Tuesday, 22 April 2014
Learning Points - 2 Major Financial Commitments
I have to say sorry to readers for going on a break over past 4 months as I was extremely busy with my marriage and house collection cum renovation. Finally, over the Easter long weekend when most of the wedding and renovation matters largely settled, I am able to sit down and pen some of my thoughts down.
I got married at the end of December last year. And 1 week after that, I received notice from HDB to collect my house keys in early Jan. The timing and sequence of event was coincidentally perfect relative to each other. Actually I didn’t expect the flat to arrive so soon but nonetheless I was happy for it.
So, weekends and week day nights were spent first on wedding matters followed by renovation appointments. It was quite stressful at times as me and my wife did both major events on our own without wedding planner or interior designer. However, we are happy that it is almost over now and we are almost ready to move into our new place. And I feel a sense of achievement and pride as achieving two life milestones at age of 28.
Drawing from my experience handling marriage and home renovation, both considered life milestone events with substantial financial outlay, I would like to share 2 learning points.
We often hear about young couples spending large amount of money on wedding banquet, expensive wedding and photography package, lavish pre and post wedding parties etc. From a financial standpoint, all is fine if the couples are wealthy and able to afford it. It spells trouble when ordinary couples are not able to afford this kind of spending, but doing it because they do not have the courage to do it their way/fear others’ judgement and opinions on them if they do not conform to the crowd. In this case, priority is mis-placed on these one-time expenses, while neglecting the fact that true meaning and significance of marriage is how they spend the next 50 years of their life in harmony and bliss, not how grand and well-off they look on the wedding day.
Think about investing. How often do you pay attention to the daily price fluctuations of your companies, instead of their intrinsic values? How often would you rather seek out quick tips from your friends and relatives instead of verifying the business performance of your counters through proper financial report research? How often do you feel elated at the rising price quote on your mobile phone stock app instead of at the latest quarterly results that showed growing earnings, margin, cash flow and market share?
Stripping the stock market down to its most fundamental purpose and reason of existence, it merely provides a platform for exchange of shares ownership and nothing more than that. Do not mis-place your priority and attention on the stock market, instead of the companies.
Importance of Long Term Planning
In my case of wedding and renovation preparation, it started 2.5 years ago when both of us decided to settle down. What followed was planned monthly savings and careful expenditure to ensure that we are reasonably capable of settling both matters well, without causing a dent in our financial well-being. Of course I am very lucky and fortunate to have an understanding wife who is supportive of our plans and I am forever grateful to her for that. Hence, in the course of past 2.5 years our networth continued growing without being affected by wedding and renovation at all.
Likewise in share investing, you need a sound plan and have a vision and a set of goals of what you intend to achieve over short, mid and long term. Work towards these goals by being disciplined about your financial matters over short term, studying/researching strong companies worthy of investing in over mid term, have a sense of how far are you from the goal over the long term. In short, have the determination and mental discipline to carry your plans through till you achieve your goals.
Lastly, I am happy that the 2 big money bombs have been largely settled. And I am ready to embark on aggressive wealth building through monthly addition to my portfolio. The next 2 years will be crucial to my wealth building journey as there are no major financial commitments spotted so far, and I hope to be able to have a $130k portfolio before I turn 30.
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