want to give 3 in 1 coffee a miss. There are studies the claim it will cause memory loss over a extended period of consumption

Everytime is about moderation and diversification! That is why nutritionists say balanced diet!

Work 3 stressful hrs a day to make billions can kill cos stress induce billions of cancer cells before one can make billions of dollars! Evidence from animal and human studies has shown that chronic stress weakens the immune system which is responsible for constant surveillance within our bodies for infections and cancers. This system seeks out and destroys abnormal cancer cells which may arise from time to time. When it fails, the cells can go undetected and grow into malignant tumours. See http://health.asiaone.com/Health/Women%27s+Matters/Cancer+Centre/Story/A1Story20081222-109728.html


See also http://health.asiaone.com/Health/News/Story/A1Story20081231-111442.html
 

panzergrenadier

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Hi Supergmail

Noted.

I tend to agree with Al-Jay that it's about moderation. I drink about 1 cup of 3-in-1 coffee to every 2-3 cups of coffeshop brewed coffee.

But I'd rather not live life without coffee..hahahhah

Be well and prosper.
 

panzergrenadier

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You are what you THINK you are (Making Plans for 2009!)
Posted by panzer on December 30, 2008.

The topic, “You are what you think you are”, popped up in my life as a table-topic during the 2007 Toastmasters annual convention in Hong Kong where I was a participant in the table-topics contest. A table-topic is a topic given to a speaker without earlier preparation or knowledge who then has to speak on it for one and a half to two and a half minutes.

I chose this as the title because in many respects, we ARE what we THINK we are. If you are into personal effectiveness and self-development literature, the power of goal setting and focussing your mind on what you intend to achieve is an important part of success in any endeavour.

Why Set Goals and Make Resolutions?

In order for you to improve and to move closer to your goal of financial freedom, you need to set goals and more importantly, take action to achieve them.

I personally am not one to only set resolutions or goals at the end of the year as my net worth worksheet highlights my goals for financial freedom prominently throughout the year. However, it’s helpful to take stock of one’s performance for the past year and to plan to make improvements for the year ahead.

Panzer’s Financial Freedom Goals for 2009

1. Increase income from alternative sources

My blog monetisation efforts cover my out-of-pocket costs incurred and I’ve learnt more about web 2.0 technologies than I ever did just reading about it. I realise that the seeds I sow now are actually for me to develop a viable lifestyle post-retirement. Whilst I am working towards financial freedom, I am open to working another 20 years or so if I am fit and healthy. However, increasing income from my blogging efforts as well as to derive more dividends, interest and yields from investments will help me diversify my income sources and also help me grow my means towards financial freedom is a shorter period of time.

2. Simplify my lifestyle by 30%


Ever since I started tracking my monthly expenditure, I’ve become more attuned to trying to simplify my life. I sleep early and get up early due to my daughter’s schedule. I’ve decided to reduce the amount of clutter in my life by buying fewer consumption items and by throwing out stuff I don’t need at home.

Weekends see me cooking for my family for at least one meal of each Saturday and Sunday and in bringing my family to public parks that cost only some petrol as they are mostly free (including parking!).

Enjoying life doesn’t have to always mean spending money. Going to the movies and dining out is fine, but it can be supplemented with visits to public spaces provided by Nparks.

3. Exercise regularly 2-3x a week

I’ve slimmed down since my daughter was born and aim to maintain my current weight. I realised that regular exercise is the way to continue with the healthy lifestyle. Until my daughter gets older, I will have to schedule exercise sessions at work during lunchtime. Fortunately, my workplace has a gym nearby that staff can use. No more excuses for not hitting the treadmill at least 2x during weekdays!

Your Goals for 2009

What are your goals to help you move closer to financial freedom?

Share with Panzer whether it is related to living within your means, growing your means, saving and investing or protecting your means.

Be well and prosper.

Related Posts:

How to Conduct Your Own Annual Review - Chris Guillebeau

==================================================================

Panzer is a 30-something accountant who finally grasped the concept of financial freedom at the ripe old age of 32. Ever since, he has been travelling on his journey towards financial freedom and documenting his adventures through his blog Five Cents Ten Cents.

His first self-published book, “Panzer’s Guide to Financial Freedom: It’s Your Money and It’s Your Life“, was launched in November 2008 sharing his thoughts on his journey towards financial freedom.
 

panzergrenadier

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5 Essential Kung-Fu Elements Towards Financial Freedom
Posted by panzer on December 31, 2008.

The more I travel along this journey towards financial freedom, the more I realise that we can learn from martial arts/kung-fu/wushu world towards financial freedom. Kung-fu movies feature a lone hero or heroine who journeys towards a quest to avenge his family or to seek to overthrow a dictator or tyrant.

Whilst our own journey will not require us to off somebody using our nei-gong or internal qi, it will require us to fend against the global financial crisis, weak economic and job market as well as the poor management of money and investments.

Let Panzer share with you those kung-fu elements he picked up over the years that has helped him move significantly further along his journey towards financial freedom.

These qualities are not difficult to pick up but require time and effort to master. If you are serious about your own journey towards financial freedom, you may want to spend some time away from chasing the 9pm show 小娘惹 The Little Nyonya, or hammering creeps in World of Warcraft or even sleeping to learn these skills.

1. Slow Palm of Spreadsheet Synchronicity


Whether your favourite tool is Microsoft Office’s Excel or the Open Office version of Calc, spreadsheets are a critical component of being able to compute quickly your net-worth, to track your living expenses, to compute future value, present value of annuities or do cash flow analysis. The powerful thing about understanding spreadsheets is that you can built up templates and formulas that will help compile totals for month to month. Analyse trends of your investment returns.

