Wednesday, 11 January 2017

2017 - Financial Position

All too often we met with financial advisor who is only keen to sell you a dream / vision of retiring with a nest egg of a dreamy number, asking you to make the savings to the oft 30 years investment plan. I too was sold on this and even considered laddering the investment. After reading multiple books on financial  education, I find this approach to be totally a waste of time. Case in point, my personal endowment programme enrolled in 1998, having paid monthly for the last 20 years netted me a yield of 0.5% per annum. Well, that is for protection, I argued, but does it really make sense to put your money into such a programme for 30 years?

My approach is to develop a passive income stream, with the tenants paying me my living expenses. I'm not concern about capital growth. Treat these investments like small business. No, annuity plans sound stupid! annuity is like paying someone a lump sum of money and having him pay you in batches, installments. You can do that with some financial discipline.

Based on the past 6 years or so of investment and planning, this graph shows my cashflow for the next eternity. The assumption is of course based on 100% occupancy rates, constant interest rates, constant expenses. By age 65, all mortgages are fully paid up (by tenancy). Working for the next 5 years, this is the achievable. (totally not withstanding any capital growth that might occur or not). Spreading the risks would be multiple properties spread over a few geographical areas and a war chest to be accumulated to tide over 6-12 months.

5 years to go is counting down now.