As from April 2013 my Journey in Investing is to create Retirement Income for Life till 85 years old in 2041 for two persons over market cycles of Bull and Bear.

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This blog is authored by an old multi-bagger blue chips stock picker uncle from HDB heartland!

"The market is not your mother. It consists of tough men and women who look for ways to take money away from you instead of pouring milk into your mouth." - Dr. Alexander Elder

"For the things we have to learn before we can do them, we learn by doing them." - Aristotle

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Thursday, 24 December 2015

Wealth Formula : On Cash Flow Part - Counting Interests!!!


Wealth = Assets Value + Cash Flow


Counting interests is not bad too when we are 55 and above!



Now, Uncle8888 has realized during this prolong period of bearish market environment that counting his interests for his non-market volatile assets is not stressful. Bulk of these expected interests can be easily counted during his lifetime. 

With the past highest annual household expenses since 2001 is already known, it just required simple Maths to count future interests receivable and assets draw-down to meet the highest expected annual household expenses at 2.5% inflation rate p.a. No other additional or complicated evaluation tool is required.




Currently, his Tap 1 has cash flow capacity to manage up to 89% of his past highest annual household expenses at 2.5% inflation rate p.a. using assets draw-down and future interests receivable strategy.

Unless ugly Black Swan happens, it should be quite comfortable for the rest of his lifetime on Earth.













5 comments:

  1. The best i think is our Net Assets can generate enough cash flow for our yearly expenses and still able to grow a little. Or at least all assets still intact.
    If so, we will never worry about running out of moola.
    It's not so much about leaving too much behind but we can live to any age without worrying about sleeping well at night.
    Alas, i am still trying even at age of 67+
    But very "careful now".
    That's more KIASI now.

    ReplyDelete
    Replies
    1. I am thinking very hard on how to generate year-on-year higher cash flow from net assets to fight decades of inflation? What should be the right assets mix and allocation to be sustainable over future market cycles without asset draw-down strategies?

      How about a portfolio of investment properties and stocks?


      Delete
    2. Without assets draw-down strategy; it is extremely tough to generate that kind of investment income to offset year-on-year inflation e.g. next 20 yrs.

      Delete
    3. Agree!
      That's mainly because our wants seem to grow faster than our needs.
      Like i have scraped my Vios and live without a car for about 2 weeks because by the end of 2016, i just have to go down stair, less than 100 yards, viola the SMRT train will take me to anywhere in Singapore.

      But it's not to be
      Out of the blue my BIL offers his 9.6 years Honda Civic which is in very good conditions FOC except pay him for the PARF value.

      How to refuse such an offer?
      So the car, it becomes one of my wants again at least until FEB 2016.
      6 months of driving a car, "Free of Rental Fees and COE".
      Why not?
      Greed knows no limit?

      Delete
  2. i know from my son's close friend who is a housing agent specialsing in rental properties alone can afford to drive a BMW.
    He is so good at servicing that a Businessman who owns about ten rental properties let him alone manage, in the end.
    As for us working class, i think it's better to invest in REITs, if you think of a rental property.
    i don't have to say all the advantages of Reits over a rental property.
    The main disadvantage is Reits may ask you for money--Rights issue and may be insolvent too.
    Though i think if you don't go for too high yield Reits, it is quite "safe".

    Of course stocks for dividend income and a little growth.

    What about Bonds?

    i use CPF (my wife's) as a kind of "Perpetual Bond".
    It's also use as "Cash Option" without time limit.
    Which can be deployed when there is a SALE in SGX.
    And if you can, keep 3 to 5 years of cash or near cash (FD?) so that you won't be forced to sell any of your assets at the "wrong" price.
    Especially stocks in a Bear Market.
    No?
    This is my 2 cents.
    What's yours?
    This is my 2 cents

    ReplyDelete

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