Semi sandwiched generation and it's kinda stifling... need a bit of advice on my situation. What should I do? - Seedly
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Anonymous

Asked on 14 Feb 2020

Semi sandwiched generation and it's kinda stifling... need a bit of advice on my situation. What should I do?

34 y/o. Technical industry ~9yrs. 3.68K/mth net aft deducting CPF. Mom housewife. Monthly expense 1.6k incl. mom allowance. No car. Dad freelance project sales for industrial factory equipment. Wish to stay single bc i want to FIRE, been saving & building wealth in stocks. Hv abt 200k+ cash, 20k stock. 200k CPF. Hv loaned dad 20k for business so far, he faces a cash flow problem. Now he proposes I partner with him instead of outsiders to inject capital, Profit 50:50. FI might delay if I help dad

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HC Tang
HC Tang, Financial Enthusiast, Budgeting at The Society
Level 9. God of Wisdom
Updated on 17 Feb 2020

Hi

Wow, I think you've saved a lot and done quite well for yourself. Bravo!

On the FI side, you can still plan for your FI, but have you ask yourself, after FI, do you also want to RE ? Since you didn't state that you want to FIRE, hence you have plan to do something after FI. So what is it that you wanna do ? or can you join your father as the things to do after FI ? It would be quite meaningful and nice to build a business together father and son and pass on the legacy, afterall, how many can proudly say they have co-founded a business with their father and it prosper ? From you Q&A, I sense that you're much better managing financial. For your father biz income and expenditure side, suggest you take over that part first.

He might need to find supplier that offer terms (unless is for better pricing), because usually no terms means upfront to get better purchase price with greater discount.

On the other end, customer will always delay as usual. Since he's selling industrial factory equipments, it means the cost would be rather high, try to google the market see how other does it , I believe it could be having to charge his customer partial payment by phases (like renovations payment going by 5 phases or more) to ensure benefits and cash flow of both side.

Industrial equiment usually means quite niche, and requires professional knowledge and experience on it, thus entry is quite hard and competitor will be lessor. Do some SWOT analysis of the industry, where his biz stands, what does his competitor does and he doesn't ? Talk to his customer to find out what do they want and what is really missing in the industry ? That will be your USP (unique selling point) , where you can help sculp the biz to focus on that. Once you have the competitive edge, you can always demands some advance payment or phase payment for those difficult customer.

In short, I think he needs more help managing the details of the business than just $. Everyone has it's strength in 1 or few area and some area others will do better, that' may be the part where you can help.

Finally, discuss with him, helping him managses his biz finance and personal finance may help him to plan his own retirement better (which in turns avoid yourself becoming the sandwich gen). Try discuss nicely with him and later with your mum, afterall you're famiy and they are your parents, so you'll be somehow someway requires to deal with family financial as all kids grow up. After all, parents raise their kids to be better right ? :) so now you're betterin managing financial, then it's time to help , which also helps yourself too :D Together work as a family! That would be quite an achievement! :) Hope it helps shed some alternative thoughts too.

Cheers.

If you like my answer or think that my answer is useful or my answer has help you, please do upvote / like my answer / reply. Thank you :)​​​

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HC Tang
HC Tang

21 Feb 2020

You're most welcome. Don't worry. The fact that you're able to save so much and invest shows that you're very wise, discipline and sensible. Not many able to do so. We don't have answers to everything in life, but what we can do is to find out more as we go along, get help and plan for it as much as possible.
HC Tang
HC Tang

21 Feb 2020

For the unknown, we'll just go along and adjust & learn along the way, somehow someway we'll figure it out. As long as we do our best, there's is no regrets, because at least we tried. Many years later, looking back, we know we have done our best. Life's worth living 😀 Never try never know , give it a chance 👍😀
Cedric Jamie Soh
Cedric Jamie Soh
Level 8. Wizard
Updated on 17 Feb 2020

FIRE is not a goal of its own. FIRE is a means.

Happiness is the goal.

I wanna address the point that you mentioned you don't wanna get a partner because you are trying to FIRE. Which makes you happy? A decent partner who makes you smile daily, and you making her smile and feeling the luckiest person on earth.... or having digital numbers that mean nothing in the end (face it, we are all going to die, so either we die happy or we die rich)

Your dad is proposing capital infusion for a business that may potentially make you more money. (sorry I not sure about his proposal). Isn't that reaching the means of FIRE better? No one got super rich from saving accounts and saving money.

