Showing posts with label 5 elements of financial freedom. Show all posts
Showing posts with label 5 elements of financial freedom. Show all posts
Saturday, 10 September 2011
Thursday, 3 June 2010
The New Millionaires - When a million is not enough
When a million is not enough
GEORGINA ROBINSON
May 28, 2010
In a time when a television network can afford to run a game show called Who Wants To Be a Millionaire but the average Sydney house costs $600,000, it's time to re-assess the value of $1 million dollars.
Can it still guarantee you financial freedom when whole residential blocks in Sydney are lined with homes carrying million-dollar plus price tags?
“You were generally considered to be rich if you had $1 million in the 1950s and now nobody would say you were seriously rich unless you had $10 million,” author and sociologist Michael Pusey says.
“But if you're talking about a sum of money that leaves you without economic insecurity then probably no sum will do it because expectations have risen and the multimillionaires themselves are at risk of going bankrupt and they want more and more … in order to feel safe.”
The professor of Public Ethics at Charles Sturt University, Clive Hamilton, agrees that the noughties' equivalent of a 1950s millionaire is someone with between $10 million and $20 million to burn.
And Eddie Maguire's television show is his proof.
“We now have a television program called Who Wants To Be A Millionaire, that would have been impossible 30 years ago because no television company would have been willing to stump up prize money of a million dollars, it would have sent them broke if anybody had won,” Professor Hamilton said.
The magic million may not have the same cache it once did but that will be little comfort to the many Australians who found themselves kicked out of the club during the GFC.
A study compiled by financial research company CoreData found nearly a quarter of the 1700 Australians with investment assets of more than $1 million were pushed out of the $1 million-plus bracket by the global financial crisis.
Another survey in the Boston Consulting Group's latest global wealth report, reported a 40 per cent drop in the numbers of millionaire households in Australia.
“It's about money that you could use, money is hard to use if it's tied up in your house,” wealth researcher Simon Kelly says.
Professor Kelly, working at the University of Canberra's National Centre for Social and Economic Modelling, says international benchmarks have declared US$2 million to be “the new $1 million dollars”.
“And that's excluding houses … because particularly in places like Sydney, there'd be whole suburbs where the value of each house is worth $1 million dollars and they take that out.”
A Sydney-based funds management specialist, who wanted to remain anonymous, says $10 million – split just about evenly between property and income-generating assets – would have him sleeping soundly at night.
“Enough to form a stash to generate comfortable annuity for a period of 30 years,” he says.
But Professor Pusey says it is impossible in today's economic, political and social climate to confidently predict what “enough” might look like.
“In the baby boomer times
“Today you would need vastly more than $1 million to achieve those ends for yourself.”
Professor Pusey says incomes are much more volatile these days, people enter the full-time labour market later and are often forced out earlier but live for much longer.
“The good news is you're going to live until you're 82-and-a-half, the bad news is you get pushed out of the labour market in your 50s if you can make it that long,” he says.
http://www.smh.com.au/executive-style/luxury/when-a-million-is-not-enough-20100528-wkkp.html
GEORGINA ROBINSON
May 28, 2010
In a time when a television network can afford to run a game show called Who Wants To Be a Millionaire but the average Sydney house costs $600,000, it's time to re-assess the value of $1 million dollars.
Can it still guarantee you financial freedom when whole residential blocks in Sydney are lined with homes carrying million-dollar plus price tags?
Do you need something closer to $10 million or $20 million to attain the symbolic separation from the masses a million once bought?
“You were generally considered to be rich if you had $1 million in the 1950s and now nobody would say you were seriously rich unless you had $10 million,” author and sociologist Michael Pusey says.
“But if you're talking about a sum of money that leaves you without economic insecurity then probably no sum will do it because expectations have risen and the multimillionaires themselves are at risk of going bankrupt and they want more and more … in order to feel safe.”
The professor of Public Ethics at Charles Sturt University, Clive Hamilton, agrees that the noughties' equivalent of a 1950s millionaire is someone with between $10 million and $20 million to burn.
And Eddie Maguire's television show is his proof.
“We now have a television program called Who Wants To Be A Millionaire, that would have been impossible 30 years ago because no television company would have been willing to stump up prize money of a million dollars, it would have sent them broke if anybody had won,” Professor Hamilton said.
“So now $1 million dollars is perhaps not chicken feed … but it just doesn't have the punch that it used to have.”
The magic million may not have the same cache it once did but that will be little comfort to the many Australians who found themselves kicked out of the club during the GFC.
A study compiled by financial research company CoreData found nearly a quarter of the 1700 Australians with investment assets of more than $1 million were pushed out of the $1 million-plus bracket by the global financial crisis.
Another survey in the Boston Consulting Group's latest global wealth report, reported a 40 per cent drop in the numbers of millionaire households in Australia.
The survey excluded individuals' businesses, homes and luxury goods, a key differentiator in the wealth race.
“It's about money that you could use, money is hard to use if it's tied up in your house,” wealth researcher Simon Kelly says.
“If you talk about people having $2 million to spend that's quite a different sort of person to one that's just worth $2 million.”
Professor Kelly, working at the University of Canberra's National Centre for Social and Economic Modelling, says international benchmarks have declared US$2 million to be “the new $1 million dollars”.
“And that's excluding houses … because particularly in places like Sydney, there'd be whole suburbs where the value of each house is worth $1 million dollars and they take that out.”
A Sydney-based funds management specialist, who wanted to remain anonymous, says $10 million – split just about evenly between property and income-generating assets – would have him sleeping soundly at night.
“Enough to form a stash to generate comfortable annuity for a period of 30 years,” he says.
But Professor Pusey says it is impossible in today's economic, political and social climate to confidently predict what “enough” might look like.
“In the baby boomer times
- we assumed that we would be able to buy a house on one income;
- we assumed that we would have quality health care for nothing;
- we assumed we'd have enough education as we wanted or needed for nothing;
- we assumed that the pension with our own savings would support us in our retirement and
- we assumed that we would have the resources to set up our children with those things,” he says.
“Today you would need vastly more than $1 million to achieve those ends for yourself.”
Professor Pusey says incomes are much more volatile these days, people enter the full-time labour market later and are often forced out earlier but live for much longer.
“The good news is you're going to live until you're 82-and-a-half, the bad news is you get pushed out of the labour market in your 50s if you can make it that long,” he says.