My own Excel worksheet does the following for me:

* Tracks daily expenses for daily, monthly and yearly tracking
* Tracks returns on investments from capital gains/(losses), dividends, interest, treasury bills yields and blogging income
* Calculates my net-worth at any point in time taking into consideration lower of cost for equity, cash and cash equivalents, cash value of insurance policies and CPF monies less outstanding liabilities
* Computes purchase cost, sales proceeds for any share purchase inclusive of commissions, clearing fees etc. net gains/(losses) and annualised returns based on purchase/sales prices and dates of purchases/sales
* Simple interest future value, compound interest future value, future value of annuity, present value of annuity, compounded annual growth rates

What I’m using Excel for is probably only 10% or less of its functions but it already does quite a lot for me. :)

2. Calculator Crane Position


You may not always have you computer handy or you may need to do some quick calculations before making a decision. Having a calculator on your mobile phone or a physical one to do some old-school number crunching involving adding, subtracting, dividing or multiplying works wonders to obtain percentages. Is a $4.85 bottle of 400 ML shampoo X cheaper than a $5.90 bottle of 750 ML shampoo Y? (Answer: No, shampoo X costs $0.12/ML compared to shampoo Y at $0.008/ML.)

The ability to compute offline using a calculator saves you cents and in some cases even dollars when shopping for stuff on a per unit basis. It also allows you to check on the spot receipts and tabulations where-ever you are.

3. Mind Over Matter - Internal Tranquility of Needs vs Wants


The journey towards financial freedom is built on the small steps of spending within your means. This requires you to master your mind over matter — the matter of telling the difference between what you need and what you want. Living within your means requires you to be at inner peace. Knowing that you are happy even as most of your spending is on needs and on the occasional want.

4. Iron Will Against Fear & Greed


Emotional control over our twin terrors of fear and greed in investing is the pillar that will anchor us against falling for Ponzi schemes such as Maddoff scandal or allowing ourselves to be conned by attractive relationship managers selling us toxic products without full disclosure of the potential risks involved.

5. Yin-Yang Balance Between Finances, People and Things


Ultimately, we can be financially free but lose our health in the process. We can be financially free and lose our perspective. We can be financially free and lose the love of our family and loved ones.

I’ve learnt to balance more between people, finances and things. I am seeing more of my want/need decisions in terms of balancing between these elements in my life. And I think this flow between the three areas need to be readjusted from time to time for that equilibrium that each of you have to strive for within yourself.

Kung Fu Elements for 2009?


What are some of the elements that you think are the most important for your success in financial freedom for 2009?

Share with Panzer in the comments section. :)

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Panzer is a 30-something accountant who finally grasped the concept of financial freedom at the ripe old age of 32. Ever since, he has been travelling on his journey towards financial freedom and documenting his adventures through his blog Five Cents Ten Cents.

His first self-published book, “Panzer’s Guide to Financial Freedom: It’s Your Money and It’s Your Life“, was launched in November 2008 sharing his thoughts on his journey towards financial freedom.
 

panzergrenadier

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Roadmap for Five Cents Ten Cents - Panzer’s Workplan 2009
Posted by panzer on January 1, 2009.

The beginning of the year is the time to embark on new initiatives, to break-through new frontiers and to seek to challenge yourself to become even better in the various areas of your life.

Look Back at Five Cents Ten Cents


Five Cents Ten Cents has come a long way since its humble birth 678 days (1 year 10 months) ago on 22 February 2007. It started out as a blog using blogger platform as it was free and interface quite user-friendly for a relative newbie to blogging. As I learnt more about personal finance, blogging and in Web 2.0 technologies, I decided to go one step further and migrated Five Cents Ten Cents to a paid host (3ix) using wordpress as the publishing platform.

Blogger allowed me to learn in a fun setting and it was this phase of growth that introduced me to the concept of blog monetisation and AdSense. Since then, I’ve embraced Web 2.0 in its many forms such as social networking through my online participation in hardwarezone forums as well as sgfunds and related forums. My twitter and plurk presence was also established as part of my experimentation with these micro-blogging (some people say time wasting platforms).

The Path Ahead: Road Map for 2009


In line with simplifying my life, the path ahead for this blog is direct and straightforward. It is described in the following vision and mission statements:

Vision: To empower individuals towards financial freedom, one realistic step at a time.

Mission: To be the preferred online personal finance resource in Singapore, through sharing of knowledge, building of skills and fostering a community of financially free individuals.

In order for me to fulfil the vision and mission for Five Cents Ten Cents, I would embark on the following 3 key initiatives for 2009:

1) Improve Useability (Target: March 2009)

It is coincidental that when I checked the statistics for this blog, 29 December 2008 had the highest number of page views at 593. This is a record since I ported over to my own host using wordpress. The more readership I have, the more I need to provide a great user experience in navigating through my blog.

2) Themed Posts and Series (Target: January 2009 - 1st Series to be published)


My blogging strategy has been mostly mining my thoughts that I write down in my PDA as well as tracking current affairs that have an impact on personal finance (e.g. CPF rule changes, statistics on bankruptcies etc). I realise that some of the posts that have long-legs, i.e. are relevant and still read by you are those that delve a bit more in-depth into issues such as retirement or my book review on “Your Money or Your Life” by Joe Dominguez and Vicki Robin.

I’ll continue to do more of such posts because it challenges me to go more into a topic and would require more research and insights on such areas.

3) Stories and Parables (Target: March 2009 - 1st story/parable post to be published)

As a toastmaster, I did an Advanced Project Manual on Story-Telling. For those who are not toastmasters, a project manual is a do-it-yourself speech training where you are given instructions on how to craft and deliver a 5-7 minute (or sometimes it can be 10-13 minutes) speech to develop certain speaking skills. The Story-Telling manual does that, it teaches you how to tell personal stories, stories about historical figures or events in history and even fairy-tales. I’ll be crafting some posts that go along the line of stories or parables to allow the fundamental principle behind a personal finance story to come out through the characters. This will take some time so I’ve given myself a fairly generous timeline of March 2009 (haha!)

