Recently I met a person who consulted me on his property matters. He wanted to know if he should buy more properties so that he can accumulate more for retirement and to fulfill his life’s dreams. He told me that he has attended various property courses and had gain different understanding on what he has learned. One piece of advice that he received from the courses he attended is to sell his HDB flat and subsequently buy 10 properties for investment. He wanted to know my opinion.
One of the first few questions that I asked him is, what are his investment objectives and what are his objectives in life? Is it getting enough for retirement, fulfilling his life’s passion or more? He mentioned to me that he wanted to accumulate more money so that he can retire earlier, as well as being able to pursue his dream of travelling around the world. Something that he has always been wanting to do.
With his life’s objectives in mind, I proceed to determine how much assets he has now and if these assets are going to be enough to fulfill his dream. I started to formulate and communicate the various possibilities and scenarios for him. We then discuss if he will be able to pursue his dreams right now, what will happen if he were to acquire another property, the significances of how these actions will affect his dreams and his future.
In the end, I discovered that he has accumulated adequate assets right now to retire and to pursue his dreams. Personally, I feel that it is not necessary for him to sell his property or to buy another one. I see no reason for him to take on additional risk when he has already enough for future retirement and the fulfilment of his current dreams. If he were to upgrade or to buy another property right now, he will have to set back his dreams perhaps by another 5 to 10 years due to the mortgage commitments.
I do agree that if he were to invest in another property now, by the time when it is 5 to 10 years later, maybe he will be “richer”. However, how will be his health conditions and fitness level be like? Will he still be able to climb, walk or travel the world the way he can do it now?
Should we spend our best years squirrelled and save so much for the future? Yet in retirement, we regretted not doing many things while we are younger? Perhaps it’s really time to look at life and what it has to offer. Having lots of money is good, but will it give us a fulfilling life? There are many things that money can buy, yet at the same time, there are a lot of things money cannot buy too. Can you imagine spending years working, saving and earning yet missing our child’s growing up? Or by the time you have saved enough, your health can no longer afford for you to pursue your dreams?
In closing, I explained to him what I see from my point of view and told him that there is no point to take on additional risk and wait any longer to pursue his dreams. He can immediately proceed towards what he always wanted in life. He was pleasantly surprised to hear that.
Therefore, should I invest or not?
This leads me to one of the most important question. Should I invest or not?
Most investments will come in tandem with investment risks. In my point of view, if we can avoid taking any risk, and yet still achieve our financial and life’s goals, I really don’t see a point in making any additional investments. Of course, this may not be possible all the time. We cannot avoid taking risk altogether, if the returns from our current assets are insufficient to achieve our financial goals. We may need to invest and get a better return from our assets. So, where should be the balance?
One of the ways that I use to determine whether we should invest or not is to align our life objectives to our current financial condition. For example, if my dream is to climb mountains around the world, then I should do it while I am young and being fit enough to do so. If I have enough funds now, then I should go for my dream.
Of course, most of the time in life, things may not be so straight forward. We do have many different objectives in life to fulfil. For example, instead of just climbing mountains around the world, we may want to have enough for our children’s education, enough for our current daily consumption, enough for our future retirement etc. In order to strike a balance between all these objectives, one of the approaches that I use is to project the future financial outlook of the person by establishing it on the different scenarios. For example, if he were to pursue his dreams now, will he still have enough for his current needs and future retirement? If there is not enough, then how much does he have to invest today to achieve that? Or perhaps, based on his current circumstances, there is a need to compromise on both his current needs and future needs.
What I learn from all the people that I met
From the numerous meet ups that I had, there are generally a few similar groups of people. The first group are people that don’t really know what they really want in their life. They do not really bother to think what they want in life or the dreams they want to pursue. Usually in the meet up with them, I will try to assist them to uncover their life objectives.
The second group of people are those who know what they want, but they are afraid in confronting the truth. For example, they know planning for retirement is important, yet they keep putting it off due to busyness, or just like me previously, running away from it. Here, the key thing is to start planning now and encouraging them to take the first steps.
The third group of people are those who clearly know what they want in life, and they just want to confirm or have clarity that their plans are really on track. Here, we will discuss the various assumptions that are put into the future projections and if these assumptions are valid.
However, in whichever group, the challenge is still to balance between our dreams now and having enough for the future. The balance between current consumption and future security. I believe through detailed planning and sound strategies; this challenge can be easily overcome.