"There is no economic security and [people] need vastly more money to get it because their incomes are insecure and because debt levels are much higher than they were."
http://www.smh.com.au/executive-style/luxury/when-a-million-is-not-enough-20100528-wkkp.html
Sunday, 7 March 2010
Having a concrete plan to financial freedom
Saturday March 6, 2010
Having a concrete plan to financial freedom
By FINTAN NG
fintan@thestar.com.my
Financial freedom is a distant dream for the vast majority of working people, it is made almost unattainable by the generally low wages and inflationary pressure that many here have to struggle with.
An observer says it has become increasingly difficult to rely on just a day job to achieve that freedom as wages here have not kept up with inflation.
This person has a day job and several side incomes including running a dragon fruit farm and being involved as an agent in the Malaysia My Second Home programme.
Some, like Ginger Leong, say “forced savings” is their path to financial freedom. However, she acknowledges that whatever is saved now may not be enough due to inflation and other commitments.
Many also find it hard to even start on the path to financial freedom as they are confronted by a plethora of investment instruments available as well as the endless numbers of books and blogsites on financial management.
What most people need is guidance on how to sift through all the information out there and come up with what Whitman Independent Advisors Sdn Bhd managing director Yap Ming Hui says should be a “down-to-earth” and sensible view on achieving these goals.
He tells StarBizweek that most people “dream of achieving financial freedom” but “they don’t have a workable or concrete plan”.
Yap, who wrote a book, Roadmap to Financial Freedom, says defining goals – a “self-defined good life” for attaining financial freedom – is important.
“Not everyone can become wealthy but everyone can achieve financial freedom, however those who want to achieve it must have a roadmap as a guide to know what is the optimum investment that needs to be made,” he says, adding that even people with average assets and incomes can attain their financial goals.
Yap defines financial freedom generally as “an optimum financial position whereby your wealth is optimised to match your optimum financial needs and wants”. In this respect, “wealth” can also be defined as “assets”.
He realises that individuals have different goals, needs and wants but says this can be simplified to two components for the purpose of mapping out a roadmap - optimisation of assets and identifying and managing financial needs and wants.
Yap says needs and wants should not be viewed strictly from the financial context alone but from a bigger picture - the higher context of life.
“Most people will just concentrate on optimising their wealth but just concentrating on making more money is not true financial freedom if needs and wants are not defined,” he says.
Yap says when a person embark on the path to achieving financial freedom, some of the questions to ask are: How far is that person from their goals? If situations come around that will impact finances, what will that person do? What’s a person’s next move suppose to be?
Standard Financial Planner Sdn Bhd chief executive officer Alfred Sek says that freedom has been achieved as long as there is no stress from financial problems or commitments.
“Achieving it is a gradual process, people adjust as they go along, so if they earn more then they adjust their goals, similarly if they earn less than they adjust too,” he says.
Sek says in his experience advising clients on their finances, flexibility is important. “There are no real yardsticks, personal situations and needs are different,” he says.
http://biz.thestar.com.my/news/story.asp?file=/2010/3/6/business/5757178&sec=business
Having a concrete plan to financial freedom
By FINTAN NG
fintan@thestar.com.my
Financial freedom is a distant dream for the vast majority of working people, it is made almost unattainable by the generally low wages and inflationary pressure that many here have to struggle with.
An observer says it has become increasingly difficult to rely on just a day job to achieve that freedom as wages here have not kept up with inflation.
This person has a day job and several side incomes including running a dragon fruit farm and being involved as an agent in the Malaysia My Second Home programme.
Some, like Ginger Leong, say “forced savings” is their path to financial freedom. However, she acknowledges that whatever is saved now may not be enough due to inflation and other commitments.
Many also find it hard to even start on the path to financial freedom as they are confronted by a plethora of investment instruments available as well as the endless numbers of books and blogsites on financial management.
What most people need is guidance on how to sift through all the information out there and come up with what Whitman Independent Advisors Sdn Bhd managing director Yap Ming Hui says should be a “down-to-earth” and sensible view on achieving these goals.
He tells StarBizweek that most people “dream of achieving financial freedom” but “they don’t have a workable or concrete plan”.
Yap, who wrote a book, Roadmap to Financial Freedom, says defining goals – a “self-defined good life” for attaining financial freedom – is important.
“Not everyone can become wealthy but everyone can achieve financial freedom, however those who want to achieve it must have a roadmap as a guide to know what is the optimum investment that needs to be made,” he says, adding that even people with average assets and incomes can attain their financial goals.
Yap defines financial freedom generally as “an optimum financial position whereby your wealth is optimised to match your optimum financial needs and wants”. In this respect, “wealth” can also be defined as “assets”.
He realises that individuals have different goals, needs and wants but says this can be simplified to two components for the purpose of mapping out a roadmap - optimisation of assets and identifying and managing financial needs and wants.
Yap says needs and wants should not be viewed strictly from the financial context alone but from a bigger picture - the higher context of life.
“Most people will just concentrate on optimising their wealth but just concentrating on making more money is not true financial freedom if needs and wants are not defined,” he says.
Yap says when a person embark on the path to achieving financial freedom, some of the questions to ask are: How far is that person from their goals? If situations come around that will impact finances, what will that person do? What’s a person’s next move suppose to be?
Standard Financial Planner Sdn Bhd chief executive officer Alfred Sek says that freedom has been achieved as long as there is no stress from financial problems or commitments.
“Achieving it is a gradual process, people adjust as they go along, so if they earn more then they adjust their goals, similarly if they earn less than they adjust too,” he says.
Sek says in his experience advising clients on their finances, flexibility is important. “There are no real yardsticks, personal situations and needs are different,” he says.
http://biz.thestar.com.my/news/story.asp?file=/2010/3/6/business/5757178&sec=business
Sunday, 29 March 2009
Roadmap to financial freedom
Business/Your Money: Roadmap to financial freedom
By Yap Ming Hui
2009/03/08
IN my previous articles, I had discussed the five essential elements of financial freedom namely, spending, inflation, return on investment (ROI), time and saving. If you have knowledge of these elements it is good. However, knowing and understanding the five elements will not help you achieve financial freedom. Knowledge is only powerful when you apply it. Therefore, the challenge is to apply the knowledge of the five elements to your own real-life situation. Do you know how?
Let me share a real-life case study of Muthu. The following details of him:
- He is 36 years old and the wife is 34 years old
- He has two children age 8 and 5 now
- He works as senior manager in a multi-national corporation with RM120,000 annual income. His wife works as adminis-trative manager with RM100,000 annual income
- He has the following financial assets:
-- House: RM500,000 with RM250,000 mortgage loan
-- Unit Trust: RM30,000
-- Bank savings: RM200,000
-- EPF: RM200,000 (himself), RM150,000 (wife)
- He and his family is currently enjoying a life style of RM120,000 per year.
