Financial Independence vs. Financial Freedom

A while back, I heard a retiree saying: "Nowadays if I like something, I don't think. I just buy!"

I think I have heard similar lines before, but this is the first time hearing it since I hit FIRE.

This is a very different lifestyle from mine, where I watch every dollar I spend and stick strictly to a monthly budget. 

So I started to think: have I really reached financial independence?

I realized there is a difference between financial independence and financial freedom. 

Financial freedom means one doesn't have to think about money anymore. He/she can buy whatever he/she wants, without worrying about running out of cash. This is the retiree above.

Financial independence means one doesn't have to work for money anymore. This is what people achieve what people reach FIRE.

I will say I have financial independence but not financial freedom. 

Next, I begin to wonder if financial independence and financial freedom are 2 ends of a spectrum, as shown above. Clearly, I am at one end but not the other.

It dawned on me that both are achievable. In fact, many retirees in Singapore are able to achieve both as they have no need to work, yet are able to spend as they like (up to a certain range of course).

In FIRE terminology, this is termed as 'FAT FIRE'. For more info, see here: 

https://financeopti.blogspot.com/2023/08/the-ultimate-guide-to-financial.html

For me, I have only achieved LEAN FIRE. 

Now, how do you define FAT FIRE exactly? What should the withdrawal rate be? How much are the monthly expenses to be considered FAT FIRE? Do I simply x2 or x5 to my monthly expenses? How long do I need more before I can achieve FAT FIRE?

These are things to think about. 

Portfolio Returns for Mar 2024 - An Exciting Month for AI

I felt it would be good to track the returns on a regular basis since the returns will fluctuate from time to time depending on the stock market.

Here are the movements for this month:

The US market remains the strongest, in anticipation of the soon-to-drop interest rates. 

The SGP fund took a dive, likely because of the prevailing high interest rates. 

What was interesting in this month was the rapid rise of the Cryptocurrency portfolio. There is an event called 'Bitcoin Halving' which is happening around 15th Apr 2024. The halving refers to the Bitcoin mining rewards being cut in half. This event happens once every 4 years, and this is the 4th event. This event, coupled with the approval of the Bitcoin Spot ETF by the SEC, is making Bitcoin prices rise.

Experts, including Robert Kiyosaki, have predicted that Bitcoin could reach $100,000 by June 2024, while Standard Chartered suggests that Bitcoin could soar to $150,000 by the end of the year.

For the Robo-Advisors, my Endowus, Syfe, and StashAway portfolios are riding the wave. The one with the highest returns is Syfe, followed by StashAway then Endowus. The Syfe Reit portfolio which focuses on the Singapore Reit market unfortunately took a dive, but I expect it to recover once interest rates drop. 

Additionally, I think it will be interesting to see the breakdown of my portfolios in percentages. You can see it is built to capture all the upsides once interest rates drop. There is a component 'X' which I do not want to disclose for now. But what this chart is telling me is that my concentration on 'X' is too high and must be reduced over the next few months. 

Some key events in the last 30 days:

• Fed Policy meeting points to 3 rate cuts in 2024, with the first one coming in June. The Fed has said that it does not expect to cut rates until it has greater confidence that inflation is on its way to the 2% target. Powell has said that the Fed was 'not far' from that confidence. The next Fed Policy meeting is in May. 

https://www.marketwatch.com/story/fed-still-on-track-for-june-rate-cut-and-2-other-takeaways-from-powells-press-conference-8dfe3ab3?mod=home-page

• AI stocks are hot property at the moment, such as NVIDIA, Micron, TSMC

• War in Russia is still ongoing, and the US has recently announced 300 million USD security assistance for Ukraine. As to whether funding will continue should Trump get elected on 5 Nov 2024, it seems unlikely. Trump has made clear he will 'not give a penny to Ukraine' and 'end the war' should he win. 

• War in the Gaza Strip still has no end in sight, though there are increasing calls that Israel has 'gone too far'. In fact, Singapore Foreign Minister Vivian Balakrishnan has visited Israel and told PM Netanyahu that. Also, SAF has airdropped critical supplies into Gaza, operating out of Jordan. Well done, Singapore! Proud of you!

• As part of the Two Sessions meeting, China set a GDP growth target of 5% for 2024, but it did not offer concrete plans on how to get there

There should be a correction in the US market soon, which is to be expected after such a strong rise. And after the correction, rise again!

Wrapping up my Ninth Month of FIRE - What's Next?

I just finished my ninth month of FIRE in Feb 2024.

How time flies!

Below are what I ate and did for fun, and a record of my expenses.

Eating

Home cooked food is always the best.

At Aeon Mall Bukit Indah.

This and the below are from Bangkok Jam Marina Square. It is actually pretty good!

