Me & My Money Series (Sunday Times)

(21-11-2011, 08:58 AM)momoeagle Wrote: From what I heard, it is the low 5 figures.
There are many such "quiet" professions by free-lancers which can earn so much... most bordering on the education side...

i.e.
Fitness Education
School Education
Piano School

etc...

It just depends on whether you know how to go about doing it, and your marketing strategy...

Interesting. But I guess the revenue is inconsistent, right? After all, the term "freelance" would imply ad-hoc jobs and so revenue would fluctuate depending on the quantity and type of assignments you get.

Swimming instructor can also earn 5k part time.

(21-11-2011, 09:45 AM)Musicwhiz Wrote:

(21-11-2011, 08:58 AM)momoeagle Wrote: From what I heard, it is the low 5 figures.
There are many such "quiet" professions by free-lancers which can earn so much... most bordering on the education side...

i.e.
Fitness Education
School Education
Piano School

etc...

It just depends on whether you know how to go about doing it, and your marketing strategy...

Interesting. But I guess the revenue is inconsistent, right? After all, the term "freelance" would imply ad-hoc jobs and so revenue would fluctuate depending on the quantity and type of assignments you get.

Yes, being self-employed is like any other business. Revenues are inconsistent, and one has to plan well for the inconsistency.

But done right, and your remuneration can potentially be much higher than most employed. Of course it can be the other way as well, potentially much less! Ultimately, it is the annual income over many years that counts.


The inconsistency and uncertainty could be a driving source of energy for a self-employed or entrepreneur, or it could also be a resistance to others who prefer a steady income source. My 2 cents

y job for supplementary income? Until it comes to a point where absolute returns beats your max possible savings, I'm starting to see less reason I'm doing very detailed research into companies. Time is better spent generating more secured income!

(24-11-2011, 10:23 AM)piggo Wrote: So what's the motivation behind investing when savings rate beats investment income anytime? Shouldn't most people be working their bums off In free lance work after their day job for supplementary income? Until it comes to a point where absolute returns beats your max possible savings, I'm starting to see less reason I'm doing very detailed research into companies. Time is better spent generating more secured income!

My 2 cents. Not saying that either decision is right or wrong but I think there's some conisderations to make if there's a either/or decision.

I think if a free-lance job ends up being a second job (i.e. not the case where it throws off passive income), one will still have to sacrifice time for money.

The rate of return from savings will seem extremely high at first but once your Net Worth hits a certain level, you'll realise that returns from investments make more sense. If your portfolio is $1,000,000, every $1,000 saved is 0.1% increase in your portfolio. So unless the freelance job can continually generate income w/o a ceiling, at some point, there will be limits to this strategy.

Knowledge gained from doing research now can be carried over into the future and I find that while doing research is painful at the beginning because one is looking at every aspect of the company;in future, further research on the industry or competitor will allow an investor to zoom in on the crucial bits making the research process less painful and/or lead to superior insights.

piggo Wrote:So what's the motivation behind investing when savings rate beats investment income anytime? Shouldn't most people be working their bums off I'm free lance work after their day job for supplementary income? Until it comes to a point where % returns beats your max possible savings, I'm starting to see less reason I'm doing very detailed research into companies. Time is better spent generating more secured income!

In the beginning, absolute dollar savings trump investment returns. But later on, investment returns dominate, as capital compounds while salary tends to move in step jumps but gets eroded by lifestyle inflation (kopi becomes Starbucks, Honda becomes BMW, HDB becomes condo).

So why bother investing when the sum is low? The most important reason is practice. Without sufficient practice it is hard to get good at anything, including investing. Learning to invest when you are 50 and have $300k on hand is not as effective as when you are 25 and have $5k on hand. By the time the 25-year old reaches 50 he will have a 25-year headstart on the 50-year old, and quite likely he will not have $300k on hand but significantly more.

Of course, this only applies if you are a salaried employee. As an entrepreneur your business can compound faster than any passive investment can, and it is usually best to concentrate your efforts on your business and leave the investing to others, whether a trusted fund manager or a private banker. Buying real estate, for example, is a popular way for entrepreneurs to diversify. Others invest into other private businesses.

(24-11-2011, 10:50 AM)d.o.g. Wrote: In the beginning, absolute dollar savings trump investment returns. But later on, investment returns dominate, as capital compounds while salary tends to move in step jumps but gets eroded by lifestyle inflation (kopi becomes Starbucks, Honda becomes BMW, HDB becomes condo).

