Tag Archives: passive income

4 lessons I learn from playing RISK

1. You can choose the best strategy, but the outcome will still depends a bit on luck

I spent a lot of time on the RISK game and kind of figured out the best strategy to win the game at its hardest level. However, the strategy only INCREASED your chance of winning, not GUARANTEE your victory. It is the same as our strategy for early retirement, you might be saving 50% of your salary, optimise your spending and invest the difference, but the end result sometime still depends on how the economic is performing. This is especially true when we are just starting to execute our early retirement strategy.

2. Someone at some point of time will disrupt your plan.

RISK is an interesting game, because you are facing 6 others opponent at the start of the game, you might have some plan in mind but someone at some point of time will disrupt your plan. While you on the way to conquer Africa, some computer player will attack you at your weakest link to break your occupation of that region.

Interestingly, it is similar scenario to whether we are talking about eating healthy or saving money. Imagine 5 friends having a gathering, if 4 of them is watching their spending closely and the remaining one just spend his money like no tomorrow, the 4 person won’t criticise the spending person. But if the trend reverse, interesting conversation start to happen, the 4 spending person will start saying things like “I rather spend a bit more money to enjoy myself” or “What is the point of saving so much if you cannot enjoy your life?”.

3. If you cannot join them, beat them!

In the game of RISK, since I am playing with computer, there is no way for me to convince the computer to join me for my game, the only way for me to survive and thrive is to beat all my opponent during the game. However, in real life, you should try your best to convert people around you to join you in your early retirement journey, bring out your best argument by living happily without spending all your earning at the end of the month.

4. Things will get easier and easier once you pass the initial phase.

In the game of RISK, once you passed the initial fighting phase and occupy one of the region, things get easier. Your supply of army at each round increased, your chance of victory increasing by each round. In the journey of early retirement, your job get easier and easier once you build your first passive income source. As your passive income increase,  your freedom increase.

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Filed under Passive Income, Personal Development

Why am I saving money?

This is one of the most important question you need to ask yourself before you start doing anything about your personal finance. Always start with why first whenever you started anything. Why are you learning a new skill? Maybe because you want to embark in a new career. Why are you start running? Maybe because you want to have a better health to accompany your kid during his growing journey.

So, why are you saving money? Because you really do not have much material needs? Because you want to save up for that year end trip? Because you want to buy some asset and redeem back your time freedom from working life? Or maybe you are saving for a house payment after marriage. Whatever it is, without a clear reason behind your action, very soon you will feel that saving money is a sacrifice.

For me, I have passed that phase long ago. I realised I value time freedom so much that I don’t feel sacrifice when I am saving money. In a matter of fact, I actually feel very proud to be able achieve an increasing saving rate although my income remains the same, imagine how fast will my progress will be when my income level rising over the time. My best bet now will be working super hard and super smart to increase my professionalism and my income.

The idea of multiple stream of income has became more and more popular as more and more people value freedom and they realise that they don’t want to work in an unfulfilling job all their life and place the control of their life on the hand of another person. However, what this idea fails to capture is that we should build the multiple stream of income one step at one time. Focus on your regular job, sharpen your professional skill and making sure that you main source of income is stable and strong enough before explore other source of income. It is always your main job that has the most potential to earn you the most money compare to whatever side line you try to pursue during your night time and weekend. No doubt there are people who are able to create large income source using their night time and weekend hours, but they are in the minority. For the most of us, our best bet is still with our day job.

Back to the topic of saving money. Change of mindset is a must. And reading and implementing those saving tips that spread all over internet is not helpful. For example, instead of shopping around for the car that provide the best value for your money, try bus, MRT or bicycle. Instead of comparing between various value phone plan, choose a basic phone and prepaid card. Maybe you would say most of the people are holding a smartphone, what is wrong with that? Why am I asking people go back to ancient time and use those ancient phone with limited function and unpressable button. As I mentioned in my previous post, a $42 monthly commitment required you to invest more than 10K into an investment vehicle that has a return of 5%. With this calculation in mind, I certainly think twice or even thrice before I sign my name on any dotted line.

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Filed under Passive Income, Save, Spend

How much is house costing me( or you)?

As I written in previous post, I bought a house with the price tag RM 196,000, it make me wonder how much is this house costing me in absolute cost and working years.

I listed the the cost involved so far and interest I expected to pay if we pay the mortgage off in 10 years.

Deposit :RM1,000

Insurance :RM4,530

Lawyer fee :RM3,100

Disbursement :RM1,130

House loan :RM196,000

Housing loan interest for first 10 years :RM 78,122.68 

Total :RM 283,882.68

As I am sharing the ownership with my sister, my part of responsibility will be RM141,941.34 and that is excluding all the renovation cost , maintenance cost and car cost which might be coming along when my parent move from village to a small town.

Since I am working in Singapore right now, I will use my saving rate in Singapore currency and the current exchange rate to calculate the real cost of my future house.

Current monthly saving amount: SGD 1,500

Exchange rate: SGD 1.00 to RM 2.50

House cost in SGD = RM 141,941.34 / 2.50 = SGD 56,776.54

So, I will need about 38 months of work to cover that cost of my house. Not to mention the opportunity cost I will need bear during those 10 years. 5% of SGD 56,776.54 will give out SGD 2838.83, that is one good passive income to hold on 🙂

Situation here in Singapore is a bit different, a small simple 3 rooms flat here is priced at SGD 330,000(I am talking about minimum). With median salary now at SGD 3,000, it is no wonder not many people staying in Singapore now think they can retire early in Singapore. Besides that, there are other influences here to that make it difficult to retire early too.

It is kind of socially unacceptable for man to not working here, a man look weak without a job here and not many man can accept that.

Secondly, it is very consumer/spending driven here in Singapore, this country is importing everything and we can buy almost everything we need in our daily live and a little bit extra. There are all kinds of interesting product and services that waiting there for us to spend our money on them.

Thirdly, supporting old age parent is expected here in Singapore given there is no solid retirement support system and I think the problem will be even bigger in the future. You might be thinking your living cost will be lower after you paid off your mortgage but the medical cost kick in in old age, so expect more spending during your parent old age (and your own old age).

I just realized I am a bit out of topic here, the points I want to make here is view your house as a liability before you pay off your mortgage and don’t think the house price is always going up. Only buy when you are ready, sometime renting is not a bad decision either.

What do you think?

 

 

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Filed under Debt, Insurance, Passive Income, Spend