Investing: My retirement goal

You have often heard the phrase, ” It takes money to make money.” This is true in investing, which is why I tend to be thrifty in my lifestyle. Not only do you need at least 6 months of emergency savings to cushion any negative life circumstance, but also save capital for investing. And what exactly is the purpose of investing? For me, it is to offset all of my monthly expenditures so that I don’t need to spend my time working to pay for that. I can then use the free time to better engage in hobbies and spend more time with my loved ones and friends. So the next question to ask is,” How much do I need to make from my investments so that I can retire?” To answer that, I had to look through my financial records. Let’s begin with last month, January.

Here’s an estimated overview of the expenditures I incurred during last month:

*Food & Drink = $220.05

Transport = $60

Entertainment = $7.39

Sports = $4.80

Donations = $20

Others = $8.50

Internet = $52.00

Phone = $35.00

*Utilities = $30.21

Insurance = $85.50

Medical = $251.45

Estimated Total = $774.90

There is an asterisk in some categories that I record my spending. For example, for food and drink, because I am single and living with my parents, I didn’t record the groceries spent by my mum when she cooks for the family. So, the actual total should be more than the amount stated in this blog post. What I recorded was the amount of money that actually left my wallet when I buy food for myself during the day. For utilities, the actual bill was $151.03. Because there are 5 persons in my family living under the same roof, I took the average, hence the figure $30.21. I am lucky enough to have my parents paying for my phone, utilities, internet, insurance and medical bills but I understand that I have to include it in my expenditure to ensure a fair calculation of bills. Overall, an estimated total of $774.90 doesn’t seem to be a lot for spending. This is especially so when I am living with my family and I didn’t include rent into the calculation. To be conservative, I believe an average monthly expenditure of $1000 should be sufficient for a simple lifestyle.

Therefore, I should have monthly dividend income of $1000 to sustain a simple lifestyle. Actually, $1000 is the bare minimum as we haven’t account for savings. Maybe an additional savings of $500 per month should be enough. Hence, the total amount of dividends I have to get from my investments per month is $1,500. This amounts to $18,000 of annual dividend income. If the average dividend yield is about 5%, I would need to have $360,000 worth of investment capital to retire a simple lifestyle. Right now, my portfolio is less than one-third of that value. Guess I have to keep on working and saving while my dividends compound gradually over time…

What is your retirement goal? Share it in the comment section below!

 

One thought on “Investing: My retirement goal

  1. The calculation for a relatively safe reserve for monthly retirement will need to take into consideration time-value of money. A dollar now is worth much less in the future. Like the Chinese saying, those who failed to plan, plan to fail! Start young and build your portfolio is the way to go. Jia you!

    Liked by 1 person

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