Building the third and fourth pillars of monthly passive incomes.
As per the last post, I decided to invest in Greatlink Multi-Sector and US Income & Growth fund. These were the two long term funds that provide monthly payouts which I plan to keep till the day I expired. I knew that these would not be enough for me if I want to retire early. After the discussion with my insurance agent, I turned to one of his three proposals and made some changes. He proposed a saving plan, a monthly endowment and a monthly pay out fund.
I decided to sign up for two monthly pay-out funds and a monthly endowment plan. I was planning to use one of the monthly payouts to fund the monthly endowment plan for 15 years. Once the monthly endowment plan matures, I will switch it to a fund that provide monthly payout. That would be my fourth source of monthly payouts (Even through I list this ahead of my third source of monthly payouts, it will only be activated when I am in my 62 years old). If I retired there and then, I would have beat my own retirement goal of 65 (Right now, the retirement age of Singapore is 62 years old).
Annual expenses as at 2024
Parents living expenses - $12,480 (Around 3-5% growth depending on my current salary increment)
Parents insurances - $5,500 (Expect this to grow as they age)
My insurance - $8,800 (This would grow as I age)
My housing mortgage (currently CPF but to use cash if I no longer working) - $14,400
My household expense - $6,500
My personal expense - $21,600
Total expenses per year -$69,280
Total expenses per month - $5,774
From the listing above, you can see that the only expenses that I could reduce is my own personal expenses. based on the statistic, I was spending about $1,800 a month. Truly shocking. I do not want to list all of my expenses but one expenses stood out. I was spending around $400 a month buying lotteries and gambling football with Singapore pool. The figure did not look much, just $4,800 a year but it constituted 23% of my expenses. That was for something with low returns.
I could use this amount to build something for myself to help to fund my early retirement without the need to shrink my spending further. (Having saying that, I would still need to review my spending further to weed out unnecessary spending without killing all the joys in life.)
Having that additional $400 dollars meant that I could send it to other investment plans. I looked around and decided to go for SYFE Pimco Passive Income Fund which pay around 5.5% to 6% per year based on what SYFE said.
I have an account with SYFE. I am looking at consolidating all the funds in the difference portfolio and place them into Pimco Passive Income. It will increase my monthly payouts. Depending on situation, I will likely to reinvest the monthly payout receive back to the income fund itself.
So with that I will be having three funds with monthly payout and one endowment plan which I plan to turn it into a monthly payout fund as well. With the four pillars of monthly payout funds, I think I am more or so less secure for my retirement. The question whether can I retire in my late 50s, early 60s, or at 65 years old. I hope that I can pace down by the time I hit my late 50s.
With the four pillars of fixed incomes, I think that should be enough and I will not likely to set up more of such pillars. I will likely to review my monthly expenditure further to see if I could get any further spare cash. Any further spare cash that I obtained will be deployed into Singapore REITs and dividend stocks. I do expect this to form my fifth pillar of incomes.
I will be using this platform to update the result of my investment journey. Hopefully I would be able to go on financial freedom before the age of 65. I hope that this would inspire those who received early critical illness payout and have no specific use for these funds to have some idea on how to invest on these critical payout funds.
P.s. Not a financial advice. Please treat this as the rambling of an middle age uncle.
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