Tuesday, 2 June 2015

[Today] Create multiple income streams to gradually build your nest egg

Mr Ong Ai Bin began building his retirement savings 20 years ago the way many Singaporeans do — with an insurance endowment plan. Since then, he’s been able to gradually grow his savings by reviewing his portfolio regularly and creating different streams of income.
The 58-year-old technician with SIA Engineering feels that starting early enough to build multiple income streams was important, especially as he has a family to support. Mr Ong has been married for 30 years and has three children, all of whom are now in their 20s.
“I think saving for retirement is a driving force that motivates you to save harder and work harder,” he said.
“When you are young and have a family, you have to work harder to provide for your family. You also don’t know what will happen in the future, so it’s better to have some savings to meet your daily living expenses.”
Multiple income sources
Starting early gave Mr Ong an added advantage — opportunities to develop more diverse streams of retirement income. Rather than put all his eggs in one basket, Mr Ong bought shares in several local blue-chip companies on the open market and still earns dividends from his stocks.
He recently opened a fixed-deposit account and bought an endowment plan with POSB.
Having several income sources from different sectors helped give him peace of mind. If returns from one sector were not as good as expected, income from his other streams could help keep his overall earnings stable.
Early start, lighter load
Another advantage of saving early for retirement is that Mr Ong needs to set aside less money each month to meet his retirement goals.
Mr Ong sets aside about S$400 in savings every month. He and his wife also receive some money from their working children to help with household expenses.
It helps that Mr Ong and his wife are disciplined when it comes to spending. This has helped them save enough to go on annual holidays.
“My wife and I don’t spend on luxury goods, mostly just on our daily necessities. We like Japan and have been visiting the country for the last few years. We’re planning our next trip at the end of the year.”
Staying healthy
Although he is approaching Singapore’s minimum retirement age of 62, Mr Ong would like to continue working after that bridge is crossed, for very practical reasons.
“If I am able to continue working with my company, I would like to continue in a full-time role because I find my work interesting. My children are all grown up, so if I stay at home or work part-time, I may end up staring at the walls at home. Continuing to work will help keep me healthy.”
To stay fit, Mr Ong takes brisk walks along the river near his home in Sengkang. The avid bird-watcher and photography buff usually takes his camera on his walks to photograph the area’s diverse flora and fauna. Apart from staying active, he also does this to address one of his main concerns — his health.
“It’s important to stay active and healthy. When we grow older, our health may deteriorate. So we are not sure what will happen next. I’m very concerned about the cost of healthcare and I think it’s something many Singaporeans are also concerned about.”
Mr Ong is a realist and expects his needs and priorities to change. Thankfully, his foresight in building up several streams of income has given him the stability to help him cope with financial challenges that may arise.
This is the first story in a 15-part collaboration between TODAY and POSB. To read this story online, visit http://ift.tt/1I3OmMJ.