4) Panzer’s Guide to Financial Freedom Book II (April 2008)

I’ve been encouraged by the number of readers for my first ebook, “Panzer’s Guide to Financial Freedom: It’s Your Money and It’s Your Life”. It is a deliberately short book (15 pages) to distill some of what I’ve been saying in this blog: live within your means, save and invest, grow and protect your means. I am still thinking about how I want to approach my second book. I am inclined towards a work-book type of format as I believe that whilst understanding the personal finance principles is well and good, but applying it to your life makes the world of difference in the quality of your life.

Parkinson’s Law tells us that “work expands to fill the time available”. I’ve set a tight deadline to push myself to get started on this. The feedback I received from my first ebook shows me that publishing an ebook is a powerful way to reach out to more people. The number of people who visit my Panzer’s Guide section now outnumbers any of my regular posts.

Tracking Outcomes

Given that I’ve publicly stated my goals for Five Cents Ten Cents 2008, this post will serve to remind myself of whether I’ve delivered on my targets. I won’t beat myself up if I miss one or two deadlines but I’ll add some references to this post in future posts as constant reminder for me to be focussed on the outcomes and goals I’ve set for myself. Offline, I’ll create a Freemind mindmap to track specific tasks and activities, what the Getting Things Done (GTD) movement likes to call “next actions”.

These help me plan and execute by making myself think of what I should be doing next to propel these projects forward.

Do you have a blog? Are you thinking of improving it?

Share with Panzer your experiences! :)

Be well and prosper.

==================================================================

Panzer is a 30-something accountant who finally grasped the concept of financial freedom at the ripe old age of 32. Ever since, he has been travelling on his journey towards financial freedom and documenting his adventures through his blog Five Cents Ten Cents.

His first self-published book, “Panzer’s Guide to Financial Freedom: It’s Your Money and It’s Your Life“, was launched in November 2008 sharing his thoughts on his journey towards financial freedom.
 

panzergrenadier

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Central Provident Fund - Nest Egg|Retirement Egg|Smaller Egg?!
Posted by panzer on January 3, 2009.

Many of us rely on our Central Provident Fund or CPF as the main source of retirement funding. I’ve explored in my retirement series why this is risky. The Government has allowed the CPF to be used for housing as well as for medical and even education and for investments.

It’s retirement purpose is getting more diffused even as the Government continues to reduce the amount of employers’ CPF contributions back in Oct 2003 from 16% to 13% before reinstating it to the current 14.5%. Mind you, the reinstatement doesn’t cover the fact that CPF contributions are also capped at monthly income of $4,500 so your employer doesn’t have to contribute more if you earn more than that amount.

I ran a poll along with Derek from thefinance.sg because there were ominous noises that the convening of the National Wages Council earlier would herald the risk of a employers’ CPF contribution rate cut. The sample size is 46 participants.
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Such a cut may help lower employers’ payroll costs but unlike the previous economic downturn during SARs, this period of recession has its roots in the global financial meltdown due to sub-prime and the US banks taking the whole world for a ride on their toxic collateralised debt obligations and other risky products. A move to cut CPF may save jobs, but it damages retirement savings for the next 20-30 years.

Many of you are sceptical that the Government will NOT cut CPF employers’ rates until Lim Boon Heng came out to reassure the public as majority 65% believed that the Government will actually cut CPF employers’ contribution rates. 28% felt that the Government would not while 7% actually didn’t know what CPF stands for! Other than the 7%, I think many who have gone through CPF cuts in the past know that nothing is cast in stone. If jobs have to be saved, CPF cut appears to the blunt policy option favoured by the Government.

As the current indication appears that no cut is imminent, the question then is are elections around the corner?

Who knows, only time will tell.

In the meantime, tell Panzer your own stories about CPF cuts in the past affecting you in the comments section.

Be well and prosper.
 

panzergrenadier

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Uncle Panzer Wants YOU! (To guest post )
Posted by panzer on January 4, 2009.

Five Cents Ten Cents has grown and one of the ways to make this personal finance blog grow in terms of building a community of like-minded people is to invite you to guest post on my blog!

Panzer is opening up his blog to one post every fortnight to be featured on Saturday. Each guest poster will be reimbursed $10 (SGD) for his/her efforts. The post should be as follows:

1. Topic

Related to personal finance in the areas of living within your means, savings and investing, growing your means or protecting your means. The article should be an unpublished original and not a copy from those article directories or an old post from your existing blog. Article length should be one or two A4 pages (double-spaced), or 500-1000 words.

2. Submissions

Articles can be submitted to Panzer anytime and should have the subject line: “Article for Five Cents Ten Cents Guest Post”. Please direct your submissions to email via rod.loh at gmail.com. Panzer reserves all rights to accept or reject your submissions and to edit your submissions for publication on his blog five cents ten cents. You agree to allow Panzer to publish your article on his blog http://fivecentstencents.com convey the copyright of your article to him for use in relation to his blog.

If you have something interesting you would like to share on personal finance and think it would made an contribution to this blog, drop Panzer a note with your submission at rod.loh at gmail.com

Be well and prosper. :)
 

panzergrenadier

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Reading your way to financial freedom (1 year ago on Five Cents Ten Cents)
Posted by panzer on January 5, 2009.

[This Article was first posted on 3 January 2007 on Five Cents Ten Cents on Blogger]

All of us started out as investment newbies. No-one was born already equipped with knowledge about personal finance, investments, savings and financial freedom out of our mothers’ wombs. We were all born into this world, naked and innocent until the big bad world of finance and investments teaches us to start learning how to navigate the pitfalls in our journey towards financial freedom or pay hefty tuition fees in terms of lost opportunities, bad investments and loss of capital.

Reading your way to financial literacy
Part of the building blocks that you need in establishing a firm foundation for achieving financial freedom is to learn about financial literacy. You can also learn from talking to more experienced investors, friends and relatives who work in the industry or more importantly have achieved financial freedom and are willing to share. However, such people are not easily available on tap. What is available virtually anytime, anywhere are resources online through the internet as well as resources on paper in our well-stocked public libraries.

I have been seriously investing my own money towards my financial freedom since 2003 and I continue to read a book about personal finance, investments, equities every one to two months.