Bangkok Jam

Bangkok Jam

Bangkok Jam

Bangkok Jam

Fun

There is not much to report on this, except that I harvested some spinach I have been growing. 

Other than this, it was the usual Chinese New Year eating and visiting routine. 

Expenses

In terms of expenses, this was an excellent month as I did not bust any of my budgets. The CDC vouchers helped.

 

Eating Out Target: $650

Eating Out Actual: $495.27

Household Target: $600

Household Actual: $275.77

Travel Target: $100

Travel Actual: $99.04

Entertainment Target: $50

Entertainment Actual: $15.20

Personal Target: $250

Personal Actual: $70.31

What's Next

Well, I have actually started working, but no longer in a salaried 8.30 am to 6 pm job. I have started my own business! It doesn't pay me much, in fact my monthly income has dropped by 92% (no typo) from my last-drawn pay. But the important thing is my FIRE journey allowed me to pursue this business opportunity even with this huge drop in monthly income. 

So what's next? I plan to continue to write this series but I will remove the 'RE' in the 'FIRE'. After all, it is important to track my expenses to ensure I do not exceed my budget. Even better, I get to pen down what I did each month for Fun, which is what life is all about, don't you think? 😉

 

Top Myths of Retirement

Now that I have 'retired' for the past 9 months, I have some discoveries that I would like to share.

If you recall in my previous post, I started a sabbatical in June 2023, rationale and motivations are in the link below:

https://financeopti.blogspot.com/2023/06/wrapping-up-my-first-month-of-fire-had.html

Embarking on the journey toward retirement is a significant milestone, often accompanied by different expectations and assumptions. However, as we navigate the evolving landscape of financial planning and lifestyle choices, it becomes increasingly clear that many commonly held beliefs about retirement are mere myths waiting to be debunked. In this exploration, we'll unravel these misconceptions, challenging conventional wisdom to reveal a more nuanced and empowering perspective on what it truly means to retire. So, let's cast aside the stereotypes, question the status quo, and embark on a journey to redefine the narrative of retirement. Are you ready to discover the truth behind the myths?

Here are the myths of retirement that I would like to bust:

1. You will be bored to death in retirement

This is absolutely not true. I have a huge backlog of stuff I would like to do for example, books I want to read, subjects I want to study, hiking trips I want to take, and places I want to explore. Simply taking care of my kids' stuff already makes my brain fully loaded, and I sleep very well most nights. 

2. Your brain will become stagnant

This is only true if you become a couch potato and everyday watch TV/play games. You need to plan things to do, and subjects to study. For me, I found time to revise some of the topics I learned in Graduate school, which I have forgotten, but is still useful for my career. 

3. Every day will be like Sunday

I think this is only true if you have no kids. On Sundays, I spend my time ferrying the kids to their classes, bringing them out for fun, and cooking dinner. On weekdays, my kids go to school and I have my precious alone time where I can do the stuff I want, even day-dream a bit.

4. You will spend more in retirement

I think in retirement there is definitely an inclination to spend. Because now you have more free time, you can choose to dabble more in your hobbies. Fortunately for me, my hobbies (e.g. hiking) are not expensive. Furthermore, I have fixed a monthly budget which I have to stick to every month to ensure I do not overspend. 

Thats it! Above are some misconceptions of retirement that I found in the last nine months. By challenging misconceptions and acknowledging the evolving landscape of retirement, individuals can better prepare for their post-career years. It's essential to recognize that retirement is not a one-size-fits-all concept and that flexibility, adaptability, and financial literacy are key components of a successful retirement plan. Embracing the idea that retirement is not the end but a new beginning allows individuals to redefine their purpose, explore new passions, and continue contributing to their communities.

Onwards!

Dividends for Feb 2024 - Steady Returns from ETFs

Achieving financial independence is a journey marked by strategic financial planning and investment decisions, and monthly dividends play a pivotal role in this pursuit. Monthly dividends offer a frequent and consistent stream of income. This steady cash flow has the potential to significantly impact an individual's financial landscape, providing a reliable source of funds to cover living expenses, reinvest in additional assets, or simply enhance one's overall financial well-being.

Here are my dividends for Feb 2024:

So I collected $2,064.63 in dividends for Feb 2024.

 
In case you are wondering, some stocks are repeated because I have 2 brokerage accounts.

Here are my monthly dividends over the last 6 years:

Here are the dividends I collected every year until the current day:

Interesting, 5 years later, I have already surpassed my total yearly dividends in 2019. And it is only Mar!

My plan is to first receive $2500, then finally $5000 in dividends every month on average.

Additionally, I share the interest I received from the various banks for the deposits in Feb:

So I collected $454.79 in interest payments this month.

Onwards!