- He and his wife intend to retire at 55 with RM96,000 living expenses per year.
- They would like to provide RM200,000 each for their children's tertiary education.
Do you think Muthu will be able to achieve his financial freedom (assuming that he expects to live until the age of 80)?
Will he or will he not?
The best way to answer this question is to plot a roadmap to financial freedom for Muthu and it would look like chart A.
The Y axis of chart A represents the net worth amount of Muthu. The X axis represents the age of Muthu.
From the roadmap, we can see that Muthu's net worth will grow to about RM400,000 when he is 45. But it drops to almost zero at 46 when his first child goes into university. After that, it rises slightly but drops to zero again at 49 when the second child enters the university. His net worth stays there until 55 when he withdraws his EPF money. Then, his net worth grows to about RM1,100,000.
At age 57, his wife withdraws her EPF money and their family net worth grows to about RM2,450,000. From there, their net worth continues to drop. Their net worth becomes zero when Muthu is 65. In another words, Muthu's wealth will run out at age 65.
Based on Muthu's desire to have his wealth last until age 80, the roadmap shows that his current money management will not achieve all his financial needs and wants.
It is important to have a roadmap to measure our progress towards our goal of financial freedom.
By having the roadmap, we are able to know where we stand now in our journey to financial freedom, and the necessary actions to take to move towards that destination.
Without a roadmap to financial freedom, you won't know if you have enough financial resources to meet all your financial needs and wants. Without this knowledge, you may continue to over-spend and under-save. When you realise the problem at age 50 or 55, it is already too late to make any changes or take any actions.
In short, managing your personal finance without the roadmap to financial freedom is like shooting a target in the dark. You don't know where the target is and you don't know whether you have shot the target.
By knowing his current roadmap, Muthu will be able to take some actions and re-prioritise his financial needs and wants to achieve his financial freedom.
First, he can restructure his investment portfolio to achieve higher ROI. His current investment's ROI is 3.8 per cent. If he is able to achieve nine per cent ROI for his investment portfolio, his roadmap will look like chart B.
After increasing his ROI, Muthu's net worth will last longer now from age 65 to age 68. This is still not good enough. The target is to have the money last beyond age 80.
In that case, he will need reduce his life style spending during his retirement from RM96,000 to RM84,000. It means RM1,000 less per month. Muthu is willing to make the adjustment to make his wealth last longer. After the adjustment, his roadmap will look like chart C.
After reducing his retirement life style spending, Muthu's net worth will last until age 71. This is better but still not good enough.
Based on the adjusted roadmap, Muthu will need to adjust his current life style spending to increase his savings. If he reduces his current life style spending per year from RM120,000 to RM105,000, he will have additional RM15,000 savings per year. Then his roadmap will look like chart D.
After reducing his current life style spending Muthu's net worth will now last until age 83. By making those few adjustments Muthu is now able to achieve his financial freedom.
* Yap Ming Hui is the managing director of Whitman Independent Advisors Sdn Bhd, which has recently launched Roadmap to Financial Freedom service to help guide Malaysian families to achieve financial freedom.
--------------------------------------------------------------------------------
© Copyright 2009 The New Straits Times Press (M) Berhad. All rights reserved.
http://www.nst.com.my/Current_News/NST/Sunday/Focus/2498095/Article/pppull_index_html
By Yap Ming Hui
2009/03/08
IN my previous articles, I had discussed the five essential elements of financial freedom namely, spending, inflation, return on investment (ROI), time and saving. If you have knowledge of these elements it is good. However, knowing and understanding the five elements will not help you achieve financial freedom. Knowledge is only powerful when you apply it. Therefore, the challenge is to apply the knowledge of the five elements to your own real-life situation. Do you know how?
Let me share a real-life case study of Muthu. The following details of him:
- He is 36 years old and the wife is 34 years old
- He has two children age 8 and 5 now
- He works as senior manager in a multi-national corporation with RM120,000 annual income. His wife works as adminis-trative manager with RM100,000 annual income
- He has the following financial assets:
-- House: RM500,000 with RM250,000 mortgage loan
-- Unit Trust: RM30,000
-- Bank savings: RM200,000
-- EPF: RM200,000 (himself), RM150,000 (wife)
- He and his family is currently enjoying a life style of RM120,000 per year.
- He and his wife intend to retire at 55 with RM96,000 living expenses per year.
- They would like to provide RM200,000 each for their children's tertiary education.
Do you think Muthu will be able to achieve his financial freedom (assuming that he expects to live until the age of 80)?
Will he or will he not?
The best way to answer this question is to plot a roadmap to financial freedom for Muthu and it would look like chart A.
The Y axis of chart A represents the net worth amount of Muthu. The X axis represents the age of Muthu.
From the roadmap, we can see that Muthu's net worth will grow to about RM400,000 when he is 45. But it drops to almost zero at 46 when his first child goes into university. After that, it rises slightly but drops to zero again at 49 when the second child enters the university. His net worth stays there until 55 when he withdraws his EPF money. Then, his net worth grows to about RM1,100,000.
At age 57, his wife withdraws her EPF money and their family net worth grows to about RM2,450,000. From there, their net worth continues to drop. Their net worth becomes zero when Muthu is 65. In another words, Muthu's wealth will run out at age 65.
Based on Muthu's desire to have his wealth last until age 80, the roadmap shows that his current money management will not achieve all his financial needs and wants.
It is important to have a roadmap to measure our progress towards our goal of financial freedom.
By having the roadmap, we are able to know where we stand now in our journey to financial freedom, and the necessary actions to take to move towards that destination.
Without a roadmap to financial freedom, you won't know if you have enough financial resources to meet all your financial needs and wants. Without this knowledge, you may continue to over-spend and under-save. When you realise the problem at age 50 or 55, it is already too late to make any changes or take any actions.
In short, managing your personal finance without the roadmap to financial freedom is like shooting a target in the dark. You don't know where the target is and you don't know whether you have shot the target.
By knowing his current roadmap, Muthu will be able to take some actions and re-prioritise his financial needs and wants to achieve his financial freedom.
First, he can restructure his investment portfolio to achieve higher ROI. His current investment's ROI is 3.8 per cent. If he is able to achieve nine per cent ROI for his investment portfolio, his roadmap will look like chart B.
