SG Budget Babe
Asked on 14 Feb 2020
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
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.
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3 more comments
21 Feb 2020
21 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.
1 more comments
17 Feb 2020
20 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.
1 more comments
16 Feb 2020
17 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.
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.
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.
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.
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.
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.
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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)
2 more comments
18 Feb 2020