I am reading Benjamin Graham’s “Intelligent Investor” one of the foremost books about investments you can find still valid today even though it was written in 1971. I have reserved a book by Martin Pring relating to technical analysis as that is one part of my investment knowledge that I need to beef up.

What are you reading today?
In order to build your foundation in financial literacy so as to achieve financial freedom, you need to read, read and read. Time is precious. You only have 24 hours a day. What will you do with it while you commute to/from work in the bus/MRT. While you wait for your doctor’s/dentist’s appointment. While you drop off your children at the tuition class?

Go read, read and read.

Be well and prosper.

______________________________

Related Posts:

How to Avoid Being Hit by a Black Swan
 

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5 Steps to Live Your Future Life Today

Posted by panzer on January 6, 2009.

Have you ever day-dreamed about your ideal lifestyle?

Waking up to the natural light of the sun streaming gently into your room.

Taking a deep breath knowing that you’re going to start the day with some light exercise followed by a leisurely breakfast of kopi-c (coffee with evaporated milk) and a bowl of steaming wan-ton noodles cooked to perfection?

Knowing that today is the day where you have achieved financial freedom and each day your passive income is more than your living expenses.

You go to work because you want to, and not because you have to.

Such a reality is possible and it starts with TODAY.

Why is your future today?

I learnt from David Allen’s Getting Things Done (GTD) approach that any endeavour that takes multiple steps is a project. Financial freedom is a project because to reach the goal, you need to work at it one activity and task at a time. You break-down your goal into a series of steps or next actions that will help you achieve it.

But there’s a catch…

You need to start now AND work at it today. Everyday of many, many todays.

We fret about tomorrow because of our unpaid bills, living expenses and whatever life throws at us, and yet, we forget that worrying about tomorrow but doing nothing for today will not help us one bit.

Not. One. Bit!

The trick of achieving financial freedom is to be able to dream of your future, but execute it today, one realistic step at a time.

Let’s see how you can take that step TODAY and move yourself closer to financial freedom for 2009 and beyond!

Step 1: Set Your Goals

I’ve talked about goal setting in many of my earlier posts. The key is to make it SMART.

Specific - Don’t say I want to save more for 2009, say I want to save $5,000 or $10,000.

Measurable - How much. Give numbers.

Achieveable and Realistic- If you managed to save $500 in 2008, you may not want to set $50,000 for 2009. Aim for $1,000 or even $5,000. Something achievable and is within the realm of possibility

Time frame - Set a date, be specific about it. Better still, write the date in your personal organiser, your Excel worksheet and set a countdown to it!

Step 2: Break Down You Goals into Key Areas

Let’s say your goal is to achieve $500,000 in net-worth excluding your home by 2030. It’s a good start as you have specified your financial freedom goal, of reaching $500,000 in net-worth in 21 years’ time.

Now, if you divide $500,000 by 21 years, you need to save $23,809.52 a year. To make things simple, we’ll ignore interest rate and compounding for the time being. Say $24,000 is what you need to save every year for 21 years to get half-a-million in net-worth. That’s $2,000 a month.

So the question for you is how are you going to save $2,000 or $x,xxxx a month? Here’s where you set your key areas and start to think creatively.

To save money, you can spend less if your income is more than $2,000. You can also try to develop alternate sources of income, such as blog monetisation or put money in fixed deposits and treasury bills for yields.

Step 3: Measure Your Performance

This is where the challenging part comes. You have to start measuring how well you perform in terms of savings or developing alternate streams of income. You have to track how much you are spending each month and what you are saving.

After reading “Your Money or Your Life” by Joe Dominguez and Vicki Robin, I start to realise the importance of keeping good records of your cash inflows and outflows as a means to become clearly aware of where the gaps in your behaviour is leading you in this journey towards financial freedom. This tracking is how you can determine if you are making progress or not.

Those who work in organisations know the importance of having key performance indicators where you track. I track my net worth as a % of my target and know if I’m going nearer or further from my goal.

Step 4: Take Corrective Action and Make Changes

Tracking your performance in living within your means, savings and investing, growing and protecting your means is not enough. You have to be prepared to take corrective action if you are moving away from your target.

Saving too little in December, make adjustment to your lifestyle expenditure in January and the following months. Eat out a little less. Spend less on mobile phone charges. Buy one less PC game a month. Get a cheaper accessory. You still can live life but know that your actions determine how you get closer or further from being financially free.

Not earning enough? Join toastmasters and develop better inter-personal communication skills to help you speak better and showcase your talents in your organisation more effectively. This could help you clinch that promotion or increment to have more earned income to save. Consider ways to make money through your hobbies, sell your unwanted stuff on eBay, give tuition, put more money into investments yielding interest, dividends. Do something constructive.

Change is painful. Human beings tend to avoid changes and enjoy being in the comfort zone. I know I love the comfort zone. It’s warm, familiar and easy to navigate.

Looking back at my career, most of my gains in earned income have come through career changes I took that had a fair degree of risk. I moved from financial auditing into IT audit and security after 5 years in my first employer. A unfamiliar but growing field that required certain niche expertise and a quick ramp-up of skills acquisition. After 4 years plus of understanding the IT sector as well as the IT security and audit niche, I moved back into internal audit and governance. Three plus years there and some personality differences and backstabbing later, I find myself in internal audit but with a much friendlier environment.

Step 5: Re-visit Your Goals

Once you have put the above steps in place, re-visit your goals at least annually to reflect on where you have made progress and where you have not. Don’t engage in self-criticism for the sake of putting yourself down. Learning from mistakes is part of being human. Learning and growing is the way you change for the better.

Along the way, you may discover some insights that help you refine your goals. For me, the birth of my daughter made me more concerned about health issues as my state of health is no longer an issue that concerns me alone. Her dependence on her parents makes us aware of the greater responsibility to take care of our own health so that we can take care of her well.