After increasing his ROI, Muthu's net worth will last longer now from age 65 to age 68. This is still not good enough. The target is to have the money last beyond age 80.
In that case, he will need reduce his life style spending during his retirement from RM96,000 to RM84,000. It means RM1,000 less per month. Muthu is willing to make the adjustment to make his wealth last longer. After the adjustment, his roadmap will look like chart C.
After reducing his retirement life style spending, Muthu's net worth will last until age 71. This is better but still not good enough.
Based on the adjusted roadmap, Muthu will need to adjust his current life style spending to increase his savings. If he reduces his current life style spending per year from RM120,000 to RM105,000, he will have additional RM15,000 savings per year. Then his roadmap will look like chart D.
After reducing his current life style spending Muthu's net worth will now last until age 83. By making those few adjustments Muthu is now able to achieve his financial freedom.
* Yap Ming Hui is the managing director of Whitman Independent Advisors Sdn Bhd, which has recently launched Roadmap to Financial Freedom service to help guide Malaysian families to achieve financial freedom.
--------------------------------------------------------------------------------
© Copyright 2009 The New Straits Times Press (M) Berhad. All rights reserved.
http://www.nst.com.my/Current_News/NST/Sunday/Focus/2498095/Article/pppull_index_html
Finding out what financial freedom is to you
Finding out what financial freedom is to you
By Yap Ming Hui
2009/02/07
IN this article, I will elaborate on the definition of financial freedom and share a few points to help you define your own financial freedom. When you ask people what financial freedom is to them, chances are that you are going to get different answers from different people. Some may say that financial freedom means having RM1 million in the bank. For some financial freedom means no more debts and loans, and for others it means having enough money to do whatever they want.
I define financial freedom as "a controlled financial position whereby there are sufficient financial resources to meet your financial needs and wants at any time and in any circumstances".
From this definition, we can see that there are two main components to manage in attaining financial freedom.
The first involves the management of your financial resources. The second involves the management of your financial needs and wants.
The management of financial needs and wants should not be viewed only in the financial context. You need to view it at a higher context of your life. You need to identify your financial needs and wants that will give you a good life based on your definition.
This type of financial freedom planning helps you to stop chasing financial freedom defined by the society at large.
For example, having a bungalow with swimming pool, driving a luxurious car, wearing branded clothes, and so on. This definition challenges you to define your own financial needs and wants.
Normally, the first component is the component where most people understand and would focus their attention and effort on.
Most people start their life with little or no financial resources. They are very sure that they don't have sufficient financial resources to meet all their financial needs and wants. As a result, they won't bother to define their financial needs and wants in detail. They will focus their attention on making more money. That is not entirely wrong. However, you cannot achieve true financial freedom by just generating more financial resources without considering what your financial needs and wants actually are.
Remember that money is only a means to achieve an end. It is used to support an ideal or good life that we want.
The component of your financial needs and wants is whereby you translate you self-defined good life into financial terms and measurements.
Without defining your own financial needs and wants, it is likely that you will take other people's definition of financial freedom as your own. That's why there are so many people out there who just want to keep up with the Jones.
Based on this definition, the amount required to achieve financial freedom will vary from one person to another because different persons have different needs and wants.
For someone who has fewer needs and wants, he will require less money to achieve his financial freedom. For someone who has more needs and wants, he will require more financial resources to achieve his financial freedom.
Therefore, a multi-millionaire may not have achieved his financial freedom if his needs and wants are more than what his millions can meet.
On the other hand, someone who is not a millionaire may still be able to achieve financial freedom if his financial resources are more than enough to meet his needs and wants.
Key steps to attain financial freedom
The following are the key steps to follow to achieve financial freedom:
- Define what is a good life to you.
- Find out the financial needs and wants to support your good life.
- Test if you have sufficient financial resources to meet all your financial needs and wants. If you have enough, congratulation, but if you don't then have a plan to increase your financial resources and re-look and re-prioritise your financial needs and wants
- Test again if you have sufficient financial resources to meet your adjusted financial needs and wants. If you have enough then you are on your way to achieve your financial freedom. But if you don't, then you have to continue to increase your financial resources and re-look and re-prioritise your financial needs and wants.
As we can see, true financial freedom attainment is not only about money or financial management. It is also about managing your financial needs and wants.
Essentially, financial freedom attainment is about balancing your financial resources with your financial needs and wants. You can increase your financial resources to meet your high financial needs and wants but you will have a certain price to pay.
You may have to take more risks. You may have work longer hours and harder.
On the other hand, to re-prioritise your financial needs and wants, you will also have to pay a price. You may have to change your lifestyles or give up some of your expensive hobbies. The upside of it is that you get to have more time for yourself and family, less stress and more health.
Francis, one of my clients, is a business owner. He and his wife like to enjoy a luxurious life. He knows that he has to work very hard and take a lot of risks to have enough money to support his expensive lifestyle. However, he is happy to do so.
Another client of mine, Joshua, is also a business owner. He knows that he will need to spend a lot of time and undergo a lot of stress to make more money. As a result, he does not mind lowering his financial needs and wants to match his financial resources.
To Joshua, a good life is having peace of mind and more time for himself and family.
From the example of Francis and Joshua, we know that a person can either increase his financial resources or reduce his financial needs and wants depending on his values and definition of a good life. There is no right or wrong in either case.
Each individual will have his own unique financial freedom goal, depending on his financial needs and wants.
Financial freedom is never about becoming a millionaire or billionaire like most people would assume.
The biggest challenge to achieving financial freedom is finding out what financial freedom really means to you. Once you find that answer, the issue of how to achieve it would not be so difficult.
Yap Ming Hui is the managing director of Whitman Independent Advisors Sdn Bhd, the first multi-client family office in Malaysia
--------------------------------------------------------------------------------
© Copyright 2009 The New Straits Times Press (M) Berhad. All rights reserved.
http://www.nst.com.my/Current_News/NST/Sunday/Focus/2471848/Article/pppull_index_html
By Yap Ming Hui
2009/02/07
IN this article, I will elaborate on the definition of financial freedom and share a few points to help you define your own financial freedom. When you ask people what financial freedom is to them, chances are that you are going to get different answers from different people. Some may say that financial freedom means having RM1 million in the bank. For some financial freedom means no more debts and loans, and for others it means having enough money to do whatever they want.
I define financial freedom as "a controlled financial position whereby there are sufficient financial resources to meet your financial needs and wants at any time and in any circumstances".
From this definition, we can see that there are two main components to manage in attaining financial freedom.
The first involves the management of your financial resources. The second involves the management of your financial needs and wants.
