Financial Matters & Tips #Ep 4 - The True Story of an Asset Rich but Cash Poor Elderly

Straits Times recently reported the plight of an elderly woman who lived in a $4 million condominium but relied on bank loans to get by provides a stark cautionary tale on the consequence of being asset-rich but cash-poor.

When she died in early 2023, her relatives found that she had only $3,700 in her savings account and had chalked up an overdraft loan of over $200,000 secured on her home.

This always led me to wonder how we can keep a good balance between being asset rich and cash rich at the same time.

It is definitely not easy as everyone of us have our daily needs and expenses to tend too, with some having young children and elderly parents to support as well.

It is not never an easy journey to prepare for retirement as it always seems like the last thing on our mind. As such, many people underestimate their needs in old age because they fail to prepare for major unexpected expenses that may strike unexpectedly.

So how do we avoid being in the same plight as the cash poor elderly?

Here are some of the ways that we can do to prepare ourselves for a comforting retirement whilst enjoying our life at the same time:

1) Save hard when you are still young (20s, 30s and 40s) as we will not work forever.

2) Get your finances in order and cut down any unnecessary spending.

3) Work on a side-hustle or acquire additional skills apart from your full-time job.

5) Understand how much you need for retirement and work towards that goal.

6) Invest in broad-based ETF.

7) Focus to reach full retirement sum in your CPF.

6) Build up a portfolio that generate enough passive income to cover your monthly expenses.

7) Top up your SRS funds to reduce tax for higher income earner whilst investing through a number of ways.

The goal isn't to get rich. Rather, the goal is to have enough money to lead the life we want and enjoy our retirement without any worries to pay next month bills and expenses.

Regards,
SG Cashflow Investor

I have hit Full Retirement Sum in my SA account at the age of 41!

I am always a big fan and advocate of CPF similar to other Financial Youtubers and bloggers have advocated.

This is purely due to the fact that CPF Special Account generates 4% interest per annum and CPF funds are legally protected from creditors in the event you need to declare bankruptcy.

My view of CPF is on the following:

If all my other investments fail, my SA account is my last safety net for my retirement when I reach 65 years old. Upon 55 years old, any excess money above Full Retirement Sum is withdrawable and become another form of bank account enjoy 3% interest!

It is indeed possible to save hard when you are young to invest while focusing to top up your CPF or transferring some excess OA money into the Special Account so you can enjoy the compounded effect for more years! 

As such, I am happy that I have achieved Full Retirement Sum at the age of 41 years old! I know many others such as Chris from Honey Money SG have achieved this at a much younger age, but I prefer not to compete with anyone in order to make myself better (endless of comparison!).

I have done two times of transferring my $5K from my OA to SA as well as topping up by cash twice. The rest is all compounded through my monthly salary and bonuses while I did nothing much. This is the power of compounding.

There is another S$200K which I have put into my property, and another S$40K in CPF investment.

Seems like I am on track to achieve full ERS or 1M65 when the time comes.

Best Regards,

SG Cashflow Investor

My Portfolio Update in Year 2024 as of 12th May 2024

My Portfolio Update in Year 2024 as of 12th May 2024:

Hi Everyone, it has been a long hiatus of around 4 years since I have written on my blog. 

Alot has happened these 4 years including having my second child and focusing more on my career.

Here are my top 10 stock counters.

 

As of 12th May 2024:

Total Cost: SGD 426,607.15

Current Value: SGD 313,778.35

Current P&L: - SGD 112,828.81 (doesn't look that good but looks better when including dividends collected).

Current P&L including Dividends: -SGD 45,837.83

Portfolio Current Yield: 6.52%

Dividend per Annum: SGD 20,337.04

Dividend per Month: SGD 1,694.75 of passive Income!

Milestone Achieved in Year 2024:

1)  My Portfolio reaches more than SGD 400,000 in capital investment as of 5th May 2024, this is notwithstanding my other investment in US stocks and cryptocurrency investment which is around another SGD 120,000 combined and is not tracked under Stocks Cafe.

2)  Dividend collected in Year 2024 total up to SGD 20,000 which translates to more than SGD 1.5k passive income per month.

3)  Have DCA a number of Reits in view their prices are battered down badly due to high interest rates, namely MPACT and A Reit. Am looking to add more positions in MLT, MIT and other smaller Reits including Blue Chip counters such as Banks and YZJ.

I am continuing to build this dividend portfolio on a long-term basis to ensure I have a steady stream of dividend as passive income for my retirement. Aiming to hit SGD2k per month soon and beyond that!

This is the time when interest rates are all time high at 5.25% but Fed has already confirmed they are not increasing rates further and will look to have only 1 to 2 rates cut this year.

As what AK has mentioned, don’t be Rich! Don’t be Cash Rich!

Be Cashflow Rich!

Best Regards,

SG Cashflow Investor