Two in a row! I’m already on the right path in continuing this weekly summary.

Now it may not seem like a lot, but like with everything else in life, it’s all about baby steps. Just like in personal finance. Going two days without impulsive buying may not seem like a lot, but it’s going down the right path. Similarly, to master a new skill REQUIRES the first step to be taken, however small it is.

That said, never judge yourself on not being there. You’re just not there… yet 🙂

From Traditional Media

With termination payments ending years before retirement, this Ontario couple’s free spending ways are over
This is a really sad article. The husband and wife were caught in a bunch of unfortunate events. The husband is 55 and took a voluntary retirement package at the age of 55 and the wife was unexpectedly let go at the age of 48. Because of this, they will have to rely heavily on our retirement benefits but will also have to cut their $1000/month expense in living their lives to almost $0.

The article goes into how they would have to do this but the point I would like to focus on is how you would never fall into that trap. It’s true that as you get older, you’ll be less likely to be hired and more likely to be let go of. However, there is something that will easily make this whole thing highly unlikely and that is to be an expert in your field. 

I’m not referring to the expert where you say you have x years of experience in the industry when you’ve been doing the same thing day in, day out. But expert in the sense of you know the latest trends in your field. You know the pros and cons of those trends, and you’re able to take advantage of it. It means people constantly come up to you to get your opinion. That type of expert will make it really hard for the company to let you go, and if they did, someone else would want you. That or you can easily become a consultant in that field.

Take away: never let your financial future be controlled by your employer. Build out your skills to be top class so people are always looking to you for your thoughts. Otherwise you may end up like this couple who will be living without being able to truly enjoy life.

From a few Canadian Bloggers

When we are living much longer… better prepare MORE
Malaysia is starting to run into the same troubles that developed nations run into. In some studies, Malaysia will have more people who are going to be in the “retirement phase” of life than in the income producing phase. Not only that, but the life expectancy will also continue to improve.

Now that’s great news from person to person, but it’s actually a tough spot for a government because they will have more people to take care of than people who are paying taxes. The government has already increased retirement age from 55 to 60, however, that number will only go up. In Canada, it’s already at 67.

This is one of the reasons why I don’t believe in relying on the government for retirement. By the time I get to that age, the age would be much higher, or the income they provide will be much lower. But more importantly, I don’t believe in waiting until I’m that age to be able to do what I want (more on that in the future).

Take away: create your financial plan under the assumption that you will not get any support from the government. If, by the time you’re at that stage in life and there is some sort of support, then it’ll be the cherry on top.

The One Major Move To Increase Your Net Worth
One of the biggest obstacles to building wealth is not necessarily having a low income – it’s having high living expenses. And the biggest living expense if the cost of your home (whether that’s renting or paying a mortgage).

Although the article goes into giving an argument for moving cities and finding a new job, I find that far too extreme. Instead, I would suggest that you live further from work or from the super popular places. 

The best example I can give is what I’m about to do. I work in the Bangsar area. Bangsar is known to be the expat area which means that not only is rent here super high, but so is the cost of food and groceries. Although many of my colleagues decide to live in this area, I decided to move 30 minutes away by LRT. The price of the place I got is 1800 for a 2 bedroom (whereas that won’t even get you a bachelor pad in Bangsar). To top it up, I am splitting the rent with a friend which drops to under RM1000 a month. This move will save me at least RM500 a month in rent, but equally as important, saves me money for groceries and food (I’m a lot closer to cheap delicious food now). I believe that the total savings would be close to RM1000 / month compared to what my colleagues would be paying.

Take away: think about living further away from work as a way to save some major money.

From a Few International Bloggers

What your flippant beliefs cost you
If you’re thinking about automating your investment, this article does a great job in pushing you over the fence. Remit is actually writing about a study that was done that showed how much worse off you would be by somehow missing some of the biggest stock market rallies. 

For example, did you know that if you had somehow missed the 5 biggest stock market rallies over the past 20 years, your portfolio value would be 45% lower!?

Take away: Don’t try to time the market. Have your investments automated by purchasing a basic index fund.

When we are living much longer… better prepare MORE.
This article is focused on Malaysia, however the same problem is happening all over the world: the average age is increasing which means there are more old people than young. This is an issue because there will come a day when all these older people are retiring (so instead of providing income to the government, they take money), there are not enough young people to provide the money to allow the government to take care of the pensions.

Combine that with the fact that people are living longer, you get the problem of government not being able to keep up with their obligations. This is why our retirement age was moved from 65 to 67 and I won’t be surprised for it to hit the 70s.

This is one of the reasons why I don’t believe in relying on the government for retirement. By the time I get to that age, the age would be much higher, or the income they provide will be much lower. But more importantly, I don’t believe in waiting until I’m that age to be able to do what I want (more on that in the future).

Take away: create your financial plan under the assumption that you will not get any support from the government. If, by the time you’re at that stage in life and there is some sort of support, then it’ll be the cherry on top.