The global financial crisis also made me see the transient nature of unrealised gains in the equity market. Reading Nicholas Nassim Taleb’s books, “Fooled by Randomness” and “The Black Swan” has also made me more aware of liquidity and portfolio management issues in a world of black swans. Highly improbable retrospectively predictable events that have such devastating consequences that could wipe us out financially. I need to be able to manage the black swans especially nearer to my retirement days when I want to cash out my equity portfolio.

Today While the Blossoms Still Cling to the Vine


I sing the song above to my daughter almost everyday. This song says

Can I forget all the joy that is mine today?

In your journey towards financial freedom, don’t forget to enjoy the present. Yes, work hard and be focussed on financial freedom by doing the necessary today. Live within your means. Save and Invest. Grow and protect your means. Enjoy today a little.

A McDonalds $1.50 chocolate sundae eaten slowly.

The sight of sunset at West Coast Park with my family.

Seeing my net-worth Excel worksheet grow yearly.

Be well and prosper.

------------------------
Panzer is a 30-something accountant who finally grasped the concept of financial freedom at the ripe old age of 32. Ever since, he has been travelling on his journey towards financial freedom and documenting his adventures through his blog Five Cents Ten Cents.

His first self-published book, “Panzer’s Guide to Financial Freedom: It’s Your Money and It’s Your Life“, was launched in November 2008 sharing his thoughts on his journey towards financial freedom.
 

panzergrenadier

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Budgeting for Baby - Part 1 of 3
Posted by panzer on January 8, 2009.


Children are a scarce commodity in Singapore. With our total fertility rate at 1.29, families are becoming smaller and children are getting fewer.

The impact of this is that each child who is conceived becomes the jewel of the crown, the apple of the family’s eye and the precious one who will inherit all when he or she comes of age.

A baby born is a mouth to be feed for the next 20 years or so. Since the birth of my daughter, I’ve come to realise how much it costs to feed, clothe and provide for her. I thought it would be interesting to share with you how much it can cost you if you are thinking of family planning as well as financial planning.

This series will cover three phases of the birth of a baby into the family:

1. Pregnancy stage (1st 9 months)
2. Birth and the first month
3. The first year

I’m currently coming to the end of the 1st year and it has been a challenging ride going through the ups and downs as well as the cash outflows (with some inflows courtesy of MCYS) related to my daughter’s birth.

Pregnancy Stage (1st 9 Months)

This is where after the “magic” happens as the celebrities on MTV’s Cribs programs like to talk about when showing off their bedrooms, the expenses start to come in with the first visit to the gynaecologist to confirm the pregnancy. :)

Choice of Gynae

The first major cost is the monthly checkups. Depending on your choice, the fees can vary between private hospitals and restructured hospitals. My own experience has been to budget $80-120 per visit. This may vary depending on your own gynae’s charges for professional consultation and medicine prescribed.

Maternity Ward and Hospital Related Charges

There are two components to this: ward charges and delivery fees. My own daughter was born in Mt. Alvernia hospital and they offer 2-3 day maternity packages that vary in price depending on the room. The ward charges range from as low as $1,106 for 4 bedder for normal delivery (without epidural) up to $4,166 for 3 days stay in family suite for Caesarean with epidural.

These are only the ward charges. You still have to pay for the delivery charges which includes the use of the delivery room and facilities charged by the hospital plus your own gynae’s fees plus anaestheticist’s fees. Another thing to note is that while your baby is in the hospital, you are expected to get a pediatrician to visit your baby each day. Per visit costs $100 so budget this as well. You can use medisave subject to some caps.

For comparison, my wife gave birth via caesarean with epidural and all in, it costs almost $10k because she stayed for 5 days and we had the single room. This was even though it was a normal delivery with no complications for my daughter.

Be sure to check your final bill because we noted double charging for one item in our bill due to a surgical consumable ordered by my wife’s gynae and issued by the hospital. It is chargeable to your final bill so scrutinise and take your time. Ask if you’re not sure what specific items are for.

Miscellaneous Expenses

Some wives will experience cravings for certain foods during pregnancy. If you are paying for your wife’s cravings, then you have to factor in the costs as well as maternity wear etc. We’ll discuss the baby stuff in part 2 of the series.

Money Saving Tips

If you are not fussy, accepting 2nd hand maternity clothes makes sense because your wife will only wear them for during the pregnancy so it may not be cost-effective to buy a large maternity wardrobe. Shopping around for gynaes by comparing prices through speaking with friends and colleagues may help. Choosing the right maternity package is also important factor.

Essentially, choose within your means and you should be fine.

How much did you or your spouse spend on maternity and ward charges?

Share with Panzer in the comments section.

Be well and prosper.
 

panzergrenadier

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Budgeting for Baby - The First Month (Part 2 of 3)

The first month is the month of excitement for new parents and is also the time for your bank account to feel the impact on your finances from starting a family.

Before your bundle of joy arrives back home, you would have to consider the following:

1. Caregiver
2. Clothes & Accessories
3. Room and furniture

The figures given are approximate as the pricing varies a lot with brand you choose especially for bigger ticket items such as cots, strollers, car seat etc.

1) Caregiver


Some families hire a confinement nanny to help out with the mother and baby. In some cases, if you have a mother or mother-in-law who is able to help, that would be a bonus. Confinement nannies don’t come cheap. They cost about $1,800 to $1,900 a month to hire. You may be considering getting a foreign domestic worker (FDW) or a maid to help out. They can cost $330-$350 if you are hiring a FDW from Philippines. The foreign worker levy is $265 or $170 (concessionary rate if you qualify).

2) Clothes and Accessories


Baby clothes can cost $3-5 a piece for top and bottom. Baby detergent is also recommended to clean baby’s clothes separate from the adults’ clothes. Your diapers ($26 per pack), wipes ($3 per pack) and drapolene ($5) /destitin ($12)cream, luyi oil ($2) are all consumables that need to be factored into your budgeting.

