Thursday, August 7, 2014

My financial journey and how it all started

Many people have emailed me saying that they are interested to start investing or manage their money better. Most are in their 20s with some even younger at 18 or 19. Maybe i'll take this chance to share how my own financial journey started so that it will inspire more to start this journey as well.

Before that, i would like to say one of the most important thing in the journey is saving money. For those who want to start investing, knowing that a larger amount of savings will help to grow the money faster is important. If you have $10,000, a 10% yield is only $1000 but if you have $100,000, the same 10% yield will become $10,000. Now, this is a huge difference.

My journey all started when i was in the army thinking how my life would be in the future. I've shared this before in my "about me" page. It was after reading the book "rich dad poor dad" that inspired me to manage my money better. One of the most important concepts that changed my attitude towards money is that the rich buy assets that generate cash flow to pay for their expenses. This is a stark difference to the poor and middle class who spend all their earned income or buy liabilities with their earned income which depletes their money even more. It becomes a vicious cycle. It went on to say that assets put money in your pocket while liabilities take money out of your pocket. This gave me a very strong motivation to save money. Saving money is no longer just saving money to me. I can actually use the saved money to buy assets that put money in my pocket. This money that is generated from the asset can help pay for my expenses and thus the next month i have even more money to save and buy more asset that generate more cash flow. Keep repeating this process and it becomes an unstoppable force. Money just keeps flowing round and round until you achieve financial freedom.

When we invest in stocks, it provides income in the form of dividends for us. If we invest long enough at the right prices, these stocks can become free money for your whole life in the future. Let's say we invested in Singapore press holdings more than 10 years ago. The price doubled and you sold half of your shares and got back your initial capital. Over the years, you've collected dividends and are still collecting dividends even until now. This becomes part of your free money which you will continue to receive as long as you remain a shareholder of SPH. Of course another possibility that you lose this income is if the company goes bankrupt or is de listed. But who cares, you've got back your initial capital so just collect money as long as its still available. This can be done is we have the patience to invest for the long term and also the knowledge and experience to buy at the right price. It is totally possible.

My colleagues and I always casually joke that we should buy more stocks when the market crash. We remind each other that when the market crashes, we must remember to push each other to buy in. My colleague is in his 50s and has seen at least 3 market crashes in his lifetime. Everytime he buys during a market crash, the results are always good. But bear in mind that you have to buy the right stocks. He has more than enough to retire but still works because he enjoys the work.

My financial journey has been fruitful so far. Since starting this blog, i've learnt so much myself as i seek to write good articles. The read up and researches on investing, financial planning, buying a house, marriage costs and even the CPF has allowed me to be more prepared for my financial future. The discussions and comments on my blog on these topics have widened my perspectives as well. Thanks to all who shared your precious experiences and knowledge in the comments in my blog. I do personally read everyone of them and try to reply to all of them too. The IPS forum on CPF and retirement adequacy which i was invited to attend last month was a good experience for me as i get to hear different perspectives of retirement from different people. It was good to know a few new friends along the way too who are passionate in financial matters as well.

A financial journey is not all about making more money. In fact, making money shouldn't even be what you should be thinking in the first place. As the saying goes, do what is right and the money will flow in later. If we focus on making money, we may end up doing all the wrong things as many people out there would tell you what to do if you want more money which are often wrong. People who promise you easy ways to make money are often the ones you should not believe in.

Start your financial journey and experience the benefits later. The right things to do are save money, use the money to buy assets that generate cash flow and do it over and over again. After doing this for the past few years, i'm beginning to see cash flow amounting to thousands of dollars on a yearly basis. It started with a few dollars to a few tens of dollars to a few hundred of dollars. I did share my passive income in a blog post in March. I've not blog about it since then but actually, the money is still coming in. It started slow but it will get larger and larger as time goes by. If you can visualise this, you'll definitely reach there one day. But meanwhile, enjoy the journey and you'll reach the destination easier. Have a great weekend ahead and let us celebrate Singapore's 49th birthday together this Saturday.

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Related Posts:
1. 1 year of blogging and it continues....
2. Extra and passive income for the month of March


  1. Hey,

    sorry haven kept in contact by email with you. Thanks for writing this article. Am saving and looking to let my money grow too!


    1. Hi JC,

      Its ok. You're on the right track in saving money.

  2. You've touched on the two salient point of financial journey, SAVINGS and CAPITAL SIZE. Nice article, keep writing....

    1. Hi Richard,

      I guess that's what we discover along the way. In the past, I always thought there would be an easy way to have money but i realised its still back to savings that we can accumulate ourselves to financial freedom.

  3. Hi SGYI

    Thanks for sharing your journey.

    I think its amazing at your age you already realized so many things people still doesnt realize.

    Keep going.

    1. Hi B,

      Well, you're young too. IT's good that we started young.