People get rich investing, in business, in stocks, in funds.

However, I digress.... I want to focus on this point- FIRE IS NOT THE END GOAL

Your end goal is Happiness.

If you manage to reach FIRE, but single at age 65, get back all your CPF, single lonely and dejected and regretted that you didn't help as many people around you as you could have, is that a good thing?

be happy bro! Happiness is the main reason for money.​​​

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Question Poster

17 Feb 2020

Yes to be frank i would like to have a partner. I would love to have a supportive partner that we can help each other to fight for a better future. But my current situation now may not permit me the luxury of time to have a relationship..
Question Poster

20 Feb 2020

Thank you for taking the time to draft your advice. I will study your advice and also compile everyone's answers and attempt to navigate thru this uncertainty in this milestone of my life.
Shengshi Chiam, CFA
Shengshi Chiam, CFA, Personal Finance Lead at Endowus
Level 6. Master
Answered on 16 Feb 2020

Hmm, sounds pretty awkward!

Are you helping him financially or do you actually think that this is a good investment situation? I think there may be ways for you to help him without having to put your own money in. Seems like what he needs most may not be your capital.

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Question Poster

16 Feb 2020

I don't know how will he be able to survive till old age with his wife who has no income. I'm so squeezed I'm have to totally give up my FIRE..
Shengshi Chiam, CFA
Shengshi Chiam, CFA

17 Feb 2020

Perhaps you should help him find money then. Pitch his investment ideas to external parties and help him refine his plans. If you are the only one that is willing to help him fund his business then it should raise red flags at different levels. It's hard on you, but it can be a great learning opportunity as well.... All the best!
Poh Yang Loong
Poh Yang Loong
Level 2. Rookie
Answered on 20 Feb 2020

Few years back I also have thoughts of staying single, it seems like a short cut to fire. I think its extremely important to decide how you want to live your life, it's really not that long. We sleep 1/3 of the day, and assuming you live still 90, that's like only 38years left. For some people it's even shorter, they get dementia as early as in their 40s. There are also many things that we can't do when we are older, even when FIRE with alot of money; having babies, lending $$ to parents (they probably moved on) for example. Money is a tool to solve problems, if money can't do that, it's just a number. In our 30s-40, that like our last golden decade to find a partner, get married, have babies, travel, buy nonsense, eat junk food, etc. Sure for some guys, they can still do it even when they are in their 60s or 70s, but I don't think it will be the same. Be careful not to lose the balance, not to lose moments, relationships, experiences , in exchange for FIRE. If you have the capacity and can use money to help and support a love one, there's really nothing much to think about. U have $420, papa ask only $20. If he loses everything, that's life and you should accept it.

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Firstly, we should start by having a detailed understanding about yourself. This can be done in two parts:

Part 1: Consolidation for your Insurance Portfolio

One of the most important things to do is to have a complete understanding of your existing insurance portfolio. Through this process, it allows us to understand the coverage that we have, any financial gap, as well as to find out whether we are overpaying for our insurance policies. I have highlighted the rest of the reasons here: https://www.blog.pzl.sg/why-every-client-needs-an-insurance-policy-summary/

Part 2: Understanding Your Cashflow

Secondly, we need to have a complete understanding on our cashflow. Through this process, we will understand our earning ability and spending habit. Here is a guide to help you: https://www.blog.pzl.sg/understanding-your-personal-cash-flow/

Through a detailed process, we are able to scrutinise and check whether we will be able to increase our income or reduce our expenses. Moreover, knowing when we will receive our bonus helps in your overall financial planning.

Concern 1: Attaining FIRE

Attaining FIRE is overrated for the most part. Instead, you should focus on living the life that you want now and to stay in good health. I read some of your comments below and understand that you are open to having a partner. In this case, then you should be open to dating. Just because you are dating does not mean that you should stop pursuing FIRE. On the contrary, look for a partner (I know it is easier said than done) who shares similar dreams and goals with you.

As a result, your partner will be able to motivate you so that both of you can reach greater heights together.

Concern 2: $200k Cash

In Part 2 (above), we conducted a cashflow analysis. Now, the question to ask is, "do you need so much liquidity?" If not, then most of your money could be placed in better tools that are capable of helping you reach your goals, rather than to deflate as cash over time.

