Jun 22, 2014

Cory Diary : Retirement Amount


Retirement Amount

One of the misconception about saving is how long it can last once we retired.
Assuming no investment and just plain saving bank. See Table 1.

Table 1 : Without inflation adjustment







Above is a simulation without inflation. How will this impact me ?
Assuming 3.5% inflation rate, the monthly absolute amount increases as Table 2.

Table 2 : With inflation adjusted







So how long can my S$1M last actually ? See Table 3.



















Just  below 16 years. After that i am on my own ...

For those who are curious on whatif Inflation hits 5%. The answer is 14 years.
That's how long S$1,000,000 can last.


Cory
22nd June 2014



Jun 15, 2014

Cory Diary : Currency Risk

Strength of Currency drives purchasing power. Determines where, what and how to park and invest my money.

What's the use of doubling my S$ denominated Stocks if Singapore currency devalue by half. Most likely I will see super inflation like Venezuela with soaring prices.

What happen overnight we have a watershed election and Opposition won the day. Will I still see Singapore progress or sustainability as normal ? The risk is there but am i prepared ? It will be a serious mistake to say i have S$100K today and still same number after that there is no loss. The notion that Value is Absolute can be disastrous in my financial well being.

I will first have to classify all my net worth by currency denominations as below.














Pretty enlightening after i draw up the pie chart. What's next ?

Using back Venezuela economic situation as an example, i would have to increase my net worth by 60% within a year just to break even on all the basket of items i could buy last year with the same items today.

Well i am not in that part of the world ? It won't happen ! Will 15% devaluation within realm of possibilities ? That will set me back years of investment gains without need of global financial crisis. Well, if to act, at least i have something to plan ahead today.


Cory
15th Jun 2014





Cory Diary : Net Worth Metrics

Watching World Cup Greece V Columbia right now and decided to write this article in parallel. Hopefully i can wake up for the next two morning matches as well. In summary, next few weeks will be challenging. :)

From my earlier Retirement titled article which has my net worth chart, i will be doing an update here. Since then, i have invested in RMB FD, bought some bonds and did a major re-balance in my Reits Portfolio. I have also increase my Telecom and Banking exposures. Passive income has caught up to last year 50% mark.


















Key Metrics

First : Net worth climbed about 19% annually. This is a surprise.
Second : Average annual increase is larger than my income. Money is working hard. :)

The climb has been relentless. Considering low interest rates environment in major economies still a trend, I would expect stock index to continue to break new grounds and inflation in developing countries to stay high. I think it will takes Major International Disruptions to change that story. Hopefully my bet is right.

Oh ... the game just finished with Columbia 3-0 Greece. Good night !

Cory
15th Jun 2014