Importance of having a 5 year plan.

When you fail to plan, you plan to fail. That is how important a plan is. Maybe I should have started earlier to do a five year plan. Thus I am pushing myself to start one now.

When we are working in the office, we spend time planning for projects and deadlines. We know the importance of a plan to act as a guide to finish a project or task. The weird thing is why are we not planning for ourselves?

Planning done for work is beneficial to the company, which is why it is a requirement for you as an employee to do it. The beneficiary, of course makes sure it is done, in this case it is the company. So when it comes done to planning for yourself, no one but yourself will have to make sure it is done.

I started by browsing the internet for 5 year plan templates. I got inspirations from some templates and attempted to do my own. When I was thinking about a 5 year plan, which is supposed to list down things you want to accomplish, I was not sure if there is a difference between 'A practical goal' or a 'Target' which can be a lot more difficult to achieve. To tackle this, I merged these two components.

Below you can find a snap shot of the template I came up with, feel free to use as a template for your own as well. Just insert lines to input more goals and apply same template for year 2,3,4,5 etc. The 'Category/Task' section is for practical goals that you want to achieve. The 'Dream big' section is a much higher goal compared to 'Category/Task'. I feel that it is important to remind yourself to dream big while staying practical.

For my progress, I am almost done for year 1 only and it took me a few hours to do the template plus the planning. It is not difficult as all it took was some time and effort. The time and effort spend is worthwhile as I am the beneficiary. 

5 years into working life

Got into the work force at 24 years old. I'm 29 now. 5 years has gone by in a flash. There are some things that went right, some did not. Also, the work experience has taught me new things.

Things that gone wrong during last 5 years

·         The break up.

·         Did not invest in bitcoins.

·         I'm getting old.

Things that gone right during last 5 years

·         Got a promotion this year. Yay.

·         Continuing to write my book. Picked up from where I left it.

·         Started a target of allocating $5000 to investments yearly, only started this year. Before that was depending on whether I come across any good stocks by chance. Will do more homework starting now.

 Realizations after working for 5 years

·         There is no getting used to waking up by an alarm.

·         Perhaps it is impossible to find a job you love. So far it has been manageable.

·         Keeping fit is hard. The key is making it a habit. Going gym once a week, no sugar in my coffee and only have soft drinks once in a while.

·         Price of good quality work clothes seems to be coming down with more online shopping options.

·         There are colleagues that can be friends, some are better to be just colleagues.

·         Effort does not equals to recognition. Sometimes it is necessary to claim the credits for something that is your hard work.

·         Good bosses are hard to come by. It was one out of three in my second job. I changed departments three times in my second job, quite a feat. I left the department which has a good boss as I wanted to learn more things. It was not a easy decision. We still have lunch once a while.

·         Speaking up at work is essential. If you have opinions or suggestions, make an arrangement to speak to your manager. For better or worse, you made yourself heard.

It is time to plan for the next 5 years. Next post will be a 5 year plan.

How is your working life so far?

Getting back on track

It has been almost one year after the break up.

I should get back to writing and complete the booking writing. Hopefully it can be published one day.

Book title: Middle class millennial survival guide

4 Insurance policies everyone must have

It's not easy to find a good insurance agent. Most agents want you to over-insure on every possible policies there is. It can be too late after signing up and realising most policies are not what you imagined. There are cancellation fees and minimal period of lock in that make you feel helpless.

Nonetheless, it is important to filter out the really important policies and get some basic protection. For graduates who just started working, 2-4% of the annual income is a good gauge to spend on insurance premium. The plan is to gradually increase the coverage when you have dependents.

1. Hospitalisation policy

Everyone needs a hospitalisation policy if you can afford it. This insurance only has payout if you need to stay in a hospital for at least a day. So if you needed a day consultation, it will not be covered. In the event you are seriously ill and need to be warded in a hospital, at least you will not be too worried about the medical fees.

Most hospitalisation policies has a co insurance clause, where you pay 20% of the medical fees and the insurance company pays 80%. A rider can be added to having the insurance company pay 100%.

2. Death and disability policy

This type of insurance will have a payout to your family in the event the policy owner unfortunately passes away, or payout to the insurer a percentage of the policy payout when a disability occurs. The payout amount usually starts from 100k, then 200k etc. A small insurance amount is a good place to start, and then increase the payout which gets more expensive when you have dependents.

3. Accident policy

When an accident happens and you require a day surgery which can cost a few thousand bucks, you are caught in a limbo. It is not serious enough to be warded in a hospital so the hospitalisation policy does not kick in. This is when it is good to have an accident policy to cover you up to a few thousand dollars of insurance per annum.

4. Critical illness policy

A critical illness policy can be the most costly out of the 4 types of polices. It can be further broken down to early stage critical illness policy and late stage critical illness policy. This kind of insurance usually does not make financial sense unless you’ve got a fairly high income. So I would recommend getting the first 3 types and getting this coverage later.