Your baby’s bathing accessories are also needed. Nowadays, hospitals provide individual baby bathtubs for hygiene purposes. But you would need to get baby bath, shampoo etc. For my daughter, we use Lactycyd ($9 a bottle) which is a PH neutral bathing liquid you pour into the wash. You may not need to get a lot of shampoo as sometimes the hospital’s baby goodie bag come with free samples from manufacturers.

3) Room and Furniture

This is the major capital cost of having a baby. A cot ($200-$500) and mattress ($40-$100) is required. Lining the sides of the cot with a bumper is helpful later on when your baby learns to crawl and sit up. Having at least 2-3 bedsheets are handy for times when your child accidentally wets the bed (when the diapers are not fastened securely or when the baby regurgitates milk).

If your place has mosquitoes, a mosquito net is highly recommended as a physical barrier is the most effective way of preventing mosquito bites.

When feeding your baby, a bassinet for feeding could be useful and later-on, a high chair when your baby becomes old enough to sit up.

How do you get your baby from point A to point B? A stroller ($80-$1000) is also helpful to transport junior from point to point. If you drive and use your vehicle to carry your child, a baby car-seat ($200-$500) that can take in infants up until they are 18 kg in weight.

A visit to Baby Hypermart or Baby’s Kingdom is helpful as you can find out what is the costs like for various brands of cots, strollers, car-seats, high chairs and other related accessories. Baby stuff nowadays costs more perhaps due to the fact that with fewer children, parents are willing to spend more on better quality items for their precious offspring.

Money Saving Tips

Given that you roughly know when your baby will be due, it’s good to make a trip to find out prices and ranges of stuff you may need for your baby BEFORE he/she arrives. :)

Unless your baby is born just before the Lunar New year period, you can get the other stuff as and when you need it. I.e. stroller, high chair. No need to go overboard by buying everything in advance. During the first month, you won’t be bringing baby out much so the cot, mattress, mosquito net (optional), clothes and bathing accessories are important. Thus, it’ll be useful to check out nearby shops around your neighbourhood for stores selling baby consumables and accessories. There will be items you need/realise you need along the way.

Your baby will grow up very fast, so you don’t have to buy large quantities of clothes and toys that he/she will outgrow. Friends and relatives can be very helpful in donating used items that are in good condition, check around for hand-me downs. Even for my daughter, we accepted hand-me downs as many of baby’s clothes last only 3-6 months, after that, they start to become too small for her to wear.

The important thing is to set aside some budget for these plus contingencies so that you are in a better position to budget for baby.

Be well and prosper.
 

panzergrenadier

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Budgeting for Baby - The First Year (Part 3 of 3)
Posted by panzer on January 11, 2009.

The first year of a child is perhaps one of the most challenging times for new parents! The steep learning curve coupled with the excitement, fear and doubts that come with every new issue related to parenting is truly an unforgettable experience. :)

Recurrent Expenses (Costs of Input/Process/Output)

The delivery and prenatal medical expenses before your child is born is already significant. But those are one-off charges. What’s to come are the costs for the inputs, processes and outputs that your baby will go through:

Inputs

Infant formula or breast milk are the two major sources of nourishment for your baby. Breast-feeding is cheaper relative to infant formula. Depending on whether you breast-feed or use formula, there are associated expenses related to each.

Formula can cost $20+ to almost $40 for a 900gm tin. This lasts as little as 1 week to 2-3 weeks depending on how much your baby consumes. Even if you choose to breast-feed, you would need to buy feeding bottles, teats and related cleansers etc. Bottles can cost from $4 to $8+ depending on brand and type. Baby bottle cleaning liquid are about $5-7 for 500-700ml.

Breast feeding is cheaper but you would still have to invest in a steam steriliser ($100-150) unless you want to use the old method of boiling which is cheaper but more time consuming. Steam sterilisers get the job done in 8 minutes. The choice of breast-pump is also bewildering. You can get manual ones for around $40 up to the Medela ones costing $300ish. Manual pumps are cheaper but tiring to operate. Electrical ones are easier to operate but costly to buy.

As your baby grows older and starts to be able to consume semi-solids, cereals ($3-$5 a box) and baby food ($2 - $3 a small jar) can be factored into the baby budget.

Process

Your baby needs to sleep, wear clothes and bathe. These require a cot and mattress, baby clothes and baby washing tub. Cot prices vary depending on material and size. $200-$500 will get you different types. A visit to Baby Kingdom will allow you to see the various models and pricing.

Output

Wipes and diapers are the two major cost drivers for baby’s output. Diapers are the main cost and each diaper can cost from $0.20 to $0.50 depending on the brand. Different brands have different qualities and prices. The most cost-effective way is to get a brand where your baby won’t get nappy rash and is affordable to you. Unfortunately, if your baby has sensitive skin, chances are the expensive brand (Pampers) will be the one as I’ve encountered myself. On average, in you day you may change from 5 to 8 times the diaper depending on frequency of your baby’s bowel habits. Infants on breastmilk tend to poo more so be prepared for the initial high use of diapers.

Medical Insurance

Other than the day-to-day costs of baby consumables, you may want to consider medical insurance for your child as part of budgeting for baby. Healthcare costs are one of the major emergency types of expenditure that may occur and the cost of top-quality healthcare is not low. In order to help reduce the impact of any of such emergencies, I decided to get my daughter a hospitalisation policy that costs $112 a year that covers 85% of qualifying hospitalisation costs subject to co-payment of 15% after a deductible of $3,500. This would help defray costs of any hospital stays. In addition, I bought a little more coverage through a per-day type of coverage that has no deductible. That costs me an additional $200+ a year.

Many financial planners would recommend life policies, education policies etc.. for the child. I decided against it as my child needs life insurance only when she starts working. In the meantime, the major risks are that of medical emergencies according to my own assessment.

Getting the Best for Junior (Enrichment Classes)

Besides the expenditure on feeding, clothing and taking care of your baby, the other costs that hit the wallets are the ones for educational and enrichment classes. Personally, I am somewhat skeptical of some of these as basically they are teaching your child what he or she can pick up by herself through trial and error. Of course, such lessons help the child through socialisation with other children, getting used to being in a group or classroom having group activities. But how much it helps the child develop their fullest potential is still questionable.

