Moving off the daily grind

[existential_reality]

Hi All,

Its my first post and I would like to wish you guys well, I see active participation here and I hope to maybe get some insight from any fellow forum users.

I am late 30's and been working in the finance arena for the last 12 years. Lately I'm considering getting out of my 9 to 5 job (reality 9 to 9) and focus on supplementing my monthly salary thru investment.

My current job pays slightly above 5 digits a month, long hours & lots of travel. I can literally feel my health go down daily (no exercise given my work hours), my manager has been tempting to retain me with talks about bonus and promotion etc usual. Unfortunately my skills in the industry are narrow hence finding a suitable replacement job and restarting will be quite challenging and I fear not having the energy to push ahead.

On the flip side I have a small portfolio or properties and decent cash pile to make a return to supplement my salary. My concern is if I stop work and try to invest for myself I might lose focus after time. Given my age its also quite a long way to go if I do lose focus.

So for those who are retired or invest for themselves how do you maintain the discipline to stay on path and how do you occupy your time if not investment focus. Also do you regret leaving your jobs?

Open to any views, want to make sure I know what I'm doing before I make a rash decision.

 

[Shiny Things]

Hi All,

Its my first post and I would like to wish you guys well, I see active participation here and I hope to maybe get some insight from any fellow forum users.

I am late 30's and been working in the finance arena for the last 12 years. Lately I'm considering getting out of my 9 to 5 job (reality 9 to 9) and focus on supplementing my monthly salary thru investment.

My current job pays slightly above 5 digits a month, long hours & lots of travel. I can literally feel my health go down daily (no exercise given my work hours), my manager has been tempting to retain me with talks about bonus and promotion etc usual. Unfortunately my skills in the industry are narrow hence finding a suitable replacement job and restarting will be quite challenging and I fear not having the energy to push ahead.

On the flip side I have a small portfolio or properties and decent cash pile to make a return to supplement my salary. My concern is if I stop work and try to invest for myself I might lose focus after time. Given my age its also quite a long way to go if I do lose focus.

So for those who are retired or invest for themselves how do you maintain the discipline to stay on path and how do you occupy your time if not investment focus. Also do you regret leaving your jobs?

Open to any views, want to make sure I know what I'm doing before I make a rash decision.

Hey, you sound a lot like me a few years ago (except for the travel).

I wouldn't suggest retiring unless your portfolio's a lot bigger than you're talking about. A good rule of thumb for living off an investment pile is to assume a 3% withdrawal rate - that is, if you've got $2 million in the bank, then if you invest it sensibly you should be able to extract about $60,000 a year to live on. Any more than that, and you risk running out of money or falling behind inflation.

I didn't have my f*ck-you number yet, so I ended up changing industries. I went from trading FX to working for a company that builds software for FX traders.

That way, I had the domain knowledge that the company was looking for, but I was able to move into an industry that's lower-stress and more stable. I parked my investment portfolio basically on autopilot in a mix of stocks and bonds, and focused on keeping my work income going. Being able to pull the ripcord and actually trade for a living is a pretty rare thing.

And don't tell yourself that your skills are narrow. If you're high-up in investment banking, you have sales skills that other companies would kill for. If you're on the trading, DCM, or ECM side, you have quantitative skills that you could put to use.

 

[revhappy]

I am also in the same boat as you OP. I think there are various stages you need to take before full retirement.
1) The first stage is where everyone is at, when they work full throttle to earn and save as much as possible
2) The second stage, when you know that you really don't need to take shi*t from anyone. So you kind of slow down, don't do a lot of work, leave office on time. Tell your manager you value family life etc. Most people can easily pull it off. Meanwhile keep looking for a change and jump when you see a more relaxed job that may pay lower but still pays the bills
3) 3rd stage, By now you are damn sure you have enough money and don't need to work. You quit and think of doing what you like, even if it doesn't pay anything.

I think you can spend a lot of years in stage 2 without getting frustrated. I am currently in stage 2. I work 8-5 and leave office sharp as 5. My work is very relaxed, most of the time slacking and reading forums.

I am 38 years old and it is still too early to retire. There are lots of risks. These days all the Uber drivers I meet are uncles who tell me they feel bored so they drive. They are over 50 years of age, yet they can't sit at home.

Sent from Xiaomi REDMI NOTE 4 using GAGT

 

[koja6049]

get a hobby, start a business, start a project in kickstarter. Lots of things you can do after employment, just be creative. And the income, however small, you derive from your small projects and hobbies can help sustain yourself, combined with your investments

 

[unhinged_loon]

If I retire, I'd build a website for my hobbies like history.

Ah well, not anytime soon.

 

[trojanguy]

Hey, you sound a lot like me a few years ago (except for the travel).