The management of financial needs and wants should not be viewed only in the financial context. You need to view it at a higher context of your life. You need to identify your financial needs and wants that will give you a good life based on your definition.
This type of financial freedom planning helps you to stop chasing financial freedom defined by the society at large.
For example, having a bungalow with swimming pool, driving a luxurious car, wearing branded clothes, and so on. This definition challenges you to define your own financial needs and wants.
Normally, the first component is the component where most people understand and would focus their attention and effort on.
Most people start their life with little or no financial resources. They are very sure that they don't have sufficient financial resources to meet all their financial needs and wants. As a result, they won't bother to define their financial needs and wants in detail. They will focus their attention on making more money. That is not entirely wrong. However, you cannot achieve true financial freedom by just generating more financial resources without considering what your financial needs and wants actually are.
Remember that money is only a means to achieve an end. It is used to support an ideal or good life that we want.
The component of your financial needs and wants is whereby you translate you self-defined good life into financial terms and measurements.
Without defining your own financial needs and wants, it is likely that you will take other people's definition of financial freedom as your own. That's why there are so many people out there who just want to keep up with the Jones.
Based on this definition, the amount required to achieve financial freedom will vary from one person to another because different persons have different needs and wants.
For someone who has fewer needs and wants, he will require less money to achieve his financial freedom. For someone who has more needs and wants, he will require more financial resources to achieve his financial freedom.
Therefore, a multi-millionaire may not have achieved his financial freedom if his needs and wants are more than what his millions can meet.
On the other hand, someone who is not a millionaire may still be able to achieve financial freedom if his financial resources are more than enough to meet his needs and wants.
Key steps to attain financial freedom
The following are the key steps to follow to achieve financial freedom:
- Define what is a good life to you.
- Find out the financial needs and wants to support your good life.
- Test if you have sufficient financial resources to meet all your financial needs and wants. If you have enough, congratulation, but if you don't then have a plan to increase your financial resources and re-look and re-prioritise your financial needs and wants
- Test again if you have sufficient financial resources to meet your adjusted financial needs and wants. If you have enough then you are on your way to achieve your financial freedom. But if you don't, then you have to continue to increase your financial resources and re-look and re-prioritise your financial needs and wants.
As we can see, true financial freedom attainment is not only about money or financial management. It is also about managing your financial needs and wants.
Essentially, financial freedom attainment is about balancing your financial resources with your financial needs and wants. You can increase your financial resources to meet your high financial needs and wants but you will have a certain price to pay.
You may have to take more risks. You may have work longer hours and harder.
On the other hand, to re-prioritise your financial needs and wants, you will also have to pay a price. You may have to change your lifestyles or give up some of your expensive hobbies. The upside of it is that you get to have more time for yourself and family, less stress and more health.
Francis, one of my clients, is a business owner. He and his wife like to enjoy a luxurious life. He knows that he has to work very hard and take a lot of risks to have enough money to support his expensive lifestyle. However, he is happy to do so.
Another client of mine, Joshua, is also a business owner. He knows that he will need to spend a lot of time and undergo a lot of stress to make more money. As a result, he does not mind lowering his financial needs and wants to match his financial resources.
To Joshua, a good life is having peace of mind and more time for himself and family.
From the example of Francis and Joshua, we know that a person can either increase his financial resources or reduce his financial needs and wants depending on his values and definition of a good life. There is no right or wrong in either case.
Each individual will have his own unique financial freedom goal, depending on his financial needs and wants.
Financial freedom is never about becoming a millionaire or billionaire like most people would assume.
The biggest challenge to achieving financial freedom is finding out what financial freedom really means to you. Once you find that answer, the issue of how to achieve it would not be so difficult.
Yap Ming Hui is the managing director of Whitman Independent Advisors Sdn Bhd, the first multi-client family office in Malaysia
--------------------------------------------------------------------------------
© Copyright 2009 The New Straits Times Press (M) Berhad. All rights reserved.
http://www.nst.com.my/Current_News/NST/Sunday/Focus/2471848/Article/pppull_index_html
Savings mean the road to financial freedom
2009/01/10
YourMoney: Savings mean the road to financial freedom
By : Yap Ming Hui
THE discipline of being able to save consistently and on target would make or break our financial freedom journey. There are three main reasons why is saving important.
- The more we save, the more we accumulate
The first reason is simple and obvious. The more we save, the more we can accumulate. Obviously, we would have more resources to invest to grow our assets.
- The more we save, the less we spend
When we force ourselves to save more, we would definitely have less to spend. As such, we are able to control the standard of living and live below the mean.
Throughout my practice, I have come across clients who are able to accumulate substantial amount of assets through prudent spending and disciplined saving.
When we do not have too high a standard of living, it makes our job of maintaining a living standard during our retirement easier to attain.
On one hand, I have seen people who do not make much but save a lot. On the other hand, I have also met people who earn high income but save very little.
Many years ago, when I had just started my profession, I met Eugene, a chief executive officer of an American multi-national corporation, who earned more than RM50,000 a month.
At that time, he was the highest income-earner person I had ever met.
In my heart, I was overjoyed as I believed that I would have a big case on which to do financial and investment planning.
However, after the fact-finding process, I discovered that Eugene had assets worth only about RM2 million.
And about RM1 million of this asset was his forced savings in the Employees' Provident Fund.
The balance was the worth of the house he was staying in.
I was very surprised to find out that he had so little assets despite his high income.
So, I asked him: "Eugene, how much do you save every month?"
Eugene said: "Well, I did want to save every month. However, at the end of the month, there is always not much left."
So, if you just want to wait till you have more income to save more, you might as well forget it.
It is never about how much you make. It is always about how much you save.
- How best can we solve this problem?
Yes, you are right. Before you start spending and paying bills every month, pay yourself first.
Determine how much is the right amount of saving for you and save that amount first. It is even better if you can have a regular and automatic saving scheme.
- The more we save, the less rate of investment return we need
In fact, the more we save, the less risk we need to take in financial freedom planning.
Let's take an example of RM5,000,000 accumulation goal.
Let's assume that you are 45 years old, and planning to retire at 60.
If you can save RM50,000 per annum, you need to achieve 23.9 per cent of rate of interest (ROI) for RM5,000,000 goal.
If you can save RM120,000 per annum,you need to achieve 13.4 per cent of ROI.
If you can save RM180,000 per annum, you need to achieve only 8.3 per cent of ROI.
Of course, RM5,000,000 is only the example.