However, like many parents, the spouse was quite keen to enrol my daughter in one of these programs and I agreed to give it a try so long as my daughter enjoys it rather than be dragged to it kicking and screaming.

Such courses do not come free. It can cost from $10 to $50 or more an hour for each lesson and each term typically covers 2-3 months. So this can get up to hundreds of dollars a month depending on the type of program.

Babies can be expensive

As my daughter gets closer to her 1st birthday, I realise that it can cost a lot to bring up a child! However, the intangibles are priceless. When I rock her to sleep and see her innocent face lying on my chest, the wave of protectiveness and love that flows is something that money cannot buy.

The $3,000 baby bonus for the first child is NOT ENOUGH. :) I’ve spent much more on the delivery and maternity expenses before the whole sum even comes in from MCYS!

Ultimately, having a child is a 20 year responsibility (and more…) but it’s really a life changing event. If you are budgeting for baby, remember that your time is going to be something you would have to invest and it’s not just your money.

Be well and prosper.

==================================
Panzer is a 30-something accountant who finally grasped the concept of financial freedom at the ripe old age of 32. Ever since, he has been travelling on his journey towards financial freedom and documenting his adventures through his blog Five Cents Ten Cents.

His first self-published book, “Panzer’s Guide to Financial Freedom: It’s Your Money and It’s Your Life“, was launched in November 2008 sharing his thoughts on his journey towards financial freedom.
 

panzergrenadier

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Losing the Roof over your head: HDB Home Loan Defaults on the Rise
Posted by panzer on January 12, 2009.

This article “HDB home loan defaults on the rise” raises the statistic that 1 in 12 or about 8% of HDB owners were in arrears for more than 3 months. In theory, if you just default on a single mortgage payment, your home can be repossessed by the HDB or commercial banks. In reality, both banks and the HDB would not want to unnecessarily repossess the home if the borrower is able to come with with alternatives such as taking a longer loan period or renegotiating the terms of the loan.

What this sobering statistics show us is that there are about 8% of people here who will never be financially free. They are not even current in their home mortgage payments which is for the roof over their heads.

If these people are in such dire straits, what about those who can continue to service their mortgages but will likely end up asset rich, i.e. fully-paid home by the time they retire but have little in their retirement savings?

Why pay off housing loans early?

Given the uncertain economic outlook and the risk of more retrenchments ahead, the strategy of paying off your home loan early can work in some cases. The underlying assumptions of paying off your loan early, i.e. way before the loan period of 25-30 years works in the following manner. In the earlier years of your career, i.e. when you are in your 20s up to late 30s or early 40s, the risk of retrenchment increases with age. Thus, if you can channel more of your available savings in addition to your CPF ordinary account monies into paying off your loan when you are younger, you become less worried about retrenchments when you reach your late 30s or early 40s.

To do this requires a degree of sacrifice and self-discipline. Every dollar that goes into paying off the home earlier is a dollar less to spend on a Starbucks coffee, a new handphone, a nice bag, a meal at a restaurant. Less consumption for now but less liability in the future.

Not everyone believes in such an approach. Some people feel that they should pay the minimum since the HDB loan rate is at 2.6% per annum. So they should borrow at “low” cost and stretch out the repayment. Whilst that is true, the issue is in using the freed up cash to invest at consistently higher than 2.6% p.a. returns. In addition, the amount you borrow for housing in the early years of having your own home tends to be more than what you have available cash for investments. As a result, the amount of interest paid to HDB is still higher than the additional investment returns you can get (assuming you can beat 2.6% consistently without risking your investment capital!)

Others believe that should anything happen, the home protection scheme covering their outstanding HDB loans would give their beneficiaries a “free” HDB flat should anything happen to them. Thus, they prefer to stretch their loans because should they suffer an untimely demise, their spouses get a “free” flat!

Asset Poor Cash Rich?

A relative of mine who is retired has not paid off her housing loan. I was amazed that people would use their annuities to fund their HDB mortgage payments even when their primary means of earned income has stopped. Didn’t they realise that their annuity income was meant for living expenses? This is worsened by the fact that the HDB apartment is already a 3-room flat. There are not much options to further downgrade to monetise the proceeds from selling a bigger HDB to downgrade to a smaller one.

The more I read about the housing situation, the more I am concerned that the ranks of those who are financially unfree grows. The saying the rich get richer and the poor get poorer has never rung more true in recent times. How will your own situation change even as home values get moderated downwards as jobs become less secure and home equity values decline with reduced demand for the next year or so?

Do you think you should pay off your home loan early?

Share with Panzer in the comments section.

Be well and prosper.

=============================================

Panzer is a 30-something accountant who finally grasped the concept of financial freedom at the ripe old age of 32. Ever since, he has been travelling on his journey towards financial freedom and documenting his adventures through his blog Five Cents Ten Cents.

His first self-published book, “Panzer’s Guide to Financial Freedom: It’s Your Money and It’s Your Life“, was launched in November 2008 sharing his thoughts on his journey towards financial freedom.
 

Gester87

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Hi folks!

I’ve just written my first book, “Panzer’s Guide to Financial Freedom: It’s Your Money and It’s Your Life” and will be offering it free for distribution. I will not charge for personal consumption but please contact me if you wish to use it for commercial purposes.

Just drop me an email at rod.loh [at] gmail.com and I will email you the book in PDF version.

Download pdf reader here if you do not have one.

You can read excerpts from the book here.

Be well and prosper!