I wouldn't suggest retiring unless your portfolio's a lot bigger than you're talking about. A good rule of thumb for living off an investment pile is to assume a 3% withdrawal rate - that is, if you've got $2 million in the bank, then if you invest it sensibly you should be able to extract about $60,000 a year to live on. Any more than that, and you risk running out of money or falling behind inflation.

I didn't have my f*ck-you number yet, so I ended up changing industries. I went from trading FX to working for a company that builds software for FX traders.

That way, I had the domain knowledge that the company was looking for, but I was able to move into an industry that's lower-stress and more stable. I parked my investment portfolio basically on autopilot in a mix of stocks and bonds, and focused on keeping my work income going. Being able to pull the ripcord and actually trade for a living is a pretty rare thing.

And don't tell yourself that your skills are narrow. If you're high-up in investment banking, you have sales skills that other companies would kill for. If you're on the trading, DCM, or ECM side, you have quantitative skills that you could put to use.

and how do you get 3% per month if you 2M?

 

[revhappy]

and how do you get 3% per month if you 2M?

He meant 3% per annum. Not month.

Sent from Xiaomi REDMI NOTE 4 using GAGT

 

[trojanguy]

He meant 3% per annum. Not month.

Sent from Xiaomi REDMI NOTE 4 using GAGT

sorry, i meant per annum. how to get 3% per annum if you have 2M?

 

[revhappy]

sorry, i meant per annum. how to get 3% per annum if you have 2M?

3% is withdrawal per annum. You just withdraw that every year. But if you invest it properly you should be able to generate returns equal to or more than 3%. In that case the 2 million will live forever. It is very complicated. You need to take into account inflation. This year 60k is enough. 10 years from now it won't be enough. You will need to withdraw more. The earlier you retire the more the uncertainty.

I would certainly not retire in an expensive place. To me retirement means has to be frugal. There is no point living in a big city if I am not working. A small town with laid back lifestyle and cheap also. So 60k per annum is way too much for me. My idea will be 24k per annum in a small town in India. I am Indian by the way, working on EP in Singapore.

Sent from Xiaomi REDMI NOTE 4 using GAGT

 

[Mr.Canberra]

3% p.a. ROI is not difficult. Anything that is above 5% p.a. takes experience.

If you have confidence Mr. existential_reality you can move on to stage 2 as suggested by Mr. revhappy. Good luck.

 

[BBCWatcher]

A good rule of thumb for living off an investment pile is to assume a 3% withdrawal rate - that is, if you've got $2 million in the bank, then if you invest it sensibly you should be able to extract about $60,000 a year to live on. Any more than that, and you risk running out of money or falling behind inflation.

It is possible to buy a lifetime annuity, and with annual inflation adjustments. Looking at the U.S. annuity market (which is well developed and fairly transparent, with quotations easy to get), a 40 year old buying a S$2 million immediate lifetime annuity would get about S$8,000 per month (fixed nominal; with inflation adjustment the present dollar amount would be less). NTUC might be able to offer a quote on a lifetime annuity locally, although it won't be as good as the U.S. annuity underwriters. And of course there's CPF LIFE, which will be quite a good value but which isn't as flexible. You have to wait until age 65 to start collecting, and you can't buy very much of it. (The ERS is the maximum.)

If you have $2 million you don't necessarily need to put all of that into a lifetime annuity. You can buy a $1 million immediate lifetime annuity, for example, as a "bedrock" foundation, then invest above that. Or you can buy an annuity later, but you have to be at least a little careful about that.

If you have a spouse then it's possible to buy a "joint/survivor" annuity that continues paying the monthly benefit to the surviving spouse for his/her lifetime. I suppose it's even possible to buy a joint/survivor annuity that continues paying out for the lifetime of the last surviving child. Practically anything is possible if you shop around enough, although maybe not in Singapore.

I don't necessarily recommend lifetime annuities, or particular annuity levels, but they can be interesting tools for retirees or semi-retirees of any age.

 

[revhappy]

Interesting, bbcwatcher. I will investigate this more. So this annuity, is it like the investment plans sold by AIA, where you pay a fixed monthly payment until 60?

Sent from Xiaomi REDMI NOTE 4 using GAGT

 

[existential_reality]

Hi Shiny Things,

Thanks for the quick reply, at 4.30 am no less, you must an early risers

Using that rule I can might be able to get away substituting salary but with 2 kids of course its always a gamble. My initial thoughts were to target somewhere in a region of about 5% focus on some stable REIT counters (i.e say 1.5M) and another 0.5 in more progressive stocks (and others in bonds etc). However my investment skills are very limited, I tend to go down the value investing route and look for decent counters with good P/B ratio so far its paying off but there are only that many counters with this profile in SG.

Lol F*ck you money, reminds me of Billion (love that quote), I'm actually in Project management but what I specialize in is slowly eroding given the automation that's gone into the industry over the years. Competition is steep as well with the number of increasing consultancy companies staffed with very competent personnel.

