Wealth

Having accumulated a liquidity of at least US$1.2M (excluding spouse) upon retirement would come in handy. With this in hand, a passive income could be generated with some planning. What is passive income?  It is an income that is obtained without the need to work for a monthly pay cheque. The most common form of passive income is derived from the rental of property. Owning a property also has its hidden risks and costs. In time of property bubble burst you could be losing 30% to 40% of its value. Rental property that is left empty while sourcing for a tenant is no longer tax exempted. With any new tenant taking up a rental agreement a commission needs to be paid to the estate agent and probably the home needs to be renovated or replaced with furniture that the tenants requested. ( This is a massive topic and we shall stop here )

Getting a passive income from the stock through dividends return is a good source of income. Learn how to trade online and enjoy the cheap commission that is gained and is the recommended method. Learn to flip the stock when the gain has reached 30% to 50% which would reap you an instant profit. It does not mean once you have sold off your blue chip stock you can't return until it reached another low again. It is more about buying in a lesser quantity than what you have just sold. This is a tricky part which depend on the volume which you are involved and the strategy that is being deployed. Believe in your blue chips and stay diversified. Getting a turnover return of 3% to 4%  from your portfolio is quite simple which is adequate to hedge the annual inflation. Never dream about making a kill in the stock market or you would get killed instead.

Getting bank interest from your fixed deposit is like cutting the inflationary by 50% as the usual FD rate from the banks is hovering between 1% to 1.5% which is inadequate to absorb the full inflation rate of 3%.  Anyway, it could still generate a sort of passive income for the rainy days.

Always remember what the seasoned expert said about trading in stock

When you are no longer collecting that monthly pay cheque from your employer, you should not be caught with big ticket items such as servicing a car loan, taking care of your child education, servicing a housing loan, servicing an extended family, involve in a matrimonial split and other nightmarish act of self destruction.

For those who can't even generate a liquidity of US$300k upon reaching retirement age, please stay employed as that monthly pay cheque no matter how small is still important to you.

( The writer in this blog does not professed to be an expert in wealth mgmt, but someone who has good mentors around )