The age of retirement, and the amount we need to retire, seems to be ever-increasing. There is no correct amount any individual should obtain, as we don’t all want the same retirement, and do not all earn the same amount. You should start thinking about your retirement as soon as possible. When planning your retirement, consider things such as the lifestyle you wish to live, the impact of potential inflation on your retirement fund, when you wish to retire, and your investments' expected returns (which will be a function of the risk you are willing to absorb given how many years you have before retirement and myriad of other personal / financial factors.)
The official retirement age in Singapore is 62. However, the CPF Life payout only begins at 65. Should you wish to retire before 65, you will have to find funds to cover living expenses. This is where investment earnings can come into play. According to OCBC, only 42% of Singaporeans are on track to meet their ideal retirement.
To give yourself the best chance of hitting your retirement fund goals, have targets for how much you need to save by certain ages. It really pays to start saving for your retirement early. Calculating how much you need now and into the future is both incredibly difficult to calculate as well as probably being wrong by the time you get there, if nothing else, because... life. You may wish to consult a professional to help with broad planning, whether you prefer to make all the decisions yourself or not. That said, a quick and dirty rule of thumb from fund manager Fidelity is quite handy for a super high-level order of magnitude view: have 1x your salary invested by 30, 3x by 40, 6x by 50, 8x by 60, and 10x by 67.
Photo by Anukrati Omar on Unsplash
For anybody needing help with their retirement plans, the prospects of becoming part of the Financial Independence Retire Early (FIRE) movement may seem very bleak. Drastic savings, plus investments, define the FIRE movement, with members aiming to save 25 times their annual expenses. For most, this ultimately results in retiring before they hit 50. For those who have read our article on budgeting, you will know that we recommend the 50:30:20 rule. For those who choose FIRE, this will probably look more like 30:20:50. For a lot of people, saving this amount of money at a young age simply isn’t achievable or even desirable. However, this does not mean that the principle of financial independence is undesirable.
In recent years, the world has woken up to the immediate action needed to combat environmental issues. Investors are increasingly wishing to channel their funds towards companies that create positive change. If you are wishing to become a green investor, here are some options available:
Green Bonds
Green bonds work the same as regular bonds. However, the money raised goes to green causes, which allows investors to profit whilst helping create positive change. Unfortunately, there is no standard on what the definition of ‘green’ is.
Green Investment Funds
Green investment funds work the same as regular mutual funds/ETFs, except the money raised goes to ethical causes. Globally, ESG funds have never been more popular. According to Morningstar, $1.652trn worth of assets were in sustainable funds as of the end of December 2020. This figure was a record high, and up 29% from three months earlier. However, there is reason for concern, as there is a lack of standardised ESG regulations globally. A 2019 study by the 2 Degrees Investing Initiative states that up to 85% of green-themed investment funds globally were guilty of ‘misleading marketing’. This option should require thorough research.
Green Shares
Purchasing the shares of companies that meet your environmental criteria. There is potential for huge growth in the share price of more environmentally friendly companies, though as with many such new, thematic opportunities, a lot of future growth may have already been "priced in" – e.g., electric car companies such as Tesla and renewable energy companies such as Vestas.
CAUSE-DRIVEN INVESTING. COMPLETED. ✅
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