The lesson to be learnt is that the more we save, the less ROI is required to achieve the same accumulation goal.
When we do not need to achieve a high ROI, we do not need to stomach too much risk and volatility.
The less risks we take, the more peaceful life will be.
- How much to save?
I believe most of us understand the importance of saving. In fact, almost every time I was interviewed by the media, I would always be asked, "How much of their income should Malaysians save?"
To some financial planner, it is not a very difficult question for them to answer. Some would say 20 per cent. Some would say 30 per cent. Some would even say 40 per cent.
However, this is quite a tough and tricky question for me to answer.
Based on my experience of developing many tailor-made financial plans for clients, I know that the right saving rate varies from one person to another.
For example, if you have a monthly income of RM3,000, the right savings rate for you may be 20 per cent.
This is because you need to spend majority of your income to sustain your standard of living.
However, if you have a monthly income of RM50,000, the right savings rate for you may be 50 per cent.
This is because you don't need to spend the majority of your income to sustain your standard of living.
Of course, this is just one of many examples, but it shows that there is no standard "right saving" rate for every one.
Therefore, each of us should have a tailor-made financial plan to determine the right savings rate for us.
Only then, would we know that we are saving enough to meet our future commitments.
- What if your saving is under target?
If the savings and contributions are less than target planned, you may fail to achieve your financial freedom.
If the gap continues, chances are that you may not be able to achieve your original financial goals set.
In the situation whereby the actual saving is less than planned, we must review our cash flow statement to identify the discrepancy and take necessary recovery measures.
If we have confirmed that the planned saving target is unrealistic, it is important that we readjust some of our financial goals and asset allocation strategies.
--------------------------------------------------------------------------------
Yap Ming Hui is the managing director of Whitman Independent Advisors Sdn Bhd, the first multi-client family office in Malaysia
YourMoney: Savings mean the road to financial freedom
By : Yap Ming Hui
THE discipline of being able to save consistently and on target would make or break our financial freedom journey. There are three main reasons why is saving important.
- The more we save, the more we accumulate
The first reason is simple and obvious. The more we save, the more we can accumulate. Obviously, we would have more resources to invest to grow our assets.
- The more we save, the less we spend
When we force ourselves to save more, we would definitely have less to spend. As such, we are able to control the standard of living and live below the mean.
Throughout my practice, I have come across clients who are able to accumulate substantial amount of assets through prudent spending and disciplined saving.
When we do not have too high a standard of living, it makes our job of maintaining a living standard during our retirement easier to attain.
On one hand, I have seen people who do not make much but save a lot. On the other hand, I have also met people who earn high income but save very little.
Many years ago, when I had just started my profession, I met Eugene, a chief executive officer of an American multi-national corporation, who earned more than RM50,000 a month.
At that time, he was the highest income-earner person I had ever met.
In my heart, I was overjoyed as I believed that I would have a big case on which to do financial and investment planning.
However, after the fact-finding process, I discovered that Eugene had assets worth only about RM2 million.
And about RM1 million of this asset was his forced savings in the Employees' Provident Fund.
The balance was the worth of the house he was staying in.
I was very surprised to find out that he had so little assets despite his high income.
So, I asked him: "Eugene, how much do you save every month?"
Eugene said: "Well, I did want to save every month. However, at the end of the month, there is always not much left."
So, if you just want to wait till you have more income to save more, you might as well forget it.
It is never about how much you make. It is always about how much you save.
- How best can we solve this problem?
Yes, you are right. Before you start spending and paying bills every month, pay yourself first.
Determine how much is the right amount of saving for you and save that amount first. It is even better if you can have a regular and automatic saving scheme.
- The more we save, the less rate of investment return we need
In fact, the more we save, the less risk we need to take in financial freedom planning.
Let's take an example of RM5,000,000 accumulation goal.
Let's assume that you are 45 years old, and planning to retire at 60.
If you can save RM50,000 per annum, you need to achieve 23.9 per cent of rate of interest (ROI) for RM5,000,000 goal.
If you can save RM120,000 per annum,you need to achieve 13.4 per cent of ROI.
If you can save RM180,000 per annum, you need to achieve only 8.3 per cent of ROI.
Of course, RM5,000,000 is only the example.
The lesson to be learnt is that the more we save, the less ROI is required to achieve the same accumulation goal.
When we do not need to achieve a high ROI, we do not need to stomach too much risk and volatility.
The less risks we take, the more peaceful life will be.
- How much to save?
I believe most of us understand the importance of saving. In fact, almost every time I was interviewed by the media, I would always be asked, "How much of their income should Malaysians save?"
To some financial planner, it is not a very difficult question for them to answer. Some would say 20 per cent. Some would say 30 per cent. Some would even say 40 per cent.
However, this is quite a tough and tricky question for me to answer.
Based on my experience of developing many tailor-made financial plans for clients, I know that the right saving rate varies from one person to another.
For example, if you have a monthly income of RM3,000, the right savings rate for you may be 20 per cent.
This is because you need to spend majority of your income to sustain your standard of living.
However, if you have a monthly income of RM50,000, the right savings rate for you may be 50 per cent.
This is because you don't need to spend the majority of your income to sustain your standard of living.
Of course, this is just one of many examples, but it shows that there is no standard "right saving" rate for every one.
Therefore, each of us should have a tailor-made financial plan to determine the right savings rate for us.
Only then, would we know that we are saving enough to meet our future commitments.
- What if your saving is under target?
If the savings and contributions are less than target planned, you may fail to achieve your financial freedom.
If the gap continues, chances are that you may not be able to achieve your original financial goals set.
In the situation whereby the actual saving is less than planned, we must review our cash flow statement to identify the discrepancy and take necessary recovery measures.
If we have confirmed that the planned saving target is unrealistic, it is important that we readjust some of our financial goals and asset allocation strategies.
--------------------------------------------------------------------------------
Yap Ming Hui is the managing director of Whitman Independent Advisors Sdn Bhd, the first multi-client family office in Malaysia
What is your optimum ROI?
2008/12/13
Your Money: What is your optimum ROI?
By : Yap Ming Hui
RETURN on Investment (ROI) is an important ally in attaining financial freedom. ROI can help us overcome the threat of excessive spending and inflation. If we are serious about achieving our own financial freedom, it is important for us to understand and know ROI better.
Power of compound ROI
Table 1 shows the compounding effect of RM100,000 invested at different compound ROI compounded over 36 years. From the table, we see that differences in ROI that may appear moderate in the short-term can, with compounding, multiply into very large differences in the long term.
