Financial Freedom SG

I just stumbled onto a useful feature on the CPF (Central Provident Fund) website. There is a very useful calculator function there that allows you to determine if you ready for retirement at an age that you determine. It looks at your exisiting savings, investments, CPF funds, insurance and at the same time helps you to estimate your expenses so that you know your own financial standing.

This investment calculator takes into account your mortgage payments and whether you have any mortages left when you are retired. At the end, it tells you if you have enough to retire comfortably or if there is a shortfall and the estimated amount of retirement fund you have or the shortfall amount.

It was a useful exercise for me to revisit the basic principles of planning for retirement which this site does very well. Be prepared to do it for about 30 minutes, and I am sure that you will learn something from it. You may decide that you don't have enough for retirement and actively save more by cutting down on unnecessary expenses like planning for a holiday in a place nearer to Singapore than say, United States or Europe.

This brings us to the principle of delayed gratification. For investments to work, a person should follow this principle, as a dollar invested today will compound exponentially into the future so the opportunity costs of spending the dollar now is high. So if you can put off the purchase of a big ticket item (ie not an asset like a house but a consumption item like a car) to a later date, you can use the amount you would have used to buy it to invest first. So theoretically, the price of the item would have been lower after taking into account inflation and present value versus future value of an item. Of course if it is an urgent need, you will have to get it right now, but for the items that you want, like an Xbox or PS3, maybe you need to think harder.