Algoinsights Blog, Financial Planning, Investing, Retirement, Wealth

An Insurance Advisor requested for a meeting with me to look into my retirement. I told her I am good, but her persistence won me over. Also, I would like to know how she looks like too. Therefore, we decided to meet over coffee at a cafe in town.

The meeting started well and good. Yes, she looks good too.

After some small talks, I asked her, “so, what is the objective of this meeting?”

She said she would like to do a financial analysis for me to see if I had enough money for my retirement. She also mentioned that retirement planning is her specialty topic as she enjoys helping people free themselves financially.

After some fact finding, she told me at my current age, my life expectancy, current FD interest rate, and my expected lifestyle at retirement, I will need a lump sum of about 25,000,000SGD to retire without a hitch.

Part of our conversation

Me: “What? I need 25 million dollars in FD to retire?”

She: “Yes, Mr Ang.”

Me: “Wow. This is unbelievable.”

She: “Yes. It is. But if you could lower your living standards at your retirement, you will not need 25M. Perhaps 10M?”

Me: “Assuming I want to retire next week. Where can I get the 25M in a hurry?”

She: “No. Mr Ang, my calculation assumes you retire at our official retirement age of 62 and live till your mortality of about 80 years. So, you must think of ways to accumulate that 25M from your current age of 53 to 62. You still got 9 years to do that.”

Me: “Then I can only think of 3 people on earth who can afford to retire in a hurry.”

She: “Who are they?”

Me: “Bill Gates, Warren Buffett, and George Soros.”

We all laughed….

Retirement Vs Financial Freedom

Retirement and financial freedom are 2 different things altogether. They are never the same. However, most financial planners lump them together as one which is NOT correct.

Retirement is an event in a person’s life.

Financial freedom is a state of living that life.

All people on earth will retire someday. But NOT all people will get to enjoy financial freedom before, during, and after their retirement.

Retirement will come to us by default whether you like it or not. Financial freedom is a planned move. This is an important difference that most people leave it to God, fate, or the erroneous financial planner.

If you do not plan for your financial freedom, you will NEVER have it. You will never know how good it feels to be financially free.

Definition of Financial Freedom

How you define certain things shapes your perception of those things. A right definition will send you on the right path to heath, wealth, and happiness. A wrong definition will send you to hell.

So, here is my definition of Financial Freedom since I started my career 30 years ago, “When your monthly passive income is greater than all your monthly bills.”

It is a very simple definition because I do not have enough education to make it more complex.

Here is how it works.

Assuming you have monthly financial obligations of 10,000SGD. And you have a monthly passive income stream of 15,000SGD, then you have achieved your financial freedom.

You can actually retire on the spot while reading this blog article. You still have 5,000SGD spare every month for your other entertainment etc.

What a life.

An easier way

Focusing your energies to generate 15,000SGD of passive income is much easier than accumulating 25M over 9 years or 2.7M per year in my case with the Insurance Advisor.

You would agree with me on that, wouldn’t you?

Therefore, following the way of the Insurance Advisor to save for your retirement is a very depressing and “an almost impossible” path. It can hardly be achieved by any working adults, including possibly the Insurance Advisor herself.

A new way of thinking

We are all living in the new economy. We need new set of thinking. What is old school should be kept away.

Naturally, the Insurance Advisor and I parted with no deal in sight.

I certainly hope that my readers, after reading this blog article, will start to think about generating passive income streams and achieve your financial freedom and retirement ASAP.

Thank you for reading my blog article.

Happy retirement.

Victor Ang