For example, if you don't do anything with your saving which earns about two per cent ROI then. your RM100,000 will multiply by two times to RM204,000 after 36 years. If you transfer the money into fixed deposit, you may earn about four per cent ROI and multiply your RM100,000 by four times to about RM410,000. If you grow your money at eight per cent ROI your RM100,000 will multiply by 16 times to about RM1,597,000. With a slight increase of your ROI from two to eight per cent, you end up having a huge difference of RM1,393,000. (1,597,000 - 204,000). If you grow your money at 15 per cent ROI, your RM100,000 will multiply by 153 times to about RM15,315,000.
Of course, increasing the ROI means you may face higher risk of losing your money.
The price of making a mistake
Most people fail to realise the high rate of ROI required to make up for money lost in investment. For example, if you start with RM100 and lose 50 per cent of it, you would have to earn 100 per cent on the remaining RM50 just to get back to where you were at the beginning.
Table 2 shows the ROI required to overcome various losses. The time period is five years, and there are two scenarios: an ROI target of 10 per cent and of 15 per cent.
For example, you plan to increase your money for the next five years with 10 per cent ROI. Unfortunately, instead of getting 10 per cent target return, you ended up with a 25 per cent loss. In order for you to still achieve your original target, you would need to achieve 21 per cent ROI for your money for the next four consecutive years. Now, that's the price you will have to pay for making 25 per cent loss in first year. Do you think it is easy to achieve 21 per cent for four years continuously? Of course, it is not easy.
In addition, you will also notice the spread between the amount of the loss and the required ROI over the next 4 years widens as the magnitude of the loss is increased. The larger the losses, the more difficult it is to overcome.
I believe you now understand why the first rule to investing, according to Warren Buffett, is "Never lose your money".
Inflation-adjusted ROI
Our money is subjected to the depletion of inflation. Therefore, to effectively grow our money, we need to attain an ROI higher than the inflation rate. For example, if the inflation rate is four per cent, the 3.7 per cent interest rate for your fixed deposit will not help your money grow. In fact, in the long run, you lose your money safely. In this case, the inflation-adjusted ROI is actually -0.3 per cent (3.7-4).
Therefore,to grow our money, we need to seek inflation-adjusted ROI.
To achieve financial freedom, you have know what rate of ROI you actually need.
There is an optimum ROI rate to target and achieve. This optimum ROI rate should be higher than the inflation rate but not too high that will risk losing money.
Therefore, the challenge for all of us who want to achieve financial freedom is to find out what that ROI is? Do you know what is your optimum ROI? If not, it is always better to find out earlier than later.
Yap Ming Hui is the managing director of Whitman Independent Advisors Sdn Bhd, the first multi-client family office in Malaysia.
http://www.nst.com.my/Current_News/NST/Sunday/Focus/2426202/Article/index_html
Your Money: What is your optimum ROI?
By : Yap Ming Hui
RETURN on Investment (ROI) is an important ally in attaining financial freedom. ROI can help us overcome the threat of excessive spending and inflation. If we are serious about achieving our own financial freedom, it is important for us to understand and know ROI better.
Power of compound ROI
Table 1 shows the compounding effect of RM100,000 invested at different compound ROI compounded over 36 years. From the table, we see that differences in ROI that may appear moderate in the short-term can, with compounding, multiply into very large differences in the long term.
For example, if you don't do anything with your saving which earns about two per cent ROI then. your RM100,000 will multiply by two times to RM204,000 after 36 years. If you transfer the money into fixed deposit, you may earn about four per cent ROI and multiply your RM100,000 by four times to about RM410,000. If you grow your money at eight per cent ROI your RM100,000 will multiply by 16 times to about RM1,597,000. With a slight increase of your ROI from two to eight per cent, you end up having a huge difference of RM1,393,000. (1,597,000 - 204,000). If you grow your money at 15 per cent ROI, your RM100,000 will multiply by 153 times to about RM15,315,000.
Of course, increasing the ROI means you may face higher risk of losing your money.
The price of making a mistake
Most people fail to realise the high rate of ROI required to make up for money lost in investment. For example, if you start with RM100 and lose 50 per cent of it, you would have to earn 100 per cent on the remaining RM50 just to get back to where you were at the beginning.
Table 2 shows the ROI required to overcome various losses. The time period is five years, and there are two scenarios: an ROI target of 10 per cent and of 15 per cent.
For example, you plan to increase your money for the next five years with 10 per cent ROI. Unfortunately, instead of getting 10 per cent target return, you ended up with a 25 per cent loss. In order for you to still achieve your original target, you would need to achieve 21 per cent ROI for your money for the next four consecutive years. Now, that's the price you will have to pay for making 25 per cent loss in first year. Do you think it is easy to achieve 21 per cent for four years continuously? Of course, it is not easy.
In addition, you will also notice the spread between the amount of the loss and the required ROI over the next 4 years widens as the magnitude of the loss is increased. The larger the losses, the more difficult it is to overcome.
I believe you now understand why the first rule to investing, according to Warren Buffett, is "Never lose your money".
Inflation-adjusted ROI
Our money is subjected to the depletion of inflation. Therefore, to effectively grow our money, we need to attain an ROI higher than the inflation rate. For example, if the inflation rate is four per cent, the 3.7 per cent interest rate for your fixed deposit will not help your money grow. In fact, in the long run, you lose your money safely. In this case, the inflation-adjusted ROI is actually -0.3 per cent (3.7-4).
Therefore,to grow our money, we need to seek inflation-adjusted ROI.
To achieve financial freedom, you have know what rate of ROI you actually need.
There is an optimum ROI rate to target and achieve. This optimum ROI rate should be higher than the inflation rate but not too high that will risk losing money.
Therefore, the challenge for all of us who want to achieve financial freedom is to find out what that ROI is? Do you know what is your optimum ROI? If not, it is always better to find out earlier than later.
Yap Ming Hui is the managing director of Whitman Independent Advisors Sdn Bhd, the first multi-client family office in Malaysia.
http://www.nst.com.my/Current_News/NST/Sunday/Focus/2426202/Article/index_html
My comment: Aim for 15% compound annual return per year. This translates into 100% return on your investment every 5 years.
Five elements to achieve financial freedom
2008/10/05
Business: Five elements to achieve financial freedom
By : Yap Ming Hui
WHEN you ask people what is financial freedom to them, chances are that you are going to get different answers. Some may say that financial freedom means having RM1 million in the bank. Some may say it means no more debts and loans. Some say it means having enough money to do whatever you like.
