Saturday, April 4, 2009

Is your Finance all about money ?

Sorry for the silence, it seems that I may get tight up for a while recently.  You may have already observed that I no longer have time to find cartoon for my articles :)  I started writting for other publication so I get a bit confused and find it hard to balance the content between this blog and the other responsibility during this transition.  But there are so many more drafts to be released in this blog.  Bad Debt topics have a lot of hanky panky so I need to spend more time before proper release for public reading.  So I hope you guys do enjoy reading and do comment more so that I have better clues what articles to put up during the limited time I have now.

I have shared Gabriel's story, a 68 years old who used to be typical middle income group who sort of make it in his finance planning.  His neighbours don't even know him by name, his ex-colleges don't even remember him when they met on the street, his clients don't remember using his services, but yet he makes it better than many others who are holding high positions in careers, running a much more bigger scale business than him.

But his case doesn't come easy as a matter of fact.  It wasn't easy for him to save money in banks actually.  That were wars all around and everyone kept all their stuff under their own pillow - the safest place to be at that time.  There was only one choice when he invested in mutual fund and even newspaper warn people to be careful because the private mutual fund was ran by someone without linkage to bumiputera.  It was considered as the biggest scam at that time.

Gabriel first kid went to local university.  Gabriel taught well to his kids on finance matters.  Well actually no, he just taught his kids on income matters.  His first kid worked part time since high school and earned half of the expenses during his degree years.  

When the 2nd kid started to hint wanting to get foreign education, Gabriel made an interesting move.  He migrated to Australia.  It costed him MYR 3,000 at that time.  ( It costs more than MYR 10,000 now without a consultant ).  He didn't really like it there but it wasn't a decision for him anyway.  Eventually both of his 2nd and 3rd kids graduated with Australia degrees.  Costed him less than his first kid's degree.  

To him, this migration was the biggest sacrifies he made for his legacy, you can observe his business income was negative during that time, the only year his business runs a lost whole his life.  Because he thinks helping his whole family settling down in Australia was more important.  But this move also brought him some surprising result, that he actually retired earlier than he thought would be.

There are quite a few more interesting stories about Gabriel, but most of them are based on the same principal. 

When you need to achieve something in your finance matter and get stuck with the numbers ie. not enough money.  Try to elevate a little bit and ask yourself, what was it you are trying to achieve again ?  Most often one is pursuing the figures or money too hard that they forgot what the real purpose was.  

When you focus on the real purpose and not the money itself, you may suddenly realize money is not the only way to achieve your purpose.  And sometimes, you may find certain ways to achieve your purpose without money at all.

If the whole purpose of your personal finance is all about money, then you do not need personal finance planning actually.  What you need is to dedicate your whole life to making income.  Perhaps bank teller would be a good start.

So, is your finance all about money now ?

6 comments:

Owner said...

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Father Sez said...

This is a good story...very inspiring and thought provoking. I still have 3 school going children and their tertiary education is something my wife and I worry about all the time.

We are prepared to make sacrifices for our children. THis post has widened my thoughts.

Regards

Michael Tsen said...

Thanks for commenting FatherSez.

As for education planning, even local government has a lot of incentives and opportunities to get FREE degree etc. Its best to search of such opportunity together with the kids. It was said that the journey of search and found of such a FREE degree would leave a great impact on the kid's future perception especially on business world.

TOMMY said...
This comment has been removed by the author.
TOMMY said...

Is Gabriel's story true or made up? Having a 12% return post retirement is not bad at all. In fact, I plan my retirement on the assumption that future inflation rate would be 4% pa while my annual return would only be 6% (to err on the safe side). If I use the same assumption (3% inflation and 12% annual return), my wife and I could have retire by now at age 30

Michael Tsen said...

true story from quite a handful of people who has made it, are making it and starting to make it ... :)

at age 30 you probably haven't found your 12% return yet :) the Universe is fair :p so at this young age, perhaps you can take more risk, explore further and deeper ...

generally 8-12% passive return is the range you should aim at. Unfortunately this is the part not one same method for all people, due to the fact we have our own emotions and life path, each will have to find his own

To totally live on passive income, your return should be high enough to sustain the total of your retirement expenses, which is usually higher than 12%

as some of the readers pointed out, retirement for single person and family with no kids are simpler but they may most probably expand their needs which will kick them out of their retirement sooner than they thought ...