Anyway despite my urge to say screw it all I am keeping a lookout for less taxing roles. Might be challenging within the current firm since everyone seems married to their work (literally on standby on weekend/leave days).

I see a super long thread on Shiny things, be sure to keep a lookout for your investment advice.

Cheers

Hey, you sound a lot like me a few years ago (except for the travel).

I wouldn't suggest retiring unless your portfolio's a lot bigger than you're talking about. A good rule of thumb for living off an investment pile is to assume a 3% withdrawal rate - that is, if you've got $2 million in the bank, then if you invest it sensibly you should be able to extract about $60,000 a year to live on. Any more than that, and you risk running out of money or falling behind inflation.

I didn't have my f*ck-you number yet, so I ended up changing industries. I went from trading FX to working for a company that builds software for FX traders.

That way, I had the domain knowledge that the company was looking for, but I was able to move into an industry that's lower-stress and more stable. I parked my investment portfolio basically on autopilot in a mix of stocks and bonds, and focused on keeping my work income going. Being able to pull the ripcord and actually trade for a living is a pretty rare thing.

And don't tell yourself that your skills are narrow. If you're high-up in investment banking, you have sales skills that other companies would kill for. If you're on the trading, DCM, or ECM side, you have quantitative skills that you could put to use.

 

[revhappy]

How did you save up 2 million in the first place man?

Sent from Xiaomi REDMI NOTE 4 using GAGT

 

[existential_reality]

Hi Happy,

I would say I am between 2 & 3 however with regards to going back early the project arena I am takes on any issues that come thru the door on top of the project. Management doesn't turn them away because its always some big brass that pushes it on the account of some regulatory issue or financial risk etc and they require someone to co-ordinate.

Oddly enough I was actually at a role previously which was 9 -5 very easy going, great team members lots of time to go exercise post work etc. Unfortunately project wound down and the main office decided to pull back to UK so that was the end of that. Did get a 3 month vacation time though (Paying for it now)

Haha yeah I was also afraid that I might end up doing part time uber if I got bored. On a more serious note I should have enough to do to not feel too bored but I think sometimes doing your own thing one would miss the interaction with colleagues. Even meeting friends for lunch feel awkward when they come decked in office wear talking about the latest issue in the office and one would feel lack of issues to contribute back.

I will reconsider my path if I can find a similiar role to my previous job, slim pickings in that though, I think such roles all taken already

I am also in the same boat as you OP. I think there are various stages you need to take before full retirement.
1) The first stage is where everyone is at, when they work full throttle to earn and save as much as possible
2) The second stage, when you know that you really don't need to take shi*t from anyone. So you kind of slow down, don't do a lot of work, leave office on time. Tell your manager you value family life etc. Most people can easily pull it off. Meanwhile keep looking for a change and jump when you see a more relaxed job that may pay lower but still pays the bills
3) 3rd stage, By now you are damn sure you have enough money and don't need to work. You quit and think of doing what you like, even if it doesn't pay anything.

I think you can spend a lot of years in stage 2 without getting frustrated. I am currently in stage 2. I work 8-5 and leave office sharp as 5. My work is very relaxed, most of the time slacking and reading forums.

I am 38 years old and it is still too early to retire. There are lots of risks. These days all the Uber drivers I meet are uncles who tell me they feel bored so they drive. They are over 50 years of age, yet they can't sit at home.

 

[ocs_woodlands]

Hi Shiny Things,

Thanks for the quick reply, at 4.30 am no less, you must an early risers

Using that rule I can might be able to get away substituting salary but with 2 kids of course its always a gamble. My initial thoughts were to target somewhere in a region of about 5% focus on some stable REIT counters (i.e say 1.5M) and another 0.5 in more progressive stocks (and others in bonds etc). However my investment skills are very limited, I tend to go down the value investing route and look for decent counters with good P/B ratio so far its paying off but there are only that many counters with this profile in SG.

Lol F*ck you money, reminds me of Billion (love that quote), I'm actually in Project management but what I specialize in is slowly eroding given the automation that's gone into the industry over the years. Competition is steep as well with the number of increasing consultancy companies staffed with very competent personnel.

Anyway despite my urge to say screw it all I am keeping a lookout for less taxing roles. Might be challenging within the current firm since everyone seems married to their work (literally on standby on weekend/leave days).

I see a super long thread on Shiny things, be sure to keep a lookout for your investment advice.

Cheers

You have 2 kids. Is your wife working?

To me, it's very simple. If you are a family man, your resign/retirement date = when your youngest hits 22 (girl) or 24 (boy).

Retirement is seldom determined by actually financial needs and more by fear of financial obligations...

