4 Tips To Help You Achieve Your Sweet Retirement

Below are some of the tips I have been practicing and I hope it helps you to achieve your sweet retirement. Please feel free to share more tips with me in the comments below.

#1 Invest For Passive Income

If you have followed my blog, you know that I am a dividend investor. As a dividend investor, I collect dividends from stocks that I bought, accumulate cash and re-invest them. Occasionally, I will do a stock take of how much cash I have on hand versus the amount I invested (Seventy Four Percent Invested, Twenty Six Percent Cash). I try to maintain at least 30 percent cash versus 70 percent investment. Anything above 30 percent, I will invest them if opportunity arises. If there is no current opportunity, I will park the cash in Singapore Savings Bonds which I think is an excellent place to keep your war chest as you can redeem the bonds anytime.

I have not been investing for a few months now as I am building my cash position towards the 30 percent mark.

#2 Transfer Your Monies From CPF Ordinary Account to Special Account

As a monthly routine, I have been transferring my monies from my ordinary account to my special account. Monies in the special account earns you a higher interest p.a. For more details of the interest rates, you can refer to the CPF website.

#3 Buy What You Need Not What You Want

I learnt to buy what I need and not what I want. There are endless things that I desire and wanted. My “Wants” are never enough. Nowadays, when I wanted to buy something, I will always ask myself whether do I need that thing that I wanted to buy and after I bought it, will I use it often? This allows me to be more conscious in my spending. For these few months, most of my monthly spending is on basic necessities such as food and toiletries. This also helps to make my home less cluttered as I avoided buying things that I do not need such as a new pair of shoes (P.S. I already have 3 pairs of shoes).

#4 Contribute to Supplementary Retirement Scheme

I contribute to the Supplementary Retirement Scheme (SRS) account. Although the interest rate is pathetic, it helps to reduce your income taxes.

My Sweet Retirement Current Portfolio Dividend Yield

Retirement

Recently, I did a rough calculation of the dividend yield on my stock portfolio. The formula is based on the total dividends I collected for FY15 divided by the total amount I invested. The current annual yield of my investment portfolio stands at 5.40%.

Being curious how much I will have when I reach 55 years old, I used the Dividend Calculator found on Dividend Ladder to do a projection. If I have a total invested amount of $200K (for illustration purposes only) and with my current annual dividend yield of 5.40% (current), how much will I have for retirement at 55 years old?

I punched in the figures as follows:

Principal amount: $200K

Annual addition: $24K

Years invested: 21 (I am currently 34. At 55 years, thus 21)

Annual Dividend Yield: 5.40%

Dividend Reinvested: Yes

Here are the results. At age 50, I will be a millionaire! By 55 years which is my targeted retirement age, I will have $1.5 million.

Having said that, is $1.5 million today or in the future enough for retirement? Nevertheless, I shall invest prudently and consistently to improve the annual yield of my portfolio. Looking forward to days where I shall never had to work a single day.

Dividend Calculator