Hi im interested in the book? mind emailing the link to gester_87@hotmail.com

And also, i currently have more or less 40 - 50k for investment. Do you have any advice? Personally im more of a risk adverse person and was thinking of keeping it in a fixed deposit acc...
 

panzergrenadier

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Hi Gester

I would suggest you put the money in Maybank iSavvy account earning 1.08% interest (balances $5k to $50k) first. Go read up books on personal finance. If you are risk adverse, then check out fixed deposit rates. BEA's interest is reasonably high.

iSAVvy Savings Account

Daily balance below S$5,000 0.25% p.a.
Daily balance of S$5,000 to below S$50,000 1.08% p.a.
Daily balance of S$50,000 and above 1.38% p.a.
Interest-on-interest every 6 months* 6.00%

Be well and prosper.

P.S. I've emailed you the download link for the book. :)
 

panzergrenadier

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Now you see it, now you don’t
Posted by panzer on January 16, 2009.

The current global financial crisis has taught me an important lesson. It is a lesson that one has to go through to understand, grasp and internalise. It is a lesson that is paid in fear, doubt and uncertainty. It is a lesson about the illusion of profits.

A bird in hand is worth two in the bush

As my equity portfolio values declined along with the spectacular collapse of the Straits Times index from the 3000+ levels all the way to the 1700+ levels in the short span of 3 to 6 months, it made me realise how fragile this entire story of unrealised capital gains. The initial low five figure unrealised capital gains had turned into a high five figure unrealised losses all in a short span of time.

Are unrealised profits REAL?


When something like this happens to you, you begin to wonder about how real were the profits in the first place? To have it happen to you when you are still employed is not too bad as you can still recover so long as you do not sell your shares. This is my current strategy as most of the shares in my portfolio have been paying dividends (so far!). Dividends are not guaranteed but most companies that have a track record of profitability and dividend payout would likely continue but at reduced payout levels.

We know from investing principles that when one invests in an equity portfolio, one is investing in a share of the business of the company. Hence, one’s time horizon is longer than a period of a few months or a year unless one is a trader looking for quick profits based on price movements. In practice, when you see your share values sink faster than the Titanic, it’s hard not to moan and groan about marketing timing, i.e. “I wish I’d had exited the market when I had $xx,xxx in unrealised gains!”

Market timing is difficult and is as random as it gets. Thus, realising profits through dividends from my own limited investment experience is a better approach for me in the longer run than trying to time the market with buy low-sell high strategies. Naked short selling is more difficult now with SGX’s penalties for doing so.

If Profits are Illusionary Then What Do I Do?

So we know share prices can go up or down in theory. Nowadays, we see it dramatically in practice. So what can you do about it?

Diversify

The key lesson I continue to learn is to avoid investing 100% of all available investible savings into one asset class i.e. equities or bonds or treasury bills. Another lesson I learn is that if you are prepared to hold whilst having unrealised losses, you need to be prepared to defer your financial freedom dreams. Let’s face it, under the current market situation I cannot exit without high 5 digit losses in my equity. Fortunately, my plan is not to exit this year or the next so it’s not as bad. However, given that I will exit my portfolio if I intend to achieve my goal of being financially free in the near future, I need to make plans on how to get my money out and consider other cash generating vehicles to support my financially free lifestyle.

Try different investment approaches

Tim Ferris of the Four Hour Workweek has sworn off equity investing and prefers to put his money into private investments where he can value-add to the business directly. Nicholas Nassim Taleb proposes a 5-10% investments in options with 90-95% in treasury bills type of rock-solid investments. The 5-10% exposes him to positive black swans that could generate the payoffs that lead to financial freedom.

I’ve started more aggressively in doing alternate sources of income. Besides my blogs which generate enough to cover internet expenses and a little extra, I’m currently exploring collaborative small internet ventures by bringing win-win strategies to other bloggers. Panzer’s Guide Part II is also on the drawing board and it will be more a commercial venture to bring paid-value to readers :)

Live an unconventional life

Given the illusionary nature of using market timing to buy low and sell high so as to reap capital gains, I realised I also need to take an unconventional approach towards financial freedom. Living below my means is another way by constantly tinkering how I can do more with less resources in my life while maintaining a similar standard of living. Instead of being a totally frugal person who doesn’t enjoy life one bit, I balance between needs and wants and focus on simplicity. Enjoying life with LESS. Less resources, less travelling, less hassle, less stuff.

The thing about moving my lifestyle towards a simpler one is that the less physical clutter I have in my life, the more relaxed about life I become. Ever since my daughter was born, my night-time routine before bed becomes even more simple. Put her to bed, household chores, preparing for work tomorrow and off to bed. Less TV, less PC games and less time spent trying to entertain myself. With a 10 month old daughter to care for, sleep comes rather easily nowadays. :)

Conclusion

The more I invest in the stock market and learn about financial freedom, the more I realise the transient nature of the money you can make (or lose) in the market. It is somewhat liberating because you come to realise you cannot depend on it for your financial freedom and you need to seek out other avenues to grow your means whilst living within your means.

How has making or losing money on the stock market affected you?

Share with Panzer your views in the comments section.

Be well and prosper.

================================

Panzer is a 30-something accountant who finally grasped the concept of financial freedom at the ripe old age of 32. Ever since, he has been travelling on his journey towards financial freedom and documenting his adventures through his blog Five Cents Ten Cents.

His first self-published book, “Panzer’s Guide to Financial Freedom: It’s Your Money and It’s Your Life“, was launched in November 2008 sharing his thoughts on his journey towards financial freedom.
 

Al-Jay

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I would suggest you put the money in Maybank iSavvy account earning 1.08% interest (balances $5k to $50k) first. Go read up books on personal finance. If you are risk adverse, then check out fixed deposit rates. BEA's interest is reasonably high.

I hv fairpriceplus savings earning 1.26%pa fr the very first dollar and no withdrawal penalty and my ntuc thrift savings earning 1.5%pa also no withdrawal penalty!

There is enormous potential in the equity market as the day goes by!
 

krazyman

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I hv fairpriceplus savings earning 1.26%pa fr the very first dollar and no withdrawal penalty and my ntuc thrift savings earning 1.5%pa also no withdrawal penalty!

Are you sure fairpriceplus savings is paying 1.26% pa now and not 1% pa?
 
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