Hospitalisation policy + Death and disability policy + Accident policy should cost less than 1500 SGD combined, per annum for a working adult less than 30 years old. Any more, you might want to find another agent who is not just commission hungry. So get yourself insured today to prepare for unforeseen circumstances.

Compound interest

1. What is compound interest

Simple interest is derived by using a percentage times the principle sum. The concept of compound interest is earning interest on interest. In investment, the interest or dividend that is earned from the principle invested amount can be reinvested for compounding to take place. Reinvestment of earnings and time are the two factors needed to see the effect of compound interest.

2. Using compound interest on investments

For an investment amount of 10,000 at 6% returns, the first year earnings is 600. Rather than spending this earning, you know about compound interest so the money is reinvested back. The second year interest is 636. It is 36 more than the first year and may look like peanuts at first, but bear in mind you did not have to put in any extra effort to earn the extra amount. On the third year, the returns is 674.16 and that is 74.16 more than the first year. By the end of twenty years, an investment of starting amount 10,000 will become 32,071.35 by repeatedly reinvesting.

Other than reinvesting the earnings, topping up the principle amount every year will bring the investment more explosive growth. Besides the principle amount of 10,000, let us add on 5,000 every year to the investment with 6% returns. At the end of ten years, the amount will grow to 87,766.69 where invested amount is 70,000. By twenty years, the amount will be 227,034.99 where invested amount is 130,000. This will continue as long as you keep reinvesting and earning interest. 

The earlier you start investing, the more can be reaped from compounding. Take two individual cases as example. Investor A starts investing at age of 25 at 10,000 principle, top up 5,000 annually at 6% returns, he will have 333,700.62 by age 50. Investor B starts a little later at age 30, he tries to catch up by investing more at 12,000 principle, tops up 7,000 annually at 6% returns he will have 311,434.71. Total amount invested by investor A is 135,000 and 152,000 by investor B. Even though investor B put in more money, his returns are lesser. By investing early, the accumulated earnings itself accrue even more earnings. 

3.Using compound interest to work for you, not against you.

On the other hand, debts have the same effect against you. When credit card companies charge you interest for the outstanding amount on your credit card bill, it is also compounding if you do not repay back. Cultivate prudent spending habits and your older self will thank you for it. Make your money work for you instead of against you. 

How to get over the loss of a loved one

When a loved one passed away, a funeral is held. A funeral is a form of respect to the dead and an opportunity to celebrate the life of the loved one.

For the living, it is an event that is equally important. Together, close friends and relatives can lend support and consolation to each other in this time of need. A chance to mourn over the loss can give closure to the ones left behind.

Coping with the loss of a loved one is never easy. It requires time and several stages.

1. Surround yourself in the company of friends and family. This is a support group that can be a source of emotional support.
2. Realize that grieving as a natural process. A mixture of emotions will be overflowing within your mind. The overwhelming sadness you feel is normal, and in most cases will not last forever.
3. Acceptance. Coming to accept the reality of the loss and moving forward with your time is one of the final stages in healing. It does not mean you will not revisit the emotions felt during the mourning period, but it will be more manageable with time.
4. Taking care of yourself. The mental and physical well being of a human body is connected. When you have enough rest, food and exercise, the mental state is healthier as well. A well maintained physical state makes dealing with emotional stress easier.
5. Taking care of the living. Sometimes, you are not the only one left behind. There are others grieving as well. Once you have settled your own emotions, it is time to turn your attention to look after the living.  

How to cope with stress

Life aint always a box of chocolates, there are ups and downs around every corner. While it is easy to deal with the ups, the downs can be hard to deal with. For some reason, sadness sticks to the human emotion like glue.

Most of the times, the stress I have experienced comes from work. It is important to de stress as the frustration from work might follow you even after work. Unintentionally, negative emotions are released towards friends and family, hurting relationships. It is not worthwhile to damage relationships because of stress from work.

1. Sharing with friends and family

Bottled emotions can make one miserable. Sharing your troubles with friends/family can lessen that burden. Sometimes we just need to say out what is bothering us. After saying out what is troubling you, the matter can seem smaller than what you thought was a huge concern.

2. Having a hobby

Brooding over a problem will rarely solve it. To take my mind off the problem, I would watch movies to free my mind and it pretty much became a hobby. I like to watch movies from different countries as a means to experience different cultures. Hobbies makes you feel excited about what you're doing and about life. The stress can fade away while you are indulging in your hobby.

3. Exercise

Exercising is always a good way to de stress. It is a good activity to release pent up frustrations and get some adrenaline flowing.

4. Resting

Without sufficient rest, it can be frustrating to take up any serious tasks. Have a good night's rest before charging up to your problems.

5. Solving the root of the problem.

Have you got angry at someone/something and later forgot what was it about? It was either a mild matter or because there was something else bothering you and that person/matter triggered your emotions. Find out what is really bothering you and solve the root of the problem.