I define financial freedom as a controlled financial position, whereby there are sufficient financial resources to meet your needs and wants at any time and in any circumstances.
The amount required to achieve financial freedom will vary from one person to another. For someone who has less needs and wants, he will require less money to achieve his financial freedom. For someone who has more needs and wants, he will require more financial resources.
For example, a multi-millionaire may not have financial freedom yet if his needs and wants are more than what his financial resources can meet.
Five essential elements of financial freedom
To achieve financial freedom, I believe one has to understand and manage the five essential elements of financial freedom effectively. Let's do a quiz to see how much do you understand the following essential elements that I share.
- Spending
Spending is one of the five essential elements of financial freedom. Unless and until you understand the impact of your spending to your achievement of financial freedom, it is unlikely you will achieve it. The more we spend, the less we save. The more we spend, the more money we need to maintain our life style in retirement years. Based on the definition of financial freedom, your spending level measures your needs and wants.
- Inflation
Inflation is another essential element that will make or break your financial freedom planning as it will not only deplete your accumulated capital, it also reduces your purchasing power. This is one of the most challenging elements to understand and manage because it is intangible and difficult to see. You can only feel it over an extended period of time.
- Return on investment
Despite the negative effect of spending and inflation, one can count compound interest to help achieve financial freedom. The higher the return on investment (ROI) rate, one can achieve, the better he can make his wealth works for him. As far as achieving financial freedom is concerned, we are not talking about ROI in isolation. It is not that you have a choice as to what ROI you want. If you don't achieve certain ROI for your money, your effort to achieve financial freedom will be very much discounted by the impact of inflation and spending.
- Time
Time is another essential element for you to consider and integrate in your financial freedom planning. We need to know the time when our financial needs and wants appear. For example, at which year will you need to finance your first child's tertiary education. We also need to know the time horizon that you have to accumulate your financial resources. Only then, you are able to structure your investment properly to achieve your funding target.
- Saving
The more we save, the less ROI we need in order to achieve the same accumulation target. For example, if you can save RM16,000 per year, you will need an annual ROI of 18.3 per cent to accumulate RM1 million in 15 years time. However, if you can save RM36,000 per year, you only need to achieve an annual ROI of 8.3 per cent.
Applying the five essential elements to your life
After examining the five essential elements of financial freedom, you will find that the five elements are closely related and inter-connected. One element will affect another. For example, how much you spend will affect how much you save. How much time horizon you have will affect the ROI you need to achieve an accumulation target. Therefore, you need to understand the combined result of these five elements.
Each one of us will have our own financial freedom target. Therefore, each one of us will also have our own code for our financial freedom. We need to find out what combination of spending, ROI, inflation, time and saving is the right code to achieve our own financial freedom.
Have you found out what is your code to your financial freedom? If you haven't, you better start now before it is too late. By then, without the essential element of time, it is going to be very difficult, if not impossible, to achieve your financial freedom.
* Yap Ming Hui is the managing director of Whitman Independent Advisors Sdn Bhd, the first multi-client family office in Malaysia
http://www.nst.com.my/Current_News/NST/Sunday/Focus/2364354/Article/index_html
Business: Five elements to achieve financial freedom
By : Yap Ming Hui
WHEN you ask people what is financial freedom to them, chances are that you are going to get different answers. Some may say that financial freedom means having RM1 million in the bank. Some may say it means no more debts and loans. Some say it means having enough money to do whatever you like.
I define financial freedom as a controlled financial position, whereby there are sufficient financial resources to meet your needs and wants at any time and in any circumstances.
The amount required to achieve financial freedom will vary from one person to another. For someone who has less needs and wants, he will require less money to achieve his financial freedom. For someone who has more needs and wants, he will require more financial resources.
For example, a multi-millionaire may not have financial freedom yet if his needs and wants are more than what his financial resources can meet.
Five essential elements of financial freedom
To achieve financial freedom, I believe one has to understand and manage the five essential elements of financial freedom effectively. Let's do a quiz to see how much do you understand the following essential elements that I share.
- Spending
Spending is one of the five essential elements of financial freedom. Unless and until you understand the impact of your spending to your achievement of financial freedom, it is unlikely you will achieve it. The more we spend, the less we save. The more we spend, the more money we need to maintain our life style in retirement years. Based on the definition of financial freedom, your spending level measures your needs and wants.
- Inflation
Inflation is another essential element that will make or break your financial freedom planning as it will not only deplete your accumulated capital, it also reduces your purchasing power. This is one of the most challenging elements to understand and manage because it is intangible and difficult to see. You can only feel it over an extended period of time.
- Return on investment
Despite the negative effect of spending and inflation, one can count compound interest to help achieve financial freedom. The higher the return on investment (ROI) rate, one can achieve, the better he can make his wealth works for him. As far as achieving financial freedom is concerned, we are not talking about ROI in isolation. It is not that you have a choice as to what ROI you want. If you don't achieve certain ROI for your money, your effort to achieve financial freedom will be very much discounted by the impact of inflation and spending.
- Time
Time is another essential element for you to consider and integrate in your financial freedom planning. We need to know the time when our financial needs and wants appear. For example, at which year will you need to finance your first child's tertiary education. We also need to know the time horizon that you have to accumulate your financial resources. Only then, you are able to structure your investment properly to achieve your funding target.
- Saving
The more we save, the less ROI we need in order to achieve the same accumulation target. For example, if you can save RM16,000 per year, you will need an annual ROI of 18.3 per cent to accumulate RM1 million in 15 years time. However, if you can save RM36,000 per year, you only need to achieve an annual ROI of 8.3 per cent.
Applying the five essential elements to your life
After examining the five essential elements of financial freedom, you will find that the five elements are closely related and inter-connected. One element will affect another. For example, how much you spend will affect how much you save. How much time horizon you have will affect the ROI you need to achieve an accumulation target. Therefore, you need to understand the combined result of these five elements.
Each one of us will have our own financial freedom target. Therefore, each one of us will also have our own code for our financial freedom. We need to find out what combination of spending, ROI, inflation, time and saving is the right code to achieve our own financial freedom.
Have you found out what is your code to your financial freedom? If you haven't, you better start now before it is too late. By then, without the essential element of time, it is going to be very difficult, if not impossible, to achieve your financial freedom.
* Yap Ming Hui is the managing director of Whitman Independent Advisors Sdn Bhd, the first multi-client family office in Malaysia
http://www.nst.com.my/Current_News/NST/Sunday/Focus/2364354/Article/index_html
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