My Passive Income (Month of May 11)

CPF(OA): $233 (from interest and dividends)
Cash: $1774 (from dividends and other passive incomes)
Total: $2007
Target: $3200
Achievement: 62.7%

There are no changes in my passive income 1 and 2.

For passive income 3, there are no changes too.

For passive income 4, there is decrease of $12. However since it is still in the building stage, I will be expecting it to go up and down. In my post "Forget about achieving Financial Freedom if you do not have perseverance or refuse to learn.", I have mentioned that it will take time and effort to build up passive income.

More and more pawn shops

In the last seven years, I have seen the growing number of pawn shops around my neighborhood. I remembered that there was just one pawn shop in the past, but now, I am seeing at least three of them. And also on the local TV channels, I have seen a lot of advertisements on pawn shops recently. I don’t recall seeing such advertisement seven year ago.

I understand that the purpose for pawn-broking is to help people tide over urgent times. And that explain the existence of the pawn shop. My question now is why is there an increase in the number of pawn shops? Am I right to say that there are more people in need of money urgently now as compared to years ago?

No one is indispensable!

Last week in the “Great Event” in Singapore, it has proven again that no one is indispensable. No matter how high are your position, how much experience you have and how much effort you put in, you may just lose your post due to some reason. Well, it is quite sad to know that is the truth in today society. So what can one do to protect oneself financially before the day really come?

Have zero or minimum reliabilities.
As you probably know that reliabilities are the thing that constantly take money from you. An example for reliability is buying a car just to drive to your work place and does nothing else. Having too much reliability will definitely add up to your financial burden. As for me, I have achieved to have zero reliability.

Commit only when you can afford.
Make sure that you only commit when you can afford. For example, buying a big house which stretches your financial boundary is not a wise thing to do. As for me, I can only afford a 4 room flat and will not be planning to do any upgrading at the moment.

Multiple income streams instead of just one.
Well this is one of the best protection again any income loss. Focusing on just one income stream is very risky. It is because once you lose it, you will not have any other income streams to support your living. As for me, I am having a main active income stream and 3 passive income streams.

Take good care of your health and have enough insurance coverage.
Make sure anything that you do will not affect your health. It is because once your health is lost, you are prepared to pay for huge amount of medical expenses and you may not be able to work again. And also, make sure your family and yourself have enough insurance coverage to provide all the protection you need. Currently I am spending about $500 per month on insurance to ensure that.

Is it worth to buy a big flat now and downgrade it when approaching retirement?

I happen to hear from people saying that they would be buying the biggest flat that they can afford and downgrade it when they are approaching retirement. The reason to downgrade is to take out some cash to support themselves during their retirement. But is it really worth to do that? Let us do some simple calculation to find out.



I am using example of a 4 room resale flat which costs $400,000 and an EA resale flat which costs $600,000. The payment for both the flat will be using CPF. So based on my calculation, buying a 4 room flat instead of EA flat will provide a saving of around $800 per month. The total saving without any interest after 30 years will be around $288,244. But assume that CPF is giving 2.5% interest per year for the next 30 years; the amount will compound to $428.337.

So conclusion, if the difference between the selling price of EA flat and buying price of 4 rooms flat is more than $428.337, then it is worth it. If not, it is not a good idea to buy a big flat and downgrade it later. And also please note take I did not include the possible agent commission and renovation cost when doing the downgrading.