I thought it would be good to share with all of you the importance of saving for retirement. Many of my peers of my age, facing the quarter life crisis would beg to differ. They have ideals to fulfil, like looking for a salaried job with high renumeration, while still demanding work-life balance. I'm sure it is a give and take, either u have work life balance with low salaries or have none but with very good compensation. Its really up to the individual priorities in life, but I know mine and that is to save as much as possible to generate enough passive income to allow the power of compounding to work.
So how to save up enough for dividend investing? Well, the definition of enough is actually never enough for me, but its good to set targets to achieve by a certain time of your life which I would have done for myself by putting it in this blog. You should take some time to reflect what your goals are and how to go about achieving it. Please feel free to adopt my financial goals if its suitable! :)
Ok, so now is the moment you are waiting for, the secret formula to riches is
What you save = Your income - Your expenditure
Yup, I admit its really anti-climax here, but never underestimate the power of strict discipline. Yes, this is not for the faint-hearted, discipline is very important to achieving retirement plans early and it goes a long way to moulding yourself into a better person as a whole, no doubt about it.
So the secret to saving up enough for dividend investing is no complex maths/formulae which is out of reach for the regular man on the street. It is simply understanding the formula and making sure it works to your benefit. As I mentioned, you need strict discipline to make it work.
Reducing Your Expenditure
I would suggest to focus on reducing your expenditure before considering options to boost your income. And because reducing expenditure requires strict discipline, it is a good way to save more moolah while moulding yourself into a better person. Delaying instant gratification in today's world is much more difficult to do, given the ample advertisements and media encouraging living the high and luxurious life and all the prestige that comes with it. Please, don't fall for their trap.
The motives of such media is to encourage consumers to spend more, of which our hard earned moolah goes from our pockets to theirs. You can think of it as a system whereby it facilitates transfer from your savings account to their pockets. I'm not trying to say we should be misers and reduce spending on everything. We need to know our needs and wants, simply sustain our needs and delay our wants. Basic necessities should be our priority and anything additional should be reduced if not cut back totally. It may seem like small moolah right now, but accumulation of small moolah leads to great things.
Diligently saving moolah is a a good habit which I'm sure many parents instil them from an early age. But it is surprisingly common to see high income earners falling into debts these days, succumbing to the temptations of instant gratification. I'm sure with the discipline and rigorous monitoring, we will be able to achieve our retirement goals on time or better yet, earlier.
For myself, saving well is good and getting a savings account which provides decent interest rates would be important too. We know that bank interests rates are ridiculously low now, and it does not make sense to park our excess moolah there. You might be surprised to find some good promotions banks are offering to attract deposits.
The OCBC 360 Account
Personally, I park the majority of my funds in the OCBC 360 account, which offers up to 3.05% per annum, if you are able to achieve the required conditions (IMHO easy to satisfy).
More details, please refer to:
However, since this is probably the best deal in the market so far, I don't think OCBC can continuously sustain such a promotion. The promotion has been running for almost a year already, so I won't be surprised if they reduce the interest rates or scrap the promotion altogether. Probably the idea is that they are just trying to get as much people to open accounts with OCBC and widen its customer base.
Perhaps I should do a run down on some of the decent bank accounts to open in Singapore in another post.
Boosting Your Income
There are many ways to boost your incomes, ranging from taking on part-time work and running a side business. These take up your time outside of your salaried position and would not appeal to those who are looking for work-life balance.
So perhaps the obvious choice is to build up your career and work hard on your job to make you stand out for a promotion. Focusing on your career should be utmost importance, of course, it is only secondary to your family commitments, so please know your priorities first.
And of course, we can't leave out dividend investing as a way to boost incomes. After all, the fact you are reading this post means you are looking for a way to generate passive income, which is in fact, a way to boost your income. So every dollar you save right now, will be able to contribute to your passive income and significantly compound itself over time. So that is the reason why I always emphasise on being disciplined savers, delaying gratification and thinking for the future you.
Final comments
So I have just touched on the surface on how to save up for retirement, which is pretty common sense to everybody, but it is worrying how many are not acting on it. Think of it this way, every dollar we save right now, will be like minions a working to produce more minions to work for you. So which means, you no longer have to work so hard to create more minions haha
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