Sent from Common Sense using GAGT

 

[BBCWatcher]

Interesting, bbcwatcher. I will investigate this more. So this annuity, is it like the investment plans sold by AIA, where you pay a fixed monthly payment until 60?

No, it's not an investment plan per se. It's a straight up trade of X dollars today (the premium) for Y dollars per month for the rest of your life, starting immediately (an "immediate lifetime annuity") or in the future ("deferred lifetime annuity"). Y can optionally be 2017 dollars, adjusted annually for inflation. Another common option is joint/survivor, as mentioned. The insurance company, hopefully a highly rated and well regulated one, manages a portfolio of investments (funded by premiums, in aggregate) and pays the assured monthly stream of income to beneficiaries. Its actuaries estimate life expectancies to help decide premiums v. payout levels.

Traditional pension program managers work the same way, fundamentally. CPF LIFE also follows the same basic principles.

Lifetime annuities are also known as "longevity insurance," because you're insuring against outliving/outlasting your savings.

In Singapore, NTUC Income sells lifetime annuities. Tokio Marine does as well, although their annuities apparently won't start paying out any earlier than age 55. (They have some interesting survivor options, though.) Great Eastern might have some lifetime annuities, but they don't provide many details. I don't think the lifetime annuity market in a particularly developed one, but there are a few options even locally. If you shop internationally there are many more annuity options, although those non-local annuities probably aren't available with Singapore dollar payouts.

 

[revhappy]

Hi Happy,

I would say I am between 2 & 3 however with regards to going back early the project arena I am takes on any issues that come thru the door on top of the project. Management doesn't turn them away because its always some big brass that pushes it on the account of some regulatory issue or financial risk etc and they require someone to co-ordinate.

Oddly enough I was actually at a role previously which was 9 -5 very easy going, great team members lots of time to go exercise post work etc. Unfortunately project wound down and the main office decided to pull back to UK so that was the end of that. Did get a 3 month vacation time though (Paying for it now)

Haha yeah I was also afraid that I might end up doing part time uber if I got bored. On a more serious note I should have enough to do to not feel too bored but I think sometimes doing your own thing one would miss the interaction with colleagues. Even meeting friends for lunch feel awkward when they come decked in office wear talking about the latest issue in the office and one would feel lack of issues to contribute back.

I will reconsider my path if I can find a similiar role to my previous job, slim pickings in that though, I think such roles all taken already

There are certain perks that come with being employed; like 1/3 of you day passes by without you having to wonder what to do. Even staring at the monitor is okay, because you have no choice but to stare. Also you get business trips, get to fly business class and visit places that you wouldnt visit with your own money. I like that part of it apart from the fact that there is regular inflow into my account. Also, being employed, gives me an option to travel to other countries in future. This is something to think of. You have 2 million, but may be you want to migrate to another country and see how life is there. Australia may be? Being employed allows you to apply for PR. So these are few things that make me still go to work. Also I dont think my wife and daughter will appreciate a lot if I am at home all the time. You know, no matter what if you are at home all the time, somehow kind of lose respect and not a good example for kids.

 

[revhappy]

No, it's not an investment plan per se. It's a straight up trade of X dollars today (the premium) for Y dollars per month for the rest of your life, starting immediately (an "immediate lifetime annuity") or in the future ("deferred lifetime annuity"). Y can optionally be 2017 dollars, adjusted annually for inflation. Another common option is joint/survivor, as mentioned. The insurance company, hopefully a highly rated and well regulated one, manages a portfolio of investments (funded by premiums, in aggregate) and pays the assured monthly stream of income to beneficiaries. Its actuaries estimate life expectancies to help decide premiums v. payout levels.

Traditional pension program managers work the same way, fundamentally. CPF LIFE also follows the same basic principles.

Lifetime annuities are also known as "longevity insurance," because you're insuring against outliving/outlasting your savings.

In Singapore, NTUC Income sells lifetime annuities. Tokio Marine does as well, although their annuities apparently won't start paying out any earlier than age 55. (They have some interesting survivor options, though.) Great Eastern might have some lifetime annuities, but they don't provide many details. I don't think the lifetime annuity market in a particularly developed one, but there are a few options even locally. If you shop internationally there are many more annuity options, although those non-local annuities probably aren't available with Singapore dollar payouts.

Thanks. So there must be 2 choices right? One upfront lumpsum payment and another monthly payment? I guess you are talking about the lump sum payment?

 

[sAVaGEmP5]

Are u the type that leads a luxury life or the type that needs to do something ?

Do you like to do 1 activity a day or u like to keep urself busy ?

If u can do same salary... i dun see how u cant find happiness with freeing time. The best things is to free up time to do whatever you want. Take care of kids, family, go oversea travel anytime u wan, the bank auto add 30k every mth. How to find sia.


This... you need to ask yourself.