Jean’s

I was reading a very interesting article. Was attracted by it’s title ~ “Millionaires-in-the-Making” 

 

The article was about a young couple of 27 years old, John and Gina, whom are different from their fellow friends of their age group with similar earning power. While the latter indulge their life with fancy dinners, luxury vacations and designers wardrobes, this couple is planning how to make their millions and retire by the age of 40.  To achieve their goals, they: -

1.     Rent a house which only cost $650 per month

2.     Rarely travel or eat out

3.     Saved a big portion (50%) of their earned income (USD 174,000 per year) and invest this portion

4.     With the saved income, they built a formidable portfolio of USD 380,000 in stocks, mutual funds and cash.

 

It was said that during their process of saving, they have of course lost some of the fun that the others of the same age group enjoy. They even lost some friends along the way for they refused to join them in any social activities that might cost them more than what they had budgeted.  All these were due to the fact that both of them are driven by a fierce determination to control their own fate ~ John yearns to quit his job to indulge his passion for the outdoors, and Gina plans to cut back her hours at the boutique they own, in order to work with animals.

 

According to one of the money expert whom studied their case and current asset portfolio, assuming that they can maintain their current rate of saving and investment pattern, they’ll build an impressive nest egg over the next 13 years. Assuming they get raises of 4% annually and their portfolio averages gains of 6% a year, the expert estimates they’ll have USD 2.9 million at age 40. Combined with the passive income they might earn from any investment (i.e. properties rental income) that might be enough to last them the following 50 to 60 years. Wow!

 

I enjoyed reading the article (a fairly long article though) and feel inspired by the wisdom of these two young couples. Well, I don’t think I can give up my social indulgences as much as they can J, but surely having financial goals and working towards them is on my agenda.

 

It is worth to see what makes John and Gina able to stay so focused and disciplined on their financial planning? That’s is all because they have their dreams and they have set a clear target. Without setting a clear target, for e.g.: - 

1.     How much I need to buy my dream house

2.     How much I need for my retirement

3.     How much I need for my child’s education, and etc 

It is hard for one to stay focused and stay disciplined.  I am sure often we can tend to let go and over spend on something we want, although it might not be needful. And if such “situation” happened too often, our financial plan will surely be disturbed.

 

We know we can’t delay saving and investment because of compound interest. So, if we don’t set our targets and stay focused, it is highly likely that we will delay our saving while feeding our current luxury lifestyle, and hence jeopardize our long-term financial goals.  

 

I did a financial planning for myself, for both retirement as well as children education planning. According to the data input and my choice of life style required after retirement, I now have a clear idea how much I need to put aside and placed in an investment vehicles that require generating average annual return of 6%.  I know if I take the recommended figures seriously, save and invest accordingly; I should be able to achieve my financial goals. Of course, at the end of the day, it also depends on whether I am able to keep up my savings rate, and be able to invest wisely.  At least, I have fixed a monthly-required saving figure to help me to stay focused on achieving my long-term financial goals.

 

So, if someone asks you, what is your dream lifestyle after retirement, and you have a clear answer for it. That’s great! If someone ask you, do you know how much you need to put aside or what plans do you have to help you to achieve that goals, and if you have no answer to it, I strongly recommend you to find someone capable to work out a financial plan for you. Financial planning is indeed an easy task with the help of financial planning software.  I did mine within a night.