Generally, the idea is to create a well-diversified portfolio that is capable of helping you reach your goals in a more efficient manner. Time is running short. In fact, we probably have less than a quarter of our life left before we need to retire. Hence, plan your cashflow to this end.

Concern 3: Business Partner

In summary, more information is required in order to understand if it is a feasible investment as a partner. If there is a good 10 to 15 years plan that makes sense to you, then go for it. Otherwise, work things out with your dad to find out how both of you can make this business profitable. When done right, this may help you reach FIRE earlier rather than later. The key is always, "how well can you overturn and run a business?"

Concern 4: Comprehensive Planning

All in all, I feel that you are feeling confused and perhaps burned-out in your life and needs someone who is capable to lead you in the right direction. For the most part, this can be easily resolved by writing everything down and analyse it on your own or seek a mentor. When done right, you will be able to propel forward at a remarkable speed.

Here is everything about me and what I do best.​​​

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Yeow Ih
Yeow Ih
Level 3. Wonderkid
Answered on 18 Feb 2020

Without knowing your dad's business but I would think that is still developing whilst you are doing reasonably well in your current job. As such, it will be a great risk in letting go your stable income to a riskier business together.

You are putting all 2 eggs in a single busket for your family.

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Kunxiang Chia
Kunxiang Chia
Level 3. Wonderkid
Answered on 18 Feb 2020

How do you gauge your dad's business on the long term future? The fact that you already pumped in 20K must mean there is a potential waiting to be developed.

Focus on the items on hand 1st, why is your dad requiring more capital? Inflating costs? Shouldn't be the case now. My guess is he is over budgeting. Look into his cashflow and address areas of concern as soon as possible. Your goal is to help grow his business so much so that he can self suffice and return you your capital.

That on its own has a bigger impact that to just get back your 20k invested.

With regards to the other items in question, you have all the other experts here in this platform. Growing and investing. Remember, capital appreciation is tax free.

So you'd guess which is the greater nemesis.

Cheers.

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Hi,

Sorry to hear about your difficult situation.

Does your Dad have any cash-value insurance policies? If yes and if he wish so, he can choose to sell it to a resale insurance policies broker for higher cashback so he can use the funds to inject capital for his business, instead of using your funds.

Disclaimer: I co-founded PolicyWoke, which is a resale insurance policies broker.

https://www.policywoke.com

https://www.facebook.com/PolicyWoke

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First, congratulations on building a sizable nest egg.

Do not neglect the biggest asset you have. Your potential earning power.

Whether or not you wish to proceed with investing in business really depends on your risk-taking ability and tolerance. For business ventures, the probability of loss and failure is possibly the highest amongst all ventures.

The success rate might be higher if the person doing the business understands how to get it done.

From a legal liability standpoint, this will be regarded as a personal loan. The best advice would be to accept that the money will not be coming back to you at all if you do decide to go in. The process of legal action, apart from money, will come in the form of emotional cost. As such, tread carefully.

From the answers you have provided, it is apparent that you have a running capital problem. You do not see the money because it costs a princely sum to grow the business. I would advise that you speak to a banker instead to get a loan facility to solve that problem.

Click here to find out more about me!

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Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport
Top Contributor

Top Contributor (Mar)

Level 8. Wizard
Updated on 16 Feb 2020

Difficult question to answer

viability of the company?

cause for cash flow problem?

maybe both of you contact capable professional advisor with experience in the market

family business seems good (but only if it develops good)​​​

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Sharon
Sharon

18 Feb 2020

A one-man show business is hard. I was once a freelance print designer. Chasing customers for payment is tough (I had one who didn't pay for 1 year+ until his project was completed >:(. And even when I collect 50% payment upfront, one person's effort and salary is limited. Unless the sole proprietorship is able to scale up to bring in more business, or the goods are difficult to replicate or business model is changed, (my gut feeling) I think it may be best for you to build on your earning power instead. And then, try to help him on the side (treat it like a side hustle), also to keep watch that things are doing OK. In the unfortunate event if this business doesn't work out, at least you still have your income to support the family. If you think of injecting capital, then I'd suggest you need to approach it like any other business. Do note that if you say YES, you're saying NO to everything else. If you say NO, you're saying YES to everything else. Imagine you're buying shares in a company. Would you invest in this?
Frankie Aufhauser-Rappaport
Frankie Aufhauser-Rappaport

18 Feb 2020

Super commentary, thank you dear Sharon