Actually, I can attest to this. When I first started out I was simply aggressively adding to my portfolio (inorganic growth) and the amounts I added came purely from my savings from salary and bonuses. This allowed the portfolio to grow slowly (but steadily) from a base of $5,000 back in early 2005 to about $200,000 today (admittedly, with some capital gains being reinvested back into the portfolio).

I've realized that as the capital base grows larger, the dividends also get a lot larger (not in % terms, but in absolute terms), such that you can better compound the returns. Now the total dividends for a year can actually be as large as twice or even three times our combined monthly spousal salaries (just to give an example). It used to be that the capital gains would be around that figure, but with compounding the recurring dividends have now reached that annual number.

So yes, salary tends to move very slowly (in fact, my salary is one of the most stagnant among my friends due to the fact that I jumped a few jobs and also due to the recession). The strange thing is most of my friends are earning much more but have a portfolio which is generating much less - which is something I can never seem to understand!

(24-11-2011, 10:50 AM)d.o.g. Wrote: So why bother investing when the sum is low? The most important reason is practice. Without sufficient practice it is hard to get good at anything, including investing. Learning to invest when you are 50 and have $300k on hand is not as effective as when you are 25 and have $5k on hand. By the time the 25-year old reaches 50 he will have a 25-year headstart on the 50-year old, and quite likely he will not have $300k on hand but significantly more.

How true! An ex-classmate of mine, who decided to get started on investing a few months back was behaving like a nervous wreck everytime his stock dropped a few cents. I was getting urgent calls, sms, email to provide "hand-holding" services. Fortunately for him (and for me), the market did a slight rebound and he managed to get out with a slight profit. As he'd stopped calling me (despite bigger market drops), I think he must have decided to get out of this investing adventure and must be now happpy with that 0.xx% interest he can get from any Bank Promo FD! The interesting was, he'd only invested only a small amount of his net worth, being cautious as it was his first time investing.

Musicwhiz Wrote:Now the total dividends for a year can actually be as large as twice or even three times our combined spousal salaries (just to give an example).

With your Capital Base of $200k and assuming a good 8% dividend yield, that'd be $16k. If that is, say, only 2x your combined salary, that means your salaries must be only $8k/yr or $667/mth!! Either both of you are very lowly paid or you must have meant the Disposable Income available (after expenses) for investing.

Quote:So yes, salary tends to move very slowly (in fact, my salary is one of the most stagnant among my friends due to the fact that I jumped a few jobs and also due to the recession). The strange thing is most of my friends are earning much more but have a portfolio which is generating much less - which is something I can never seem to understand!

I can identify with that, even though I didn't job hop. While my salary was growing at a very slow pace, my peers' were flying at a much higher pace. After 5-10yrs, their salaries were easily 50-100% more than mine. But, as I'd started investing the moment I came out to work, my Net Worth slowly caught up and overtook many of them over the years. Besides the compounding effect of Stocks Investments, perhaps having a more modest salary had curbed my spending bahaviour too ie. I'd continued to spend within my modest salary, with some extra for investing. After another 5-10 yrs, I even had the choice to quit the rat race even as some of them only just realised they had better start doing some retirement planning...

Think about it. Even if you'd managed to save $1Mil, you won't be able to survive on $10k/yr FD interest (assuming 1% interest). Instead, you'd likely have to buy some annuity which draws mainly on the Capital as a regular payout. Not sure how long it'll last though. So, better learn how to invest if you are just a salaried worker now.

Hi KopiKat,

Paiseh, amended my post to include "monthly". So if annual dividend is $16K, that is roughly around 2x++ of monthly spousal salary (which makes more sense than $667/month). Haha.

Just check how much yoga and scuba diving instructors charge and you will realise how much fun if we enjoy what we do. But it's still work for those instructors who "don't enjoy what they do".

I am of the view if we can find something we like and get someone to pay for it - that's the best retirement plan!

Of course that's easier said than done.

Investing or trading is not for everyone. I had a colleague who lost $5,000 and swore of stocks forever!? If the pain or fear of loss is more than the thrill of winning, forget investing/trading! Nothing wrong with it - just top up CPF voluntarily can earn risk-free 2.5% returns. Transfer to SA is 4%! Sure beats those investors/traders who lose money all the time - despite their "passion". Self awareness is better than denial.

Having said that, it's best we know our investing/traduing psychology as early as possible. Imagine waiting till 55 or 65 - fully flushed with cash and we wonder what to do with all these money... Making mistakes in our 20s or 30s we can have time to recover. But at 65.... Time is not on our side....